Mar 25

Today’s News 25th March 2020

  • "Tinderbox For Spread": UN Braces For Covid-19 Carnage In Refugee Camps
    “Tinderbox For Spread”: UN Braces For Covid-19 Carnage In Refugee Camps

    “Around 70 million people are suffering displacement in crowded camps, awaiting the arrival of the coronavirus pandemic,” an alarming report in Foreign Policy begins.

    It’s been low on governments’ radar considering many are bogged down battling the pandemic in their midst, but the UN High Commissioner has warned there’s a looming coronavirus disaster soon to hit the over-crowded camps especially across the Middle East and Africa.

    “We don’t know, and that’s largely because we haven’t done any testing,” Muhammad Zaman, a professor of bioengineering at Boston University, commented recently on the potential case numbers in the camps. “We need to know how acute the problem is before we come up with an intervention.”

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    Syrian refugee camp. Source: AFP via Getty/FP

    A handful of Covid-19 cases have been confirmed in camps in Iraq as well and with suspected cases in migrant camps on the Greek islands, prompting the UNHCR to initiate a $33 million program to provide additional protective gear and sanitation training for health workers in the camps.

    But many officials think it’s only a matter of time before the pandemic unleashes carnage in the camps — the most populated lying in Lebanon an southern Turkey along the Syrian border, with official Turkey numbers at 3.4 million. There are also sprawling camps across sub-Saharan Africa.

    An official with the Norwegian Refugee Council, Jan Egeland, predicted that “There will also be carnage when the virus reaches parts of Syria, Yemen and Venezuela where hospitals have been demolished and health systems have collapsed.”

    Another humanitarian official recently interviewed by NBC called the already poor conditions camps “a tinderbox for the spread of the disease”.

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    Azraq refugee camp, near Al Azraq city, Jordan. Image via Middle East Online.

    Last week the UN was forced to suspend refugee resettlement abroad due to travel delays and closures due to the coronavirus pandemic. Last year the UNHCR settled a total of 64,000 abroad.

    “Refugee families are being directly impacted by these quickly evolving regulations in the course of their travel, with some experiencing extensive delays while others have been stranded or separated from family members,” the agency said in a statement.

    The program’s temporary halt also came after there were 10 confirmed Covid-19 cases in Germany among recently resettled refugees.

    UNHCR spokesman Andrej Mahecic said of the cases: “These are people who are either refugees or asylum seekers.” He told a press briefing the cases are in Munich, Berlin and Heidelberg.


    Tyler Durden

    Wed, 03/25/2020 – 02:45

  • The European Central Bank Is Being Stretched To Its Breaking Point In Italy
    The European Central Bank Is Being Stretched To Its Breaking Point In Italy

    Authored by Fabrizio Ferrari via The Mises Institute,

    When Mario Draghi’s tenure was approaching its end, I argued for a sterner governor for the European Central Bank (ECB); hence, I was not even slightly enthusiastic when Draghi’s successor turned out to be Christine Lagarde – a patent dove, as can be inferred from her ideological proximity to a famous Keynesian like Olivier Blanchard.

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    However, I am here to defend the stance she took with her March 12 speech – in which, addressing the economic turmoil spurred by the coronavirus crisis, she declared that it was not a central banker’s job to prevent the occurrence of spreads on financial markets – which has been fiercely attacked both by Italian media and politicians, and even by Italian president Sergio Mattarella. There are three reasons why I deem, for once, Lagarde’s viewpoint to be right. These reasons are based in monetary policy theory, in the institutional framework of European Union, and in the current situation of the Italian economy.

    The Limits of Monetary Policy

    First, we need to understand that what Lagarde stated—that it is not her job to prevent government bonds’ prices in the European Monetary Union (EMU) from diverging—is absolutely correct from a technical perspective. Indeed, if we consider the theoretical approach to the role of the central bank as a lender of last resort as conceived by both Walter Bagehot and Henry Thornton (both recognized and respected even by mainstream neoclassical economists), we find that actually there should be no room for monetary policy to be influencing assets’ relative prices. In fact, the role of a central bank (i.e., of a lender of last resort in a fiat money and fractional reserve banking system) should be to grant liquidity to temporarily illiquid—but solvent, i.e., structurally sound—commercial banks. In no way should monetary policy be involved in steering (and messing with) asset prices—as has regrettably been occurring in the EMU since the beginning of QE in March 2015—since central banks’ interferences distort the natural market formation of prices, bringing about Cantillon effects and spurring both malinvestment and excessive risk taking (through generally lowering returns on assets and pushing savers to invest in riskier ones).

    It is evident that the ECB has already been a hugely interventionist central bank; suffice it to mention that currently the ECB’s balance sheet is roughly 40 percent of the EMU’s GDP and that the European banking system is already flooded with €1.5 trillion in excessive reserves. Hence, it is also frankly hard to see how further room for monetary policy interference in a market capitalist economy could be justifiable—even conceding to hardened shortsighted Keynesians that the current coronavirus shock is a purely demand-side one, which it absolutely is not.

    The Institutional Framework of the European Union

    Here the argument is pretty simple and straightforward. First of all, we need to remember that EMU is a monetary union in which European national states retain fiscal sovereignty. The problem with such a framework is that Italian monetary nationalists, Keynesian and MMTer (modern monetary theory) pseudoeconomists, and national socialist politicians interpret this international deal as follows: “burdens should be shouldered together and addressed with a common tool (i.e., the currency we all share, the euro), whereas benefits should be enjoyed privately by member states.” Indeed, they do not see (or pretend not to see) that the only way—even under a Keynesian paradigm—whereby monetary policy could be helpful in such a crisis would be if the fiscal policy decision level were the same as the monetary policy one.

    This is exactly why the current EMU’s institutional framework—developed in the unideal world we live in, i.e., with fiat money, fractional reserve, and Keynesian macroeconomics—already provides OMT (outright monetary transactions), that is, a safety net for those governments (such as the current Italian one) begging for a monetary policy shield to cover their debt costs. Obviously enough, however, given that the euro is the currency of all Europeans (and not only of Italians), the regulatory framework of OMT requires the applying state to sign a Memorandum of Understanding, which basically transfers its fiscal sovereignty at the European level. So, it is evident that the tool available to the Italian government in order to reduce its financing costs already exists and can be triggered whenever Italian politicians would like to do so.

    The problem is that Italian politicians want to squander the dowry of every European (i.e., the euro, which would be inflated and/or whose massive unbalanced injection would cause price distortions) without agreeing to implement those fiscal and institutional reforms that by themselves would suffice to better their public finance lot and to reduce the funding cost of their debt. In other words, Italians want to be saved by the EU without being subject to any conditions. Secondly, we ought not to forget that the ECB has already helped Italian governments a lot: the Public Sector Purchasing Program, indeed, has so far (December 2019) bought roughly €370 billion in Italian bonds and €530 billion in German ones; however, German GDP is now (2019) almost twice as much as Italy’s—meaning that in terms of the proportion of government bond purchases to national GDP Italy has been hugely privileged (530/370 = 1.4) through disproportionate monetary policy support for its public debt funding cost.

    The Current Situation of the Italian Economy

    To put it bluntly, there is nothing monetary policy could do now for the Italian situation. Italy is a paramount example of a capital-consuming economy, where the investment level has plummeted (Figure 1) and labor productivity stagnates (Figure 2).

    Figure 1

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    Figure 2 : GDP per hour worked (Germany, Italy, EMU), 2010 = 100.

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    Source: OECD (2020), GDP per hour worked (indicator). Accessed Mar. 13, 2020. DOI: 10.1787/1439e590-en.

    Moreover, unfavorable demography (almost one Italian in four is older than 65) and decreasing natality (on average roughly half as many children as were born in the 1950s and ’60s are born annually) put further stress on the frail pension system—which has was very poorly devised in the 1970s and ’80s.

