Category: zerohedge

Darius Dale, founder and CEO of 42 Macro, joins the Daily Briefing to discuss his updated outlook on inflation expectations and market sentiment as the S&P 500 hits a new intra-day high. Dale joins Real Vision’s Ash Bennington and Samuel Burke to examine the results of the New York Fed’s Consumer Survey for inflation expectations. Additionally, the trio looks at the possibility of an ECB policy shift as it looks to continue its monetary stimulus to support Europe’s reopening economy.

The NYT and WaPo reported on Monday that the Johnson & Johnson vaccine has been found to be associated with even more rare side effects that could be potentially harmful to a small number of patients who accept the vaccine. According to the reports, the FDA has determined that the vaccine can lead to an increased risk of a rare neurological condition known as Guillain-Barré syndrome, anther setback for a one-shot ‘miracle’ jab that has been sidelined in the US.

Although chances of developing the disease are extremely small, the link between the jab and the symptoms has been well-established. Patients who receive the J&J jab are 3-5x more likely to exhibit the rare syndrome.

Federal officials have identified roughly 100 suspected cases of Guillain-Barré disease among recipients of the J&J shot through a federal monitoring system that records complaints about potential vaccine-linked side effects reported by the public.

“About 100 preliminary reports of Guillain-Barré have been detected after 12.8 million doses of Johnson & Johnson vaccine were administered”

This is Dr. House-level stuff.

— zerohedge (@zerohedge) July 12, 2021

Just like it did after it was made aware of the heart inflammation caused in rare instances by the Pfizer and Moderna jabs, the FDA has concluded that the benefits of the vaccine in preventing severe disease or death from the coronavirus still very much outweigh rare risks and side effects.

But the agency plans to include a warning in fact sheets about the jab distributed to providers and patients.

“It’s not surprising to find these types of adverse events associated with vaccination,” said Dr. Luciana Borio, a former acting chief scientist at the F.D.A. under President Barack Obama. The data collected so far by the F.D.A., she added, suggested that the vaccine’s benefits “continue to vastly outweigh the risks.”

The CDC also acknowledged the rare side effects, and said it’s monitoring reports of Guillain-Barre syndrome after the J&J jabs.

The new safety concern comes at a precipitous moment in the nation’s fight against Covid-19. The pace of vaccinations has slowed considerably just as a new, more contagious variant called Delta is spreading fast in under-vaccinated areas. Federal health officials are worried that the news could make some people even more hesitant to accept the vaccines developed by Pfizer-BioNTech or Moderna, even though well over 100 million people have received those vaccines, according to the Centers for Disease Control and Prevention.

Nearly one-third of American adults remain unvaccinated. In an attempt to try and convince them to accept the jabs, the Biden Administration has shifted its strategy to focus on enlisting “community workers” to go door to door to try and convince Americans to try and accept the vaccine, instead of relying on mass vaccination centers.

The J&J jab was supposed to play an important role in the American vaccine rollout. However, thanks to complications at the Baltimore factory where US production was based, more than 75MM doses of the jab have been destroyed due to possible contamination.

This isn’t the first side effect tied to the J&J jab. American and European regulators have warned about the risks of rare blood clots stemming from all vaccines using the adenovirus vector, including J&J and Astrazeneca.

Authored by Jeffrey Tucker via RealClear Markets (emphasis ours),

Life in the United States and in many parts of the world was transformed in mid-March 2020. That was when the great experiment began. It was a test. How much power does government have to rule nearly the whole of life? To what extent can all the power of the state be mobilized to take away rights that people had previously supposed were protected by law? How many restrictions on freedom would people put up with without a revolt?

It was also a test of executive and bureaucratic power: can these dramatic decisions be made by just a handful of people, independent of all our slogans about representative democracy?

We are far from coming to terms with any of these questions. They are hardly being discussed. The one takeaway from the storm that swept through our country and the world in those days is that anything is possible. Unless something dramatic is done, like some firm limits on what governments can do, they will try again, under the pretext of public health or something else. 

There is so much to unpack from those early days, every day filled with drama and meaning. 

There were two critical turning points, so far as the public knows. The first was on March 12, when Trump gave an evening speech that ended in announcing a travel ban from Europe. Fauci had previously said that it would not happen. 

It happened anyway. 

Who knew that the president could do such a thing on his own? I’m not sure anyone did. But it was so shocking and there was no time and means to challenge it. Plus, people were afraid of the virus, their primal survival instincts overriding all rationality, and deleting the rule of law. 

The second turning point was March 16, at Trump’s long press conference at which he announced the strong lockdown advisory. There he was surrounded by Deborah Birx and Anthony Fauci, the people who have since revealed themselves as Biden partisans. They were the team advising him, with his son-in-law in the background. 

According to Washington Post reporters, Trump had spent the weekend with these very advisors. It was they, and Birx in particular, who convinced him to go full lockdown. She convinced him that lockdowns would arrest the virus and then he would be considered a hero who saved the country. 

It was supposed to be only for 15 days, just enough time to get the virus contained in some way. The public messaging was that this was to “flatten the curve” but Trump had been led to believe that these measures would somehow help “get rid” of the virus, an absurd and unachievable goal but Trump did not know that. Birx’s virus-control method was no more complicated than her own words: “We really want people to be separated.”

What’s fascinating to me about this narrative is that it leaves out a very critical document. In fact, the book by the Washing Post leaves it out completely. 

