- German State Finance Minister Found Dead
German State Finance Minister Found Dead
The body of Thomas Schäfer – finance minister of the German state of Hesse, was found next to high-speed train tracks on Saturday morning in the town of Hochheim, located between Frankfurt and Mainz, according to DW, citing local police.
The remains of Schäfer, 54, were initially unable to be identified due to the extent of the injuries after witnesses reported the body. His death has been ruled a suicide by police.
According to media in the state of Hesse, the 54-year-old regularly appeared in public in recent days, for example, to inform the public about financial assistance during the coronavirus crisis. Schäfer had been finance minister of Hesse for almost 10 years
The state premier of Hesse, Volker Bouffier, said in a statement Saturday that the state’s leadership has received the news with “sadness and disbelief.” –DW
“We are all shocked and can hardly believe,” he died “so suddenly and unexpectedly” said Bouffier, adding “Our sincere condolences go to his closest relatives.”
On Thursday, “Schäfer, together with Economics Minister Tarek Al-Wazir (Greens), explained how the government wants to support the more than 200,000 small entrepreneurs and solo self-employed in the country who fear for their existence due to the corona pandemic,” according to WELT.
A bailout of 8.5 billion euros is opened and the debt brake, which Schäfer had always defended, is relaxed. The Mittelhesse from Biedenkopf near Marburg was very worried, that was obvious. The country and the whole world were facing “unforeseen challenges,” he said, and that tackling this “task of the century” would take several generations.
But he also tried to relieve fears: The country would help quickly and unbureaucratically, Schäfer promised. “The fight against the corona crisis will not fail with money.” –WELT (translated)
He leaves behind a wife, a nine-year-old son and a twelve-year-old daughter.
Schäfer isn’t the only high-profile German to meet his end on train tracks.
In 2009, 74-year-old billionaire Adolf Merckle committed suicide after pushing his business empire to the edge of ruin with a speculative bet on Volkswagen stock that went wrong. He was found dead on railroad tracks near his villa in the southern German hamlet of Blaubeuren.
Merckle lost hundreds of millions of euros after he was “caught in a brief but ferocious speculative riptide linked to a campaign by Porsche, the sports car manufacturer, to seize control of Volkswagen,” reported the New York Times at the time. As a result, he was facing a massive liquidation of his empire to cover the bad bet.
Tyler Durden
Sun, 03/29/2020 – 01:33 - The Propaganda Of Terror And Fear: A Lesson From Recent History
The Propaganda Of Terror And Fear: A Lesson From Recent History
Authored by Dr Piers Robinson, Co-Director Organisation for Propaganda Studies, via Off-Guardian.org,
The ongoing and unfolding reactions to the Coronavirus look set to have wide-ranging and long-lasting effect on politics, society and economics. The drive to close down all activities is extraordinary as are the measures being promoted to isolate people from each other.
The deep-rooted fear of contagious disease, hardwired into the collective consciousness by historical events such as the ‘Black/Bubonic Plague’ and maintained through popular culture (e.g. the Hollywood movies Outbreak and Contagion), means that people are without question highly susceptible to accepting extreme emergency measures whether or not such measures are rational or justified. The New York Times called for America to be put on a war footing in order to deal with Corona whilst former Army General Stanley McChrystal has been invoking his 9/11 experience in order to prescribe lessons for today’s leaders.
At the same time, political actors are fully aware that these conditions of fear and panic provide a critical opportunity that can be exploited in order to pursue political, economic and societal objectives. It is very likely, however, that the dangers posed by the potential exploitation of Corona for broader political, economic and societal objectives latter far outweigh the immediate threat to life and health from the virus. A lesson from recent history is instructive here.
9/11 AND THE GLOBAL ‘WAR ON TERROR’
The events of September 11 2001 represent a key moment in contemporary history. The destruction of three skyscrapers in New York after the impact of two airliners and an attack on the Pentagon, killing around 3000 civilians, shocked both American and global publics. The horror of seeing aircraft being flown into buildings, followed by the total destruction of three high rise buildings within a matter of seconds, and the spectre of a shadowy band of Islamic fundamentalists (Al Qaeda) having pulled off such devastating attacks, gripped the imagination of many in the Western world.
It was in this climate of paranoia and fear that extraordinary policies were implemented. The USA Patriot Act led to significant civil liberty restrictions whilst the mass surveillance of the digital environment became normalized.
In the United States torture was authorized in the name of preventing terrorism whilst the Guantanamo Bay facility in Cuba became a site in which accused individuals have been held without any adequate legal protection or due process.
Remarkably, the individual accused of leading the alleged 9/11 plot, Khalid Sheikh Mohammed, who ‘confessed’ to CIA interrogators after being ‘waterboarded’ 183 times, has recently received his trial date, set for January 11 2021 and 20 years after 9/11. Civil liberty restrictions, mass surveillance and torture were only a sub-strand of the major war-fighting-policy that was enabled by 9/11.
Presented at the time as America’s ‘New Pearl Harbour’, 9/11 provided the conditions for a series of major regime-change wars which persist until today.
Critically, these wars have not been primarily about combatting ‘Islamic fundamentalist terrorism’/Al Qaeda, but rather attacking ‘enemy’ states. Indeed, the evidence that the 9/11 event and the alleged threat of ‘Islamic fundamentalist’ was then exploited in order to pursue a geo-politically motivated set of regime-change wars which had little connection to the purported Al Qaeda threat is well established.
Former Supreme Allied Commander of NATO, Wesley Clark, famously went public in 2006/7 stating that immediately after 9/11 he had been informed that the US was intending to attack seven countries within five years including Iraq, Syria, Lebanon, Somalia, Sudan and Iran. Clark stated:
He [the Joint Staff officer] picked up a piece of paper, he said I just got this down from upstairs, from the Secretary of Defence’s office today, and he said this is a memo that describes how we are gonna take out seven countries in five years, starting with Iraq and then Syria, Lebanon, Libya, Somalia, Sudan, and finishing off Iran.
