China Signals Surge In Oil Demand With 20% Increase In Refiner Oil Import Quotas
China issued a substantial increase in its crude imports quotas for this year, the clearest sign yet that Chinese refiners are set for a material increase in output – and a surge in demand for oil – as the nation finally moves away from its ridiculous Covid Zero policy.
On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg. According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.
On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg. According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.
Combined with the 20 million tonnes in 2023 quotas granted to 21 refineries in October, that takes the total for this year to 131.82 million tonnes, up from the 109.03 million tonnes issued in the first batch for 2022. The second batch of quotas for 2022 was released in June last year.
Zhejiang Petrochemical Corp, which operates China’s biggest privately-owned refinery site, was granted the largest quota of this batch at 20 million tonnes, on par with last year’s issuance, according to the documents.
Hengli Petrochemical received a quota of 14 million tonnes and Shenghong Petrochemical’s newly started 320,000 barrels-per-day refinery received 8 million tonnes. Hengli won a quota of 4.83 million tonnes in the first batch in October.
Additionally, as Reuters notes, China, the world’s biggest oil importer, allocated some 2023 quotas earlier than usual to shore up the sluggish economy by encouraging refiners to boost operations.
“The issuance is largely in line with market anticipation, and it suggests that Beijing is trying to boost economy by allowing refineries to ratchet up operation,” a Singapore-based oil trader told Reuters.
Global oil futures benchmarks Brent and WTI both gained than $2 a barrel on early Monday trading on optimism for future fuel demand as China dropped its zero-COVID restrictions and began unfettered travel across its borders.
With mortgage interest rates currently hovering around 7 percent, many lenders across the country have seen a resurgence of the mortgage buy-down – a plan that allows potential homeowners to save money on monthly mortgage payments.
The National Association of Mortgage Brokers (NAMB) describes a mortgage buy-down as a type of financing that provides lower interest rates for at least a few years of the mortgage. They typically are offered by the home seller or builder who contributes to an escrow account that subsidizes the loan during the first few years.
In a 2-1 buy-down, homebuyers can save on interest rates for the first two years of the loan, but will pay the full interest rate at the time of signing for the third year. A 3-2-1 buy-down operates under the same principle: lower payments for the first three years and full interest for the fourth year of the mortgage.
“I’ve seen this a lot in the past, and it’s a way for the consumer to be able to purchase the home they want when increased interest rates would make their mortgage payments too high,” Ernest Jones Jr, NAMB board president told The Epoch Times.
“If the buyer is willing to offer the seller more for their home, the seller will sometimes make concessions in the form of a buydown. However, the home still has to appraise for the higher amount.”
For example, if a buyer opts for a 2-1 buydown, the interest rates will be 2 percent below the current rate for the first year, and 1 percent below for the second year before rising to the regular, permanent rate. In the event that the market’s interest rates drop by the third year, the buyer always has the option to refinance.
“Before this recent turn in the economy, most of the time sellers didn’t have to make any concessions,” Jones said.
“People were just rolling in and paying above market prices. Now things are starting to change and sellers may be willing to help buyers more with the purchase, especially if they’re in position where they need to move quickly.”
Builders Are Ahead
Jones explained that seller concessions are limited by the down payment that the buyer makes. On most loans, seller concessions may be limited to 3 percent, unless the buyer puts down 10 to 20 percent.
“I think we may start to see this more with new construction,” he added.
“Builders are in a better position because they control all of the costs.”
Jones noted that a buy-down is not the same as an adjustable-rate mortgage (ARM), where the rate is fixed for a set period of time before adjusting to a variable rate.
Once the market levels out, he said, sellers may be more reluctant to give concessions.
“In areas like Phoenix, where property values shot up substantially over the past two years, the home equity grew very quickly,” said Jones.
“In cities where there has not been so much growth, and in rural areas, you’ll see less of this type of financing.”
Mo Hamideh, branch manager of Nations Lending in Scottsdale, Arizona, has been seeing a lot buy-downs lately.
“Everyone seems to be asking for them, and I think the real estate agents have been overselling it as well,” he told The Epoch Times.
“Buyers are looking for some relief with their monthly payments, but they still have to qualify at the higher payment levels.”
Hamideh and his team cover the entire Phoenix metropolitan area, where new construction is booming. Still, he said, builders have not been able to keep up with the demand for housing. As a result, rents are also on the rise, as people who can’t find the home they want are forced to opt for an apartment. “Like the rest of the nation, we still have an inventory issue here,” he said.
Much of Arizona saw a huge increase in home prices over the past two years, as people from the Northeast and coastal regions of the country looked to western and southern states for more affordable home options. “When interest rates were low, people were paying way over asking prices and waiving home inspections,” recalled Hamideh. “Now things are different, and buyers are actually able to negotiate with sellers.”
‘Just Like a Marriage’
Derek Fertig, senior vice president at Fairway Independent Mortgage Corp. in Fort Lauderdale, Florida, admits that mortgage buy-downs have their pros and cons.
“They’re just like a marriage–for better or worse,” he told The Epoch Times.
“Buyers can save money on their monthly payments for the first couple of years, but once the discounted rate period ends, their monthly payments could end up higher than what they expect. That could be a problem if their income drops since buying the home.”
Echoing Jones’s observation, Fertig said buy-downs have been around for a long time, but the rising interest rates brought them to the forefront this year. Many times, sellers will opt to help buyers with a mortgage buydown rather than reduce the price of their home. “Buyers are basically paying attention to the dollar amount of payments,” he said. “Their biggest concern is, ‘Is this house affordable for me?’ and if not, they won’t make the move.”
By offering credits toward a mortgage buy-down, he explained, the seller doesn’t need to reduce the price of the home, and the buyer is able to more easily afford the payments for the next few years.
Hot on the heels of last Friday’s US payrolls report will be Thursday’s release of US December CPI inflation data. As previewed by Rabobank, the market is expecting the headline figure to moderate further to 6.5% y/y from 7.1% the previous month, with the core number also expected to ease from 6.0% to 5.7%. Bolstering the disinflation case, moments ago the latest Manheim used car index update came in at 219.3, down 14.9% from a year ago: “This was the largest annualized decline in the series’ history.”
Another inflation-related data point will come from the University of Michigan survey on Friday, where the gauge of consumer inflation expectations will be in focus. Other US data releases will include consumer credit (DB forecast +$30.5B vs +$27.1 in October) today and the NFIB small business optimism index on Tuesday.
A smattering of Fed officials is scheduled to speak during the week, which will allow the market to assess the impact of the de-acceleration of earnings growth on policymakers’ respective policy outlooks.
A summary of key US events this week:
Several ECB officials are also speaking during the week. Speculation regarding scope for a less aggressive policy stance has not just been reserved for the Fed. Last week’s softer Eurozone CPI inflation data had already ignited a debate about whether the ECB needs to maintain the ultra-hawkish tone on display at its December policy meeting.