    In other words, there exists no magic monetary or financial trick that can save Italy now: the only available path is to reduce pension expenditures (which are the second highest in proportion to GDP among Organisation for Economic Co-operation and Development (OECD) members, immediately after Greece’s) and employ these resources in healthcare and tax reductions. However, those are all policies that do not (or should not) at all concern a central banker, and they are exactly the policies that other European partners would request Italy to enact in order to apply for OMT.

    Concluding, Lagarde might have been untoward in her timing and the form of her speech; nonetheless, the substance is ironclad and sound. Italy cannot keep whining and hoping for external help: it needs to handle its fate and must take the courageous—and socially and politically tough—path that it has avoided so far. Economies grow—as Hayekian business cycle theory teaches—only if agents are willing to forego consumption today and save and invest in order to deliver higher output (thanks to increased productivity) tomorrow. There is no shortcut.


    Tyler Durden

    Wed, 03/25/2020 – 02:00

  • EU Shrugs Off US Sanctions, Gives Millions In Coronavirus Aid To Iran
    EU Shrugs Off US Sanctions, Gives Millions In Coronavirus Aid To Iran

    The White House has not backed off it’s ‘maximum pressure’ campaign on Iran even as the Islamic Republic’s Covid-19 cases and deaths continue to soar, approaching 25,000 confirmed cases Tuesday.

    Despite even close US ally Britain quietly signalling it’s had enough of Washington’s ill-timed pressures, Secretary of State Pompeo has upped the ante further, on Monday accusing the Iranian regime of everything from hoarding masks and equipment to intentionally spreading the deadly disease to at least five countries.

    But it appears Europe has finally begun to shirk US demands. On Monday EU foreign policy chief Joseph Borrell announced 20 million euros in new aid to Iran, and more crucially said the body will support Tehran’s request for IMF assistance.

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    “We’ve not been able to provide a lot of humanitarian help but there is some 20 million euros in the pipeline … that we expect to be delivered over the next weeks,” Borrell said in a video news conference Monday.

    “We also agree in supporting the request by Iran and also by Venezuela to the International Monetary Fund to have financial support,” he said further but without disclosing details.

    European officials consider the situation as urgent and see the US pressure campaign as greatly exacerbating the death toll given Iran lacks much of the basic medicines and equipment to treat at-risk patients and mitigate the outbreak. Recently Iranian health officials said shockingly that one person is dying from the virus every 10 minutes.

    The pressure for some kind of dramatic blanket easing of US sanctions is only set to grow, given that last week Iran’s leaders for the first time in a half-century turned to the IMF. Bloomberg reported of the urgent IMF appeal:

    Iranians say that their economy is weak and unable to cope with the humanitarian toll because of the U.S. sanctions. Last week, Iran turned to the International Monetary Fund for the first time since the 1960s for aid, though Ali Vaez, the Crisis Group’s Iran project director, said the U.S. may try to block the IMF loan in order to keep up the pressure on the regime.

    No doubt this will unleash fury out of Pompeo’s office, but at such a crucial juncture with the whole world’s eyes on combating the coronavirus pandemic, Washington will continue to shed allies by keeping up the so-called ‘maximum pressure’. 

    Iran’s leaders have said that without immediate assistance possibly “millions” will die inside the country, while further blaming Trump and Pompeo’s policies for increasing the death toll. 


    Tyler Durden

    Wed, 03/25/2020 – 01:00

  • The Geopolitics Of American Fear
    The Geopolitics Of American Fear

    Authored by Peter Zeihan via Zeihan.com,

    Today, I’m not going to go through all the country-by-country details of the ongoing coronavirus pandemic. My team and I are working diligently – franticly – to assimilate a huge amount of ever-changing information. As soon as we have some preliminary conclusions, we will share them. But for now we just don’t have enough hard data.

    That will change soon.

    This coming week (March 23-28) the South Koreans will be in the fifth week of their epidemic. To be blunt it is what I’ve been waiting for. The “typical” coronavirus experience for someone who requires hospitalization and survives is about 25 days end-to-end; five weeks is about what we need to get some good data.

    Why the Koreans? The South Koreans are technically minded, they have a top-notch health care system, they are culturally wired for quick responses, their first instinct isn’t to lie about everything, and they believe in math. They will soon provide the world with the best and most holistic information about all aspects of the virus. If coronavirus had first erupted in South Korea, I have zero doubt it would have been contained, squashed, and we’d not be discussing it at all, much less living under self-imposed quarantine.

    Until I have that information, however, I think our time is best served discussing the ongoing panic.

    In particular, the (I’m not sure this is quite the right word) positive aspects of the panic. There is more to American panic than toilet paper shortages.

    The American geography is by far the best on the planet. The Greater Midwest is the largest chunk of temperate zone, high-quality arable land in the world, and it is overlain by the world’s largest internal navigable waterway network. Development and industrialization is the cheapest there of anywhere in the world. Barren deserts, rugged mountains, dense forests, giant lakes and ocean moats make for a nigh invasion-proof homeland. For five generations the United States experienced greater development, rising standards of living, easy financial access, minimal health concerns, rising economic growth, all in an environment of almost perfect security.

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    This has many, many outcomes. Three are worth highlighting:

    First, considering its riches, its low development costs and its security, the U.S. economy is geographically set up for massive success. It isn’t about policy or governance or ideology. It is about place. That cannot be copied. The American system has exited every decade in a stronger position than it was in when it entered, including the decade periods of the Great Depression and Great Recession. It came thru the 1920s Spanish flu epidemic (a far more deadly pathogen than coronavirus) just fine. It will come through this one.

    Second, the United States isn’t very good at national governance. When geography takes care of all the big issues, there is little need for a large, overarching, competent, national government. And it shows. The U.S. isn’t Germany or Korea, countries that live in geographic pressure cookers and so governance has to be top notch to ensure survival. This isn’t Russia which is paranoid for good reason and so must excel and intelligence operations. This isn’t Brazil where the terrain and climate are hostile to development and so excellence at infrastructure policy is essential. America’s lack of federal competence means that when there is a crisis it all comes down to the personality, skill and contacts of the person at the top. America’s initial reaction to the coronavirus isn’t its first failure of presidential leadership. But America’s sublime geography means the country will survive this failure to have others down the road.

    Third, Americans are cocky. When your national founding myth is one of achievement with minimal adversity, it is eaaaaaaaaaaaaaaaaasy to become convinced you are the Chosen People and life is simply about navigating oneself from success to success. Of course, I think we all realize this isn’t how things actually work. From time to time something or someone punches you in the face. And when that happens to Americans, we absolutely, positively, lose our shit.

    Americans have no sense of proportion. The same thing that gives us our can-do optimism and arrogance means that when we face unexpected challenge we fear the covenant with God has been broken and doom doesn’t so much beckon, but instead will crash down upon us presently. And so we panic. We overreact. But we overreact with the power of the world’s largest and most stable and most technologically advanced economy. We overreact with the strength of a continent. We overreact with the world’s most powerful long-range military, a military that absolutely controls all global waterways. And in doing so we reshape the world. Not on purpose, but simply as a side effect of our panic.

    American history of all eras is rich with examples of such manic-depressive behavior. Some “recent” ones:

    • The Pearl Harbor panic fostered the deepwater dominance strategy, culminating in a Navy more powerful than all other players combined.

    • The Sputnik panic brought us a root-to-branch overhaul of the educational system and industrial plant.

    • The Vietnam depression married tech to military strategy and brought us JDAMs, cruise missiles, the Internet and cell phones.

    • The 1979 and 1983 oil shocks led directly to deepwater oil production and the shale revolution.

