Today’s News 28th December 2020

• Twelve Times The 'Lockdowners' Were Wrong
  Twelve Times The ‘Lockdowners’ Were Wrong

  Authored by Phillip Magness via The American Institute for Economic Research,

  This has been a year of astonishing policy failure. We are surrounded by devastation conceived and cheered by intellectuals and their political handmaidens…

  

  The errors number in the thousands, so please consider the following little more than a first draft, a mere guide to what will surely be unearthed in the coming months and years. We trusted these people with our lives and liberties and here is what they did with that trust. 

  1. Anthony Fauci says lockdowns are not possible in the United States (January 24):

  When asked about the mass quarantine containment efforts underway in Wuhan, China back in January, Fauci dismissed the prospect of lockdowns ever coming to the United States:

  “That’s something that I don’t think we could possibly do in the United States, I can’t imagine shutting down New York or Los Angeles, but the judgement on the part of the Chinese health authorities is that given the fact that it’s spreading throughout the provinces… it’s their judgement that this is something that in fact is going to help in containing it. Whether or not it does or does not is really open to question because historically when you shut things down it doesn’t have a major effect.”

  Less than two months later, 43 of 50 US states were under lockdown – a policy advocated by Fauci himself.

  2. US government and WHO officials advise against mask use (February and March)

  When mask sales spiked due to widespread individual adoption in the early weeks of the pandemic, numerous US government and WHO officials took to the airwaves to describe masks as ineffective and discourage their use. 

  Surgeon General Jerome Adams tweeted against masks on February 29. Anthony Fauci publicly discouraged mask use in a nationally broadcast 60 Minutes interview on March 7. At a March 30 World Health Organization briefing its Director-General supported mask use in medical settings but dissuaded the same in the general public. 

  By mid-summer, all had reversed course and encouraged mask-wearing in the general public as an essential tool for halting the pandemic. Fauci essentially conceded that he lied to the public in order to prevent a shortage on masks, whereas other health officials did an about-face on the scientific claims around masking. 

  While mainstream epidemiology literature stressed the ambiguous nature of evidence surrounding masks as recently as 2019, these scientists were suddenly certain that masks were something of a magic bullet for Covid. It turns out that both positions are likely wrong. Masks appear to have marginal effects at diminishing spread, especially in highly infectious settings and around the vulnerable. But their effectiveness at combating Covid has also been grossly exaggerated, as illustrated by the fact that mask adoption reached near-universal levels in the US by the summer with little discernible effect on the course of the pandemic.

  3. Anthony Fauci’s decimal error in estimating Covid’s fatality rates (March 11)

  Fauci testified before Congress in early March where he was asked to estimate the severity of the disease in comparison to influenza. His testimony that Covid was “10 times more lethal than the seasonal flu” stoked widespread alarm and provided a major impetus for the decision to go into lockdown. 

  The problem, as Ronald Brown documented in an epidemiology journal article, is that Fauci based his estimates on a conflation of the Infection Fatality Rate (IFR) and Case Fatality Rate (CFR) for influenza, leading him to exaggerate the comparative danger of Covid by an order of magnitude. Fauci’s error – which he further compounded in a late February article for the New England Journal of Medicine – helped to convince Congress of the need for drastic lockdown measures, while also spreading panic in the media and general public. As of this writing Fauci has not acknowledged the magnitude of his error, nor has the journal corrected his article.

  4. “Two weeks to flatten the curve” (March 16)

  The lockdowners settled on a catchy slogan in mid-March to justify their unprecedented shuttering of economic and social life around the globe: two weeks to flatten the curve. The White House Covid task force aggressively promoted this line, as did the news media and much of the epidemiology profession. The logic behind the slogan came from the ubiquitous graph showing (1) a steep caseload that would overwhelm our hospital system, or (2) a mitigated alternative that would spread the caseload out over several weeks, making it manageable. 

  To get to graph #2, society would need to buckle up for two weeks of shelter-in-place orders until the capacity issue could be managed. Indeed, we were told that if we did not accept this solution the hospital system would enter into catastrophic failure in only 10 days, as former DHS pandemic adviser Tom Bossert claimed in a widely-circulated interview and Washington Post column on March 11. 

  Two weeks came and went, then the rationale on which they were sold to the public shifted. Hospitals were no longer on the verge of being overwhelmed – indeed most hospitals nationwide remained well under capacity, with only a tiny number of exceptions in the worst-hit neighborhoods of New York City. 

  A US Navy hospital ship sent to relieve New York departed a month later after serving only 182 patients, and a pop-up hospital in the city’s Javits Convention Center sat mostly empty. But the lockdowns remained in place, as did the emergency orders justifying them. Two weeks became a month, which became two months, which became almost a year. We were no longer “flattening the curve” – a strategy premised on saving the hospital system from a threat than never manifested – but instead refocused on using lockdowns as a general suppression strategy against the disease itself. In short, the epidemiology profession sold us a bill of goods.

  5. Neil Ferguson predicts a “best case” US scenario of 1.1 million deaths (March 20)

  The name Neil Ferguson, the lead modeler and chief spokesman for Imperial College London’s pandemic response team, has become synonymous with lockdown alarmism for good reason. Ferguson has a long track record of making grossly exaggerated predictions of catastrophic death tolls for almost every single disease that comes along, and urging aggressive policy responses to the same including lockdowns. 

  Covid was no different, and Ferguson assumed center stage when he released a highly influential model of the virus’s death forecasts for the US and UK. Ferguson appeared with UK Prime Minister Boris Johnson on March 16 to announce the shift toward lockdowns (with no small irony, he was coming down with Covid himself at the time and may have been the patient zero of a super-spreader event that ran through Downing Street and infected Johnson himself). 

  Across the Atlantic, Anthony Fauci and Deborah Birx cited Ferguson’s model as a direct justification for locking down the US. There was a problem though: Ferguson had a bad habit of dramatically hyping his own predictions to political leaders and the press. The Imperial College paper modeled a broad range of scenarios including death tolls that ranged from tens of thousands to over 2 million, but Ferguson’s public statements only stressed the latter – even though the paper itself conceded that such an extreme “worst case” scenario was highly unrealistic. A telling example came on March 20th when the New York Times’s Nicholas Kristof contacted the Imperial College modeler to ask about the most likely scenario for the United States. As Kristof related to his readers, “I asked Ferguson for his best case. “About 1.1 million deaths,” he said.”

  6. Researchers in Sweden use the Imperial College model to predict 95,000 deaths (April 10)

  After Neil Ferguson’s shocking death toll predictions for the US and UK captivated policymaker attention and drove both governments into lockdown, researchers in other countries began adapting the Imperial College model to their own circumstances. Usually, these models sought to reaffirm the decisions of each country to lock down. The government of Sweden, however, had decided to buck the trend, setting the stage for a natural experiment to test the Imperial model’s performance. 

  In early April a team of researchers at Uppsala University adapted the Imperial model to Sweden’s population and demographics and ran its projections. Their result? If Sweden stayed the course and did not lock down, it could expect a catastrophic 96,000 deaths by early summer. The authors of the study recommended going into immediate lockdown, but since Sweden lagged behind Europe in adopting such measures they also predicted that this “best case” option would reduce deaths to “only” 30,000. 

  By early June when the 96,000 prediction was supposed to come true, Sweden had recorded 4,600 deaths. Six months later, Sweden has about 8,000 deaths – a severe pandemic to be sure, but an order of magnitude smaller than what the modelers predicted. Facing embarrassment from these results, Ferguson and Imperial College attempted to distance themselves from the Swedish adaptation of their model in early May. Yet the Uppsala team’s projections closely matched Imperial’s own UK and US predictions when scaled to reflect their population sizes. In short, the Imperial model catastrophically failed one of the few clear natural experiment tests of its predictive ability.

  7. Scientists suggest that ocean spray spreads Covid (April 2)

  In the second week of the lockdowns several newspapers in California promoted a bizarre theory: Covid could spread by ocean spray (although the paper later walked back the headline-grabbing claim, it is outlined here in the Los Angeles Times). According to this theory – initially promoted by a group of biologists who study bacterial infection connected to storm runoff – the Covid virus washed down storm gutters and into the ocean, where the ocean breeze would kick it up into the air and infect people on the nearby beaches. As silly as this theory now sounds, it helped to inform California’s initially draconian enforcement of lockdowns on its public beaches. 

  The same week that this modern-day miasmic drift theory appeared, police in Malibu even arrested a lone paddleboarder for going into the ocean during the lockdown – all while citing the possibility that the ocean breeze carried Covid with it.

  8. Neil Ferguson predicts catastrophic death tolls in US states that reopen (May 24)

  Fresh off of their exaggerated predictions from March, the Imperial College team led by Neil Ferguson doubled down on alarmist modeling. As several US states started to reopen in late April and May, Ferguson and his colleagues published a new model predicting another catastrophic wave of deaths by the mid-summer. Their model focused on 5 states with both moderate and severe outbreaks during the first wave. If they reopened, according to the Imperial team’s model, New York could face up to 3,000 deaths per day by July. 

  Florida could hit as high as 4,000, and California could hit 5,000 daily deaths. Keeping in mind that these projections were for each state alone, they exceed the daily death toll peaks for the entire country in both the fall and spring. Showing just how bad the Imperial model was, the actual death toll by mid-July in several of the examined states even fell below the lower confidence boundary of its projected count. While Covid remains a threat in all 5 states, the post-reopening explosion of deaths predicted by Imperial College and used to argue for keeping the lockdowns in place never happened.

  9. Anthony Fauci credits lockdowns for beating the virus in Europe (July 31)

  In late July Anthony Fauci offered additional testimony to Congress. His message credited Europe’s heavy lockdowns with defeating the virus, whereas he blamed the United States for reopening too early and for insufficient aggressiveness in the initial lockdowns. As Fauci stated at the time, “If you look at what happened in Europe, when they shut down or locked down or went to shelter in place — however you want to describe it — they really did it to the tune of about 95% plus of the country did that.” 

  The message was clear: the United States should have followed Europe, but failed to do so and got a summer wave of Covid instead. Fauci’s entire argument however was based on a string of falsehoods and errors. 

  Mobility data from the US clearly showed that most Americans were staying home during the spring outbreak, with a recorded decline that matched Germany, the Netherlands, and several other European countries. Contrary to Fauci’s claim, the US was actually slower than most of Europe to reopen. Furthermore, his praise of Europe collapsed in the early fall when almost all of the lockdown countries in Europe experienced severe second waves – just like the locked down regions of the United States.

  10. New Zealand and Australia declare themselves Covid-free (August-present)

  New Zealand and Australia have thus far weathered the pandemic with extremely low case counts, leading many epidemiologists and journalists to conflate these results with evidence of their successful and replicable mitigation policies. In reality, New Zealand and Australia opted for the medieval ‘Prince Prospero’ strategy of attempting to wall themselves from the world until the pandemic passes – an approach that is highly dependent on their unique geographies. 

  As island nations with comparatively lower international travel than North America and Europe, both countries shut down their borders before the as-of-yet undetected virus became widespread and have remained closed ever since. It’s a costly strategy in terms of its economic impact and personal displacement, but it kept the virus out – mostly. 

  The problem with New Zealand and Australia’s Prince Prospero strategy is that it’s inherently fragile. All it takes to throw it into chaos is for the virus to slip past the border – including by accident or human error. Then heavy-handed lockdowns ensue, imposed with maximum disruption at the spur of the moment in a frantic attempt to contain the breach. 

  The most famous example happened on August 9 when New Zealand’s Prime Minister Jacinda Ardern declared that New Zealand had reached 100 days of being Covid-free. Then just two days later a breach happened, sending Auckland into heavy lockdown. It’s a pattern that has repeated itself every few weeks in both countries. 

  In early December, we saw a similar flurry of stories from Australia announcing that the country had beaten Covid. Two weeks later, another breach occurred in the suburbs around Sydney, prompting a regional lockdown. There have been embarrassing missteps as well. In November the entire state of South Australia went into heavy lockdown over a single misreported case of Covid that was mistakenly attributed to a pizza purchase that did not exist. While both countries continue to celebrate their low fatality rates, they’ve also incurred some of the harshest and most disruptive restrictions in the world – all the result of premature declarations of being “Covid-free” followed by an unexpected breach and another frantic lockdown.