Joining the fray this week will be BoE Governor Bailey. Two of the MPC last month would have favored leaving rates on hold. Insofar as the UK is already in a recession, which the Bank expects to last all year, investors have also started to debate the risks of a smaller than previously expected amount of policy tightening in the UK. The week ahead also brings UK monthly GDP data for November, which is expected to show a -0.3% m/m contraction. Monday is also expected to bring talks aimed at ended rail strikes, while yesterday PM Sunak indicated a willing to discuss pay rises for nurses, who have also been striking. However, press reports suggested that UK junior doctors could be balloted on strike action this week while the doctors’ union could open the possibility of strike action by NHS consultants. Further strikes by ambulance drivers have also been mooted. The news coincides with reports that UK ambulance wait times have hit a new record.
German November production data registered a softer than expected 0.2% m/m, with a downward revision to the previous month’s data. Later today Eurozone unemployment numbers are due for release. Tonight, Tokyo December CPI inflation will be watched in view of the ‘will they, won’t they’ debate leading up to the BoJ’s January 18 policy meeting. At the end of the week, Eurozone production data will be released. Corporate earnings season is due to start this week. This could present a test to the optimism injected by last week’s US jobs data.
Turning to earnings now and some of the largest American banks including JPMorgan, Citi and BofA will kick off the earnings season on Friday. We will also hear from BlackRock and UnitedHealth that day. The day before all eyes will be on results from TSMC as concerns over supply-demand dynamics and US-China tensions continue to weigh on the sector, with the Philadelphia semiconductor index down -35% in 2022.
Courtesy of DB, here is a day-by-day calendar of events
Monday January 9
Data: US November consumer credit, Japan December Tokyo CPI, November household spending, Italy November unemployment rate, Germany November industrial production, France November trade balance, Eurozone November unemployment rate, Canada November building permits
Central banks: Fed’s Bostic speaks
Earnings: Jefferies
Tuesday January 10
Data: US December NFIB small business optimism, November wholesale trade sales, France November industrial and manufacturing production
Central banks: Fed’s Powell speaks, BoE’s Bailey speaks, ECB’s de Cos and Schnabel speak
Earnings: Bed Bath & Beyond, Albertsons
Wednesday January 11
Data: Japan December bank lending, November trade balance BoP basis, leading index, coincident index, Italy November retail sales
Central banks: ECB’s Holzmann and Vujcic speak
Thursday January 12
Data: US December CPI, monthly budget statement, initial jobless claims, China December CPI, PPI, Japan December Economy Watchers survey, M2, M3, Germany November current account balance
Central banks: Fed’s Harker and Bullard speak, ECB’s economic bulletin, consumer expectations survey
Earnings: TSMC, Infosys
Friday January 13
Data: US January University of Michigan consumer sentiment, December import price index, export price index, China December trade balance, UK November monthly GDP, trade balance, manufacturing production, industrial production, index of services, construction output, Italy November industrial production, Eurozone November trade balance, industrial production, Canada December existing home sales
Earnings: JPMorgan Chase, Citi, Bank of America, Wells Fargo, BlackRock, UnitedHealth, Delta Air Lines
* * *
Finally, looking at just the US, Goldman notes that the main events are the CPI report on Thursday and the University of Michigan report on Friday. There are several speaking engagements from Fed officials, including remarks from Chair Powell, as well as presidents Bostic, Daly, Harker, and Bullard
Monday, January 9
12:30 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will participate in a moderated discussion hosted by the Rotary Club of Atlanta. A Q&A with audience and media is expected. On January 6, Bostic said he would “be comfortable with either a 50 or a 25, and if I start to hear signs that the labor market is starting to ease a bit in terms of its tightness, then I might lean more in the 25 basis-point position.” He added that his 5.00-5.25% terminal rate projection is “the range I think we need to move to if the economy proceeds as I expect which is continual gradual slowdown” and that “we’re not going to be bouncing policy back and forth. We’re really going to let the restrictiveness hold.”
12:30 PM San Francisco Fed President Daly (FOMC non-voter) speaks: San Francisco Fed President Mary Daly will participate in a live interview with the Wall Street Journal. On December 16, Daly said, “We still have a long way to go. We are far away from our price stability goal.” She added that a 5% terminal rate is “a good starting point” and that “everybody has rates holding for 2023…I think 11 months…is a reasonable starting point. But I’m prepared to do more if more is required.”
Tuesday, January 10
06:00 AM NFIB small business optimism, December (consensus 91.5, last 91.9)
09:00 AM Fed Chair Powell speaks: Fed Chair Jerome Powell will participate in a panel discussion on central bank independence at an event hosted by the Sveriges Riksbank in Stockholm, which will also be attended by Bank of England Governor Andrew Bailey, ECB Executive Board Member Isabel Schnabel, and others. The precise speaking time is still to be determined. Text and a moderated Q&A with the audience are expected. Last week, the December FOMC minutes noted that the committee would “continue to make decisions meeting by meeting,” leaving the FOMC’s options open for the size of rate hikes at coming meetings. We continue to expect the FOMC to slow the hiking pace to 25bp at the February meeting. “No” participants anticipated that it would be appropriate to reduce the funds rate this year, and participants welcomed the recent softening in inflation but stressed that “substantially more evidence” was required. At his December FOMC press conference, we saw Powell’s intention to “feel our way”to the appropriate policy rate as most consistent with our forecast of a stepdown in the pace to 25bp. Asked about the possibility of rate cuts next year, Chair Powell said that the FOMC will only cut when it is confident that inflation is moving down in a sustained way. We are doubtful that the inflation path that we forecast for next year would be enough to provide that confidence.
10:00 AM Wholesale inventories, November final (consensus +1.0%, last +1.0%)
Wednesday, January 11
No major data releases scheduled.
Thursday, January 12
07:30 AM Philadelphia Fed President Harker (FOMC non-voter) speaks: Philadelphia Fed President Patrick Harker will discuss the economic outlook at an event hosted by the Main Line Chamber of Commerce. Text and a Q&A with the audience are expected. On November 15, Harker said, “In the upcoming months, in light of the cumulative tightening we have achieved, I expect we will slow the pace of our rate hikes as we approach a sufficiently restrictive stance…I expect we will hold at a restrictive rate for a while to let monetary policy do its work.” He added that he expects “core PCE inflation to come in around 4.8% in 2022, around 3.5% [in 2023], and 2.5% in 2024.”
08:30 AM CPI (mom), December (GS -0.06%, consensus +0.0%, last +0.1%); Core CPI (mom), December (GS +0.25%, consensus +0.3%, last +0.2%); CPI (yoy), December (GS +6.43%, consensus +6.5%, last +7.1%); Core CPI (yoy), December (GS +5.63%, consensus +5.7%, last +6.0%): We estimate a 0.25% increase in December core CPI (mom sa), which would lower the year-on-year rate by four tenths to 5.6%. Our forecast reflects a 1.6% decline in the used car category on the back of falling auction prices and a 0.5% decline in new car prices on rebounding incentives. We also assume a decline in apparel prices reflecting increased holiday promotionality and a 2% pullback in airfares on lower oil prices. We forecast a sequentially slower pace of shelter inflation (we estimate rent +0.67% and OER +0.64%) as weakness in new rental pricing begins to offset continued upward pressure on renewing leases. On the positive side, we assume another gain in the car insurance category, as carriers push through price increases to offset higher repair and replacement costs. We estimate a 0.06% drop in headline CPI, reflecting lower gasoline but higher food prices.