On March 13, a Friday following Trump’s ban on travel from Europe, the Department of Health and Human Services released a confidential edict – one that had surely been weeks in the planning – that later became public. It contained all the essential elements of lockdown. 

In other words, what Trump was considering doing had already been done. Whether he knew that or not, I do not know. I’m guessing that the answer is that he did not. 

The March 13 edict from HHS called for “home isolation strategies” and “limiting public gatherings and cancellation of almost all sporting events, performances, and public and private meetings that cannot be convened by phone.” It called on states to “consider school closures.” It also said that “healthcare” facilities need to “alter standards of care from ‘contingency’ to ‘crisis’ standards to conserve resources.” Everything must stop, said the document, except for “skeleton crews” related to “critical public services and infrastructure.” 

To be sure, the HHS document had no force of law as such and neither did it demand all of this immediately. It only called for this under certain conditions. The trouble is that these conditions were already in place. 

I would like to quote this paragraph directly because it is a doozy. Indeed, it’s almost incomprehensible but if you were to summarize, one might say that the document called for lockdowns when there is community spread of the virus – which everyone knew at the time was inevitable since January and already happening at least in the Northeast of the US.

The document read as follows: 

“The trigger for a transition from containment to community mitigation activities in multiple affected jurisdictions is recognition of greater than three generations of human-to-human SARS-Cov-2 transmission in each, or detection of cases in the communities without epidemiologic links, in two or more non-contiguous jurisdictions in the U.S. with evidence that public health systems in those jurisdictions are unable to meet the demands to achieve and maintain containment while simultaneously providing quality care.”

Again, this was released even as Trump continued to believe that he was in the driver’s seat, deciding whether and to what extent he was going to go along with his advisors’ demands that he shut down the best-performing economic growth path in decades. He was being asked to betray all of his principles in the name of virus control. That weekend, he succumbed to their demands and prepared his Monday press conference. He was merely codifying what the “deep state” had already decided on his behalf. 

During the press conference, the stock market crashed 3,000 points, the largest point drop in history. Hearing the news of this devastation during the press conference, Fauci interrupted to assure people that this would be a short break in economic activity and certainly would not last until July. We might still be battling the virus by then, he said, but the lockdowns themselves would be of short duration. It was designed to bring calm to the markets. 

This press conference is what unleashed the political panic. States all over the country locked down, with only South Dakota resisting the push to put an end to commercial freedom and human rights. They wouldn’t open up for months or, in some cases, more than a year later. 

Then the time came for Congress to act. It was March 27, 2020, and there was a $2.2 trillion spending bill on the table. Congress was going to approve it without even showing up to the Capitol. It was an appalling sight. These lockdowns had already permissioned every privileged person who could work on a laptop to stay home while the working class had to keep up the old routine. Congress was going to throw trillions around the country now without even showing up to a vote. 

That’s when Congressman Thomas Massie, Republican from Kentucky, hatched a brilliant idea. He would insist that Congress obey its own quorum rules. He pressed the point and thereby required at least half of everyone to come back, traveling to Washington, D.C., precisely when they were most scared to leave their homes. It made sense. If you are going to shower the country with that much money, the least one could do is adhere to the rules of the house and show up for a vote! 

Trump, however, was a huge supporter of the bill and the lockdowns, and therefore furious at Massie. He tweeted that Rep. Massie – one of the more brilliant and humble members of Congress – was a “third-rate Grandstander.” “He just wants the publicity,” he said, and called for party leaders to “throw Massie out of [the] Republican Party!”

Of course the bill sailed through, with only Massie in opposition. That bill ended up being a disaster. It could arguably be blamed for why so many states kept their economies closed as long as they did. The money itself, rather than being used for compensation for lockdowns, became itself a moral hazard to continue the lockdowns for as long as possible. Indeed, the more money that Congress allocated to lockdown relief, the longer the lockdowns went on. 

The counterfactual is elusive but one still wonders. How might history have been different had Trump smelled a rat during the second week of March 2020? What if he had around him some scientists who understood the virus, could read the risk demographics, understood endemicity, and convinced him instead of spreading panic to inform the public in responsible ways? Further, what if Congress had not gone on this wild spending spree that ended up prolonging lockdowns?

I can’t see how these questions can forever be evaded. We cannot continue to pretend as if they do not matter. We are still struggling to get back what we lost in this dreadful year, and the party in power now looks back not with horror at the results of political panic but rather with a sense of opportunity for all that might be possible in the years ahead.

Commenting on the Fed’s recent communications debacle, Bank of America economist Michelle Meyer writes that the Fed was getting high marks for its communication “up until the last meeting where the message got jumbled.” Specifically, in light of the stunned market reaction following the last meeting, many commentators declared that the Fed had abandoned Flexible Average Inflation Targeting (FAIT), which Meyer strongly disagree with, conceding that while a growing number of Fed officials have become uncomfortable with rising inflation and are looking to remove accommodation faster, the reality is that Chair Powell and the majority of the Committee have not given up on FAIT. Indeed, Meyer notes, “the gut reaction of the markets pulling forward rates hikes to 4Q 22 following the last meeting proved fleeting as the market has subsequently pushed out the first hike back to 1Q23.”

To help navigate the Fed’s communication error, Meyer provides a guide for understanding the Fed’s (latest) reaction function and communication.

First, the Taper

Here Chair Powell has been crystal clear: the Fed will slowly guide the markets toward the taper. BofA shows the taper timeline in the chart below, with its expectations overlaid.

