Defender 20 is a large-scale military exercise that has gotten under way in recent weeks. This year in February Americans will deploy 37,000 soldiers to Germany, Poland and the Baltic States. U.S. Army Europe’s Chief of Staff German Brig. Gen. Hartmut Renk gives a few remarks for DW.
“Defender-Europe 20 is slated to be the largest deployment of U.S.-based soldiers for an exercise to Europe in 25 years. This will be a massive exercise that will send U.S. soldiers to the continent next spring to conduct force projection and readiness training to deter potential adversaries,” stressed the German general.
Defender 20 is a US-led multinational exercise that involves 19 countries.
Germany will serve as the logistics hub for moving equipment and supplies. Defender 2020 will also validate that German infrastructure is up to the task. The units participating in the exercise will be supported by the German Bundeswehr.
It is also critical for Germans to test their own physical infrastructure – roads and bridges. These can be seriously threatened as the weight of a tank transported on a trailer can exceed 130 tons. Military equipment will also be transported by rail and river.
The German general also mentioned that three so-called convoy support centers have been set up for the military convoys on the military training area Bergen in the Lüneburg Heath. There’s also a fuel tanker there. Some US units will bring their own equipment whereas others will use the equipment inventory already stored in Europe.
Commenting on possible Polish cooperation during Defender 20, Brig. Gen. Hartmut Renk estimated that Germany is ready for the upcoming maneuvers whereas the preparations of the Polish Army look like a real disaster.The security system, locations and technical support structures of allied forces in Poland during Defender 20 do not match the exercise requirements.
According to the German general, the worst situation is at the training grounds at Ustka and Drawsko Pomorskie.
“It’s terrible that American soldiers will live in such conditions. The barracks look like ruined stables. Mice and rats are prowling the concrete floor. It’s cold and wet. In Germany pigs are kept in better conditions. Technical support is at the level of “crowbars and hammers,” said general Renk.
It’s worth mentioning that Poland will be one of the epicentres of one of those smaller, linked exercises – exercise Allied Spirit. This will be a division-size exercise led by the United States Army 1st Cavalry Division.
Allied Spirit features a live wet gap crossing, in other words a river crossing that will take place at the Drawsko Pomorskie Training Area in north-western Poland. This time the task will be accomplished by a multinational bridging team (German and British soldiers) including rotary and fixed-wing support coming from the US and the Czech armed forces. Unfortunately, during the exercise Anakonda-18, in this instance, soldiers of the Polish Army failed to build a pontoon bridge, and flights and artillery firing were canceled.
“Lack of professionalism and complete irresponsibility which the command of the Polish Army keeps demonstrating from year to year, may be a reason to cancel the planned actions during exercise Defender 20…” – summarized Brig. Gen. Hartmut Renk.
Maj. Gen. Jeffrey Kramer, who leads EUCOM exercise programs, said DEFENDER-Europe 20 is the most massive exercise since the Cold War.
In an important new book, political scientist Yuval Levin argues that we have lost faith in our institutions—public, private, civic, and political.
We need institutions, including families, associations, churches, corporations, trade unions, political parties, professions such as law and medicine, as well as the formal institutions of government such as Congress, the presidency, and the courts.
They are, as Levin puts it, “the durable forms of our common life.” They serve purposes or missions, like educating the young, resolving disputes, or defending the country. They give life meaning by assigning roles, teaching self-control, and enforcing standards. In the process, they form the character of those who participate in them.
But we no longer trust them. What went wrong?
From Molds to Platforms
There has been a big shift in the way elites, those who play a leadership role in our institutions, treat them. Instead of seeing their institution as a mold that forms and shapes their character and behavior, they treat them as platforms for promoting their own.
Think of a new member of Congress, who is less interested in learning and conforming to the traditions and expectations of the House than using it as a platform for gaining fame and celebrity. Congress—by its own will, Levin argues—has become increasingly weak and ineffectual. Its members seek publicity and fame through social media and other avenues even before learning or accomplishing anything of substance in Congress itself.
Indeed, Levin notes, political leaders often appeal to their outsider status—claiming not to be part of the Washington bubble or swamp themselves—as a way to enhance their own power. Even as leaders, they criticize their own institutions as if they were not themselves responsible or in charge of them.
The one exception to the breakdown of confidence in institutions is the military. In that case, the formation of character—fitting those serving with the sense of duty, mission, and self-effacement of one’s own interest—is recognized and primary. It’s rare for a soldier in uniform to use the military as a platform to promote himself, not, anyway, until resigning or retiring from duty. We trust the military, beyond other institutions, to do its job of forming those who serve.
Levin shows the need to rebuild institutions and to form elites who can better lead them. He spends much space criticizing anti-elite populism.
But Elites Are the Problem
The problem with all this is that it underplays the extent to which our most important institutions have been undermined systematically by the very elites who are supposed to lead and represent them.
President Donald Trump, a performer rather than a self-effacing institution-builder, tapped into the loss of confidence in our institutions and promised to shift policy in ways that would strengthen them. He talked of draining the swamp of the federal bureaucracy, which had become an “administrative state” pursuing its own interests and policies.
In the case of Trump’s presidency, deep hostility has been evident not only in the violent demonstrations of Antifa, but also in all the leading institutions of society. The administrative state itself has been a center of resistance to the elected president—running its own unelected government even as it asserted its own professionalism and commitment to the Constitution.
We see this from the start in Trump’s White House itself. An opinion column by a senior official in the Trump administration in the New York Times makes the position clear. It’s called “I Am Part of the Resistance Inside the Trump Administration.”
The author, writing under the name, Anonymous, boasts of working diligently to thwart the president’s policies even while working for him. Trump, the author says, is unaware of the extent to which “many of the senior officials in his own administration are working diligently from within to frustrate parts of his agenda.”
The point is that Trump was elected and is supported by tens of millions in order to carry out his agenda, not that of establishment Republicans or “Never-Trumpers,” or of Obama holdovers still in his administration.
The Wall Street Journal recently carried an opinion piece from one of those rare figures, a (former) official within the Trump administration who was a director of strategic planning in the National Security Council (NSC), who supported Trump’s policies.
The author, Rich Higgins, confirms but deplores the overwhelming opposition to the president among executive branch staffers. As he portrays the situation on the NSC staff, those who faithfully sought to implement the president’s policies were thwarted by more senior officials on the NSC who were Obama holdovers. Those who attempted to carry out the sitting president’s policies, Higgins among them, were isolated or fired for their loyalty.
Liberal media denounced what it called the firing of Lt. Col. Alexander Vindman, the army officer detailed to serve the NSC, as retaliation for his testifying to the House about Trump’s Ukrainian phone call. Higgins takes a different view. His point is not that Vindman was not in fact fired or investigated, but that he was disloyal.
Vindman’s duty, he argues, “was to serve loyally until he felt he no longer could, then resign. Resistance while in uniform undermines good order and discipline and is especially dishonorable.” It was not Higgins but Vindman, lauded by the liberal media as he was, who undermined the institutions he was sworn to serve.
Elites as Institution-Wreckers
But the problem is wider and deeper than the kind of internal “resistance” described from one side by Anonymous, another by Higgins, and the very existence of which progressives dismiss as a “deep state conspiracy theory.”
Levin begins his analysis with the institutions of our national government and works his way down to the foundational institution that involves us all, the family. But suppose we look at the problem the other way round.
No institution is more fundamental or important than the family in molding us from birth on. A large body of research from scholars across the political spectrum has established the importance of family structure, of growing up in a married two-parent family, as a protective factor for every social indicator—our health and longevity, life expectancy, involvement with the criminal justice system, education, earnings, and marital success.
Recent research indicates that family and faith (attending church or other place of worship and defining oneself as a very religious person) play a larger role in educational achievement than school-based efforts to close the gaps among racial and ethnic groups.
A meta-analysis (study of studies) examined 30 studies of attempts to bridge the achievement gap between white students on one hand and Black and Latino students on the other. It “revealed that, if an African American or Latino student was a person of faith and came from a two-biological-parent family, the achievement gap totallydisappeared, even when adjusting for socioeconomic status.” [emphasis added]
Yet progressive elites beyond the administrative state—in academia, law, media, sports, big business, and entertainment—have targeted, unrelentingly, just those institutions that are most important in the lives of ordinary people.
It is the advocates of identity politics who have attacked the institutions of marriage and family, not the populists. These ideologues have used their own institutions as platforms to train others, in psychology, social work, and other fields. The aim is not to support those they serve by helping them strengthen families and marriages, but to liberate individuals from the grip of those institutions.
The sexual revolution has gone far beyond seeking legal recognition for alternative forms and definitions of marriage and family. Its adherents seek to stigmatize and expel from public life those—individuals, parents, businesses, and faith communities—that defend those foundational institutions.
They attack as bigots and haters those whose views were the common sense of almost all communities everywhere just a few decades ago. Such people, according to the new orthodoxy, are unworthy of the right to free speech, free exercise of religion, or the right to pursue in peace their professional vocation or conduct their business enterprise.
Looked at this way, it’s the progressive elites who are destroying our institutions, opposing their purposes and missions, and so the meaning and structure of our lives. It is Trump, a performer unmolded and unintimidated by the ways and customs of political institutions and offices, who is leading the defense of our basic institutions.
His policies aim to defend families and their rights, to uphold school choice, religious freedom and protection of conscience, and the right of children in the womb, the most vulnerable and innocent of all the human family, not to be killed.
Trump and his policies provide at least a moment of respite from, and pushback against, the totalitarian impulses of progressives who seek to politicize and control every aspect of life.
EU Will Deploy Warships Off Libya’s Coast To Enforce UN Arms Embargo
Just after the EU’s foreign policy chief Joseph Borrell urged Europe to“develop an appetite for power”to better chart its own independent course in solving various international crises impacting Europe, the EU has agreed to deploy warships in order to enforce a United Nations arms embargo on the war-torn country.
The EU has stressed, however, that this is not an extension of its prior controversial mission to rescue migrants and refugees in the Mediterranean:
Josep Borrell, the EU’s chief diplomat, announced that 27 foreign ministers had agreed to launch a new operation with naval ships, planes and satellites in order to enforce the UN arms embargo on Libya.
To counter objections that the operation could morph into a rescue mission, Borrell promised the ships would be withdrawn if they became “a pull factor” that encouraged people to attempt the risky crossing from Libya to Europe. This commitment helped lift opposition to the mission from Italy and Austria, whose governments had blocked an earlier compromise.