08:30 AM Initial jobless claims, week ended January 7 (GS 210k, consensus 215k, last 204k); Continuing jobless claims, week ended December 31 (consensus 1,718k, last 1,694k): We estimate initial jobless claims increased to 210k in the week ended January 7.
11:30 AM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will discuss the economic outlook and monetary policy at a virtual event hosted by the Wisconsin Bankers Association. A Q&A with audience is expected. On January 5, Bullard said, “The policy rate is not yet in a zone that may be considered sufficiently restrictive, but it is getting closer.” In response to whether Bullard preferred a 50bp increase at the February FOMC meeting, he said, “The policy rate is still a little bit below the sufficiently restrictive zone, but I think it would behoove the committee to get into that zone as soon as we can without ignoring the data.”
Friday, January 13:
08:30 AM Import price index, December (consensus -0.9%, last -0.6%); Export price index, December (consensus -0.7%, last -0.3%)
10:00 AM University of Michigan consumer sentiment, January preliminary (GS 61.5, consensus 60.5, last 59.7); University of Michigan 5-10-year inflation expectations, January preliminary (GS 2.9%, consensus 2.9%, last 2.9%): We expect that the University of Michigan consumer sentiment index increased to 61.5 in the preliminary January report
Asian shares have extended the positive tone noted evident in US markets on Friday with Chinese re-opening news adding to hopes of a lower pace of rate hikes from the Federal Reserve. The Asia MSCI index has entered a bull market from its October lows.
A slowdown in the pace of US earnings growth and a decline in the workweek were sufficient to spark a fresh round of speculation that the Fed may be prepared to move to a less aggressively paced tightening stance. US equities markets surged on Friday, treasury yields weakened, and the USD took a hammering on the December jobs report. However, while the US labor data showed signs of loosening conditions in the US jobs market, it was not a poor report. The US unemployment rate dropped to 3.5%, matching the lowest level in half a century and employers still created 223k jobs last month bring the total for last year to a stunning 4.5 mln. That said, most of these jobs were created in the first seven months of the year. Encouraging the glass half empty view of the labour market were coincident releases of a soft US ISM report and weak factory orders numbers, which have supported the view that the US economy is softening.
After fifteen attempts Kevin McCarthy has been elected Speaker of the US House of Representatives. This will allow the House to return to business at hand. However, the arm twisting needed to persuade enough hard-core conservatives to back him has not just highlighted the deep divisions between Republicans, but it has also led to concerns about the impact of the concessions McCarthy has made. One legislator can now trigger a vote on whether to remove the Speaker. This has raised concerns about how much control McCarthy will have. Additionally, McCarthy has guaranteed to give hard core conservatives at least one seat on the powerful House Rules Committee and it is possible that other influential roles may have been promised. Another compromise is in the area of budget spending with conservatives asking McCarthy to commit to fiscal restraints. This has triggered concerns about future debates regarding the US debt ceiling and the size of additional miliary support for Ukraine.
Kyiv has announced that Russia did not observe its self-declared cease-fire over the Orthodox Christmas. On Sunday, Russia said that it killed 600 Ukrainian troops in an attack that Kyiv says did not happen; a position that appears to have been verified by journalists. Russia is still reeling over the loss of a number of troops in a missile attack on New Year’s Eve. Tens of thousands of demonstrators invaded Brazil’s Supreme Court, Congress and Presidential Palace on Sunday, easily overwhelming public security forces despite plans of the disruption being circulated on social media. Recently elected President Lula has blamed his predecessor Bolsonaro, whose supporters are refusing to accept defeat. Many of supporters of the far-right reportedly want Lula back in prison and are heavily suspicious of Lula’s left-wing stance.
China has re-opened its borders to international travellers for the first time since March 2020 meaning they will no longer have to quarantine, though a negative PCR test is still a requirement. This comes at the start of the first period of Lunar New Year travel and implies a potentially significant fillip to consumer demand, though there are also fears that this could lead to further Covid surges.
China has expanded its currency swap deal with Argentina as the latter struggles with depleted FX reserves. China is Argentina’s second largest trade partner after Brazil. China’s FX reserves are reported to have expanded by USD11 bln last month to USD3.128 trn.
In an FT interview, India’s central bank Governor Das has voiced optimism about his country’s economic outlook while raising concerns about the potential for debt distress in some of its regional neighbors, given the risks to global growth this year. Sri Lanka defaulted last year, and Pakistan’s FX reserves are very low. India’s reserves have fallen from 2021 levels in part due to attempts to stabilise the INR last year against USD strength.
Will Powell Spoil The Party? Levels To Watch This Week
The S&P 500 closed right at its 50- and 100-day moving averages on Friday after an epic meltup following ‘mixed’ jobs data and a dovish response driven by an explosion in options-day-trading volumes.
Friday’s boost was 0 DTE (days to expiration) call options activity. As SpotGamma explained on Twitter, north of 1 million calls traded with ~60% of those tied to today’s expiration.
It was call buying that was most prevalent – dealers had likely sold calls and bought underlying to hedge – which was the added bullish kicker to IV falling. Once that activity expired, though, as it did at the end of the day, it does little to create the context for a far-reaching rally.
Futures have extended that gain overnight but the pace of acceleration has slowed…
The question now is what happens next?
With Powell speaking tomorrow morning and CPI later in the week, there’s plenty of event risk.
As SpotGamma notes, the fact that we do not see a shift higher in the SPY Call Wall (390) despite the ~2% rally on Friday suggests that longer term options traders were not aggressively positioning.
There is a major pivot level at 3910 (SPY 390 Call Wall), with resistance at 3950 & 4000 (SPX Call Wall).
Support shows at 3870, 3860(SPY385) & 3850.
SpotGamma thinks the cleanest thing to do here is to look at some longer dated calls.
We are bullish on a close over 3900 as there is little resistance until 4000.
The trick here is Powell at 9AM ET tomorrow, which may inhibit bullish activity today as traders await his remarks.
It’s a guessing game as to how the market will react to Powell tomorrow, however we believe that given a dovish angle there could be a strong rally with little resistance until 4000-4050.
This presents a nice risk/reward, particularly if IV holds up into a rally due to a long call chase (i.e. VIX up, market up).
There is room for a sharp rally in January overall, as there is a large, put-heavy (in SPY/SPX/QQQ) 1/20 expiration that can provide rally fuel. The expiration is currently more put/call neutral for single stocks as a whole. Additionally, demand for downside new protection is very low, suggesting little fear in markets.
Before we get started this week, I want to show you a chart:
Now, if this chart showed the stock price of a company, would you want to invest in it?
If it’s the price of a commodity, would you be a buyer?
What if you were already heavily invested in this enterprise? Would you hold on and hope for better days ahead? Or would you look at that long downward slide and cut your losses, just walk away?
Now, when I say “long downward slide,” I do mean long. Here’s a bit more information…
The chart above includes data for over a century – from January 1913 to October 2022.
“So let me get this straight — this enterprise has been in nearly-uninterrupted decline since 1952 or thereabouts… Who in their right mind would hold on?”
True, over the last 70 years all hope for better days ahead has probably long since faded…
Well, this isn’t a stock chart. It’s not a commodity price.
This chart shows the weakening purchasing power of the U.S. dollar.