  11. “Renewed lockdowns are just a strawman” (October)

  In early October a group of scientists met at AIER where they drafted and signed the Great Barrington Declaration, a statement calling attention to the severe social and economic harms of lockdowns and urging the world to adopt alternative strategies for ensuring the protection of the most vulnerable. Although the statement quickly gathered tens of thousands of co-signers from health science and medical professionals, it also left the lockdown supporters incensed. They responded not by scientific debate over the merits of their policies, but with a vilification campaign. 

  They answered by flooding the petition with hoax signatures and juvenile name-calling, and by peddling wildly false conspiracy theories about AIER’s funding (the primary instigator of both tactics, ironically, was a UK blogger known for promoting 9/11 Truther conspiracies). But the lockdowners also adopted another narrative: they began to deny that lockdowns were even on the table. 

  Nobody was considering bringing back the lockdowns from the spring, they insisted. Arguing against the politically unpopular shelter-in-place orders in the fall only served the purpose of undermining public support for narrower and more temperate restrictions. The Great Barrington authors, we were told, were arguing with a “strawman” from the past. 

  Over the next several weeks in October a dozen or more prominent epidemiologists, public health experts, and journalists peddled the “lockdowns are a strawman” line. The “strawman” claim saw promotion in top outlets including the New York Times, and in an op-ed by two principle co-signers of the John Snow Memorandum, a competing petition that lockdown supporters drafted as a response to the Great Barrington Declaration. 

  The message was clear: the GBD was sounding a false alarm against policies from the past that the lockdowners “reluctantly” supported in the spring as an emergency measure but had no intention of reviving. By early November, the “strawman” of renewed lockdowns became a reality in dozens of countries across the globe – often cheered on by the very same people who used the “strawman” canard in October. 

  Several US states followed suit including California, which imposed severe restrictions on private gatherings up to and including meeting your own family for Thanksgiving and Christmas. And a few weeks after that, some of the very same epidemiologists who used the “strawman” line in October revised their own positions after the fact. They started claiming they had supported a second lockdown all along, and began blaming the GBD for impeding their efforts to impose them at an earlier date. In short, the entire “lockdowns are a strawman” narrative was false. And it now appears that more than a few of the scientists who used it were actively lying about their own intentions in October.

  12. Anthony Fauci touts New York as a model for Covid containment (June-December)

  By all indicators, New York state has suffered one of the worst coronavirus outbreaks in the world. Its year-end mortality rate of almost 1,900 deaths per million residents exceeds every single country in the world. The state famously bungled its nursing home response when Governor Andrew Cuomo forced these facilities to readmit Covid-positive patients as a way to relieve strains on hospitals. The policy backfired as most hospitals never reached capacity, but the readmissions introduced the virus into vulnerable nursing home populations resulting in widespread fatalities (to this day New York intentionally undercounts nursing home fatalities by excluding residents who are moved to a hospital from its reported numbers, further obscuring the true toll of Cuomo’s order). 

  New York has also fared poorly during the fall “second wave” despite reimposing harsh restrictions and regional lockdown measures. By mid-December, its death rate shot far above the mostly-open state of Florida, which has the closest comparable population size to New York. All things considered, New York’s weathering of the pandemic is an exemplar of what not to do. 

  Cuomo’s policies not only failed to contain the virus – they likely made it far more deadly to vulnerable populations. Enter Anthony Fauci, who has been asked multiple times in the press what a model Covid response policy would look like. He gave his first answer on July 20th: “We know that, when you do it properly, you bring down those cases. We have done it. We have done it in New York.” 

  Fauci was operating under the assumption that New York, despite its bad run in the spring, had successfully brought the pandemic under control through its aggressive lockdowns and slow reopening. One might think that the fall rebound in New York, despite locking down again, would call this conclusion into question. Not so much for Dr. Fauci, who told the Wall Street Journal on December 8: “New York got hit really badly in the beginning” but they did “a really good job of keeping things down, and still, their level is low compared to the rest of the country.”

  Tyler Durden
  Sun, 12/27/2020 – 23:35

• High Wage Vs. Low Wage: Visualizing America's K-Shaped Economic 'Recovery'
  High Wage Vs. Low Wage: Visualizing America’s K-Shaped Economic ‘Recovery’

  While it’s not uncommon for low wage workers to bear the brunt of an economic recession, this year’s economic collapse has been exceptionally brutal for America’s lower income employees.

  

  Employment rates for high wage workers have bounced back from their spring slump, but, as Visual Capitalist’s Carmen Ang points out, unfortunately, the recovery hasn’t been as pronounced for low income workers.

  Less than half the jobs lost earlier this year have returned for those making under $20 per hour. To give you a broader perspective, here’s a look at the percent change of employment rates from February through to November 2020:

  

  As the table above shows, this recession has been tough for low wage workers. But why?

  It’s Not You, It’s Your Industry

  There are various elements at play, but one key factor driving this unequal recession is the type of work that’s been impacted by the global pandemic.

  The sectors that have been most affected, such as accommodation and food services, are the industries that typically employ low wage workers. On the flip side, many high income workers are employed in industries that allow them to work from home.

  Although several COVID-19 vaccines are now in sight, a return to “normal” can’t come soon enough for workers in hard-hit industries such as travel, tourism, and food services.

  Tyler Durden
  Sun, 12/27/2020 – 23:00

• Can The US Reduce Its Dependency On Chinese Rare Earths?
  Can The US Reduce Its Dependency On Chinese Rare Earths?

  Authored by Alex Kimani via OilPrice.com,

  Since the days of President Jimmy Carter and the 1970s oil crisis, the United States has relentlessly pursued the utopia of energy independence. But persistent oil crises, severe oil price shocks, and the global shift to clean energy have made it glaringly obvious that Washington will never achieve true energy independence by relying solely on fossil fuels. Indeed, most Americans believe that the government should “…focus on developing alternative sources of energy over expansion of fossil fuel sources” in a bid to alleviate climate change.

  

  But as the shift to clean and renewable energy gains serious momentum, the United States is now facing another conundrum: It’s almost completely dependent on China for the minerals it uses to build clean energy systems.

  China is a rare earth monopoly, supplying 80% of the rare earths elements (REE) used by the United States in the manufacture of solar panels, windmills, electric car batteries, cellphones, computers, national defense systems, medical equipment, and even in oil and gas technologies.

  That leaves the country in a particularly precarious position, especially with the never-ending trade tensions between the two nations. Indeed, all it took was a simple visit to an obscure factory by Chinese President Xi at the height of the trade war last year to raise the specter of Beijing cutting off supplies of critical materials to the U.S. and potentially crippling large swathes of industries. 

  Further, the U.S. is about to start keenly feeling China’s stranglehold on the industry now that Biden is about to ascend into the Oval Office and possibly implement his ambitious Green Deal.

  Depending on China

  Rare earth minerals, also known as the “vitamins of chemistry”, are a group of elements used in the manufacture of a wide range of equipment in small doses to produce powerful salutary effects. These minerals are extensively used in smartphones, batteries, turbines, lasers, electromagnetic guns, missiles, advanced weapon sensors, stealth technology, and jamming technology. For instance, lanthanum is used in lighting equipment and camera lenses; neodymium in hybrid vehicles; praseodymium in aircraft engines; europium in nuclear reactors and gadolinium in MRIs and X-rays. Oil refiners also use rare earth catalysts to process crude oil into gasoline and jet fuel.

  China produced more than 90 percent of the world’s supply of these critical elements over the past decade, though its share fell to 71.4 percent last year. 

  In 2018, the U.S. Geological Survey identified 35 minerals critical to the country’s economy and national security. America is heavily dependent on imports of these minerals, producing less than a tenth of the world’s supplies and importing half what it consumes. It clearly highlights the U.S.’ soft underbelly.

  And China’s dominance might only increase going forward.

  The global REE industry is expected to nearly double from $8.1 billion in 2018 to $14.4 billion in 2025, as demand for EVs, cell phones, and microchips skyrockets. Biden anticipates this wild growth and has pledged to install 500,000 new EV charging stations by 2030 from the current U.S. tally of 26,000.

  Beating China at its own game

  But China’s control of REE might not necessarily be ‘‘an ace in Beijing’s hand’’ as the Global Times once claimed. On the contrary, the U.S. is actually in a strong position to dent China’s control of the industry and move towards rare earth independence.

  Biden clearly recognizes this challenge and opportunity and has pledged to support the increased exploration of lithium, copper, nickel, and rare earths, among other minerals, to ensure domestic sourcing of minerals critical to solar panels, wind turbines, and electric vehicles.

  Indeed, the government of the United States has been ramping up efforts to expand domestic mineral research and development.

  For example, the bipartisan Reclaiming American Rare Earths (RARE) Act that was introduced in the House in September offers a comprehensive framework of tax incentives to encourage more investment into the U.S.-based REE mining and production. Meanwhile, dozens of companies and startups from Alaska to Texas are advancing mining development, with a site in Colorado about to become the first non-China facility for refining rare earth ores.

  The U.S. is not exactly lacking in REE resources, either. For instance, a mountain in Wyoming called Bear Lodge holds about 18 million tons of REE, enough to supply the country for years.

  And if push comes to shove and Beijing suddenly bans REE exports to the United States, America might counter by building a new supply chain outside of China just like Japan did when a similar fate befell the country a decade ago.

  Or we can simply start recycling more.

  Currently, only around 1% of REE are recycled from end-products at the end of their life-cycles.

  Yet, the potential for recycling rare earths is huge. 

  A 2013 paper says that simply boosting the collection rate of batteries, bulbs, and magnets could improve the recycling rate of REE from one percent up to 20-40%. That would amount to up to 5% of global REE mine production, or nearly half of the U.S. annual mine supply. But we could do even better. As Simon Jowitt, assistant professor at UNLV’s Department of Geoscience, has told ArsTechnica, much more than 40% of REE could be recycled depending on adoption rates of technologies like EVs.

  To be fair, recycling that amount of rare earths would not be a walk in the park

  The diverse types of electronics being recycled would not necessarily contain enough rare earths and in the right proportions to make recycling those elements profitable. In many cases, the manufacturers usually are not responsible for running recycling operations, meaning they might not even be privy to which components contain what materials. 

  Here, the United States’ REE industry needs to borrow a leaf from Europe.

  The EU’s Waste of Electrical and Electronic Equipment WEEE requires manufacturers of electronic devices to not only finance or perform the recycling of those devices but also requires sellers to offer free e-waste collection.

  But ultimately, it might all boil down to political will–or lack thereof.

  The permitting process in the U.S. is ridiculously long, and can take up to three decades compared to just two years in countries like Australia and Canada. Navigating a regulatory minefield of labyrinthine local, state, and federal rules stifle U.S. mining companies compared to their Chinese competitors. 

  But given recent bipartisan moves in the industry, legislators can hopefully look beyond party lines and affiliations and fashion a workaround.

  Tyler Durden
  Sun, 12/27/2020 – 22:25

• Major Covid Vaccine Glitch Emerges: Most Europeans, Including Hospital Staff, Refuse To Take It
  Major Covid Vaccine Glitch Emerges: Most Europeans, Including Hospital Staff, Refuse To Take It

  All is not going according to plan in the biggest global rollout of what is arguably the most important vaccine in a century, and it is not just growing US mistrust in the covid injection effort that was rolled out in record time: an unexpected spike in allergic reactions to the Pfizer/BioNTech vaccine (and now, Moderna too) may prove catastrophic to widespread acceptance unless scientists can figure out what is causing it after the FDA’s rushed approval, and is also why as we reported yesterday, scientists are scrambling to identify the potential culprit causing the allergic reactions.

  Making matters worse, Europe rolled out a huge COVID-19 vaccination drive on Sunday to try to rein in the coronavirus pandemic but even more Europeans than American are sceptical about the speed at which the vaccines have been tested and approved and reluctant to have the shot.

  While the European Union has secured contracts drugmakers including Pfizer, Moderna and AstraZeneca, for a total of more than two billion doses and has set a goal for all adults to be inoculated next year, this is looking increasingly like a pipe dream: according to recent surveys, the local population has expressed “high levels of hesitancy” towards inoculation in countries from France to Poland, with many used to vaccines taking decades to develop, not just months.

  “I don’t think there’s a vaccine in history that has been tested so quickly,” Ireneusz Sikorski, 41, said as he stepped out of a church in central Warsaw with his two children.

  “I am not saying vaccination shouldn’t be taking place. But I am not going to test an unverified vaccine on my children, or on myself.”