Clark’s claims have recently been corroborated by retired Colonel Lawrence Wilkerson (chief of staff to Colin Powell and Iraq War planner) who stated that he had actually seen the same plans Clark was referring to many months prior to 9/11:
My first briefing in the Pentagon from an Air Force three-star general in February of 2001 I almost fell of my chair because their briefing included on the one hand the Air Force’s ability to take out 80 to 90% of the targets in North Korea in the first few hours of an aerial strike on that country to hey when we do Iraq we’re gonna do Syria and Lebanon and we’re going to do Iran and maybe Egypt … but this was more than that [just contingency planning] Wes Clark is right they had these plans they were going to go right through all these countries that they felt threatened Israel all through those countries that they felt threatened 25-30% of the world’s oil passing through the Strait of Hormuz.
Documentary evidence for these claims has come by way of the UK Chilcot Inquiry into the 2003 Iraq War. For example, a report quoted a British embassy cable, dated 15 September 2001, explained that ‘[t]he “regime-change hawks” in Washington are arguing that a coalition put together for one purpose [against international terrorism] could be used to clear up other problems in the region.’ Another document released by Chilcot shows British Prime Minister Tony Blair and US President George Bush discussing phases one and two of the ‘war on terror’ and when to hit particular countries. Blair writes:
If toppling Saddam is a prime objective, it is far easier to do it with Syria and Iran in favour or acquiescing rather than hitting all three at once.
The regime-change wars that have flowed directly and indirectly from 9/11 continue to this day. War and conflict continues in Afghanistan and Iraq whilst the nine-year-long war in Syria has borne witness to extensive and illegal policies pursued by Western governments including the funding and arming of extremist groups coupled with support for groups actually aligned with Al Qaeda. Iran continues to be subjected to US hybrid warfare tactics including sanctions and covert operations whilst the threat of military action is very clear and present.
The human cost of these wars, built upon the ruthless exploitation of public fear of terrorism in order to pursue multiple ‘regime-change’ wars, has been huge. According to the Brown University ‘Costs of War Project’, the wars in Afghanistan and Iraq have killed a combined 480,000 to 507,000 civilians, coalition military members, and foreign fighters, with an untold number having been maimed and disfigured. IPPNW estimated that the first ten years of the ‘war on terror’ in Afghanistan, Iraq and Pakistan killed 1.3 million people.
Since 2011, in Syria alone, over 400,000 people have died as a result of war. The numbers of people displaced as a result of these conflicts are also extremely high; wars in Afghanistan, Iraq, Pakistan, and Syria have wrought a combined 9.39 million refugees, 10.78 million internally displaced peoples, and 830,000 asylum seekers. In addition, there are persisting and very serious concerns with respect to the possible involvement of state actors with the event of 9/11.
Recent and critical developments regarding the events of 9/11 include the publication this week of the University of Alaska study of the WTC7 Collapse which confirms that the official US government investigation was wrong if not plain fraudulent. Other important developments include publication last year of the 9/11 Consensus Panel evidence and increasing scrutiny of the official narrative from mainstream academics.
Overall, the 9/11 global ‘war on terror’ is increasingly coming to be understood particularly across the world as, first and foremost, a remarkable propaganda campaign designed to enable violent conflict in the international system and with its effects and objectives being far wider and deeper than had been suggested by official narratives regarding the need to combat Al Qaeda.
CORONA VIRUS: A NEW 9/11?
The lesson of 9/11 is that major events can become what scholar Peter Dale Scott describes as deep events which are exploited by political actors in order to precipitate and manage major political, economic and social shifts. 9/11 became, in effect, the deep event that enabled 20 years of unfettered Western warfare abroad and severe civil liberty restrictions and extensive surveillance at home.
At the time of 9/11 many people in the West were terrified of terrorism. Public opposition to the invasion of Afghanistan (the first regime war to flow within months of 9/11) was almost impossible without being accused of being reckless in the ‘fight against terrorism’ or of being an ‘Al Qaeda’ sympathizer. Muslims throughout the West were widely despised. US President George Bush declared that ‘you are either with us or against us’. The parallels with what is happening today are obvious.
Is the Coronavirus a new 9/11, a new deep event? We cannot yet be sure, as of this writing. Perhaps the current strategy of suspending basic liberties will work to effectively eliminate all threats posed by the virus. Governments will then restore the civil liberties currently being suspended and all will fairly quickly return to the way things were before. Perhaps the economy will confidently weather the fallout from the ‘lockdowns’ and everything will return to business as usual.
And perhaps a sober ‘lessons learned’ review will lead to public health officials developing reasonable and balanced plans, such as developing sufficient capacity for rapid testing and tracing, which can be deployed the next time a sufficiently dangerous virus starts to spread thus avoiding terrifying publics and implementing draconian measures that inflict significant damage to the social and economic fabric of society.
Or perhaps not. It may be that, as British journalist Peter Hitchens has been warning, the loss of liberty and basic rights will continue indefinitely as governments greedily hold on to their increased powers of control over their citizenry.
Similarly, Italian journalist Stefania Maurizi has warned about the risks in Italy of state authorities, hostile to open societies and the political left, exploiting Corona in order to increase their control.
An obvious concern here is whether there will be a permanent impact on mass gatherings and protests. James Corbett warns of a permanent state of ‘medical martial law’ and there is certainly the very real possibility of the normalization of government-imposed quarantine and other freedom of movement restrictions.
Margaret Kimberley of the US-based Black Agenda Report warns that Corona may be used as a way of covering up both economic crisis and collapse. She notes that the Federal Reserve ‘recently threw Wall Street a $1.5 trillion lifeline which only kicked the can down the road. The can has been kicked ever since the Great Recession of 2008’. The likely destruction of small businesses might allow for ever greater corporate choke-hold on the economy with more people forced into the corporate workforce.
There is certainly the danger that COVID-19 will be exploited in order to distract from severe economic problems whilst also enabling the pursuit of new economic strategies which worsen rather than mitigate the social inequalities that already tarnish Western countries.
And, of course those actors behind the regime-change wars that flowed from 9/11 may use the Coronavirus to increase pressure on the countries they have been targeting for the last 20 years and those they wish to target in the future.