While Meyer concedes that it is possible for the Fed to signal tapering at the upcoming meeting in July, the BofA economist remain doubtful. The reason to wait is that the market isn’t pricing in the announcement at this meeting, and the Fed wouldn’t want to risk surprising the market. In the last meeting, Powell stated that taper was still “a ways away”. But on the other hand, they have been providing hints that an earlier move is possible, and the surprise will be minimal. Financial conditions are also very accommodative with yields significantly lower making it less painful if rates reset higher upon a taper announcement. Combining these two, BofA thinks it is much more likely that they signal in September.

There is also a risk of the Fed pulling forward the actual taper from BofA’s current forecast of January to perhaps December or even November. This depends on how much quantitative guidance the Fed offers along with the taper signal. According to Meyer, if the Fed is clear that they want to see a certain amount of job creation in order to taper – such as a range for the employment-to-population ratio or progress on the jobs deficit – it will be easier to wait to execute taper. Another option would be to offer calendar guidance but this seems to run counter to Powell’s desire for policy to be “outcome based” rather than “outlook based.” If the Fed keeps the language vague arguing for “substantial further progress”, it seems to leave options open.

What about hikes

The Fed laid out the criteria to hike rates as three-fold:

1. inflation needs to reach 2% and stay there for a year; 
2. conditions be met to believe that inflation can run moderately above 2% allowing for the overshoot to offset the undershoot;
3. maximum employment to be met with broad-based labor market recovery.

The first has been satisfied. We are on the way to meeting the second, although doubts remain – especially among the FOMC – given the potential transitory nature of inflation. The third criteria hasn’t been satisfied and also a likely needed for the second to be met.

The challenge, as Meyer explains, with declaring victory on the inflation overshoot is that we are vulnerable to inflation falling back below the target – at least temporarily – next year. For simplicity, let’s focus on the biggest source of transitory inflation: vehicles (defined here as used cars and trucks, rental cars and new vehicles). This makes up around 5% of core PCE. Over the last two months, about 40bp of the 1.2% gain in core PCE owed to these categories. To put this into perspective, if these categories were unchanged, core PCE would have been 0.48% mom in April (2.9% yoy) and 0.31% in May (3.0% yoy). For illustrative purposes, BofA also ran scenarios for %yoy core PCE inflation through next year based on the following paths for car prices: full mean reversion to preCOVID levels, 50% reversal and 25% reversal, assuming trend core inflation of 2.0% in all other categories. This would lead to core PCE of 1.3%, 1.6%, and 1.8%, respectively, as shown on the chart below. This shows the sensitivity of inflation to a singular volatile category.

The path toward maximum employment is also uncertain for two reasons:

1. it is unclear how much of the decline in the labor force will prove permanent; and
2. the Fed has changed the definition of maximum employment.

For the former, BofA has previously estimated that the vast majority of those that dropped out of the labor force will be able to return with about half of the decline likely directly attributable to the pandemic. However, about 1.2 million reflects earlier retirement which is unlikely reversible. This will make it more challenging to fully recover the employment-to-population ratio (EPOP). Perhaps a work-around is to look for the prime-working age EPOP to return to pre-pandemic levels which can be achieved by March 2022 based on BofA’s employment forecasts which currently is looking for a cumulative 5.9mn jobs to be created by 1Q 2022.

The other consideration mentioned by BofA, is that the Fed has changed its definition for maximum employment to be broad-based and “inclusive.” This means that the recovery in the EPOP has to be felt throughout the population particularly for the most economically challenged cohort, i.e., no hikes until there is a surge in black employment. To achieve this, it will require an even tighter labor market where the “fringe” of the labor market is offered greater opportunities. This in particular calls for the prime-age EPOP to exceed pre-pandemic levels, further pushing out when the Fed might declare victory. And since it is the minority workers who have repeatedly stated they will not return to the labor force unless they get far more preferential terms, it is almost as if the Fed has engineered the current reaction function to one where it will continue to ease indefinitely and blame lack of “recovery” on black jobs for its refusal to stop the easing, as if injecting $120BN per month will somehow result in more black workers getting hired!

The Committee: divided

Last but not least, there is a growing divide on the Committee which complicates forward guidance. As of the June meeting there were 7 FOMC officials who expected hikes to start in 2022. According to BofA, all of these officials are regional Fed Presidents, some of whom have never fully embraced FAIT (below is Bloomberg’s assumption of who is who on the dot plot).

And so, with the economy running strong and inflation pressures building – at least on the surface – these Fed officials are getting ready to remove accommodation. As BofA notes, this makes sense…. if you are still operating in the old regime: remember that the Fed hiked rates for the first time with core PCE inflation well below target. The view was that it was preferable to slowly normalize policy based on expectations of future inflation and growth to avoid having to hike quickly and destabilize the recovery. Hence the challenge with keeping the new framework “flexible”. BofA believes the “core” of the Committee – Powell, Brainard and Clarida – are much more influential in setting the course for policy. The Board of Governors and NY Fed President Williams will generally be in agreement. It is this group that is still strongly committed to FAIT with more than a token overshoot of the 2% target, preferring to err on the side of too much rather than too little inflation. Moreover, they might not be as concerned about higher inflation: indeed, the Board staff forecast shows a slower trajectory for inflation based on the latest FOMC minutes. The Committee members’ voices will be heard and can influence the decisions of the FOMC with the force of their arguments. As such, Meyer’s advice is to pay more attention to the centrist members of the FOMC – such as Bostic and Harker – whose arguments could resonate with the Board.