The EU has established a new naval mission in the Mediterranean, via EPA/Al Jazeera
Going all the way back to the 2011 US-NATO intervention to topple Gaddafi, the north African country has existed in a state of anarchy with multiple governments and factions vying for control, and now Benghazi-based strongman Khalif Haftar is attempting to bring the country by force under his control in his bid to seize the capital.
This has set the stage for a major proxy war involving the UAE as the prime weapons supplier of Haftar, and Turkey as supplying weapons, drones, and even troops to the Tripoli Government of National Accord (GNA). Russia has also reportedly supplied Haftar’s army with mercenaries from the Wagner group.
The EU marine mission in the Mediterranean to monitor the arms embargo on Libya must, according to Russia, be coordinated with the UN Security Council, said Lavrov on Tuesday.
Russia fears that the EU could increase pressure on Russia’s support for Haftar in the future.
The fighting in Libya as well as the external arms supplies fueling both sides of the conflict has become so bad that the United Nations has called an arms embargo recently in place “a joke”.
“The arms embargo has become a joke, we all really need to step up here,” U.N. Deputy Special Representative to Libya Stephanie Williams said days ago at an international security conference in Munich.
“It’s complicated because there are violations by land, sea and air, but it needs to be monitored and there needs to be accountability,” Williams added, and noted further that Libya has over the past multiple months of fighting been flooded with advanced weapons.
Migrant boat in the Mediterranean, image via Creative Commons
This newest EU operation appear’s the bloc’s attempt at a more muscular response in the wake of frustration over “not doing anything”.
Austria’s foreign minister, Alexander Schallenberg was quoted in The Guardian Tuesday as saying, “There is a basic consensus that we now want a military operation and not a humanitarian mission.”
The details of the new mission to block all arms going into Libya, dubbed Operation EU Active Surveillance, are as follows:
Ships under the new mission – to be known as Operation EU Active Surveillance – will patrol about 60 miles (100km) off the coast of Libya, an area of the Mediterranean that is the main route for weapons into the country.
An internal EU memo, released by the London-based civil liberties group Statewatch, underscores that the EU does not expect to be involved in rescuing people. “Naval assets can be deployed in the areas most relevant to the implementation of the arms embargo, in the eastern part of the area of operation or at least 100km off the Libyan coast, where chances to conduct rescue operations are lower,” it says.
It’s widely believed that should ‘mission creep’ occur and the European military ships get pulled into a costly ‘rescue mission’ upon possibly encountering stuck migrant ships in the area, the whole operation will lose political backing and momentum.
There’s also concern that the mere presence of EU ships will only serve to encourage more migrants to attempt the dangerous Mediterranean crossing.
“Happy 18th Birthday! Meet your new Daddy,” read one website advertisement. “Do you have strong oral skills? We’ve got a job for you!” cooed another.
A message on another billboard directed at the “daddies” was more blunt: “The alternative to escorts. Desperate women will do anything”…
SeekingArrangement was founded by Las Vegas tech tycoon Brandon Wade. Wade is apparently worth somewhere in the neighborhood of $40 million. His motto is, “Love is a concept invented by poor people”…
SA also markets itself as an antidote to student debt. In the U.S. and elsewhere, college students are enduring financial instability and hardship. Because of rising college fees and rent, and the lack of time available for work during studies, many women are extremely vulnerable to exploitation.
“SeekingArrangement.com has helped facilitate hundreds of thousands, if not millions, of arrangements that have helped students graduate debt-free,” Wade boasts on the website. Promotional videos show young, beautiful women enrolled in “Sugar Baby University” — in classrooms, holding wads of cash, driving luxury cars, and discussing the pleasure and ease of being a sugar baby.
When signing up for an account, potential sugar babies are told, “Tip: Using a .edu email address earns you a free upgrade!”
When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.
– Frédéric Bastiat
Watching politics unfold in the post-financial crisis era has been extraordinarily frustrating. While it’s been refreshing to observe the emergence of grassroots populism over the last few years, there’s a problematic lack of depth and clarity embedded in these burgeoning mass movements. Tens if not hundreds of millions of Americans now acknowledge that something’s deeply broken within the current paradigm, but we remain focused on identifying symptoms as opposed to understanding and rectifying the systemic nature of the problem.
As depressing as Bloomberg’s blatant attempt to buy the presidency is, there’s a silver lining.
It’ll force many people to admit what they’ve been trying to avoid. That the country is in fact an imperial oligarchy. Pretending it’s not only makes things worse.
Of course, there are numerous complexities when it comes to the administration of an imperial oligarchy, and our system didn’t emerge overnight. Perhaps the most fundamental mutation of the post WW2 era came in 1971 when the international convertibility of U.S. dollars into gold was severed. This is when the country began its long transformation from a largely industrial empire to a financial one. I’ve often highlighted how the purely fiat USD reserve currency is the most powerful weapon ever invented, and how the U.S. control of the global financial system is the true backbone of empire, but it’s equally important to understand how the predatory financial system is also used to subjugate Americans in their own country.
In order to understand how this works we need to dig into the most fundamentally important four letter word in any modern economy: Debt.
When most people consider the debilitating societal effects of excessive debt they tend to see it from one basic level. How the bottom half of the population essentially has no choice but to borrow in order to participate in the economy as constructed. This is because the cost of so many things has been inflated way beyond the capacity of most people to purchase them outright. Specifically, wage growth has failed to keep up with the soaring costs of fundamental things such as shelter, healthcare and higher education.
For instance, home prices have been rising faster than wages in 80% of U.S. markets, which means the higher cost tends to offset historically low mortgage rates. Low interest rates don’t really help such people, it just lets them maybe, barely purchase an intentionally inflated asset to live in by taking on a huge chunk of debt. An asset that could quickly become completely unaffordable should the economy turn down as it did a decade ago.
As such, you have multitudes taking on debt defensively just to keep going and avoid falling further down the socioeconomic scale. Debt doesn’t empower such people, rather, it turns them into modern day indentured servants endlessly stuck on a hamster wheel with little to no hope of getting off. This is not an accident, it’s a tried and tested tool which, when combined with incessant mass media propaganda, is an effective way of creating a submissive, confused and desperate underclass.
Many people understand this by now, but what’s far less understood, yet potentially more significant, is how the wealthy use debt.
The oligarchy uses debt offensively (to increase wealth and power), while the masses must use debt defensively (to survive). If more people understood precisely how the game is rigged at the highest level (financial system) we might get somewhere.
When you own your primary home outright and you’ve got enough savings that healthcare premiums and paying for your kids college in cash doesn’t make a dent, debt becomes something else entirely. Debt’s no longer an albatross around your neck, instead it becomes a tool to increase wealth. Debt becomes leverage.
Much of the explosion in wealth inequality over the past several decades can be traced back to this systemic interclass weaponization of debt. If you’re very wealthy and connected, access to extremely cheap debt is virtually unlimited, and this access is used to make leveraged bets on all sorts of stuff, but primarily real estate and financial assets such as stocks and bonds. Hasn’t this always been the case you ask? Aren’t those with capital always extremely advantaged over those without it? Isn’t that the history of capitalism and America since the beginning? My answer would be yes and no.
The main difference between prior periods of history and, let’s say the 21st century, has been the vast increase in power of the financial services sector thanks to the Federal Reserve’s willingness to encourage and enable the insatiable reckless behavior of the speculator class. It’s no secret the Fed has been intentionally boosting assets across the FIRE sector such as real estate, stocks and bonds since the crisis. Those with the capital to ride the coattails of this irresponsible and undemocratic central planning rushed out to take on debt to buy these assets, thus multiplying the return on investment.
While the white-collar cubicle worker with enough extra income to diligently add to their retirement account over the past decade has done fine, bankers or hedge fund managers who took on massive leverage to amplify such bets made generational fortunes while creating nothing of value. It’s the way debt works for the financial services sector versus how it works for the average person in a world dominated by big finance and the central bankers who provide them unlimited welfare.
The same thing occurs within the corporate suite, as executives across industries have used access to extremely cheap debt to buyback stock and reward themselves handsomely despite creating nothing of societal value while doing so. It’s pure financial engineering. Nobody should become generationally wealthy this way, but it’s exactly what’s been happening. So you see, debt’s not just a means to subjugate a desperate bottom half of the population, it’s concurrently an effective tool to expand wealth and power at the top.
Then there’s this.
“Investors are paying single A-rated LVMH to borrow money.”
In case you’re not paying attention, ECB policy is subsidizing the wealthiest man in France as he consolidates his industry.
When was the last time the bond market paid you to make an acquisition? As Max Keiser so eloquently puts it, this isinterest rate apartheid.
But it’s even more pernicious than that. It’s still possible for regular wealthy people to take on too much leverage, make a mistake, and lose their fortunes — unless of course you’re an executive at major financial services firm. In that case you simply can’t lose, which was the primary lesson learned from the response to the financial crisis.
Not only were the titans of this industry not jailed, they walked away with their fortunes intact. The Federal Reserve and the U.S. government made this happen. It wasn’t an accident and it wasn’t to “save the economy;” that’s just nonsense talk for the confused masses. The entire point was to consolidate and further entrench the unaccountable power of those at the very top of the finance feudalism paradigm and signal they’ll also be bailed out for any future catastrophe they create.
Significantly, financial feudalism isn’t just interclass, t’s also intergenerational. The stock market and real estate crash of a decade ago was the market’s attempt to reset those assets more in line with median incomes, but central banks would have none of that. They determined asset prices needed to be re-inflated as much as possible as fast as possible, and these unelected banker stooges went about implementing this major policy decision of central economic planning with zero public debate. Young people entering the workforce had no savings and poor wage growth, so a generation was quickly priced out of homeownership while simultaneously stuck with an enormous pile of student debt. The results of all this are unsurprising.
A message on another billboard directed at the “daddies” was more blunt: “The alternative to escorts. Desperate women will do anything.”
Yet another example of intergenerational abuse. Turning broke college kids into prostitutes.https://t.co/I1zs3R5yGd
The crisis facing this country is simmering and metastasizing under the surface of misleading aggregate economic data and record stock markets. While it’s tempting to focus on the symptoms, we’ll never confront and tackle any of this properly unless we understand the structure and how the game is really played. The system you’re living in isn’t capitalism or socialism, it’s financial feudalism.