    Our allies understand this. Winston Churchill famously noted that “Americans will always do the right thing, after exhausting all the alternatives.” So do our rivals: a common Russian phrase during the Cold War was “Americans feel that if it is worth doing, it is worth overdoing.”

    Americans have not felt a panic since the September 11 attacks. It has been two decades since we were scared. We are due. I always assumed the next fear-response would be because of something that some dumbass country did to the United States, thinking the Americans were over the hill. Then the full force of the United States military and economy would crash down upon it and wipe it from memory.

    Apparently, viruses can trigger America’s fear-response too.

    In the past 96 hours the United States has gone from functionally zero actions against coronavirus to among the world’s most invasive. And unlike other countries – China comes to mind – who have only instituted constraints on specific areas where there are known coronavirus outbreaks, the Americans have instituted their restrictions nationwide. America now hosts the largest population in the world under lockdown.

    The speed and depth of the change is something only Americans can culturally manage, and this is only the beginning.

    The scale of resource application that is about to occur is nothing less than historically unprecedented, rivaled only by American actions in previous fear-response incidences.

    • The Federal Reserve’s new bond-buying program to support the markets? Its only analogue is what the same Federal Reserve did back during the 2008 Financial crisis, but this time it was done in a day instead of a month.

    • The industrial plant’s re-tooling to make medical supplies? Completely unprecedented…unless you compare it to America’s post-Sputnik industrial overhaul.

    • Want to see something really impressive? Watch the process for crafting, manufacturing and distributing the coronavirus vaccine. The US just human trials on March 16. That’s a solid two months faster than any such trials, ever. (And if that were not enough, in the heart of the crisis the US government is attempting to wholesale purchase the German firm furthest along in generating the German anti-coronavirus vaccine. Needless to say, in Germany this is perceived as a total dick move.)

    Americans are capable of incredible ideological, economic, technological, logistical, military, and cultural leaps when the panic sets in. The coronavirus crisis is by no means anywhere close to being over, but the switch has been flipped. Now comes mobilization.

    These are “merely” things the United States is doing at home. With a few weeks (maybe days?) the Americans are going to do what they’ve done during every other fear-response. Apply (perhaps unfairly) that fear to all aspects of all of their international relationships.

    The timing of this particular fear-response gives it far greater weight than those that have come before.

    The global system as we know it – the system that has enabled everything from global manufactures trade to global energy trade to the existence of the European Union to the rise of China – is an American creation, designed for the Cold War. That system was the payment to our allies to side with us against the Soviet Union. That system ceased serving American strategic interests at the Cold War’s end, and in the days before coronavirus it was coming to an end. Coronavirus has sped things up, severing most of the remaining ties that bind the world together. No one else has the military capacity to ensure freedom of the seas, nor the demographic consumptive capacity to fuel global commerce. Since their economy is largely self-contained, the Americans really don’t care if the system collapses.

    And that was before the coronavirus-induced fear response.

    In this environment, other nations need to be extremely careful, lest they court American wrath. America has a near-infinite capacity to act, a near-immunity to blowback, and a near-zero concern for consequences. It isn’t clear to me that there is yet recognition of this fact in the wider world.

    Russia’s continual use of military aircraft to needle the North American air defense envelope during an American fear-response is monumentally stupid. I lack the vocabulary to communicate how fantastically foolish it is for Chinese state media to spread conspiracy theories that the US Army originated coronavirus and dropped it into Wuhan. Even Europeans whining that the Trump administration acted too hastily in enacting travel restrictions on flights between Europe and the United States wasn’t perhaps the right time to take issue with American policy.

    Yes, all-in-all it has been a crappy couple of weeks, and we should just bake into our expectations that the next three months won’t be even remotely fun. But honestly the real news is that we are now – right now – suspended in a deep-breath moment between eras of history, and the world’s only superpower is absolutely terrified.

    *  *  *

    My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It is about the shape of a global Disorder when the Americans go home.


    Tyler Durden

    Tue, 03/24/2020 – 23:45

  • Pompeo Issues '5 Facts' Claiming Iran Exported COVID-19 To "At Least 5 Countries"
    Pompeo Issues ‘5 Facts’ Claiming Iran Exported COVID-19 To “At Least 5 Countries”

    As even Britain is urging its close US ally to moderate its stance on Iran sanctions as the Mideast country’s death toll surges from the coronvirus pandemic, the Washington-Tehran tit-for-tat exchanges and blame game over Covid-19 continues unabated. 

    Yesterday Pompeo issued a new list of five allegations of how Iran’s leaders have handled the outbreak. Notably this featured the fresh charge that Iran is responsible for recklessly spreading the deadly virus to five countries.

    “In February, Iran’s chief terror airline, Mahan Air, ran at least 55 flights between Tehran and China, further infecting the Iranian people,” said Pompeo. “At least five foreign countries’ first cases of coronavirus were directly imported from Iran, putting millions more lives at risk.”

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    Pompeo’s newly released five “facts” were posted to US Embassy websites around the world, and further accuse Iran of diverting vital funds from Covid-19 protection to instead supporting global terrorist. 

    Europe has largely stood by the Islamic Republic as it’s lashed out at US sanctions. On Monday a new announcement of millions in EU aid to help with coronovirus was issued by the EU: “We’ve not been able to provide a lot of humanitarian help but there is some 20 million euros in the pipeline… that we expect to be delivered over the next weeks,” EU foreign policy chief Josep Borrell said.

    It appears the White House’s latest attempt to deflect growing criticism over its ‘maximum pressure’ campaign, which is exacerbating the outbreak in hard-hit Iran, is also also centered around the charge that the regime allegedly “stole” billions of dollars meant for humanitarian assistance to the Iranian people. However, little to no proof has been offered for such claims.

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    Here are Pompeo’s 5 facts posted to State Department websites this week regarding what he dubs “the Wuhan virus” and Iran’s alleged role in spreading it:

    Fact: In February, Iran’s chief terror airline, Mahan Air, ran at least 55 flights between Tehran and China, further infecting the Iranian people. At least five foreign countries’ first cases of coronavirus were directly imported from Iran, putting millions more lives at risk.

    Fact: The Iranian regime ignored repeated warnings from its own health officials, and denied its first death from the coronavirus for at least nine days. The regime continues to lie to the Iranian people and the world about the number of cases and deaths, which are unfortunately far higher than the regime admits.

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    Fact: As Iranian regime officials ask for more funds, it is important to note that since 2012, Iran has spent over $16 billion on terror abroad, and used sanctions relief from the JCPOA to fill up its proxies’ coffers. Regime officials stole over a billion Euros intended for medical supplies, and continue to hoard desperately needed masks, gloves, and other medical equipment for sale on the black market.

    Fact: U.S. sanctions do not target imports of food, medicine and medical equipment, or other humanitarian goods. Iranian documents show their health companies have been able to import testing kits without obstacle from U.S. sanctions since January.

    Fact: The United States has offered over $100 million in medical assistance to foreign countries, including to the Iranian people, and our scientists are working tirelessly to develop a vaccine. Khamenei rejected this offer because he works tirelessly to concoct conspiracy theories and prioritizes ideology over the Iranian people.

    * * *

    Meanwhile, Tehran officials have vehemently denied Pompeo’s “conspiracies” after recently floating their own claims that Covid-19 actually began in US Army labs, echoing similar bombastic statements in Chinese state media. 


    Tyler Durden

    Tue, 03/24/2020 – 23:25

  • Cop Out: Will Coronavirus Hysteria Open Door To Full-Blown Martial Law In America?
    Cop Out: Will Coronavirus Hysteria Open Door To Full-Blown Martial Law In America?

    Authored by Robert Bridge via The Strategic Culture Foundation,

    Amid rumors of a national lock-down, and the National Guard already activated in states across the country, rumors are rife that the land of the free will soon be cordoned off behind an iron curtain of martial law.

