Stocks Suffer For The Last Two Months And More Likely Ahead

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Estimated Reading Time: 6 minutes

Readers might recall on August 3, and subsequent to that, we suggested that the stock market had gotten “overbought” and was vulnerable to the weakness that typically is found (called seasonality) in the late summer.

Whether we are just lucky or smart, the market has cooperated by declining about 7% since our word of caution, about the same as the February-March correction.  It is doing some damage.  Recently the S&P dropped below a triple bottom in the range of  430 and the daily price has fallen below both the 50-day moving average and the 100-day moving average.  A bull trend line formed from the lows of last October has been broken.  The overall formation takes the familiar head and shoulders top with the “neckline” being snapped.  For those who think charts can inform us about markets, none of this is good right now.

September is usually the worst month but October takes the prize for the month with the most crashes.  Then the market will tend to bottom out and usually has a strong finish to the year and that bleeds usually into January.

These seasonal factors and chart factors aside, we also mentioned a number of other negatives the market must work with right now.

Breadth has been unusually narrow, with only a handful of stocks (the magnificent seven) providing the upside for the S&P, which is supposed to be a broadly diversified portfolio of 500 stocks.  Instead, it has become an extremely undiversified tech-dominated index.  Historically, that is not good.  Narrow breadth indicates strength is just with a small group of stocks, not the market as a whole. Secondly, as we pointed out, this destroys much of the justification for indexing, which in the past has been a good strategy for the average investor.

Interest rates continue to rise.  The most recent FED meeting indicated they are looking for interest rates to go higher, for a longer period of time than many participants anticipated.  Adding additional pain, since the most recent “debt ceiling agreement”, the government has been adding debt at a ferocious pace.  This means more bonds must be sold.  With traditional buyers like Social Security (cash flow has turned negative), China, Saudi Arabia, and others reducing their purchases of US debt, and the FED itself selling; more supply with less demand means lower bond prices.  Not surprisingly, this year is likely to be the third year in a row for negative returns on bonds.

Two rating services have downgraded the sovereign debt of the US.  Unfortunately, another debt ceiling fight looms.  Understand, this fight may well be worth having.  Nothing in the traditional political toolbox seems able to stop the two political parties from spending this nation into penury. As the chart below suggests, we are growing national debt more than twice the rate of GDP growth.  How about some sustainability talk about this relationship? However, attempts to stop spending by shutting down the government are a crude tool, likely to upset the bond and stock markets even further.

Higher interest rates are squeezing the marginal debtor as we suggested it would.  Corporate bankruptcy rates are rising sharply.  Commercial real estate is being hurt, as is the market for homes generally and the combination of high home prices and much higher rates have driven affordability to new lows.  The turnover in homes has slowed to a crawl and homebuyers who were fortunate enough to get 3% mortgage rates seemed disinclined to move, create a capital gain, and then get saddled with rates now above 7.5%.  It makes sense to stay put, but that freezes the supply of secondary homes and reduces liquidity in the whole sector.

The rise in interest rates has been international as well, creating major credit problems elsewhere.  Germany is in a bona fide recession (the largest economy in Europe) and China is slowing and seems in another phase of its rolling real estate crisis.

Rising rates have caused a sharp rise in the dollar, depressing commodity prices (except for oil and uranium) and making the US exports uncompetitive in many areas.

The Administration has vowed to destroy fossil fuels without supplying the alternatives at the same or lesser price.  While that plays well with environmental hysterics, the reality is after more than $4 trillion in often forced investment into “renewables”, the portion of the energy pie supplied by fossil fuels has only fallen only about 3%. We need more traditional energy while the Biden Administration has caused investment to dry up.  Who wants to invest say in an offshore drilling ship, that has maybe a 30-year life, only to know the government wants you out of business in five years? It is an investment equation that can’t and won’t attract capital.

The result is much higher energy prices in the present and much more to come in the future.  Just since May of this year, West Texas Intermediate oil has moved from around $64 per barrel to above $92.  That is a move of about 43% in just six months!  Physical stores of oil in the Strategic Petroleum Reserve are down drastically due to Biden policies and private storage at Cushing Oklahoma, and in the OECD, are down sharply as well.  Biden has abandoned US energy independence and opted for yielding control of the market to Putin and the ever-treacherous Saudis.

The Leading Economic Indicators have been down a record 17 months, the money supply is contracting, and the yield curve is still inverted.  The FED says now that recession is unlikely, which given their track record (remember transitory inflation?), is actually a bad thing.  We wish they were worried more about the recession than they appear to be.

This set of politically mandated circumstances puts a severe squeeze on the consumer.  Rising interest rates cause mortgage rates to rise and the cost of using credit cards.  Rising oil prices take more money out of the family budget for fuel for both home heating and cooling, and personal transportation, transportation costs for everything else in the economy, and finally the higher costs on about 6,000 items made out of petroleum.

Don’t blame this on the bossa nova, but blame it on Bidenonomics.

So far the correction since the first of August is about 6% or so, depending on the index you are following.  We would note, however, that the equal weight S&P (the RSP), is now negative on the year.  With bonds down hard, we have another year where the traditional 60% equity and 40% bond diversification simply can’t work as it has in the past.

 

As the market has absorbed the reality of this bad news, bullish attitudes are shifting more negatively, which ironically, is a good thing.

Back in early August when we were warning about the vulnerability of the market,  sentiment was very high, excessively high. Although there are many measures of sentiment, one of the better indices is the CNN Fear and Greed gauge.  It hit a reading of 84 (usually anything over 80 is a caution light). As we go to press, the index has now fallen into the fear range with a reading of just 27%.  It may well go lower in the next few weeks.  Generally, anything below 25% is “extreme fear”.

So here is the rub.  The news is getting bad out there.  However, it is getting worked into market prices and taking some of the excess valuation and sentiment out of the market.  But experience suggests that news must be bad for weeks, for prices to fully align with reality, and then there is customarily an overshoot into extreme pessimism, which will be just as irrational as the extreme optimism was back around the first of August.

We are not at that stage, which suggests several more weeks are likely necessary to get the market into an oversold condition.  And we have to deal with October, a month that has played host to a large number of stock crashes.

Timing events such as these are almost impossible.  However, the condition of the market can be known, even if the timing cannot.  The current condition suggests more weakness in both stocks and bonds in the weeks ahead, likely followed by a decent buying opportunity to play the normal strength displayed at the end of the year.

So far this continues to look like a correction within the context of an ongoing bull market.  The risk will be that this too will shift.  If we decline enough to break the bull trend, then we enter bear territory.  Bears are dangerous, and markets tend to act differently in bear markets than in bull markets.  Oversold readings in bull markets provide buying opportunities (buy the dip).  But bear markets are harder to handle because one low is followed by a set of new lows.

We still suggest caution, with higher cash reserves than normal and lower allocation to risk assets than you normally might have, given your age and risk profile.  If we can avoid breaking the back of the market during this corrective phase, a decent buy opportunity may emerge in a few weeks.

We will do our best to keep you up to date.

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Stock graphics courtesy of stockcharts.com and drawn by the author.

 

 

Desperate Governors Beg For Offshore Wind Cost Relief

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Estimated Reading Time: 4 minutes

Six Atlantic shore Governors are begging the Feds to bail them out of a huge looming offshore wind cost overrun. They sent Biden a joint letter asking for a list of relief measures ranging from tax breaks to revenue sharing.

The outcome is far from clear but my guess is the largess is unlikely to appear, especially given the ongoing federal budget battles. Maybe later. However most of the requests also likely require major regulatory changes, which could take years. They might even take legislation which could be never.

But the need is urgent as the offshore developers are demanding immediate power price increases of around 50% lest they leave for better opportunities elsewhere. They can do this because offshore wind is a global boom. Even mid-income developing countries like Indonesia are talking big offshore numbers.

Ironically, it is this boom that is driving some of the sticker-shocking price increases. There is even a shortage of highly specialized crane ships to erect these huge towers. The supply chain is a seller’s market, at least on paper. Rising interest rates are another big driver.