Finally, markets, where we have seen a big moves in rates

The bond market has had a significant rally; at 1.30% the 10-year is back to mid-February levels. In fact, the curve has also flattened significantly in a way that typically doesn’t happen until the hiking cycle has started. So what gives? According to BofA’s in house rates expert, Mark Cabana, the move is partly technical, driven by investors closing out short positions and trend-following hedge funds exacerbating rate moves. But it could also reflect the market becoming increasingly worried about structurally lower growth and inflation once the cyclical lift fades. It may also be that the market is doubting the Fed’s resolve to overheat the economy and facilitate higher inflation. For what it’s worth, Meyer says that while the former is a reasonable argument, she strongly disagrees with the argument that the Fed has already blinked. That’s because Powell has been setting the stage for this new framework even before the pandemic – which was a welcome catalyst to implement FAIT – and sees this as a chance to reset monetary policy.

In short: expect the flood of liquidity to continue for a long, long time.

Since the tail-end of the Trump administration the intensity of Washington efforts to prop up the Venezuelan opposition has waned, and at the same time external supporters of Caracas like Russia appear to have stepped up efforts at maintaining the international legitimacy of the Nicolas Maduro government – even as Biden has quietly continued the Trump policy (since 2019) of deeming Juan Guaido ‘interim’ or de facto president (despite him not actually ruling anything). 

After this period of relative quiet, opposition leader Juan Guaido says Maduro’s security forces are now looking to detain him once again. He issued a statement Monday saying security forces had departed his apartment building after “threatening” him with arrest. His wife, Fabiana Rosales, had earlier said that security forces had entered their apartment building in an attempt to detain him.

A group of reporters quickly gathered at his apartment building following the security forces’ departure, where he issued the statement of the “threatened” arrest. “The harassment and the threats will not stop us,” he told reporters outside the residential complex. 

While they didn’t move on Guaido just yet, which would have triggered international condemnation as possible significant action out of Washington, it soon after reported that prominent opposition lawmaker and Former First Vice President of the National Assembly of Venezuela Freddy Guevara was taken into custody.

He was reportedly taken to the Helicoide prison in Caracas, according to an opposition spokesperson said. Reuters writes of the developing story that “Guevara had earlier posted a video of himself in his car on social media stating that security forces were attempting to arrest him on a Caracas highway.”

#URGENTE La dictadura de Maduro pretende detener al diputado Freddy Guevara en la autopista Francisco Fajardo pic.twitter.com/7IfZdtxoLl

— Freddy Guevara (@FreddyGuevaraC) July 12, 2021

All of this strongly suggests that socialist strongman Maduro is ready to belatedly move of “Washington’s man in Caracas” and his network of supporters.

While Biden has been relatively silent on Venezuela – especially when compared to Trump’s prior many bellicose and threatening statements, today’s events could force the Biden White House to belatedly weigh in more forcefully.

Authored by Emily Miller via Emily Post News (emphasis ours),

The media elite has been telling us for months that the vaccine hesitancy rate is highest among Republicans, in particular, the men. The press alleges that the MAGA-hat-wearing-uneducated-conspiracy-theorists GOP are to blame for the continuing pandemic. But, guess what? The media lied. It’s young, healthy people who don’t want to get vaccinated.

After six month of shots in arms, the vaccine hesitancy can be measured largely by who has not gotten one yet. The Centers for Disease Control (CDC) reported recently that:

Vaccination coverage and intent among adults are lowest among those aged 18–39 years.

The official data shows that, from March to May, one quarter of these young adults said they were unsure about getting vaccinated and another quarter said they will not get it

The CDC doesn’t even mention political affiliation as a factor. Among the 18 to 39-year-olds, the rates were lowest for those who were younger, black, poorer, less educated, uninsured and living outside metropolitan areas. 

However, the media elite have not let these facts stand in the way of a good story.  To continue the blame-the-Republicans narrative, the press use public opinion polls as a basis of their reports. That’s how we’re still seeing so many stories on Republican hesitancy despite the CDC saying it’s not the case.

The Washington Post is Obsessed

Look at what one outlet — The Washington Post — has published in just the past week:

HEADLINE: The GOP’s very stubborn vaccine skepticism

HEADLINE:  A third of White conservatives refuse to get vaccinated — a refusal shown in polling and the real world

HEADLINE:  We are in a race’: GOP governors implore residents to overcome vaccine hesitancy as delta variant rises

The Post even did its own poll to push this narrative more.

HEADLINE: Post-ABC poll: Biden earns high marks for handling the pandemic, but many Republicans resist vaccination.

The editors at The Post don’t see their own bias in the news side. But the opinion side was so determined to push this false narrative that it published two op-eds on the topic — one from the left and the sorta-kinda right.

Opinion by Marc Thiessen: If Biden wants to convince the vaccine hesitant, give Trump credit for the vaccines

Opinion by Max Boot: Republicans are preventing America from reaching Biden’s vaccination goal

The obsession by the Post editors in making sure readers blame Republicans for any more COVID deaths is just one tiny glimpse into the larger problem with the media pushing this false narrative.

How the Media Works

Going through the media stories about Republicans who supposedly won’t get vaccinated, there’s a clear pattern.

1) The outlet cites a public opinion poll, never the CDC statistics.

2) The reporter gets quotes from random “expert’“ who says the poll proves the GOP is the problem with ending the pandemic.

3) The journalist finds a twist to blame all this on Pres. Donald Trump.

Of course it benefits Pres. Joe Biden to blame the lack of vaccinations on Republicans and Donald Trump because otherwise he would take the hit.