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    Although there have been just 258 reported deaths from coronavirus in the United States, Pentagon officials announced Friday it is drafting plans to take over hotels, college campuses, sports facilities and other buildings “if necessary” to help hospitals accommodate patients.

    “We would…take the building over in a period of an exceptionally short amount of days, and we would go in and turn this into an ICU-like facility,” Lt. Gen. Todd Semonite said in comments to the Wall Street Journal. The remarks come as the National Institutes of Health (NIH) warns that as many as 70,000 Americans could be confirmed as infected with coronavirus by the end of next week.

    Boots are already on the ground in neighborhoods across the nation as 3,300 Air and Army National Guardsmen have been called up in some 30 states and US territories, including California and New York. In Baltimore, meanwhile, the scene was reminiscent of Hurricane Katrina, when thousands of people were forced to seek shelter inside of the Louisiana Superdome, as rows of National Guard Humvees were spotted outside of empty stadiums.

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    In California, meanwhile, where officials say 56 percent of the state – more than 20 million people, a figure that has been hotly disputed since just 1,195 positive cases and 23 deaths have been reported in the state thus far – could eventually be infected, Gov. Gavin Newsom announced a “stay home” order for the state’s nearly 40 million residents. The clampdown includes the closure of various types of businesses, including dine-in restaurants, entertainment venues and public events and gatherings, according to the California state government website.

    Needless to say, it is almost impossible to imagine the lock-down of America’s most liberal and populous state – where crime and tent cities have overtaken many urban areas – without some heavy military assistance. Newsom anticipated such fears when he told a presser that martial law would not be necessary to impose order “at this moment.”

    “If you want to establish a framework of martial law, which is ultimate authority and enforcement, we have the capacity to do that, but we are not feeling at this moment that is a necessity,” he said.

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    Martial law has been instituted on the national level just once in the United States, and that was during the Civil War.

    Amid ruminations of martial law on the streets of America, there is also talk that Trump, who has not been shy about taking harsh measures to stamp out the spread of the virus, which included a travel ban on 26 European nations, may impose a weeks-long ban on domestic air travel, as well as a halt to all non-essential business activity, according to a report in The Washington Examiner.

    Such a move, should it actually come to light, would almost certainly necessitate large-scale military assistance. In other words, the imposition of martial law from sea to shining sea. This would give Trump, as Commander-in-Chief, authority over the states and their governors with regards to how to handle not only the coronavirus, but any crime and violence that follows in its wake.

    Who will pay the rent?

    Last week, Wall Street hemorrhaged about 4% in turbulent trading as fresh measures – including massive interventions by central banks to ease market strains – did nothing to calm investors.

    Meanwhile, large swaths of the international service sector – hotels and airlines particularly – are threatened with deep layoffs and even bankruptcies amid the CONVID19 pandemic. The Economic Policy Institute estimated that the outbreak could eliminate three million jobs by summer. Inevitably, millions of American will soon be feeling pain, potentially on a scale not seen since the Great Depression.

    Considering the average American’s personal debt bubble, where an estimated 49% are living paycheck to paycheck, and that wages for the bottom 50% of college graduates (many of who are saddled with record-high tuition debt) are lower today than they were in 2000, and it is easy to understand how any sudden upsurge of unemployment will reverberate through the markets like an earthquake.

    To underscore how serious the government is taking these risks, Trump announced that federal student loan payments will be suspended without penalty for the next two months, while also waiving interest on those outstanding loans as well, Forbes reported.

    At the same, as the specter of recession looms large on the horizon, the Trump administration is considering an idea that sounds like something the democratic socialist Bernie Sanders would get excited over: the distribution of free money to every American taxpayer – $1,000 to be exact. Although that amount of money could be easily blown on a weekend at Disneyland (if it were open), some economics believe it could be the incentive – similar to the one used in the wake of the 2008 financial crash – to prevent the US economy from going off the tracks.

    Cop out?

    More to the point of this article, however, is what is happening on the order and security front. While it is very encouraging to see that the White House is taking major steps to protect average Americans from economic hardship as a result of COVID19, there remains the prospect for things getting out of control. With that possibility in mind, it is difficult to understand how some cities and states are actually telling their police to essentially not respond to certain crimes.

    In Philadelphia, for example, the Police Department has been instructed its offices to temporarily stop making arrests for certain nonviolent crimes – including drug offenses, burglary, economic theft and vandalism – until next month amid the coronavirus outbreak.  According to the memo, obtained by The Philadelphia Inquirer, arresting officers would detain the offender, process the paperwork, and then release the offender back into the general population. The announcement came 24 hours after Philadelphia courts closed until April 1 to limit the spread of the coronavirus.

    Meanwhile, across the country in Fort Worth, Texas, the police will cease arresting people for “low-level crimes” – Class C misdemeanors such as thefts involving less than $100 and vandalism – if a citation can be issued in its place, the Fort Worth Star-Telegram reported.

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    Now let’s be clear. One hundred dollars may seem like chump’s change to the powers-that-be, but for people struggling on the front lines against not only a deadly virus, but unemployment as well, that type of money can mean the difference between eating and going hungry. And if criminals know they will only be slapped with an order to appear in court there is little to deter crimes from happening.

    None of this bodes well for the future of Main Street, USA, which on the one hand faces the loss of basic police protection, and on the other full-blown, boots on the road martial law. America is now at a crossroads with regards to how it addresses the coronavirus pandemic, and although the majority of Americans will probably never get sick from the disease, they may very well lose a large chuck of their civil liberties in the coming fallout.


    Tyler Durden

    Tue, 03/24/2020 – 23:05

  • $850 Billion In Stock Buying Is About To Be Unleashed
    $850 Billion In Stock Buying Is About To Be Unleashed

    Over the weekend we showed something striking: as market crashed, quant and various other systematic funds were unwinding their positions at the fastest rate in history. Starting with CTAs…

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    … which are now very short stocks and long the dollar…

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    … continuing with risk-parity…

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    … the vol control…

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    … the systematic unwind was simply unprecedented, and far beyond the selling observed in the discretionary community.

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    Of course, this is also good news: it means much if not all of the “algo” selling is now over simply because there is little more left to sell as Charlie McElligott discussed earlier today.

    It also means that all that the dip buyers need is a catalyst to unleash a massive buying rampage – as we observed in today’s 11% market surge which was the biggest since 1933. And in one specific instance, a group of investors doesn’t even need a catalyst as a result of the massive outperformance of bonds relative to stocks in the past month.

    We are talking about month and quarter-end rebalancing, and according to JPMorgan estimates, balanced or 60:40 mutual funds, a $1.5tr universe in the US and $4.5tr universe globally, need to buy around $300 billion of equities to fully rebalance to 60% equity allocation.

    At the same time the $7.5 trillion universe of US defined benefit plans, would need to buy $400 billion to fully rebalance and revert to pre-virus equity allocations.

    Finally, there are the “balanced” sovereign pension funds such as Norges bank and GPIF, which before the correction had assets of around $1.1tr and $1.5tr, respectively, and which according to JPM would need to buy around $150 billion equities to fully revert to their target equity allocations of 70% and 50%, respectively.

    While JPM admits that the timing of these rebalancing flows is uncertain, it is likely to take place over the coming days and ahead of March 31. As JPMorgan concludes, “$850 billion of pending rebalancing flows is done over the next few weeks that should also help to reduce vol and to lift equity prices higher from here.”

    The only question is whether much if not all of this massive rebalance took place during today’s historic surge. If so, those hoping for an invisible hand pushing stock higher into month end may be very disappointed, especially if Congress is unable to come out with any credible stimulus package.


