San Francisco Gas Prices Hit All Time High, Average Near $4.75 Per Gallon
The Biden administration has vowed to use every tool at their disposal to curb rising petrol prices that are causing pain at the pump for tens of millions of Americans.
According to petroleum analysis from GasBuddy, average gas prices across the San Francisco metro area this week reached a record high of $4.75 per gallon.
“The Bay area just recorded the nation’s highest-ever average price of gasoline in the United States; certainly a feat that even last year seemed impossible. But thanks to myriad challenges, derived from the Covid-19 pandemic, the average fillup now costs motorists in the Bay area nearly $62,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
GasBuddy explains heavy rains in the Bay area caused refinery outages, in conjunction with already high crude prices due to an energy crunch across the world. Also, add an increasing raising gasoline tax, and it’s entirely possible that $5 per gallon could be imminent.
“While prices in the Bay soared to similar levels in 2012, they were temporary as a result of a refinery fire. My concern here is that even after refineries get back online after a deluge of rain, prices may remain near or at record levels thanks to the continued rise of the price of oil,” De Haan warned.
Currently, the average price for a gallon of gasoline in the U.S. is about $3.69, a 70% increase since the early days of the virus pandemic.
“Gas prices continued to soar in a majority of the nation over the last week as oil’s meteoric rise pulls gasoline and other refined product prices higher,” De Haan said.
There’s been growing discontent among the American people, watching their real wages evaporate weekly as soaring energy and food inflation shows no signs of abating.
The Biden administration has promised to use every tool possible to curb soaring fuel prices contributing to inflation. White House officials have said they’re “closely monitoring” the cost of gasoline (and likely also the President’s approval rating).
The Biden team continues to beg OPEC+ to increase crude production, possibly stemming the tide of soaring inflation. One thing to note, why doesn’t Biden unleash another executive order demanding that U.S. crude producers ramp up their production?
As respected energy market (and geopolitical) observer Daniel Yergin recently told Bloomberg, “the Biden admin doesn’t have many tools on energy prices.”
So get used to paying higher gas prices. This will certainly not go well ahead of the midterms, as voters may vote with their empty wallets.
Former NJ Wells Fargo Adviser Arrested For Stealing Nearly $3 Million From Clients
More positive press for Wells Fargo! This time it was a now-former adviser for the company who is in the news for allegedly stealing almost $3 million from his clients and using the money for personal expenses and gold coins.
Adviser Kenneth A. Welsh was arrested at his home in River Edge, NJ, Thursday morning, according to Bloomberg.
He was booked on charges of “misappropriat[ing] funds from the accounts of five investors between 2016 and 2021,” the report says. His victims are alleged to include some people who were “elderly and financially unsophisticated”.
Welsh was fired in June of this year by Wells Fargo when his conduct was discovered, the report says.
He transferred “at least” $2.59 million from client accounts to credit cards of his family members and is accused of also drawing checks on customers accounts. Seven of the more than a dozen checks in question were made out to a New Jersey coin dealer for gold coins, the report said.
He allegedly stole $1.8 million from one single victim who lives in Whitehouse, NJ, the report said. That victim had established a brokerage account with Walsh at his previous business and then followed him to Wells Fargo, Bloomberg noted.
Now, he is facing up to 20 years in prison if convicted. He was freed on bail after making an initial appearance earlier this week before U.S. Magistrate Judge Leda Dunn Wettre.
Welsh is also facing a concurrent civil suit from the Securities and Exchange Commission.
A Wells Fargo spokesperson commented: “At Wells Fargo we hold our employees to the highest ethical standards. We notified regulators of this matter, the financial adviser was terminated, and we are working directly with clients to reimburse them.”
Coal Prices Halved As Beijing Central Planners Step Up Interventions
Having soared to record highs just weeks ago, Chinese coal futures extended their declines on Friday, down more than 50% in a little over a week as Beijing unleashed its latest verbal crackdown as saying prices have further to fall, an attempt to ease the energy crunch, according to Bloomberg.
Thermal coal futures on Zhengzhou Commodity Exchange dropped 7.5% Friday to 973 yuan ($152) a ton, the lowest since early September.
China’s top economic planning body, the National Development and Reform Commission (NDRC), announced on its official WeChat account Friday that production costs for coal miners are much lower than current spot prices for the fuel, suggesting coal prices have more room to fall. NDRC cited initial results from a survey of top firms in all producing regions.
China’s ruthless authoritarians revealed a plan earlier this week to impose limits on the price miners sell thermal coal as they seek to ease a power crunch that’s prompted electricity rationing in more than half of the country’s provinces. China has also urged miners to deliver about 100 million tons of the fuel by the end of the year to help meet winter demand.
China’s coal mining stocks have plunged on Beijing’s interventions.
The energy crisis that’s engulfed the world’s second-largest economy started in part due to surging coal prices, which caused almost all coal-fired power plants in the country to run at losses. What made it worse was when Beijing told energy firms to “secure supplies at any price” less than a month ago. Zhengzhou’s coal futures rose to a record above 1,980 yuan ($309) a ton earlier this month, while spot prices soared higher.
And since this is China, where the government intervenes in every market, the surges in both futures and physical coal markets triggered immediate intervention by the country’s central government. Action by authorities to curb those gains and help miners boost supply has had an impact, with futures tumbling by more than half since Oct. 19.
There’s only so much intervention Beijing can accomplish if supply is not immediately brought online because the China Meteorological Administration warned earlier this week that a La Nina weather pattern has already ushered in the first round of cold weather, increasing power demand.
China’s Energy Crisis Spreads As Gas Stations Run Out Of Diesel
There is one recurring problem with central planning: the greater the level of intervention, the worse and more widespread the unexpected adverse consequences. Just two days ago, when we reported that Beijing had imposed price controls on its coal rationing, we said that the problem with such explicit subsidies which create an artificially low price, is that they don’t address the underlying problem (too much demand, not enough supply), but instead accelerate hoarding and lead to a run on the artificially underpriced commodity, forcing spikes in another energy commodity while resulting in an even faster drain of the commodity in question, in this case coal. In essence, it’s like a giant geopolitical game of “whack a mole”.