* * *
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Chinese Cities Begin Subsidizing Car Purchases To Resurrect Auto Market From The Dead
As nearly the entire country of China remains on lockdown – and the country’s auto industry, which was already mired in recession prior to the coronavirus fiasco, gets thrashed even further – some Chinese cities are doing what governments do best: inefficiently throwing money they don’t have at their problems.
The Chinese city of Foshan is the first in what we guess is going to be a long line of cities to start subsidizing car purchases, according to a Bloomberg report out Monday.
Consumers who trade in old models are going to be given 3,000 yuan (about $430 USD) of subsidies. Buyers of new vehicles without trade ins will be entitled to 2,000 yuan.
The move comes after President Xi Jinping has urged local officials to help boost auto sales.
Recall, we wrote just days ago that auto sales in China were crushed in January, declining 20.2% on a year over year basis, according to the government-backed China Association of Automobile Manufacturers. The country sold 1.94 million vehicles, according to the CAAM.
The decline is attributable, obviously, to the coronavirus outbreak in the country, combined with the lunar new year falling in late January, as opposed to early February, this year.
And, unfortunately, there is literally no reason for optimism in February, as it was the end of January and early February when China was placed essentially on a full lockdown due to the outbreak of the virus.
In fact, we just wrote a couple weeks ago that auto industry executives are admitting that the virus could “wreak havoc” on sales and production for the first quarter, according to the Asia Times. Automakers across the country have been forced to cancel sales targets and offer subsidies to hold over dealers during the outbreak.
The coronavirus has now killed over 1,700 people (if you are to believe the CCP’s likely understated numbers) and more than 70,000 people are now confirmed to be infected in China. 780 million people in China are now living under travel restrictions.
Just days ago, we reported about a major inventory glut looming in the Chinese auto market, as well.
Accordingly, we noted, traffic to showrooms has collapsed across the country since late January. A China Automobile Dealer’s association poll shows that dealers predict a drastic drop in sales of 50% to 80% this month, compared to February 2019. 70% of dealers have said they have seen “almost no customers” since the end of January.
Philippines President Rodrigo Duterte has just given us notice he will be terminating the Visiting Forces Agreement that governs U.S. military personnel in the islands.
His notification starts the clock running on a six-month deadline. If no new agreement is negotiated, the VFA is dissolved.
What triggered the decision?
Duterte was offended that one of his political allies who led his anti-drug campaign in the islands, which involves extrajudicial killings of drug dealers, had been denied a U.S. visa.
Yet, Duterte has never been an enthusiast of the U.S. presence. In 2016, he told his Chinese hosts in Beijing: “I want, maybe in the next two years, my country free of the presence of foreign military troops. I want them out.”
The Pentagon is shaken. If there is no VFA, how do we continue to move forces in and out to guarantee our ability to honor the 1951 Mutual Defense Treaty? Defense Secretary Mark Esper called Duterte’s action “a step in the wrong direction.”
President Donald Trump openly disagreed: “If they would like to do that, that’s fine. We’ll save a lot of money.”
The Philippine Islands are among the largest recipients of foreign aid in East Asia, and we’ve provided $1.3 billion in military assistance over the last two decades. But money shouldn’t be the largest consideration here.
Trump has been given a historic opportunity to reshape U.S. and Asia policy along the lines he ran on in 2016.
He should tell Duterte that we accept his decision and that we, too, are giving notice of our decision to let the 1951 treaty lapse. And following expiration of that treaty, the U.S. will be absolved of any legal obligation to come to the defense of the Philippines.
Time for Manila to take charge of its own defense. Indeed, what is the argument for a treaty that virtually dictates U.S. involvement in any future war in 7,600 islands 8,000 miles from the United States?
When we negotiated the 1951 treaty, it was a different world.
We had entered a Cold War with Stalin’s USSR. We were in a hot war in Korea that would cost 37,000 U.S. lives. Gen. Douglas MacArthur had just been relieved of his command of U.S. forces in Korea by Harry Truman. A disarmed Japan had not fully recovered from World War II.
The Communist armies of Chairman Mao had overrun China and driven our Nationalist allies off the mainland. The Viet Minh were five years into a guerrilla war to drive the French out of Indochina.
Today, the Cold War is long over. Vladimir Putin’s Russia is no threat to the Philippines. Nor is China, though Xi Jinping has occupied and fortified islets like Mischief Reef in the South China Sea that are within the exclusive economic zone of the Philippines.
There is no U.S. vital interest at risk in these islands to justify an eternal war guarantee or treaty commitment to fight Beijing over rocks and reefs in the South China Sea.
Trump should seize this opportunity to tell Duterte that when the VFA, which guarantees immunity for U.S. forces in the Philippines, is dissolved, the 1951 Mutual Defense Treaty is dissolved.
A message would be sent to Asia, and the world, that Trump was serious when he said that he intends to revisit and review all the defense alliances and war guarantees entered into 60 and 70 years ago, to address threats that no longer exist in a world that no longer exists.
The U.S. has a long history with the Philippines, beginning in the War of 1898 with Spain, when Admiral George’s Dewey’s Asian squadron sank a Spanish fleet in Manila harbor, and we invaded, occupied and colonized the islands, thus emulating Europe’s imperial powers and abandoning the anti-colonial legacy of the Founding Fathers.
“Take up the White Man’s burden,” Rudyard Kipling admonished us.
After Filipino patriots fought for nearly four years to liberate their islands from the Americans, as they had from the Spanish, inflicting on U.S. soldiers and Marines thousands of casualties, the New York Herald replied to the Poet of Empire:
“We’ve taken up the white man’s burden/Of ebony and brown/Now, will you tell, Rudyard/How we may put it down.”
After Pearl Harbor in December 1941, the Japanese invaded and occupied the islands, until Gen. MacArthur made good in on his famous pledge on leaving Corregidor, “I shall return.”
In 1944, we liberated the islands.
A year after Japan’s surrender, on July 4, 1946, we granted the Philippines full independence. And that nation and people, far more populous and prosperous than in 1946, should take full custody of the defense of their own sovereignty and independence.
At the end of the Cold War, nationalists in Manila ordered the U.S. to vacate the great naval base we had built at Subic Bay. We should have used that expulsion to let the 1951 security treaty lapse.
Stunning Video: Dubai Shows Off Human Jet Pack That Does 150MPH
It was just days ago that we reported about Disney’s new dystopian flying robotic acrobats that were taking the place of stunt actors and were capable of performing flips and changing body positioning in mid-flight.
Today, we move a step closer to human superheroes. Pilot Vince Reffe, who is referred to as Jetman Dubai, was recently videotaped flying around the city in a human jetpack that draws comparisons to comic book characters like Iron Man.
In a video that has been going around on Twitter Monday that originated with The Crown Prince Hamdan Mohammed, Reffe is seen hovering with his jetpack over the water outside the city of Dubai.
He then turns the jetpack toward the city and blasts off at what appears to be well over 100 miles per hour, at one point flying straight up into the sky, mimicking fighter jet moves.
It was estimated that he reached “as much as 1,800 meters” in the air in a matter of seconds, according to TMZ. The pilot then performs some acrobatics, before coming back down to land using a parachute.
And the jetpack doesn’t just look badass, either.
It sounds like a small jet engine aircraft. You’ll want to turn the sound on for this video.
The Iranian Foreign Ministry on Monday urged U.S. officials to focus on fixing their own country’s “nontransparent” and undemocratic system before calling into question the legitimacy of elections in other nations.
Abbas Mousavi, spokesperson for Iran’s Foreign Ministry, told reporters that the U.S. system “ignores the vote of the majority of people” and said “American officials had better address questions” about the country’s elections from the U.S. public.
Iranian Foreign Ministry spokesman Abbas Mousavi. Image source: Xinhua/Ahmad Halabisaz via Getty Images)
Mousavi appeared to be referring to the Electoral College, the archaic system the U.S. uses to elect its president every four years. Two of the last three presidents — George W. Bush and Donald Trump — have lost the popular vote yet won the presidential election thanks to the Electoral College.
Democratic presidential candidates Sen. Bernie Sanders (I-Vt.), Tom Steyer, Sen. Elizabeth Warren (D-Mass.), and Pete Buttigieg have all expressed support for abolishing the Electoral College.
Mousavi’s remarks came in response to a video released last Friday by the U.S. State Department characterizing Iran’s upcoming Feb. 21 parliamentary elections as fraudulent.
“The regime would have you believe that these are free and fair elections,” U.S. Special Representative for Iran Brian Hook said in the video. “But the real voting takes place in secret and long before Feb. 21. The clerics pick the winners and losers before the ballots are even cast.”
Special Rep. Hook: The Iranian regime is holding what it calls “elections” on February 21. But the clerics pick the winners & losers before the ballots are even cast. We call on the Iranian regime to give the Iranian people a real choice & let their voice be heard. #IranElectionspic.twitter.com/BTyvuXhx21
Democratic presidential campaigns and activists in the U.S. are voicing concerns that this week’s Nevada caucusescould be plagued by the same issues — from technology failures to lack of preparation — that threw the Iowa caucus into chaos earlier this month.
One Democratic volunteer warned based on training sessions hosted by the Nevada Democratic Party that the caucus could be a “complete disaster,” pointing to the iPads the party plans to use to record and submit results.
An anonymous aide to a Democratic presidential campaign told the Washington Post Sunday that “it feels like the [Nevada State Democratic Party is] making it up as they go along.”
“That’s not how we need to be running an election,” the aide said.
“It’s The Biggest Sex-Abuse Bankruptcy Of All Time” – Facing 100s Of Lawsuits, Boy Scouts Of America Goes Chapter 11
When we last checked in on the Boy Scouts of America, the organization was reeling from a deluge of sex-abuse lawsuits that was soaking up all of its financial resources and attention, raising the possibility of a bankruptcy filing to help the organization escape the hefty penalties and allow the 110-year-old nonprofit to survive.
And on Tuesday, the organization finally followed through: According to Fox News, the BSA filed for Chapter 11 bankruptcy protection early Tuesday following decades of sex abuse claims by troop leaders.
The petition was filed in Delaware bankruptcy court, and will halt the hundreds of lawsuits that the organization is facing after several states passed laws allowing abuse lawsuits based on allegations stretching back to the 1960s to proceed against the organization.
In response to the bankruptcy filing, an attorney who is representing some 300 alleged victims said that the bankruptcy would be “bigger in scale than any other sex abuse bankruptcy.”