Since Democrats have retaken the White House, the taxpayer-funded media outlets (VOA, NPR, PBS) have been cleared out of Republicans so that the liberals who report and produce in these outlets can return to their agenda.

So, look what the Voice of America is airing all over the world: “Unvaccinated Americans Whiter, More Republican Than Vaccinated.” The story follows the patterns of corporate media.

1) Cite a poll, not stats

Kaiser Family Foundation and never mention the CDC.

2) Get quotes to say the poll shows Republicans are the bad guys

In this case, the expert is just the head of the polling company: Liz Hamel, director of Kaiser Family Foundation’s Public Opinion and Survey Research

3) Blame Trump

In this story, they did it by quoting Hamel as the expert, like this:

For example, she said, “believing that the media has exaggerated the seriousness of the pandemic — that’s something that we heard President Trump saying when he was in office. It’s something that Republicans are more likely to agree with than Democrats. And people who believe that the pandemic has been exaggerated are much less likely to say they want to get the vaccine.”

The New York Times is Ground Zero

How did we get to this common knowledge that Republican men are the biggest holdouts of the COVID vaccine in the US? To answer that, we need to go back to March 2021 when people under 65-years old were first getting vaccinated and could provide real world data. Up to that point, the public opinion polls from as far back as June 2020 were hypothetical about getting a vaccine.

The The New York Times often sets the narrative for the rest of the media, especially TV news.  This was the story in NYT on March 15:

HEADLINE: As Biden Confronts Vaccine Hesitancy, Republicans Are a Particular Challenge

The Times seems to have started the system for how to falsely claim Republicans are the most vaccine hesitant.

1) Cite poll, not stats—

The evidence for the GOP being a “particular challenge” was a poll done by CBS News that the Times reported said one-third of Republicans would not be vaccinated compared with 10 percent of Democrats. That number is accurate, but The Times didn’t put it in perspective.

Overall, 22 percent of the people in the CBS poll said they will not get the vaccine, so “one-third” is not that big of a difference. (CBS said it “weighted” the results but didn’t publish the original numbers to show how.)

If The New York Times reporters had looked at the poll independently of the conclusion by CBS News, they might have looked at other factors. The age difference in the poll shows young people were above average for vaccine hesitancy — just as significant of a divider as party affiliation.

Those under 30 years old who said they won’t get a vaccine were 26 percent compared to only 15 percent over 65 years old. The divide is just as big as party affiliation when you look at actual hesitancy, people who are not sure. That is split 31 percent of young people and only 10 percent of older people. 

If the story had instead concluded that age was the most important factor, then this NYT story in March would match the facts now from CDC that show young people are not getting vaccinated. Instead, just as the vaccine first became available for people under 65-years-old, The Times concluded this: 

The administration is seeking help in urging Republicans to get inoculated. But the president said he was not sure how much value there was in enlisting his predecessor.

2) Expert says poll proves Republicans are the problem

The Times refers to a reporter asking Pres. Biden about the alleged Republican vaccine problem at a press conference.

REPORTER:   Should President Donald Trump help promote the vaccine among skeptics, sir, especially those Republicans who say they’re not willing to take it?

THE PRESIDENT:  I’m hearing a lot of reports from serious reporters like you saying that.  I discussed it with my team, and they say the thing that has more impact than anything Trump would say to the MAGA folks is what the local doctor, what the local preachers, what the local people in the community say. 

Notice how Biden legitimizes the blame-Republicans theory by saying it’s coming from “serious reporters like you.” He never said it’s true or factual because there’s no evidence of it. The media and the Biden White House have the same agenda.

3) Blame Trump

This was a layup for Biden since the reporter did it for him. The Times just piled on by saying Trump is to blame because he got his vaccine “in secret.”

Media Follows The New York Times

As I wrote earlier, the TV networks generally take The New York Times stories and put them to video. Since The Times used a poll from CBS to blame Republicans, CBS then used someone else’s poll to continue the hit job. This story is from April 7:

HEADLINE: Many Republican men are hesitant to get coronavirus vaccine: “I don’t think it’s necessary”

CBS followed the pattern to establish the narrative.

1) Cite poll

They cited this poll without linking to it:

A recent Marist poll in partnership with NPR and PBS NewsHour found 49% of Republican men said they would not take the vaccine when it’s available to them.

2) Quotes to back up the poll as fact

CBS interviewed someone named Steve Mitchell who has “been polling Republicans in the state of Michigan for more than 30 years.” It’s a stretch to interview one guy in one state to assess the entire country, but that was how CBS could make this story stick.

Then CBS interviewed one guy in Michigan named Chris Howe who has no expertise or public position but just described as a “conservative living in Clarkston, Michigan, where he runs his own hardwood flooring business.” The point of using Howe is to get the juicy headline. But it is taken totally out of context.

Howe said he already had COVID so has the antibodies. The headline reads “I don’t think it’s necessary,” and it leaves out the second part of what Howe said: “”I have gotten it and I have not died.” Of course it’s not necessary if you have natural immunity. But that doesn’t fit the narrative of this story.

3) Blame Trump

This story doesn’t blame Trump directly, but says this :

In an interview with Fox News, former President Donald Trump said that he’s taken the vaccine. “It’s a great vaccine. It’s a safe vaccine. It’s something that works” he said.