This may come as a surprise, considering how often we’ve been hearing about the “strength” of the U.S. dollar on mainstream media reports. The mighty dollar has been blamed for all sorts of troubles recently. For example:
“Our policies do have spillovers and, of course, many countries are concerned with the spillovers from U.S. policy on their exchange rates with the dollar being so strong.” – Janet Yellen to the G20 Summit in Bali, November 14 2022
“…the strong dollar continues to take a toll on earnings.”
Think about those charts I showed you. Today’s question is, how can the U.S. dollar be so strong as to cause all this ruckus?
The answer: it’s a matter of perspective…
The dollar’s strong (but only in comparison)
A strong currency is one that can buy more goods and services than other currencies. That’s not the case with the U.S. dollar.
In fact, the U.S. dollar is only “strong” in comparison to other currencies.
Take the euro for example. Adjusted for inflation, the euro has lost about 35% of its purchasing power since its introduction in 1999.
The yen? It’s down 23% against the dollar this year alone.
Take a look at the three other major global currencies compared to the U.S. dollar and it’s plain as day, they’re not doing well…
As we’ve seen, the U.S. dollar has lost the vast majority of its purchasing power since the Federal Reserve was established in 1913.
So the U.S. dollar is strong in comparison to other currencies… but only because their purchasing power is falling faster than the U.S. dollar’s.
What’s really happening
The central banks of the world are engaged in a race to the bottom. They’re all printing money at an unprecedented rate, and the effects are being felt everywhere. It’s no coincidence that the worldwide inflation rate is “near double digits,” as Bloomberg recently reported (8.8% globally, according to the IMF – ranging from 2% – 210%).
Money-printing destroys the purchasing power of all the currencies involved, including the U.S. dollar.
The only way to restore the purchasing power of the U.S. dollar is to stop the money printing. The only way to do that is to end the Federal Reserve and return to a monetary system based on sound money.
When you hear talk of a “strong U.S. dollar,” don’t be fooled. The U.S. dollar is only strong in comparison to other rapidly-depreciating currencies. The only way to restore global financial sanity is to return to a system of sound money such as the gold standard.
We must do this before the central banks of the world print every currency in existence into total collapse. Look at those charts again. We’re much, much closer to total collapse than we are to stability. And if all your savings are tied up in U.S. dollars, I strongly recommend examining the benefits of diversification.
China Responds To US Warship Presence With Large-Scale Exercises Off Taiwan
China is intensifying its military presence near Taiwan coming days after the US sailed a warship through the Taiwan Strait for the first time in 2023 last week.
The USS Chung-Hoon made the provocative passage on Thursday, and three days later on Sunday China sent 28 warplanes across the median line of the Taiwan Strait. The Chinese PLA military has been semi-regularly breaching the median line by air and sea ever since Nancy Pelosi’s provocative visit to Taiwan back in August.
Taiwan’s Defense Ministry detailed that these latest drills involved a total of 57 aircraft spotted near Taiwan, including J-10, J-11, J-16 and Su-30 fighters, as well as H-6 bombers, early warning and reconnaissance planes and multiple drones.
As is typical, Taiwan says it scrambled jet fighters to monitor the PLA warplanes, and put its land-based missile systems on alert, along with deploying naval assets. Taiwan’s military said further it observed at least seven locations where the median line was breached.
As for China, the PLA’s Eastern Theater Command acknowledged the war drills in describing, “The exercise focused on land strikes, sea assaults and other subjects, aiming to test the troops’ joint combat capability and resolutely counter the collusive and provocative acts of the external forces and the ‘Taiwan independence’ separatist forces.”
China’s drills around Taiwan are once again involving large displays of force, with these latest exercises coming on the heels of similar Dec.25th PLA action, which involved 71 total aircraft buzzing the self-ruled island, and among these 47 aircraft breaching the Taiwan Strait median line.
Meanwhile, the end of this week will see the start of US-Taiwan official trade delegation talks in defiance of China’s condemnations being in Taipei.
USS Chung-Hoon (DDG 93) conducted a routine Taiwan Strait transit Jan. 5 (local time) through waters where high-seas freedoms of navigation and overflight apply in accordance with international law. Read more: https://t.co/ZMjUT47Kv5pic.twitter.com/F3g1fhN83Q
The South China Morning Post details that “Terry McCartin, assistant US trade representative for China affairs, will lead a group of trade officials and representatives from other US agencies to Taipei from January 14-17 for negotiations on the US-Taiwan Initiative on 21st-Century Trade, the Office of the US Trade Representative announced on Wednesday.”
China has in the meantime vowed it won’t let Taiwan become a Ukraine situation, as the US continues to pour in arms and increasingly large defense packages for Taiwan’s forces.
Is the Fed trying to wean the markets off monetary policy? Such was an interesting premise from former British diplomat Alastair Crooke via the Strategic Culture Foundation, to wit:
“The Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation ‘dragon’ (they would need to be much higher to do that). The purpose is to break a generalised ‘dependency habit’ on free money.”
That is a powerful assessment that, if true, has an overarching impact on the economic and financial markets over the next decade. Such is especially important when considering the effect these repeated monetary and fiscal interventions have had on financial market returns of the previous decade.
The chart below shows the average annual inflation-adjusted total returns (dividends included) since 1928. I used the total return data from Aswath Damodaran, a Stern School of Business professor at New York University. The chart shows that from 1928 to 2021, the market returned 8.48 percent after inflation. However, notice that after the financial crisis in 2008, returns jumped by an average of four percentage points for the various periods.
(Source: RealInvestmentAdvice.com)
We can directly trace those outsized returns back to the Fed’s repeated monetary and the government’s fiscal policy interventions during that period. Following the financial crisis, the Federal Reserve intervened with monetary support each time the market stumbled or threatened the “wealth effect.”
(Source: St. Louis Federal Reserve, Refinitiv, RealInvestmentAdvice.com)
While many want to suggest the Federal Reserve’s monetary interventions do not affect financial markets, the correlation between the two is extremely high.
(Source: St. Louis Federal Reserve, Refinitiv, RealInvestmentAdvice.com)
However, the result of more than a decade of unbridled monetary experiments led to a massive wealth gap in the U.S. economy which has become front and center of the political landscape.
(Source: St. Louis Federal Reserve, Refinitiv, RealInvestmentAdvice.com)
It isn’t just the massive expansion in household net worth since the financial crisis that is troublesome. The problem is that nearly 70 percent of that total household net worth is concentrated in the top 10 percent of income earners.
While it was likely not the Fed’s intention to cause such a massive redistribution of wealth, it was the goal of its grand monetary experiment.
Pavlov’s Great Experiment
Classical conditioning (also known as Pavlovian or respondent conditioning) refers to a learning procedure in which a potent stimulus (e.g., food) is paired with a previously neutral stimulus (e.g., a bell). Pavlov discovered that when he introduced the neutral stimulus, the dogs would begin to salivate in anticipation of the potent stimulus, even though it was not currently present. This learning process results from the psychological “pairing” of the stimuli.
This conditioning is what has happened to investors over the last decade.
In 2010, then-Fed Chairman Ben Bernanke introduced the “neutral stimulus” to the financial markets by adding a “third mandate” to the Fed’s responsibilities—the creation of the “wealth effect.”
