Jul 14

Today’s News 14th July 2020

  • Concorde 2.0? Boom Supersonic To Unveil Ultrafast Plane In October 
    Concorde 2.0? Boom Supersonic To Unveil Ultrafast Plane In October 

    Tyler Durden

    Tue, 07/14/2020 – 02:45

    It’s been 17 years since Aerospatiale/BAC Concorde, a turbojet-powered supersonic passenger airliner, flew passengers across the Atlantic at Mach 2.04 (1,341 mph). Come October, that could all change, as Boom Supersonic will unveil its supersonic demonstrator.

     

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    XB-1 demonstrator. h/t Boom Supersonic 

    The Denver-based aerospace startup will rollout the XB-1 on October 7, powered by three GE J85-15 engines. The demonstrator will be one-third-scale but used in trial flights for the eventual debut of the 55-passenger Overture supersonic airliner by mid-2020s. 

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    Supersonic travel was popular in the late 1970s, 80s, 90s, and early 2000s. Concorde was the only game in town, flying 20 jets (6 non-commercial aircraft) for 27 years. The end of commercial supersonic flight was in 2003 when Air France Flight 4590 struck debris on the runway and crashed shortly after takeoff.  

    “With XB-1, we’re demonstrating that we are prepared to bring back supersonic,” said Blake Scholl, Supersonic Boom founder and CEO. “We’re ensuring that the supersonic future is safe and environmentally and economically sustainable. We’ve learned that the demand for supersonic has grown even faster than we anticipated.”

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    “To design and build XB-1, Boom has recruited a team of experts from around the industry, established supplier relationships, and built a strong safety culture. XB-1 is the first aircraft program to announce a 100% carbon-neutral flight test program. The company’s innovations include one of the highest-efficiency civil supersonic intakes ever tested, demonstrating Boom’s ability to deliver a breakthrough in propulsive efficiency for Overture. XB-1 will begin its test program later this year and is slated for first flight in 2021,” the release stated. 

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    XB-1 demonstrator. h/t Boom Supersonic

    The aerospace startup said a full-scale aircraft (Overture) would take to the skies in the mid-2020s and shuttle passengers around the world at Mach 2.2 (1,688 mph) by 2030. 

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    Overture. h/t Boom Supersonic  

    Before the pandemic, the company locked in more than $6 billion worth of pre-orders for Overture, which costs $200 million per plane, with buyers included Japan Airlines and Virgin Group. 

    The development of commercial supersonic jets has gained momentum in the last five years. In 2019, we noted NASA’s X-59 Quiet SuperSonic Technology (QueSST) plane is set to hit the skies in the near term. The purpose of the test flight is to design future planes that generate a sonic thump (rather than sonic boom) when planes travel faster than the speed of sound. 

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    The good news for Boom Supersonic is that Overture won’t carry passengers until 2030 or at least five years after the global recovery in air travel will be seen from the 2020 virus-induced crash.

  • 'Psychologically' Locked-Down
    ‘Psychologically’ Locked-Down

    Tyler Durden

    Tue, 07/14/2020 – 02:00

    Authored by Rob Slane via The BlogMire,

    On the first day of “lockdown”, I wrote this:

    “So that seems to be that. The end of Britain as we knew it. … I must say I am astonished and saddened that this has happened to the country I love, because of an illness which will likely turn out to kill no more than might die during a very bad flu season*. Astonished and saddened by the fact that we are risking economic meltdown and the untold misery this could bring to the lives of millions in lost jobs, decimated businesses and a plunging into poverty. Astonished and saddened that a once free people are being caged like prisoners, at a huge risk to their mental health, general wellbeing and future liberties. Astonished and saddened that so many freeborn people seem to be welcoming all this.”

    *[Covid-19 has killed around 550,000 in more than 6 months worldwide, and the W.H.O. estimates that flu kills between 290,000 and 650,000 in a season]

    Months later, and after having done all I could think of to warn people and plead with them about what is happening to them and what is being done to them, both on this blog, on Twitter, and elsewhere, through analysis of data, by pointing to true experts who are ignored by the media, and by careful argumentation, the astonishment I once had for these things has morphed into something like a shrug of resignation. Months into the most dangerous social experiment ever conducted; with no political or media opposition to be seen; with a tsunami of unemployment coming our way; with social and public life frozen due to the ongoing restrictions; with millions still petrified and panicked by a virus that has indeed turned out to be roughly as deadly as a severe flu season; with local “lockdowns” now being implemented for no rational reason whatever; and with Schedule 21 — perhaps the most sinister legislation this country has seen for centuries — being passed without a peep of controversy, and apparently millions still cannot see what is happening to them and what is being done to their lives and their country. What can one do except shrug?

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    When I wrote that piece in March, I intuitively sensed that something had happened from which we would not recover for years, decades, perhaps even generations. I marvelled at those who kept saying it would soon be over — three weeks to flatten the curve and all that — not because of any intuition I might have felt, but because the report which was used to put us into “lockdown” — Neil Ferguson’s “boggy mess” “angel hair pasta” report — could hardly have been plainer that this was not going to be the case:

    “When examining mitigation strategies, we assume policies are in force for 3 months, other than social distancing of those over the age of 70 which is assumed to remain in place for one month longer. Suppression strategies are assumed to be in place for 5 months or longer.

    And there was this:

    “A minimum policy for effective suppression is therefore population-wide social distancing combined with home isolation of cases and school and university closure. To avoid a rebound in transmission, these policies will need to be maintained until large stocks of vaccine are available to immunise the population – which could be 18 months or more [my italics].

    Be honest, those who supported the “lockdown” policy and believed it would be all over soon: did you actually read the report that put us into it to find out what was in store for us? Somehow, I doubt it.

    Yet, even without looking at Ferguson’s hopelessly wrong report (click here to see just how hopelessly wrong), it was plainly obvious that it wasn’t going to be over in three weeks, and that we were moving into an era of what I would call a Medical Tyranny, or Health & Safety Despotism, take your pick. Why? Because once a people have accepted that these actions are right and proportional to the threat of a virus with a similar mortality to a bad flu season, how exactly do you propose going back to normal? If hysteria, fear and panic are created on those kind of levels, rather than calmness, reason and proportionality, all you’ve done is set a new benchmark for all future threats, from which there is only one escape — that is, to admit that the whole thing has been a monumental blunder, and vow never to repeat it again.

    One of the few people in the public eye to really grasp this was the Swedish epidemiologist, Johanne Giesecke. Where others appeared to look not much further than the end of their nose, he was looking way off into the future, not just in terms of the Swedish herd immunity strategy (which is, I think, now largely achieved), nor the economic and social consequences. No, he also foresaw with amazing prescience the conundrum we would face, whereby on the one hand we could not keep lockdown indefinitely, since it would destroy our society:

    “But then, what next? No democratic society can remain in lockdown for many months or years. Their economies cannot withstand it, and the public won’t allow it.”

    Yet on the other hand, according to Giesecke, we wouldn’t be able to lift it fully, because having acted in this way for such a virus, we’d have to continue with the same treatment for every virus of similar lethality that comes along, or even the same one if it doesn’t go away, because we had created a precedent and because public fear would demand it:

    “You’ve painted yourself into a corner. What are you gonna do for the next 30 years? I don’t know how you gonna handle that. But that’s your problem!”

    Well quite. What are we going to do if Covid-19 comes back in the winter? Or Covid-20 comes along next year? Not to mention Covids-21,22,23 etc? Or maybe even a really bad influenza? Are we going to shutter our economy every time? Are we going to quarantine millions of healthy people again? The precedent has been set, the fear has been created, the Pandora’s Box has been opened. How do we shut it?

    We have, by accepting the policy of quarantining millions of healthy people for whom Covid-19 posed almost no danger (fact: the number of under-60s who have died of Covid-19 with no pre-existing condition in English hospitals is 302), shutting places of worship, cafes, pubs, restaurants etc, and allowing the Government to stoke up fear, acted rather like a person with Obsessive Compulsive Disorder. Instead of accepting that the world is a dangerous place, life is risky, and we’re all going to die one day, we have instead allowed the apparent threat of a virus to dominate us, to shape our whole way of life, to alter our thinking and our being, to destroy the good things we had, to rid ourselves of the chance to live properly like free people. Most appallingly, in my view, is what we have done to children, who are being treated like lepers, denied the opportunity to have normal childhoods in a normal environment (fact: the number of under 19s that have died in English hospitals from Covid-19 is 16 with underlying conditions, and 4 without).

    Although the worst aspects of the national physical “lockdown” may have been lifted, what I would describe as Psychological Lockdown is here to stay. We see it in the increasing pressure, and soon-to-be state-mandated wearing of face coverings, which is something I had previously associated with some of the more intolerant regimes in the Middle East. The mandated wearing of these secular burkas is hideous, dehumanising, and extremely unnerving, and the thought of my children having to wear these things and cover their faces is most distressing. It is remarkable that people accept being told to wear these things by a Government which just three months ago went out of its way to tell us that they were unnecessary and that there was no evidence for their efficacy (which there isn’t). I also find it incredible that people can blithely put them on now, of all times, when deaths from the virus have almost come to an end, and yet it doesn’t occur to them to ask why — if the things are oh so necessary — the Government advised against wearing them in March. Is this cognitive dissonance on steroids? Perhaps, but then again, I have recently come to realise that many do not simply believe that the Government follows the science; they believe the Government is the science, even if that involves believing utterly contradictory messages from day to day, or month to month:

    In many ways, this psychological lockdown is the culmination of a number of things.

    Firstly, we have put death out of sight, at least partly by building crematoriums out of town, where nobody can see them as they drive past, and so we hardly see death as a thing anymore. And so when people were shown the potential of death coming to their doorstep, and when they were bombarded with spurious figures from this deeply irresponsible Government (Governments are supposed to govern, which requires calm leadership, not fearporn night after night), they freaked out. To this day, people freak out when they hear of another 100 Covid deaths or so, seemingly oblivious to the fact that death claims 1,400-1,500 people in this country every day of the year.