Cable TV Blaming Republicans

A couple weeks later, CNN does a report with this headline “Vaccine hesitancy among Republicans emerges as Biden’s next big challenge.” It says:

And the hurdles that lie ahead for President Joe Biden in persuading Americans who did not vote for him to take the vaccine are coming into sharper focus as resistance among Republicans, White evangelicals and rural voters persists even though vaccines are now widely available.

CNN is able to write this as fact by doing the standard three steps to get to blame Trump.

1) Cite a poll, not hard numbers

Even though this story was produced after people under 65-years-old started getting vaccinated, CNN did not use any actual statistics from the CDC. Instead it used a Monmouth poll that asks people if they got the shot. CNN was thus able to report that: “a stunning 43% of Republicans said they would likely never get the vaccine.”

2) Expert quotes to back up the poll

CNN is of course totally in the tank for Biden, so it doesn’t try to back up the poll but instead uses administration officials to allegedly prove that Republicans not getting vaccinated will kill people. CDC Director Dr. Rochelle Walensky is cited:

“Because this virus is an opportunist, we anticipate that the areas of lightest vaccine coverage now might be where the virus strikes next.” She added that with only modest protection for the oldest people within the US population, “many more deaths” could ensue.

3) Blame Trump

CNN’s business model is talk about how bad Trump is 24/7. So it’s not a surprise that the report on vaccine hesitancy just blames Trump without even a connection. The report says:

Trump has also seemed uninterested in helping to combat vaccine hesitancy even as some have urged him to do a public service announcement and greater publicity to encourage his supporters to get vaccinated. Trump did not get his vaccine on camera like other former US presidents.

CNN concluded— without any facts— that Trump is to blame for alleged Republicans holdouts who are stopping our country from ending the pandemic.

It remains unclear whether Trump will weigh in to help the Biden administration address vaccine skepticism, but Biden needs to find a way to get the message out to Trump’s base that vaccines are safe, and in fact, necessary, for America to beat the virus.

Media Bias Seeps Into Science

The most disconcerting of all The New York Times followers is the supposedly data-based journal “Scientific American.” The headline in its June issue is “Do Republicans Mistrust Science?” Here’s how it explained this totally non-scientific theory.

….. [click here to read the rest of the investigation]

Chinese tech stocks dead-cat-bounce is over after more DIDI headlines and more restrictions over the weekend…

Source: Bloomberg

Overall almost $1 trillion of market value has been wiped out in the latest sell off in China Tech…

But US Stocks managed gains after last week’s mixed bag with Small Caps showing the biggest swings intraday (and managing to scramble and hold on to green)…

Record highs for S&P, Dow, & Nasdaq.

But the improvements are slowing for stocks and the runs are not extending intraday as Goldman’s Chris Hussey notes, the bar for catalysts that drive meaningful upside for the S&P 500 from here is likely higher now vs earlier this year as investors navigate a ‘peak growth – peak liquidity’ backdrop.

And rather notably, all these gains have come as the number of NYSE new 52-week highs has plummeted to its lowest since Nov 2020…

Source: Bloomberg

And the S&P’s breadth is even more dismal…

Source: Bloomberg

As Morgan Stanley noted, we think the recent decline in rates, commodities, and cyclical stocks geared to economic growth is indicative of a market that is getting worried about the sustainability of the pace of recovery, especially relative to expectations. Perhaps the greatest warning sign coming from the market is the increasing deterioration in breadth as the index makes new highs every week. While the decline in long end rates has appropriately benefitted large cap growth stocks over the past month, we would suggest lower rates from here will no longer prove to be beneficial to stocks as it will signal these growth fears are coming true.

Makes you wonder when the rope gets cut?

Financials outperformed ahead of Bank earnings beginning tomorrow…

Source: Bloomberg

SPCE crashed back to earth from soaring too close to the sun in the pre-market…

The Dow traded back above 35k for the first time since early May’s spike highs…

 

After a tempestuous few days last week, bonds barely budged today with a modest 1-1.5bps rise in yields focused mostly in the short-end…

Source: Bloomberg

The rebound in yields appears to have stopped as the 10Y auction was striog today…

Source: Bloomberg

The dollar ended very marginally higher after a pump’n’dump during the day…

Source: Bloomberg

Cryptos tumbled, with Ethereum testing back down towards $2000 and the lowest since late June…

Source: Bloomberg

Bitcoin also broke down, back below $33k…

Source: Bloomberg

Despite the dollar going nowhere, commodities were mixed with Silver the only major to end with gains as crude and copper disappointed bulls…

Source: Bloomberg

Finally, we note that today was the S&P 500 cross a notable level – exactly a double (up 100%) from March 2020’s spike lows…

Source: Bloomberg

Via SchiffGold.com,

There has been a growing sentiment in the markets that inflation isn’t transitory and the Fed is going to eventually have to tighten monetary policy to deal with it. The International Monetary Fund fed the narrative last week when Managing Director Kristalina Georgieva warned of a “sustained” inflation rise in the United States. This comes after a June Federal Reserve meeting that many perceived as a turn toward hawkishness. But in his podcast, Peter Schiff said the Fed is like the boy who cried wolf when it comes to fighting inflation and the markets are bracing for the wrong impact.

There was a pivot to safe havens last week. Peter thinks this growing sense that the Fed is going to start tightening sooner rather than later drove it.

If inflation is not transitory, if it’s sustained, well, everybody expects the Fed to do something about it. If it’s transitory, the Fed doesn’t have to do anything because it takes care of itself. But if it’s not transitory, now the Fed has to take action to reduce the rate of inflation. And that is what is spooking the markets. The markets are worried about the Fed taking action.”