    Tyler Durden

    Tue, 03/24/2020 – 22:42

  • LA Mayor To Cut Off Water & Power Of "Irresponsible, Selfish" Stores That Remain Open
    LA Mayor To Cut Off Water & Power Of “Irresponsible, Selfish” Stores That Remain Open

    Earlier, Los Angeles County Sheriff Alex Villanueva ordered all gun stores closed  (fearing that too many first-time gun-owners were getting access to weapons), and now LA Mayor Eric Garcetti lashed out at non-essential stores that refuse to close, making an ominous threat.

    After reflecting on the first COVID-19 death of a teenager in L.A. County, he went on to announce actions against nonessential businesses that don’t close.

    “This behavior is irresponsible and selfish,” he said of those that remain open.

    He said the Department of Water and Power will shut off water and power for the businesses that don’t comply with the “safer at home” ordinance.

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    Neighborhood prosecutors will implement safety measures and will contact the businesses before issuing further action, according to Garcetti.

    “The easiest way to avoid a visit is to follow the rules,” he said.

    This all seems to be accelerating down the extremely slippery slope towards full authoritarian control – something the politicians will be unwilling to easily give up once this crisis blows through.

    Finally, the mayor said L.A. is six to 12 days behind New York in being hit with a wave of positive cases.

    “The peak is not here yet,” he said.

    “It will be bad… We need to be prepared for some of the darkness that is ahead.”

    L.A. County had 669 confirmed coronavirus cases as of Tuesday, with 11 deaths. The state had 2,566 cases with 51 deaths.


    Tyler Durden

    Tue, 03/24/2020 – 22:25

  • "Mountain Don't": Kentucky Couple Rage At Supermarket Disallowing Purchase Of 552 Cans Of Soda
    “Mountain Don’t”: Kentucky Couple Rage At Supermarket Disallowing Purchase Of 552 Cans Of Soda

    Two morbidly obese Americans from Kentucky were panic hoarding 23 cases of Mountain Drew, totaling 552 cans, at a Louisville Kroger last week, all caught on camera, along with an altercation with store employees about product limitations, reported Pop Culture.

    A bystander captured the incident on video that ended up on Reddit, as craziness at supermarkets have gone to a new level this month, as Americans are frantically loading up on supplies to weather a virus storm.

    “A couple came up to the register with two carts. They told the cashier they had 23 total cases of Mountain Dew. … The cashier informed them that they have a limit of three that they can purchase, due to COVID-19,” the bystander said. 

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    The video starts with the Kroger manager telling the two obese Kentuckians that there’s a limit on how many items a customer can purchase. The man starts yelling at a cashier who approved the purchase of some of the soda cases. When the manager told him, he could not buy above the limit, he was heard yelling: 

    “A straight up lie. What a liar! You’re such a liar. … You just told me right now that I could go outside and come back in and get the drinks.”

    The man became mentally upset when he was told there was a limitation. A women in the video tried to calm him down, as he argued with store employees. 

    She was seen paying for several cases and then threw the remaining ones on the counter as they both exited the store. 

    The bystander sums it up: “Folks losin’ their mind over here for some Mountain Dew.”

    Kroger revealed last week that it would be placing limitations on how much products customers can purchase, along with new operating hours for stores in Texas, Kentucky, Ohio, Georgia, Indiana, South Carolina, Tennessee, Michigan, Virginia, and West Virginia.

    Panic hoarding in the US has gone to extremes, in March, as confirmed virus cases and deaths have become exponential. The fear of the unknown, and the uncertainty of a looming apocalypse has driven many to buy obscene amounts of food, health supplies, gold, and weapons.

    And for those who are trying to return all the items they panic hoarded in the last month, well, good luck, because Costco said they are not accepting returns of certain products:

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    Tyler Durden

    Tue, 03/24/2020 – 22:05

  • Will Trump Be Forced To Delay November Election?
    Will Trump Be Forced To Delay November Election?

    As states postpone voting in party primaries to comply with new social distancing guidelines enforced by the federal government to flatten the curve to slow down the spread of Covid-19, questions are starting to arise that maybe, President Trump will use the pandemic crisis to delay the 2020 election. 

    As of Tuesday morning, at least 43,499 people across every state, plus Washington, D.C., and three U.S. territories, have tested positive for the virus, according to a New York Times database, and at least 537 patients with the virus have died.

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    We pointed out several weeks ago that the fast-spreading virus could interfere with the 2020 presidential election. 

    We specifically said pandemics generally work in several waves: the first wave is happening now, and as Bill Gates said Wednesday, could last for ten weeks. Then comes summer, and things should settle down a bit. However, the second wave of the virus could come later this year, right around the time the presidential election begins. After all, the second wave of the Spanish flu of 1918 was much more severe. 

    So, then what? Does that mean President Trump would be forced to cancel the elections?

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    The answer is “no,” according to LA Times’ Evan Halper, who said the president doesn’t have the power to cancel the elections.

    No. The president does not have that power. Legal scholars are widely in agreement on this point, as are both Republican and Democratic election officials. The nonpartisan Congressional Research Service reached the same conclusion when it investigated the question in the aftermath of 9/11.

    Under the US Constitution, Trump and Vice President Mike Pence cannot stay in office past their four-year terms without being reelected. If the election does not happen for any reason, constitutional rules of succession kick in.

    And here is where things get interesting: If the election is delayed because of the virus crisis, this would mean “a lawmaker down the line of succession who is not up for reelection could be the new president,” said Halper.

    “The 20th Amendment says if we have not chosen a president by a certain date, it goes to succession,” said Rick Hasen, an election law scholar at UC Irvine. “It’s not like a delay would keep Trump in office longer.”

    If wave 2 of the pandemic is expected to begin in November, the presidential election could be delayed for several weeks. Lawmakers could continue pushing the election out but risk violating constitutional law. 

    Georgia, Kentucky, Louisiana, and Maryland have already delayed voting in party primaries by at least a month as confirmed cases become exponential across the country. The move to postpone is unprecedented, but states have the authority to delay election-day voting in primary elections but cannot reschedule a federal general election.

     “It’s important to remember the distinction between primary and general elections,” Edward B. Foley, director of the election law program at Ohio State University, tweeted. “There is no equivalent power in the states to change the date of the general election for Congress or the presidency.”

    And while the presidential election must go on – but could be delayed for a short period – it seems that at least 13 states could allow absentee-voting if the pandemic reemerges. A bill in the US Senate could expand the use of absentee-voting in other states, but there’s no visibility if it will pass. 


    Tyler Durden

    Tue, 03/24/2020 – 21:45

  • Stunning Satellite Images Show What It Looks Like When The World Stops
    Stunning Satellite Images Show What It Looks Like When The World Stops

    The virus shock that has struck the global economy has been far faster and more severe than the 2008 financial crisis, Dot Com bust, and even the Great Depression.

    In one fell swoop (several months), the global economy has ground to a halt; stock markets have crashed 30-50%, credit markets have frozen, commodities tanked, bankruptcies and bailouts seen, massive unemployment and worldwide GDP cratered.

    Strict social distancing measures, mass quarantines, and travel bans across the world to combat the fast-spreading COVID-19 outbreak has been the reason why the global economy has crashed. At this very moment, more than a billion people are confined to their homes, some of the largest factory hubs are shuttered, and education systems are closed indefinitely.

    JPMorgan Chase & Co. describes this moment as “the day the earth stood still.” Wall Street anxieties are growing by the day as a protracted shutdown of the global economy could trigger a depression.