Well, as we anticipated, in China’s attempts to defy the laws of supply and demand when it comes to coal, the world’s second-largest economy may have set its people up to relive one of the worst aspects of the 1970s stagflationary wave: gas shortages that have left many gas stations across the country running out of diesel due to supply constraints caused by the surging demand for subsidized coal.
Weeks ago, as China’s energy crisis was first unfolding, analysts at Goldman showed a map disclosing the intensity of shortages across China:
Unsurprisingly, as the Chinese economy aggressively reopened from the covid shutdown and as the supply of fossil fuels become scarce amid China’s “green” crackdown and supply bottlenecks, demand for thermal power soared to an all time high.
But while Beijing has sought to conserve coal, diesel and other critical fossil fuels, consumers and gas stations in China’s Hebei Province have been left to deal with the brunt of the shortage. One told the Global Times on Friday that they had been “struggling with empty pumps for days and even a week” as a result of supply constraints posed by the booming demand for coal transportation and factories using diesel to generate electricity. And when there is gas to sell, gas station owners face heavy pressure to ration their gasoline.
Several gas stations in North China’s Hebei Province told the Global Times on Friday that pumps had been empty from days to even a week. Those who have just acquired supplies face a limited amount of diesel delivery to each customer, in addition to charging them a higher price.
“Each customer can only buy a fixed amount, because there isn’t enough at the moment,” an employee from a gas station in Shijiazhuang, capital of Hebei, told the Global Times on Friday. Staff from another gas station said that the diesel price had increased in recent days by 0.2 yuan ($0.03) to 7.22, but they cannot say if the price will continue to rise or there will be any diesel available in the near future.
“The diesel price hike is driven by demand for the booming transportation of bulk cargo, especially coal, which has now entered a peak season, while some factories have also increased their use of diesel to generate electricity to complete orders amid tight power supplies,” Han Xiaoping, chief analyst at energy industry website china5e.com, told the Global Times on Friday.
Since China relies on imports for 70% of its crude oil, the country’s energy market is particularly vulnerable to exogenous supply shocks that can ripple across the entire Chinese economy, creating gas lines straight from 1970s America.
The good news, according to Han Xiaoping, chief analyst at Chinese energy industry website china5e.com, is that while gasoline may be scarce, at the very least China will make it through what’s expected to be a cold winter. “The tight situation is expected to be a temporary one that will be largely eased after the heating season this winter,” Han said.
Sadly, the Chinese won’t be alone in that. As for the crisis energy crisis being “transitory” just ask central bankers how similar predictions have played out.
Here Is Bill Ackman’s Presentation To The NY Fed Urging It To “Begin Hiking Rates ASAP”
Add Bill Ackman to the roster of financial icons who are convinced that the Fed is making a huge policy error by waiting to hike until the second half of 2022 (or as soon as June, if the Eurodollar strip is correct)
One week after legendary trader Paul Tudor Jones excoriated the Fed, saying in an interview with CNBC that the Fed was employing what may be the most inappropriate monetary policy of his lifetime, and that high inflation is likely to remain stubborn and potentially “much worse than what we fear”, moments ago Pershing Square’s billionaire boss, Bill Ackman, revealed on twitter that he “gave a presentation to the Federal Reserve Bank of New York last week to share our views on inflation and Fed policy. The bottom line: we think the Fed should taper immediately and begin raising rates as soon as possible.“
Ackman was not shy in revealing that he was obviously talking his book, stating that “we have put our money where our mouth is in hedging our exposure to an upward move in rates, as we believe that a rise in rates could negatively impact our long-only equity portfolio.”
In other words, Ackman is short rates, although it is unclear for now how large his exposure is.
His poetic conclusion: “We are continuing to dance while the music is playing, and it is time to turn down the music and settle down.”
We are continuing to dance while the music is playing, and it is time to turn down the music and settle down.
So what was in his 15 page pitch to the Fed to hike rates? Nothing that we haven’t seen many times before:
In the presentation, Ackman has included slides discussing the “substantial progress toward full employment”…
… including the record job openings…
… which he sees normalizing soon as covid-impacted sectors are “poised for continued recovery as the Delta variant subsides.”
And with inflation moving from “runaway” and entering “galloping” territory, as “the annualized pace of growth across several key inflation measures, including wage inflation, has remained elevated in the mid to high-single-digit range, considerably in excess of the Federal Reserve’s long-term target of 2%”…
… as “both the unemployment rate is lower AND inflation measures are substantially higher today than at the beginning of prior rate hike cycles”…
… Ackman pointed to the Bank of England recently revising its views on inflation…-
… as well as the IMF warning on inflation and urging central banks to get ready to tighten policy.
Ackman’s conclusion: “A “wait and see” approach to raising interest rates creates significant risks given the substantial progress to date on employment and inflation combined with the unprecedented economic backdrop”
Translation: he is super short bonds and the cost of carry is starting to bite, so will the Fed please go ahead and hike asap.
Canadian Company Meta Materials Surges After Confusion Over Facebook Name Change
Shares of Canadian material-science firm Meta Materials surged early Friday in the latest apparent ticker confusion with Facebook’s new name change to “Meta”.
Meme Stock Meta Materials Gains as Ticker Confusion Fuels Volume. Because the Fed created a market for idiots
Meta Materials, which trades under the ticket MMAT was up as much as 24% early on Friday, Bloomberg noted.
The mix-up left it as one of the most actively traded stocks on the day, with 11 million shares traded before mid-day. 1.35 million shares had changed hands in the pre-market session Friday, the report said. Obviously, Facebook’s new name “Meta Platforms Inc.” doesn’t mean it is associated in any way with Meta Materials (as an aside, FB’s new ticker will be MVRS).