There was also renewed focus on the June Federal Reserve meeting with the release of the minutes. It’s clear Fed members are starting to talk about tapering the bank’s asset purchase program. But Peter noted that if you read closely to what they’re saying, they’re telling you they’re not ready to taper.

Even though they are now talking about tapering, what they’re talking about is the fact that they’re not going to do it. What they’re saying is, ‘Yes, we’re talking about tapering, but the conditions that would result in a taper have not yet been met.’”

The Fed hasn’t stipulated exactly what those conditions are.

I don’t think they’re ever going to lay out the conditions because I don’t think there is any condition that would actually result in a taper. So, they don’t want to pin themselves into a corner by actually saying what it is that would cause us to taper because when those things happen, if they happen, and then the markets expect a taper and they don’t get it, well, then they lose some credibility.”

Keep in mind, tapering doesn’t mean shrinking the money supply. It just means expanding it at a slower pace.

They’re not talking about stopping the debt monetization, going cold turkey, and they’re certainly not talking about shrinking the money supply. They’re simply talking about inflating the money supply at a somewhat lower pace than they’re inflating it right now.”

Peter said the tone the Fed has taken should reveal to anybody with a brain that it is not going to taper. And if there really is an inflation problem, simply tapering wouldn’t be enough to deal with it anyway.

You’re still adding to the problem when you’re expanding the balance sheet. Even if you are adding to the problem more slowly, you are still fueling the fire. Even if you’re throwing on less fuel, you’re still giving the fire more fuel and it’s going to get bigger.”

The Federal Reserve isn’t even talking about what would actually be required to battle “sustained” inflation.

I think they recognize that there’s no way the markets could handle something like that, so they’re trying to give the markets a little bit of tightening but not too much to really scare them.”

In fact, talking about tightening affects the markets as if there was actual tightening.

The one thing the Fed doesn’t want to do is have rates go up. But it can’t admit that it’s never going to raise them.  So, it’s trying to have its cake and eat it too by tightening without actually tightening. And they do that by just talking about tightening.”

But when the Fed talks about tightening, the markets think it’s serious. In effect, the markets start tightening for the Fed.

It’s like the Fed is this boy who cries wolf, and every time the Fed cries wolf, the villagers come running because they actually expect the wolf. They still don’t realize that it doesn’t matter how many times the Fed cries wolf — there’s never going to be a wolf. So, they can talk about, they can think about, they can do whatever they want about tapering and about raising rates, but they really can’t do it.”

Peter said the markets are bracing for the wrong impact. They’re worried about Fed tightening slowing down the economic recovery.

It’s not that inflation is going to turn out to be not transitory and therefore the Fed is going to fight it. It’s that inflation is not transitory and the Fed is not going to fight it. And because the Fed is not going to fight the non-transitory inflation, it’s actually going to end up getting much worse than people think. And the reason that they are not going to fight inflation in the future is the same reason they’re not fighting it now — because they can’t do it without collapsing the economy. They can’t do it without crashing the stock market, crashing the housing market and forcing the US government to dramatically cut spending or raise taxes on the middle class, two things that it is completely reluctant to do. So, since the Federal Reserve wants no part of any bitter-tasting medicine, even if ultimately it cures what ails us, they’re not going to fight inflation in the future, they’re not going to fight inflation now, they’re never going to fight inflation.”

In the latest Macro Credit note from Goldman Sachs’ Credit Strategy Research group, Lofti Karoui admits that the Fed’s shift coupled with thin spread valuations most likely puts the trough in USD spreads behind us, as risk premia continue to adjust to the prospects of slower growth and a gradual tightening of policy.

In fact, they admit, there has been an almost record erosion of the excess premium in the low end of the USD bond market’s rating spectrum, now trading at their richest since right before completely collapsing in 2008…

But, rather than cash-in your chips and wait for better opportunities (because how is a lowly i-bank gonna earn the spread and the commish if you don’t trade), Karoui and his credit group suggest you ‘rotate’ from simple (extremely rich) credit exposure to more complex (and slightly less expensive) credit assets.

The exact wording could not be more ‘doublespeak’ as the bank says they:

“also shifted to a more defensive posture, preferring the “complexity premia” offered in structured products such as CLOs and consumer ABS.”

So buy BB CLOs and sell your HY bonds because… elevated valuations coupled with the Fed’s shift leave little room for further compression in risk premia…

Historical percentile ranks for various bond index spreads. We use OAS for the HY, IG, agency MBS, and credit card ABS indices, discount margin for CLO tranches, and Z-spread for non-agency RMBS.

And we can only guess how much wider the bid-ask spread is on those ‘complex’ assets (ker-ching).

Buried deeper in the report, Goldman does admit there are ‘some risks’ to this decision at such extremely elevated spread valuations…

…risks naturally skew to the downside, especially over longer horizons. Coupled with the ultra-level of implied volatility, both on an absolute basis and relative to the equity market, we think this provides a good entry point to add hedges. In the near to medium term, and aside from the spread of new and more vaccine-resistant virus variants, we see three key risks to risk sentiment.

The first is a large inflation shock. So far, credit investors have treated the recent spike in inflation as a transitory shock (rightly so, in our view). But the risk of more persistent upward pressure on prices cannot be ruled out.

Given still negative average real yields in the IG market, investors’ protection against any repricing of inflation risk is non-existent.