    Secondly, one of our great national idols, Health and Safety, has rendered us unable to look at life and ask the simple question: is a life spent trying to avoid all risks and permanently sanitising everything even worth living? Sounds utterly ghastly, soul and freedom-destroying to me, but it is also counter-productive even on its own terms. The practice of sanitising our lives means that we do not build up the immunity we should, and so ironically we become more susceptible to illnesses than if we’d got on with our lives and let our kids muck about together in the mud. Oxford University’s Professor Sunetra Gupta has warned precisely of this in relation to so-called “social distancing”, which would of course be amazingly ironic, and yet entirely foreseeable. We live in a world of trade-offs and consequences, and we are supposed to think about the possible long-term costs before we take actions — especially drastic ones. But unfortunately, our Health & Safety Commissars have convinced people that it is not so, and that we can eliminate almost all risk. Well no we can’t, and quite frankly who (apart from Health & Safety Commissars) really wants to live such an insipid existence anyway?

    And thirdly, it is the culmination of decades of inviting the state and its scientists to manage our lives. C.S. Lewis saw this way back when:

    “On just the same ground I dread government in the name of science. That is how tyrannies come in. In every age the men who want us under their thumb, if they have any sense, will put forward the particular pretension which the hopes and fears of that age render most potent. They ‘cash in’. It has been magic, it has been Christianity. Now it will certainly be science. Perhaps the real scientists may not think much of the tyrants’ ‘science’ — they didn’t think much of Hitler’s racial theories or Stalin’s biology. But they can be muzzled.”

    In our desire to pretend death is not a thing; to put health and safety so far above the desire to live like free people; and to trust state scientists to order our lives for us, this is what we’ve become.

    A nation in psychological lockdown, unable to get back to normality, because we have accepted abnormality as a price worth paying for protecting us against a virus that is harmless to all but a few, who could have been protected but were not.

    A nation in psychological lockdown, unable to get back to normality, because we have accepted the arbitrary, unscientific diktats of a Government that spooked millions, and are now ready to accept their every imposition in the name of being kept safe.

    A nation in psychological lockdown, in denial about the tsunami of job losses, business closures, resultant increase in poverty, resultant decrease in life expectancy awaiting us, and yet utterly unable to accept that it was not the virus that did it, but the disproportionate response.

    As I said at the beginning, after months of trying to warn people of where this is heading, only to be smeared with insults or met with sheer apathy, I now simply shrug my shoulders in a sort of, “Oh well, have it your own way,” sort of manner. Of course, I continue to pray fervently that the future would be other than the bleak picture I have painted, and as a rampantly Post-millennial Christian, I am 100% persuaded that one day this will indeed be so. But for the foreseeable future, I’m afraid we’ve chosen a course where we decided to hand in the keys of our lives and our freedoms to the Government in return for the illusion of safety. From this there is only one escape — but that would involve something I’m not sure we’re yet ready to do.

  • Is China The New Indispensable Nation?
    Is China The New Indispensable Nation?

    Tyler Durden

    Mon, 07/13/2020 – 23:45

    Authored by Tim Kirby via The Strategic Culture Foundation,

    Usually when there are protests, however minor, happening in a nation that has run afoul of the United States the “International Community” and “Human Rights Activists” rally to push for regime change. However, now that there are mass protests exploding over the United States these types of voices are completely silent. American police are free to destroy CHAZ and other camps however they see fit. This is the power of America, however this time around there sure are a lot of red flags and Communist sentiments in the mouths of the protestors. If we were still in the Cold War the Soviet Union would have been instantly blamed as spark that lit BLM. But interestingly in today’s world the only powerful Communist nation on Earth left standing is getting 0% of the blame. This is the power of China.

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    If we remove relevant issues related to feelings and sexuality the real big story over the last five to ten years has been the rise of the Chinese economy with all sorts of “predictions” grounded in the biases of those making them. The more Fox News/Republican you are the more Chinese “Communism” seems gilded at best and for those on the other side of the line they see China taking the 21st century as its own due to the failures of “late stage Capitalism”. We’ve all lived through years of speculation about where China is going, but finally according to Max Keiser (who is far from perfect himself in predicting the future, but has better results than most mainstream economists) it looks like this is the year the Red Chinese will finally overtake the Rugged Individualists and become the largest economy in the world.

    To be clear he argues that this “achievement” will be due to weathering the global economic downturn that is coming in the wake of the Covid-19 Pandemic. For the tinfoil hat crowd, yes it does seem awfully convenient that the country that started the plague may wind up benefiting the most from it.

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    Photo: China is rising but how far can it go?

    So is China in the near future going to become like a post-WWII United States – damaged from battle but in vastly better condition than any of its competitors ready to reach out across the globe to secure its Superpower status? Let’s take a look at some arguments for and against this and Mr. Keiser’s prediction.

    Arguments Against:

    • China has nowhere to expand to. There will be no “Red Marshall Plan” for the post Covid world and Chinese goods have already saturated international markets. This is what gave Beijing the chance to rise but does it really have anywhere new to go? Can China somehow explode further and become even more pervasive than it already is? Probably not. Perhaps this fact is why the Chinese economy (according to a variety of sources) is starting to slow down if not stagnate.

    • China has economic successes over the competition, not cultural ones. Countries with pathetic geopolitical influence like Japan produce more media consumed abroad than China. America has been able to export some sort of universal attractive picture of itself as a Soft Power aphrodisiac for decades. One has to be “cool” to be a king of the world and China thus far only knows how to speak to its own people internally.

    • It is unknown if the People’s Liberation Army is up to the impossible task of policing the planet. The United States spends $750 billion on it per year and seems to be barely hanging on. Could China really maintain some sort of global presence?

    • The Financial Times lays out a laundry list of social problems that the Chinese have not resolved. From a massive gender imbalance to a surprisingly shrinking workforce that is aging rapidly. China’s biggest asset its population, like its economy is also stagnating.

    • Add in some large debts and parts of the economy resting on the value “ghost towns” and we see there could be some rough waters ahead for the internal side of the Chinese economy.

    • China generally steals ideas and makes them on the cheap, or produces them well for foreign creators. It is hard to imagine a dominant world power that has no ideas of its own producing plastic widgets for its vassals as a key source of income. China’s role as the world’s factory excludes it from becoming the global executive.

    Arguments For:

    • China still has the ideal conditions for a 21st century economy. Over a billion people mostly packed together around the coast, willing to work for cheap with the ability to export everything for pennies by boat. (And, even if that fails or is sabotaged by America they New Silk Road is a fantastic Plan B). China has these advantages, and although others like India want to pretend that they do, in actually they are not even close. In this way China is an “exceptional” nation as it has the collective mentality and organized manpower to win.

    • At the very least China plays an important role in every national economy on Earth. Even in countries a bit more trade dependent on America, they still have the Chinese coming at #2. The USA was about 50% of the world economy after WWII and today it has 23%. China is at 15% and rising, perhaps if it could hit 33% it would enter in to its own 1950s like utopia by 2050.

    • Things like a “lack of free press” or “rule of law” have been very overblown in their importance in a powerful economy and China is proof of this. Any of these emotional “boo-hoo they aren’t like us” arguments are garbage that needs to be burned and should be ignored.

    • There is nothing besides the United States stopping China from using mafia tactics to shut down competition. What are some manufacturing plants in Malaysia or South Korea going to do when the PLA threatens to break their legs? They will probably instantly back down and surrender. If Washington wants “controlled chaos” in the Middle-East – you’re done. If the Chinese want you to work less in a post American world then enjoy your permanent vacation time, or else.

    As mentioned above people who write analysis pieces are very often blinded by their ideology, and when one is an advocate for a Multipolar World it is possible to see “Multipolarity” in everything, but it seems unlikely that our era will truly become “China’s Century”. Just because the world’s only Hyperpower is on the decline does not mean that a new one has to take its place. When Rome fell no other Mediterranean city automatically took its place as the lord of the West. China as nation will remain strong, it will not collapse, but it will not become a post-WWII United States. This simply does not seem to be in the cards.

  • Where China's Unsold Cars Go To Die
    Where China’s Unsold Cars Go To Die

    Tyler Durden

    Mon, 07/13/2020 – 23:25

    While every effort has been made in China to paint a picture of a recovering ‘back to normal’ economy with production rebounding dramatically, it appears, as we noted earlier, that the demand side of the equation is not keeping pace with supply.

    Case in point, China’s passenger car sales broke the v-shaped recovery narrative in June, slumping back 6.5%, despite soaring auto production data.

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    So what happened to all those cars?

    We have the answer…

    Wuhan, the epicenter of the CCP virus, is one of the major automaking towns in China. Dongfeng Motor Group, China’s third-biggest state-owned automaker, is headquartered in the city.

    On June 30, a woman was shocked to see thousands and thousands of unsold new cars sitting idle on Dongfeng Motor land.

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    She shot the video from an overpass above Dongfeng’s car lots…

    So now we know, the old mantra of “if we build it, they will come” is thoroughly debunked in the case of China’s COVID comeback.

  • Why Hedge Funds Buy Pet Rocks In Times Of Crisis
    Why Hedge Funds Buy Pet Rocks In Times Of Crisis

    Tyler Durden

    Mon, 07/13/2020 – 23:05

    Authored by Eddie van der Walt, macro commentator at Bloomberg

    Even when hedge funds have a world of risk-protection products at their disposal, such as going short the S&P 500 or going long the volatility of volatility, many still buy gold. Why? Because it offers broad protection against unknowns, rather than targeted insurance against identified risks.

    During the darkest days of March, the supposed haven metal fell alongside equities and other risky assets as investors rushed to the liquidity of short-end Treasuries. Even forgiving that failure, it’s a blunt instrument compared with other forms of portfolio insurance.