  Smart: why take the risk of getting vaccinated when others will do it, resulting in the same outcome.

  Surveys in Poland, where distrust in public institutions runs deep, show that fewer than 40% of people planning to get vaccinated. Worse, according to Reuters on Sunday, only half the medical staff in a Warsaw hospital where the country’s first shot was administered had signed up. And if the doctors don’t trust the vaccine, one can be certain that the broader population will refuse to take it.

  The situation is similar in Spain, one of Europe’s hardest-hit countries, where 28-year-old singer and music composer German summarizes the skepticism of a broad range of the population, and plans to wait for now.

  “No one close to me has had it (COVID-19). I’m obviously not saying it doesn’t exist because lots of people have died of it, but for now I wouldn’t have it (the vaccine).”

  A Christian Orthodox bishop in Bulgaria, where 45% of people have said they would not get a shot and 40% plan to wait to see if any negative side effects appear – meaning only 15% of the population will actually volunteer for a vaccine in the near future –   is in the tiny minority when it comes to taking the vaccine.

  “Myself, I am vaccinated against everything I can be,” Bishop Tihon told reporters after getting his shot, standing alongside the health minister in Sofia. He spoke about anxiety over polio before vaccination became available in the 1950s and 1960s.

  To be sure, the establishment is pounding the table on why the vaccines are safe despite the record short time in development (even though not even the “scientists” can explain what is behind the spike in vaccine allergic reactions), and claiming that the new technology behind the mRNA vaccine is all one needs to know… when it is precisely this new technology that is sparking the skepticism.

  “We’ll look back on the advances made in 2020 and say: ‘That was a moment when science really did make a leap forward’,” said Jeremy Farrar, director of the Oxford University Clinical Research Unit, which is backed by the Wellcome Trust. Oxford also received $750MM from Bill Gates in June in the billionaire’s quest to vaccinate the world against Covid.

  Only problem: nobody in Europe seems to care about these “scientific” justifications. Independent pollster Alpha Research said its recent survey suggested that fewer than one in five Bulgarians from the first groups to be offered the vaccine – frontline medics, pharmacists, teachers and nursing home staff – planned to volunteer to get a shot.

  An IPSOS survey of 15 countries published on Nov. 5 showed then that 54% of French would have a COVID vaccine if one were available. The figure was 64% in Italy and Spain, 79% in Britain and 87% in China.

  Since then things have gone far worse, and a more recent IFOP poll  showed that only 41% people in France would take the shot. This means that a vast majority will not.

  

  Not even in Sweden, where public trust in authorities is absurdly and inexplicably high, is there a universal trust in the vaccine, with at least one in three saying they won’t get the shot: “If someone gave me 10 million euro, I wouldn’t take it,” Lisa Renberg, 32, told Reuters on Wednesday.

  Meanwhile, in a paradoxical attempt to force more to sign up – not realizing that it will only have the precisely opposite effect – Polish Prime Minister Mateusz Morawiecki urged Poles on Sunday to sign up for vaccination, saying the herd immunity effect depended on them. Critics have accused Warsaw’s “nationalist leaders” of being too accepting of anti-vaccination attitudes in the past in an effort to garner conservative support. Well… let’s check back on said attitude in 10 years and see if perhaps it was the right one.

  For now, however, the more European governments pressure their populations to get immunized, the fewer the people who will actually sign up and the worse the vaccine rollout will be, that much we can be 100% sure of.

  Tyler Durden
  Sun, 12/27/2020 – 21:50

• On Riding Freight Trains…
  On Riding Freight Trains…

  Via AdventuresInCapitalism.com,

  I have a friend who’s a reasonably competent trader. He’s the type that draws his voodoo lines everywhere on the charts. He caught the same trendline break on Bitcoin that I did around $9,200. He expected some resistance around $10,000 and sold out for a quick score just below the figure. He then got the breakout at $12,000 and rode it a few thousand. He also bought the big breakout at $20,000 and I’m sure he made another ten percent. Nothing wrong with that; he’s stacking up quick wins using low-risk setups. The odd thing is that he’s wildly bullish on Bitcoin. During a time when I’m up roughly $18,000 on my $9,200 basis, he’s up less than $5,000 and, unlike him, I think Bitcoin is a total worthless joke of an asset.

  Why am I making more? Let’s talk about how to be a pig at the trough.

  Every time I put a position on, I always stop to think about what I’m trying to accomplish and where my exit would be. Is this just an Event-Driven trade with a few-week duration? Is this a value position where I’m hoping that some of the gap to NAV closes or do I see this as something that could go much further? Micro-trend inflections can multi-bagger in a spectacular way, but they tend to be volatile and many of them flame out before hitting escape velocity—as a result, I usually sell some on the way up. Meanwhile, true compounders build value rapidly—I don’t need to fear the downside in the same way there.

  

  So many amazing places in Costa Rica. Hard to choose through them…

  What about Bitcoin?

  Who knows what the right price is—in some ways that’s the beauty of the product—it’s so worthless that any price is justifiable—it’s just completely ephemeral; a quote on the screen. I invested on the thesis that Bitcoin would become the first truly global Ponzi Scheme; why would I sell after only a few thousand of upside? That’s the average daily range. I personally expect something monumentally stupid to occur to the upside and don’t intend to sell until then.

  Let’s return to my friend. He actually thinks Bitcoin is real—he’s drunk the proverbial Kool-Aid. As a result, I keep asking my friend why he’s settling for a thousand here and two-thousand there? He’s missing the true meat of the move and he doesn’t even have another “safe” entry-point until there’s a consolidation in the charts. If he believes in it, why not put it on and let it happen? I mean, I have a much weaker thesis and have let it trend once I built up a decent cushion. Oddly, my friend doesn’t have a response. This is simply how he plays bull markets, which seems odd to me. If you’re going to be taking risk on something that has theoretical multi-bagger upside, why not play it big and be an absolute pig about it once you have a decent cushion?

  Despite what many market commentators want you to believe, the vast majority of financial products are not offering you multi-bagger upside from currently inflated prices. If anything, they mostly offer downside. When I come across something that has real upside, I prefer to size it up big and let it happen. There are so few of these chances that I cannot afford to miss them. Yes, I’ll have some relapses where I give up spectacular gains (happened to me with tankers this year). I’ll have a few that fail to ignite and eventually hit my time stop, while tying up my capital. Plenty more will stop me out for small losses. That’s all part of the game when I look for multi-baggers. What’s the alternative? Buying and selling every little wiggle on the chart? That’s ludicrous. The money isn’t made guessing the next 5% anyway. It’s in finding multi-baggers and then enjoying life. I’m writing to you from a cliff-side villa above a deserted beach in Costa Rica. I can do that because I know what I own—therefore, I can step away and let it happen.

  

  

  

  This is my office and trading floor for the week. Can get some real thinking done…

  That doesn’t mean that I’m ignoring risk. I put real time into pondering what could kill my thesis. I also protect my downside. As soon as Bitcoin broke out over $10,000, I put in a mental stop at $9,200 or roughly break-even. Over time, I have increased the level for this stop so that I can lock in a good-sized gain while letting it trend higher. Of course, I’m also going to give Bitcoin plenty of room. I know it’s a wild beast and I want to let it do its thing. Fortunately, that’s mostly been to the upside.

  Should you be pyramiding into Bitcoin here at $27,200? Who knows? The chart looks horribly extended short-term—that means it can have a nasty shakeout any day. Part of why I’m on vacation is that if I was watching the 10% intraday swings, I know I’d start having opinions. I’d try to sell a few and buy them back lower. I’d find some instrument to hedge off some risk somehow. I know myself. When I’m up this much, this fast, the emotions take over and I end up doing something awful dumb. Besides, the real money isn’t made guessing which way the next thousand-dollar move is. It’s by swinging hard at a fat pitch and then doing a whole lot of nothing.

  

  Spent yesterday swimming in the Nauyaca Waterfall in Costa Rica…

  Let me give you another example. I’m long a position limit in St. Joe (JOE – USA).

  It’s my favorite portfolio position as it captures most of the macro trends I’m focused on. It doesn’t hurt that it trades for a fraction of liquidation value or that I think it’s trading at a single digit FFO multiple looking out a few years. It’s more than doubled from my cost basis, but that’s what’s supposed to happen when you’re right about a position that is rapidly inflecting.

  Oddly, every day, someone reaches out to ask if I’m taking any JOE off. Why would I do that? I think it’s worth over a hundred today and it’s headed to a few hundred over the next few years. Is the chart extended? Absolutely. Could it pull back by $10 or even $20? Of course. In fact, I almost expect it to have a nasty, soul-destroying pullback that shakes out a lot of recent longs. So why am I ignoring that potential? Because I think it’s going much higher and I don’t want to step off a world-class freight train going at maximum speed. If I sold my JOE, I’d need to spend my rapidly devaluing dollars on some other hard asset and there’s nothing cheaper with as strong of a tailwind, that I know of.

  

  Lake Arenal, Costa Rica

  Besides, I’m not a fan of paying taxes. Let’s use some quick math here. My cost basis on JOE is around $19. Say I sell some at $48. That’s a $29 gain that is taxable at short-term rates. I live in Florida, but still pay my share of federal taxes. For the ease of math, let’s say my rate is precisely 40%. I’d have to pay $11.60 of my $29 gain. For me to come out ahead by selling here and buying a pullback, I’d need the stock to drop by more than $11.60. If the stock only pulled back by $10, after paying taxes, I’d actually have LESS shares when I repurchase them (let’s ignore the step-up in cost basis). Why would I want to risk missing upside and pay short-term taxes along the way? This is the very definition of fuktarded—as only a complete fukwit would do something this retarded.

  The trade-off, like I noted above, is that I genuinely expect that JOE will have some nasty pullbacks. Given how overbought it is, I’d say that a pullback is more than overdue. If it dropped by a third, it would be a pretty awful month for my fund. At the same time, I’d sort of shrug my shoulders as this should be expected from time to time. If Bitcoin dropped in the same month, my performance number would be something that would leave people wondering what I did “wrong.” In reality, that’s just how it goes when you run a concentrated book. You can smooth volatility and you can trade around positions or you can let it happen and ensure you don’t miss the big ones. I know which strategy I prefer. Besides, taxes disgust me.

  

  Can’t have a Costa Rica travelogue without the rain forest…

  Why is my friend fixated on doing it his way? I don’t know. Maybe it’s to smooth out his returns. Maybe he just wants to grab those low-risk chart patterns. Maybe his conviction isn’t as strong as he makes it out to be. All I know is that I’m typing to you from a beach in Costa Rica and he’s at his office drawing voodoo lines worried about the next 5% move. I used to do it his way because I couldn’t help but grab the quick gains—I believe I’ve matured since then. I’ve learned when and how to be a gluttonous pig about something I strongly believe in. At the same time, I never stop questioning that I could be wrong—don’t confuse inaction with dereliction. What I do know is that I’ve approached position management quite differently from my friend and thus far, it’s working out in my favor. In the rare situations where I can achieve escape velocity, the last thing I want to do is micro-manage it.

  It’s worth pointing out that despite me believing these are both multi-baggers, I’m treating the risk component quite differently. I have no stop loss for JOE. JOE has real assets and cash flow. On a down day, it simply gets cheaper and less risky while the value of the business increases every day through the beauty of retained earnings and asset inflation. Meanwhile, Bitcoin is a number on the screen driven purely by sentiment. You need to get out if the sentiment turns on you, as it’s a long way down to zero. JOE needs no stop. I feel that this needs to be pointed out. I am strapped into two freight trains, but they have very different risk profiles. I’m not trading around either, but I know that one will eventually have a jumping off point. I need to be highly attuned to when that is.

  The big money is made from the multi-baggers. In our bizarre, always connected world, the endorphins fire away and make you want to do something. Much like there’s often nothing to do in the markets on most days, there’s often nothing to do in my existing positions. I’m going to just let it happen.

  Pura Vida…

  *  *  *

  Disclosure: Funds that I control are long GBTC and JOE

  Tyler Durden
  Sun, 12/27/2020 – 21:15

• Trump Signs COVID-19 Relief Bill With $600 Checks, Asks Congress To Approve Increase Later
  Trump Signs COVID-19 Relief Bill With $600 Checks, Asks Congress To Approve Increase Later

  President Trump on Sunday signed a $900 billion pandemic relief package which will include $600 direct checks checks, abandoning his immediate demand that Congress go back to the drawing board and provide $2,000 checks, and instead encouraged them to vote on a separate bill to “increase payments to individuals from $600 to $2,000.”