“You’re talking about thousands of perpetrators,” Seattle-based lawyer Michael Pfau, who has represented more than 300 Boy Scout victims in 34 states, told the New York Daily News. “You’re talking about tens of thousands of victims. This will be the largest bankruptcy the country has ever seen, and likely one of the largest corporate bankruptcies.”
The scouts organization said it’s filing for bankruptcy to guarantee that victims are fairly compensated for any abuse suffered during their time in scouting. A Victims’ Compensation Trust will be set up during the bankruptcy process, which the organization says will allow for “equitable compensation.”
The organization added that it wants scouting to survive:
“The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting. We are outraged that there have been times when individuals took advantage of our programs to harm innocent children,” said Roger Mosby, president and chief executive officer of the BSA.
“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed Trust structure – will provide equitable.”
The BSA has also published an “open letter to victims”, which be found online, or as a full-page ad in the Feb. 19 edition of USA Today.
As a father, a former Scout, and the National Chair of the Boy Scouts of America, I am truly heartbroken that you were harmed during your time in Scouting and that you carry unfathomable pain.
I am outraged that individuals took advantage of our programs to commit these heinous acts.
I am also outraged that there were times when volunteers and employees ignored our procedures or forgave transgressions that are unforgivable. In some cases, this led to tragic acts of abuse. While those instances were limited, they mean we didn’t do enough to protect the children in our care – to protect you.
On behalf of myself and the entire Scouting community: I am sorry. I am devastated that there were times in the past when we failed the very children we were supposed to protect.
Please know we have worked consistently over many years to implement multilayered policies to keep kids safe. As knowledge on child sexual abuse prevention has advanced, so have our expert-informed policies, including mandatory background checks and trainings, a ban on one-on-one interactions between youth and adults, and mandatory reporting of any suspicion of abuse to law enforcement. Today, we believe the BSA’s youth safety measures are the strongest and most effective policies found in any youth-serving organization.
I regret that these measures weren’t always in place or weren’t always enough. The fact is that predators harmed innocent children in Scouting programs, and for this I am deeply sorry.
The BSA cannot undo what happened to you, but we are committed to supporting you and to doing everything in our power to prevent it from happening to others. It is a social and moral responsibility that I and the entire organization take extremely seriously. We believe that all victims should receive our support and compensation – and we have taken decisive action to make that possible.
Specifically, the national organization of the Boy Scouts of America has initiated a voluntary financial restructuring to ensure we can equitably compensate all victims of past abuse in our programs, through a proposed Victim’s Compensation Trust.
I encourage you, and all victims to come forward and file claims so you can receive compensation from this Trust. We will provide clear notices about how to do so.
I want you to know that we believe you, we believe in compensating you, and we have programs in place to pay for counseling for you and your family by a provider of your choice.
We have also partnered with 1in6, a trusted national resource for male survivors, to expand their services so that you are able to anonymously access vital support from trained advocates when and how you need it. You can access these services at www.1in6.org/BSA.
The abuse you suffered weighs on us all every day. But your courage also motivates us to do more for the children we are entrusted to protect. We will do better – for you, for kids today, and for kids tomorrow.
Yours in Scouting, Jim Turley, National Chair, Boy Scouts of America
Sadly, as we learned from the Catholic Church and numerous other examples in recent decades, institutions can survive allegations of widespread sex abuse.
A bigger threat for the Boy Scouts is the advent of social media and video games, which encourage kids to stay home with their screens, far away from nature. To a tech-addicted pre-teen, there’s probably nothing that sounds more nightmarish then a weekend out in the woods with your weird classmate’s dad.
US Engaged In “Shameless, Impudent Pillage Of Wealth” In Syria: Russia
Western mainstream media is once again putting Idlib at the center of their coverage, with emotive and hugely exaggerated headlines like “Bombed as they flee: A million Syrians try to escape Assad’s onslaught” — however with no mention that a US designated terrorist organization, al-Qaeda’s Hayat Tahrir al-Sham, has for years brutally held Idlib territory, suppressing the civilian population.
With the Syrian Army and its Russian allied force now again feeling US pressure over the ongoing offensive, the Kremlin has hit back, slamming the US for its occupation and resource plunder of Syria.
Russia’s Defense Minister Sergey Shoigu while on a state visit to Rome on Tuesday charged American forces with a “shameless, impudent pillage of the wealth,”according to Russian state sources.
US armored vehicles on the key M4 highway in Syria’s northeast, via AFP.
“The oil fields… are controlled by the US. There’s shameless, impudent pillage of the wealth that belongs to Syria and the Syrian people taking place,” Shoigu said.
He pointed out that this resource theft combined with an extreme US sanctions regimen is creating horrific conditions among the civilian populace facing freezing winter temperatures. “Most of the people, who are now suffering in Syria, are in need of heat, hot water and electricity, which — as we understand it — come from hydrocarbons that are forbidden to be supplied there,” the minister said further.
Over the past two weeks US and Russian convoys have had dangerous run-ins in Syria’s northeast anytime Russian forces get too close to Syrian oil fields. Though no exchanges of fire have resulted, the two superpowers’ militaries are coming dangerously close to engaging in a major incident.
Meanwhile in separate statements a top Syrian official has confirmed that Russia is helping the Syrian state and its people to counter the West’s economic blockade.
Syria’s ambassador to Russia, Riyad Haddad, said at an event hosted in Siberia that “Russia together with the Syrians is fighting the economic blockade imposed by Western powers and is also providing our people with all kinds of support and humanitarian assistance.”
Russian bomber over Idlib file image, via Al Masdar News.
Over the past months President Trump has articulated in a provocatively blunt manner that US troops will remain in Syria “to secure the oil”. There’s been nothing in the way of a timetable or specified goal in terms of when the mission might be ‘accomplished’ or the troops might come home.
And last Saturday President Trump held a much anticipated phone call with his Turkish counterpart Tayyip Erdogan at a moment tensions continue soaring over Idlib, and after a week of direct confrontations between the Syrian and Turkish armies left scores dead and wounded on either side.
The two leaders condemned the Syrian Army advance into Idlib, calling the military offensive with Russian support “unacceptable”. This after last week the US dispatched special envoy for the region James Jeffrey to Ankara, where the diplomat verbalized full support to “our NATO ally Turkey”.
President #Assad‘s message to #Erdogan;
“The battle to liberate #Aleppo countryside & #Idlib will continue regardless of some empty sound bubbles coming from the north, and the battle for liberating all #Syrian soil, crushing terrorism, and achieving stability will also continue” pic.twitter.com/msZilXc7mU
“Stressing that the regime’s most recent attacks are unacceptable, the president and Trump exchanged views on ways to end the crisis in Idlib without further delay,” the Turkish presidency said in a statement.
At the start of this week the Russian Defense and Foreign ministries expressed they will not heed the US call to halt the offensive, reaffirming that Russian forces are assisting in a legitimate counter-terror operation.
“Absolutely Unacceptable” – Leaked Boeing Memo Shows ‘Debris’ Found In 737 MAX Fuel-Tanks
With airline after airline pushing back their ‘return-to-service’ dates based on Boeing’s total lack of clarity on the path forward for the 737 MAX, the troubled aircraft maker (and the troubled aircraft) now faces more problems.
According to an internal memo, seen by Reuters, Boeing found debris that could pose potential safety risks in the fuel tanks of several 737 MAX aircraft that are in storage and waiting to be delivered to airlines.
To be clear about what ‘debris’ means, Reuters details that:
“an industrial term for rags, tools, metal shavings and other materials left behind by workers during the production process.”
And notes that this ‘debris’ problem has been a quality control issue for various Boeing aircraft, such as its KC-46 tankers.
Foreign-object debris (FOD) “is absolutely unacceptable. One escape is one too many,” Mark Jenks, a Boeing vice president and general manager of the 737 program, said in a message to employees that was viewed by Reuters.
“With your help and focus, we will eliminate FOD from our production system,”
The FOD problem on the MAX was first reported Tuesday on Scott Hamilton’s Leeham.net aviation site:
“There’s a systemic issue with Boeing’s quality control that hasn’t been corralled yet,” said Hamilton in an interview.
“This is not related to the MAX crashes or exclusively a MAX issue. Boeing has these FOD issues on other airplane programs.”
A Boeing spokesman confirmed the memo’s authenticity; and Boeing now having to inspect more than 400 stored 737 Max jets, but Bernard Choi said “it’s still undecided if we will inspect the rest” of the MAX fleet – another 385 aircraft that were delivered to customers but have been grounded for almost a year and are parked at airfields around the world.
“Obviously, we’ll do what’s right for safety,” Choi added.
Boeing spokesman Chaz Bickers was, however, careful to claim that the company does not see the debris as contributing to delays in the jet’s return to service. (The inspections will take two to three days per aircraft. Fuel must be drained from the wings before a mechanic can go in and do a thorough check.).
The Federal Aviation Administration said it was aware that Boeing “is conducting a voluntary” inspection for debris in the undelivered aircraft “as part of the company’s ongoing efforts to ensure manufacturing quality.”
It may delay the airlines’ decision to accept delivery of the jets though (as its not exactly reassuring to crew members and passengers of the company’s commitment to manufacturing quality and safety!)
Yellen Says Fed Should Buy Stocks In The Next Crisis
Back in June 2017, there were several odd moment of bizarre honesty coupled with schizophrenic confusion under Janet Yellen’s Fed.
First there was San Fran Fed president John Williams, who would eventually on to become the Fed’s #2 when he took over as head of the NY Fed in 2019, who said that “there seems to be a priced-to-perfection attitude out there” and that the stock market rally “still seems to be running very much on fumes.” Williams added that “we are seeing some reach for yield, and some, maybe, excess risk-taking in the financial system with very low rates. As we move interest rates back to more-normal, I think that that will, people will pull back on that.”
Then it was then-Fed vice chairman Stan Fischer’s turn, who echoed Williams in saying that “the increase in prices of risky assets in most asset markets over the past six months points to a notable uptick in risk appetites…. Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels–and that fact is also a cause for concern.” Fischer then also said that the corporate sector is “notably leveraged”, that it would be foolish to think that all risks have been eliminated, and called for “close monitoring” of rising risk appetites.
Finally, none other than then-Fed Chair Janet Yellen said that some asset prices had become “somewhat rich” although like Fischer, she hedged that prices are fine… if only assumes record low rates in perpetuity: “Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought to depend on long-term interest rates.”
But while these three moments of rare honesty prompted surprised stares among investors – as a reminder, back then the S&P was trading at “only” 2,400, the Fed was only starting to hike rates and QE4 was more than two years ago – it is what Yellen said next that shocked virtually everyone.