    Yet the price of gold has been chased to eight-year highs above $1,800/oz. Investors in exchange-traded funds built a stockpile large enough to supply global gold demand for three quarters of a year. And luminaries including Paul Singer, David Einhorn, and Crispin Odey have told backers they’re bullish.

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    The first reason usually presented is the inverse relationship with real rates. As a non-yielding asset with perceived inflation-protection qualities, gold tends to do well when central banks turn dovish in the face of slow growth. But there are more precise ways of achieving this, for instance, via inflation swaps.

    Such a trade will introduce counterparty risk, which is the second excuse often given for resorting to gold. But unless we’re talking about the collapse of the global financial system these risks can be met through collateral and clearing houses.

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    Instead, it’s gold’s bluntness as a tool that makes it useful. It offers broad insurance against the unknown, whereas a credit default swap offers protection against a very specific event.

    This can be illustrated by how it moves relative to other assets. In normal times, the best input to explain the tick-by-tick movements in gold is the dollar, the two having a correlation of -0.5 since the turn of the century.

    But it’s not stable over time. In periods of acute stress, particularly if the stress is perceived as outside the U.S., gold and the dollar can move in tandem. In fact, gold often takes the opposite side of the biggest perceived risk factor in global markets.

    Anecdotally, periods of heightened uncertainty in the euro zone, including the sovereign debt crisis and then the Greek bailout referendum in 2015, saw stronger-than-usual inverse links between the euro and gold priced in that currency.

    It was the same case with the pound during the Brexit vote, when the mathematical relationship between sterling and bullion priced in sterling went from its 10-year average of -0.2 to -0.84.

    And it works on a statistical level, too. Across major equity indexes and the most liquid currencies, the correlation between gold and the counter asset becomes more inverse as the volatility of the other asset increases.

    The table below shows the average correlation to gold in changing volatility regimes, with data for the last two decades compiled on a rolling 60-day basis by Bloomberg. For currencies, the cross-correlation was measured to gold priced in that currency.

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    This shows that the nature of gold’s protection changes as the risk factors change. Preoccupations shift from trade wars to geopolitics to hyperinflation, and gold’s offers the all-purpose protection hard to achieve with a short against the S&P 500.

    So in the hyper-speed coronavirus world, it’s no wonder hedge funds still love gold.

  • China's Stealth Jet With Thrust Vectors Enters Mass Production
    China’s Stealth Jet With Thrust Vectors Enters Mass Production

    Tyler Durden

    Mon, 07/13/2020 – 22:45

    A heavily modified Chengdu J-20 stealth fighter jet formally entered mass production this month, according to a new report via South China Morning Post (SCMP), who spoke with military sources about the development surrounding the fifth-generation fighter jet with upgraded Russian engines. 

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    Chengdu J-20 stealth fighter jet

    China held a ceremony last week, unveiling the modified J-20B stealth fighter jet. The source said, “production of the J-20B started on Wednesday. It has finally become a complete stealth fighter jet, with its agility meeting the original criteria.” 

    “The most significant change to the fighter jet is that it is now equipped with thrust vector control,” the source said. 

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    Chengdu J-20 stealth fighter jet

    Thrust vector control (TVC) is cutting-edge aviation technology that is currently dominated by the US and Russia, gives these nation’s stealth jets better combat capability. 

    “TVC involves a movable thrust nozzle that enables a fixed-wing plane to change the direction of its engine exhaust. This allows the pilot to raise the aircraft’s nose cone vertically while maintaining forward momentum so the plane effectively “sits” on its own tail in an aerodynamic stall caused by low speed and a high angle of attack. 

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    fighter jet engine 

    “The use of such technology extensively boosts the maneuverability of a fighter jet, providing advantages in aerial combat, especially during close-range dogfights,” said Defense Aerospace.  

    Thrust vectoring capabilities will allow J-20Bs to take on US’ Lockheed Martin F-35 Lightning II that Washington has spent several years deploying to allied countries around China, effectively building an “F-35 friends circle.” 

    SCMP notes Chinese engineers were working on a TVC system of their own but failed to materialize into promising results. 

    “The Chinese engine designed for the J-20s still failed to meet requirements, but its development is going quite smoothly, and it may be ready in the next one or two years,” the source said.

    Chinese engineers then decided to go with Russian Saturn AL-31 engines as the “ultimate goal is to equip the J-20B fighter jets with domestic engines,” the source said. 

    “The launch of the J-20B means this aircraft now is a formal fifth-generation fighter jet,” the military source said, adding that Chengdu Aerospace Corporation (CAC), which manufactures the J-20s, had received “heavy orders” from the People’s Liberation Army (PLA). – SCMP 

    In 2019, the People’s Liberation Army Air Force (PLAF) said an upgraded J-20 (likely referring to the J-20B) will achieve “overwhelming superiority” over the F-35. 

  • What Greta Thunberg Forgets About Climate Change
    What Greta Thunberg Forgets About Climate Change

    Tyler Durden

    Mon, 07/13/2020 – 22:25

    Authored by Joakim Book via The American Institute for Economic Research,

    In August 2018, Greta Thunberg first began skipping school to protest outside the Swedish parliament. Almost two years later, her fame is global; everybody knows her name, climate activist or climate change denier, politician, or janitor. 

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    The relentless rise to international fame for this teenager – becoming Time Magazine’s Person of the Year in 2019 – was cut short only by the corona pandemic. Media teams followed her through lockdown, where she eagerly expressed her love for learning and repeated her frequent message of listening to the learned.  

    Now, however, she’s back, crushing the audience records of the Radio Sweden show “Summer in P1.” This 60-year-old tradition consists of a public figure given free range for 90 minutes to tell the story of their lives and choose the appropriate music that accompanies it. Monologues by these hosts, often musicians, politicians, business leaders or cultural personalities of one kind of another, are often deeply personal. Once a day between June 20 and August 16, the host of the day tells us about their great adventures and emotional journeys.  

    When Greta Thunberg became internationally renowned for her climate activism last year, it was only natural that Radio Sweden – with the same biases and skewed climate emphasis that Americans may recognize from NPR or the pages of the New York Times – would jump at the chance of hosting Greta. Starting off this year’s round of summer hosts, her show broke all previous records: over a million Swedes, a tenth of the population, listened to her show, and the BBC will broadcast the English version on July 11. 

    The format is no stranger to difficult topics, both politically and personally. Usually, the themes are biographical and very emotional: celebrities have been known to unearth secrets and talk about the most intimate of feelings. To this day, the lugubrious words of Kristian Gidlund, the drummer in the band Sugarplum Fairy, still bring me to tears. Having been diagnosed with an incurable cancer in his twenties, Gidlund hosted the show in June 2013, just a few months before he died. Most memorably, he read a letter to the beloved child he will never have, imagining his or her life and Gidlund’s journey as a parent.

    Greta’s talk is less grim but equally powerful – and one of the better ones she’s given. As a fellow Swede, I’ve always admired her devotion and seeming aura of calmness and factfulness. Throughout, her programme is delivered in a calm voice, balanced and sane, even though the topic she addresses is huge and cataclysmic. Remarkably, with all the world’s attention over the last few years, she has avoided delusions of grandeur and resisted having her self-image distorted. 

    Or at least so she says. I distinctly recall her World Economic Forum statement, where she said “Our house is on fire,” and where climate change was “the greatest and most complex challenge that Homo Sapiens have ever faced.” When she ushered world leaders to panic, she wasn’t exactly balanced and calm.

    In this longer-form talk, she dismissed most of the interactions she has had with world politicians as futile virtue-signaling. The listener can clearly detect Greta’s detest for people talking the talk but not walking the walk. Bureaucrats and journalists are eager to snap selfies with the face of climate activism, but take almost no actions in their ostensible support of said climate activism. Hashtags and Instagram pictures won’t do, Greta repeatedly points out, her voice full of frustration and discontent. 

    She recounts her much-publicized United Nations speech, from which everyone mistakenly took away only “How dare you,” when her intended message was: “We don’t accept these odds” and “Listen to the scientists!” She tells of meeting after meeting where people, politicians as well as strangers on the subway, wish to congratulate her on her speech and celebrate her achievements: “What for?” she exclaims, noticeably surprised and annoyed, “Another meeting is over; empty words are all that remain.” 

    And in those few words, she captured the essence of politics. 

    Repeatedly during her show, she asks us, commonsensically, to listen to the science. The problem, she explicitly admits, is of course which science. In contrast to what Greta seems to believe, environmentalism is not a question of climate scientists vs climate deniers – that ship, as she persuasively points out, has sailed. Unfortunately, she overlooks the more difficult battle between the sciences and how the object of their inquiry interacts with human societies. Economy is not ecology. 

    While the full details are fuzzy, the impact that humans have on our world is pretty clear: our carbon-using activities leading to glaciers melting, storms getting worse and unpredictable, harvests and agricultural cycles being altered. That’s not controversial and, to my knowledge, in this Greta is mostly correct. 

    The science about how best to safeguard human flourishing, however, is controversial and a topic that the teenage activist rarely addresses. How climate change affects human societies and how best to protect us against a slightly changed nature is far from clear. According to the climate models of William Nordhaus, the co-recipient of the 2018 Nobel Prize in economics, the optimal rise in global mean temperature is around 3.5 degrees Celsius – much higher than the 1.5-degree target espoused by the UN and echoed by Greta. Perhaps Nordhaus is wrong, but he’s hardly a climate change denier, and he has at least thought long and hard about the aggregate pros and cons of a warmer planet.

    Many of the topics that Ms. Thunberg raises are real ecological dangers – she’s serious and honest enough not to make stuff up. But they’re much less troublesome than she thinks, and many available solutions are vehemently detested by her fellow climate activists: nuclear power, geoengineering, economic growth, capitalist innovation.  