The second risk is a premature return of shareholder-friendliness that would weaken liquidity positions and offset the tailwind from strong growth to credit quality. So far, the funding structures of the ongoing M&A wave have remained neutral to bondholders. But low funding costs, record-levels of balance sheet liquidity and elevated valuations in the equity market could gradually turn managements less conservative, from a credit perspective.

The third risk is a change in tax policy beyond what is currently priced in. In recent research, we showed that investors already demanded an extra premium against the risk of a higher statutory tax rate, following President Biden’s election. Should the rollback of the TCJA fuel a larger shock to free cash-flows than what is currently priced in, we think performance could be challenged, particularly among lower rated and over-leveraged issuers.

Trade accordingly.

The nation’s highest-paid employee in the US government, Anthony Fauci, has gone full-throttle on vaccines – this time with a Sunday appearance on CNN‘s “State of the Union,” where he pushed for vaccine mandates at the local level, and slammed a guest speaker at CPAC (Alex Berenson) for applauding young people for researching vaccine side-effects.

More on local mandates from Jenny Goldsberry via SaraACarter.com,

Dr. Anthony Fauci of the National Institute of Allergies and Infectious Diseases Director appeared on CNN’s State of the Union Sunday to give his opinion on vaccine mandates. He agrees with the White House and President Biden himself, saying vaccination mandates should be the next step.

“I have been of this opinion, and I remain of that opinion, that I do believe at the local level, Jake, there should be more mandates,” Fauci told host Jake Tapper. “There really should be.”

For fear of more people dying, Fauci strongly supports mandates. “We’re talking about life and death situation. We have lost 600,000 Americans already, and we’re still losing more people,” Fauci said. “There have been 4 million deaths worldwide. This is serious business. So I am in favor of that.”

Meanwhile, at the Conservative Political Action Conference, author Alex Berenson called out the vaccination efforts as a scam. “The government was hoping that they could sort of sucker 90% of the population into getting vaccinated,” Berenson said. “And it isn’t happening.” People in the audience cheered when they heard that. On the other hand, Fauci called the reaction “horrifying.”

On #CNNSOTU w/ @jaketapper, Dr. Anthony Fauci calls the reaction by the crowd at the Conservative Political Action Committee to a conservative author’s comments about the US falling short of it’s vaccination goal ‘horrifying’ https://t.co/riMPKronHA

— State of the Union (@CNNSotu) July 11, 2021

As a result, the NIAID director says the solution to vaccine hesitancy is official approval from the Food and Drug Administration. “One of the things that will happen, and I think the hesitancy at the local level of doing mandates is because the vaccines have not been officially fully approved,” Fauci said. “But people need to understand that the amount of data right now that shows a high degree of effectiveness and a high degree of safety is more than we’ve ever seen with the emergency use authorization, so these vaccines are as good as officially approved with all the I’s dotted and T’s crossed. It hasn’t been done yet because the FDA has to do certain things. But it’s as good as done. So people should really understand that. But they are waiting now until you get an official approval before. And I think when you do see the official approval, you’ll see a lot more mandates.”

Meanwhile, Steve Watson of Summit News notes Fauci’s shock at the ‘horrifying’ facts presented by Berenson.

Appearing on CNN Sunday, Anthony Fauci described it “horrifying” that a crowd at the CPAC gathering applauded when a guest speaker declared that young people are educating themselves about the side effects of the COVID vaccine.

Conservative writer Alex Berenson was speaking about the government’s attempts to indiscriminately push the vaccine on people of all ages, including young people who are statistically more at risk from the vaccine than from the virus.

“They were hoping, the federal government was hoping, they could sucker 90 percent of the population into getting vaccinated,” Berenson said, adding “younger people are well aware of what the risks really are and they are well aware of the side effect profile of the vaccines.”

The comments drew applause from sections of the crowd.

Watch:

CPAC crowd applauds a comment about the U.S. failing to reach a 90% vaccination rate pic.twitter.com/iGX6FD4SaU

— Andrew Solender (@AndrewSolender) July 10, 2021

When asked for his thoughts by CNN host Jake Tapper, Fauci responded “It’s horrifying…I just don’t get that. I mean, and I don’t think that anybody who is thinking clearly can get that.”

“We’ve got to put aside this ideological difference or differences thinking that somebody is forcing you to do something,” Fauci continued.

“The public health officials, like myself and my colleagues, are asking you to do something that will ultimately save your life and that of your family, and that of the community,” he continued.

“I don’t know. I really don’t have a good explanation, Jake, about why this is happening. I mean, it’s ideological rigidity, I think. There’s no reason not to get vaccinated,” Fauci further proclaimed.

Watch:

Jake Tapper asks Dr. Anthony Fauci to react to the CPAC Texas crowd cheering that the government has been unable to reach its vaccine goals so far.

Fauci: “It’s horrifying… I just don’t get that. I mean, and I don’t think that anybody who is thinking clearly can get that.” pic.twitter.com/4nY7CMor5i

— Justin Baragona (@justinbaragona) July 11, 2021

The government has failed to reach its targets on fully vaccinating 70 percent of the population, with the White House suggesting “herd immunity is kind of an outdated term,” and vowing to send “strike forces” to people’s homes in an effort to get more vaccinated.

Meanwhile, the Vaers report continues to monitor deaths from side effects of the vaccine, which are at time of writing approaching 10,000 in the U.S. alone, with in excess of 438,000 adverse reactions also reported.

The likes of CNN are declaring that it is “time to start mandating” coronavirus vaccines for all Americans to counter people opting not to take the shots because of hesitancy over potential side effects.