Already we have seen the regime-change advocate John Bolton blaming China for the Corona Virus whilst the New York Times reported that US Secretary of State Mike Pompeo and national security adviser Robert C. O’Brien were ‘arguing that tough action while Iran’s leaders were battling the corona virus ravaging the country could finally push then into direct negotiations’.
ABC news report that, despite the Coronavirus, US and UAE troops have held a major military exercise ‘that saw forces seize a sprawling model Mideast city’. It is also worth nothing here the recent US assassination of Iranian General Solemeni and the on-going proxy battles between US forces and Iranian-backed groups in Iraq. The possibility of Corona being exploited in order to further the regime change wars we have seen over the last 20 years is extremely likely and it would be naïve in the extreme to think otherwise.
Whatever the COVID-19 event may or may not be, the fundamental lesson of the last 20 years is that governments can and do exploit, even manipulate, events in order to pursue political, social, military and economic objectives. Fearful populations are frequently irrational ones, vulnerable and malleable. Now is not the time for deference to authority and reluctance to speak out.
It is time for publics to get informed, think calmly and rationally, and to robustly scrutinize and challenge what their governments are doing. The dangers of failing to do this likely far surpass the immediate threat posed by the Coronavirus.
Tyler Durden
Sat, 03/28/2020 – 23:45 - China Suffers Economic Double-Whammy As Current Global Demand Collapse Follows Earlier Supply Crash
China Suffers Economic Double-Whammy As Current Global Demand Collapse Follows Earlier Supply Crash
As the first quarter is about to close, many Chinese factories are still operating below full capacity, have been gradually ramping up production over the last several weeks as government data suggests the country’s pandemic curve has flattened.
But as Bloomberg notes, there is a serious problem developing, one where the virus crisis is locking down the Western Hemisphere, has resulted in firms from Europe and the US to cancel their Chinese orders en masse, triggering the second shockwave that is starting to decimate China’s industrial base.
A manager from Shandong Pangu Industrial Co. told Bloomberg that 60% of their orders go to Europe. In recent weeks, manager Grace Gao warned that European clients are requesting orders to be delayed or canceled because of the virus crisis unfolding across the continent.
“It’s a complete, dramatic turnaround,” Gao said, estimating that sales in April to May could plunge by 40% over the prior year. “Last month, it was our customers who chased after us checking if we could still deliver goods as planned. Now it’s become us chasing after them asking if we should still deliver products as they ordered.”
A twin shock has emerged, one where China shuttering most of its industrial base from mid-January through early March, generated a supply shock. Now, as those Chinese firms add capacity, expecting to be met with a surge in demand from Western companies, that is not the case and is resulting in a demand shock.
“It is definitely the second shockwave for the Chinese economy,” said Xing Zhaopeng, an economist at Australia & New Zealand Banking Group. The pandemic across the world “will affect China manufacturing through two channels: disrupted supply chains and declining external demand.”
With orders canceled, supply chains disrupted, and payments delayed – the road to recovery in China is going to be a bumpy one at best. Overly optimistic analysts who have been touting a V-shape recovery in China, thus the world, in the first half of the year, will likely be wrong, and as we’ve explained several times, the best case is a U-shape or even perhaps an L-shape.
“Manufacturers are seeing many cases where overseas clients regretted their orders or where goods can’t be delivered due to customs closures in other countries,” said Dong Liu, vice president of Fujian Strait Textile Technology Co. in southeastern China. Liu’s factory was on the cusp of resuming full capacity this month until a demand shock severely dented export orders.
Nomura International HK Ltd warned earlier this week that China could be on the verge of “plummeting export growth in the coming months.”
We noted on Friday morning that Chinese industrial profits crashed the most on record in January-February, due mostly because of the Lunar new year holiday, coupled with the virus outbreak and strict social distancing measures implemented by the government. This means many Chinese firms are struggling to survive, running out of cash, and on the brink of bankruptcy as demand from abroad has collapsed.
In Keqiao, Shaoxing, a district known for textile manufacturing, many firms are in rough shape after several months of shuttering operations. Have now been greeted with a collapse in demand, thwarting any hope that full capacity can arrive in the coming weeks.
The twin shocks, first being a supply shock, originating from shutdowns in China, then a demand shock, now coming from the Western world, is the evolution of the global economic crash that is unfolding right in front of us. The world is headed for a depression, if not already in one, as central banks are frantically deploying MMT and unleashing helicopter money to save the world.
Tyler Durden
Sat, 03/28/2020 – 23:20 - Is The COVID-19 Outbreak A Trojan Horse To Increase Smartphone Surveillance?
Is The COVID-19 Outbreak A Trojan Horse To Increase Smartphone Surveillance?
Authored by Aaron Kesel via ActivistPost.com,
The coronavirus outbreak is proving to be the Trojan horse that justifies increased digital surveillance via our smartphones.
All over the world, starting with China – the suspected origin of the COVID-19 outbreak – governments are increasing surveillance of citizens using their smartphones. The trend is taking off like wildfire; in China citizens now require a smartphone application’s permission to travel around the country and internationally.
The application is AliPay by Ant Financial, the finance affiliate controlled by Alibaba Group Holding Ltd. co-founder Jack Ma, and Tencent Holdings Ltd.’s WeChat. Citizens now require a green health code to travel, Yahoo News reported.
China isn’t the only country looking towards smartphones to monitor their citizens; Israel and Poland have also implemented their own spying to monitor those suspected or confirmed to be infected with the COVID-19 virus. Israel has gone the more extreme route, and has now given itself authority to surveil any citizen without a court warrant. Poland on the other hand is requiring those diagnosed with COVID-19 ordered to self-isolate to send authorities a selfie using an app. Which, if Poles don’t respond back in 20 minutes with a smiling face, they risk a visit from police, Dailymail reported.
Singapore has asked citizens to download an app which uses Bluetooth to track whether they’ve been near anyone diagnosed with the virus; and Taiwan, although not using a smartphone, has introduced “electronic fences” which alert police if suspected patients leave their homes.