    Indeed, adopting policies that severely cut back humanity’s use of fossil fuels such that the 1.5-degree target would be achievable, are likely to make humanity much poorer than not doing anything at all. As we’ve learned recently from the corona debacle, cures are often much worse than the disease they intend to fix. 

    In contrast to the cataclysmic nature of Greta’s talk, humans have never been more well-protected from the awesome power of mother nature. Damages from U.S. hurricanes, adjusted for population and prices, have shown no upward trend in the last 120 years. Damages from wildfires, so vividly in the news last year, have similarly not been made worse by anthropogenic climate change. 

    Economic losses due to weather events, composed of both naturally-occurring events and any human-made worsening through emissions, have actually been decreasing over the last thirty years. Similarly, the number of people who die from climate events (floods, storms, droughts etc) has been rapidly falling for a hundred years. While human-made climate change seems to have altered our environment roughly in the ways that Greta outlines, we have at the same time gotten much, much better at protecting ourselves from those extreme events. In no small feat thanks to the fossil fuels that activists detest so much, we have been able to tame nature’s most devastating harms. 

    This is the science Greta forgets about. 

    My favorite paragraph from an IPCC report that Greta frequently cites and a sister report to the one she famously delivered as testimony to the U.S. Congress reads: 

    “For most economic sectors, the impact of climate change will be small relative to the impacts of other drivers (medium evidence, high agreement). Changes in population, age, income, technology, relative prices, lifestyle, regulation, governance, and many other aspects of socioeconomic development will have an impact on the supply and demand of economic goods and services that is large relative to the impact of climate change.” (emphasis added)

    Perhaps Greta’s message for politicians to listen to the scientists and take real action has hit home. In one sense, they are already well on the way to following her advice. They read chapter 10 of IPCC’s AR5 report, where they learned that climate change is important – but that other socioeconomic developments matter much more.

  • US Recovery Stalls As Pandemic 'Second Wave' Threatens To Unleash Double-Dip Recession 
    US Recovery Stalls As Pandemic ‘Second Wave’ Threatens To Unleash Double-Dip Recession 

    Tyler Durden

    Mon, 07/13/2020 – 22:05

    The US economy has stalled as the virus pandemic flares up. Real-time data shows slowdowns in consumer foot traffic, restaurant foot traffic, discretionary income, and overall economic activity as virus cases rise in 38 states. 

    The US reported its largest single-day caseload increase on Friday, with more than 67,000 new confirmed cases. Six states (Arizona, California, Colorado, Florida, Michigan, and Texas) have seen a surge in cases over the last month – governors in these states are reversing reopening plans, with 15 more states pausing reopenings. 

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    On top of rising cases, the death toll in the US rose last week for the first time in months, as hospitals in the sunbelt and coastal states become inundated with virus patients. The country reported 4,200 deaths in the last seven days. Virus-related hospitalizations have surged to levels not seen since May, a troubling sign for hard-hit states that suggest the trend will worsen through July. 

    The reemergence of the virus cases, forcing governors to pause or reverse reopening plans have stalled out economic activity and risks the shape of the recovery being downgraded from a “V” to “U” or even the dreadful “L.” Also, a looming fiscal cliff risk crashing consumption as more than a quarter of all personal income is reliant on direct deposits from the government.  

    Courtesy of Capital Economics, which has compiled a handy breakdown of real-time US indicators, we can see the full extent of how the recovery has stalled. 

    Consumer foot traffic for casual dining and malls have yet to revert to pre-corona levels as the bounce stalled in late June. Foot traffic for auto dealers and big-box retailers have almost returned to January levels but plateaued in the same period.

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    Restaurant foot traffic (measured in person % Y/Y) remains collapsed with recovery stalled through June and reversing in July.

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    Discretionary consumption (% Y/Y) shows continued depression for air travel, restaurant diners, and hotel occupancy. 

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    The NY Fed’s Weekly Economic Index does not support the V-shape narrative the Trump administration routinely touts on Twitter.

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    The stalled recovery is set to pressure employers who will be forced to layoff another round of folks. Americans will be staying home this summer and not traveling as the virus-induced recession has wrecked their finances.   

    It’s becoming evident the virus and or the emergence of cases can influence economic recovery shape. Damage from the downturn is widespread, with permanent job loss and deep economic scarring set to derail the recovery.

    Here’s Gary Shilling, the president of A. Gary Shilling & Co., take on what could be next for markets as investors figure out the shape of the recovery is an “L.”

    “I think we’ve got a second leg down and that’s very much reminiscent of what happened in the 1930s where people appreciate the depth of this recession and the disruption and how long it’s going to take to recover,” said Shilling. 

    Shilling said today’s stock market bounce from March lows resembles the initial dip then rebound in 1929 – and we all know what happened next… 

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    The Fed and Trump administration better unleash another round of MMT or a double-dip recession is ahead for the back half of the year.  

    For more color on the stalled recovery via real-time data, here is Bank of America’s latest credit and debit card spending trends. 

  • What Is The Real Purpose Of The Lockdowns?
    What Is The Real Purpose Of The Lockdowns?

    Tyler Durden

    Mon, 07/13/2020 – 21:45

    Authored by Renée Parsons via Off-Guardian.org,

    If given the choice between maintaining a toxic world of fear, pollution and violence controlled by the State or a society of prosperity and compassion based on freedom and individual rights, there is little doubt that the majority of Americans would want the old paradigm of synthetic events to take a hike; except that choice has been distorted under the guise of what the World Health Organization (WHO) has mislabeled the most deadly virus in history.

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    The coronavirus crisis arrived in a flash with little time to analyze exactly WTF was going on. Americans struggled to process what is real, trustworthy and authentic as the unraveling of deep political decay revealed a behind-the-scenes subterranean power struggle that has surfaced with the intent on disintegration of American Society.

    While the country is fast approaching an existential crisis on steroids, millions experienced an inner knowing that some indefinable thing was not right with recognition that the early explanations were hogwash while others, addicted to mainstream/social media who still believed in the illusion of democracy, were on board with the litany of spin from the medical and political establishment.

    While the Lockdown could have been a wake up call for humanity to change its consciousness with a paradigm shift – whether it be a spiritual awakening, a political realignment or re-evaluating one’s own personal health choices, since, after all, humanity was locked in a major health crisis. And most importantly, it was an opportunity to acknowledge that the planet itself is ailing from abuse and neglect with CV as a metaphor urging a personal reconnection with Nature.

    In early 2020, Neil Ferguson of the UK’s Imperial College used a scare tactic to predict that 80% of Americans would be infected and that there would be 2.2 million American deaths – neither of which materialized. Yet Ferguson’s extremism accomplished its intended purpose in establishing the basis for draconian Lockdown requirements. Ferguson later retracted his earlier prediction down to 20,000 fatalities.

    With current infection fatality rate at 0.20%, Lockdowns have been devoid of science and are based on arbitrary, contradictory and inconsistent requirements.

    Just a few examples come to mind, such as liquor stores and big chains are considered ‘essential’ and remain open but stand-alone, independent, mom ‘n pops are not. Barbers may be open but hair salons may not. While it is advised to get tested for Covid19, a colonoscopy or other elective surgery are not allowed. While vitamins C and D and Sunshine strengthen the immune system, all outdoor sport programs have been canceled.

    In an unexpected development, a recent JP Morgan study asserted that the Lockdowns failed to “alter the course of the pandemic” as it “destroyed millions of livelihoods” and that as infection rates ‘unrelated to often inconsistent lockdown’ measures decreased, fewer outbreaks were reported as the quarantines were lifted.

    As the official narrative of the Covid19 as an existential threat has collapsed, it is interesting to follow how ‘hot spots’ occur just as a particular State, like Florida, announces re-opening.

    Those new hot spots encourage a reinvigorated debate over mandatory face masks and social distancing with its success depending on a duplicitous media instilling panic and a naive public still believing Covid19 to be more dangerous than seasonal flu.

    WHY LOCKDOWN ASYMPTOMATIC CITIZENS?

    Dr. Maria Van Kerkhove, technical lead of WHO’s COVID19 Task Force threw a monkey wrench in the works recently by stating:

    what we really want to focus on.. if we followed all the symptomatic cases, isolate those cases, follow those contacts and quarantine those contacts, we would drastically reduce..transmission. We would do very, very well…”

    Dr. Van Kerkhove then explained that transmission of the virus from asymptomatic patients appears to be very rare:

    It still seems to be rare that an asymptomatic person actually transmits onward to a secondary individual.”

    The next day, there was panic at the WHO but Dr. Van Kerkhove’s uncensored comments were very clear as they validated questioning the purpose of the entire Lockdown process. If an asymptomatic person is not spreading the disease but might publicly increase herd immunity, then why wear a face mask or be quarantined?

    House Speaker Pelosi called for a national mask mandate as HHS Secretary Azar reported that Pence and Trump are tested daily and are asymptomatic; therefore not required to wear a mask.

    WHY FACE MASKS?

    To date, there is no standard for what constitutes a ‘safe’ face mask or instructions for disposal considering that a used face mask will be a contaminated bio-hazard material; ergo a face mask is more of a device to require citizen compliance than a safety precaution.

    Adding a partisan narrative to the crisis, the most expansive lockdown restrictions (some with criminal penalties) came from predominantly Democratic Governors and Mayors who offered no science or forensic data to prove that either mandatory face masks or home sequestration have failed to prevent a spread of the virus.

    During a House Oversight committee meeting, the mask debate broke down along party lines with Dems dutifully covered while strenuously objecting to their mask-free peers.

    A riveting June 23rd Palm Beach County Commission public hearing on a proposed Mandatory Face Mask ordinance drew overwhelming opposition.

    While OSHA’s (Occupational Safety and Health Agency) responsibility is to oversee the health and safety of every American worker as each workplace is expected to comply with OSHA standards, its website regarding COVID19 states that cloth-based face masks

    will not protect the wearer against airborne transmissible infectious agents due to loose fit and lack of seal or inadequate filtration.“

    OSHA goes on to inform that a safe level of oxygen must be maintained as an oxygen deficient atmosphere (defined as below 19.5% by volume) creates a respiratory risk.