Responding to a question on financial system stability, Yellen said post-crisis regulations had made financial institutions much “safer and sounder”, and as a result she went on to predict that there would never again be a financial crisis “in our lifetimes” to wit:
“Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will.”
While some were quick to compare this statement by Yellen (who then was 70–ears old) to Neville Chamberlain infamous – and very, very wrong – 1938 prediction of “peace in our time”, perhaps she was hiding a trump card all along… A trump card which she revealed only now, almost three years later.
Speaking via video conference with bankers in Kansas City, Yellen said that the Fed would take a page out of the SNB and BOJ playbook, and “might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds.” Of course, by “US economy” she meant the “top 1%” and their political cronies.
And while Yellen was quick to walk back this “hypothetical” scenario, saying that “the issue was not a pressing one right now” and pointed out the U.S. central bank is currently barred by law from buying corporate assets, the idea was already “incepted” in the heads of America’s political rulers (whose fate is just as tied to the vagaries of the stock market) and the law can be changed literally overnight. And after all, it is only a matter of time before a crisis does hit, and now Yellen has explained has to happen to avoid an all out social catastrophe in a country where financial assets account for nearly 6x of GDP.
To validate her point, Yellen said that the Fed’s current toolkit might be insufficient in a downturn if it were to “reach the limits in terms of purchasing safe assets like longer-term government bonds.”
“It could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions,” she said, adding that buying equities and corporate bonds could have costs and benefits…. But mostly benefits, if only for the Fed, the politicians and the very, very rich.
Keep in mind that what Yellen said was merely a paraphrase of Ben Bernanke’s famous April 2010 WaPo oped in which he defended easy monetary policy is facilitating higher stock prices, which would “boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
Of course, none of this “trickle-down” ever happened, and instead what did happen is that the top 10% of US society who own 93% of all equities got fantastically rich…
… while the bottom 90% who own virtually no stocks and owe most of the debt, got very, very angry as they watched how the Fed plundered their future and hopes to become wealthy, and resulted first in the election of Trump, and the upcoming election of a socialist candidate as America goes full-on populist in response to the Fed’s catastrophic policies.
However, thanks to Yellen we now know that the Fed won’t go down without a fight… or at least without monetizing everything before the Marriner Eccles building is finally burned down.
Last month, Yellen told a conference the Fed would fight a future recession by buying government debt and jaw boning interest rates lower with pledges on future policy. But she said other tools might be necessary, including expanding the range of assets it would purchase.
And so, thanks to Janet Yellen, we now we know that before the current fiat regime of central banks finally ends and before stocks go limits up as the revolution starts, the Fed will order a POMO of, well, everything in one final, last ditch effort to keep social stability by creating the impression that stocks are stable and rising even as society implodes.
Will it be successful? Normally we would say “not a chance.” But when one considers that that’s precisely what has happened for the past decade, and one has to think really hard just how much further the Fed can keep kicking the can before it all comes crashing down.
Which Supply Chains Are Most At Risk: The Answer In One Chart
Now that Apple has broken the seal and made it abundantly clear that China’s economic collapse which could push its Q1 GDP negative according to Goldman as the second largest world economy grinds to a halt (as described here last week)…
… will have an adverse impact on countless supply-chains, which in today’s “just in time” delivery environment, are absolutely critical for keeping the global economy running smoothly (for a quick reminder of what happens when JIT supply chains stop functioning read our article from 2012 “”Trade-Off”: A Study In Global Systemic Collapse“), attention on Wall Street has turned to which other US sectors stand to be adversely impacted should the coronavirus pandemic not be contained on short notice and China’s economy crisis transforms into a supply shock.
Conveniently, Goldman Sachs just did this analysis.
In a report looking at the impact of Chinese factory shutdowns on the US consumer, Goldman’s Spencer Hill first looks at historical precedent and finds that a somewhat similar supply shock emerged in the winter 2014-15—a four-month labor dispute affecting West Coast ports— which appeared to meaningfully affect retail spending on consumer goods in the first quarter of 2015 (though snowy weather was likely a factor as well). This is shown in the chart below.
Indeed, the March 2015 Beige Book noted that consumer spending in the San Francisco Fed district would have been stronger “if not for delays receiving merchandise caused by labor disputes at West Coast ports.”
Extrapolating this historical pattern, Goldman notes that “long shipping times to the US (generally 1 month or more by sea) imply the supply-chain effects of Chinese production shortfalls may not fully materialize until future quarters—at which point above-trend Chinese production or import substitution from other counties could offset some of the impact.”
However, analyzing granular international trade data from the Census Bureau, Goldman finds that nearly a third of Chinese products arrive by air (by value, including over 75% of telecom hardware), with these goods representing 3.6% of US retail sales and just under 1% of personal consumption expenditures. The composition of these products (and their wholesale value) are shown in the left panel of the chart below, and represent the sector most likely to be impacted as China remains paralyzed. Unsurprisingly, airfreight imports are skewed towards high-value, light-weight products such as smartphones, laptops, and consumer electronics, representing a perfect storm for a company such as Apple which is reliant on all three. Additionally, a significant share of apparel and footwear (10%) also arrives from China by plane.
To summarize, here are the sectors more at risk from a continued crunch across Chinese factories:
Illustratively, Goldman notes that if air freight from Mainland China falls by 50% in February and returns to roughly normal in March, forgone sales could reduce monthly retail control by as much as 1.8%. Assuming only half of these spending dollars are used to purchase other goods and services, February retail spending would be depressed by 0.9%, lowering Q1 consumption growth by 0.3% (qoq ar).
The good news, until last night at least, is that virtually no companies had disclosed an immediate adverse impact emerging due to Chinese supply chains, sparking some hopes that most if not all had found alternative supply chain substitutes to offset the Chinese crisis. However, with Apple’s guidance cut, it now appears that US companies had merely hoped to delay as long as possible the guidance cuts. As a result we now expect a waterfall of negative earnings preannouncements from most companies that have even a modest exposure to Chinese output, which also means that Q1 earnings are looking increasingly gloomy after the modest EPS rebound in Q4, which as we detailed previously was entirely on the back of the “Big 5” FAAMG tech megacaps.
In what is being called a “successful mission on Monday morning, SpaceX launched a Falcon 9 rocket as part of its fifth Starlink satellite mission. Not so much of a success was the rocket’s ability to “stick the landing” after the mission had ended.
Streaming the mission live via the internet, the Falcon 9 first stage appeared to miss the drone ship it was supposed to be landing on in the Atlantic Ocean. In the livestream, smoke can be seen on one side of the ship before water splashes the camera.
It sure seems like the SpaceX Falcon 9 did not make it back to the drone ship. You can see smoke on the right drift in and then water splashed on the camera 🤔 pic.twitter.com/mVVLgfkb8C
“We clearly did not make the landing this time,” says Starlink engineer Lauren Lyons on the livestream.
Another commentator on the webcast also said: “Unfortunately we did not land the first stage on our drone ship, but it did make a soft landing on the water right next to the drone ship so it does look like it might be in one piece.”
The primary mission of the launch, however, was a success. The mission was to put Starlink satellites in orbit that will join SpaceX’s existing network. It hopes to grow that network to over 10,000 satellites to be able to deliver high-speed internet across the Earth, according to Mashable.
SpaceX has failed 11 out of 65 landings, according to the company, though they have not publicly commented on Monday’s miss.
And after he has control of the entire planet’s WiFi, we guess that Musk will probably use that power to ban access to anyone who makes a snide remark or offers criticism about any of his companies on the web.
Thousands Ordered To Work From Home As Experts Warn Japan Is “On The Cusp Of A Large Outbreak”
With half of China’s population facing some level of travel restriction due to the coronavirus outbreak, the Politburo’s attempt to get the country back to work has been slow going and fraught with setbacks.
Much of the coverage so far has lingered on Apple’s supply woes and warnings by companies as diverse as automakers and textiles firms about supply chain disruptions tied to factory closures in China. But China isn’t the only country facing serious economic blowback from the outbreak.
Tens of thousands of professional workers in Japan have been asked to work from home in a government-supported policy to contain a possible outbreak in Tokyo.
With 66 confirmed cases outside the 542 infected aboard the ‘Diamond Princess’, Japan has the largest number of cases outside China.
As the government advises people to avoid crowded area, many companies have instructed employees to either work from home or minimize their time in-office. According to Nikkei, they include: Soy, Fujitsu, Toshiba, Takeda, NEC, KDDI and SoftBank.
To keep employees out of large crowds, Sony urged staffers Tuesday to telework and avoid commuting during rush hour. It is suspending its usual 10-day monthly cap for working from home.
For those who must physically be on-site, Sony is offering a flexible schedule with shorter mandatory hours of noon to 3:30 p.m., compared with the usual start time of 9:30 a.m. Bypassing rush-hour commutes will minimize the risk of contracting the coronavirus, the thinking goes.
Fujitsu is letting employees who are pregnant or have underlying health conditions to work from home for as many full days as needed, scrapping its usual weekly and monthly limits. Toshiba told all subsidiaries Tuesday to introduce telecommuting to all workers.
Takeda also urged its 5,200-plus workers to stay off and avoid commute during rush hour if they must come in at all. Among other companies advocating telework are NEC, KDDI and SoftBank Corp.
Shinzo Abe’s government, eager to do everything it can to ensure that the Summer Olympics in Tokyo go off without a hitch, is backing the work-from-home policy for as long as necessary to prevent the virus from spreading.
The government has embraced such efforts. “It’s important to create an environment where students and workers feel like they can stay home, and I ask for your cooperation,” Japanese Prime Minister Shinzo Abe said at a response meeting Tuesday.
“Teleworking is an effective solution,” he said.
“People must not go to school or work if they have coldlike symptoms, such as a fever, and avoid leaving the house,” said Abe, who also discouraged large-scale events that could lead to widespread infection.
Tokyo Gov. Yuriko Koike on Monday threw her support behind teleworking and staggered commutes. “We need to start with what we can, and we’ll come up with a detailed plan as soon as we can,” she said.
Abe is especially concerned as infectious disease experts warn about the possibility of a China-style outbreak in Japan, as former FDA Director Scott Gottlieb said the country looked to be on the verge of a major outbreak.
The Tokyo Metropolitan Government decided that day to distribute roughly 150,000 protective masks to bus and taxi drivers in response to a request by industry groups.