Meanwhile, here in the U.S. as reported by the Washington Post, smartphones are being used by a variety of companies to “anonymously” collect user data and track if social distancing orders are being adhered to. Beyond that, the mobile phone industry is discussing how to monitor the spread of COVID-19. If that’s not enough, as this author reported for The Mind Unleashed, the government wants to work with big social tech giants like Google, Facebook, and others, to track the spread of COVID-19.
A new live index shows the increase of the police state by Top10VPN, a Digital Rights group. Top10VPN lists a total of 15 countries which have already started measures to track the phones of coronavirus patients, ranging from anonymized aggregated data to monitor the movement of people more generally, to the tracking of individual suspected patients and their contacts, known as “contact tracing.”
That’s not the only live index, a company called Unacast that collects and analyzes phone GPS location data also launched one. Except this is a “Social Distancing Scoreboard” that grades, county by county, monitoring who is following social distancing rules.
As Activist Post previously wrote while discussing the increase of a police surveillance state, these measures being put into place now will likely remain long after the pandemic has stopped and the virus has run its course. That’s the everlasting effect that COVID-19 will have on our society. The coronavirus is now classified as a pandemic by the World Health Organization, and it may very well be a legitimate health concern for all of us around the world. But it’s the government’s response that should worry us all more in the long run.
At the time of this report the COVID-19 virus has infected 640,589, killed 29,848, while 137,270 have recovered according to the Johns Hopkins map.
Tyler Durden
Sat, 03/28/2020 – 22:55 - Global Pandemic Preparedness – Which Country Is The Most (And Least) Ready For COVID-19?
Global Pandemic Preparedness – Which Country Is The Most (And Least) Ready For COVID-19?
The world has experienced many pandemics throughout its history, but not every era has had the benefit of modern medicine and hindsight.
However, as Visual Capitalist’s Nichaolas LePan notes, even with the readily available medical expertise and equipment that exists today, it is still unevenly distributed throughout the globe. Combine this with a highly interconnected global economy, and large populations are still at risk from infection.
Today’s chart pulls data from the 2019 Global Health Security Index, which ranks 195 countries on health security. It reveals that while there were top performers, healthcare systems around the world on average are fundamentally weak – and not prepared for new disease outbreaks.
Pathways for Commerce and Disease
Modern transportation and trade have linked the farthest stretches of the world to fuel a global economy. Physical distance plays less a limiting role and more an enabling one to form a flat world as Thomas Friedman put it, creating opportunities for commerce anywhere in the world.
A person can sell dishware from his home in Cusco, Peru, online to a customer in Muncie, Indiana, with products manufactured in China, from materials sourced in Africa.
While these connections sound sterile, there are people interacting with one another to procure, manufacture, package, and distribute the goods. The connections are not just through products, but also people and animals across many borders.
Now, add up the interactions within the global food supply chain with plants and livestock and tourism industries and place them under the pressures of climate change, urbanization, international mass displacement, and migration—and the volume and variety of opportunities for disease transmission and mutation becomes infinite.
The same pathways of global commerce become the transmission vectors for disease. A cough in Dubai can become a fever in London with one flight and one day.
You Cannot Manage What You Do Not Measure
Despite this, we still live with national healthcare systems that look inward towards national populations, with less of a focus on integrating what is happening with the outside world.
The Global Health Security (GHS) Index is the first comprehensive effort to assess and benchmark health security and related capabilities by nation, and it tracks six key factors to come up with an overall score for each of the 195 countries in the ranking:
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Prevention
Prevention of the emergence or release of pathogens -
Detection and Reporting
Early detection and reporting for epidemics of potential international concern -
Rapid Response
Capability of rapidly responding to and mitigating the spread of an epidemic -
Health System
Sufficient and robust and health system to treat the sick and protect health workers -
Compliance with Global Norms
Compliance with international norms by improving national capacity, financing plans to address gaps -
Risk Environment
Risk environment and country vulnerability to biological threats
Note: The GHS Index is a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), and was developed with The Economist Intelligence Unit (EIU).
Country Overall Rankings
Overall, the rankings uncover a distressing insight. Global preparedness for both epidemics and pandemics is weak, with the average score in the index sitting at 40.2 out of 100.
The countries with the highest scores have effective governance and politics systems in place, while those with the lowest scores fall down for their inadequate healthcare systems—even among high-income countries.
Here are the 10 highest-ranking countries in the index:
You can view the complete rankings of all 195 countries on the GHS Index website.
Interestingly, 81% of countries score in the bottom tier for indicators related to biosecurity—and worse, 85% of countries show no evidence of having completed a biological threat-focused simulation exercise in conjunction with the World Health Organization (WHO) in the past year.
Confirmed COVID-19 Cases vs. Global Health Security Score
Many healthcare systems have had their security tested with the outbreak of COVID-19.
Although it is still extremely early, there appears to be a relationship between a nation’s health security and its ability to cope with pandemics.
Takeaways: A World Unprepared
While there may be top performers relative to other countries, the overall picture paints a grim picture that foreshadowed the current crisis we are living through.
“It is likely that the world will continue to face outbreaks that most countries are ill positioned to combat. In addition to climate change and urbanization, international mass displacement and migration—now happening in nearly every corner of the world—create ideal conditions for the emergence and spread of pathogens.”
– The Global Health Security Index, 2019
The report outlined eight critical insights about global health security in 2019 that reveal some of the problems countries are now facing.
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National health security is fundamentally weak globally. No country is fully prepared for epidemics or pandemics, and every country has important gaps to address.
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Countries are not prepared for a globally catastrophic biological event.
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There is little evidence that most countries have tested important health security capacities or shown that they would be functional in a crisis.
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Most countries have not allocated funding from national budgets to fill identified preparedness gaps.
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More than half of countries face major political and security risks that could undermine national capability to combat biological threats.
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Most countries lack basic health systems capacities critical for epidemic and pandemic response.
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Coordination and training are inadequate among veterinary, wildlife, and public health professionals and policymakers.
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Improving country compliance with international health and security norms is essential.