  “I am signing this bill to restore unemployment benefits, stop evictions, provide rental assistance, add money for PPP, return our airline workers back to work, add substantially more money for vaccine distribution, and much more,” Trump said in a Sunday night statement.

  

  The pandemic relief package is coupled with $1.4 trillion in funds to run the government through September and includes other end-of-session priorities such as increases in food stamp benefits and funding for the transit system. Plus, tons of pork, which we noted last week.

  According to the New York Post:

  The bill authorizes direct checks of $600 for people earning up to $75,000 per year. The amount decreases for higher earners and people who make over $95,000 get nothing.

  There’s an additional $600 per child stimulus payment.

  In a statement, Trump said that Congress on Monday would vote on a separate bill to “increase payments to individuals from $600 to $2,000.”

  The bill creates a new $300 weekly unemployment supplement and replenishes a forgivable loan program for small businesses. It also creates new criminal penalties including prison time for violating copyright laws with online streaming. –NYP

  Futures and gold are happy for the moment:

  

  

  Full Trump statement (emphasis ours):

  “As President of the United States it is my responsibility to protect the people of our country from the economic devastation and hardship that was caused by the China Virus.

  I understand that many small businesses have been forced to close as a result of harsh actions by Democrat-run states. Many people are back to work, but my job is not done until everyone is back to work.

  Fortunately, as a result of my work with Congress in passing the CARES Act earlier this year, we avoided another Great Depression. Under my leadership, Project Warp Speed has been a tremendous success, my Administration and I developed a vaccine many years ahead of wildest expectations, and we are distributing these vaccines, and others soon coming, to millions of people.

  As President, I have told Congress that I want far less wasteful spending and more money going to the American people in the form of $2,000 checks per adult and $600 per child.

  As President I am demanding many rescissions under the Impoundment Control Act of 1974. The Act provides that, “whenever the President determines that all or part of any budget authority will not be required to carry out the full objectives or scope of programs for which it is provided, or that such budget authority should be rescinded for fiscal policy or other reasons (including termination of authorized projects or activities for which budget authority has been provided), the President shall transmit to both Houses of Congress a special message” describing the amount to be reserved, the relevant accounts, the reasons for the rescission, and the economic effects of the rescission. 2 U.S.C. § 683.

  I will sign the Omnibus and Covid package with a strong message that makes clear to Congress that wasteful items need to be removed. I will send back to Congress a redlined version, item by item, accompanied by the formal rescission request to Congress insisting that those funds be removed from the bill.

  I am signing this bill to restore unemployment benefits, stop evictions, provide rental assistance, add money for PPP, return our airline workers back to work, add substantially more money for vaccine distribution, and much more.
   
  On Monday the House will vote to increase payments to individuals from $600 to $2,000. Therefore, a family of four would receive $5,200. Additionally, Congress has promised that Section 230, which so unfairly benefits Big Tech at the expense of the American people, will be reviewed and either be terminated or substantially reformed.
   
  Likewise, the House and Senate have agreed to focus strongly on the very substantial voter fraud which took place in the November 3 Presidential election.

  The Senate will start the process for a vote that increases checks to $2,000, repeals Section 230, and starts an investigation into voter fraud.

  Big Tech must not get protections of Section 230!

  Voter Fraud must be fixed!

  Much more money is coming. I will never give up my fight for the American people!

  *  *  *

  Many Trump supporters are not impressed, while others defended the president:

  He didn’t “cave.”
  He approved it AFTER all of The People saw what the bill really contained. He wanted The People to see the truth.

  — M.J. Marino (@MiriamMarino1) December 28, 2020

  Thank you for the recommendation. I’ve seen his thread, but I’m not sure that he’s correct. It doesn’t cite any specific language from the act itself or provide examples of how it’s worked in practice.

  I’m not convinced it has the legal weight he’s attributed to it. We’ll see.

  — Murray 🇺🇸 (@Rothbard1776) December 28, 2020

  What’s wrong with him? For real? Why does he always bark only to fold? Don’t bark and done. Not sure why he yanks his supporters around only to fold every time for 4 years in a row. https://t.co/rPUK1LKm4U

  — Yossi Gestetner (@YossiGestetner) December 28, 2020

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

  So am I buying a $600 gun or a $2000 gun?? Let me know

  — Jason (@JRup513) December 28, 2020

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

  Tyler Durden
  Sun, 12/27/2020 – 20:48

• Which States Saw The Biggest Population Inflows And Outflows In 2020
  Which States Saw The Biggest Population Inflows And Outflows In 2020

  When it comes to migratory patterns among US states and cities, there were some notable winners and losers in 2020.

  Among the former, Indiana gained nearly 24,000 new residents during 2020, a slight increase that continued the state’s ongoing trend of slow population growth, the U.S. Census Bureau’s annual estimate shows.  The Hoosier state’s population grew to 6.75 million, up from 6.73 million in 2019 – a 23,943-person increase, according to the federal agency’s estimates.

  Other states, however, saw a continued exodus as people couldn’t wait to bail: take adjacent Illinois – its population fell by 79,487 residents to 12.6 million, the second biggest loss nationwide after only New York state, The (Northwest Indiana) Times reported.

  The official results of the 2020 Census have not been released yet, and the new numbers reflect the Census Bureau’s annual estimate and not the official count.

  The annual estimates show that northwest Indiana has been gaining population for the first time in years, adding an estimated 2,102 more residents last year. That increase reverses a long-running trend that followed deindustrialization and a loss of jobs at the region’s steel mills, Micah Pollak, an Indiana University Northwest assistant professor of economics, in a recent article for the Indiana Business Research Center.

  He wrote that better public transportation from the expansion of the South Shore Line commuter rail line, “a wider range of high-end retail, restaurants and breweries” and expanded bicycle trails and green spaces now “allow the Region to better meet the needs and expectations of the next generation.”

  “While Northwest Indiana was once a region many residents hoped to one day leave, we are now seeing more people return, choose to remain here, or be attracted into the region,” Pollack wrote.

  In any case, what is quite clear is that such “progressive” bastions of Democratic power such as New York, Illinois, California and Michigan saw the biggest population outflows in 2020, while the biggest winners were the sunbelt states Texas, Florida and Arizona. Expect this trend to only accelerate.

  

  Tyler Durden
  Sun, 12/27/2020 – 20:40

• China Will Be The First Country To Launch A Digital Currency: What Happens Then
  China Will Be The First Country To Launch A Digital Currency: What Happens Then

  By Wim Boonstra of Rabobank

  Summary

  • China may be the first major country to launch a central bank digital currency or CBDC
  • The Chinese CBDC, named DCEP, will strengthen the position of the central bank and help to further modernize the Chinese economy
  • The DCEP will probably also be available for China’s trade partners, to begin with Africa
  • The DCEP may strengthen the international position of the renminbi to the detriment of the euro
  • The arrival of the DCEP should be a strong wake-up call for Western, especially European, policymakers

  Introduction

  Most central banks are busy preparing for the potential introduction of central bank digital currency (CBDC). CBDC is a digital currency issued by the central bank. It is sometimes referred to as a digital version of a bank note, but in many cases this is not correct. There are indeed many different potential variants.

  

  So far, virtually all the central banks are keeping their options open as to whether a CBDC will ultimately appear.

  China, where a far-reaching trial is under way, is the major exception. If this trial is successful, one can expect the Chinese CBDC to be introduced widely in the near future. China is therefore comfortably leading the way because the country has big ambitions for its digital currency. First, it should provide a sizable boost to the Chinese economy; second, it will concurrently further increase the Chinese government’s control of Chinese society; finally, the new currency is part of an ambitious plan to strengthen the international position of the renminbi, the Chinese currency, and potentially at the expense of the euro in particular. This Chinese decisiveness should spur European policymakers into action by further strengthening the euro.

  China: from cash-based to almost completely cashless money in 10 years’ time

  Not so long ago, retail payments in China were still almost entirely made in cash. There has been a revolution in payments traffic since that time, and China is now one of the leading countries in cashless payments. Unlike in other countries, such as the Netherlands and Sweden, in China this development did not originate from the banking system, but it was induced by a few key apps from relatively young Fintech companies such as WeChat (Tencent) and Alipay (Ant Financial). These parties, that form a kind of extra layer between the banks and their customers, now have a collective market share of more than 90% in Chinese payments cashless retail payments. The Chinese cashless payments system is already able to settle approximately 100,000 transactions per second.

  The Chinese CBDC: DCEP

  Against this background, the People’s Bank of China (PBoC), the Chinese central bank, has taken the initiative of developing its own digital currency known as the Digital Currency Electronic Payment (DCEP). Above all, the DCEP is a digital alternative to bank notes, although it has features that differ from cash in certain respects (see below). The DCEP does however have the same value as a renminbi.

  

  The technology that can be used by the public for payments is based on traditional payment technology and not on blockchain technology. This is the only way to achieve the necessary scale. The aim is to reach a capacity of 300,000 transactions per second. The central bank might itself use blockchain, for example for wholesale transactions or settlements in DCEP between private banks. Although the DCEP is a cashless currency that will be held in an account with a private entity, there is also the possibility of using a token-based functionality on for example a chip to effect peer-to-peer payments, even where there is no Internet. This is especially needed for successful adoption in the rural areas of China. This token-based functionality will be widely used, as a result of which the DCEP will compete with cash. A sizable trial has been running for several months in which tens of thousands of people have been participating.

  What does the PBoC want to achieve with the DCEP?

  The PBoC has several objectives with the introduction of the DCEP.

  Prevention of a monopoly in the payment system

  The PBoC wants to prevent a situation in which WeChat and AliPay take over the Chinese payment system. It is concerned that the entire payment system will soon fall into the hands of these private parties. The DCEP therefore has to restrict the involvement of these parties and increase the role of the central bank in the payment system. It is even more likely that any key private firm will be prevented to become a dominant player, as ultimately China is not a ‘normal’ market economy (which explains Beijing’s current crackdown on Ant Financial far better than just a feud between Xi Jinping and Jack Ma).

  Promotion of financial inclusion and further reduction of the role played by cash

  Highly efficient cashless payments dominate in large parts of China. But in the poorer regions, especially the rural areas, people have less access to banking services such as regular credit. In these areas, cash still plays an important role. Payments in the criminal underworld, including the illegal gambling industry, are also still largely made in cash. The DCEP will offer people in these regions full access to financial services, but it can also reduce the importance of cash payments. The main aim of the DCEP is therefore to replace cash. In terms of features, it will also closely resemble cash.

  Better information on payment flows and prevention of illegal transactions

  Unlike payment transactions using a bank account, which by definition leave traces in a bank’s records, cash payments are highly anonymous. As we have said, the DCEP will closely resemble cash, with the possibility of making payments directly from one person to another. Some degree of anonymity would thus appear to be safeguarded. But on further consideration, it becomes clear that the PBoC, and therefore the Chinese government, will have full insight.

  To be precise, in a transaction between two people effected with DCEP, anonymity between these two people will be assured, as is the case with a cash payment. But the PBoC can always establish at a later date who were involved in the transaction. This will enable more effective tracing of illegal transactions than if these were effected in cash. But there will also be detailed insight into the payment behavior of individuals.

  Restricting capital flight

  Although China does not have free cross-border capital movements, capital flight is a common and substantial phenomenon. Capital flight can occur in various ways, and is often difficult to trace. For example, internationally trading Chinese companies can for instance manipulate invoices, as a result of which money can be transferred abroad. People can also use the Bitcoin system to hide money from the authorities and/or transfer it abroad.

  The Chinese government, like its counterparts in Europe and the US, is concerned that stablecoins could assume an important role as an alternative to the regular money in circulation, but also may develop into a vehicle for capital flight (read “How The Chinese Use Illegal Online Gambling And Tether To Launder Over $1 Trillion Yuan“). Stablecoins are cryptos like Bitcoin, but unlike Bitcoin they are, at least in theory, secured by financial assets. When Facebook announced in April 2020 that it intends to add national stablecoins to its Libra, a digital currency basket that it announced in 2019, central banks reacted immediately by devoting more urgent attention to CBDC.23 Such stablecoins could for example create the possibility that people could use a Libra-stablecoin to transfer money abroad. With the DCEP, the PBoC intends to slow the momentum of private stablecoins. This is also an important consideration for the Western central banks.