    To give you a worldly view, one from outer space, Bloomberg shares images from satellite company Planet Labs Inc.’s SkySat imaging orbiters that shows certain regions across the world that have ground to a halt:

    Wuhan’s Yingwuzhou Yangtze River Bridge (before and after shutdown):

    The first image of Wuhan’s Yingwuzhou Yangtze River Bridge was taken Jan. 12, one day after Covid-19 took its first known life in China. By the time the second photo was taken, Wuhan was quarantined, China had seen 17 more deaths, and Asian neighbors and the U.S. counted their first cases. The disease had already escaped. – Bloomberg

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    Wuhan’s Yingwuzhou Yangtze River Bridge

    Great Mosque of Mecca, Islam’s holiest site (before and after shutdown): 

    At the heart of the Great Mosque of Mecca, Islam’s holiest site, sits the Kaaba, the cubic structure that orients Muslims’ daily prayers around the world. At the peak of the pilgrimage called the Hajj in late-July and early August, some 2 million people from around the world make their way to the site at once. On Feb. 27, Saudi Arabia closed its borders to international pilgrims. The nation took further steps to limit access to the shrine over the next three weeks until it temporarily suspended all entrance and prayers on March 20, leaving the site empty. – Bloomberg 

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    Great Mosque of Mecca

    Grand Canal channel in Venice, Italy (before and after shutdown): 

    Italy’s Prime Minister Giuseppe Conte snapped Europe to attention on March 8 when he ordered a lockdown of the country’s northern region, which includes Venice. A day later, he extended the lockdown nationwide. Within days of the closure, Venetians were startled to see that their canals and perimeter waterways becalmed. Without the usual human tumult churning the waters, the canals were suddenly still and clear. – Bloomberg 

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    Grand Canal channel in Venice, Italy

    Epcot Center in Bay Lake, Florida (before and after shutdown): 

    Epcot Center in Bay Lake, Florida was meant to be the realization of Walt Disney’s fundamentally optimistic vision of a technology-driven global future. On March 18, two days after The Walt Disney Co. temporarily suspended theme-park operations and with many nations restricting overseas travel, its vast parking lots were empty of visitors’ cars. –Bloomberg 

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    Epcot Center in Bay Lake, Florida

    Volkswagen’s Tianjin, China factory (before and after shutdown): 

    Within days of Volkswagen AG’s March 17 decision to halt production for up to three-weeks, CEO Herbert Diess said it might not be long enough given the necessary “drastic measures to protect liquidity.” After Germany asked its largest carmakers to help make masks and ventilators to treat Covid-19 victims, Volkswagen began building up production capacity in China. The company’s Tianjin, China, plant is pictured here. –Bloomberg 

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    Volkswagen’s Tianjin, China factory

    Miami Beach (before and after shutdown):

    Few places have struggled as vividly with coronavirus-related precautions as Miami Beach, where the disease arrived just as college students descended for spring break. With the state reluctant to demand sweeping closures, local officials in towns and cities began to shut down their most prized money-makers. The City of Miami Beach issued a nighttime curfew on beaches and required non-essential businesses to close daily by 10 pm on the 15th. By the 18th, all beaches were closed in the city and Miami-Date County. On the 20th, the city closed hotels and other lodging services. – Bloomberg 

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    Even if the pandemic and economic fallout were brought under control in the months ahead, there are still tail risk events that could trigger financial Armageddon. 

    Afterall, Guggenheim’s Scott Minerd declared on Bloomberg TV:

    “…this is possibly the worst thing I have seen in my career… it’s hard to imagine a scenario in which you can contain the virus threat,” adding that “Europe and China are probably already in recession and US GDP will take a 1.5-2.0% hit.”

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    Tyler Durden

    Tue, 03/24/2020 – 21:25

  • Here Is Where The World Now Is On The "Corona Curve" At This Moment
    Here Is Where The World Now Is On The “Corona Curve” At This Moment

    With 1.7 billion people in the world under quarantine (and India about to make that 3 trillion) and desperate to find out where on the coronavirus “curve” they are to calculate how much more pain there is, JPM has made an attempt at a (very nonscientific) visual representation of where on the curve the main covid outbreaks in the world currently stand.

    The good news, China has is now well into the recovery phase, although since any and every number out of China is a lie, we would ignore any reports that the covid pandemic in China is easing especially after a spate of recent indications that China is openly manipulating its infection numbers. Also good news: Korea is almost “over the hump”, and absent new clusters emerging in the next few days, should be in recovery.

    Now the not so good news: both Italy and Iran are in the “late accumulation” phase. If they fail to halt the breakout at this point as the recovery phase approaches, it will get very ugly as much of the local population could then be infected. Behind Italy and Iran is the rest of Europe, with Spain, Germany, France, the UK all in the acceleration phase. The onus in on them to execute successful lockdowns.

    Finally, the bad news: both the US and India are at the very start of the curve and things will get much uglier in the coming weeks before they get better.

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    Some more observations from JPM:

    Global infections accelerated 14% d/d or 45,495 new cases over the last 24 hours to 381,499 according to Johns Hopkins, implying the global curve may be gradually shifting toward an early acceleration stage. The US (13,060 d/d), Spain (6,368 d/d), Italy (4,789 d/d) and Germany (4,183 d/d) reported the most new infections. In Asia, China’s Hubei reported one new infection after 5 days of no new increase. As recent infection spike in Hong Kong SAR and Singapore suggests, as long as the global infection curve is developing, premature relaxation of heightened community risk awareness could set off a rebound of a controlled infection curve or a second infection wave. From that vantage, China’s full lift on Wuhan city on 8-Apr bears close watching in our view as infections may appear to persist in society for at least one month. In ASEAN, 212 new cases were reported in Malaysia, taking total infection to 1,518. Our epidemiology model suggests a mid-April infection peak. Our Australian team reviewed the strategy taken by the government and introduced an epidemiology model, forecasting a possible peak in new cases around 15 April.

    Finally, as we noted last night, Trump is now eager to recreate China’s experience and reopen the economy in under 2 weeks to avoid a second great depression. Needless to say, this will be problematic unless the US shifts into the recovery phase by then.


    Tyler Durden

    Tue, 03/24/2020 – 21:11

  • "Someone Is Gonna Get Shot" – LA County Sheriff Orders All Gun Stores Closed
    “Someone Is Gonna Get Shot” – LA County Sheriff Orders All Gun Stores Closed

    Amid the coronavirus outbreak, gun sales across the country have been skyrocketing, with firearm shops everywhere from San Diego, where one shop owner said he was seeing sales “ten times higher” than normal, to New Jersey, where sales across the state have more than tripled, reporting major upticks in the purchasing of both guns and ammunition.

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    Gun shops have been allowed to remain open during the lockdowns, apparently deemed an “essential function.” 

    However, for Los Angeles County Sheriff Alex Villanueva, the situation has got out of hand.

    Speaking to FOX 11 LA, Villanueva feared the wave of people purchasing their first guns in the midst of the coronavirus outbreak could be a recipe for disaster.

    “We will be closing them, they are not an essential function,” Villanueva said.

    “I’m a supporter of the 2nd amendment, I’m a gun owner myself, but now you have the mixture of people that are not formerly gun owners and you have a lot more people at home.

    And anytime you introduce a firearm in a home, from what I understand from CDC studies, it increases fourfold the chance that someone is gonna get shot.”

    Villanueva has some serious swing as he is also the Director of Emergency Operations, meaning he is the number one person in charge during a crisis like the coronavirus. All FEMA requests go through him, and all National Guard requests go through him.


    Tyler Durden

    Tue, 03/24/2020 – 21:05

  • Putin's Pin & America's "Everything Bubble"
    Putin’s Pin & America’s “Everything Bubble”

    Authored by ‘V F’ via TheChicagoEconomist.com,

    The Setting.

    Last September the Fed was forced to acknowledge a new systemic problem surfacing in the overnight lending markets. These are the same markets that collapsed the system in 2008 but a slightly different issue. This time the system literally ran out of cash due to an enormous amount of leverage cheered on by US economic policy. And so began the latest financial bailout. It began with $75 billion in cash injections, and moved up to $100 billion at the end of 2019, then $500 billion and now unlimited. But the problem doesn’t seem to be going away, it seems to be getting worse.