A Stark Reality
The intention of the Global Health Security Index is to encourage improvements in the planning and response to one of the world’s most omnipresent risks–infectious disease outbreaks. When this report was released in 2019, it revealed that even the highest ranking nations still had gaps to fill in preparing for a pandemic.
Of course, hindsight is 20/20. The COVID-19 outbreak has served as a wake-up call to health organizations and governments around the world. Once all of the curves have been flattened, the next version of this report will undoubtedly be viewed with renewed interest.
Tyler Durden
Sat, 03/28/2020 – 22:30 -
- COVID-19 Is Forcing The World To Re-Think The Idea Of "Monetary Value"
COVID-19 Is Forcing The World To Re-Think The Idea Of “Monetary Value”
Authored by Matthew Ehret via The Strategic Culture Foundation,
Western society has long been gripped by a deep seeded belief in money. Trillions of dollars of bank notes tied to ever-growing mountains of un-payable national debts has taken on a life of its own over the years. As the post-1971 years rolled by, society increasingly lost a sense that this human invention called “money” was created to serve humanity rather than rule it, and with that lost sense, money became an idol of worship.
Decades of this modern religion have resulted in an incredibly tragic situation: a disproportionate wealth distribution in the hands of the 0.1%, an over-bloated services/consumer driven economy, increased rates of poverty and despair internationally as well as a dismal loss of vital skills, and productive capacity once enjoyed by advanced industrial nations just four decades ago. Vital infrastructure built up during the 1930s-1960s has been permitted to decay through simple neglect while un-payable debts have reached record highs.
Then like a thief in the night, the illusion was ripped away.
The Confused Response to the Crisis
This ripping away took the form of an international pandemic which has resulted in western nations’ economies grinding to a halt with a new $2 Trillion government emergency spending bill unveiled on March 24. The Washington Post reports that this bill will authorize “hundreds of billions of dollars sent to Americans in the form of checks as a way to flood the country with money in an effort to blunt the dramatic pullback of spending that has resulted from the coronavirus outbreak.”
Governments across the Trans-Atlantic have also announced national interventions into banks and private industry in order to force production quotas of vital equipment like ventilators, masks and other medical necessities to meet the increased demand. Banks in Spain have been nationalized (albeit only “temporarily”) to force finance to act in accordance with the needs of society. In America, the Defense Authorization Act and broader War Powers Act passed by President Trump gives the executive broad powers to take over vital industries if needed in order to mobilize the nation to respond to the crisis.
This renewal of national sovereign powers breaks all of the monetary “laws of the neoliberal order” and with that defiance of globalization, a genuine positive potential for a paradigm shift is visible…
…but something vital is still missing.
This “missing something” is clearly demonstrated by the continued obsession with money as new bailouts of the collapsing speculative banks have now risen to a $1 trillion/day overnight repo loan to collapsing banks which is added to the $1 Trillion 14 week loans offered every week that will dramatically increase the $9 trillion already emitted since helicopter money began in earnest in September 2019. With the mass panic and economic shutdown instigated by COVID-19, markets have lost over 30% of their value and fears of a new great depression have spread far and wide. Rather than impose serious bank regulation like Glass-Steagall to break up the commercial from speculative banks as was done in 1933, the American government has merely unleashed unlimited money printing. This bipolar response is akin to trying to stop a raging fire with a combination of water and gasoline.
We thus find that the greatest crisis facing humanity is not caused by the market crisis, or even the coronavirus per se, but rather society’s profound inability to understand the source of real from fictitious value.
What is REAL Value? Lincoln and FDR Revisited
“The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”
These words were uttered by none other than America’s 16th president Abraham Lincoln as he fought to take federal control of credit vis a vis the “greenbacks” that not only allowed him to win the war of secession but also construct the greatest infrastructure and industrialization programs of history driven by the trans continental railway. The dramatic success of Lincoln’s “American System” not only saved the union, but spread successfully across the world from Japan’s Meiji restoration, Russia’s trans Siberian rail development, Bismarck’s Zollverein in Germany and Sadi Carnot’s France. This powerful spread of what German economist Friedrich List called “the American System of Political Economy” nearly annihilated the money-worshipping system of Adam Smith’s Free Trade doctrine from the earth and only failed in this task via a plenitude of London-directed assassinations, and a couple of imperially-orchestrated wars and revolutions along the way.
The world spun out of control between the murder of the “last Lincoln republican” William Mckinley in 1901 and the orchestrated meltdown of the U.S. economy known as the great depression of 1929.
Amidst this dark period, Franklin Roosevelt called for the Democrats to claim the legacy of Lincoln from the corrupt republican party and faced a Wall Street-backed coup d’etat, survived a freemasonic assassination attempt and subverted a City of London-orchestrated bankers’ dictatorship… all in his first year in office. During his March 4, 1933 inaugural address, the president rallied the American people saying:
“I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.”
As I have outlined in my recent paper How to Crush a Bankers’ Dictatorship, FDR took control of credit in a similar manner as Lincoln by forcing the Federal Reserve to obey a national mandate for the first time since the private bank was set up in 1913. He did so by imposing his ally Mariner Eccles into the position of Chairman who understood that money had to create infrastructure and industrial growth in order to acquire any claim to having actual “value”. This was a stark break from the “hands off/laissez-faire” policy of President Hoover and his JP Morgan-run cabinet. FDR also emitted Lincoln-styled productive credit through the Reconstruction Finance Corporation (RFC) to fuel the New Deal. The RFC issued over $33 billion in low-interest loans by the end of the war (more than all private banks combined).
Describing his moral philosophy of political economy, FDR stated:
“We seek not merely to make government a mechanical implement, but to give it the vibrant personal character that is the very embodiment of human charity. We are poor indeed if this nation cannot afford to lift from every recess of American life the dread fear of the unemployed that they are not needed in the world. We cannot afford to accumulate a deficit in the books of human fortitude.”
What is missing today
Today’s America is confronting an existential crisis similar to that which both Lincoln and Franklin Roosevelt battled in their time. Just as the proto-deep state of 1865 ran Lincoln’s assassination from Montreal Canada, and took over the White House minutes after FDR’s untimely death in 1945, today’s deep state has attempted in vain to overthrow President Trump while successfully undermining the political viability of other “outsiders” like Bernie Sanders and Tulsi Gabbard.