The world is watching to see if Japan will see the first major outbreak outside China. Japan appears “on the cusp of a large outbreak and maybe epidemic growth,” former U.S. Food and Drug Administration Commissioner Scott Gottlieb told CNBC on Tuesday. The country’s patient count has doubled in four days, he said.
“If you start to see this become epidemic in other nations or have other nations experiencing large outbreaks that’s going to be extremely worrisome that we’re not going to control this globally,” Gottlieb said.
But with a stampede of passengers and crewmembers of the ‘Diamond Princess’ about to be released from a two-week quarantine tomorrow through Friday, even as the number of newly diagnosed cases continues to rise, Abe should probably pray that his government’s top public health officials know what they’re doing.
Japan Releases First 500 ‘Diamond Princess’ Passengers As 14-Day Quarantine Ends
Summary:
Death toll passes 2,000 as Hubei reports 132 deaths for Tuesday
Japan to release first wave of 500 passengers + crew at 10:30 am in Tokyo
Florida health officials mysteriously refuse to share virus info with reporters
Russia bars all Chinese from entering
NYT notes signs of impending economic distress
South Korea announces “emergency steps” to prepare for outbreak.
South Korea announces 15 new cases
* * *
Update (1940ET): It’s Wednesday morning in Yokohama. So you know what that means.
Japanese health authorities are beginning the process of offloading the remaining 2,000+ passengers and crew aboard the ‘Diamond Princess’, a ship that has been under quarantine for 14 days.
The offloading will take place in phases over three days, finally wrapping up on Friday. The first 500 people are set to leave at around 10:30 am Tokyo time on Wednesday. There will be no preference given to different nationalities, according to Japan’s Ministry of Health.
Many who depart will be subject to another 14 days of quarantine, including any Americans who elected to stay on the ship instead of traveling back to the US on the evac flight. Roughly 40 Americans were also excluded from that flight because they were being treated for the virus in a Japanese hospital.
So far, 542 people – including at least 14 of the 300 or so Americans who traveled back to the US on Monday in Japan – have tested positive for the virus. And while Japan says it has tested everybody aboard, doctors and experts say there’s no way to certain that people being released won’t be carrying the virus – hence the quarantines when they return home.
But where will they go between now and then? And with no immediate after-care plans – at least none that have been publicly disclosed, it looks like Japan is about to set thousands of people aboard the most infected environment outside China loose in Tokyo.
Of course, Japanese authorities are so paranoid about the Olympics, one would think they would be doing everything in their power to stop an outbreak in Tokyo, especially at such a sensitive time.
About 500 people are set to leave the ship from around 10:30 a.m. Tokyo time on Wednesday, with no preference given to any particular nationality, Japan’s Health Ministry said.
Hopefully, health officials will manage to convince the world that they successfully screened for the virus.
The ship was first quarantined on Feb. 5 more than a week after a man who tested positive for the virus in Hong Kong disembarked. Journalists have shared stories of desperation and paranoia from those trapped on the ship, making it sound like such a nightmare that many who read those stories may never want to travel on a cruise.
In other news, Yonhap reported minutes ago that South Korea has another 15 cases, increasing the countries total by roughly one-third to 46 one day after the country’s president warned of an “economic emergency” as companies like Hyundai suffer from supply shortages from China. The South Korean government has already announced a fiscal stimulus package to help companies hurt by the virus.
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Update (1720ET): Health officials in Hubei reported a big jump in deaths on Tuesday, shattering the state’s narrative that the virus is being beaten because the number of confirmed cases and deaths were falling.
And with the new figures, the China death toll has hit 2,000 exactly, up from 1,868 deaths as of the end of Monday, according to China’s NHC.
HUBEI REPORTS 1,693 NEW CORONAVIRUS CASES, 132 DEATHS FEB. 18
CHINA’S CORONAVIRUS DEATH TOLL HITS 2,000
Meanwhile, state officials in Florida are refusing to release any information about the state’s efforts to contain a coronavirus outbreak, including data about the number of patients who have been tested for the virus, according to the Tampa Bay Times.
“The goal of this public health response is containment,” said state Surgeon General Scott Rivkees, who presented to the Senate Health Policy committee Tuesday. “And if there’s a confirmed case, it will absolutely be reported.”
Rivkees added that the state wasn’t allowed to release the information because of “privacy concerns” – likely a rule about patient confidentiality codified in the federal HIPPA guidelines.
However, veteran journalists in the state pressed the surgeon general: These numbers were shared with the public during Zika, and since the numbers don’t include any personalized details, there shouldn’t be any conflict with HIPPA.
Despite their protests, the state simply deferred to the Department of Health, which has created a 700-person incident management team to liaise with states and help the country prepare for the potential outbreak. Certain protocols have been shared with officials in every state.
Though if not sharing this information is part of some kind of federal ‘protocol’, then how come Washington State is sharing some of this information directly on a Department of Public Health website?
Also in the US: the CDC said earlier that the State Department is planning to bar any Americans who were aboard the Diamond Princess but didn’t return with the evacuees from returning to the country until next month.
Economic fallout from the new coronavirus epidemic continued to spread on Tuesday, with new evidence emerging in manufacturing, financial markets, commodities, banking and other sectors.
HSBC, one of the most important banks in Hong Kong, said it plans to cut 35,000 jobs and $4.5 billion in costs as it faces headwinds that include the coronavirus outbreak and months of political strife in Hong Kong. The bank, based in London, had come to depend increasingly on China for growth.
Jaguar Land Rover warned that the coronavirus could soon begin to create production problems at its assembly plants in Britain. Like many carmakers, Jaguar Land Rover uses parts made in China, where many factories have shut down or slowed production; Fiat Chrysler, Renault and Hyundai have already reported interruptions as a result.
U.S. stocks declined on Tuesday, a day after Apple warned that it would miss its sales forecasts due to disruption in China, as concerns about the impact of the outbreak weighed on the outlook for the global economy.
Stocks tied to the near-term ups and downs of the economy slumped, with energy, financials and industrial shares the leading losers. The S&P 500 index was down 0.5 percent at midafternoon in New York trading.
Bond yields declined, with the 10-year Treasury note yielding 1.55 percent, suggesting investors are lowering their expectations for economic growth and inflation. With much of the Chinese economy stalled, demand for oil has fallen and prices were down on Tuesday, with a barrel of West Texas Intermediate selling for roughly $52.
In Germany, where the economy depends heavily on global demand for machinery and automobiles, a key indicator showed economic sentiment has tumbled this month, as the economic outlook has weakened.
You know it’s bad when CNBC’s unspoken economics ‘Word of the Day’ is ‘one-off’.
Meanwhile, America’s ‘paper of record’ reported that at least 150 million people in China are living under severe lockdown restrictions confining them largely to their homes. That’s one-tenth of China’s population, and 1% of the global population.
Kind of hard to work and consume when you can’t leave the house.
* * *
Update (1410ET): In an interview with Fox News, the CDC’s Dr. Anthony Fauci said the risk to Americans of contracting COVID-19 is relatively low right now, but that “could change” given the chaotic and unpredictable situation.
“The risk clearly is relatively low right now, but that could change. So we’re telling our American citizens to not be fearful, to not be afraid, but to keep an eye on it.”
Dr. Fauci added that the federal government has quarantined every known case of the virus.
“The people in this country that were aware of being infected they’ve been contacted, isolated and made aware that this is the case.”
Just in case any get through, the US is starting ‘sentinel surveillance’ of patients around the country who go to the hospital to report flu-like symptoms, as we reported yesterday.
“That will give us a better idea of whether there are any cases that we haven’t identified or noticed,” the doctor added.
Update (1300ET): In a landmark decision, Russia has temporarily banned Chinese from entry as of Feb. 20, becoming the first country to ban all Chinese from entry in response to the coronavirus outbreak, according to Russian news agency TASS.
This is only the latest step from Russia, which has already closed most entry points along its 4,200-kilometer border, suspended e-visas and work visas for Chinese nationals.
Russia has already reported two cases of coronavirus – the only cases confirmed in the country so far – both involving Chinese nationals.
Though there haven’t been many cases, there have been a number of interesting virus-related headlines out of Russia in recent weeks. Two men in the city of Chelyabinsk were fined for hooliganism after they filmed a prank video where they pretended to shoot a man infected with the virus in a park. The men wore white hazmat suits and face masks while simulating the shooting of the third person, who wasn’t actually infected.
— Russia discharged a Chinese national from the hospital in the Siberian city of Chita on Wednesday after he recovered from a coronavirus infection, the second of Russia’s two confirmed cases of coronavirus to recover. The other victim, also a Chinese national, was also said by authorities to have recovered and been released from quarantine in Siberia’s Tyumen region.
Meanwhile,apropos of nothing, BNO News shared one of the latest videos out of Hubei Province, which we’d like to now share with you.
Video from Hubei province shows doctors running across the street to take patients who are critically ill with coronavirus to a new ICU unit. It took 30 minutes per patient, 10 in total – Xinhua pic.twitter.com/16XLrYzB8l
This could be an Olympic Sport (if they don’t cancel the Olympics, that is).
As a handful of brave foreign correspondents continue to report on the outbreak inside mainland China, the Epoch Times’ reporter Jennifer Zeng revealed on Tuesday that 71 people from one workplace in Beijing have been placed under quarantine after one employee was infected by COVID-19.
We’re glad to see China’s shift back to work is going so well.
* * *
Update (0840ET): Global Times editor Hu Xijin, a government mouthpiece whose tweets were closely followed during the ‘Phase 1’ trade-deal negotiations, is touting China’s dubious data as a sign that the Communist Party is winning the ‘People’s War’ against COVID-19.
Daily new infection cases outside Hubei fell below 100 for the first time according to data released on Tuesday. We are on the way to the victory. People are in a better mood and cities are recovering the vitality. I myself is also very happy. pic.twitter.com/nTlxIhOwF4
Last night, the western press exposed the Americans for breaking Japan’s quarantine on the ‘Diamond Princess’ by ferrying some 14 infected individuals to the US. But with one day left to go before the Japanese government ends its quarantine and releases thousands of terrified and paranoid passengers into the streets of Tokyo.
On Tuesday, another 88 passengers from the Diamond Princess were diagnosed with the virus, bringing the total to 542.
Japan has completed tests for all passengers and crew aboard the ship as of Monday, but the results for the last batch of tests aren’t expected until Wednesday, the day that the quarantine is slated to end. So far, results are back for 2,404 passengers and crew, out of the 3,711 who were on board the ship when the quarantine began on Feb. 5.