    With the repo market implosion accelerating in early 2020, the Covid-19 pandemic also began creeping into our lives.

    By mid-January the virus had China spiraling into the abyss and with it, the oil market due to factory shut downs. We saw an initial drop in oil price from $60 to $50 during the second half of January. By the end of February it found a bottom at $45 with a small rally into the first week of March on the hopes of an oil production slow down.

    The Superpowers.

    At this point let’s step back and look at the global landscape.

    As the US spent the last 12 years leveraging up, Russia has been the largest buyer of gold and the biggest seller of US Treasuries.

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    So while Russia was strengthening its financial wherewithal, the US had doubled its Debt to GDP, the Fed increased its balance sheet by 95% to $4 trillion, the US financial system was literally running out of cash due to over-leveraging, and the nation was succumbing to a state of mass hysteria not seen since 9/11.

    Enter Putin.

    On March 6, 2020, OPEC called on Russia to coordinate an oil production slow down in an effort to stabilize oil prices. All expectations were that a supply reduction would be agreed upon and the price of oil would stabilize.

    However, Putin had other ideas.

    This was the opportunity he had been waiting patiently for in a chess match that spanned several White House Administrations. He was ready to launch a Muzio Gambit, willing to sacrifice some assets for a strike at the heart of American strength, the US dollar. The energy markets were always going to be the weapon of choice when the timing was right.

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    Russia and Saudi Arabia can produce oil at around $20 per barrel, while US shale production costs average around $46 per barrel. And so Saudi Arabia and Russia can live with sub $30 oil for quite some time. Comparatively, the US energy sector will collapse very quickly with sub $30 oil unless banks and hedge funds are willing to lend more dollars. But America has run out of dollars.

    And so when Putin shocked the world on March 6 by denying OPEC a supply reduction and thereby baiting the Saudi’s into an oil price war he was sticking a pin in America’s decade long “Everything Bubble”. It was a brilliant play at America’s weakest moment perhaps since the Great Depression, perhaps ever. A moment Putin had been waiting for since stepping into the world’s second most powerful position.

    The Denouement.

    America is in an election year, and the powers the be want nothing less than their White House back. They are willing to destroy everything to regain control. Soros and the boys, not ones to let social chaos (opportunity) pass them by, are coordinating economic destruction state by state.

    The lock down was initiated in the big three cities that had always been strongholds for the Globalists – Los Angeles, New York, and Chicago. But this election year was beginning to look like the minority voters were shifting to Trump, a populist, who had the best minority employment and business ownership numbers in America’s history. If Trump were to be the first Republican to win the minority vote since the New Deal it would solidify the populist movement for the next century.

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    And so the virus and the financial collapse presented a perfect moment not only for Putin but for Soros and his band of traitors.

    America doesn’t stand a chance and those of us not hypnotized by the hysteria are forced to soberly, watch her burn.


    Tyler Durden

    Tue, 03/24/2020 – 20:45

  • Surging Grocery Comps Could Rocket Into Double Digits As Worried Quarantiners Lock Themselves Down
    Surging Grocery Comps Could Rocket Into Double Digits As Worried Quarantiners Lock Themselves Down

    With the entire world getting ready to hunker down and quarantine themselves due to the coronavirus outbreak, grocery sales have been surging so far this month. Food retailers saw explosive new sales growth of 8% during the first week of March, according to analysts at Morgan Stanley. This is an unprecedented surge for a retail segment that generally moves in small ticks. 

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    The same analysts predict that this number has accelerated in recent weeks.

    Morgan Stanley analysts including Simeon Gutman and Josh Kamboj say that comps could even move “well into” the double digits for the first quarter of 2020. They predict that a recent 6% boost to Kroger’s sales estimates could be too conservative. 

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    Analysts at Jefferies agree, stating that trends would continue to be pronounced, especially in canned products and other shelf-stable items. They predict that frozen food and other core categories will also show improvement.

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    At the same time, Amazon is prioritizing the stockpiling of household staples and medical supplies while trying to deal with a surge in demand due to shoppers not wanted to leave the house. The company is looking to hire 100,000 new workers to help pick, pack and deliver orders. 

    Amazon is the only name that has declined in March, while brick and mortar names like Kroger, Walmart and Costco have all outperformed the S&P index by a longshot.

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    Meanwhile, U.S. food processors like Tyson have rushed to expand production of key items like chicken, pork and beef while other processors in countries like Brazil slow, or suspend production. U.S. processors are also diverting food that would normally be used for restaurants and for export back to grocery chains to meet the needs of the U.S. shopper as dine-out demand collapses. 

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    Source: Womply

    The demand surge is also becoming evident in prices, with live cattle futures surging almost 5% early this week. 


    Tyler Durden

    Tue, 03/24/2020 – 20:25

  • SoftBank Held Secret LBO Talks With Elliott As Masa Plots "Going Private" Rescue
    SoftBank Held Secret LBO Talks With Elliott As Masa Plots “Going Private” Rescue

    Yesterday, we joked that SoftBank’s decision to pursue a massive share buyback and deleveraging, ostensibly made to please activist investors like Paul Singer’s Elliott Capital Management, might have an important ancillary benefit: it could place Masa Son one step closer to taking the company – or at least a stripped down version of it – private, after the blowup of WeWork and a handful of other SoftBank-backed companies damaged Son’s reputation as one of the most savvy momentum investors of his generation.

    By the time the unicorn bubble popped, following numerous warnings on Zero Hedge before the WeWork IPO’s collapse transformed the company into a cautionary tale.

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    SoftBank’s decision to yank $3 billion that it had promised to WeWork and raise even more money via asset sales suggested that Masayoshi Son was desperate. He felt he needed to retrench, then reassess, to protect his position, and as the FT reports, the SoftBank chairman went to considerable lengths to try and bolster his company’s valuation, including a scheme to take the company via an LBO, which he discussed with Elliott Management after the hedge fund said it might be interested in buying more shares.

    But a potential take-private illustrates the extent to which Mr Son was considering all options to manage the turbulence that rattled SoftBank’s share price and global markets. At the end of last week, SoftBank’s shares had an equity value of around $50bn before any potential premium would have been applied. SoftBank, Elliott and Mubadala declined to comment. 

    Mr Son, who already owns a quarter of the company, began thinking about a leveraged buyout after Gordon Singer, who runs the London office of Elliott, expressed interest in buying more SoftBank shares last week as their price fell, according to one person close to the talks.  During the course of those discussions, these people said, Mr Son began to seriously study the formation of an investor consortium to take SoftBank private.

    “The idea originated from people around Masa and he wanted to explore it,” one person following the situation said.  The discussions also involved some of Mr Son’s key lieutenants, including Yoshimitsu Goto, SoftBank’s chief financial officer, Rajeev Misra, the former Deutsche Bank trader who oversees SoftBank’s Vision Fund, and Marcelo Claure, the company’s chief operating officer.  The plan was eventually abandoned for a number of reasons, including the complications around getting an investor consortium together quickly for such a large deal, Tokyo-listing rules and other tax considerations, multiple people said.

    Those who know him well claim that Masa frequently grumbles about SoftBank’s steep market cap discount to the book value of its assets, a factor that has only gotten worse as Masa’s reputation as a risk-addicted gambler was highlighted by the Vision Fund’s many blowups, even if all the headlines made the blow look worse than it truly was.

    By the end of last week, SoftBank said that its market cap discount to book had stretched to a record 73%, the widest in the company’s history.

    Masa Son is desperate to win back total control of SoftBank and taking the company private with the backing of a few friends who believe in the Japanese billionaire is probably his last, best option, though Elliott seems like an odd match for this. The steep market cap discount is just a barometer showing now would be a good time to strike.