This company/ticker mix-up farce, which we have seen on many prior occasions, was made possible thanks to the unlimited liquidity sloshing around capital markets and which enables so-called traders to buy first and ask questions later, if ever.
The Roundhill Ball Metaverse ETF, with the ticker META, also experienced increased volume after the name change.
As a reminder, a week after The Verge first reported that Mark Zuckerberg would rebrand/rename Facebook, the tech giant’s CEO announced yesterday that the new company name is ‘Meta’.
“I’ve been thinking a lot about our identity” with this new chapter, Zuckerberg said, speaking at a virtual event to showcase Facebook’s technological bets of the future. “Over time, I hope we’re seen as a metaverse company.”
Zuckerberg first noted in July that he wanted Facebook to eventually become a “metaverse company,” and last week the company said it would hire 10,000 people across Europe specifically to build out its metaverse project.
$META has already traded 2x its 30-day avg in the first 30m today, on pace to break yest record. The good news for ppl who think they buying $FB is the fund holds it at 5% weight and it is a directionally related bet. pic.twitter.com/SXjOXOkRUT
Eurodollar Flattening Carnage As Rate Hike Odds Spike
Yesterday, when discussing the VaR shock hammering rates traders over the past 48 hours as a result of the surge in short-term rates as one after another central bank capitulates to the rising global inflation wave, we excerpted from a recent analysis by Nomura’s Charlie McElligott who noted that the flattening push will only accelerate as short-end traders are stopped out of their existing positions.
One day later, the latest Eurodollar data confirms that the carnage indeed accelerated as open interest in front-month eurodollar futures in preliminary CME data for Thursday suggests that many traders were stopped out of positions as shifting expectations for Fed rate increases repriced the market.
According to Bloomberg’s Edward Bollingbroke, the net change in white-pack (Dec21-Sep22) eurodollar futures was -113,546 contracts, while open interest plunged -84,014 in red-pack futures (Dec22-Sep23). Open interest dropped 27,212 and 64,213 respectively in Dec23 and Dec24 contracts following a cluster of EDZ3/EDZ4 flattener trades, executed via blocks and totaling 35,000 on the day; the OI drop suggests the trades were done to exit steepeners.
The changes amounted to a 7.7% drop in total open interest for EDZ4, 2.3% for EDZ3.
The violent puke comes as the EDZ3/EDZ4 spread has flattened around 10bp from 30bp since Wednesday as prior steepening bets looked for rate-hike premium between these tenors to increase.
What does this mean practically? Well, the weakness in eurodollar futures, which set in following the raft of U.S. data at 8:30 a.m. ET, has seen rate hike odds jump for 2022 and 2023, and the market is now pricing in odds of a June rate hike as high as 87% – or around 22 bps – based on overnight swaps data. This is remarkable as even the Fed’s aggressive tapering schedule does not see the Fed ending its QE until June; for the central bank to hike the same month as it ends QE suggests that inflation will have to be scroching hot in mid-2022 for the Fed to reverse so quickly and commence effective tightening the same month as it ends QE.
At this rate the Fed, like the ECB, will soon lose control of the front rate as the market is telegraphing in no uncertain terms that Powell and Co. are now well behind the curve.
Tucker Rips ‘Lying Coward’ Liz Cheney After She Joins Democrat Meltdown Over His J6 Exposé
On Wednesday, Fox News host Tucker Carlson released a preview for a trailer on a new series scheduled to debut next week, which tells the “true story” of the January 6th Capitol riot.
It appears to both condemn the left for framing the incident as terrorism and its participants as terrorists, while exploring the potential role of the FBI in staging a false flag.
Unsurprisingly, the left has been absolutely triggered over Carlson’s upcoming exposé, and wants it stricken from existence before millions, perhaps tens-of-millions of Americans are presented with an alternative narrative that contains highly uncomfortable truths.
“There is no lie too big or conspiracy theory too dangerous for Tucker Carlson to propagate,” said top Russiagate / Ukrainegate peddler Rep. Adam Schiff (D-CA) in a statement to WaPo. “His latest salvo is nothing less than an invitation to violence. By airing it, Fox News demonstrates yet again a willingness to profit from tearing the country down.”
And the above SUERPCUT! isn’t an invitation to violence?
“It is irresponsible and dangerous for Fox News to promote lies and conspiracy theories,” said Rep. Zoe Lofgren (D-CA).
Many pointed out that the calls for censorship were fundamentally anti-American:
The people who love democracy very deeply and are profoundly concerned about growing fascism and authoritarianism want the US Government to shut down Fox because it’s airing a program exploring the role of FBI informants and infiltrators at the 1/6 riot. https://t.co/pgLphjvPNO
Carlson responded to Cheney on Thursday, slamming her as a liar and a coward.
“This show is somehow, she says, abetting violence. Now if that argument sounds familiar, there’s a reason that it does. That argument is a staple for the hysterical purple-haired activist you see yelling at people in violent videos. ‘Your speech is violence’ they shout, ‘Our violence is speech.’ So in other words, burning down America’s cities is a civil rights protest. Shooting an unarmed female Trump supporter to death is an act of courage. But, objecting to racist propaganda being imposed on your kids in school – that’s terrorism, lock those parents up.”
“Until yesterday, she [Cheney] and Nancy Pelosi had a monopoly on how Americans were allowed to understand January 6th. ‘It was a racist insurrection,’ they told us with straight faces. ‘It was the single worst day of political violence since 9/11 or the Civil War. That was their often-repeated storyline, and they were entirely in charge of that story – no questions were allowed.
“But unfortunately for them, that is not how a free society works. Politicians don’t get to put parameters around your thoughts or conversations. Free people are permitted to ask any question they want. They can follow the facts to their own logical conclusions, and that is exactly what we set out to do months ago…”
After Cheney refused to appear on Tucker’s show to discuss her tweet, the Fox News host called her a “liar” and a “coward.”
What the left doesn’t realize is that they’ve just Streisanded Tucker’s series into national prominence with the best advertising money can’t buy. Whoops!