    While there is no sound science or evidence to prove the benefits of mandatory usage, the NE Journal of Medicine reported that:

    We know that wearing a mask outside health care facilities offers little, if any, protection from infection […] The chance of catching Covid-19 from a passing interaction in a public space is therefore minimal. In many cases, the desire for widespread masking is a reflexive reaction to anxiety over the pandemic.”

    More recently, NIAID Director Dr. Anthony Fauci declared masks as largely ‘symbolic’ as he was setting an example for what other people should be doing.

    There’s also a “Risk of Hypoxia to All Mask Wearers” according to Drs. Russell Blaylock and Zach Bush.

    SOCIAL DISTANCING AKA QUARANTINE

    With not a whit of science in support, Social Distancing which is a mutually exclusive phrase since there is nothing social about enforced distancing from other humans, has been attributed to a CIA protocol in use since the 1950’s to break a prisoner’s resistance or a teenage science project.

    In any case, SD has proven a great way to erode an individual’s normal need for social contact, to effectively starve the brain function of human interaction and comparable to other emotionally unhealthy deprivations. As former Vietnam POW John McCain related “It crushes your spirit more effectively than any other form of mistreatment.”

    Rules 3 and 44 of the Nelson Mandela Rules warn of being cut off from the outside world and prohibits more than two weeks of isolation as cruel and inhumane treatment.

    *  *  *

    While the manufactured COVID 19 health crisis opened the door for the World Economic Forum and its friends to activate One World Government, millions of Americans continue to play the cognitive dissonance game with little awareness they are witnessing a government takeover with increased surveillance and censorship. As coordinated violent protests in Seattle and DC spread a thinly veiled political coup, all accomplished more easily while the American public were in Lockdown.

  • Before You Buy Tonight's Dip, Here's One Chart To Consider
    Before You Buy Tonight’s Dip, Here’s One Chart To Consider

    Tyler Durden

    Mon, 07/13/2020 – 21:25

    Today’s Nasdaq price action was likely a bit of a shocker for many freshly-minted day-trading gurus.

    After accelerating after the cash trading open to gains of more than 2% from Friday’s close, a combination of the S&P 500 tagging unchanged on the year, Dallas Fed’s Kaplan spoiling the party with comments that suggested the Fed punchbowl may not be there forever, and various COVID headlines (including major rollbacks in California) sent the Nasdaq tumbling to down 2% on the day…

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    This was only the 26th time that has happened to the Nasdaq (closing down 2% after trading up 2% on the day)…

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    Source: @MikeMcKerr_TDA

    BUT… the Nasdaq 100 rallied more than 2% intraday to set an all-time high, then reversed to close down by more than 1%.

    And as @Sentimentrader notes, it’s only done that twice. Today was one…

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    …March 7, 2000 was the other.

    It would seem like an historically notable time for the Nasdaq’s melt-up to slowdown.. if not end…

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    Trade accordingly.

  • Bridgewater "Manufactured False Evidence" To Crush Potential Competitors… And Was Jim Comey Involved?
    Bridgewater “Manufactured False Evidence” To Crush Potential Competitors… And Was Jim Comey Involved?

    Tyler Durden

    Mon, 07/13/2020 – 21:05

    Who knew that part of Ray Dalio’s “radical transparency” fetish was accusing potential competitors of stealing trade secrets, and when there is no theft, to radically fabricate “evidence” to shut them down?

    While it has long been known that in the annals of active management lore, not one hedge fund comes even close to pursuing non-compete clauses and trade secrets lawsuits against its former employees with the same ferocity, tenacity and unbridled glee as the world’s biggest hedge fund Bridgewater (despite valiant attempts by RenTec and Citadel they are at best runners up), what nobody knew until now, is that when Bridgewater was lacking enough legal facts on its side, it would resort to simply fabricating them.

    That’s what the world’s biggest hedge fund did on at least one occasion according to a panel of three arbitrators, who according to the FT, found that Bridgewater “manufactured false evidence” in its attempt to prove that former employees had stolen its trade secrets.

    According to humiliating – to Ray Dalio – court documents which were made public on Monday, and which quote findings from a panel of three arbitrators, Bridgewater – which manages $138BN in assets, and whose billionaire founder prides in the way “radical transparency” is shoved down all employees’ throats – was found to have “filed its claims in reckless disregard of its own internal records, and in order to support its allegations of access to trade secrets, manufactured false evidence”.

    The dramatic discovery emerged as a result of a dispute launched by Bridgewater against former employees, Lawrence Minicone and Zachary Squire, in November 2017, in which the fund claimed the duo had misappropriated trade secrets and breached their contracts. However, Bridgewater’s attempt to bully not only its former employees from launching a new fund, but also the legal system, promptly suffered a spectacular breakdown, when a panel of three arbitrators found that Bridgewater had “failed to identify the alleged trade secrets with specificity”, knowing Minicone and Squire would have to fight an expensive case in order to defend against the allegations, the court filing states.

    In other words, even though its former employees – who quit years prior in mid-2013 – did nothing wrong, Bridgewater knew that simply by throwing armies of lawyers after them, it could bankrupt them into submission. And while this strategy has worked over and over, this time it failed.

    “The trade secrets as described constituted publicly available information or information generally known to professionals in the industry, and . . . Claimant [Bridgewater], a highly sophisticated entity, knew that the trade secrets as described did not constitute trade secrets,” the tribunal ruled, according to material quoted in the court filing.

    There was more. Just to cover its bases, in addition to the trade secrets claim, Bridgewater also accused its two former employees of unfair competition after they co-founded Tekmerion Capital Management, a systematic macro hedge fund with about $60MM in assets under management, which received backing from billionaire Alan Howard and Michael Novogratz.

    But here too, Bridgewater hit a brick wall, when the arbitrators found that Bridgewater’s claims had been brought in “bad faith”.

    “Claimant’s actions in continuing to press its claims constitute further evidence that its intentions were not to prove misappropriation, but rather, were to adversely affect respondents’ ability to conduct a competitive business,” the arbitrators ruling stated, according to the new court filing.

    So how did all of this leak? Simple: Bridgewater was too stingy to pay the falsely accused duo $2 million in lawyer fees, forcing Minicone and Squire to file a court petition against Bridgewater on July 1 to confirm the $2 million in lawyers fees awarded by the arbitration panel in January and, in a move that is set to terminally humiliate and expose Dalio as a consummate hypocrite, to have the full decision by the arbitrators made public.

    And while it is hardly news to those in the industry just how despicable Bridgewater’s tactics have been in the past when faced with a potential competition  emerging from its own ranks who may – gasp – steal the fund’s “trading secrets” such as momentum and inverse variance, which incidentally are perfectly public “strategies”, or at least expose to the world just how Bridgewater ended up being a $160BN $138BN hedge fund, what we are far more interested in is whether Bridgewater’s former general counsel was instrumental in creating the strategy used by the fund against its former employees.

    We are, of course, talking about one James Comey.

    Here are the specifics: Squire joined Bridgewater in 2010 as an investment associate and spent three years at the group working with its research and trading teams before quitting in mid-2013. Minicone, also an investment associate at Bridgewater, joined in 2008 and remained there for almost five years. He too quit in 2013.

    What does that have to do with James Comes? Well, before joining the FBI, readers may or may not know that the man who singlehandedly tried to take down the standing US president on what he knew well were false charges, was general counsel of Bridgewater from 2010 to 2013 – the very years that overlapped with Squire and Minicone’s tenure at Bridgewater too.

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    Comey, Obama, Mueller

    Yet what is remarkable is that the exact same strategy was pursued against the two former Bridgewater employees as Comey, now in his capacity as disgruntled former FBI chief, would pursue against Trump: fabricating evidence behind a FISA Warrant, and then purposefully leaking select confidential fact and fiction to the NYT, in order to trigger a Special Counsel probe of a sitting US president.

    Sadly for Comey, his attempt at a soft coup failed, but the same fundamental strategy was used in both cases. Which is why we wonder: was Comey also the mastermind behind the legal strategy used to pursue all those Bridgewater traders that dared to leave the highly confidential fund and start their own thing.

    As for Dalio, who checked out long ago, and is far more excited about his annual pilgirmage to Burning Man…

    https://platform.twitter.com/widgets.js

    … in a TED talk Dalio delivered in April 2017, he said the group had created an “ideas meritocracy” by effectively preventing employees from keeping secrets. “We literally tape almost all conversations and let everybody see everything,” he told the audience. Oddly enough, he said nothing about fabricating evidence to make sure any chance of true meritocracy is trampled before it even has a chance to emerge.

    As the FT concludes “Bridgewater has said that one in five hires leaves within a year”… in light of the latest news, it must the non-sociopathic hires.

  • More Than Half Of COVID-19 Patients In New Study Have Heart Damage
    More Than Half Of COVID-19 Patients In New Study Have Heart Damage

    Tyler Durden

    Mon, 07/13/2020 – 20:45

    While the mortality rate from COVID-19 is far lower than initially projected, the disease can leave people with a bevy of health problems of unknown duration; from fatigue, to lingering respiratory issues, to loss of taste and smell.

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    KHN Illustration

    Now, we can add heart damage to the list of common post-COVID complications, according to a new study. 

    The long and short of it: Older individuals with pre-existing heart issues, or those with ‘sleeper’ heart conditions which have gone undiagnosed, are at the most risk.

    While we’ve known since at least February that coronavirus was suspected of causing – or contributing to – cardiac problems, the extent has been largely unknown. In April, The Harvard Gazette detailed the “multiple ways” COVID-19 may spark cardiac damage;

    First, people with preexisting heart disease are at a greater risk for severe cardiovascular and respiratory complications from COVID-19. Similarly, research has shown that infection with the influenza virus poses a more severe threat for people with heart disease than those without cardiac problems. Research also shows that heart attacks can actually be brought on by respiratory infections such as the flu. 