The letter is pretty vague, but there are basically three kinds of federal relief requested. These are tax credits, revenue sharing, and streamlined permitting. I am sure there is lots of lobbying going on by the developers, as well as the Governors. Unfortunately, it is all secret so the specific issues are well hidden, making the following brief analysis somewhat speculative.

The letter is here: https://cleanpower.org/wp-content/uploads/2023/09/Governors-Offshore-Wind-Letter_ACP.pdf

There look to be two tax credit issues. The first, which the IRS might actually be able to do something about, involves the definition of the renewable energy project that gets the investment tax credits. At present, probably only the generating assembly counts. This likely includes the tower and monopile foundation as well as the turbine generator and enormous blades.

But it may not include the extensive undersea connector cabling, the massive offshore substations, the huge export cabling, and the costly onshore transmission upgrades. These system components make up a sizable fraction of the project cost.

The second issue is the bonus tax credits awarded under the so-called Inflation Reduction Act. This is a 10% credit bump that developers get if they meet certain domestic content specs. Offshore wind already gets a big break under IRA because their content requirement is just half that of all other renewable projects.

As far as I can tell, they want the presently measly requirement to be even less. This is likely because most of the components come from overseas. America has very little specialized offshore component production capability since we have never built any here. Building this kind of industrial capacity will take a long time.

However, since the specific domestic component requirements are in the law, the IRS may have very little leeway, and what they have should require rulemaking. How this works out will be very interesting to watch. It might take legislation, which is uncertain, to say the least.

On revenue sharing, the States want a piece of the billions of dollars developers are paying the Feds in offshore site lease payments. Single sites have paid over a billion. Some sites are at least partially within State waters, but most are not.

Here the question is why taxpayers in, say, Wyoming should, in effect, pay to lower electricity bills in New Jersey? The agency in charge of offshore leasing is the Bureau of Ocean Energy Management (BOEM) in the Interior Dept. They are gung ho for offshore wind, so might not mind sharing revenue if it keeps the project coming.

I have no idea what the legalities are here except they are likely to be complex. BOEM has been doing offshore oil and gas leasing in the Gulf for a long time, so there should be a big body of law to deal with.

Who gets how much is an interesting question, especially for projects set to sell juice to several States. Plus, the States expect to sell some to other States. Given that many of the power purchase contracts at issue are with utilities, not States, maybe they should get the money.

For that matter, if this revenue sharing happened, the Gulf states might want a piece of the oil and gas action. None of this is simple, for sure. (Aside: maybe the Feds should collect royalties on the harvested wind power, like the 18.75% they get on offshore oil production.)

As for speeding up permitting, that is already a hot topic in Congress, but there is no consensus on what it even means, much less how to do it. I think BOEM is already going as fast as it can, ignoring many issues in the process, such as whale deaths. And, of course, the Biden Executive Branch cannot speed up the Judiciary, where a lot of the project delay lies in litigation.

In short, this seemingly simple letter is pointed at some really hairy issues. The talks are going on in secret, and I have yet to see any detailed analysis of the potential policies and ramifications thereof. If the fate of Atlantic offshore wind really depends on taking these hairy steps, then we are in “Nobody knows land” for sure. This cannot be good from the investment point of view so more stocks may drop.

Stay tuned to CFACT to see how this wacky offshore drama plays out. It might be a while.

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This article was published by CFACT, The Committee For A Constructive Tomorrow, and is reproduced with permission.

Image Credit: Wikimedia Commons

 

Is America A Bad Place To Work?

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Estimated Reading Time: 4 minutes

Recently I encountered a study by an organization called Oxfam Research. That study: Where Hard Work Doesn’t Pay Off. As defined in Wikipedia, Oxfam was founded in 1942 as a confederation of 21 independent charitable organizations, centered in Oxford England focusing on alleviating global poverty and led by Oxfam International. There is an American affiliate. I thought the study would be worthy of a deep dive.

As the proverbial “big dog,” we can expect operations to take off after us. It did not take long to discern the orientation of this 39-page study – attacking America. After lauding the American economy by size, the authors made this statement, “Despite a powerful economy, one that largely drives the global economy forward, the United States does little to share revenue with workers and does even less to ensure workers are safe and protected while on the job. These are political choices, not inevitabilities.”

The introduction then launches into a tirade against the United States seemingly written by the lawless members of Black Lives Matter. Out of left field they made this statement, “The long legacy of slavery and subsequent immigration policies in the US underscore the ways in which the government of this country has written laws and policies meant to create hierarchies of workers in which workers of color, especially women of color, were excluded from protections, stable wages, and the ability to organize.”

I looked at the history of slavery and when the other 37 countries abandoned slavery. Some of the countries (like Iceland) did not exist or were barren of population during the 19th century. Some of the countries may not have had slaves, but they were involved in the slave trade. They also welcomed very few immigrants. An example, go to Sweden in the 19th century and try to find someone who wasn’t a native-born Swede.

The bottom line is the Western world abandoned slavery as a policy in varying stages during the first half of the 19th century, which timing was about concurrent with America. On the other hand, many of these countries had slavery within their borders but did not acknowledge it. Germany had slavery in the 20th century and two countries not in the study, China, and Russia, still have slavery up to today.

The United States ranks 36th out of thirty-eight countries in their survey of how employees thrive by the Oxfam standards. Mexico is ranked last, but it is a lawless mess. Interestingly, that “socialist heaven”, Denmark, ranks 37th. Notwithstanding that Bernie Sanders touted Socialism in Denmark as a model for the United States, their Prime Minister offered “I know that some people in the US associate the Nordic model with some sort of socialism,” he said. “Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

And where are people banging down the door to enter? America. Angela Merkel engineered a mass migration from Northern Africa during the first part of this century. This has caused unrest in most countries where mass migration happened. Look at the war on the streets of France. In Sweden, the immigrants have not exactly blended into their society as crime has soared and jobs have not.

Concurrent with the Oxfam study coming out stating how badly America treats its employees, the Organization for Economic Cooperation and Development released information that income in the United States for employees had grown over the past fifteen years while all those ‘generous’ benefits have shrunk incomes for employees in Greece, Italy, France, etc.

Here are some fun facts about the economies that are lauded by the report:
The eurozone economy grew about 6% over the past 15 years, measured in dollars, compared with 82% for the U.S. Maybe all those “benefits” employees receive in the other countries come with a cost – like no jobs.

The United States has had a steady flow of over ten million job openings for a couple of years since the pandemic subsided. There are few job openings in the EU which is part of the strife caused by immigrants. There are no jobs.

Oxfam is another elitist organization attempting to establish criteria for employees who do not work in the real world. And then they insult the intelligence of people who decide to go where the jobs are – America — by telling them the jobs in America are tainted by racism. If the economy is so racist, why do Indian Americans and Asian Americans have higher average incomes than Caucasians? Why do immigrants have a higher homeownership rate than native-born Americans?

Here is another finding from diving into Oxfam’s anti-success attack on America. They have a separate study incorporated in the report showing the best places in America to work. The best places are in varying shades of green and the worst are in varying shades of red. The green states are places like California, Illinois, New Jersey, and New York where people are moving from in the hundreds of thousands and the red ones are where the economies are booming.

Conclusion: Oxfam thinks the people relocating are just stupid and do not understand what they are giving up. On the other hand, the simpletons leaving for red states realized the only ones getting the benefits defined by Oxfam are the public employees. The transplants have given up paying the unsupportable cost of outsized benefits.

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This article was published by Flash Report and is reproduced with permission from the author.

Here’s How Biden Admin Destroyed Our Immigration Law

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Estimated Reading Time: 3 minutes

Since early 2021 we have witnessed somewhere between 7 million and 8 million illegal entries across the now-nonexistent southern border of the U.S.

The more the border vanished, the more federal immigration law was rendered inert, and the more Homeland Security Secretary Alejandro Mayorkas spun fantasies that the “border is secure.” He is now written off as a veritable “Baghdad Bob” propagandist.

But how and why did the Biden administration destroy immigration law as we knew it?

The Trump administration’s initial efforts to close the border had been continually obstructed in Congress, sabotaged by the administrative state, and stymied in the courts. Nonetheless, it finally had secured the border by early 2020.