Meanwhile, speaking of being on the wrong side of the fence:
BREAKING: Neocon Adam Kinzinger to retire from Congress after expected re-election loss
COVID-19 erased the regulatory and trial-related hurdles that Moderna could never surmount before. Yet, how did Moderna know that COVID-19 would create those conditions months before anyone else, and why did they later claim that their vaccine being tested in NIH trials was different than their commercial candidate?
In late 2019, the biopharmaceutical company Moderna was facing a series of challenges that not only threatened its ability to ever take a product to market, and thus turn a profit, but its very existence as a company. There were multiple warning signs that Moderna was essentially another Theranos-style fraud, with many of these signs growing in frequency and severity as the decade drew to a close. Part I of this three-part series explored the disastrous circumstances in which Moderna found itself at that time, with the company’s salvation hinging on the hope of a divine miracle, a “Hail Mary” save of sorts, as stated by one former Moderna employee.
While the COVID-19 crisis that emerged in the first part of 2020 can hardly be described as an act of benevolent divine intervention for most, it certainly can be seen that way from Moderna’s perspective. Key issues for the company, including seemingly insurmountable regulatory hurdles and its inability to advance beyond animal trials with its most promising—and profitable—products, were conveniently wiped away, and not a moment too soon. Since January 2020, the value of Moderna’s stock—which had embarked on a steady decline since its IPO—grew from $18.89 per share to its current value of $339.57 per share, thanks to the success of its COVID-19 vaccine.
Yet, how exactly was Moderna’s “Hail Mary” moment realized, and what were the forces and events that ensured it would make it through the FDA’s emergency use authorization (EUA) process? In examining that question, it becomes quickly apparent that Moderna’s journey of saving grace involved much more than just cutting corners in animal and human trials and federal regulations. Indeed, if we are to believe Moderna executives, it involved supplying formulations for some trial studies that were not the same as their COVID-19 vaccine commercial candidate, despite the data resulting from the former being used to sell Moderna’s vaccine to the public and federal health authorities. Such data was also selectively released at times to align with preplanned stock trades by Moderna executives, turning many of Moderna’s highest-ranking employees into millionaires, and even billionaires, while the COVID-19 crisis meant economic calamity for most Americans.
Not only that, but—as Part II of this three-part series will show, Moderna and a handful of its collaborators at the National Institutes of Health (NIH) seemed to know that Moderna’s miracle had arrived—well before anyone else knew or could have known. Was it really a coincidental mix of “foresight” and “serendipity” that led Moderna and the NIH to plan to develop a COVID-19 vaccine days before the viral sequence was even published and months before a vaccine was even considered necessary for a still unknown disease? If so, why would Moderna—a company clearly on the brink—throw everything into and gamble the entire company on a vaccine project that had no demonstrated need at the time?
The Serendipitous Origins of Moderna’s COVID-19 Vaccine
When early January 2020 brought news of a novel coronavirus outbreak originating in Wuhan, China, Moderna’s CEO Stéphane Bancel immediately emailed Barney Graham, deputy director of the Vaccine Research Center at the National Institutes of Health, and asked to be sent the genetic sequence for what would become known as SAR-CoV-2, allegedly because media reports on the outbreak “troubled” him. The date of that email varies according to different media reports, though most place it as having been sent on either January 6th or 7th.
A few weeks before Bancel’s email to Graham, Moderna was quickly approaching the end of the line, their desperately needed “Hail Mary” still not having materialized. “We were freaked out about money,” Stephen Hoge would later remember of Moderna’s late 2019 circumstances. Not only were executives “cutting back on research and other expenditures” like never before, but – as STAT News would later report – “cash from investors had stopped pouring in and partnerships with some drug makers had been discontinued. In meetings at Moderna, Bancel emphasized the need to stretch every dollar and employees were told to reduce travel and other expenses, a frugality there were advised would last several years.”
At the tail end of 2019, Graham was in a very different mood than Bancel, having emailed the leader of the coronavirus team at his NIH lab saying, “Get ready for 2020,” apparently viewing the news out of Wuhan in late 2019 as a harbinger of something significant. He went on, in the days before he was contacted by Bancel, to “run a drill he had been turning over in his mind for years” and called his long-time colleague Jason McLellan “to talk about the game plan” for getting a head start on producing a vaccine the world did not yet know it needed. When Bancel called Graham soon afterward and asked about this new virus, Graham responded that he didn’t know yet but that “they were ready if it turned out to be a coronavirus.” The Washington Post claimed that Graham’s apparent foreknowledge that a coronavirus vaccine would be needed before anyone officially knew what type of disease was circulating in Wuhan was a fortunate mix of “serendipity and foresight.”
A report in Boston magazine offers a slightly different account than that reported by the WashingtonPost. Per that article, Graham had told Bancel, “If [the virus] is a coronavirus, we know what to do and have proven mRNA is effective.” Per that report, this assertion of efficacy from Graham referred to Moderna’s early stage human-trial data published in September 2019 regarding its chikungunya vaccine candidate, which was funded by the Defense Advanced Research Projects Agency (DARPA), as well as its cytomegalovirus (CMV) vaccine candidate.
As mentioned in Part I of this series, the chikungunya vaccine study data released at that time included the participation of just four subjects, three of whom developed significant side effects that led Moderna to state that they would reformulate the vaccine in question and would pause trials on that vaccine candidate. In the case of the CMV vaccine candidate, the data was largely positive, but it was widely noted that the vaccine still needed to pass through larger and longer clinical trials before its efficacy was in fact “proven,” as Graham later claimed. In addition, Graham implied that this early stage trial of Moderna’s CMV vaccine candidate was somehow proof that an mRNA vaccine would be effective against coronaviruses, which makes little sense since CMV is not a coronavirus but instead hails from the family of viruses that includes chickenpox, herpes, and shingles.