    Second, people with previously undiagnosed heart disease may be presenting with previously silent cardiac symptoms unmasked by the viral infection. In people with existing heart-vessel blockages, infection, fever, and inflammation can destabilize previously asymptomatic fatty plaques inside the heart vessels. Fever and inflammation also render the blood more prone to clotting, while also interfering with the body’s ability to dissolve clots — a one-two punch akin to throwing gasoline on smoldering embers. –The Harvard Gazette

    Last month the President of Burundi died of a sudden heart attack at the age of 55 after falling ill with coronavirus.

    Now, a new study has found that more than half of COVID-19 patients have some type of heart damage, according to Newsweek.

    A study involving 1,216 patients – 813 of whom were diagnosed with COVID-19, revealed that 55% had abnormalities when given an echocardiogram between April 3 and 20.

    The paper, published in the journal European Heart Journal – Cardiovascular Imaging, had an average participant age of 62, while 70% were male.

    Sixty percent of the scans were performed in a critical care setting, such as an ICU unit or emergency room, while the others were carried out in general medicine settings, cardiology, respiratory, or COVID-19 wards. Some 54 percent of the patients had severe COVID-19.

    Those with abnormal scans were more likely to be older and have certain underlying heart problems. But after the team excluded patients with existing heart conditions from their analysis, the proportion of abnormal scan results and those with severe cardiac disease was similar. This suggests that the issues were related to COVID-19, they said. –Newsweek

    In short, people with cardiovascular disease, or who are at risk of developing it, have a worse prognosis.

    If only most advanced nations hadn’t been gorging on fast food for three decades as physical fitness took a backseat, leading to epidemic levels of heart disease.

  • Martenson: Time Is Running Short To Brace For Impact
    Martenson: Time Is Running Short To Brace For Impact

    Tyler Durden

    Mon, 07/13/2020 – 20:25

    Authored by Chris Martenson via PeakProsperity.com,

    Like a windstorm toppling a hollowed-out tree, SARS-CoV-2 didn’t cause the current recession so much as it exposed how rotten things already were.

    Even before SARS-CoV-2, households were struggling. Far too many were limping along without any savings at all, one crisis away from financial ruin.

    Debts at every level were at record highs before SARS-CoV-2 came along, and the Federal Reserve was already busy bailing out the US financial system before the virus hit.

    The shale oil industry had failed to generate any profits for over a decade before anyone ever heard of Covid19.

    The worldwide wealth gap was already record levels before we were forced into lockdown.

    What the coronavirus pandemic has done, though, is give the ruling authorities aircover to accelerate all of these trends to warp speed.

    Billionaires have been, by far, the largest winners in this story so far.  Ditto for mega corporations.  Main Street and small and medium-sized businesses have been utterly crushed.

    Where the Great Financial Crisis in 2008 could have been — and should have been — a wake-up call to operate the system more equitably and sustainably, it was used instead as an excuse to make things even worse.

    No bank executives were charged or even went to jail for any crimes they played in bringing the financial system to the brink of disaster.  Accounting deceit, wire fraud, and forgery — anybody remember ‘robosigning’?  That was forgery, a felony, and not one charge was ever leveled.  Instead, the Too Big To Fail banks were bailed out and got bigger at the expense of smaller, more responsible firms.

    My point here is that SARS-CoV-2 has laid bare our true value systems.  Some countries have done an admirable job of showing they care about their citizens, making public safety and health their top priority.  Other countries, such as mine (the US), have demonstrated the opposite.

    When it comes to making judgment, I look at actions much more than words. What have been the actions of the US authorities so far?

    1. The Federal Reserve swooped in to assure that the wealthy got even wealthier.

    2. The CDC couldn’t get effective test kits prepared or deployed until months after many other countries did.

    3. $Billions and $billions were smoothly and rapidly delivered to the largest institutions, corporations and wealthiest households.

    4. But only a single $1200 stimulus check has been sent to the poorest of American families.  Well, most of them, but many are still waiting for their stimulus checks.  Every household sandwiched between the rich and the poor has received nothing.

    In other words, the Fed has made its #1 priority the preservation of the financial advantages of the already-rich, while the federal government has made clear that public health isn’t really a priority at all.

    The unfairness and legal and moral wrongness of this next bit of news stunned even long-time skeptics like myself:

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    (Source)

    I object strenuously to any taxpayer money, my money, being sent to any and all religious organizations (I’m a big believer in the separation of church and state).  But to do so to help the Catholic church cover shortfalls due to payouts to victims of institutionalized pedophilia?  Really, that’s just…I’m out of words.

    But more often than not, that’s the business the federal government is in: protecting the abusers, not the victims.

    Thousands of hedge funds and other extremely wealthy financial firms are similarly feeding from the same trough of substantial taxpayer payouts.

    But where real support is needed? The free money river has never been more than a trickle. Testing for SARS-CoV-2 has been throttled back due to lack of funding. Hospitals remain chronically short of critical PPE. 30% of all US households were unable to make last month’s mortgage payment.

    As I said, these dots simply reveal the values and priorities of those running the show.  If I were to use a single word to sum things up, it would be: greed.

    Anything and everything that funnels money from the many into the pockets of the few is being done and done swiftly.  Anything monies directed to the well-being of the masses is being done slowly, grudgingly, and sparingly (if at all).  “Never let a good crisis go to waste” is the motto of current crowd in charge.

    I am asked all the time to decide between Covid-19 being real or this whole thing being a scam.  To which I reply, “why not both?”

    The Elites Have Won

    The elites have all the power and they have no interest in sharing any of it.  They are too blinded by greed and driven by fear to do otherwise.

    In this way, they pretty much have won.

    They’ll print up however much money they desire and hand it out to themselves — after, of course, laundering it through the ““markets”” to create the appearance that fairness was actually involved.

    But we all know it’s not. The data is crystal clear: Wall Street’s mighty siphons assure that nearly all of the Fed’s freshly printed money goes straight into the pockets of the most well-connected players.

    As I’ve taken pains to point out, given all the public’s focus on Black Lives Matter, somehow the Federal Reserve has escaped being called out for being a nearly pure-white organization whose efforts overwhelmingly funnel additional funds to white households.  Whether by design or accident, the Federal Reserve’s actions do more to cement racial inequality than any other entity, group, or organization in existence.  By far.

    Looked at another way, Trump is soothed by the stock market hitting new all-time highs and I believe this has blunted the seriousness with which he takes SARS-CoV-2.  In jamming the stock markets higher, I see the Federal Reserve as also partly responsible for the lame US response to Covid, which has already cost far too many people their lives and many more people their health.

    Of course, intervening in the financial markers to push them higher during an election year is a profoundly political act. Something the Fed has absolutely no business doing.

    Put all that together and the Federal Reserve is a partisan, political organization that is costing people their lives and health while promoting racial inequality.

    Yet it’s given a nearly free pass on all of that from the mainstream press, our supposed watchdog for truth.  Hardly is Fed Chair Jerome Powell ever asked a single daunting question along these lines.

    Our health organizations like the CDC and the WHO are similarly compromised and complicit, too shot through with political intrigue and pharma money to be of any help.

    All of which is both shameful and self-injurious, because if we’d like to avoid a very dark future filled with societal unraveling, then the Fed’s dangerous actions need to be brought to heel. And soon.

    However, after all that has transpired, I don’t see much hope of the Fed changing its ways.  It has proven it can’t be goaded or shamed into introspection or altering course.

    Conclusion

    All of which is my way of saying that I am bracing for impact.

    I simply don’t know what else to do.  We are on our own.

    It’s time to consider how you will provide your family with the basics, the very bottom layers of Maslow’s Hierarchy of Needs — water, food, shelter, resources, health & safety — if the systems we depend on today start weakening:

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    When people are busy moving down the Hierarchy of Needs, that means society is crumbling.

    And folks are already indeed moving. Literally. Real estate for sale in Manhattan is piling up without takers, while more rural properties are being snapped up.  Gardens are being planted and guns are being bought.

    SARS-CoV-2 has taught many lessons and revealed much.  To me, it’s revealed that the elites as led by the Federal Reserve won’t deviate from accelerating inequity until being forced to stop.  Whether that will occur via social revolution, the destruction of the purchasing power of the US dollar, or something else, I don’t know.

    But I do know that whatever it is, it won’t be the cause of all the misery that will follow.  The true culprits are the current and former managers (not leaders) with the Fed and within the DC beltway who failed to protect the vulnerable, set reasonable policies, and conduct themselves with integrity.

    So my advice is to brace for impact.  There’s nothing any of us can do to affect national monetary policy or stop the major unraveling trends already set in motion, but we can do our best to step outside harm’s way and tend the welfare of ourselves and those we care about as the system falters.

    In Part 2: Brace For Impact! I share the key indicators that have me most concerned about the nearness of the next systemic shock, as well as the key steps I recommend you take now using whatever time remains available to you.

    We are facing unprecedented challenges that are accelerating at a faster rate than at any other time in human history. Every day we have left to prepare prudently is a gift. Use the time wisely.

    Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

  • If The US Was Japan, The Fed's Balance Sheet Would Be $25 Trillion
    If The US Was Japan, The Fed’s Balance Sheet Would Be $25 Trillion

    Tyler Durden

    Mon, 07/13/2020 – 20:05

    If anyone still needs a simple yet infallible thesis to buy gold, here it is from Deutsche Bank’s chief credit strategist Jim Reid.

    Fed Balance Sheet – One-way traffic again

    Last week the Fed balance sheet dipped below $7tn and is now -3.5% below its peak a month ago. However, this reflects emergency pandemic liquidity facilities rolling off rather than anything more structural. DB’s Steven Zeng now thinks it will start to climb again with QE and various other loan facilities to around $8.3tn by year end, double where it was at the start of 2020.