Bernanke wrote of the “wealth effect” in a Washington Post Op-Ed in November, 2010:
“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose, and long-term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
Importantly, for conditioning to work, the “neutral stimulus,” when introduced, must be followed by the “potent stimulus” for the “pairing” to be completed. For investors, as the Fed introduced each round of “Quantitative Easing,” the “neutral stimulus,” the stock market as the “potent stimulus” rose.
Twelve years and 400 percent gains later, the “pairing” was complete. Such is why investors now move from one economic report and Fed meeting to the next in anticipation of the “ringing of the bell.”
The problem, as noted above, is that despite the massive expansion of the Fed’s balance sheet and the surge in asset prices, there was relatively little translation into broader economic prosperity.
The problem is the “transmission system” of monetary policy collapsed following the financial crisis.
Instead of the liquidity flowing through the system, it remained bottled up within institutions and the ultra-wealthy, who had “investible wealth.” However, those programs failed to boost the bottom 90 percent of Americans living paycheck-to-paycheck.
The failure of the flush of liquidity to translate into economic growth can be seen in the chart below. While the stock market has returned more than 180 percent since the 2007 peak, that increase in asset prices was more than 6x the growth in real GDP and 2.3x the growth in corporate revenue. (I have used SALES growth in the chart below as it is not as subject to manipulation.)
(Source: St. Louis Federal Reserve, Refinitiv, RealInvestmentAdvice.com)
Since asset prices should reflect economic and revenue growth, the deviation is evidence of a more systemic problem. Of course, the problem comes when they try to reverse the process.
The Great Unwinding
The chart below sums up the magnitude of the Fed’s current problem.
(Source: St. Louis Federal Reserve, Refinitiv, RealInvestmentAdvice.com)
From bailing out Bear Stearns to HAMP, HARP, TARP, and a myriad of other Governmental bailouts, along with zero interest rates and a massive expansion of the Fed’s balance sheet, there was roughly $10 of monetary interventions for each $1 of economic growth.
Now, the Federal Reserve must figure out how to wean markets off of “life support” and return to organic growth. The consequence of the retraction of support should be obvious, as noted by Crooke:
“Perhaps the Fed can break the psychological dependency over time, but the task should not be underestimated. As one market strategist put it: ‘The new operating environment is entirely foreign to any investor alive today. So, we must un-anchor ourselves from a past that is ‘no longer’—and proceed with open minds.’
“This period of zero rates, zero inflation, and QE was a historical anomaly—utterly extraordinary. And it is ending (for better or worse).”
Logically, the end of Pavlov’s great “monetary experiment” cannot end for the better. Once the paired stimulus gets removed from the market, forward returns must return to the basic math of economic growth, plus inflation and dividends. Such was the basic math of returns from 1900 to 2008.
In a world where the Fed wants 2 percent inflation, economic growth should equate to 2 percent, and we can assume dividends remain at 2 percent. That math is simple: 2% GDP + 2% dividend – 2% inflation = 4% annualized returns.
Such is a far cry below the 12 percent returns generated over the last 12 years. But such will be the consequence of weaning the markets off years of monetary madness.
Of course, there is a positive outcome to this as well.
“If Jay Powell breaks the Fed put and takes away the unfair ability of private capital to rape and pillage the system, he will have finally addressed income inequality in America,” Danielle DiMartino Booth, CEO and chief strategist of research firm Quill Intelligence, said on Twitter Dec. 8.
The bottom line is that fixing the problem won’t be pain-free. Of course, breaking an addiction to any substance never is. The hope is that the withdrawal doesn’t kill the patient.
Barron’s And Baillie Gifford Stay Bullish On Tesla
The hits have certainly kept coming for Tesla over the last 6 months: first Elon Musk buys Twitter and starts dedicating a large portion of his time to fixing the platform. Then, questions arise about the sustainability of demand for Tesla after the company slows production at its Shanghai plant. Just days ago, the company cut prices in China for the second time in three months, inciting protests at their showrooms.
All the while, Tesla stock has been plunging – from 52 week highs near $384 per share to where it closed on Friday, at about $113 per share. But despite the seemingly neverending stream of negative news for the EV making, the nearly 70% drop from highs is making it look like a buy – at least, that’s what Barron’s thinks.
On Friday Barron’s listed Tesla’s as a growth investing stock pick, saying Tesla’s “battered stock looks like a buy again”. “Demand is slowing. Costs are rising. Elon Musk is distracted and a distraction. It’s time to buy the stock,” they wrote.
Just a day prior, the publication had featured the take of Dave Bujnowski of Baillie Gifford, who co-manages the firm’s U.S.equity growth portfolio. Baillie Gifford have been long-term Tesla bulls and, despite Bujnowski’s U.S. fund falling more than 50% last year, he is “unflinching” on his stance that his company is taking the right approach to long-term bets – including their position in Tesla.
He told Barron’s about EVs: “Electric vehicles are a great example of a disruptive growth engine inside a system that isn’t necessarily growing. A new type of supply enters the market and meets demand in a new and better way. They are stealing market share from combustion-engine vehicles. We’re believers in EVs. There’s a $4 trillion market globally, with a new product, and buyers finding more reasons to own them. EVs have gone from about 1% of the market in 2016 to 10%-12% now.”
Talking about Tesla, he noted that the firm is still “enthusiastic” on the name: “We are still enthusiastic about Tesla. A few years ago, the debate was whether Tesla could ever make money. They’ve proven they can. Now, the questions are around [CEO Elon] Musk and his involvement in Twitter and his lower engagement with Tesla.”
“I’m relatively relaxed about his engagement level with Tesla, for two reasons. One is that he’s always had multiple big endeavors, and has shown he has the capacity to do more than one job. More important than that is the culture he has created at Tesla—a culture of innovation, of being able to build this manufacturing machine that can produce cars at scale like no one else can. The company can basically run itself day to day without Elon.”
He concluded that he didn’t see Musk’s behavior as risk for Tesla’s potential market going forward: “We’re being watchful. For every person who says they don’t want a Tesla because of Elon’s behavior, it shrinks the addressable market by one. And that shouldn’t be overlooked. On the other side of the debate—and this is why we are still enthusiastic about Tesla—this is an absolutely massive market.”
CDC’s VAERS safety signal analysis based on reports from Dec. 14, 2020 – July 29, 2022 for mRNA COVID-19 vaccines shows clear safety signals for death and a range of highly concerning thrombo-embolic, cardiac, neurological, hemorrhagic, hematological, immune-system and menstrual adverse events (AEs) among U.S. adults.
There were 770 different types of adverse events that showed safety signals in ages 18+, of which over 500 (or 2/3) had a larger safety signal than myocarditis/pericarditis.
The CDC analysis shows that the number of serious adverse events reported in less than two years for mRNA COVID-19 vaccines is 5.5 times larger than all serious reports for vaccines given to adults in the US since 2009 (~73,000 vs. ~13,000).
Twice as many mRNA COVID-19 vaccine reports were classified as serious compared to all other vaccines given to adults (11% vs. 5.5%). This meets the CDC definition of a safety signal.
