FORECASTS & TRENDS E-LETTER
By Henry Rohlfs
August 13, 2024

IN THIS ISSUE:

1.  To Cut or Not to Cut

2.  Difficult to Diagnose

3.  A New Blood Test

4.  The Bottom Line

Recently, the CME Group’s FedWatch Tool that predicts the odds of a Fed interest rate cut has had more ups and downs than an Olympic trampoline gymnast. Recent economic reports have spurred calls for the Federal Reserve to cut interest rates big and now. We first take a quick look at why and see that the panic is probably unfounded.

Finally, a very promising development in the diagnosis of Alzheimer's disease. Researchers report that a new blood test can diagnose this devastating condition with the same accuracy as much more invasive and expensive techniques. This could be a real breakthrough in its early detection and treatment.

To Cut or Not to Cut

I originally planned on writing about the possibility of a rate hike in September given the predictions by the CME Group. Their FedWatch Tool today shows a 45.5% chance of a 25 basis point rate cut and a 54.5% chance of a 50 basis point cut at the September FOMC meeting. The chance of a 50 basis point cut had been as high as 85% last week! Some analysts had even called for an emergency cut of 50 basis points immediately.

Why the sudden urgency? There are a few factors.

The August 2 jobs report showed an unexpected sharp rise in the unemployment rate to a near 3-year high of 4.3%. This sparked panic selling in the stock market and a drop in bond yields. The Volatility Index (^VIX) shot to over 65, the highest level since the 10-year Treasury yield touched a 14-month low of 3.67%. Investors were convinced we were quickly heading toward a recession.

I have been a subscriber for some time to the weekly and monthly Economic Outlook reports by Richard Moody and his team at Regions Bank. The August edition has a very thoughtful and thorough report that analyzes the exaggerated reaction to the July employment report. He asks the question, “What, if anything, was really different about the U.S. economy at 8:31 AM on August 2 than at 8:29 AM on August 2.”

His answer – “not much.” And he makes a strong case that the last unemployment report is inherently flawed due to the impact of Hurricane Beryl and more people re-entering the workforce after a long hiatus due to COVID. You really need to read this report to understand the economy is not crashing, but just normalizing.

The next reading of the Consumer Price Index (CPI) from the Bureau of Labor Statistics is released tomorrow morning and the Personal Consumption Expenditures price index (PCE) on August 30. It will be interesting to see if inflation continues to cool or if consumers and their steady spending habits buoy inflation. With so much uncertainty, I am very reluctant to make a prediction.

And on whether the FOMC cuts rates in September, your guess is as good as mine. My Magic 8 Ball even tells me, “Cannot Predict Now.” Let’s reconvene in a few weeks to see if the murk has cleared some.

Difficult to Diagnose

Nearly all of us know of a family touched by Alzheimer's disease, the degenerative brain disorder that steals a person's memories and cognition. I have listened to friends describe the slow decline of their loved ones’ memory and the toll it takes on their families. Particularly painful are the times a parent could not recognize their own child because of the disease.

Diagnosis can be a long journey. Doctors usually first hear that a person has some issues with short term memory recall. As the problem gets worse, patients are referred to a neurologist who will make an Alzheimer's diagnosis by merely eliminating other possibilities.

Tests can show areas of cognitive difficulty, but that does not always lead to a clear diagnosis. AgingParents.com reports that many families of elders who have all the typical Alzheimer’s symptoms have not been diagnosed yet by any doctor. They also observe that misdiagnosis is common and that their symptoms are due to other causes.

The problem is that no widely used blood test exists to tell if a person has the disease until a post-mortem brain exam is done.

A New Blood Test

But here is the exciting news.

A study released earlier this year by researchers at Washington University School of Medicine in St. Louis shows that a blood test can be as good at detecting Alzheimer’s disease as more invasive and expensive screening methods such as spinal taps and brain scans.

The blood test uses a highly sensitive technique to measure blood levels of Alzheimer’s proteins. Those specific kinds of protein in the blood reflect protein deposits in the brain that are hallmarks of the disease.

Researchers found that the blood test was just as good as current FDA-approved tests at detecting Alzheimer’s proteins in spinal fluid. Accuracy scores for all tests were at 95%-97%.

Alzheimer’s therapies and diagnostic tests are now only used for people who already show signs of memory and thinking problems. But Alzheimer’s disease can take two decades or more to develop, during which the protein deposits build up in the brain and neurodegeneration sets in.

“We now have therapies that have clinical benefits, which is great, but they don’t reverse the loss of neurons in the brain,” emphasizes Nicolas Barthélemy, PhD, a researcher at Washington University. “What we really want is to treat the disease before people start losing brain cells and showing symptoms.”

The Bottom Line

About 6 million people are now diagnosed with Alzheimer’s disease in the U.S. alone. That number is projected to increase rapidly over the next decades with an anticipated 14 million to be diagnosed by 2060.

“Imagine a person who is 55 or 60 and has a family history of Alzheimer’s or some high-risk genetic variants,” Barthélemy said. “It would be really valuable to have an easy way to know whether they have [Alzheimer’s] pathology in their brains. If they do, they could come in, maybe once every two or three years, and get a therapy to clear the amyloid out and then never develop dementia at all. We’re still a few years away from such an approach, but I think that’s the future of Alzheimer’s care, and it depends on presymptomatic diagnosis and treatment.”

What an amazing breakthrough that would be, effectively eliminating Alzheimer's disease from developing.

All the best,

 

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