Japanese Health Minister Katsunobu Kato said Tuesday that people who have tested negative for the virus would start leaving on Wednesday, but that the process of releasing passengers and crew won’t be finished until Friday, according to the Washington Post.
The remaining 61 American passengers on the DP who opted not to join the evacuation will not be allowed to return to the US until March 4, according to the American embassy in Tokyo. The governments of Australia, Hong Kong and Canada have also said they would evacuate passengers.
Elsewhere, Japan confirmed three more cases of the virus. This time, they were confirmed in Wakayama, a prefecture in eastern Japan.
In the latest indication that the 14-day quarantine simply wasn’t enough to kill the virus, a British couple has tested positive for the virus just one day before Japanese authorities are set to release everybody from quarantine, according to the Guardian.
“David and Sally Abel, a British couple onboard the Diamond Princess cruise liner in Japan, have tested positive for coronavirus, a day before passengers who tested negative were due to start leaving the ship after spending two weeks in quarantine.”
Including all of the cases announced overnight, there are now 73,336 confirmed cases of the virus worldwide, compared with 1,874 deaths.
As the battle against the virus rages in Wuhan, Liu Zhiming, 51, a neurosurgeon and the director of the Wuchang Hospital in Wuhan, became the latest high-profile medical worker to succumb to the virus, as we noted last night. Late last week, China confirmed that nearly 2,000 medical workers had been infected.
The Commission overseeing China’s virus response has released a statement commemorating Liu’s life and honoring his death.
“From the start of the outbreak, Comrade Liu Zhiming, without regard to his personal safety, led the medical staff of Wuchang Hospital at the front lines of the fight against the epidemic,” the commission said. Dr. Liu “made significant contributions to our city’s fight to prevent and control the novel coronavirus,” it added.
In Beijing, senior officials including President Xi continued to play down the economic blowback from the virus. During remarks on Tuesday, Xi insisted that China could still meet its 2020 economic targets – which called for a doubling of the size of the Chinese economy in 10 years – despite the outbreak.
We cross live to the Chinese Statistics Bureau as President Xi says China can still meet 2020 economic targets despite coronavirus pic.twitter.com/JJeqvbWJCZ
Of course, China’ goalseeked economic data has never offered a truly accurate reflection of the world’s second-largest economy. And a report by PitchBook warns that Chinese startups are struggling to raise money as the epidemic complicates deal talks an deals a serious blow to the country’s ‘venture capital’ scene.
From the start of the year through Feb. 12, venture capital activity in China fell from 381 to 137 deals, and the capital raised declined from $4.05 billion to $1.37 billion, compared to the same period last year.
Moving south to Seoul, South Korean President Moon Jae-in called for South Korea to take “emergency steps” to prepare for a more widespread outbreak of COVID-19.
In contrast to Xi, Moon warned the coronavirus could have a “bigger and longer-lasting impact” on his country’s economy than the 2015 MERS outbreak, which prompted South Korea to roll out a supplemental budget while the central bank cut rates, WaPo reports. Speculators are now betting on a rate cut at the Bank of Korea’s meeting next week. Singapore also announced on Tuesday that it had earmarked $2.8 billion for virus relief measures to help stabilize its economy and assist workers.
Over in the Philippines, 25,000 stranded workers can now return to work.
French Health Minister Olivier Veran said Tuesday there was a “credible risk” that the virus could transform into a pandemic, Reuters reports.
“This is both a working assumption and a credible risk,” Veran told France Info radio, when asked about the possibility of the coronavirus spreading globally.
Taking a brief break from the news, our disturbing video of the day comes from Xinjiang, the far-flung province that’s home to millions of Uyghur Muslims.
In this video, shared by the Epoch Times’ Jennifer Zeng, a police officer suddenly collapses while walking. His current status is unknown.
Zhou Shunxin, a police officer in #Xinjiang, suddenly collaspes while walking. Officail report says vaguely that he “passed out” at the frone line of #COVID2019 control, and sent to the hospital, but doesn’t talke about why he collasped or his current status. #Coronaviruspic.twitter.com/CYfUi259Pt
Offering a lesson in contrasts, the Global Times, a mainland tabloid, has continued to tweet lighthearted human interest stories from the heart of the outbreak. Today’s story: A health-care worker getting married in the heart of the outbreak.
The GT also reported that officials in Hubei are continuing with a “comprehensive search” for patients with fevers, and have even started tracking down every individual who has purchased fever or cough medicine since Jan. 20.
Central China’s Hubei Province, where epicenter #Wuhan is located, launched a comprehensive search of fever patients on Tuesday. Authorities are tracking down people with symptoms of fever or those who bought fever and cough medicines since January 20. #COVID2019#coronaviruspic.twitter.com/6hwEYzymtM
As we reported last night, Apple published a press release admitting it “does not expect to meet the revenue guidance we provided for the March quarter” due to coronavirus-related issues.
Since we haven’t reported a full breakdown of cases in a while, here’s a complete list and breakdown of infections by country and territory, courtesy of the AP:
Mainland China: 1,868 deaths among 72,436 cases, chiefly in Hubei
Hong Kong: 58 cases, 1 death
Macao: 10
Japan: 607 cases, including 542 from a cruise ship docked in Yokohama, 1 death
Singapore: 77 cases
Thailand: 35
South Korea: 31
Malaysia: 22
Taiwan: 22 cases, 1 death
Vietnam: 16 cases
Germany: 16
United States: 15 cases; separately, 1 US citizen died in China
Australia: 14 cases
France: 12 cases, 1 death
United Kingdom: 9 cases
United Arab Emirates: 9
Canada: 8
Philippines: 3 cases, 1 death
India: 3 cases
Italy: 3
Russia: 2
Spain: 2
Belgium: 1
Nepal: 1
Sri Lanka: 1
Sweden: 1
Cambodia: 1
Finland: 1
Egypt: 1
In a recent study, China’s CCDC found that the virus’s fatality rate – 14.8% – is for people aged 80 or older with co-occurring medical conditions. Young and healthy people, meanwhile, typically experience much more mild symptoms, according to the BBC. Along those same lines, the WHO confirmed on Tuesday that the virus manifests as only a minor infection in four out of five people who contract it, according to the Guardian.
For everybody still saying that the virus is no more dangerous than the annual flu outbreak, here’s some food for thought: An analysis of 44,672 coronavirus patients in China whose diagnoses were confirmed by laboratory testing has found that 1,023 had died by Feb. 11, a fatality rate of 2.3%. That’s far higher than the mortality rate for the seasonal flu.
Finally, the New York Times has reviewed lockdown conditions across China, and confirmed that more than 760 million people are living in neighborhoods or villages with at least some imposed strictures regulating residents’ comings and goings. That represents half of China’s population, and one out of every ten people on the planet.
Some neighborhoods only require residents to show ID, sign in and have their temperature checked. Other villages prohibit bringing in guests. In places with more stringent restrictions, households are only allowed to send one person out at a time – and often not even every day.
Last night, Zeng reported that in some parts of Wuhan the lockdown has become so strict that people aren’t allowed to come outside at all.
Mississippi Welfare Director Arrested For Largest Embezzlement In State History
Submitted by Sovereign Man Explorer
Mississippi welfare director arrested for largest embezzlement in state history
What happened:
The former director of Mississippi’s Department of Human Services, John Davis, was arrested for embezzling millions of dollars from welfare funds. Some of the funds went to a former WWE wrestler who was allegedly being paid to give classes on drug abuse. In reality, the money was paying for the wrestler’s own posh drug rehab.
Former head of Department of Human Services, John Davis
He never taught a class. According to the auditor’s office, Davis and another DHS employee made fake invoices to pay Brett DiBiase — a former pro wrestler who later became a DHS employee — with money intended to help poor families. DiBiase is the son of well-known former pro wrestler Ted DiBiase.
Embezzled funds were also funneled to other co-conspirators through their businesses, using fake documents and forged signatures.
What this means:
The stolen money came from a federal grant for state welfare programs, so this doesn’t just affect Mississipians.
It’s unclear right now exactly how much money was stolen. But over $30 million tax dollars were granted to the Mississippi Community Education Center, which is owned and operated by a mother-son team who have been arrested and charged in the fraud. Just makes you wonder how many of these types of schemes go under the radar.
When the government has so much of your money to give away, it’s bound to happen.
* * *
Texas Supreme Court to decide if mom’s boyfriend has same rights as biological dad
What happened:
A divorced Texas couple split custody of their young daughter. Tragically, the girl’s mother died in a car accident.
But rather than award custody to the girl’s father, the courts split custody between the biological father and the deceased mother’s boyfriend. Everyone agreed – including the courts and the boyfriend – that the father was a perfectly fit parent.
But the daughter had lived with her mother’s boyfriend for about 50% of the time over an 11-month period. So the courts decided he had just as much standing as the biological father to seek custody.
In contrast, the girl’s maternal grandparents were denied custody, because they could not prove that leaving the biological father as sole custodian of his daughter would be harmful to her.
This is a sad case. And it’s possible or even likely that the boyfriend actually cares about this girl. But she is not his daughter. And it is concerning for a state to take away the right of the biological father to make decisions regarding his daughter’s life.
If the ruling goes the wrong way, it could set a precedent that courts can simply overrule parental rights, and grant custody to people unrelated to the child, based on any number of criteria.
* * *
Man goes to court for using phone while riding a horse
What happened:
In New South Wales, Australia a man was riding his horse down the road. That’s perfectly legal. But he was also talking on his phone. And he did not have a hands-free device attached to his horse. So the local police ticketed him for operating a vehicle while using a mobile phone.
This guy was actually forced to go to court and plead guilty, just to resolve the matter.
What this means:
Apparently Australia has cleared up all violent crime, doesn’t have any theft, and has run out of criminals. Otherwise, what cop in his right mind is going around ticketing horse riders for talking on their phones, on a rural road with light traffic?
Unlike cars, horses can actually steer themselves.
* * *
Cop who passed out drunk in his patrol car on the job won’t be charged
What happened:
A local cop in Colorado was in his patrol car, armed, and passed out, when another stumbled upon the scene. The cop who found him called it in, and said that it appeared the passed out officer was drunk. But an internal affairs investigation found there wasn’t enough evidence to prosecute.
The District Attorney finds that hard to believe. The DA said he was frustrated that he was not given enough evidence to charge the officer with drunk driving, or other crimes related to being drunk on the job.