There are 96 safety signals for 12-17 year-olds, which include: myocarditis, pericarditis, Bell’s Palsy, genital ulcerations, high blood pressure and heartrate, menstrual irregularities, cardiac valve incompetencies, pulmonary embolism, cardiac arrhythmias, thromboses, pericardial and pleural effusion, appendicitis and perforated appendix, immune thrombocytopenia, chest pain, increased troponin levels, being in intensive care, and having anticoagulant therapy.
There are 66 safety signals for 5-11 year-olds, which include: myocarditis, pericarditis, ventricular dysfunction and cardiac valve incompetencies, pericardial and pleural effusion, chest pain, appendicitis & appendectomies, Kawasaki’s disease, menstrual irregularities, vitiligo, and vaccine breakthrough infection.
The safety signals cannot be dismissed as due to “stimulated,” exaggerated, fraudulent or otherwise artificially inflated reporting, nor can they be dismissed due to the huge number of COVID vaccines administered. There are several reasons why, but the simplest one is this: the safety signal analysis does not depend on the number of reports, but whether or not some AEs are reported at a higher rate for these vaccines than for other non-COVID vaccines. Other reasons are discussed in the full post below.
In August, 2022, the CDC told the Epoch Times that the results of their safety signal analysis “were generally consistent with EB [Empirical Bayesian] data mining [conducted by the FDA], revealing no additional unexpected safety signals.” So either the FDA’s data mining was consistent with the CDC’s method—meaning they “generally” found the same large number of highly alarming safety signals—or the signals they did find were expected. Or they were lying. We may never know because the FDA has refused to release their data mining results.
INTRODUCTION
Finally! Zachary Stieber at the Epoch Times managed to get the CDC to release the results of its VAERS safety signal monitoring for COVID-19 vaccines, and they paint a very alarming picture (see his reporting and the data files here, or if that is behind a paywall then here). The analyses cover VAERS reports for mRNA COVID vaccines from the period from the vaccine rollout on December 14, 2020 through to the end of July, 2022. The CDC admitted to only having started its safety signal analysis on March 25, 2022 (coincidentally 3 days after a lawyer at Children’s Health Defense wrote to them reminding them about our FOIA request for it).
[UPDATE: T Coddington left a link in comments to a website where he made the data in the Excel files more accessible.]
Like me, you might be wondering why the CDC waited over 15 months before doing its first safety signal analysis of VAERS, despite having said in a document posted to its website that it would begin in early 2021—especially since VAERS is touted as our early warning vaccine safety system. You might also wonder how they could insist all the while that the COVID-19 vaccines are being subjected to the most rigorous safety monitoring the world has ever known. I’ll come back to that later. First I’m going to give a little background information on the analysis they did (which you can skip if you’re up to speed) and then describe what they found.
BACKGROUND ON SAFETY SIGNAL ANALYSIS
Back in June 2022, the CDC replied to a Freedom of Information Act (FOIA) request for the safety signal monitoring of the Vaccine Adverse Events Reporting System (VAERS)—the one it had said it was going to do weekly beginning in early 2021. Their response was: we never did it. Then a little later they said they had been doing it from early on. But by August, 2022, they had finally gotten their story straight, saying that they actually did do it, but only from March 25, 2022 through end of July. You can get up to speed on that here.
The analysis they were supposed to do uses what’s called proportional reporting ratios (PRRs). This is a type of disproportionality analysis commonly used in pharmacovigilance (meaning the monitoring of adverse events after drugs/vaccines go to market). The basic idea of disproportionality analysis is to take a new drug and compare it to one or more existing drugs generally considered safe. We look for disproportionality in the number of adverse events (AEs) reported for a specific AE out of the total number of AEs reported (since we generally don’t know how many people take a given drug). We then compare to existing drugs considered safe to see if there is a higher proportion of particular adverse events reported for the new drug compared to existing ones. (In this case they are looking at vaccines, but they still use PRR even though they generally have a much better sense of how many vaccines were administered.)
There are many ways to do disproportionality analysis. The PRR is one of the oldest. Empirical Bayesian data mining, which was supposed to be done on VAERS by the FDA, is another. The PRR is calculated by taking the number of reports for a given adverse event divided by the total number of events reported for the new vaccine or the total number of reports. It then divides that by the same ratio for one or more existing drugs/vaccines considered safe. Here is a simple formula:
So for example, if half of all adverse events reported for COVID-19 vaccines and the comparator vaccine(s) are for myocarditis, then the PRR is 0.5/0.5 = 1. If one quarter of all AEs for the comparator vaccine are for myocarditis, then the PRR is 0.5/0.25 = 2.
Traditionally, for a PRR to count as a safety signal, the PRR has to be 2 or greater, have a Chi-square value of 4 or greater (meaning it is statistically significant) and there has to be at least 3 events reported for a given AE. (This also means that if there are tons of different AEs reported for COVID vaccines that have never been reported for any other vaccine, it will not count as a safety signal. I found over 6,000 of those in my safety signal analysis from 2021.
Ah yes, shared with the public — after first refusing to share the results and months of foot-dragging following repeated FOIA requests! We will see that the CDC has not done a more focused study on almost any of adverse events with “new patterns” (AKA safety signals).
SO WHAT DID THE CDC ACTUALLY DO?
The Epoch Times obtained 3 weeks of safety signal analyses from the CDC for VAERS data updated on July 15, 22 and 29, 2022. Here I will focus on the last one, since there is very little difference between them and it is more complete. The safety signal analysis compares adverse events1 reported to VAERS for mRNA COVID-19 vaccines from Dec. 14, 2020 through July 29, 2022 to reports for all non-COVID vaccines from Jan 1, 2009 through July 29, 2022.
PRRs are calculated separately for 5-11 year-olds, 12-15 year-olds and 18+ separately. For each age group, there are separate tables for AEs from all reports, AEs from reports marked serious and AEs from reports not marked as serious.2 Recall that a serious report is one that involves death, a life-threatening event, new or prolonged hospitalization, disability or permanent damage, or a congenital anomaly. I will focus on the reports for all AE’s.
They also have a table that calculates PRRs by comparing reports for the Pfizer COVID-19 vaccine to reports for the Moderna vaccine and vice versa, again for all reports, serious reports only and non-serious reports. There were no remarkable findings in those tables, so I will not discuss them. [Edit: I forgot what Norman Fenton noted in his analysis: the overall proportion of reports with serious adverse events is 9.6% for Modern compared to 12.6% for Pfizer.] This isn’t that surprising since both vaccines are very similar and so should present relatively similar adverse events when compared to each other, and any differences are likely not large enough to be picked up by a PRR analysis. [Though the difference in the overall rate of serious adverse events, which are not specific to a particular type of event only how serious it is, was significant.]
The CDC seems to have calculated PRRs for every different type of adverse event reported for all the COVID vaccines examined – though it’s possible they only analyzed a subset. What seems clear is that, among the AEs they examined, the only ones included in the tables satisfy at least one of two conditions: a PRR value of at least 2 and a Chi-square value of at least 4 (Chi is the Greek letter χ and is pronounced like ‘kai’). When both conditions were met, they highlighted the adverse event in yellow, which appears to indicate a safety signal. There were no COVID vaccine AEs listed with fewer than 3 reported events, though for non-COVID vaccines there were many AEs listed that had only 1 or 2 reported since 2009. The CDC tables still include these and highlight them in yellow when the PRR is greater than 2 and the Chi-square value is great than 4, indicating these events are counted as safety signals.