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    Some believe this is already a huge amount, but as the second graph shows, the Fed’s balance sheet as a % of GDP is notably lower than the ECB and BoJ’s. If they were aligned, the Fed balance sheet would now be around $11tn and $25tn, respectively.

    With DB’s Matt Luzzetti expecting that US debt to GDP will be above 100% in 2020 and near 140% by 2030 from just shy of 80% at the start of this year, it seems inconceivable to me that the Fed and other central bank balance sheets will do anything other than explode over the next decade and perhaps beyond.

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  • Demographics, Debt, & Disappointment – The Japanifation Of America's Economy
    Demographics, Debt, & Disappointment – The Japanifation Of America’s Economy

    Tyler Durden

    Mon, 07/13/2020 – 19:45

    Authored by Chris Hamilton via Econimica blog,

    I’m not an economist nor a Wall Street analyst.  I get paid nothing to write this, have nothing to sell, make no buy recommendations, and leave it up to the reader to determine what it all means.  Today, just some comparisons of the Japanese and American demographic driven zero interest rate policy kickoffs, resulting in debt explosions, ongoing collapses in births, and declining energy consumption…yet (thus far) resulting in divergent asset depreciation/appreciation.

      Also of note should be that regardless the crisis (Lost decade(s), Fukushima, 9/11, GFC, Coronavirus) the answer has been the same; cheaper debt to incentivize more debt and call it “growth” (without a concern how it would ever be repaid).

    For Japan, 1991 was the conclusion of the last bit of demographic driven demand growth.  Since then, interest rates have been pushed to zero to incent an ever decreasing quantity of consumers to consume more…with little positive impact.  Instead, the Japanese government has decided to do what Japanese consumers couldn’t…grow spending via blowing out official government debt to GDP.  Interestingly for all the government market intervention, equity prices are still down over 40% from peak valuations.

    For the US, the last bit of demographic driven momentum concluded in 2018 but the US went to ZIRP a decade earlier in the demographic cycle (’09) than Japan.  Now the US government has decided even the best efforts of US consumers to consume beyond their means isn’t adequate…and thus official government debt to GDP is soaring (and of course, this doesn’t take into account the 2x to 4x larger unfunded liabilities that did not exist prior to 1950).  Like Japan, the US federal government and Federal Reserve have taken an ever increasingly “interventionist role”, to great effect for asset valuations.  One note on the estimated return to working age population growth in the chart below…it is entirely dependent on the unlikely return to high rates of immigration.

    Annual Change Working Age/Elderly, Discount Interest Rate, Debt/GDP, Equities

    To read the charts, five variables – annual change in 20 to 60 year old populations (green columns), annual change in 60+ year old populations (grey columns), discount interest rates (black dashed lines), Nikkei 225/Wilshire 5000 (yellow lines), and debt to GDP ratios (red line).

    JAPAN

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    US

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    BTW – In retrospect, the talking heads and market gurus agree the market peaks of 2000 and 2007 were “bubbles”, but these same folks are now suggesting “this time is different”!?!

    Childbearing, Post-Childbearing, & Births

    JAPAN

    Below, no anecdotes or happy stories, just demographic facts that drive the real world…annual births plus UN estimated births through 2040 (grey columns), likely births (black dashed line), childbearing females (yellow line), post childbearing females (red line).  Japan (and its domestic consumption) will only continue shrinking and likely at an accelerating rate!?!

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    US

    Annual births plus Census/UN estimated births (grey columns), actual births since ’00 and likely births (black dashed line), childbearing females (yellow line), post childbearing females (red line).  BTW – US female childbearing population is inclusive of anticipated immigration, but actual immigration in 2019/2020 is running far below estimates…and may essentially be zero for 2020.  Beyond that, who knows, but continued lower immigration means significantly fewer females of childbearing age and subsequently significantly fewer births…and significantly smaller present and future consumption (GDP).

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    Demographics & Energy Consumption

    To round out the picture, I show the correlation of demographics in energy consumption.  Charts below are total primary energy consumption (oil, coal, renewable, nat. gas, etc) blue line, year over year change in energy consumption (red columns), year over year change in 20 to 60 year old population (green columns), and the central bank set discount interest rate (black dashed line).  Consumption data is from EIA through 2017 and then my estimates through 2040 following existing demographic reality.  After decades (centuries) of energy consumption growth, both Japan and the US continue falling for over a decade now…mirroring their domestic demographic and import/export realities.

    JAPAN

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    US

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    Make of this data what you will and invest accordingly.

  • Mobile Trading Surges In India As Retail Joins Stock Market Party
    Mobile Trading Surges In India As Retail Joins Stock Market Party

    Tyler Durden

    Mon, 07/13/2020 – 19:25

    The rise of mobile daytraders has been a global phenomenon during the pandemic. From the US to Europe to China to India, pajama traders swinging stock and options positions from their smartphones steadily increased as global central banks printed trillions of dollars and ignited a historic rally in world stocks. 

    Central bank balance sheets expanded rapidly as pandemic began. 

    World stocks drop on the pandemic, but V-shaped recovered as central banks unleashed trillions of dollar into global markets. It was the run-up when retail decided to download mobile apps for trading and join the stock market party. 

    More recently, daytraders in China have seen a chaotic melt-up catapult the tech-heavy ChiNext index 40% in the last 30 trading sessions. 

    US daytraders using the Robinhood mobile app bored during virus lockdowns with no sports and confined to their homes, panic bought shares of bankrupted companies, outpaced hedge funds in returns over the last several months.   

    The rise of daytraders using smartphones has also become popular in India. Mobile trading recently overtook internet-based trading in cash markets. 

    Nitin Kamath, founder, and CEO of Zerodha, told BloombergQuint, inexpensive smartphones have made mobile trading more accessible to the masses who don’t have access to a desktop computer or traditional stockbroker. 

    Official data via the National Stock Exchange of India shows mobile trading turnover in cash markets increased 9-percentage-points to 23% since February, compared against the 4-percentage-point rise to 13% for internet trading during the period. 

    As of June, the mobile share of trading on the National Stock Exchange was about a quarter of all traders. 

    Upstox, an Indian discount brokerage firm operated by RKSV Securities India Pvt., which has a mobile app for trading – has seen a rapid increase in users this year: 

    “Over the last year, Upstox has on-boarded a large number of digitally savvy traders from non-metro cities,” Ravi Kumar, co-founder, said in a statement. “Over 80% of the total customer base acquired by the company is from tier-2 and tier-3 cities like Nashik, Jaipur, Guntur, Patna, Kannur, Tiruvallur & Nainital and among others. Currently, almost 75% of the total customer base is below the age of 35.” 

    BloombergQuint notes, “as more investors flock to equity markets, shares of listed brokerages surged in the last three months. ICICI Securities, IIFL Securities Ltd., 5paisa Capital Ltd. and Motilal Oswal Financial Services Ltd. jumped 33-101% during the period.” 

    NIFTY’s rising wedge broke – can’t get too excited about this pattern’s downside break. 

    Retail is going all-in into equity markets during a global pandemic, worldwide recession, and central banks juicing stock markets with trillions of dollars will ultimately end in tears.

    We’ve already outlined Robinhood traders blowing up their accounts by taking out too much leverage. 

    And how will this all end for inexperienced daytraders using mobile apps to panic buy stocks across the world at record high valuations? Well, Leon Cooperman recently said it ‘won’t end well’. 

  • COVID-19's "Inconsistent Nature" Confuses Us All
    COVID-19’s “Inconsistent Nature” Confuses Us All

    Tyler Durden

    Mon, 07/13/2020 – 19:05

    Authored by Bruce Wilds via Advancing Time blog,

    As time goes by covid-19 has proven not to be the hammer or tsunami we feared. It has not taken the large number of lives many experts predicted but it has brought the economy to its knees. It now seems covid-19 is just a deadly bug that will probably with us for some time. Not only has it spread slower than we were told it would but the fatality rate is far lower than many “experts” predicted. Still, this inconsistent beast holds society confused and paralyzed with fear.

    The article below is an effort to give this subject some context and frame of reference.

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    Covid-19 Has Confused Us All

    Over time answers have begun to emerge as to the extent covid-19 will have to impact our lives in coming years, however, the truth is being diluted and held hostage by politics. Because I live in a rather conservative area my views may be a bit skewed when it comes to how other Americans see the government’s role in handling the pandemic.

    Interestingly, it is mainstream media that is largely responsible for banging the drums of fear by speculating the worst is yet to come. Mainstream media appears to be going out of its way to weaponize covid-19 it an effort to demonize Trump and paint his administration as a failure. One theory is that democrats and other big-spending politicians are using all the fear-mongering as a way to  push a massive stimulus package through with little resistance. This is a very troubling development for those of us that expect our government to be at least somewhat responsible and to consider how its actions will impact society.

    Early on I pointed out the “need to know more and collect real information” was crucial to creating a plan that would minimize the damage covid-19 posed. That need still exists. When the virus first appeared, the projection below was written based on the lower edge of what the experts were touting as expected percentages of infection. No wonder people became fearful.

    We are all like frogs in a pot of water and the water temperature is slowly rising.

    If predictions are correct, I see a giant catastrophe ahead. In a city of 300 hundred thousand people, let’s do some numbers. They est. 40% to 80% of people may get this bug. Of those American health officials say as many as 20% may need to be hospitalized, some for months.

    Going with a 50% catch rate, roughly 150,000 people will get infected in my area.

    With only a 10% hospitalization rate it would come to 15,000

    We sure don’t have the beds in my area to handle such a surge. Note, this is 5% of the population.

    In this case, It’s not just about how many people may die but the fact that simply

    caring for so many very sick people creates a massive problem!