The difference is that today’s crisis combines elements of all previous crises of 1861-1865, 1929-1933 and 1938-1945: the very real new threat of chaos and civil war within, NATO-led wars with China and Russia without and economic collapse across the entire trans-Atlantic bubble economy. The other difference is located in the current presidency’s inability to FOCUS with a clear mind on principled solutions to this multi-faceted crisis while instead finding itself trapped within contradictory impulses.
While FDR and Lincoln understood that VALUE was located the physically productive forces of labor which sustained and improved the lives of people and gave the constitution’s pre-amble a real living character, today’s American leadership has displayed a far greater ignorance to this basic fact of life. The vital difference between “need” vs “want” which has been obscured by decades of free market ideology has resulted in a loss of moral judgment necessary to properly put out the fires threatening to unleashing civil war, chaos and fascist global government “solutions” across the Trans Atlantic today.
The new multipolar alliance led by Russia and China have demonstrated what modern day New Deal policies can do. The Belt and Road Initiative as well as the Strategic Eurasian Partnership, Polar Silk Road and bold space exploration projects all reflect the type of principles of win-win cooperation and long term planning that characterized both FDR and Lincoln earlier. The Health Silk Road announced earlier this week by President Xi Jinping provides a brilliant maneuver to tackle the COVID-19 pandemic under a non-Malthusian worldview. This Multipolar Alliance exists as a form of a life raft for anyone wishing to escape the fate of the Titanic and embark on a new epoch of growth and cooperation.
The question is: Do western powers have the ability to act according to a scientific (and moral) standard of value by aligning with this multipolar alliance or will they choose to remain in Orwell’s dystopic cage and succumb to a fate which Lincoln, FDR and other great leaders gave their lives to prevent?
Tyler Durden
Sat, 03/28/2020 – 22:05 - More Evidence China Is Lying; Number Of Urns More Than Double Reported Coronavirus Deaths
More Evidence China Is Lying; Number Of Urns More Than Double Reported Coronavirus Deaths
China has been caught lying once again about coronavirus figures – with the latest evidence coming from ground-zero in Wuhan, where according to official CCP data just 50,006 people were infected with COVID-19, and 2,535 dying of the virus.
Yet, Chinese investigative outlet Caixin revealed that when mortuaries opened back up this week, photos revealed a far greater number of urns than reported deaths. In one, a truck loaded with 2,500 urns can be seen arriving to the Hankou Mortuary. According to the report, the driver said he had delivered the same amount the previous day.
In another photo, seven 500-urn stacks can be seen inside the mortuary, adding up to 3,500 deaths.
This adds up to more than double the amount of reported deaths in the region – for which grieving family members waited in line for as long as five hours to collect, according to Shanghaiist.
Urns are reportedly being distributed at a rate of 500 a day at the mortuary until the Tomb Sweeping Day holiday, which falls on April 4 this year.
Wuhan has seven other mortuaries. If they are all sticking to the same schedule, this adds up to more than 40,000 urns being distributed in the city over the next 10 days.
When reporters at Bloomberg made calls to the funeral homes to check on the number of urns waiting to be collected, the mortuaries said that they either did not have that data or were not authorized to disclose it. –Shanghaiist
Given the constant, provable lies, does anyone believe that China has actually contained COVID-19?
And of course, as former White House press secretary Sean Spicer pointed out implicitly, don’t expect the mainstream media to question anything…
Reminder to all of the journalists that took China at face value when they claimed they had no more cases https://t.co/mlS0t9HvRo
— Sean Spicer (@seanspicer) March 28, 2020
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Besides they all know the truth…(but must resist)
Tyler Durden
Sat, 03/28/2020 – 21:40 - Fictional Reserve Lending Is The New Official Policy
Fictional Reserve Lending Is The New Official Policy
Authored by Mike Shedlock via MishTalk,
Official policy finally caught up with reality. Reserves are fictional.
Official Announcement
With little fanfare or media coverage, the Fed made this Announcement on Reserves.
As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.
Amusingly, a few days ago yet another article appeared explaining how the Money Multiplier works. The example goes like this: Someone deposits $10,000 and a bank lends out $9,000 and then the $9,000 gets redeposited and 90% of the gets lent out and so an and so forth.
The notion was potty. That is not remotely close to how loans get made. Deposits and reserves never played into lending decisions.
What’s Changed Regarding Lending?
Essentially, nothing.
The announcement just officially admitted the denominator on reserves for lending is zero.
There are no reserve lending constraints (but practically speaking, there never were).
Fictional Reserve Lending Flashback
I wrote about this in December of 2009 in Fictional Reserve Lending and the Myth of Excess Reserves.
The flashback is amusing as I reference a number of people worried about hyperinflation.
Here are the facts of the matter as I explained in 2009.
Money Multiplier Theory Is Wrong
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Lending comes first and what little reserves there are (if any) come later.
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There really are no excess reserves.
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Not only are there no excess reserves, there are essentially no reserves to speak of at all.
The rationale behind the last bullet point pertains to banks hiding losses. Regulators suspended mark-to-market accounting.
When Do Banks Make Loans?
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They meet capital requirements
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They believe they have a creditworthy borrower
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Creditworthy borrowers want to borrow
All three requirements must be met.
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Banks generally do not lend if they are capital impaired.
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Clearly someone must want to borrow.
Point two is worthy of discussion.
Banks may not have a creditworthy borrower, they just have to believe it, or they have an alternate belief that applies. In 2007 banks knew full well they were making mortgage liar loans.
So Why Did They?
Because banks bought into the idea home prices would not go down so they did not give a rat’s ass if someone was out on the street. All they cared about was the quality of the loan. If Home prices appreciated, they were covered.
From a bank lending aspect, nothing has changed. Neither reserves nor deposits never entered into the picture.
Denominator Officially Zero
The denominator on lending is now officially zero. But nothing really changed. The Fed was always ready, willing, and able to supply unlimited reserves.