WHAT SAFETY SIGNALS DID THE CDC FIND?
I’m going to divide this up by age groups and the Pfizer v. Moderna comparison. Let’s start with the 18+ group.
There are 772 AEs that appear on the list. Of these, 770 are marked in yellow and have PRR and Chi-square values that qualify them as safety signals. Some of these are new COVID-19 related codes, and we would expect those to trigger a signal since they didn’t exist in prior years to be reported by other vaccines. So if we take those off, we are left with 758 different types of non-COVID adverse events that showed safety signals.
I grouped these 758 safety signals into different categories. The figure below shows the total number of AEs reported for each of the major categories of safety signals:
Let’s dig into some of these categories to look at what types of AEs generated the most number of reports:3
You can peruse the adverse events using the Excel tables provided by the CDC, which were posted by The Epoch Times and Children’s Health Defense at the links at the top of this post.
What about The Children?
If there is anything that looks remotely like a bright spot in all of this is that the list of safety signals for 12-17 and 5-11 year-olds is much shorter than for 18+. There are 96 AEs that qualify as a safety signal for the 12-17 group and 67 for the 5-11. When we take out the new COVID-era AEs, there are 92 safety signals for 12-17 year-olds and 65 for 5-11 year-olds. Here are the most alarming ones:
I don’t know why the list of AE’s is so much shorter for these age groups. It could be that the list of AE’s for other vaccines for these age groups is much shorter, so in a case where AEs have been reported for the mRNA COVID vaccines but not for other vaccines, it will not be counted as a safety signal by definition.
COMPARISONS TO MYOCARDITIS & PERICARDITIS
We are told that the existence of a safety signal doesn’t necessarily mean the AE is caused by the vaccine, and I accept that premise. But the current practice seems to be to ignore safety signals, dismiss them as noise without any evidence, and stall any investigation into them as long as possible. The precautionary principle, however, dictates we should presume that a safety signal indicates causality, until proven otherwise. Since, it has been acknowledged that the mRNA COVID vaccines can cause myocarditis and pericarditis (often referred to as myo-pericarditis), we can take those AEs as a kind of benchmark, and propose that, at minimum, any AE with a signal of equal or greater size should be considered potentially causal and investigated more thoroughly.4
After dropping the new COVID-era AEs, there are 503 AEs with PRRs larger than myocarditis (PRR=3.09) and 552 with PRRs larger than pericarditis (PRR=2.82).5This means that 66.4% of the AEs had a bigger safety signal than myocarditis and 77.3% were larger than pericarditis. You can see what those were by use this Excel file provided by the CDC and sorting the 18+ tab by the 12/14-07/29 PRR column (Column E). Then just look at which AEs have PRRs larger than the ones for pericarditis and myocarditis.
For 12-17 year-olds, there is 1 safety signal larger than myocarditis (it’s ‘troponin increased’) and 14 safety signals larger than pericarditis (excluding myocarditis), which include: mitral valve incompetence, bell’s palsy, heavy menstrual bleeding, genital ulceration, vaccine breakthrough infection, and a range of indicators of cardiac abnormalities.
For 5-11 year-olds, the comparison to myo/pericarditis is less germane, as they seem to suffer less from this side effect. But we can still make the comparison: there are 7 safety signals larger than pericarditis, including bell’s palsy, left ventricular dysfunction, mitral valve incompetence, and ‘drug ineffective’ (presumably meaning they still got COVID). There are 16 safety signals larger than myocarditis (excluding pericarditis), which in addition to those listed above also include: pericardial effusion, diastolic blood pressure increase, tricuspid valve incompetence, and vitiligo. Sinus tachycardia (high heart rate), appendicitis, and menstrual disorder come in just below myocarditis.
Now if we think of a safety signal as having both strength and clarity, then the PRR can be thought of as an indicator of how strong the signal is, while the Chi-square is a measure of how clear or unambiguous the signal is, because it gives us a sense of how likely the signal is due to chance alone: the larger the Chi-square value, the less likely the signal is due to chance. A Chi-square of 4 means there is only a 5% chance the observed signal is due to chance. A Chi-square of 8 means there is only a 0.5% chance of it being due to chance.6
For the 18+ group, there are 57 AEs with a Chi-square larger than myocarditis (Chi-square=303.8) and 68 with a Chi-square larger than pericarditis (Chi-square=229.5). Again, you can see what these are by going the Excel file linked above and sorting on Column D.
For the 12-17 group, there are 4 AEs with a larger Chi-square than myocarditis (Chi-square=681.5) and 6 larger than pericarditis (Chi-square=175.4).
For the 5-11 group, there are 22 AEs with a Chi-square larger than myocarditis (Chi-square=30.42) and 34 AEs with a Chi-square larger than pericarditis (Chi-square=18.86).
RESPONDING TO OBJECTIONS
Let’s dispense with some of the criticisms used to dismiss VAERS data, which will undoubtedly be raised if you try to bring the CDC’s analysis to people’s attention.
Objection: Anybody can report to VAERS. The reports are unreliable. Anti-vaxxers made lots of fraudulent reports. Nobody was aware of VAERS in the past, but now they are. So many people were afraid of the vaccine so they blamed all their health problems on it. Health workers were required by law to report certain adverse events, like deaths and anaphylaxis. Etc. Etc.
All of these objections ultimately rely on the notion that VAERS reports for COVID-19 vaccines have been artificially inflated over previous years for one reason or another. The thing of it is, though, that the CDC has a method for distinguishing between artificial inflation and real signal. The idea is simple: if adverse events are artificially inflated, they should be artificially inflated to the same degree. Meaning, the PRRs for all of these safety signals should be about the same. But even a casual glance at the PRRs in the Excel file show they vary widely, from as low at 2 to as high as 105 for vaccine breakthrough infection or 74 for cerebral thrombosis. This method does not on the number of reports, but the rate of reporting for certain events out of all events reported. If anything, this method would tend to hide safety signals in a situation where a new vaccine generates a very large number of reports.
The CDC has even done us the favor of calculating upper and lower confidence intervals, meaning that we can be at least 95% confident that two PRRs are truly different if their confidence intervals don’t overlap. So for example the lower confidence interval for pulmonary thrombosis is 19.7, which is higher than the upper confidence interval for 543 other signals. Artificially inflated reporting cannot explain why so many different adverse events have large PRRs that are statistically distinct from one another.
Objection: The safety signals are due to the huge number of COVID vaccines given out. Never before have we given out so many vaccine doses. By the end of July, the US had administered something like 600 million vaccine doses to people aged 18+. But the CDC analysis compares VAERS reports for these doses to all doses for all other vaccines for this age group since Jan. 1, 2009. But from 2015-2020 there were over 100 million flu doses administered annually to this age group alone. In previous work, I estimated 538 million doses of flu given to people 18+ from July 2015-June 2020. The number of flu and other non-COVID vaccines for this age group administered from Jan 1., 2009 through July 29, 2022 must be well over double this number, meaning VAERS reports for COVID vaccines are being compared to reports for at least double the number of doses for other vaccines. In addition to this, as already noted, the PRR methodology does not depend, strictly speaking, on the number of doses, but rather the rate of reporting of a specific AE out of all AEs for that vaccine.