Yet almost all of the Trump administration’s successful initiatives were immediately overturned in 2021.

Construction of the wall was abruptly stopped, and its projected trajectory was canceled. The disastrous Obama-era “catch and release” policy of immigration nonenforcement was resurrected.

Prior successful pressure on Mexican President Andres Manuel Lopez Obrador to stop the deliberate export of his own citizens northward ceased.

Federal Border Patrol officers were forced to stand down.

New federal subsidies were granted to entice and then support illegal arrivals.

No one in the Democratic Party objected to the destruction of the border or the subversion of immigration law.

However, things changed somewhat once swamped southern border states began to bus or fly a few thousand of their illegal immigrants northward to sanctuary city jurisdictions—especially to New York and Chicago, and even Martha’s Vineyard.

The sanctuary-city “humanists” there who had greenlighted illegal immigration into the southern states suddenly shrieked. They were irate after experiencing the concrete consequences of their own prior abstract border agendas. After all, their nihilism was always supposed to fall upon distant and ridiculed others.

New York Mayor Eric Adams went from celebrating a few dozen illegal immigrants bused into Manhattan to blasting his own party for allowing tens of thousands to swamp his now bankrupt city.

But why did the Biden administration deliberately unleash the largest influx across the southern border in U.S. history?

The ethnic chauvinists and Democratic Party elites needed new constituents, given their increasingly unpopular agendas.

They feared that the more legal Latino immigrants assimilated and integrated into American society, the less happy they became with left-wing radical abortion, racial, transgender, crime, and green fixations.

Democratic grandees always had bragged that illegal immigration would create what they called “The New Democratic Majority” in “Demography Is Destiny” fashion. Now they slander critics as “racists” who object to left-wing efforts to use illegal immigration to turn southwestern red states blue.

Mexico now cannot survive as a modern state without some $60 billion in annual remittances sent by its expatriates in America. However many illegal immigrants rely on American state and federal entitlements to free up cash to send home.

Mexico also encourages its own abject poor and often indigenous people from southern Mexico to head north as a safety valve of sorts. The Mexican government sees these mass exodus northward as preferable to the oppressed marching on Mexico City to address grievances of poverty and racism.

The criminal cartels now de facto run Mexico. An open border allows them to ship fentanyl northward, earn billions in profits—and kill nearly 100,000 Americans a year. Illegal immigrants pay cartels additional billions to facilitate their border crossings.

Don’t forget American corporate employers. Record labor nonparticipation followed the COVID-19 lockdown. In reaction to the dearth of American workers, the hospitality, meat packing, social service, health care, and farming industries were desperate to hire new—and far cheaper—labor.

Human rights activists insist that the borders themselves are 19th-century relics. And the global poor and oppressed thus have a human right to enter the affluent West by any means necessary.

Many in the tony suburbs and in universities do not live anywhere near the southern border. So they pontificate on the assurance that thousands of unaudited illegal immigrants will never enter their own enclaves or campuses.

The result is elite-bottled piety—but not firsthand experience with the natural consequences of millions chaotically fleeing one of the poorest countries in the world to pour into the wealthiest. Without background checks, vaccinations, and health audits, legality, high school diplomas, English facility skill sets, or capital, the result is an abject catastrophe.

Polls continue to show that the American people support measured, diverse, legal, and meritocratic immigration as much as they oppose mass illegal immigration into their country and the subsequent loss of American sovereignty on the border.

They understand what the Biden administration does not: No nation in history has survived once its borders were destroyed, once its citizenship was rendered no different from mere residence, and once its neighbors with impunity undermined its sovereignty.

Ending illegal immigration now depends solely on the American people overriding the corrupt special interests and leaders who profit from the current chaos and human misery.

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This article was published by Daily Signal and is reproduced with permission.

Photo Credit: Wikimedia Commons

Rand Paul Comes Out Swinging Against Lindsey Graham Over Ukraine Aid

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Estimated Reading Time: 2 minutes

Kentucky Republican Sen. Rand Paul called out his fellow Republican South Carolina Sen. Lindsey Graham over Ukraine aid Thursday while on Fox Business.

Graham told reporters Wednesday those opposed to giving Ukraine more aid should stay out of it until they’ve visited Ukraine and seen the war firsthand.

“Somebody needs to remind the Senator that we don’t have any money. We are about $1.5 trillion dollars in debt for this year. Over the last three months we’ve accumulated almost a trillion dollars in three months. The total is $33 trillion, so we don’t have like an extra rainy day fund or a surplus we can send them,” Paul said in response.

“We have to borrow the money from China to send to Ukraine, so no matter what your sympathies are in the war, and I am sympathetic to Ukraine fighting off the Russian aggressors, but at the same time I think it’s irresponsible to think about their country before I think about my country.”

Paul claimed U.S. funding is also helping Ukrainian government worker pensions, and he believes most Americans agree with him that aid needs to be cut.

Paul then went on to criticize Ukrainian President Volodymr Zelenskyy for saying he’s not holding elections next year, claiming it would be inconvenient during a war and expensive. Paul then argued Europe has a greater incentive to help Ukraine fight off Russia, and Ukraine should rely on its neighbors.

Zelenskyy is visiting the White House and Capitol Hill this week to ask the U.S. for more aid in addition to the $100 billion that Congress has already approved, per The Wall Street Journal. President Joe Biden’s administration has called for an additional $24 billion in aid amid a spending conflict that threatens a government shutdown Sept. 30. (RELATED: ‘Huge Catastrophe’: JD Vance Says US ‘Blank Check’ Spending Focus On Ukraine Is ‘Massive Strategic Victory’ For China)

Other Republicans have expressed opposition to additional funding.

“There’s no money in the House right now for Ukraine,” Florida Rep. Byron Donalds told The Recount. “It’s not a good time for [Zelenskyy] to be here, quite frankly. That’s just the reality.”

Republican Arizona Rep. Paul Gosar told the Daily Caller News Foundation he would never support additional funding for Ukraine, since there are more dire issues domestically.

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This article was published by the Daily Caller News Foundation and is reproduced with permission.

Truck This: Why I’m Leaving the Long-Haul Industry

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Estimated Reading Time: 4 minutes

I’ve been a truck driver for over 20 years. I suppose I always knew I would be, ever since that career day in the third grade when among all the kids dressed like doctors and baseball players, there I stood dressed like Jerry Reed from Smokey and the Bandit. Pop culture in the 80s painted the picture of truckers as rugged men, wild and free, burdened by nothing except their own wanderlust. That romanticized version of the American truck driver still lingers in the back of my mind, but in recent years the burden of government regulation has proven to be greater than my desire to see what’s over the next hill.

Oppressive regulation in the trucking industry has been around almost as long as the iconic chrome bulldog on the hood of Mack trucks. Franklin Delano Roosevelt signed the Federal Motor Carrier Act (FMCA) of 1935 during his first term. This gave the Interstate Commerce Commission (ICC), an agency originally formed to regulate railroads, the authority to regulate the burgeoning business of moving goods by tractor-trailer. The ICC ultimately decided which companies could haul certain goods, for whom, where, and what they could charge. The ICC even decided if new transportation companies could enter the market by requiring eager upstarts to prove their services were “needed.”

The only exemptions to these laws were in the agricultural sector. FDR and his horde of central planners did not want to cause an increase in food prices during a time when many Americans were already struggling to put food on the table. Never mind the tacit admission that the FMCA would raise prices on all other goods. This exemption had its own unintended consequences. While independent drivers, commonly referred to as wildcatters in driver slang, were not subject to the price floors previously mentioned, they were limited to hauling only agricultural goods. This limitation caused a significant logistical dilemma for wildcatters delivering in industrialized parts of the country and is largely responsible for the mythos of the outlaw truckers we all know today from music and film. Whether in an old country song from Red Sovine or Kurt Russell’s character in Big Trouble in Little China, such renegades are almost always hauling agricultural goods.