The only thing that’s new is the official announcement that reserves are fictional.
Capital Concerns in 2009
There are capital concerns, but note that in March of 2009 the Fed suspended mark-to-mark accounting.
That was the key announcement that launched the bull market.
Capital Concerns Now
There are still capital concerns, but the Fed stepped up to the plate and is willing to buy corporate bonds.
Guess who is going to unload as much questionable junk as possible and guess who will buy it.
Banks know they have losses but hey will not admit them.
All it takes to mask them is a clever swap takes the assets off the balance sheet of the banks and temporarily hides them on the balance sheet of the Fed.
What About New Lending?
Hiding junk is not new lending. It is not new production. And it is not new hiring.
To achieve real growth we need new production, not hiding of losses.
Losses and Zombies
Once again, the Fed has chosen to hide losses and shelter zombie corporations.
This will be a drag on any recovery.
All Excess Now
Hey, look on the bright side.
By definition, all reserves are now excess reserves. Banks can collect on all reserves.
The rate may not be much, but Interest on Excess Reserves = Interest on Reserves
Ain’t life grand?
But, But, But, But
But banks are saved. What more could you possibly want?
Meanwhile, Nothing is Working Now (Except for Banks)
For a 20-point discussion of where we are headed, please see What’s Next for America?
Tyler Durden
Sat, 03/28/2020 – 21:15 -
- Rosneft Abruptly Exits Venezuela, Sells Assets To Russian State, Amid US Squeeze On Maduro
Rosneft Abruptly Exits Venezuela, Sells Assets To Russian State, Amid US Squeeze On Maduro
In the past weeks the Kremlin has shown it’s willing to punch back as well as take drastic necessary defensive action in the face of Washington sanctions at a moment America is preoccupied and made more vulnerable by the coronavirus threat — first by dumping OPEC+ and MbS, effectively declaring war on US shale — and now by taking aggressive measures to insulate Russia’s state-controlled Rosneft.
On Saturday Rosneft announced it has sold off all its Venezuelan oil assets to an unnamed Russian state entity. “The government of the Russian Federation has acquired assets in Venezuela from Rosneft. A company 100% owned by the Russian Federation has become the owner,” Russia’s TASS said.
A company statement framed the move as key to protecting shareholders’ interests at a moment the Trump administration ramps up pressure on Maduro and external entities still doing business with Caracas. It’s been widely reported that Rosneft has explored exit options since early 2019 when Venezuelan assets continued rapidly losing money, leading to worsened current operating conditions.
Venezuelan President Nicolas Maduro holds a sword given as gift by Russian oil company Rosneft’s CEO, Igor Sechin. File image: AFP via Getty “As a result of the concluded agreement all assets and trading operations of Rosneft in Venezuela and/or connected with Venezuela will be disposed of, terminated or liquidated,” Rosneft said. “We took this decision in the interests of our shareholders, as a publicly traded international company,” Rosneft spokesman Mikhail Leontyev further told TASS. “And we have a right to expect, indeed, that the US regulators fulfill their public promises.”
On Thursday the White House went so far as to issue a $15 million bounty on Maduro and his inner circle over drug trafficking charges, amid sweeping indictments against what Washington dubbed a vast narco-state criminal enterprise orchestrated by the regime. It appears Rosneft took note of Trump’s willingness to press his economic war on Venezuela further even as the United States now leads the world in numbers of confirmed coronavirus cases, which threatens to decimate an economy still on “pause” and extreme uncertainty still on the horizon.
All of this follows in mid-February the US slapping new sanctions on Rosneft Trading SA, a unit of Rosneft, and the company’s executive Didier Casimiro, accusing it of being the “primary culprit” of a campaign to evade Washington’s pressure campaign on the Maduro government. But the sanctions stopped just short of naming parent company Rosneft, though the Trump administration long accused it of “actively evading sanctions — engaging in ruses, engaging in deception.”
Via AFP/Getty Bloomberg observed that “The fight over Venezuela fits into a much larger geopolitical battle between Trump and Vladimir Putin, with both turning to oil as the weapon of choice.” And the report further cited Russia’s ambassador to Venezuela, Sergey Melik-Magdasarov, as saying:
“Don’t worry! This is about Rosneft’s assets being transferred to Russia’s government directly. We keep moving forward together!,” he [Amb. Melik-Magdasarov] said, in a message that also posted on the embassy website.
The assets include Rosneft’s stakes in local upstream companies Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria, as well as oil-service, commercial and trading units.
The Russian Federation controls Rosneft with just over 50% of its shares, while BP Plc is the second-largest shareholder with 19.75%, and Qatar’s QH Oil Investments owns 18.93%.
Rosneft’s position has long been that US sanctions are illegal and that its own operations in Venezuela are commercial in nature, not political, after in prior months the company’s cooperation with state-run PDVSA became an “open secret”.
The ultimate strategy behind Saturday’s dramatic announcement is as yet uncertain, it should be noted:
But Russ Dallen, head of Caracas Capital Markets brokerage, cautioned that it’s too early to know for sure whether the move is intended to bolster Maduro.
“We don’t know whether the new state entity is a cemetery corporation, where companies go to die, or whether the Russians are simply doing it to take Rosneft — which is their crown jewel and provides a large portion of Russia’s income — out of the way of sanctions and Putin will use the new company to continue to help Maduro,” he said.
Rosneft has emerged as one of PDVSA’s closest joint venture partners, being crucial as a heavy lifter keeping Venezuelan oil afloat at a moment Washington tries to strangle and blockade the socialist state’s industry.
Tyler Durden
Sat, 03/28/2020 – 20:50 - Midnight On Planet Lockdown: Bob Dylan Strikes Again
Midnight On Planet Lockdown: Bob Dylan Strikes Again
Authored by Pepe Escobar via The Asia Times,
What spectacular timing. Like a shot ricocheting at Heaven’s Door as a virus pandemic rages and Planet Lockdown is the new normal, Bob Dylan has produced a stunning 17-minute masterpiece dissecting the November 22, 1963, assassination of JFK – releasing it at midnight US Eastern Standard Time on Thursday.