Objection: the vaccines are mainly being given to older people who tend to have health problems, whereas other vaccines are given to younger people. This objection is dealt with, since the analyses are stratified by age groups. It might be still be somewhat valid for the 18+ group, except that in the safety signal analysis I did in the fall of 2021, I stratified by smaller age bands and still found safety signals. In any case, this objection is not enough to dismiss the safety signal analysis out of hand, but rather calls for better and more refined research.
Objection: The VAERS data is not verified and cannot be trusted. I’ll be the first person to agree that VAERS is not high quality data, but if it is completely untrustworthy, then how is it that the CDC uses these data to publish in the best medical journals such as JAMA and The Lancet? If the data were worthless, then these journals shouldn’t accept these papers. In that JAMA paper, they reported that 80% of the myocarditis reports met their definition of myocarditis and were included in the analysis. Many other reports simply needed more details for validation. Furthermore, the CDC has the ability and budget to follow-up on every report VAERS receives to get more details and even medical records to verify the report.
So if myocarditis shows a clear signal in the CDC’s analysis, and 80% of those reports were apparently high quality enough to be included in a paper published in one of the world’s top medical journals, how is it possible that all the rest of the reports are junk? That all of the other safety signals are meaningless? Answer: it isn’t.
And since we’re on the topic of safety signals that turned out to be real, it’s instructive to find appendicitis turn up as a safety signal in all 3 age groups, since a study published in NEJM based on medical records of over a million adult Israelis found an increased risk of appendicitis in the 42 days following Pfizer vaccination (but not following a positive SARS-CoV-2 PCR test). That study also found an increase in lymphadenopathy (swollen lymph nodes) after vaccination, but not after positive COVID test. Lymphadenopathy was another safety signal.
And that brings us to our last objection to be dispensed with: all of these AEs were due to COVID. There was an epidemic and so people were falling ill due to COVID and having all of these problems that were then blamed on the vaccine. Well to begin with, as we just saw, at least two of them (appendicitis and lymphadenopathy) do not appear to have increased risk ratios following a positive SARS-CoV-2 test, and we know that the mRNA vaccines increase risk of myo/pericarditis independent of infections. So how can we assume the rest of these are and dismiss them with the wave of a hand? We can’t. At minimum, they need further investigation. Furthermore, in the safety signal analysis I did in 2021, I dropped all VAERS reports where any sign of a SARS-CoV-2 exposure or infection was indicated on the report, and I still found large, significant safety signals.
PUTTING IT ALL INTO PERSPECTIVE
The Epoch Times article quotes my esteemed colleague and friend, Norman Fenton, Professor of Risk Management and an world renowned expert in Bayesian statistical analysis: “from a Bayesian perspective, the probability that the true rate of the AE of the COVID-19 vaccines is not higher than that of the non-COVID-19 vaccines is essentially zero…. The onus is on the regulators to come up with some other causal explanation for this difference if they wish to claim that the probability a COVID vaccine AE results in death is not significantly higher than that of other vaccines.” (See his post on the CDC analysis here.) The same is true for all the safety signals they found.
The CDC’s VAERS SOP analysis document lists 18 Adverse Events of Special Interest says they are going to pay close attention to. In their 2021 JAMA paper (and similar presentations to ACIP), the researchers responsible for analyzing the millions of medical records in the CDC’s Vaccine Safety Datalink (VSD) using the ‘Rapid Cycle Analysis’ only studied 23 outcomes. A Similar analysis in NEJM from Israeli researchers focused on only 25 outcomes. Compare this to over 700 safety signals found by the CDC when they finally decided to look—and that’s not even counting all the adverse events that have never been reported for other vaccines so cannot ever show a safety signal by definition. How can the CDC say that these safety signals are meaningless if almost none of them have been studied any further? And yet we are assured that these vaccines have undergone the most intensive safety monitoring effort in history. It’s complete and utter hogwash!
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Josh Guetzkow is a senior lecturer at The Hebrew University of Jerusalem. Subscribe to his Substack here.
1) To be precise, the ‘adverse events’ are for ‘preferred terms’ (PTs) which is a type/level of classification used in the Medical Dictionary for Regulatory Activities (MedDRA), which is the classification system used by VAERS and in other pharmacovigilance systems and clinical research for coding reported adverse events. Not all preferred terms are a symptom or adverse event per se. Some refer to a specific diagnostic test that was done or a treatment that was given.
2) It’s not entirely clear how they divided these up, since there are clearly AEs that should be considered serious that don’t show up in the serious Excel table — though maybe they don’t come up simply because they are looking within serious reports. I believe that they just filtered the reports to include only serious reports or non-serious reports, then did the safety signal analysis on all the AE’s coded in those reports. The reason I think this is that I used the MedAlerts Wayback Machine, selected just the serious COVID-19 vaccine reports, and the numbers of total reports was very close to the one in the table provided by the CDC (MedAlerts actually had a bit less). The files obtained by the Epoch Times do not include much in the way of a description as to how the analyses were done, so I had to infer some details, which might be incorrect. I will try to note when I am drawing an inference about how the analysis was done.
3) Generally speaking, these figures show the top ten AEs in each category. In some cases I combined AEs that indicated the same thing, such as combining ‘heart rate irregular’ with ‘arrythmia.’ [UPDATE: Note that the charts of all categories, cardiac and thrombo-embolic events were updated on Jan 7, 2023. The reason is that I had previously categorized acute myocardial infarction as a cardiac issue and myocardial infarction as thrombo-embolic. To be consistent, I have now combined myocardial infarction and acute myocardial infarction into one AE category in the thrombo-embolic events (which made the total AEs reported for that category larger than for pulmonary ones) and then added a different cardiac AE to the cardiovascular AE category, ventricular extrasystoles, AKA premature ventricular contraction (PVC), which dependent on frequency and the presence of other cardiomyopathies is associated with sudden cardiac arrest.]
4) Note that using the myo-pericarditis signal as a yardstick doesn’t mean that these are the only signals that matter. To give one example, anaphylactic reactions don’t even show up in the list of safety signals, even though that was one of the very first risk of the vaccine that became apparent from day one of the vaccine rollout.
One potential objection to this benchmark is that it is too low of a bar, since myo-pericarditis appears to disproportionately affect younger men and so a proper safety signal should be stratified by age and gender then compared with myocarditis similarly stratified. I agree, and it is the CDC’s job to do that. But the fact is that any adverse reaction might disproportionately affect some subgroup of people, in which case the safety signal for that group would be similarly faint or diluted when we look at everyone together. So objection overruled.
5) In their Standard Operation Procedures document, the CDC said they would combine these and related codes together to assess a safety signal, but never mind – at least they finally got around to doing something.
6) In this context, the Chi-square is largely driven by the sheer number of adverse events: the more adverse events reported, including for the comparator vaccine, the larger the Chi-square. For example, the PRR for pericarditis and subdural haematoma is the same (2.82), but there were 1,701 incidents of pericarditis reported for mRNA COVID vaccines versus 221for the comparator vaccines, with Chi-square of 229.5. For subdural haematoma, these numbers are 162 verus 21, for a Chi-square of 21.2.