Thankfully, a trend towards deregulation began in the 1970s, and the cesspool of cronyism and perverse incentives created by FDR was substantially reined in with the FMCA of 1980. This is why we now see hundreds, if not thousands of company names sprawled along the sides of 53-foot trailers. Granted, we still have the ICC, though today it is known as the Department of Transportation, and any truck driver that has had to spend 10 hours at a scale house without a shower or a hot meal over a minor infraction of hours of service rules (another specter of the FMCA of 1935) will tell you it remains quite burdensome. But things are still better than they used to be.

Unfortunately, the federal government continues its misguided attempts to control an industry regulators know little to nothing about. But today’s attempts tend to focus more on something they understand even less than trucking: technology.

The electronic logging device (ELD) has been around since the late 1980s. The devices were first adopted by large nationwide fleets to simplify managing their plethora of drivers and eventually became a way to lower insurance costs. Manufacturers and employers claimed the devices prevented drivers from driving longer than legally allowed, therefore reducing the number of tractor-trailer-related crashes. It was under the latter premise that the DOT mandated that all trucks be equipped with ELDs no later than the end of 2017. Unfortunately, fatal accidents involving tractor-trailers have seen a recent increase following a sharp decline. This correlation suggests that mandating ELDs has not had the promised or intended safety improvements.

More recently, environmental regulations requiring manufacturers to reduce emissions gave us the diesel particulate filter (DPF), an exhaust treatment system that replaces a standard muffler. While there is no current federal mandate requiring a DPF, the filters are required by the 2008 California Statewide Truck and Bus Rule, which has incentivized many nationwidwie fleets to adopt them. The problem with DPFs is the filter system clogs. A lot.

When DPFs go down, trucks roll to a stop. Truckers report having to have a DPF serviced as often as every 5,000 miles, which means lots of lost productivity and stranded cargo. I’ve had four breakdowns over the past two years, and three were due to my DPF. A tow truck driver I spoke to on one of those occasions told me half of his business comes from malfunctioning DPFs. Repairs are a specialized affair, and replacements can cost up to $2,000. When my truck isn’t moving, I’m not earning. And these regulators have required that my truck stand still far too often.

Next up on the government’s list of ways to make truckers’ lives miserable are proposed speed limiters. Pete Buttigieg, the Secretary of Transportation, wants to limit all tractor-trailers to the same speed. Imagine being stuck behind a pair of tractor-trailers side by side, who can’t speed up to pass each other. It’s relatively rare right now, but it will become the norm. Every single interstate nationwide will be populated by moving roadblocks, inspiring road rage and blocking critical services. What happens when the fire truck or ambulance is stuck behind these unbreakable pairs?

However well-intentioned these rules and regulations might be, it’s clear that no one is consulting with the long-haul truckers about the totally foreseeable bad outcomes. The great problem with all central planning is that regulators lack local knowledge, and are not inclined to speak to the people living with the consequences of their decrees. Probably because we would tell them what idiots they are.

The last two decades I’ve spent traversing this beautiful nation have, by and large, been a wonderful experience. I have countless stories to share with other drivers over a cup of coffee at my favorite fuel stops or with my more stationary friends over a cold beer. I wouldn’t trade the things I’ve seen, the binds I’ve been in, or the successes I enjoyed, for anything. But the burden that has been laid on these old tired shoulders by bureaucrats and central planners has become more than I’m willing to bear. I’ll always yearn for the open road, but now I’ll have to satisfy that wanderlust in my pick-up truck. I’m pulling the parking brake on this Peterbilt for the last time.

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This article was published by AIER, The American Institute for Economic Research, and is reproduced with permission.

4 Ways Washington’s Spending Spree Caused Inflation With Trillions in Waste, Fraud

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Estimated Reading Time: 4 minutes

Americans are justifiably unhappy with the state of the economy.

The inflation figures for August took a turn for the worse—meaning, families have now lost $5,100 in purchasing power since President Joe Biden entered the White House.

In addition to the burden of inflation, rising interest rates are making home mortgages unaffordable, pushing the American dream out of reach for millions.

While month-to-month economic numbers tell part of the story, a new report from The Heritage Foundation explains how Washington’s reckless spending pushed the economy to this tipping point. (The Daily Signal is the news outlet of The Heritage Foundation.)

The special report, “The Road to Inflation: How an Unprecedented Federal Spending Spree Created Economic Turmoil,” reveals that Congress passed an astonishing $7.5 trillion in new spending between 2020 and 2022—or more than $57,000 per household.

Pushing such an unprecedented amount of deficit spending had predictable consequences.

>>>Read the full report here: “The Road to Inflation”

At a time when supply chains were strained by the COVID-19 pandemic and harmful government-imposed lockdowns, throwing more money at a lower volume of goods and services could only drive prices up.

It would be one thing if the spending spree had been made up of good investments. Unfortunately, most of the initiatives were poorly designed, based on faulty economic reasoning and/or motivated by political opportunism.

The following are just four of the areas where the federal government misused trillions of dollars in taxpayer resources during the spending spree:

Welfare Expansion Causes World Record Fraud

At the start of the pandemic, Congress expanded eligibility and increased payments for the unemployment insurance program.

At the time, it was easy to predict that this would have negative consequences, incentivizing workers to actively seek joblessness or otherwise game the system to maximize their handouts.

Incredibly, even the most cynical analysis underestimated just how big a problem would result from this welfare expansion.

A combination of individual scammers and organized crime rings using identity fraud bilked the federal government for at least $100 billion, with upper-end estimates of $350 billion to $400 billion.

To put that in perspective, the Bernie Madoff scheme that generated extensive media coverage and numerous documentaries was worth $65 billion. (Naturally, the press is less interested in publicizing fraud enabled by a welfare program.)

Slush Funds for State, and Local Governments

In addition to increased federal payments for mass transit, education, and Medicaid, the spending spree included a whopping $500 billion in few-strings-attached handouts to state and local governments.

The first batch of this money, $150 billion, was approved as protection against potential tax revenue declines at the start of the pandemic. However, it soon became clear that most areas were not experiencing a tax decline, and the total amount of revenue loss was much smaller than expected.

Despite that reality, Democrats passed an additional $350 billion in slushy funds.

Since there was no revenue gap, state and local governments blew through their second round of handouts with inflationary check-cutting, record-setting levels of corporate welfare, bailing out government-owned golf courses, tax credits for Hollywood studios, promoting tourism, special bonuses for government employees, and much more.

As with the unemployment insurance fraud, we will never know the total amount of money wasted on “relief” payments to state and local governments.

Teachers Unions Held Schools Hostage

Perhaps the most infuriating part of the spending spree took place in early 2021.

Amid a raging debate about reopening schools, with children receiving substandard educations, teachers unions were pressing to keep schools closed. That was part of a pressure campaign to give government-run K-12 schools a massive federal handout.

The Biden administration kowtowed to teachers unions, and it was later revealed that officials at the Centers for Disease Control and Prevention colluded with union officials on school-reopening guidance to help stack the deck.

In the end, Democrats approved $123 billion for public K-12 schools, rewarding the unions for holding schools hostage.

Since there was no pandemic-related need for such a huge amount of money, much of it went toward hiring sprees and raises for school employees.

Regrettably, the obscure nature of how funds were distributed means that we will likely never know what public schools did with that windfall.

Business Support Program Defrauded

The Paycheck Protection Program passed early in the pandemic, was designed to help businesses keep employees on the payroll during the lockdown-driven economic downturn.

However, the $835 billion program—with Congress intending to get money out the door quickly—suffered from a lack of guardrails. Hundreds of billions of dollars in spending were flagged for review. There were hundreds of billions of dollars in improper payments, and the volume of fraud overwhelmed the system.

While some violators (such as a man who used the program to buy a $57,000 Pokémon card) were caught, countless others got away scot-free.

Conclusion

In the wake of the spending spree, the national debt is now more than $33 trillion, or an average of $253,000 per household.

Ignoring the dangers of such an incomprehensible amount of debt, and ignoring the ongoing damage that elevated inflation is having on family finances, many in Washington are still determined to keep the federal gravy train rolling.