Bancel apparently had reached out to Graham because Graham and his team at the NIH had been working in direct partnership with Moderna on vaccines since 2017, soon after Moderna had delayed its Crigler-Najjar and related therapies in favor of vaccines. According to Boston magazine, Moderna had been working closely with Graham specifically “on [Moderna’s] quest to bring a whole new class of vaccines to market” and Graham had personally visited Moderna’s facilities in November 2019. Dr. Anthony Fauci, the director of the NIH’s infectious-disease division NIAID, has called his unit’s collaboration with Moderna, in the years prior to and also during the COVID-19 crisis, “most extraordinary.”
The year 2017, besides being the year when Moderna made its pivot to vaccines (due to its inability to produce safe multidose therapies, see Part I), was also a big year for Graham. That year he and his lab filed a patent for the “2P mutation” technique whereby recombinant coronavirus spike proteins can be stabilized in a prefusion state and used as more effective immunogens. If a coronavirus vaccine were to be produced using this patent, Graham’s team would financially benefit, though federal law caps their annual royalties. Nonetheless, it would still yield a considerable sum for the named researchers, including Graham.
However, due to the well-known difficulties with coronavirus vaccine development, including antibody dependent enhancement risk, it seemed that commercial use of Graham’s patent was a pipe dream. Yet, today, the 2P mutation patent, also known as the ’070 patent, is not just in use in Moderna’s COVID-19 vaccine, but also in the COVID-19 vaccines produced by Johnson & Johnson, Novavax, Pfizer/BioNTech, and CureVac. Experts at New York University School of Law have noted that the 2P mutation patent first filed in 2016 “sounds remarkably prescient” in light of the COVID crisis that emerged a few years later while later publications from the NIH (still pre-COVID) revealed that the NIH’s view on “the breadth and importance of the ’070 patent” as well as its potential commercial applications was also quite prescient, given that there was little justification at the time to hold such a view.
On January 10, three days after the reported initial conversation between Bancel and Graham on the novel coronavirus outbreak in Wuhan, China, Graham met with Hamilton Bennett, the program leader for Moderna’s vaccine portfolio. Graham asked Bennett “if Moderna would be interested in using the new [novel coronavirus] to test the company’s accelerated vaccine-making capabilities.” According to Boston, Graham then mused, “That way . . . if ever there came a day when a new virus emerged that threatened global public health, Moderna and the NIH could know how long it would take them to respond.”
Graham’s “musings” to Bennett are interesting considering his earlier statements made to others, such as “Get ready for 2020” and his team, in collaboration with Moderna, would be “ready if [the virus then circulating in Wuhan, China] turned out to be a coronavirus.” Is this merely “serendipity” and “foresight”, as the Washington Post suggested, or was it something else? It is worth noting that the above accounts are those that have been given by Bancel and Graham themselves, as the actual contents of these critical January 2020 emails have not been publicly released.
When the genetic sequence of SARS-CoV-2 was published on January 11, NIH scientists and Moderna researchers got to work determining which targeted genetic sequence would be used in their vaccine candidate. Later reports, however, claimed that this initial work toward a COVID-19 vaccine was merely intended to be a “demonstration project.”
Other odd features of the Moderna-NIH COVID-19 vaccine-development story emerged with Bancel’s account of the role the World Economic Forum played in shaping his “foresight” when it came to the development of a COVID-19 vaccine back in January 2020. On January 21, 2020, Bancel reportedly began to hear about “a far darker version of the future” at the World Economic Forum (WEF) annual meeting in Davos, Switzerland, where he spent time with “two [anonymous] prominent infectious-disease experts from Europe” who shared with him data from “their contacts on the ground in China, including Wuhan.” That data, per Bancel, showed a dire situation that left his mind “reeling” and led him to conclude, that very day, that “this isn’t going to be SARS. It’s going to be the 1918 flu pandemic.”
This realization is allegedly what led Bancel to contact Moderna cofounder and chairman, as well as a WEF technology pioneer, Noubar Afeyan. Bancel reportedly interrupted Afeyan’s celebration of his daughter’s birthday to tell him “what he’d learned about the virus” and to suggest that “Moderna begin to build the vaccine—for real.” The next day, Moderna held an executive meeting, which Bancel attended remotely, and there was considerable internal debate about whether a vaccine for the novel coronavirus would be needed. To Bancel, the “sheer act of debating” pursuing a vaccine for the virus was “absurd” given that he was now convinced, after a single day at Davos, that “a global pandemic was about to descend like a biblical plague, and whatever distractions the vaccine caused internally at Moderna were irrelevant.”
Bancel spent the rest of his time at the Davos annual meeting “building partnerships, generating excitement, and securing funding,” which led to the Moderna collaboration agreement with the Coalition for Epidemic Preparedness Innovations—a project largely funded by Bill Gates. (Bancel and Moderna’s cozy relationship with the WEF, dating back to 2013, was discussed in Part I as were the Forum’s efforts, beginning well before COVID-19, to promote mRNA-based therapies as essential to the remaking of the health-care sector in the age of the so-called Fourth Industrial Revolution). At the 2020 annual meeting attended by Bancel and others it was noted that a major barrier to the widespread adoption of these and other related “health-care” technologies was “public distrust.” The panel where that issue was specifically discussed was entitled “When Humankind Overrides Evolution.”
As also noted in Part I of this series, a few months earlier, in October 2019, major players in what would become the Moderna COVID-19 vaccine, particularly Rick Bright and Anthony Fauci, had discussed during a Milken Institute panel on vaccines how a “disruptive” event would be needed to push the public to accept “nontraditional” vaccines such as mRNA vaccines; to convince the public that flu-like illnesses are scarier than traditionally believed; and to remove existing bureaucratic safeguards in the vaccine development-and-approval processes.