  Retention of monetary sovereignty

  This is connected with the previous point. If people have easy access to a private stablecoin, it could actually in a sense reduce the role of the national currency. Something similar actually happened in Zimbabwe, where confidence in the national currency completely vanished as a result of hyperinflation and people turned en masse to foreign currencies such as US dollars and South African rand. In such a situation, the national central bank loses control of monetary conditions in its own country. Importantly, however, the DCEP could also be used by China to interfere with monetary sovereignty in other countries.

  What about privacy?

  The PBoC says it will respect the privacy of people and therefore the anonymity of the transactions but at the same time it says that DCEP will help it to detect illegal transactions. What this probably comes down to in practice is that people will be able to effect payments and retain anonymity between each other, but that the central bank will on the other hand be able to view the transactions. Anonymity will therefore not be guaranteed and the central bank will have much greater insight into people’s payment behaviour than it has at the moment. The DCEP will also have the status of legal tender. This means that Chinese residents will be obliged to accept the DCEP, as confirmed by various statements from the central bank on the issue (South China Morning Post, 10 November 2020). The DCEP is thus not really coming into being as a result of strong demand from the Chinese public, but it is being imposed on the population by the government. Moreover, the way the DCEP is designed, it may develop into a perfect vehicle for a quasi-command economy: it allows all transactions to be monitored, and opens the door for a retreat to a more Soviet model of banking, viz. banking under full state control.

  Internationalization of the renminbi

  The use of the renminbi in international transactions is still relatively limited, certainly in comparison with the dollar and the euro. But China is working steadily on increasing its usage, and even hopes that one day the renminbi can succeed the dollar as the global reserve currency. China sees the DCEP as an important vehicle for strengthening the renminbi’s international position, as foreigners will also be able to use the DCEP in transactions with China.

  The benefit of this for China is that it can settle more of its international trade in (digital) renminbi. China has initially targeted Africa in this respect. Many African countries do not have fully convertible currencies and mutual trade is frequently settled in US dollars, which is expensive. China is aiming to achieve a situation in which African countries can use the DCEP not only in their trade with China, but will also use it for their domestic transactions. This is a good example of how China is aiming to position itself internationally and how various projects and institutions will cooperate under the direction of the government. The newest model of the Huawei smartphone indeed includes an app enabling payment in DCEP without the need for Internet (Eurasia). Huawei is currently already a leading telecoms provider in Africa, which gives China a head start. In other parts of the world, where Huawei is less dominant or even banned, it will off course be less simple for China to push the DCEP ahead.

  Note that while China intends to strengthen its own monetary sovereignty with the DCEP, it clearly has no qualms regarding its use to undermine the monetary sovereignty of other countries. If not only a larger proportion of the trade between China and African countries but also part of intra-African trade could soon be settled in DCEP, therefore renminbi, international use of the Chinese currency will significantly increase. Note, that if a larger share of China’s international trade will be conducted in DCEP, it will also become more difficult for Chinese im- and exporters to use trade as a way to channel funds abroad. So it will held the Chinese government to reduce capital flight, although complete elimination of this phenomenon will not be possible.

  Decision time: is the DCEP a wake-up call?

  China is leading internationally with the introduction of CBDC, and is clearly moving in a different direction than many other countries considering a similar move. The debate in Europe is still mainly about the form the digital euro, its CBDC, should take, the question of whether there is consumer demand for it, and who should pay for it. The Chinese authorities are taking a more strategic approach, and most of all from the perspective of whether a digital currency can contribute to strengthening/entrenching China’s international position.

  Assuming that the current Chinese trials are successful, we could very well see the DCEP appear as early as next year. This could be a significant step in the further movement of the Chinese economy towards cashless money. The payments system would be further strengthened by the DCEP, as this will prevent large private parties gaining a duopoly with the market power that this would entail. Financial inclusion would be improved in the underdeveloped areas, and everyone would have access to cashless money and the associated financial services that this would make possible. The black economy would be further reduced, and the Chinese government will have better insight (and control) of the payment behaviour of its citizens to an extent that we in the West would probably see as unacceptable. Lastly, the introduction of the DCEP can discourage capital flight and probably strengthen the renminbi’s international position.

  

  All in all, the DCEP will certainly make a positive contribution to the further development of the Chinese economy. Although the DCEP looks to be less innovative than the CBDCs under consideration by the Western central banks in certain respects, the determination shown by China is undoubtedly impressive.

  This Chinese resoluteness also shows that China is working very actively on strengthening the renminbi’s international position, with the central bank and companies such as Huawei working closely together to achieve this. While still a long way off, a scenario in which first parts of the African, but later maybe Asian, Latin American of even some European economies will use the renminbi for cross-border and in due course also domestic transactions is gradually becoming more plausible.

  One may also expect China to try to get all countries involved in its Belt and Road Initiative to use the DCEP and therefore the renminbi. Today, the renminbi is still a small currency in comparison to the euro and most of all the dollar. But this situation could change if the DCEP becomes widely accepted. In the context of a situation in which the euro’s international position has more or less stagnated over the last decades, this is at the very least somewhat disconcerting.

  Of course we may expect that, once the digital renminbi takes off and gains traction, other central banks will react strongly. Especially the US will be determined to hold on to the dollar’s international dominance. The US authorities will soon understand that a successful digital renminbi may in the long run turn out to be a larger threat to the position of the dollar than the euro ever was. The most important difference is that the euro is institutionally weak and European politicians have so far failed to use their currency as a geopolitical instrument. The Chinese government, in contrast, understand very well the power of money as a ‘peaceful’ instrument to increase international political clout.

  But after all the good news may be, that the DCEP also turns out to be the important wake-up call that prompts European policymakers to finally devote serious attention to strengthening the international role of the euro. Having the second currency after the US dollar is maybe not optimal, but is not disastrous. Being third after the Chinese renminbi is a different story. In the end, money talks.

  * * *

  Appendix: what will the DCEP look like?

  The exact design of the DCEP is still not clear. According to the BIS, the DCEP will be what is known as a hybrid CBDC. People will hold balances in their names at the central bank, but transactions will be approved using an intermediate layer of private parties (possibly including commercial banks). There will then be no direct interaction between the central bank and the account holders, but people will have an account in their names at the central bank. This would be similar to the ideas being mooted at other central banks such as the ECB and the Bank of England. Bloomberg, Blockchain News and the China Daily on the other hand describe the DCEP as a two-tier system, in which people will not directly hold accounts with the PBoC. According to these reports, in the Chinese system people will hold only a DCEP account with a bank or, more likely, with a payment service provider. These parties will in turn hold a balance with the PBoC as a liquidity reserve that exactly covers the amount of DCEP. They will also settle interbank payments in DCEP. This kind of system is also known as a synthetic CBDC (sCBDC), as people will not have their own CBDC accounts with the central bank. The PBoC will however receive regular statements of effected transactions.

  

  If this last model is adopted, the Chinese CBDC model would be more like a full (liquidity) reserve bank than a real CBDC. A full liquidity reserve bank is a bank that would hold a 100% cash reserve with the central bank against the CBDC payment accounts held with it. But in the Chinese model, there would be no additional institution created, the existing financial institutions would offer additional accounts that would then be 100% backed by central bank reserves. Statements from the PBoC also suggest the direction is more towards a synthetic model. Technically speaking, this would represent a less innovative move than a true CBDC.

  Tyler Durden
  Sun, 12/27/2020 – 20:05

• New Year's Week Storm Could Cause Havoc Across US 
  New Year’s Week Storm Could Cause Havoc Across US 

  A new storm will sweep across the country next week, just like the last one, from Southwest to the Plains to Midwest to East, spreading rain and snow along the way. 

  As 2020 concludes and 2021 is just days away, it appears more wicked weather is on the way. The storm will unfold in two phases, according to The Weather Channel.

  

  The first phase will begin on Sunday night. 

  San Francisco and Los Angeles will be hit with heavy rain, strong winds, and mountain snow.

  By Tuesday into Wednesday, the storm will traverse the country’s central part with heavy snow for Iowa, Minnesota, and Wisconsin. Rain is expected along the Mississippi River Valley with severe thunderstorms in Texas. 

  The second phase of the storm will begin mid to late week. 

  By New Year’s Eve, heavy rain and thunderstorms are expected in the Gulf Coast and Tennessee River Valley regions. Rain and wind are also expected in all major Mid-Atlantic and Northeast cities. 
  More snow could develop in the Midwest and Great Lakes. A wintery mix could be seen in northern Texas and parts of Oklahoma. Portions of the Northeast near the Canadian border could see accumulating snowfall. 

  Meteorologists at BAMWX have analyzed “103 of the ensemble models” for the New Year’s Eve/Day storm potential. 

  I’ve looked at all 103 of the ensemble models for the #NewYearsDay storm potential…

  So far there is no consensus as the models continue to make drastic west shifts with every new run.

  Perhaps some consistency will arise today? Brutal… pic.twitter.com/lcl4HpHolB

  — BAMWX (@bamwxcom) December 27, 2020

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  The accuracy of the weather models will greatly improve in the next couple of days, nevertheless, if you’re planning on traveling and mixing with other households around New Years, be careful, a potentially powerful storm could be headed for the Eastern US.

  Tyler Durden
  Sun, 12/27/2020 – 19:30

• Forced Liquidations? Bitcoin Futures Open With Massive Gap After Xmas Spike
  Forced Liquidations? Bitcoin Futures Open With Massive Gap After Xmas Spike

  Update (1900ET): Bitcoin futures have opened dramatically higher than spot as the massive gap open appears to have triggered forced short liquidations (which makes sense as margin calls must be massive on a $4000-plus gap)…

  Bitcoin Futures are up 19%, the biggest jump since June 2019…

  

  And after spot gapped as much as $5000 from futures closing price, futures opened with a $1365 gap higher over spot prices…

  

  That is the biggest spread since the contract’s inception…

  

  Will this drag spot higher?

  *  *  *

  Bitcoin  has been stealing the spotlight in recent weeks as it has soared to record-er and record-er heights, but overnight saw a ‘regime-shift’ as Bitcoin topped $28,500…

  

  Source: Bloomberg

  …before crashing over $2,000 lower, only to be bought back…

  

  Source: Bloomberg

  Bitcoin’s surge had pushed it above its stock-to-flow model estimate…

  

  Source

  Some still have even bigger plans…

  #Bitcoin tenX from here by end of 2022 or early 2023.

  — Tim Draper (@TimDraper) December 26, 2020

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  While Ethereum surge to a fresh cycle high…

  

  Source: Bloomberg

  Its highest since May 2018…

  

  Source: Bloomberg

  This was a very notable reversal in the recent trend of Bitcoin outperformance…

  

  Source: Bloomberg

  As Ethereum seemed to find support again at 0.025 Bitcoins…

  

  Source: Bloomberg

  Bitcoin’s surge in price pushed it above the $500 billion market cap level for the first time…

  

  Source: CoinMarketCap

  With institutional investors taking a break, talk turned to retail buyers fuelling the latest phase of the Bitcoin bull run.

  “The bull cycle of bull cycles has started, as more and more players are starting to adopt towards Bitcoin and cryptocurrencies,” Cointelegraph Markets analyst Michaël van de Poppe summarized to Twitter followers.

  But, judging by the GoogleTrends data, this remains an institutional story, very different from 2017…

  2017 vs 2020 – retail interest hasn’t surged back pic.twitter.com/fnPHSYEbwr

  — skew (@skewdotcom) December 27, 2020

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  Finally, this looks set to be the biggest gap open in Bitcoin futures markets ever as spot prices have surged an incredible $4000 since Bitcoin Futures closed on Thursday…

  

  Source: Bloomberg

   $2.3 billion worth of Bitcoin futures expired on Christmas day, which historically has led to choppy markets, but we suspect some serious margin calls are still on their way.

  With the end of the year looming, some fund managers may also be buying BTC so they can brag next year about being smart enough to get in in 2020 while neglecting to say at which price they had done so.

  Tyler Durden
  Sun, 12/27/2020 – 19:03

• "Their Careers Are Over": Cornell Student Reps Targeted For Opposing Efforts To Defund/Disarm Campus Cops
  “Their Careers Are Over”: Cornell Student Reps Targeted For Opposing Efforts To Defund/Disarm Campus Cops

  Authored by Jonathan Turley,

  We have been discussing student editors and student government leaders using their positions to retaliate against the exercise of free speech by other students with the support of faculty. This trend is hardly surprising as journalism deans call for censorship and journalism professors call for the rejection of neutrality in the media. Universities have generally remained passive as students and faculty harass and punish those with opposing views.  The latest such example was detailed in a column on the site College Fix on how students at Cornell University moved to oust student representatives who voted against disarming and defunding campus police.