  • The pending set of appropriations bills is loaded with pork, including goodies for left-wing activist groups and frivolous recreational projects.
  • These bills also contain tens of billions in fraudulent budget gimmicks that hide spending.
  • Several other measures that would or could increase spending are also looming on the horizon, including the so-called farm bill (where most of the money goes to welfare programs), and supplemental appropriations that would throw tens of billions more at Ukraine and to leftist nonprofits that encourage illegal immigration.

It’s crucial for the American public to be on guard against politicians whose default response to most problems is to throw other people’s money around.

That has been a bad habit for many years, but now it has turned into a chronic addiction the country can’t afford.

*****

This article was published by Daily Signal and is reproduced with permission.

Weekend Read: Populism, Politics, and Markets

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Estimated Reading Time: 7 minutes

Markets function within a complex framework of regulatory and central bank influence.  This regulatory and monetary backdrop is not the benign rule of “experts”  supposed by regulatory advocates in college textbooks, but rather often the product of raw entrenched political power.  Success is getting in sync with the flow of money and political power.  The “imperial city” in Washington is the lodestar, not open competition in the marketplace.

The influence of political power has several dimensions.  It is both internal political changes and external political changes that can influence markets.

In terms of domestic politics,  the old “spoils system” which existed prior to 19th-century civil service reform, was superior in the sense that when an administration came into power, it brought its friends and supporters, many of whom were not particularly talented.  When a particular party was turned out of office, the old bureaucratic friends had to leave as well and the new administration was able to bring in their own team.  And then, over time, they too would be removed and the cycle would begin again.

Getting a new team from time to time brought in new ideas and it allowed the administration to function without the hostility of entrenched interests held over from political opponents, who would use their administrative power to block new directions.  In a sense, it was more democratic.  When things changed at the polls, things changed in the bureaucracy.

The unintended consequence of professional bureaucrats is they can stay in place as political parties ebb and flow, giving birth to a permanent bureaucracy almost impervious to change.  This is further complicated when opposing political parties basically agree to the same regulatory philosophy.

But the world changes whether bureaucrats do or don’t change, thus political change does still seep through and has the potential to change the way markets have operated.

One of the aspects of the way things have run over the past several decades has been a close economic alliance with China.  US industry poured billions into Chinese development, based on the theory that as they grew rich, they would become more “liberal”.  Authoritarianism would wane, and having too great of a stake in the world economy, China would not become belligerent.

As China took over more and more manufacturing jobs, the US commensurately lost key knowledge and skills and has become overly dependent on China.  We agreed to give up our jobs and they agreed to buy our debt.

It has proven to be a very bad political and economic bet.  The US has become dependent on China and reshoring efforts are proving difficult.   China is massively building and modernizing its military and has moved into an alliance of sorts with US rival Russia.

Moreover, as the Wall Street Journal recently reported, US business confidence in China has fallen to a 24-year low.  Clearly, a major political shift is on with China, with MAGA Republicans initiating the change.

Meanwhile, Mexico has replaced China as the greatest exporter to the US, and China is steadily reducing its holdings of US Treasury debt.  Additionally alarming,  Mexico is descending deeper into the corruption of a narco-state.  Bilateral trade seems to be taking over from globalist pretensions.

This shift from China will be disruptive to the US and to China itself.  And when the two largest economies in the world are disrupted, the world economy will feel the change.

China has many problems, both political and demographic.  One of the most immediate is the ongoing unwinding of their massive real estate bubble.  After wobbling for two years, Ever Grande, a giant real estate development company has filed for bankruptcy.  More companies, though, are in trouble.  This is all part of the top-down, authoritarian model imposed by Chairman Xi as he moved his nation away from the market model back to the socialist model.  Additionally, it was not just central planning of the worst sort, it was central planning juiced with a giant debt bubble.

So among the political changes likely to influence markets, the troubles in China are likely to be significant.

In terms of domestic politics, we have had our own flirtation with top-down central planning. Since Obama, elites have sought to change the healthcare system and fight “global warming”. The adoption of Modern Monetary Theory by the Biden Administration, and its record acceleration of Federal debt to pay for all these schemes, has caused a spike in interest rates, which itself runs the risk of destabilizing our own domestic and international debt bubble.

The supply of bonds is rising sharply, but the FED has become a seller rather than a buyer, Social Security is a seller, and China has become a net seller.  Lower bond prices have meant higher rates, even as the FED attempts a “pause.”

Democrat policies of supply restriction and cost escalation,  have all but destroyed the dream of owning a house for many young people.  The ability to afford a new car also is fading.  The destruction of the American middle class is already creating an enormous political backlash with significant risk for Democrats.

A strategic realignment has occurred with supporters of small businesses, farmers, and nongovernment labor-tending Republicans. while Big Business, wealthy elites, and Rainbow members now favor the Democrats.

We recently completed two trips to rural Pennsylvania and rural Montana.  Trump signs are everywhere. It is fair to say, these people feel ignored.  They rightly or wrongly do not feel the current system is working for them.

Big business and the regulatory state have cross-captured each other.  Many business leaders would rather get a subsidy or loan guarantees than fight for profits against talented rivals. Those who benefit from the Green New Deal include car companies, power companies, and favored technologies.  Democrats are busy building cartels in healthcare, pharma, technology, and power generation and have turned their backs on small businesses.

As the government increasingly picks winners and losers, those picked as “winners” by the government can get a nasty surprise when they discover customers don’t agree.  We are seeing this play out among many of the EV companies.  We don’t want a car that is expensive, has little range, and is prone to spontaneously catch fire.

Democrat political enemies include traditional farming, ranching, timber cutting, mining, coal, and petroleum industries.  Tech companies are heavily favored by Democrats and often willingly become their political pawns.  Democrats hate private medicine.

No wonder there is a huge divergence between small-town America and the Big Blue cities that reliably elect Democrats.

The rise of multiple monopolies has birthed a new variant of “populism”, which does not look much like its 19th-century cousin, which had a socialistic slant to it.  Today’s populism could be described as formerly business-supporting conservatives joining forces with blue-collar workers turning against the policies favoring China and the crony capitalism cabal of the Green New Deal. 

Small business and labor traditionally frowned on monopolies.   Traditional free market advocates suggested it is only with government favors that monopolies can be maintained. That is still likely true.  However, now that industrial cartels have government favor, how do you change that?

Exactly how does one try to get market share from Google?

Oppressive regulation is increasing costs and very often, the government-sanctioned products are inferior and of poor quality.  The government now wishes to tell you how to wash your clothes, your dishes, and even how to cook your meals.  In the name of “global warming” the government creates dishwashers that run for a half day and don’t clean dishes.  If you can buy one that lasts five years, you are lucky.

The business community itself has further alienated the public with its constant panderings to ESG and woke culture.  In so doing, they have alienated natural free market allies and will soon discover that state-planning socialists are not the best partners for business prosperity.  Conservatives remain in favor of free enterprise but they no longer feel much loyalty to the current American form of crony capitalism,  especially large corporations.

As strikes spread throughout Hollywood and Detroit, conservatives yawn and suppose these “woke” corporations are getting what they deserve.

This change in politics likely means the end of an era for American business.  For the past 25 years or so, it has been a profitable joyride in China, a profitable alignment with the government, generous benefits of ultra-cheap money and low-interest rates, bailouts, and a record rise in corporate profits.  Great benefits have accrued to capital and less to labor.

The middle class feels it is getting screwed.  Loud minorities demand state reparations, increased benefits, and exemption from criminal activities.  It may have started with Brexit and Trump, but populist movements are ascendant in Italy and rising even in socialist Argentina.

Schools don’t work, public safety is collapsing, and the system seems to favor the racially aggrieved, and the sexually confused, while the whole thrust of government is one of constant interference in our difficult daily lives with institutional lying now the norm rather than the exception.

Populism reflects that the middle class does not feel the current system is working for them nor are the elites pushing such policies either concerned or aware of these problems.  Utopians have seized the reigns of power and want to change the climate of the earth, the relations between men and women, between families and the government, all while keeping as many people as medicated as possible.

Populists don’t trust the legal system, the medical establishment, the school system, the press,  and the universities.  They think the popular culture is often hostile to raising families.