That panel took place less than two weeks after the Event 201 simulation, jointly hosted by the World Economic Forum, the Bill & Melinda Gates Foundation, and the Johns Hopkins Center for Health Security. Event 201 simulated “an outbreak of a novel zoonotic coronavirus” that was “modeled largely on SARS but . . . more transmissible in the community setting by people with mild symptoms.” The recommendations of the simulation panel were to considerably increase investment in new vaccine technologies and industrial approaches, favoring rapid vaccine development and manufacturing. As mentioned in Part I, the Johns Hopkins Center for Health Security had also conducted the June 2001 Dark Winter simulation that briefly preceded and predicted major aspects of the 2001 anthrax attacks, and some of its participants had apparent foreknowledge of those attacks. Other Dark Winter participants later worked to sabotage the FBI investigation into those attacks after their origin was traced back to a US military source.
It is hard to imagine that Bancel, whose company had long been closely partnered with the World Economic Forum and the Gates Foundation, was unaware of the exercise and surprised by the closely analogous event that transpired within three months. Given the accounts given by Bancel, Graham, and others, it seems likely there is more to the story regarding the origins of Moderna’s early and “serendipitous” push to develop a COVID-19 vaccine. In addition, given that Moderna was in dire financial circumstances at the time, it seems odd that the company would gamble everything on a vaccine project that was opposed by the few investors that were still willing to fund Moderna in January/February 2020. Why would they divert their scant resources towards a project born only out of Barney Graham’s “musings” that Moderna could try to test the speed of its vaccine development capabilities and Bancel’s doomsday view that a “biblical plague” was imminent, especially when their investors opposed the idea?
Moderna Gets to Bypass Its Long-Standing Issues with R & D
Moderna produced the first batch of its COVID-19 vaccine candidate on February 7, one month after Bancel and Graham’s initial conversation. After a sterility test and other mandatory tests, the first batch of its vaccine candidate, called mRNA-1273, shipped to the NIH on February 24. For the first time in a long time, Moderna’s stock price surged. NIH researchers administered the first dose of the candidate into a human volunteer less than a month later, on March 16.
Controversially, in order to begin its human trial on March 16, regulatory agencies had to allow Moderna to bypass major aspects of traditional animal trials, which many experts and commentators noted was highly unusual but was now deemed necessary due to the urgency of the crisis. Instead of developing the vaccine in distinct sequential stages, as is the custom, Moderna “decided to do all of the steps [relating to animal trials] simultaneously.” In other words, confirming that the candidate is working before manufacturing an animal-grade vaccine, conducting animal trials, analyzing the animal-trial data, manufacturing a vaccine for use in human trials, and beginning human trials were all conducted simultaneously by Moderna. Thus, the design of human trials for the Moderna vaccine candidate was not informed by animal-trial data.
This should have been a major red flag, given Moderna’s persistent difficulties in getting its products past animal trials. As noted in Part I, up until the COVID-19 crisis, most of Moderna’s experiments and products had only been tested in animals, with only a handful able to make it to human trials. In the case of the Crigler-Najjar therapy that it was forced to indefinitely delay, toxicity concerns related to the mRNA delivery system being used had emerged in the animal trials, which Moderna was now greenlighted to largely skip. Given that Moderna had subsequently been forced to abandon all multidose products because of poor results in animal trials, being allowed to skip this formerly insurmountable obstacle was likely seen as a boon to some at the company. It is also astounding that, given Moderna’s history with problematic animal trials, more scrutiny was not devoted to the regulatory decision to allow Moderna to essentially skip such trials.
Animal studies conducted on Moderna’s COVID-19 vaccine did identify problems that should have informed human trials, but this did not happen because of the regulatory decision. For example, animal reproductive toxicity studies on the Moderna COVID-19 vaccine that are cited by the European Medicines Agency found that there was reduced fertility in rats that received the vaccine (e. g., overall pregnancy index of 84.1% in vaccinated rats versus 93.2% in the unvaccinated) as well as an increased proportion of aberrant bone development in their fetuses. That study has been criticized for failing to report on the accumulation of vaccine in the placenta as well as failing to investigate the effect of vaccine doses administered during key pregnancy milestones, such as embryonic organogenesis. In addition, the number of animals tested is unstated, making the statistical power of the study unknown. At the very least, the 9 percent drop in the fertility index among vaccinated rats should have prompted expanded animal trials to investigate concerns of reproductive toxicity before testing in humans.
Yet, Moderna declined to further investigate reproductive toxicity in animal trials and entirely excluded reproductive toxicity studies from its simultaneous human trials, as pregnant women were excluded from participation in the clinical trials of its vaccine. Despite this, pregnant women were labeled a priority group for receiving the vaccine after Emergency Use Authorization (EUA) was granted for the Moderna and Pfizer/BioNTech vaccines. Per the New England Journal of Medicine, this meant that “pregnant women and their clinicians were left to weigh the documented risks of Covid-19 infection against the unknown safety risks of vaccination in deciding whether to receive the vaccine.”
Moderna only began recruiting for an “observational pregnancy outcome study” of its COVID-19 vaccine in humans in mid-July 2021, and that study is projected to conclude in early 2024. Nevertheless, the Centers for Disease Control recommends the use of Moderna’s COVID-19 vaccine in “people who are pregnant, breastfeeding, trying to get pregnant now, or might become pregnant in the future.” This recommendation is largely based on the CDC’s publication of preliminary data on mRNA COVID-19 vaccine safety in pregnant women in June 2021, which is based on passive reporting systems in use within the United States (i. e., VAERS and v-safe).
Even in the limited scope of this study, 115 of the 827 women who had a completed pregnancy during the study lost the baby, 104 of which were spontaneous abortions before 20 weeks of gestation. Of these 827 pregnant women, only 127 had received a mRNA vaccine before the 3rd trimester. This appears to suggest an increased risk among those women who took the vaccine before the 3rd trimester, but the selective nature of the data makes it difficult to draw any definitive conclusions. Despite claims from the New England Journal of Medicine that the study’s data was “reassuring”, the study’s authors ultimately stated that their study, which mainly looked at women who began vaccination in the third trimester, was unable to draw “conclusions about spontaneous abortions, congenital anomalies, and other potential rare neonatal outcomes.” This is just one example of the problems caused by “cutting corners” with respect to Moderna’s COVID-19 vaccine trials in humans and animals, including those conducted by the NIH.