  

  According to the report, students failed to pass a resolution calling for the defunding and disarming of the Cornell Police Department. After the measure failed, student leaders called for the removal of opposing leaders from committees or the student government as a whole.

  Uchenna Chukwukere, the Student Assembly vice president of finance declared

  “These 15 student assembly members watched us pour out our traumas and fears on the floor practically begging them to vote no, and finally send a message to the university that we can no longer allow these oppressive institutions to keep us down. Many of these assembly members are white-cis-het men and women who quite literally laughed and danced in our faces when the resolution failed…Their faces are all over social media…We will never forget… their campus careers are over… We must disarm, defund, and disband the Cornell University Police Department.”

  Eventually, after a series of failed votes, the student organizers were able to pass Resolution 30, calling to disarm campus police by two votes.

  Student Dakota Johnson, a Marine veteran, recounted a confrontation with a government leader where he was allegedly told that:

  “As a white man, you cannot be the arbiter of what is and isn’t racist and who is a good or bad person. … You will never be the arbiter because you are a white man.”

  The question is the responsibility of universities when students use their positions to deny the free speech of other students or punish those who hold opposing views. There has been a conspicuous silence from faculty ad administrators as both free speech and academic freedom has been attacked in recent years. It is a disgraceful failure to protect the foundational values for academia. Many are afraid of being the next to be targeted by campaigns like those directed against the students at Cornell.  This silence has continued even as faculty are hounded for their views or writings.  We have been discussing these cases across the country including a similar effort to oust a leading economist from the University of Chicago as well as an effort at Harvard targeting a leading academic.  It is part of a wave of intolerance sweeping over our colleges and our newsrooms — a campaign that will devour its own in the loss of academic freedoms and free speech.

  Even if we will not protect our colleagues, we have a duty to protect the students who come to our campuses to learn and develop their own views and values. That includes protecting them from being formally punished or ousted for their viewpoints. If we do not fight for them and their rights, we have become entirely untethered from any principle other than our personal advancement and safety.

  Tyler Durden
  Sun, 12/27/2020 – 18:55

• Equity Futures Surge Off Weak Open After Trump Tweet, Gold Gains
  Equity Futures Surge Off Weak Open After Trump Tweet, Gold Gains

  After opening down around 150 points, Dow futures went panic-bid after President Trump tweeted “Good news on Covid Relief Bill. Information to follow! “

  Good news on Covid Relief Bill. Information to follow!

  — Donald J. Trump (@realDonaldTrump) December 27, 2020

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

  We also note this headline printed about 30 mins before the futures open…

  • *ASTRAZENECA CEO: COVID VACCINE EFFECTIVE AGAINST NEW STRAIN

  But futures opened down hard before Trump’s tweet lifted them 250 points amid negligible liquidity to take out Thursday’s highs…

  

  We suspect now those stops are run, we retest the lows as the algos exhausted themselves on the nothingburger tweet since there is nothing coming aside from the $2,000 bill amendment vote that Republicans have (in enough numbers) been negative about.

  We do note that gold ran higher on the tweet…

  

  …and the dollar is down a smidge…

  

  Tyler Durden
  Sun, 12/27/2020 – 18:44

• Illegal Street Vendors "Overtaking" NYC And The Entire City is Blaming Bill De Blasio
  Illegal Street Vendors “Overtaking” NYC And The Entire City is Blaming Bill De Blasio

  Another day, yet another way in which Comrade De Blasio is turning New York City into a third world country.

  In addition to murders rising, restaurants closing, shops being boarded up and a litany of taxation and “redistribution of wealth” tactics that De Blasio has brought to the table during his tenure as Mayor, he is now also being blamed for a inconspicuous rise in illegal street vendors that the New York Post says is “overtaking” the city. 

  Pushing items like live crabs, knock-off Louis Vuitton caps and disposable face masks, illegal vendors are making an already miserable 2020 for shop owners even worse. The Post says it counted 27 street vendors on just one side of the street between Sanford and 41st Avenue on Main Street in Flushing. And it doesn’t stop there: vendors are scattered everywhere from Manhattan to the Bronx to Brooklyn. 

  The number of illegal street vendor complaints for 2020 have almost eclipsed 2019’s number, despite New York City being in lockdown for 78 days. 

  DianSong Yu of the Flushing Business Improvement District told the paper that 90% of vendors aren’t licensed. Of the 20,000 vendors across the city, only a “few thousand” are licensed, Yu said. “It’s a very tough time for everybody, we get it. But we need to be fair to the local merchant who are paying very high rent and taxes. And they’re hurting.”

  One vendor who did have a license, and was a military veteran, told the Post: “They’re robbing the city of taxes. They’re taking money from the veterans. They’re taking jobs.”

  

  Another former illegal vendor, now in his 70s, said: “I can understand if you can go out and sell. Why not? But the situation is out of hand – outrageously out of hand.”

  Ira Dananberg, who has worked in Flushing for 19 years, said: “I’ve never seen anything like it. People literally have no choice but to walk on top of each other.” He blames the issue on De Blasio for ordering the NYPD to stop cracking down on vendors in June. 

  Councilman Peter Koo, who introduced a bill 2 years ago to ban vending on Main Street, called it a “circus” and said the issue “falls squarely on the mayor”. 

  The Department of Consumer Affairs is in charge of handing out licenses and limits non-Veteran licenses citywide to 853. Veterans that are honorably discharged can get one for free, while others pay between $100 and $200.

  And for items like the live crabs that are being sold during a pandemic that supposedly started in a Chinese wet market? The wife of a licensed vendor bought a dozen crabs several weeks ago from another vendor and “started to feel sick” after eating them. After her husband cracked one of the crabs open, he found “white worms in the bellies”. The Health Department says it is investigating. 

  “Whether the crabs are legal or safe to eat is anybody’s guess. No agency could tell The Post with certainty and none took responsibility for oversight,” the article concluded. 

  Tyler Durden
  Sun, 12/27/2020 – 18:20

• "Immediate Gratification"-Bias Is Real!
  “Immediate Gratification”-Bias Is Real!

  Authored by Richard Rosso via RealInvestmentAdvice.com,

  January is the time to make your fiscal fitness resolutions for 2021.

  Most promises we make to ourselves will be a memory by February. Want a fiscal fitness head start and get 2021 going STRONG on the right foot? Here are 9-steps:

  #1: A thorough portfolio review with an objective financial partner is timely.

  Have you ignored your long-term asset allocation or the mix of stocks, bonds, and cash? With the major stock indices close to new highs, your allocation specifically to stocks may have grown disconnected from your risk tolerance.

  Complacency is the emotional foible du jour. After all, every market dip appears to be a buying opportunity. With volatility subdued, investors head blindly overconfident into equity markets.

  A financial professional, preferably a fiduciary, can help make sense of how your portfolio’s risk has changed and provide input on rebalancing or selling back to targets for what could shape up to be a very different 2021.

  #2: Sell your weak links (losers), trim winners.

  Consider tax harvesting where stock losses are realized (you may always purchase the position back in 31 days) and shed profits from winners. Going against the grain when the herd is chasing performance takes intestinal fortitude and investment acumen counterintuitive to the masses.

  Candidly, tax-harvesting isn’t such a benefit to overall portfolio performance. However, the action of disposing of dead weight is emotionally empowering, and if gains from trimming winners can offset them, then even better.

  Per financial planning thought-leader Michael Kitces, the economic benefit of tax-loss harvesting is best through tax-bracket arbitrage. The most favorable harvesting scenario is a short-term loss offset by a short-term gain (usually taxed at ordinary income rates).

  #3: Fire your stodgy brick & mortar bank.

  Let’s face it: Brick & mortar banks are financial fossils. How many times did you enter a bank branch over the last five years? Banks won’t be in a hurry to increase rates on conservative vehicles like certificates of deposit, savings accounts, and money market funds even when (if) the Fed raises rates again.

  Virtual banks like www.synchronybank.com provide FDIC insurance, don’t charge service fees, and still offer savings rates above the national average.

  Accounts are easy to establish online and electronically link to your existing saving or checking accounts to transfer funds.

  #4: Get an insurance checkup.

  Unwelcome consequences for financial health can arise due to holes in your insurance coverage.

  Risk mitigation through insurance is crucial to reduce “financial fragility,” when a life-changing event not adequately prepared for creates an overall collapse of a household’s fiscal state.

  Risk mitigation, analysis, and insurance consideration are more crucial than ever before, especially in light of the pandemic.

  How are insurance pitfalls revealed?

  Common insurance pitfalls surface through comprehensive financial planning. Insufficient life insurance coverage, especially for stay-at-home parents who provide invaluable service, underinsurance of income in the event of long-term disability, overpaying for home and auto coverage are recurring pitfalls.

  Common is how high-net-worth individuals lack inexpensive umbrella liability coverage to help protect against major claims and lawsuits. Renter’s insurance appears to be a second thought if it all.

  Look to download an insurance checkup document from www.consumer-action.org. It’s a valuable overview and comprehensive education of types of insurance coverage.

  Set a meeting with your insurance professional or a Certified Financial Planner who has extensive knowledge of how insurance fits your holistic financial situation.

  #5: Maximize your Health Savings Account.

  The number of employers moving to high-deductible health care plans for their employees increases every year. Overall, individuals and families are shouldering a more significant portion of health care costs, including premiums every year.

  According to a survey of 600 U.S. companies by Willis Towers Watsons, a major benefits consultant, nearly half of employers will implement high-deductible health plans coupled with Health Savings Accounts.

  HSA Limits for 2020.

  Health Savings Accounts allow individuals and families to make (and employers to match) tax-deductible contributions up to $3,550 and $7,100, respectively, for 2020. Those 55 and older are allowed an additional $1,000 in “catch-up” contributions.

  Money invested in an HSA appreciates tax-free and is free of taxation if withdrawn and used for qualified medical expenses. Like a company retirement account, an HSA should have several investment options in the form of mutual funds.

  Although Health Savings Accounts provide tax advantages, as an employee, you’re now responsible for a larger portion of out-of-pocket costs, including meeting much higher insurance deductibles. Comprehensive healthcare benefit has morphed into catastrophic coverage.

  Employees can no longer afford to visit the doctor for any ailment because the hefty deductible will take a bite out of a household’s cash flow.

  At RIA, we recommend participants to refrain from tapping the funds in these accounts. After all, they are “retirement savings accounts,” not “retirement spending accounts.”

  Try to refrain from treating an HSA as a current healthcare expense account and look to pay for healthcare co-pays, deductibles, and other costs, if possible, from sources such as brokerage, savings, and checking accounts.

  Health Savings Accounts are more versatile than you think. Distributions can pay for Medicare Part A, B, C, and D premiums in addition to the Part B deductible.

  For laid-off workers who must consider COBRA health insurance coverage, HSA funds can be used to pay the hefty premiums. What a welcomed relief for cash-strapped families that don’t want to tap retirement accounts drain emergency cash reserves!

  #6: Check beneficiary designations on all retirement accounts and insurance policies.

  It’s a common mishap to forget to add or change primary and contingent beneficiaries. It’s an easily avoidable mistake. Several states like Texas have formal Family Codes that prevent former spouses from receiving life insurance policies post-divorce with few exceptions.

  Proper beneficiary designations allow non-probate assets to transfer to intended parties quickly. Not naming a beneficiary or lack of updating may derail an estate plan as wishes outlined in wills and trusts may be superseded by designations.

  #7: Shop for a credit card that better suits your needs.

  Listen, it’s perfectly acceptable to utilize credit cards to gain travel points or cash back as long as balances are paid in full every month, so why not find the card that best suits your spending habits and lifestyle?

  For example, at www.nerdwallet.com, you can check out the best cash-back credit cards.

  For those who carry credit card balances, and unfortunately, it’s all too common, consider contacting your credit card issuer to negotiate a lower rate or threaten to take your business (and your balance) elsewhere.

  Keep in mind, on average, an American family maintains more than $5,700 in credit card debt, and the national average annual percentage rate is a whopping 17.98%, according to WalletHub.