Even the reputation of the military is falling, which explains recruiting woes. What happens when a large swath of the population becomes alienated from basic institutions?

One wonders if all the marijuana shops are there primarily to keep young, aggressive men in a haze of self-induced contentment and oblivious ignorance.

Above all that, the frequent bailouts and interventions to save various industries have lost considerable political support.  The next credit crisis will find much less support for bailouts and besides, given the current state of deficit spending, big huge new bailouts are financially out of the question.

All these megatrends are moving in different directions than they were previously and markets will have to go about adjusting to the new reality.  Republicans are no longer reliably “pro-business” while Democrats remain reliably anti-free market.  The Chamber of Commerce is out of touch.

Today’s “populism” is more than a revolt against the administrative state and the commercial cartels it generates.  It is a combination of economic frustrations and cultural alienation. It flips the 1960s on its head.  The middle class is now revolting against the “Establishment run by the elites.”

This revolt is likely to grow, and politicians, in the end, are more than anything opportunists. Markets will have to adapt.

 

The Acceleration of Inflation in the Second Half Has Begun, “Disinflation” Honeymoon Terminated

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Estimated Reading Time: 3 minutes

Month-to-month CPI spikes, core CPI and core services CPI accelerate, despite ongoing massive health insurance adjustments.

 

The Consumer Price Index (CPI) jumped by 0.63% in August from July, the biggest month-to-month increase since June 2022. Annualized, this amounts to a red-hot 7.8%.

This jump comes despite the still ongoing ridiculous monthly adjustment to the health insurance CPI that caused it to collapse by 33.6% year-over-year. The September CPI, to be released in October, will be the last month with that adjustment; with the October CPI, to be released in November, it will flip, which will add upward momentum to the CPI readings. CPI, core CPI, and core services CPI have been understated significantly since October last year, when the monthly health insurance adjustment started, one of the biggest data distortions coming out of the pandemic (more in a moment).

With this month-to-month spike, the year-over-year CPI rate accelerated to 3.7%, the second year-over-year acceleration since June 2022, according to the Bureau of Labor Statistics today (green in the chart below). July had already marked the end of the period of “disinflation” when the year-over-year inflation rate accelerated for the first time since June 2022.

The “Core” CPI, which attempts to track underlying inflation by excluding the volatile food and energy products, rose by a still-hot 4.3% in August, compared to a year ago (red in the chart).

Given the narrower focus of core CPI, and the therefore proportionally bigger weight of health insurance in it, core CPI was even more distorted than overall CPI by the 33.6% collapse of the health insurance CPI.

Core CPI, month-to-month, was held down by the collapse of the health insurance CPI, and yet, it still accelerated to 0.28% in August from July.

Fuel prices will push CPI up further, even core CPI.

Starting with April, the year-over-year plunge in energy prices at the time, particularly gasoline, pushed the overall CPI increases below those of core CPI.

But on a month-to-month basis, gasoline prices have been surging all year – they jumped 10.6% in August from July – thereby whittling away at the year-over-year plunge as we went. In August, gasoline CPI was still down by 3.3% from August 2022.

Given how the gasoline CPI plunged in late 2022, we know that on a year-over-year basis, gasoline CPI will turn sharply positive later this year. The green line in the chart connects August 2023 and August 2022:

Gasoline accounts for about half of the total energy CPI. Note that gasoline, and energy overall, are still negative year-over-year, despite the sharp month-to-month increases. They will flip to positive, and become bigger drivers of CPI inflation over the coming months:

CPI for Energy, by Category MoM YoY
Overall Energy CPI 5.6% -3.6%
Gasoline 10.6% -3.3%
Utility natural gas to home 0.1% -16.5%
Electricity service 0.2% 2.1%
Heating oil, propane, kerosene, firewood -12.4% 8.4%

How fuel prices filter into “core” CPI.

Diesel has also been surging this year on a month-to-month basis. The price of diesel over time filters into the prices of consumer products that are shipped by truck and rail, as are nearly all consumer products. Jet fuel has been surging similarly, and that filters into products that are shipped by air, and into services via air fares. These products and services are reflected in core CPI, which is how core CPI reacts indirectly to rising energy costs.

The tougher second half has started.

We’ve been warning here about this for months while the media was touting the story that inflation was “vanquished” or whatever. We knew CPI would worsen dramatically in the second half for at least three reasons:

  • Energy prices won’t plunge forever, and in fact, gasoline prices began surging again.
  • The “base effect,” which pushed down year-over-year CPI in the first half, is finished.
  • The ridiculous “health insurance adjustment” that started with October 2022, will swing the other way, starting with the October CPI, to be released in November. More in a moment.

The collapse of the health insurance CPI.

The monthly adjustments to the health insurance CPI, which started with the October CPI last year, will swing the other way with the October CPI this year, to be released in November (I discussed the details a month ago here).

The adjustment pushed down the health insurance CPI every month on a month-to-month basis by 3.4%-4.3%, which has now caused the year-to-year health insurance CPI to collapse by 33.6%, despite maddening price increases of health insurance in the real world. I’ve called these monthly adjustments “odious” and “ridiculous” because that’s what they are. They’re one of the worst data distortions that came out of the pandemic…..

*****

Continue reading this article at Wolf Street.

 

The FDA Has Gone Rogue

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Estimated Reading Time: 12 minutes

Many of us knew this day would come, and now here it is. As of Monday, September 11, 2023, the FDA has provided “Emergency Use Authorization” for the SARS-CoV-2 mRNA vaccine boosters. But there is no public health emergency at this time. And the “boosters” being “Emergency Use Authorized” are designed to provide protection against the Omicron variant called “Kraken.” Which is on its way to becoming extinct, outcompeted by newer variants like Eris which have evolved even further to escape the antibody pressure elicited by the globally deployed leaky “vaccines.”

Prior versions of which boosters, by the way, have been shown to have been adulterated with high levels of plasmid DNA incorporating SV40 virus promoter/enhancer sequences. Which adulteration the FDA continues to ignore.

“Vaccination remains critical to public health and continued protection against serious consequences of COVID-19, including hospitalization and death,” said Peter Marks, M.D., Ph.D., director of the FDA’s Center for Biologics Evaluation and Research. “The public can be assured that these updated vaccines have met the agency’s rigorous scientific standards for safety, effectiveness, and manufacturing quality. We very much encourage those who are eligible to consider getting vaccinated.”

But Biden, under congressional pressure, had decided and certified that the COVID crisis “national emergency” and ended on May 11, 2023, right? Sort of.

The administrative class at the FDA decided that they have the authority to interpret this in their own special way. Despite clear Congressional intent and the Presidential decision, the FDA responded with a series of delaying tactics. These are summarized in an “action notice” in the Federal Register titled “Guidance Documents Related to Coronavirus Disease 2019 (COVID-19), A Notice by the Food and Drug Administration on 03/13/2023”. At the time of the Presidential declaration, the FDA had 72 COVID-19-related guidance documents currently in effect. These are not law, they are administrative guidance, but often function and are enforced as if they are law. If you are seeking an example of administrative state overreach, this would be a good place to start. So, what is an agency to do? Issue an action notice in the federal register laying out new rules, functionally guidance on guidances.

So here are the new rules, as unilaterally determined by FDA administrators. They took those 72 COVID-19 related guidances and divided them into four tables, and determined what they would mandate for the guidances in each table.

Table 1 were those that would expire when the public health emergency (PHE) would expire.
Table 2 were those that would be revised to continue in effect for 180 days after the PHE declaration expires, then will no longer be in effect on November 07, 2023 (Tuesday).
Table 3 were those to be revised to continue in effect for 180 days after the PHE declaration expires, during which time FDA plans to further revise these guidances .
Table 4 lists COVID-19-related guidance documents whose intended duration is not tied to the COVID-19 PHE and that will remain in effect when the COVID-19 PHE declaration expires. In other words, by administrative fiat, those guidances listed in Table 4 will remain in place for as long as the FDA administrators wish them to remain in place.
And at the top of Table 3 (the ones that they will revise as they see fit and continue as long as they think necessary) is the following:

Did they actually revise FDA-2020-D-1137 between then and now? Did they do the work that they said they would do? In short, no. The guidance remains unrevised since March 2022.