    While it is true we should error to the side of caution when dealing with a new pandemic, the problem is that as this unfolded, not only can we not trust the numbers because of fraud and inconsistent testing from one area to another but when important facts or a shred of truth does emerge it is rapidly mucked up when dropped into this data. Adding to the confusion and fear-mongering flowing from the mainstream media is the fact frustrated Americans confronted with a resurgence of the scourge are facing long lines at testing sites in the summer heat or are getting turned away. Some people are having to wait before receiving a diagnosis. Not only are some test sites running out of kits, but labs are also reporting shortages of materials and workers to process the swabs.

    The total failure of Governments across the world to lead us through this mess confirms a bleak future for mankind going forward. One critic of  how this has been handled is Ron Paul, a physician that served as the U.S. Representative for Texas’s 22nd congressional district from 1976 to 1977 and again from 1979 to 1985 recently wrote an article in which he questioned whether the covid-19 spike in Texas was fake news. He contends Texas Governor Greg Abbott’s executive order mandating the wearing of face masks both indoors or outdoors across the state is a violation of the civil liberties of all Texans.

    Will History View Fauci As A Hero Or Goat?

    Paul argues the executive order is based on inaccurate information about a “rise” in Covid cases due to the Texas State Department of Health Services changing the definition of what constitutes a “Covid case” to a ridiculous level. Paul writes, In a Commissioners Court hearing for Collin County on May 18th, it was revealed that while previously the determination of a Covid “case” was a confirmed test result, the definition was suddenly changed to count “probable” cases as “cases.” This discounts the fact that many people will already carry some natural immunity to covid-19 making them far less likely to catch it.

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    The policy adopted by Sweden differs greatly from that of other countries. The Swedes have settled on a more traditionalist approach that avoided a full-scale lock-down and has allowed people to maintain their personal freedom even amid this global pandemic. Sweden pursued a course they felt was sustainable and would save as many lives as possible in the long run. While Sweden’s fatality rate is higher than some and lower than others. (Sweden has 543 deaths per million this translates into roughly 1 death in every 2,000 people.) As in other countries, the vast majority of Swedish fatalities have been among people 70 years and older with underlying health conditions.

    By settling on a policy, that keeps the economy running, preserves an atmosphere of normality, and exposes its young, low-risk people to the infection, Sweden is moving its population closer towards the ultimate goal of achieving “herd immunity.” Some people think Sweden is very close to reaching the point where the majority of people have developed antibodies that will help to fend-off similar sars-covid infections in the future. This would ensure that future outbreaks will be less disruptive and less lethal. It must be noted that even The Herd Immunity Threshold (“HIT”) is still being debated.

    The reason everyone was so scared about covid-19 originally was because after the lock-down in China it was hyped as a completely new deadly virus with no known cure or natural protection. That has turned out to be false but has been promoted by Fauci and many others. This has resulted in vast destruction to the US economy, an explosion in our national debt, an unprecedented spike in unemployment, and the destruction of tens of millions of small businesses. As we look back most people will realize the error we have made by shutting down a $21 trillion economy and ordering 340 million people into quarantine because a small number of people may die.

    All this means is the subject of a “covid future” has a lot of parts that we have yet to face. Successfully balancing the damage to the economy and the mess it makes of our lives with health issues is a difficult act. It includes the complications, health issues, and other negative outcomes arising from covid and all the ways that it can affect you even if it doesn’t actually kill you. It includes whether schools should be reopened, whether it is safe to fly, and if governments are abusing our rights when ordering people about claiming it is for the greater good. Expect the confusion to continue but rest assured that through all this, those making the rules and at the top of the food chain will be sure to remain unscathed.

  • New Court Filing: Ghislaine Maxwell 'Fled' Across House During Raid; FBI Found Tin Foil-Wrapped Cell Phone
    New Court Filing: Ghislaine Maxwell ‘Fled’ Across House During Raid; FBI Found Tin Foil-Wrapped Cell Phone

    Tyler Durden

    Mon, 07/13/2020 – 18:45

    According to a Monday court filing (see below), Ghislaine Maxwell bolted to another room when FBI agents showed up to her secluded New Hampshire estate to arrest the accused sex-trafficker.

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    Ghislaine Maxwell pictured in front of her New Hampshire estate (Illustration: Bruce Hubbard)

    When agents entered, they found a cell phone wrapped in tin-foil sitting on a desk in what prosecutors described as a “misguided effort to evade detection, not by the press or public, which of course would have no ability to trace her phone or intercept her communications, but by law enforcement.”

    FBI agents were first barred from entering the property by a locked gate they had to pry open and were then confronted by one Maxwell’s private guards, according to the U.S.

    When the agents approached the front door, they caught a glimpse of Maxwell through the window, trying to “flee” rather than answer them. The FBI ultimately forced to “breach” Maxwell’s door to enter and only arrested Maxwell after she was found “in an interior room in the house,” according to the government. –Bloomberg

    According to the filing, one of Maxwell’s security guards told agents that that the British socialite’s brother had hired former members of the British military to guard her 24-7. As Bloomberg reports, Maxwell gave one of the guards a credit card in the name of the same LLC which bought her luxury New Hampshire bugout last year. According to the guard, Maxwell hadn’t left the property in the time he’d been working there, and had been ordered to buy things for the estate.

    Federal prosecutors detailed the lengths Maxwell went to in order to evade US law enforcement in order to argue that she’s a flight risk who has access to “extraordinary financial resources” and would flee the country if allowed free on bail. A federal judge will decide on Tuesday whether to grant Maxwell’s request to post $5 million bond so she can live under house arrest until her trial.

    “She has demonstrated her ability to evade detection, and the victims of the defendant’s crimes seek her detention,” said DOJ prosecutors in their filing. “Because there is no set of conditions short of incarceration that can reasonably assure the defendant’s appearance, the government urges the Court to detain her.”

    Maxwell wouldn’t be extradited if she fled to France where she has citizenship, argued the prosecution, as the country does not extradite its own citizens to the US for prosecution, according to the report.

    The government also argued Maxwell has been hiding from authorities, living in a secluded 156-acre estate in Bradford, New Hampshire, since late last year.

    Maxwell is accused of luring girls as young as 14 for sexual encounters with Epstein and engaging in some of the abuse. Prosecutors argued she could face as long as 35 years in prison if convicted. Epstein died in a Manhattan lockup last August of an apparent suicide while awaiting trial on federal sex-trafficking charges.

    While Maxwell’s lawyers said in a separate court filing that she has six people willing to co-sign her bond, prosecutors argued she hasn’t identified these people, whether any are even in the U.S. or have the sufficient finances to pay if she does flee. –Bloomberg

    Maxwell’s defense team also cited her long ties to the US, where she has lived for decades. They’re also arguing that Maxwell was covered by Epstein’s controversial 2007 non-prosecution agreement  which allowed the convicted pedophile to avoid federal sex trafficking charges.

    Federal prosecutors called that “absurd,” arguing that the current case involved evidence from two new accusers who weren’t involved in the prior prosecution – and that their case could become “even stronger” as additional witnesses have come forward to offer evidence against Maxwell.

    See the court filing below:

  • Taleb: Tail-Risk Hedges Are Now A Necessity
    Taleb: Tail-Risk Hedges Are Now A Necessity

    Tyler Durden

    Mon, 07/13/2020 – 18:25

    Authored by Michelle Jones via ValueWalk.com,

    Tail risk hedges are designed to only pay off when the markets suddenly plunge, so many investors don’t have the stomach to carry them. However, one expert on tail risk funds advises investors not to be in the market right now if they aren’t using a tail hedge.

    No V-shaped recovery

    Black Swan author Nassim Nicholas Taleb told CNBC in an interview that doesn’t expect a V-shaped recovery like most investors seem to expect. He considers the market’s continuing rise to be strange because it’s been happening while the numbers of COVID-19 infections and deaths have continued to rise.

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    He warned that the market’s rise could result in more economic pain on top of the human tragedy of the pandemic. He added that while policymakers are “printing money like there’s no tomorrow,” it may all come to nothing. He also said that the Federal Reserve slashed interest rates to below 0% and 0.25% in March and that it may not have much room to provide further support amid the resurgence in infections.

    He expects the fears about the coronavirus to plague the economy and the market for a long time. He said even if the pandemic dies down, the virus will still be out there. That means fearful customers won’t be rushing to spend money again.

    “And COVID seems to be there even if the pandemic … dies down, [so] you will still have people cautious enough that it will impact a lot of industries,” he said.

    Caution among consumers will still have a negative impact on many industries, he warned.

    Why tail risk hedges are needed

    Taleb believes investors shouldn’t be in the market without a tail risk hedge because of the high degree of uncertainty about the future right now. Tail events are extreme situations that have a lower probability of happening compared to other scenarios. However, the odds of these tail events happening increases during times of uncertainty even though they remain lower than the odds of the set of standard outcomes.

    “If you don’t have a tail hedge, I suggest not being in the market [as] we’re facing a huge amount of uncertainty…”

    Tail risk funds benefit from such rare events because they prepare for the possibility of them. According to MarketWatch, the uncertainty around the COVID-19 pandemic has been especially good for tail risk funds.

    The CBOE Eurekahedge Tail Risk Volatility Hedge Fund Index is up 48.19% year to date. The Dow Jones Industrial Average is down nearly 12%, while the S&P 500 is down 6.2% and the Nasdaq Composite is up by about 10%.

    The problem with tail risk funds is that they tend to lose money during bull runs, but if uncertainty is here to say like Taleb believes it is, now could be the time to put tail risk hedges in place.

    Meanwhile, Universa, managed by Mark Spitznagel, saw an eye-popping 4,000% return in his tail-risk fund during the height of the pandemic. Taleb has been an adviser on that fund.

    The key is to protect your portfolio from tail risks without actually betting on them. The Wall Street Journal reported about two years ago that funds which attempted to bet solely on volatility tend to outperform because they fail to benefit when the market rebounds.

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