What this means:
Every week it seems we highlight some case of an overzealous cop arresting someone for something ridiculous and petty.
But then when it comes to actual crimes and public danger caused by officers, suddenly the state isn’t so heavy handed.
Wall Street Tears Up The Reflationary Playbook, “Capitulates Into Deflationary Assets” As Growth Optimism Fades
So much can change in one month.
Back in January, when following a brief burst of reflationary euphoria Bank of America conducted its first Fund Manager Survey for the decade, it found a burst in optimism and investor euphoria, with concerns about a recession a distant memory as professional investors – unable to grasp that the market surge was entirely on the back of the Fed’s QE4 and nothing to do with actual economic growth – turned irrationally exuberant on growth.
It did not last long: just one month later, in the latest just released survey of 221 panelists who collectively manage $676BN in AUM, the mood has turned sharply lower as global growth expectations fell to just net 18% of investors surveyed believing the global economy will improve in the next 12 months (48% of respondents expect stronger growth vs. 29% expecting weaker growth) down from net 36% in January if still well above 2019 lows.
A big reason for the dour mood was rising COVID-19 fears, notably around Chinese growth, which led to the first cut in FMS global growth, global profits & global inflation expectations since Oct’19.
FMS investors also slashed their expectations for inflation 17ppt with only net 40% expecting higher global CPI in the next year; when asked what would increase inflation expectations, 26% of those surveyed said Modern Monetary Theory – also known as helicopter money and which is inevitably coming at some point, the only question is when – while 24% selected a G7 commitment to infrastructure spending.
And with the brief renaissance of value stocks that lasted for all of a few weeks last September now a distant memory, Wall Street once again expects growth stocks to outperform value stocks over the next 12 months, according to net 6% of investors surveyed; this marks the biggest jump in favor of growth since December 2014 and the highest overall reading since July 2008. So much for JPMorgan’s “once in a decade” opportunity to buy value stocks.
As a result of this reversal in sentiment, inflationary trades have once again been cast aside, and amid the combo of tepid macro, the spread of the COVID-19 virus, oil plunge offset by QE-forever consensus, BofA’s chief equity strategist Michael Hartnett sees a full capitulation into “deflation assets”, with the most “crowded trade” once again long US tech/growth stocks to an even greater extent than in January …
As one would expect, Wall Street investors cut their long-term rate expectations this month, substantiaing their conviction in owning deflation winners.
Looking at sectors, allocation to technology rose 9% to net 40% overweight, the highest level since October 2016, with Tech sector allocation the highest among FMS investors.
What about regions? Here allocation to emerging markets equities rises 3% to net 36% overweight, the highest since March 2019, making EM equities the most preferred region for the fourth consecutive month.
As for currencies, a net 54% of those surveyed say the US dollar is overvalued, the second highest level since 2002… which is ironic with the dollar continuing to surge (at least against other fiat currencies, if not so much gold).
“Investor sentiment is less bullish than last month and shows full capitulation into deflation assets,” said Michael Hartnett, chief investment strategist. “We stay irrationally bullish.”
Hartnett’s “irrational bullishness” is hardly unique, because despite this deflationary capitulation, allocations to global equities rose by 1 percentage point to net 33% overweight, a 20-month high, as US equity allocation rose 16ppt to net 19% overweight, the highest since Sept. 2018.
So can anything ever break markets out of their infatuation with deflationary assets? Yes: one thing – helicopter money. According to FMS respondents, MMT (Modern Monetary Theory, aka Magic Money Tree) is most likely to increase global inflation expectations (26%), followed by G7 infrastructure spending plan (24%) & “election of progressive liberal” as US president (18%). These are also the three biggest risks to the longest “bull market” of all time:
Hilariously, it is now the end of QE in Europe and Japan that markets believe will push inflation expectations higher. Which means that central banks have totally failed in their mission which is to stimulate inflation through monetary intervention, and in reality every central bank stimulus is now deflationary. We doubt anyone in the mainstream economic profession will touch this stunning observation with a ten foot pole.
All of a sudden, really crazy things are starting to happen all over the world. Giant swarms of locusts are absolutely devastating entire regions, extremely unusual storms are confounding meteorologists, earthquake and volcanic activity are both on the rise, and five very dangerous diseases are sweeping across the globe. So far in 2020, it has just been one thing after another, and many are speculating about what could be ahead if events continue to escalate. The other day my wife mentioned that one of her friends suggested that I should put together a list of all the weird stuff that has been taking place, and so that is what I have decided to do.
The following is a list of 10 plagues that are hitting our planet simultaneously…
#1 Armies Of Locusts – As I detailed the other day, swarms of locusts the size of major cities have been devouring entire farms in Africa in as little as 30 seconds. These swarms have also been spreading throughout the Middle East, and now we have learned that they have even reached China…
A gigantic swarm of locusts that belong to a plague that has ravaged millions of acres of crops across east Africa has been spotted reaching the Chinese border.
Billions of the insects have destroyed food supplies across Kenya, Somalia and Ethiopia in what has been described as the worst plague for decades.
#2 Extremely Bizarre Weather Patterns – It is almost as if virtually all of the old rules have suddenly been thrown out the window. An all-time record 209 mph wind gust just hit Calfiornia, and absolutely crazy storms are happening all over the planet. For example, just check out what just took place in Australia…
Sydney has been thrown into chaos by a devastating storm that saw two months of rainfall in just two days – forcing mass evacuations, leaving 150,000 homes without power, and prompted warnings not to drive to work. The storm dumped 400mm of rain on the city over the weekend, causing mayhem for commuters on Monday morning with roads blocked, ferries canceled and trains suffering major delays across the network.
#3 Unprecedented Flooding – We are seeing unusual flooding all over the world right now, and the flooding that is devastating the southern U.S. at this moment is being called “unprecedented”…
In Jackson, Mississippi, hundreds of residents either watched their homes flood over the weekend or worried their residence would soon be drenched as the Pearl River crested Monday at 36.8 feet, its third-highest level ever recorded – behind only 1979 and 1983.
Calling the Jackson floods “historic” and “unprecedented,” Mississippi Gov. Tate Reeves said in a Sunday press conference that “we do not anticipate this situation to end anytime soon. It will be days before we are out of the woods and the waters recede.”
#4 Major Earthquakes – Really big earthquakes are happening with such frequency now that it is very difficult for me to write about them all. For example, a magnitude 7.7 quake recently struck off of the coast of Jamaica, but I have been so busy writing about other disasters that I have not even mentioned it until now…
A magnitude 7.7 earthquake struck Tuesday about 80 miles from Jamaica, shaking people in the Caribbean and as far away as Miami.
A tsunami of 0.4 feet was recorded in the Cayman Islands at George Town, but no tsunami was observed at Port Royal, Jamaica, or Puerto Plata, Dominican Republic.
#5 Unusual Volcanic Eruptions – Seismic activity has been rising all over the globe, and over the past couple of months we have seen volcanoes all over the world pop off like firecrackers. One of the most notable eruptions that we have seen in recent days was the most powerful eruption of Mount Merapi in 90 years…
One of Indonesia’s most active volcanoes, Mount Merapi just experienced its most powerful eruption since 1930! The eruption reportedly took place on Thursday and was caught on video displaying a powerful and terrifying eruption showing the moment the crater exploded and launched lava and ash an estimated 2,000 meters into the air forcing local residents to stay outside of the designated no-go zone 3km (1.8 miles) from the crater.
#6 The Coronavirus – Needless to say, the coronavirus outbreak in China has been getting more headlines than anything else on this list. The numbers continue to rise, and many are speculating that this could potentially become the worst global pandemic since the Spanish Flu pandemic of 1918. In a desperate attempt to keep the truth from getting out, the World Health Organization is asking the major social media companies to censor their users…
The World Health Organization has held talks with tech giants to stop the spread of coronavirus “misinformation,” despite the fact that some things once labeled “misinformation” have since turned out to be true.
The meeting was organized by the WHO but hosted by Facebook at its Menlo Park campus in California. Attendees included representatives from Amazon, Twilio, Dropbox, Google, Verizon, Salesforce, Twitter, YouTube, Airbnb, Kinsa and Mapbox.
#7 The African Swine Fever – “Pig Ebola” has already wiped out millions upon millions of pigs in China, and it has now spread to more than 40 other countries. The price of pork is absolutely skyrocketing in China right now, and to help fill the demand the Chinese are increasingly importing pork from U.S. sources…
Tyson Foods Inc. says it’s just starting to see the benefits of the African swine fever outbreak in China, which includes a 600% year-over-year increase in pork orders to China in the fiscal first quarter.
#8 The H1N1 Swine Flu – Unlike the African Swine Fever, the H1N1 Swine Flu can actually kill humans. In fact, it has already killed more people outside of China than the coronavirus outbreak has. For instance, 13 people in Taiwan died from the virus in one recent week alone…
As of now, the H1N1 virus is posing a great threat once again as it has claimed 13 lives in Taiwan in the last week. This virus is highly contagious and is known to spread from human to human. It is especially dangerous for those with a compromised immune system like those suffering from chronic medical conditions and long-term health conditions.
#9 The H5N1 Bird Flu – This strain of the bird flu caused a massive global scare a number of years ago, and now it is experiencing a stunning resurgence. China has had to kill thousands of chickens so far, and experts are warning that this outbreak could be just getting started…
China also is reportedly dealing with an outbreak of the deadly H5N1 bird flu in chickens in the Hunan province, an area that borders the province where the coronavirus emerged, according to the South China Morning Post.
As of Feb. 1, local authorities had culled 17,828 poultry after the H5NI outbreak, according to a statement by China’s Ministry of Agriculture and Rural Affairs.
#10 The H5N8 Bird Flu – This strain is different from the H5N1 bird flu, but many believe that it is even more frightening. It has started to pop up in numerous places around the globe, and experts were really surprised when it recently made an appearance in Germany…
Germany has reported an outbreak of the highly pathogenic H5N8 bird flu virus in a backyard in the southwestern part of the country, the World Organisation for Animal Health (OIE) said on Monday.
The virus killed 44 birds out of a flock of 69 in Bretzfeld, in the Baden-Wurttemberg region, the Paris-based OIE said, citing a report from Germany’s food and agriculture ministry.
Can any of you remember a time when we have been hit by crisis after crisis like this all at once?
2020 has certainly started off with quite a bang, and many expect global events to continue to accelerate.
So hold on to your hats, because things are likely to get even crazier in the months ahead.
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