What congressional law and language determines when FDA can issue EUAs?

From the FDA’s own website regarding Emergency Use Authorization–

Under section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act), when the Secretary of HHS declares that an emergency use authorization is appropriate, FDA may authorize unapproved medical products or unapproved uses of approved medical products to be used in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions caused by CBRN threat agents when certain criteria are met, including there are no adequate, approved, and available alternatives.

So, basically, the FDA administrative bureaucracy self-determined that they could continue to bypass their normal (already lax) procedures for evaluating vaccine purity (including lack of adulteration), potency, safety and efficacy pretty much for as long as their hearts desire, at least until November 07, 2023. And that is the administrative basis used to enable the September 11, 2023 “Emergency Use Authorization” for the SARS-CoV-2 mRNA vaccine boosters. Will that authorization sunset on November 07, 2023? I very much doubt it.

Meanwhile, back at the Capitol dome, the leadership of the congressional gerontocracy continued to snooze, raise funds for the next election, and almost daily demonstrate to the world (during rare public appearances) their quite literal mental incompetence (in a strictly medical sense of the term).

The data clearly demonstrate that there is no longer a COVID public health emergency, and there are no human data demonstrating safety and effectiveness of these mismatched “vaccine booster” products.

World data:

What do the current CDC data show in the USA (total deaths)?

271 deaths per week, 38 deaths per day WITH COVID. In contrast, we lose 200 – 300 mostly young people per day to Fentanyl and other opiates. That is 1,400 deaths per week from drug overdoses. As if one 737 full of young US citizens crashed and killed all passengers per week. Five times the COVID deaths. If opioid deaths are not a public health emergency, then why is COVID an emergency?

The obvious answer is that it is not.

Hospitalization data:

Hospitalized cases are up in the USA. But deaths are down. Not surprising, as the majority of currently circulating SARS-CoV-2 virus are more highly evolved Omicron variants. Typically more infectious, less pathogenic, and better adapted to evade the narrow antibody-based anti-Spike immune responses elicited by these leaky vaccines.

Who are the ones that are being hospitalized? More of them are the ones that have received a Moderna or Pfizer Emergency Use Authorized mRNA “vaccine” product than have not. That is a fact long known by the US Government but hidden until internal government discussions about this were recently documented by FOIA request.

I infer that the real crisis here is that the data from all over the world are clearly demonstrating that some period of time after receiving a mRNA “Booster vaccine,” recipients are developing “negative effectiveness.”

What the heck is “negative effectiveness,” you may well ask? The term means that those who have received the product are more likely to develop COVID than those who have not been injected. And there are suggestions in the data that the period of time between injection and “negative effectiveness” is getting shorter.

Even if the “vaccine” products have zero rather than negative effectiveness, they certainly have toxicity risks, so why would anyone be willing to receive these products if they knew this?

The “vaccinated” are at higher risk for developing COVID than the unvaccinated. So the “vaccinated” need more “vaccines.” So they can become at yet higher risk for COVID (and other infectious diseases)? Somehow the Joseph Heller WW-II book Catch-22 comes to mind.

And why would the FDA provide “emergency use authorization” and the CDC recommend these clearly toxic products for children?

While speaking at a Thursday news conference for Gov. Ron DeSantis in Jacksonville, Florida, Dr. Joseph Ladapo, that state’s surgeon general, advised people to steer clear of the updated booster vaccine for COVID-19.

The U.S. Food and Drug Administration (FDA) has not yet approved the new vaccine — which is reportedly designed to protect against the BA.2.86 omicron subvariant.

“There’s a new vaccine that’s coming around the corner, a new mRNA COVID-19 vaccine, and there’s essentially no evidence for it,” Ladapo said during the news conference, according to local news outlets.

“There’s been no clinical trial done in human beings showing that it benefits people” he said.

“There’s been no clinical trial showing that it is a safe product for people — and not only that, but then there are a lot of red flags.”

In terms of specific concerns, Ladapo warned that the updated vaccines “actually cause cardiac injury in many people.”

The state surgeon general urged Floridians to make their own decisions based on their particular “resonance of truth,” rather than on “very educated people telling you what you should think.”

“When they try to convince you to be comfortable and agree with things that don’t feel comfortable, [that] don’t feel like things you should agree with, that is a sign, right? That’s a gift,” he said.

Instead of relying on the new vaccines, Ladapo urged people to adopt healthy nutrition habits.

Just for the record, I completely agree with Dr. Ladapo. But I also recommend checking your vitamin D levels, and taking vitamin D together with Zinc supplements in alignment with your personal physician’s recommendations. And get outside. And don’t forget that stress and fear are immunosuppressive.

Maybe you should think about following John Prine’s advice and blow up your TV. The fearporn being promoted on television and corporate media is hazardous to both your health and your ability to make rational health decisions for yourself and your family.

Let’s discuss the data that the FDA cites. Here is their statement:
The mRNA COVID-19 vaccines approved and authorized today are supported by the FDA’s evaluation of manufacturing data to support the change to the 2023-2024 formula and non-clinical immune response data on the updated formulations including the XBB.1.5 component.

OK, what does that mean? Non-clinical immune response data? What it means is that they administered the XBB.1.5 (that would be Kraken) variant vaccine products to mice, drew blood, and tested the mouse antibody responses to the XBB.1.5 as well as EG.5 (Eris) and BA.2.86 (that would be Pirola, previously discussed here) viral variants to see if the mouse serum would stop the ability of these viruses to infect cultured cells. Neither of these viral variants (XBB.1.5, EG.5, or BA.2.86) presents much of a health risk. And they assert that they found that the mouse antibodies cross-reacted against Eris and Pirola in a virus neutralization test. However they did not bother to share those data with the public, so we have no idea of how convincing or even how rigorously controlled those studies were. But we are to trust that the FDA finds these studies involving mouse model testing using a method that has not been demonstrated to predict protection against infection, replication, or spread of this virus in humans. But the corporate media thinks sounds very sciency and so they breathlessly repeat the FDA and Pfizer statements about mouse neutralization assays as if they demonstrate that these “boosters” will be effective. But it is all a lie, a sleight of hand. This is not how modern immunological science is done. This is propaganda and marketing. And the willingness of the FDA to make the above statement clearly demonstrates that they are either 1) completely incompetent, 2) barking mad, or 3) completely captured. Or come a combination of all three.

Note that nothing in the FDA justification addresses the risk to human health posed by these viral variants. The FDA has completely avoided any justification for the use of the emergency use authorization pathway, rather than a more standard, traditional testing and evaluation process. Because they do not think that they need to. This provides yet another example of the arrogance of the current administrative leviathan.

Once again – VIRUS NEUTRALIZATION IS NOT A PROVEN CORRELATE OF PROTECTION. Back in the day, before 2020, if a vaccine company were so bold as to assert that a mouse virus neutralization assay (or any other lab test) predicted vaccine protection in humans without having proven that the assay actually predicted whether or not the vaccine would protect humans, they would be sued and blocked from making such false unsupported claims. But since 2020, this type of claim has become routine. The FDA has gone completely rogue. They completely disregard what was previously well-established global regulatory standards on this subject.

The updated mRNA vaccines are manufactured using a similar process as previous formulations. In studies that have been recently conducted, the extent of neutralization observed by the updated vaccines against currently circulating viral variants causing COVID-19, including EG.5 and BA.2.86, appears to be of a similar magnitude to the extent of neutralization observed with prior versions of the vaccines against corresponding prior variants against which they had been developed to provide protection. This suggests that the vaccines are a good match for protecting against the currently circulating COVID-19 variants.

Lies and falsehoods on top of lies and falsehoods. There is clear evidence that the manufacturing process is poorly controlled, lots are highly variable, and this poorly controlled process has resulted in significant adulteration of the products.