Meanwhile, throughout February, March and April, Bancel was “begging for money” as Moderna reportedly lacked “enough money to buy essential ingredients for the shots” and “needed hundreds of millions of dollars, perhaps even more than a billion dollars” to manufacture its vaccine, which had only recently begun trials. Bancel, whose tenure at Moderna had long been marked by his ability to charm investors, kept coming up empty-handed.
Then, in mid-April 2020, Moderna’s long-time cooperation with the US government again paid off when Health and Human Services Biomedical Advanced Research and Development Authority (BARDA) awarded the company $483 million to “accelerate the development of its vaccine candidate for the novel coronavirus.” A year later, the amount invested in Moderna’s COVID-19 vaccine by the US government had grown to about $6 billion dollars, just $1.5 billion short of the company’s entire value at the time of its pre-COVID IPO.
BARDA, throughout 2020, was directly overseen by the HHS Office of the Assistant Secretary for Preparedness and Response (ASPR), led by the extremely corrupt Robert Kadlec, who had spent roughly the last two decades designing BARDA and helping shape legislation that concentrated many of the emergency powers of HHS under the Office of the ASPR. Conveniently, Kadlec occupied the powerful role of ASPR that he had spent years sculpting at the exact moment when the pandemic, which he had simulated the previous year via Crimson Contagion, took place. As mentioned in Part I, he was also a key participant in the June 2001 Dark Winter exercise. In his capacity as ASPR during 2020, Kadlec oversaw nearly all major aspects of the HHS COVID-19 response and had a key role in BARDA’s funding decisions during that period, as well as in the affairs of the NIH and the Food and Drug Administration as they related to COVID-19 medical countermeasures, including vaccines.
On May 1, 2020, Moderna announced a ten-year manufacturing agreement with the Lonza Group, a multinational chemical and biotech company based in Switzerland. Per the agreement, Lonza would build out vaccine production sites for Moderna’s COVID-19 vaccine, first in the US and Switzerland, before expanding to Lonza’s facilities in other countries. The scale of production discussed in the agreement was to produce 1 billion doses of Moderna’s COVID-19 vaccine annually. It was claimed that the ten-year agreement would also focus on other products, even though it was well known at the time that other Moderna products were “nowhere close to being ready for the market.” Moderna executives would later state that they were still scrambling for the cash to manufacture doses at the time the agreement with Lonza was made.
The decision to forge a partnership to produce that quantity of doses annually suggests marvelous foresight on the part of Moderna and Lonza that the COVID-19 vaccine would become an annual or semiannual affair, given that current claims of waning immunity could not have been known back then because initial trials of the Moderna vaccine had begun less than two months earlier and there was still no published data on its efficacy or safety. However, as will be discussed Part III of this series, Moderna needs to sell “pandemic level” quantities of its COVID-19 vaccine every year in order to avoid a return of the existential crises it faced before COVID-19 (for more on those crises, see Part I). The implications of this, given Moderna’s previous inability to produce a safe product for multidosing and lack of evidence that past issues were addressed in the development of its COVID-19 vaccine, will also be discussed in Part III of this series.
It is also noteworthy that, like Moderna, Lonza as a company and its leaders are closely affiliated with the World Economic Forum. In addition, at the time the agreement was reached in May 2020, Moncef Slaoui, the former GlaxoSmithKline executive, served on the boards of both Moderna and Lonza. Slaoui withdrew from the boards of both companies two weeks after the agreement was reached to become the head of the US-led vaccination-development drive Operation Warp Speed. Moderna praised Slaoui’s appointment to head the vaccination project.
By mid-May, Moderna’s stock price—whose steady decline before COVID-19 was detailed in Part I —had tripled since late February 2020, all on high hopes for its COVID-19 vaccine. Since Moderna’s stock had begun to surge in February, media reports noted that “nearly every progress update—or media appearance by Moderna CEO Stephane Bancel—has been gobbled up by investors, who seem to have an insatiable appetite for the stock.” Bancel’s tried-and-tested method of keeping Moderna afloat on pure hype, though it was faltering before COVID-19, was again paying off for the company thanks to the global crisis and related panic.
Some critics did emerge, however, calling Moderna’s now $23 billion valuation “insane,” especially considering that the company had posted a net loss of $514 million the previous year and had yet to produce a safe or effective medicine since its founding a decade earlier. In January 2020, Moderna had been worth a mere $5 billion, $2 billion less than its valuation at its December 2018 IPO. If it hadn’t been for the onset of the COVID crisis and a fresh injection of hype, it seems that Moderna’s valuation would have continued to shrink. Yet, thankfully for Moderna, investors were valuing Moderna’s COVID-19 vaccine even before the release of any clinical data. Market analysts at the time were forecasting Moderna’s 2022 revenue at about $1 billion, a figure based almost entirely on coronavirus vaccine sales, since all other Moderna products were years away from a market debut. Yet, even with this forecasted revenue, Moderna’s stock value in mid-May 2020 was trading at twenty-three times its projected sales, a phenomenon unique to Moderna among biotech stocks at the time. For comparison, the other highest multiples in biotech at the time were Vertex Pharmaceutical and Seattle Genetics, which were then trading at nine and twelve times their projected revenue, respectively. Now, with the implementation of booster shot policies around the world, revenue forecasts for Moderna now predict the company will make a staggering $35 billion in COVID-19 vaccine sales through next year.
The ECB Loses Control Of The Front-End As Inflation Comes In Scorching Hot
For years, the ECB would kill for prices to turn higher and reach, if not surpass, its inflation target of 2.0%. And let’s not even talk about economic growth: ever since the global financial crisis, it seemed as if the old continent is stuck in a slow, miserable debt trap whose eventual outcome is the economic disaster that is Japan.