    Though news that the company would sell some of its crown jewels, including some of its stake in Alibaba, to help pay down debt and buy back stock at a time when US lawmakers are bashing companies for spending more money on stock buybacks than their employeesl

    But we suspect Masa would have no problem explaining all this to a Congressional Committee during a public hearing.


    Tyler Durden

    Tue, 03/24/2020 – 20:05

  • Here's What A Lockdown Of India's 1.3 Billion People Looks Like
    Here’s What A Lockdown Of India’s 1.3 Billion People Looks Like

    Or rather we should ask whether this is even possible, given that as of the first night following Prime Minister Narendra Modi announcing in a televised address the immediate lockdown which orders some one-fifth of the world’s population to ‘stay indoors’ it looks like the authorities will have serious enforcement issues on their hands in the coming days.

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    A deserted path in New Delhi on Tuesday, AFP via Getty Images.

    Even his word choice left little ambiguity: “To save India and every Indian, there will be a total ban on venturing out,” Modi said Tuesday.

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    File image: Dharavi shanty town in Mumbai, India.

    Technically the order begins Wednesday, but it still set off a panic as anxious throngs descended on shopping markets, causing police to in some cases intervene and attempt to disperse the swelling crowds.

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    Modi said in his speech the ‘alternative’ to not shutting the country down would ultimately set back the economy back 21 years, while also acknowledging India will take a big hit anyway, while pledging to inject $2 billion into country’s vulnerable health care system.

    No doubt, things are about to get a lot more chaotic in the coming days. It appears the ‘crackdown’ on violators has already begun, considering this sloppily harsh yet somewhat comical response by local police:

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    After all, a billion plus citizens can’t just all get the supplies they need in a mere few days.

    The AP reports after India’s health authorities Tuesday announced 469 confirmed cases of COVID-19 and 10 deaths: 

    Officials have repeatedly insisted there is no evidence yet of localized spread but have conducted relatively scant testing for the disease. In a country where tens of millions live in dense urban areas with irregular access to clean water, experts have said local spreading is inevitable.

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    Empty streets in Ahmedabad, India this week, via Reuters.

    For this reason Modi said the deadly virus has the potential to “spread like wildfire”  — especially considering the already overcrowded and poor-conditioned sprawling shanty towns in major cities like Mumbai, which as the most populous metropolitan area in the world at a population of over 23.64 million.

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    Indians rushed to food markets Tuesday night, concerned over the coming 21-day lockdown. Image via Twitter.

    Though potential for broader panic remains high, authorities have sought to introduce restrictions on the population gradually, starting with a curfew announced Sunday, and a recent ban on international and domestic flights, with its nation-wide rail system shut down until March 31.

    Modi sought to assure the public that “all steps have been taken by central and state government to ensure supply of essential items.”

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    Police blocking a street to non-essential travel in Hyderabad, India, on Tuesday. Image source: AP/NYT

    The Ministry of Home Affairs has since said essential services to stay open would include banks, grocery stores, ATM terminals and gas stations. 

    “You must remember that you will invite a grave pandemic like coronavirus to your homes if you step out,” the prime minister warned.

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    Via Financial Express

    But there’s growing concern over just how ‘enforcement’ will look when it comes to the some 300 million Indian which live under the poverty line.

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    AFP via Getty Images

    The main worry also remains whether such drastic measures are still too-little too late.

    “Indian virologist Dr. T. Jacob John said before the wholesale lockdown was announced on Tuesday that India was being forced to take extreme containment measures after failing to mitigate the problem earlier on, when the caseload was light,” the AP writes.

    Addressing the issue of rampant poverty and the “stricter curfew’s” impact on the poor, Modi said the “supply of essential goods will be maintained” and that his government will “be working to reduce the difficulties of the poor.”

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    Prior scenes when India merely sought to impose an initial lighter curfew on Sunday:

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

    There were few details as to exactly what this will look like, however.

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    Via AP

    The coming days inside the completely ‘locked down’ country — which has the second largest population on the planet (while being geographically smaller than the first, China) — will be interesting to say the least.


    Tyler Durden

    Tue, 03/24/2020 – 19:45

  • Saudi Arabia & The US Could Form The World’s Newest Oil Cartel
    Saudi Arabia & The US Could Form The World’s Newest Oil Cartel

    Authored by Irina Slav via OilPrice.com,

    The United States and Saudi Arabia have been discussing the idea of setting up an oil accord, Bloomberg reports, citing Energy Secretary Dan Brouillette. Such an agreement would effectively amount to a cartel, which, by definition, is a group of independent market participants agreeing to act together to influence the market in a way favorable to them.

    For now, however, this is just an idea that some officials in the Trump administration support. The chance of it becoming anything more is unclear, according to Brouillette.

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    Via Reuters

    “There are many, many ideas that are floated around the policy space, that is one of them,” the U.S. Energy Secretary told Bloomberg in an interview. “I don’t know that it is going to be presented in any formal way.”

    The U.S. oil industry has suffered a heavy blow from the combination of the coronavirus outbreak and the price war that Saudi Arabia started after Russia refused to cooperate on deeper production cuts. Producers are slashing spending plans, suspending share buybacks, and some have already asked oilfield service providers for substantial discounts to their services.

    West Texas Intermediate, the U.S. benchmark, has shed about 60 percent of its value since the start of the year. 

    According to Reuters’ John Kemp, it has further to fall unless the economic outlook for the country—and the world—improves sharply and quickly. This outlook is not good news for either the shale industry or the supermajors in the U.S., which makes the administration’s moves concerning Saudi Arabia only logical. But nothing is certain yet.

    “As part of the public policy process, if you will, our interagency partners often get together and talk about a number of different items, but we’ve made no decision on this,” Brouillette told Bloomberg. “At some point we will engage in a diplomatic effort down the road. But no decisions have made on anything of that nature.”


    Tyler Durden

    Tue, 03/24/2020 – 19:25

  • Boober Eats: Portland Exotic Dancers Pivot To Food Delivery As Strip Clubs Forced To Close
    Boober Eats: Portland Exotic Dancers Pivot To Food Delivery As Strip Clubs Forced To Close

    Who says we can’t adapt and pull together in times of crisis, right?

    Certainly that’s the feeling in Portland, where strippers are now delivering food after the Lucky Devil Lounge was forced to close down. However, the same order that shut down their strip club does not prohibit food delivery, and that has some exotic dancers making a pivot to a model they’re calling “Boober Eats”. 

    The new home delivery service where scantily clad strippers deliver your hot food started as a joke, according to Oregon Live. Then, the free market went to work. Demand surged, people posted about it on social media and a cash cow was born. 

    The report says that while the rest of Portland was hoarding toilet paper, Shon Boulden, the creator of Boober Eats, was buying out one local store’s stock of pasties. 

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    Boober Eats offers the same menu as the Lucky Devil Lounge did at the same prices. Delivery rates are generally $30, but can vary. Dancers are escorted to their locations by a security guard. Popular menu items include chicken fingers, steak bites and corndogs. Pre-pandemic rules apply, and actually seem more timely now: no touching the dancers. 

    Boulden said: “If someone wants to give us a couple hundred bucks to go to the coast, we’ll do it as long as the girls are taken care of.”

    He continued: “All the calls, people are just giddy and fun. Sometimes it’s a surprise for someone, sometimes it’s a birthday, sometimes it’s people that are really stoned.”

    One dancer, Olivia, said: “It became very real when all this happened. Dancers work for tips and tips only.”

    Another dancer, Kiki, said: “Losing this job is devastating. For the majority of us, it’s been an almost complete loss of income. I’m here supporting my community and trying to keep maintaining an income flow as best as we can.”

    Boulden concluded: “It’s crazy. We mutated our one business into a totally different style of business.”


    Tyler Durden

    Tue, 03/24/2020 – 19:05

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