Furthermore, mouse-based viral neutralization assays do not predict effectiveness in “protecting against the currently circulating COVID-19 variants.” There is no evidence to support that claim. This is yet another case of substituting hope for actual scientific proof. There is no evidence that these mismatched boosters will prevent infection, replication, or spread of currently circulating COVID-19 variants. A “suggestion” is not a rational basis for “Emergency Use” regulatory authorization of these products.

The benefit-risk profile of previously authorized and approved mRNA COVID-19 vaccines is well understood as these vaccines have been administered to hundreds of millions of people in the United States.

That is a highly controversial statement. I disagree, Dr. Joe Ladapo disagrees, and regulatory oversight agencies from an increasing number of countries all over the world disagree. Just because the government and manufacturers have colluded to force hundreds of millions of people to accept these products (without informed consent) does not prove anything. Repeatedly stating a lie does not make it true. This is clearly propaganda.

The data demonstrate otherwise. The benefit-risk ratio is upside down. Little or no benefit, many well-documented risks. And immune imprinting. And negative effectiveness. And they DO NOT PREVENT infection, replication, and transmission of the virus to others. Herd immunity can never be achieved with these leaky vaccines. That was yet another Fauci (and Biden) lie.

And then there are the many analytical flaws in the cited data analyses. Which always seem to be biased in favor of vaccine effectiveness. For a deep dive into that, I recommend the following:

“The imprinting effect of covid-19 vaccines: an expected selection bias in observational studies” (Response)
BMJ2023;381doi:https://doi.org/10.1136/bmj-2022-074404(Published 07 June 2023)Cite this as:BMJ2023;381:e074404 (article)

We need proper explanations for apparent COVID-19 vaccine negative effectiveness.

Dear Editor

A striking phenomenon regarding COVID-19 vaccines, referred to as ‘immune imprinting’ or the more specific ‘negative effectiveness,’ has been recently discussed here in The BMJ. 1 Referring to Chemaitelly et al., which indicated that those with 3 doses of vaccine were more likely to be infected than those with 2, 2 Monge et al. hypothesize that “the increased risk of reinfection in individuals vaccinated with a booster compared with no booster is the result” of a selection bias wherein those receiving the booster are those “more susceptible to reinfection;” a sort of counter to the hypothesized ‘healthy vaccinee bias.’ Apart from the article’s inconclusive conclusion that this phenomenon “may be fully explained by selection bias,” this hypothesis would not apply to all such studies.

For example, while it could be reasonable to suppose that people opting for dose 3 and beyond would tend to be at higher risk of COVID-19, and thus more prone to reinfection, it is not obvious that this would apply to the recent study on healthcare workers presented by Shrestha et al.3 This study reveals an even greater problem. The phenomenon is not limited to boosters but is also found when comparing those receiving 2 doses to those receiving 0. In fact, Shrestha et al. indicate that each dose up to 3+ resulted in increased infections. And there are many other studies showing this phenomenon, also with regards to hospitalizations and deaths, in addition to the now widely accepted rapid waning of effectiveness, when comparing the double-dosed to the unvaccinated, including another study with Chemaitelly as lead author.4 5 Several recently published papers also explain how counting window issues likely led to exaggerated effectiveness and safety estimates in both observational studies and clinical trials.6 7 8

The explanation offered up by Monge et al. fails. What we need is a proper explanation for perceived COVID-19 vaccine negative effectiveness, by the vaccine manufacturers or drug regulators. We need to know if this has always been the case or only since Omicron, if the effect is dose-dependent, if certain groups are more at risk, etc. Otherwise, the notion that the benefits of the COVID-19 vaccines outweighs the risks is under threat. If the vaccines truly are negatively effective, it appears that the benefits do not outweigh the risks; there would be no benefits, and we simply add risks upon risks.

References
1. Monge S, Pastor-Barriuso R, Hernán MA. The imprinting effect of covid-19 vaccines: an expected selection bias in observational studies. BMJ. 2023;381:e074404. https://doi.org/10.1136/bmj-2022-074404.
2. Chemaitelly H, Ayoub HH, Tang P, et al. Long-term COVID-19 booster effectiveness by infection history and clinical vulnerability and immune imprinting: a retrospective population-based cohort study. The Lancet Infectious Diseases. 2023;23:816-27. https://doi.org/10.1016/S1473-3099(23)00058-0.
3. Shrestha NK, Burke PC, Nowacki AS, et al. Effectiveness of the Coronavirus Disease 2019 Bivalent Vaccine. Open Forum Infectious Diseases. 2023;10:ofad209. https://doi.org/10.1093/ofid/ofad209.
4. Goldberg Y, Mandel M, Bar-On YM, et al. Protection and Waning of Natural and Hybrid Immunity to SARS-CoV-2. New England Journal of Medicine. 2022;386:2201-12. https://www.nejm.org/doi/full/10.1056/NEJMoa2118946.
5. Chemaitelly H, Ayoub H, AlMukdad S, et al. Protection from previous natural infection compared with mRNA vaccination against SARS-CoV-2 infection and severe COVID-19 in Qatar: a retrospective cohort study. The Lancet Microbe. 2022;3:e944-55. https://doi.org/10.1016/S2666-5247(22)00287-7.
6. Fung K, Jones M, Doshi P. Sources of bias in observational studies of covid-19 vaccine effectiveness. Journal of Evaluation in Clinical Practice. 2023;1-7. https://doi.org/10.1111/jep.13839.
7. Lataster R. Reply to Fung et al. on COVID-19 vaccine case-counting window biases overstating vaccine effectiveness. Journal of Evaluation in Clinical Practice. 2023;1-4. https://doi.org/10.1111/jep.13892.
8. Doshi P, Fung K. How the case counting window affected vaccine efficacy calculations in randomized trials of COVID-19 vaccines. Journal of Evaluation in Clinical Practice. 2023;1-2. https://doi.org/10.1111/jep.13900.

“Long-term COVID-19 booster effectiveness by infection history and clinical vulnerability and immune imprinting: a retrospective population-based cohort study”
Lancet Infectious Diseases VOLUME 23, ISSUE 7, P816-827, JULY 2023

In the seventh month and thereafter, coincident with BA.4/BA.5 and BA.2·75* subvariant incidence, effectiveness was progressively negative albeit with wide CIs. Similar patterns of protection were observed irrespective of previous infection status, clinical vulnerability, or type of vaccine (BNT162b2 vs mRNA-1273).

Interpretation
Protection against Omicron infection waned after the booster and eventually suggested a possibility for negative immune imprinting.

Interpretation

Protection against Omicron infection waned after the booster and eventually suggested a possibility for negative immune imprinting. However, boosters substantially reduced infection and severe COVID-19, particularly among individuals who were clinically vulnerable, affirming the public health value of booster vaccination.

Sources of bias in observational studies of covid-19 vaccine effectiveness
Kaiser Fung MPhil, MBA, Mark Jones PhD, Peter Doshi PhD

In late 2020, messenger RNA (mRNA) covid-19 vaccines gained emergency authorization on the back of clinical trials reporting vaccine efficacy of around 95 percent,1, 2 kicking off mass vaccination campaigns around the world. Within 6 months, observational studies reporting vaccine effectiveness in the “real world” at above 90 percent, similar to trial results,3–6 became the trusted source of evidence upholding these campaigns. While the contemporary conversation about vaccine effectiveness has turned to waning protection, virus variants, and boosters, there has (with rare exception7) been surprisingly little discussion of the limitations of the methodologies of these early observational studies.

The lack of critical discussion is notable, for even highly effective vaccinations could only partially explain the drop in rates of covid-19 cases, hospitalizations, and deaths by mid-2021. For example, by March 2021, cases in the UK and the United States had dropped roughly fourfold from the January peak, when the “fully vaccinated” population only reached 20 percent and 5 percent, respectively. At the same time, in Israel, cases took longer to drop despite a substantially faster vaccine rollout (Figure 1). The vaccination campaigns in these countries can thus only be part of the story.

“There’s been no clinical trial done in human beings showing that it benefits people… There’s been no clinical trial showing that it is a safe product for people — and not only that but then there are a lot of red flags.” ~ Surgeon General of Florida, Dr. Joe Ladapo

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This article was published by The Brownstone Institute and is reproduced with permission.