  8#: Prepare to increase your contribution rate to retirement accounts and emergency cash reserves.

  Start 2021 on the right financial foot by increasing payroll deferrals to your company retirement accounts (PREFERABLY ROTH) and bolstering emergency cash reserves. Consider an overall 5% boost and prepare your 2021 household budget now to handle the increase.

  #9 Prepare to do a better job and handle your ‘fiscal emotional state’ in 2021.

  The chase for return with little regard for risk must come to a halt in 2021. Novice investors feverishly trade on platforms such as Robinhood and consider themselves geniuses when the real hero is easy-money Federal Reserve policies.

  It Begs a Question: Are Investors Rational? Yes. And No.

  A human’s rationality is bounded. Cognitive abilities are limited and emotional biases, plentiful. As a result, few recognize their deficiencies and depend on mental shortcuts to rise above information overload.

  In a market that only goes higher, investment decisions have become full-on ‘System 1.’ As illustrated in Eugene Higgins Professor of Psychology Emeritus at Princeton, Daniel Kahneman’s bestseller – Thinking Fast, And Slow, human brains operate on two systems.

  Consider System 1 the brain on auto-pilot. Fast, emotional, incredibly efficient, but fraught with error. System 2 is the slow, logical, deliberate operator. The one that seeks homework disdains immediate gratification and relishes the long term.

  The Federal Reserve’s easy cash’ machine has short-circuited our System 2. RIA’s advisors work diligently to temper investors’ euphoric, irrational states every day. Sometimes it feels like a losing battle.

  I’m increasingly worried about how the Federal Government, armed with fiscal stimulus (which I believe continue as an extension and bolster of current social safety nets like unemployment benefits), ignites further blind greed and blistering overconfidence. Do not be one of these investors, especially if you’re five years or closer to retirement.

  

  Immediate gratification bias is real!

  Increasingly, we seek a quick reward; we are blind to future outcomes. We focus on today’s satisfaction instead of rewarding discipline, which leads to wealthier tomorrows. Heck, we witness this behavior daily in Congress as ‘debt be damned!’ And while I’m supportive of stimulus, I also understand the ramifications of what we’ve done to long-term GDP growth.

  Where should self-fulfillment come from in 2021 and beyond?

  In our households, we don’t have money machines. We can’t print our own. We all must find ways to temper spending, live smaller, spend less, and seek fulfillment in things we cannot buy. Based on recent polls, many Americans are finally getting the message: “We must gain control over household spending and exhibit financial discipline in 2021!”

  As the years roll by and change, so can habits.

  When it comes to money, we can all learn from the power, beauty, and resiliency of accepting what is.

  Use 2021 to gain a fresh perspective and improve your financial health.

  Tyler Durden
  Sun, 12/27/2020 – 17:45

• Anthony Warner Died In Nashville RV Bombing, Police Chief Said
  Anthony Warner Died In Nashville RV Bombing, Police Chief Said

  Update (1944 ET): CBS News has obtained a picture of the Nashville bomber, Anthony Q. Warner. 

  

   * * *

  Update (1908 ET): ABC News’ Josh Margolin cited multiple law enforcement sources that say 63-year-old Anthony Q. Warner was paranoid over 5G cellular technology and believed in aliens. 

  Multiple law enforcement sources say investigators are looking seriously at whether Warner may have been motivated, at least in part, by a paranoia over #5G cellular technology. Sources say it appears he may also have believed in aliens. #NashvilleBomb https://t.co/VGhPjd18Wj

  — Josh Margolin (@JoshMargolin) December 27, 2020

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

   * * *

  Update (1748ET): On Sunday evening, AT&T released a statement that said its building on 2nd Avenue in Downtown Nashville sustained “significant damage” in the early hours of Christmas morning. As a result, tens of thousands of customers across the Nashville metro area, Tennessee, Kentucky, and Alabama experienced a loss of communication service(s). 

  The AT&T building on 2nd Avenue suffered significant damage in the blast. That facility includes connection points for regional internet services as well as local wireless, internet and video. In the hours that followed the explosion, our local service remained intact through temporary battery power. Unfortunately, a combination of the explosion and resulting water and fire damage took out a number of backup power generators intended to provide power to the batteries. That led to service disruptions across parts of Tennessee, Kentucky and Alabama. More than 48 hours later, some customers are still experiencing outages. We know it is frustrating and we apologize for the inconvenience. We also thank you for your understanding. -AT&T statement 

  Aerial View Of Downtown Nashville Bombing Site

  

  As of Sunday evening, Downdetector shows the AT&T outage still persists across multiple states. 

  

   * * *

  Update (1720ET): This evening, at the Metro Nashville Police press conference, authorities have confirmed Tennessee man Anthony Quinn Warner, the suspect who was confirmed today by police as the bomber, perished in the explosion on Christmas morning. 

  BREAKING: Law enforcement is now announcing that Anthony Warner, 63, of Bakertown Rd, is the man believed responsible for Friday’s explosion. He perished in the blast. No one else is presently believed to have been involved. Thank you to our federal & state partners. pic.twitter.com/PwMa1MwHvd

  — Metro Nashville PD (@MNPDNashville) December 27, 2020

  Authorities said preliminary tests of human remains found at the scene of the bombing in Downtown Nashville were a match to Warner.

  

  The results suggest Warner blew himself up – though a motive has yet to be revealed. 

  * * *

  Update (1700 ET): Metro Nashville Police is set to hold a press conference at 1700 ET. Law enforcement officials will provide an update on the Christmas Day bombing in Downtown Nashville.

  Watch Live:

  * * *

  Update (1609 ET): Hitting the wires Sunday afternoon is a report that Rutherford and Wilson Counties’ deputies are investigating a white box truck, parked on Highway 231 South near Cedars of Lebanon State Park, Tennessee, which reportedly played a similar audio recording to the recreational vehicle that exploded in Nashville, according to News Channel 5.

  Deputies have closed down the highway and have sent a bomb squad robot to investigate. 

  ***ROAD CLOSURE***

  Highway 231 South from the Cedars of Lebanon State Park to Richmond Shop road is currently shut down due to a suspicious vehicle. Please avoid the area and seek an alternate route. We will post updates as more information comes in.

  — Wilson Co Sheriff (@wilsonsheriff) December 27, 2020

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

  WATCH LIVE: THP, FBI and Wilson County deputies are investigating a white box truck on Murfreesboro Rd in Lebanon. https://t.co/KwHuVQvQFa https://t.co/bWLUPUq11V

  — WSMV News4 Nashville (@WSMV) December 27, 2020

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

  The robot has done this a few times. It appears they may be trying to open the door or break the window to get inside somehow. @WSMV pic.twitter.com/abRFmf1Xse

  — Brittany Weiner (@brittweinerTV) December 27, 2020

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

  Watch Live: 

  * * *

  Metro Nashville Police have confirmed 63-year-old Anthony Q. Warner is a suspect in connection with the Downtown Nashville bombing on Christmas Day. 

  Federal agents raided Warner’s home on Saturday afternoon. Several neighbors told WaPo that a recreational vehicle, similar to the one that exploded Friday morning, was parked in his backyard for months. 

  On Saturday, we quoted CBS’ David Begnaud as saying, “one theory investigators are looking at, regarding the Nashville Christmas Day explosion, is the possibility that AT&T may have been the target or some other building or infrastructure in the area of the explosion.” 

  By late Saturday, local news WSMV News4 reported that “FBI agents spent the days at another location today besides searching the home of Anthony Warner, pursuing tips that he was paranoid about 5g spying on Americans.”

  During an interview on CBS News’ “Face the Nation” on Sunday morning, Nashville Mayor John Cooper said the bombing location suggests Warner intended to attack the AT&T building. He said the city is rushing to protect critical infrastructure in the wake of the attack.

  “Those of us in Nashville realize that on Second Avenue, there is a big AT&T facility and the truck was parked adjacent to this large, historic AT&T facility, which happens to be in downtown Nashville,” Cooper told CBS. “And to all of us locally, it feels like there has to be some connection with the AT&T facility and the site of the bombing.”

  He also said that it’s “a bit of just local insight in because it’s got to have something to do with the infrastructure.”

  

  Besides Warner’s home, federal agents visited a real estate agency office where he worked on computers. 

  According to The Tennessean, Steve Fridrich, owner of Fridrich & Clark Realty in Nashville, said Warner provided his firm with computer consulting services for the last four or five years.

  Last month, Warner wrote an email to the realty company that he would no longer be working for them. Fridrich said Warner gave no reason. 

  “He seemed very personable to us – this is quite out of character I think,” Fridrich told the newspaper.

  Nashville Police are expected to hold a press conference around 1700 ET. 

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

  JUST IN: @MNPDNashville has called news conference for 4PM to provide update on investigation into downtown Nashville bombing. Stay with @WKRN for coverage!

  — Josh Breslow (@JoshBreslowWKRN) December 27, 2020

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

  Tyler Durden
  Sun, 12/27/2020 – 17:20

• 2020 Gun Sales Shatter Records As Americans Lock N' Load
  2020 Gun Sales Shatter Records As Americans Lock N’ Load

  Amid 2020’s ‘perfect storm’ of racial tensions, lockdowns, and a record spike in unemployment which coincided with a national crime wave, people have been stocking up on firearms like never before.

  According to monthly FBI data, November was the busiest month on record for background checks with over 3.6 million applications – a figure which is up 40% from the prior November, putting the country at an all-time high of 35,758,249 checks so far this year – and 26% higher than 2019’s 28,400,000 checks.

  

  The increase over 2019 marks the highest percentage increase in the 21-year history of the National Instant Criminal Background Check System (NICS) (when one excludes data from the year 2,000 when the system was fully implemented and produced a synthetic 1,000% increase).

  Still, November’s 3.6 million checks only places it fourth in 2020, as June saw a record 3,931,607 checks amid widespread rioting and violence amid BLM anti-police protests which began in late May following the death of George Floyd, a black man who died while in custody of Minneapolic police.

  As Just The News notes:

  That number is certain to grow even larger: The present total of checks in 2020 does not include December’s numbers. Historical data indicate that December’s checks tend to be elevated relative to the rest of the year. 

  Though each individual background check does not necessarily represent an individual buyer (many gun-buyers will purchase several guns in a year, while many others will fail their background check), the gun industry has reported significant first-time customer activity this year.

  The National Shooting Sports Foundation reported in June that gun retailers estimated 40% of their sales during the first four months of the year went to first-time gun owners, and that nearly half of those first-time buyers were women, both notable upticks.

  “Gun sales have been high and steady this entire year, even during the [COVID-19] shutdown,” said Peyton Galanti, spokeswoman for the Colonial Shooting Academy in Richmond, VA, who added that the market had been driven by “first-time gun buyers” and “people who never thought they’d own a gun” (also known as Democrats).

  “Our classes have been sold out months ahead and, until about this week, range time has also been way up all year,” Galanti added.

  Meanwhile, the record gun sales coincided with a massive ammunition shortage.

  

  “Getting guns, getting optics, getting ammo is tough right now,” said Tim Grover, firearms instructor with Jackson, Nebraska-based Rev-Tac.

  Jake Schira, owner of Gunsmith Jake LLC in Rothschild,WI says “I get like 20 to 40 calls a day pertaining to people looking to buy ammunition or searching for it.” Another nearby gun store owner, Mitch Mode, told WAOW: “We are into gun deer season, where we should have ammo for everybody, but we have ammo for nobody.“

  Tyler Durden
  Sun, 12/27/2020 – 17:10

• Are 'Never Trumpers' The Future Of The GOP?
  Are ‘Never Trumpers’ The Future Of The GOP?

  Authored by Pat Buchanan via Buchanan.org,

  Denouncing the $900 billion COVID-19 relief bill as a parsimonious “disgrace” and hinting at an Alamo-style finish on Jan. 6, when Congress votes to declare Joe Biden the next president, Donald Trump is not going to go quietly.

  The anti-Trumpers and “Never Trumpers” celebrating at Christmas 2020, in this “dark winter” of Joe Biden’s depiction, are assuring each other that Trumpism and Trump are dead and gone for good in four weeks.

  

  The future of the GOP, they suggest, belongs to the Republicans who resisted and renounced Trump through the last five years of his candidacy and presidency.

  As for those cowards and collaborators who stood by Trump and refused to repudiate him, they will, in turn, be repudiated by history and the American electorate alike.

  The wish, here, is very much the father to the thought.