But things have changed fast, and according to the latest data, the euro zone economy continued to boom over the summer as activity rebounded after coronavirus lockdowns. However, a problem has emerged: inflation has blown past expectations, leaving the European Central Bank with a growing policy headache.
First, the good news: growth soared as consumers return to stores and venues but many businesses have been unable to keep up with demand, putting further pressure on prices already being driven higher by the rising cost of commodities. The economy of the 19 countries sharing the euro expanded by a bigger-than-forecast 2.2% in the third quarter, its fastest pace in a year and putting it on course to reach its pre-crisis size before the end of the year.
Today’s data were marginally stronger than consensus expectations of 2.1%, with stronger prints than expected in France and Italy, but weaker increases in Germany and (especially) Spain. Here is a breakdown of Europe’s strong growth at the regional level:
Euro area GDP (Q3, first estimate): +2.2% vs. GS +1.8%, consensus +2.1%; previous +2.1% (unrevised)
German GDP (Q3, first estimate): +1.8% vs. GS +1.9%, consensus +2.2%; previous +1.9% (revised +0.3pp)
French GDP (Q3, first estimate): +3.0% vs. GS +2.0%, consensus +2.3%; previous 1.3% (revised +0.2pp)
Italian GDP (Q3, first estimate): +2.6% vs. GS +1.8%, consensus +1.9%; previous +2.7% (unrevised)
Spain GDP (Q3, first estimate): +2.0% vs. GS +2.9%, consensus +2.7%; previous +1.1% (unrevised)
Unfortunately, in its commentary to the GDP print, Goldman wrote that “looking ahead, we expect the pace of sequential growth to slow in Q4 across the Euro area to around 1%, given less ‘catch-up’ potential, softening survey data, near-term supply-side constraints, and the drag from the energy crisis and lower foreign demand.”
That’s not the bad news.
The bigger problem is that while the growth burst is certainly transitory, the roaring inflation may not be. Because between the surge in growth and soaring oil and gas prices, Eurozone headline inflation exploded 4.1% this month, more than twice the European Central Bank’s target and matching the all-time-high for the data series launched in 1997.
While inflation was mostly driven by higher energy prices and tax hikes, growing price pressures from supply bottlenecks were also visible in rising prices for services and industrial goods – a worry for the ECB, which is slowly accepting that price growth may be more durable than once thought. Core inflation, which excludes volatile food and energy costs yet which are just as critical to Europe’s households especially with winter approaching for a continent gripped by a historic energy crisis, rose 2.1%, the highest in two decades.
Unfortunately for Europe, this economic “golden quarter” is unlikely to last as the economy is hitting speed bumps as supply shortages, a scarcity of labor and the resurgence of coronavirus infections thwarts output.
“Growth will be much slower in the final quarter as supply chain disruption, slowing global demand and some labor shortages hamper production,” Andrew Kenningham at Capital Economics said.
A bigger question is what happens to inflation. According to Reuters “inflation is also likely to ease, although there is growing uncertainty over how fast and how far.” Indicators suggest the decline will be slower than the central bank once thought, raising the risk that high prices, even if temporary, could become entrenched in wages and corporate pricing structures.
ECB President Christine Lagarde acknowledged on Thursday that supply disruptions would persist, but said inflation will fade back below the 2% target over the medium term, so that no policy response is required for now.
And here an even bigger problem has emerged as markets increasingly doubt Lagarde: rates markets are now pricing in a 10 basis point rate hike by July 2022 and another by next October. A week ago, markets were pricing in just one hike within 12 months and the change in expectations came even as Lagarde tried to push back those bets. 3M Euribor Dec 2022 futures have plunged, hinting at a surge in rate hike odds by the end of next year.
This may well be a self-inflicted wound by the ECB head: after all, during yesterday’s dovish ECB presser which Goldman described as “pushing back against inflation pricing”, things suddenly reverse when Yellen said that “it’s not for me to say” if markets are getting ahead of themselves, a comment that sent the euro to its strongest in a month. According to commentators, “this was no longer a rigid attempt to keep the euro and yields in check.” They said that this was reminiscent of “comments by Federal Reserve officials in late May in their initial attempt to carefully communicate the bank’s intent to taper.”
FX strategist such as Bloomberg’s Vassilis Karamanis were stumped by Lagarde’s odd phrasing:
A game-changing moment through a carefully selected choice of words? Or a communication error that dovish-leaning officials will look to talk back in coming days? I would have tended to think the latter, had Lagarde not explicitly said yesterday that she expects PEPP to finish at the end of March. According to officials familiar with the matter, policy makers were cautious about an outright pushback on rate hikes backfiring, given the high uncertainty around the outlook. I’ll buy that for now. But does it also mean that the Governing Council isn’t so sure about their transitory narrative after all? Or that markets have more of a carte blanche to bet their own way?
That said, not everyone is convinced that the ECB is losing control: “Headline inflation will likely recede from its current rate of 4.1% to close to 1.5% again in late 2022 as special factors fade,” Berenberg economist Holger Schmieding said. We thus look for the ECB to start raising rates in late 2023 rather than in 2022 already.”
And yet, adding to inflation concerns, an ECB survey of companies released on Friday showed over 30% of respondents expected supply constraints and higher input costs to last for another year or longer. A slightly lower percentage predicted difficulties would last another six to 12 months. Firms also reported “a scarcity of applicants” for jobs as people changed profession, country or lifestyle, which was likely to result in wage increases.
Other central banks around the world are already tightening policy or plan to do so soon by removing extraordinary stimulus put in place to combat the pandemic. In just the past week, short-term rates in Canada and Australia soared higher as the central banks reversed on their previous defense of low rates, and either pulled forward the date of the first rate hike – in the case of Canada – or effectively ended Yield Curve Control in the case of Australia.
So while the ECB is still refusing to concede that it is behind the curve on inflation, the market has already made up its mind and is pricing in higher rates by the end of 2022. And with the ECB losing control of the front-end, a clash between central banker models and the brutal reality of markets is coming, and it could have calamitous consequences for European asset prices.
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