  For if the past is any guide, not only are the reports of the death of Trumpism premature, the probability is that Trumpism has put down roots in our national politics that are not soon, if ever, going to be pulled up.

  For those of us of a certain age, a comparable situation arose at Christmas 1964. Barry Goldwater had just been crushed in a 44-state landslide, winning the votes of only 27 million Americans. The senator had carried only five states of the Deep South and his home state of Arizona.

  The establishment saw in the crushing of Goldwater the defeat and rout of the “extremist” movement that had produced him. “The Party That Lost Its Head” was the title of a widely hailed post-election book by two Ripon Society Republicans.

  The establishment consensus was that Govs. Nelson Rockefeller of New York, William Scranton of Pennsylvania and George Romney of Michigan were the future of the party, if it was to have a future.

  What followed?

  Richard Nixon, who had stood by Goldwater when the party’s liberal elite abandoned him, would lead the GOP to recapture 47 House seats in 1966, take the presidency in 1968, and run up a 49 state landslide in 1972.

  Thus began a period of GOP presidential ascendancy, with Nixon, Reagan and Bush I winning five of six elections from 1968 to 1988, until the first baby boomer president, Bill Clinton, arrived on the scene.

  And while there are differences between now and then, there are many similarities.

  Do the anti-Trumpers or “Never Trumpers” represent the future of the GOP? If so, where is the postwar precedent for this? No Republican who turned his back on Goldwater was ever nominated for president or vice president following Goldwater’s defeat.

  When President Gerald Ford put Rockefeller on his ticket after taking over from President Nixon, the Kansas City convention of 1976 demanded Rockefeller’s removal as the price of party unity.

  Rockefeller was sacrificed, as the right had demanded.

  Four years after Ford’s defeat, Mr. Conservative himself, Ronald Reagan, Goldwater’s most effective surrogate in 1964, was nominated and won successive landslides in 1980 and 1984.

  Other factors and forces point to the probability that Trumpism has a major role in the party’s future.

  Where Presidents Truman, Nixon, and George W. Bush left office with approval ratings in the 20s, Trump’s approval rating is still in the 40s, where it has been for the duration of his presidency.

  Second, the issues that propelled Trump to the nomination and the Oval Office still resonate with the American people.

  Among them are mass migration, insecure borders and dependency upon foreign imports for the necessities of our national life.

  Moreover, there is shrinking support for a foreign policy that has us tied down militarily in Europe, East Asia and the Middle East, to fight if need be, in the defense of scores of nations, few of which have a direct bearing on the national security of the United States.

  Another issue Trump elevated and exploited that is more acute now than in 2016, is a distrust of the media, the “deep state” and the political, cultural and academic establishments that have alienated the 74 million who voted for Trump.

  And if the past is prologue, the Republican Party will make a major comeback in 2022.

  Consider. Two years after his smashing victory over Goldwater, LBJ and his party lost 47 House seats. Ronald Reagan, after his landslide in 1980, lost 26 House seats in 1982. After routing Bush I in 1992, Bill Clinton lost 54 House seats and the Senate. Two years after winning the presidency, Barack Obama lost both the House and Senate in 2014.

  Is it likely Joe Biden will be celebrating his 80th birthday after making history by leading his party to control of Congress in 2022?

  For Republicans, the nomination of 2024 is a prize to be sought.

  However, if one has spent the last four years trashing Trump, it may be as out of reach as it was for Rocky.

  Tyler Durden
  Sun, 12/27/2020 – 16:35

• The 2020 Year-End Financial Quiz
  The 2020 Year-End Financial Quiz

  In a world where central banks have thrown out all the rules, where bond markets (and soon stocks) have been nationalized, and where retail investors outperform hedge funds 14 to 1…

  

  … professional traders understandably feel more obsolete, and bored, than ever.

  So to bring them some cheer and break the monotony of a dreary existence where the only thing that matters is how many billions Powell and crew will inject over the next hour (the correct answer is below), here is Bank of America’s financial market year-end quiz.

  1.On Jan 30th the World Health Organization declared the COVID-19 outbreak a globalhealth emergency on Mar 10th declared a global pandemic; as of Dec 17th 2020 howmany COVID-19 vaccines are in development around the world?

  • a.3
  • b.10
  • c.15
  • d.32

  2.How many people in the world will be vaccinated for COVID-19 every single minute in 2021 based on current forecasts?

  • a.2
  • b.20
  • c.200
  • d.2000

  3.The pandemic plunged the UK economy into one of the deepest recessions in history (GDP is forecast to decline 11.3% in 2020); when did the UK economy last contract by more?

  • a.1709 (in The Great Frost, coldest European winter of past 500 years)
  • b.1815 (end of the Napoleonic wars)
  • c.1918 (end of World War I)
  • d.1931 (Great Depression & British pound comes off gold standard)

  4.How many times did global central banks cut interest rates in 2020?

  • a.60
  • b.125
  • c.175
  • d.190

  5.And how much did the big 4 central banks (Fed, ECB, BoE, BoJ) spend every 60minutes buying financial assets (QE) between March & November this year?

  • a.$500mn
  • b.$800mn
  • c.$1.4bn
  • d.$2.2bn

  6.Who in 2017 said “Would I say there will never, ever be another financial crisis?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 be”?

  • a.Jerome Powell
  • b.Christine Lagarde
  • c.Janet Yellen
  • d.Steve Mnuchin

  7.During the vicious financial market crash of Mar’20 only one of the following acted as a “safe haven” and actually rose in value; which one was it?

  • a.Gold
  • b.The US dollar
  • c.The 30-year Treasury bond
  • d.Bitcoin

  8.Which of the following asset classes enjoyed the largest fund inflows as a % ofAUM in 2020?

  • a.Gold
  • b.Cash
  • c.Bonds
  • d.Equities

  9.According to aggregated BAC credit and debit card data, which category is currently seeing the largest YoY increase in consumer spending?

  • a.Furniture
  • b.Home improvement
  • c.Online electronics
  • d.Grocery

  10.The consensus forecast for US GDP growth in 2021 is 4.5%; this will be the strongest US economic growth since which year?

  • a.1999
  • b.2000
  • c.2007
  • d.2010

  11.The US federal government is on course to spend $7tn in 2020; what is the current level of U.S. national debt per citizen?

  • a.$23,000
  • b.$43,000
  • c.$63,000
  • d.$83,000

  12.Excluding the US stock market the current level of global equities (MSCI ACWI) is currently how far away from their multi-year peak in Oct 2007?

  • a.25% higher
  • b.10% higher
  • c.The same level
  • d.10% lower

  13.What was the best performing stock in the MSCI ACWI in 2020?

  • a.U.S. electric vehicle maker Tesla
  • b.Chinese electric vehicle maker Nio
  • c.Malaysian latex glove producer Top Glove
  • d.U.S. mobile payments company Square

  14.Which of the 5 FAANG stocks was the top performer in 2020?

  • a.Facebook
  • b.Apple
  • c.Amazon
  • d.Netflix
  • e.Google

  15.Which of the following themes had the best return in 2020?

  • a.Crypto
  • b.Solar
  • c.CRISPR
  • d.Carbon

  16.And finally, who was the last President to govern following a “blue wave” election?

  • a.John F. Kennedy 1960
  • b.Jimmy Carter 1976
  • c.Bill Clinton 1992
  • d.Barack Obama 2008

  Answers: click here.

  Tyler Durden
  Sun, 12/27/2020 – 15:30

• Railroads Slashed Jobs In Nov To Lowest In Decades… As Stocks Soared To Record Highs
  Railroads Slashed Jobs In Nov To Lowest In Decades… As Stocks Soared To Record Highs

  Authored by Wolf Richter via WOLF STREET,

  Railroads responded to structural challenges by slashing jobs. Did nothing for volume but did everything for their stocks.

  The North American Class 1 freight railroads – BNSF, Union Pacific, Norfolk Southern, CSX, Canadian National, Kansas City Southern, and Canadian Pacific – have been shedding employees since 2015, and in November they shed another 1.6% of their employees, from October, bringing the total down to 114,960 employees, according to data released by the Surface Transportation Board (STB), an independent federal agency. It was the lowest headcount in many, many decades.

  November headcount was down by 13.7% from a year ago, down by 22% from the Great Recession low at the end of 2009 (147,000), and down by 33.5% from the recent high in April 2015 (174,000):

  

  Railroads submit employment data – along with a slew of other operating data – to the STB on a monthly basis. I have excluded Amtrak (the National Railroad Passenger Corporation) because it is not a freight railroad (it too cut headcount).

  Back in 1997, which is as far back as the publicly released data by the STB goes, railroads employed 178,000 people. In 1998, railroads employed 180,000. Employment in November was down by 36% from 1998. The chart below shows Class 1 railroad employment in each year in December, except for 2020, when I used November (in recent years, headcounts dropped further from November to December):

  

  Compared to November last year, each of the Class 1 railroads shed employees, in order of the number of remaining employees:

  1. BNSF: -15.6% (35,081)

  2. Union Pacific: -13.4% (32,046)

  3. Norfolk Southern: -15.9% (19,199)

  4. CSX: -9.0% (17,093)

  5. Canadian National: -13.2% (6,183)

  6. Kansas City Southern: -10.1% (2,718)

  7. Canadian Pacific: -9.4% (2,640)

  Since September 2016, which is as far as the STB’s monthly data by individual railroad goes back, some railroads have been busier than others shedding employees. All combined have shed 24.6% of their people. Each railroad, in order of the biggest shedders in percentage terms:

  1. CSX: -30.5%

  2. Norfolk Southern: -30.2%

  3. Union Pacific: -29.5%

  4. BNSF: -17.7%

  5. Kansas City Southern: -9.3%

  6. Canadian Pacific: -5.1%

  7. Canadian National: -4.8%

  The chart below shows the relentless progress in shedding employees by each of the railroads over the past four years:

  

  There are some structural challenges railroads have faced over the past two decades, including the decline of coal as the primary fuel for power generation (coal went from a share of 55% in the 1980s to a share of 23% these days). Coal – like other bulk commodities such as corn or petroleum products, and in addition to goods such as motor vehicles and industrial equipment – falls under the railroad metric of “carloads.” And the decline of coal is largely the cause of the long-term decline of carloads, from around 1.45 million car loads per month in 2005 and 2006, to just over 900,000 carloads currently.

  The intermodal business (hauling containers and trailers) has been the growth sector for railroads. But this is precisely where competition from truckers has been ferocious, much of it based on service, such as speed, convenience, and reliability. And a deterioration in service sends container traffic to the highway.

  The chart shows the originations of carloads (red) and intermodal (green) by all Class 1 railroads combined, monthly and their 6-month moving average:

  

  Total traffic volume over the long term, with all types of loads combined, puts the railroads in a highly volatile, cyclical, and horribly stagnant business. The good thing for railroads is that intermodal is a relatively high-margin business that brings in the dollars.

  This chart of carloads and intermodal combined, as 6-month moving average, shows just how tough this business is, and rampant cost cutting, if it entails lowering service quality, will send more of the booming intermodal business to the highway. Total originations have dropped 16% since the peak in 2006:

  

  Railroads have responded to the long-term challenges by cutting costs. The hottest cost-cutting system is Precision Scheduled Railroading (PSR), under which railroads attempt to operate their carload and intermodal business more efficiently, such as more point-to-point routing. Other folks have called it slash-and-burn because it ends up slashing headcount and capital expenses.

  Some folks have come to believe that PSR actually stands for Positive Shareholder Reaction, because it has done precisely that; these days, everything boils down to pumping up share prices no matter what, even if it sends business to the highway.

  So this is the WOLF STREET Railroad Index, based on market cap in billions of dollars of Union Pacific [UNP], Norfolk Southern [NSC], CSX [CSX], Canadian National [CNI], Kansas City Southern [KSU], and Canadian Pacific [CP]. Union Pacific, given its market cap of $137 billion, currently weighs 33.5% in the index. BNSF is owned by Berkshire Hathaway and is not included.

  The index is up 18.3% year-to-date, despite the plunge in March. Since the bottom in March, it’s up 80%. It has nearly tripled from the high before the Great Recession in August 2008, even as total carload and intermodal originations have dropped 17% from the peak in 2006. Shedding massive numbers of employees has a marvelous effect on stock prices (market cap data via YCharts):

  

  *  *  *

  Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. 

  Tyler Durden
  Sun, 12/27/2020 – 15:00

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