For baby boomers, not to mention obsessive Dylanologists, this is the ultimate sucker punch. Countless eyes will be plunged into swimming pools revisiting all the memories swirling around “the day they blew out the brains of the king / Thousands were watching, no one saw a thing.” But that’s not all: the Dylanmobile takes us on a magical mystery tour of the 60s and 70s, complete with the Beatles, the Age of Aquarius and the Who’s “Tommy.”
If there’s any cultural artifact capable of sending a powerful jolt across a discombobulated America trying to come to grips with a dystopic Desolation Row, this is it, the work of America’s undisputed, true Exceptionalist. The times, they are-a-changin’. Oh, yes, they are.
There are so many nuggets in Dylan’s lyrics they would be worthy of a treatise, tracking the vortex of music, literature, film references and interlocking Americana.
This is essentially an incantatory mantra set to piano, sparse percussion and violin. We have two narrators: a dying Kennedy (“Ridin’ in the backseat next to my wife / Headin’ straight on in to the afterlife / I’m leanin’ to the left, got my head in her lap / Oh Lord, I’ve been led into some kind of a trap”) and Dylan himself.
Or this can be read as Dylan playing Kennedy’s doppelganger, plus occasional interventions, such as Kennedy’s would-be killers
(“Then they blew off his head while he was still in the car / Shot down like a dog in broad daylight / Was a matter of timin’ and the timin’ was right / You got unpaid debts we’ve come to collect / We gonna kill you with hatred, without any respect / We’ll mock you and shock you and we’ll grin in your face / We’ve already got someone here to take your place”).
The pearl at the heart of the mantra is nothing sort of apocalyptic:
“They killed him once and they killed him twice / Killed him like a human sacrifice / The day that they killed him someone said to me, / ‘Son, The Age of the Antichrist has just only begun.’”
Extra words to define it would be idle. Wherever you are in Planet Lockdown, sit back in stay at home social distancing mode, turn on, tune in and time travel. There will be blood on the tracks.
Tyler Durden
Sat, 03/28/2020 – 20:25 - Joe Biden: "Believe All Women" (Except The One Accusing Me Of Sexual Assault)
Joe Biden: “Believe All Women” (Except The One Accusing Me Of Sexual Assault)
In September, 2018 – former Vice President Joe Biden weighed in on allegations of sexual assault against Justice Brett Kavanaugh by insisting that any woman’s public claims of sexual assault should be presumed to be true.
Except for Biden’s former Senate staffer, Tara Reade, who says Biden penetrated her with his fingers in 1993 when she was in her mid-20s, making her life “hell.”
Biden’s deputy campaign manager magically transformed “believe all women” into “all women have a right to tell their story” on Friday, saying in a statement to Fox News: “Women have a right to tell their story, and reporters have an obligation to rigorously vet those claims. We encourage them to do so, because these accusations are false.“
If you believed Kavanaugh’s accuser, why in the world would you not believe Biden’s? Believing women doesn’t end when it starts to impact your politics.
— The Gravel Institute (@GravelInstitute) March 27, 2020
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Remember when Benjamin Wittes said, “Kavanaugh himself bears the burden of proof.” Does the same apply for Biden? https://t.co/Qb53NAJI3g
— David Harsanyi (@davidharsanyi) March 27, 2020
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As we noted last week, Reade said in an interview with Rolling Stone‘s Katie Halper that Biden sexually assaulted her after she was asked to run a gym bag over to him.
Biden’s “hands were on me and underneath my clothes,” she said, after he “had me up against the wall.”
“I remember him saying first, like as he was doing it, ‘Do you want to go somewhere else,'” she said, adding “And then him saying to me when I pulled away, he got finished doing what he was doing, and I kind of just pulled back and he said, ‘Come on man, I heard you liked me.’ And that phrase stayed with me because I kept thinking what I might’ve said and I can’t remember exactly if he said ‘i thought’ or ‘I heard’ but he implied that I had done this.”
Reade then went on to say that “everything shattered in that moment” because she knew that there were no witnesses and she looked up to him. “He was like my father’s age,” she said. “He was like this champion of women’s rights in my eyes and I couldn’t believe it was happening. It seemed surreal.”
Reade then said Biden grabbed her by the shoulders and said, “You’re okay. You’re fine” and proceeded to walk away.
Reade said that Biden also told her something after the alleged assault that she initially didn’t want to share because “it’s the thing that stays in my head over and over.” But after some pressing from Halper, Reade decided to share:
“He took his finger. He just like pointed at me and said you’re nothing to me.”
Halper said she spoke with Reade’s brother and close friend, and both of them recall Reade telling them about the alleged assault at the time. –NewsOne
Reade says that after she revealed some of Biden’s inappropriate behavior, she was accused of doing the bidding of Vladimir Putin, according to The Intercept.
Listen to Reade’s interview here:
Tyler Durden
Sat, 03/28/2020 – 20:00 - "There's No Gold" – COMEX Report Exposes Conditions Behind Physical Crunch
“There’s No Gold” – COMEX Report Exposes Conditions Behind Physical Crunch
Early this week, we were among the first to report on the “break down” in precious metals markets.
While the demand for gold has been soaring as a safe haven asset amid the multiple global crises we are currently facing, forced paper gold liquidation (as leveraged funds scramble to cover margin calls) and unprecedented logistical disruptions created a frantic hunt for actual bars of gold.
Specifically, as Bloomberg details, at the center of it all are a small band of traders who for years had cashed in on what had always been a sure-fire bet: shorting gold futures in New York against being long physical gold in London. Usually, they’d ride the trade out till the end of the contract when they’d have a couple of options to get out without marking much, if any, loss.
But the virus, and the global economic collapse that it’s sparking, have created such extreme price distortions that those easy-exit options disappeared on them. Which means that they suddenly faced the threat of having to deliver actual gold bars to the buyers of the contract upon maturity.
It’s at this point that things get really bad for the short-sellers.
To make good on maturing contracts, they’d have to move actual gold from various locations. But with the virus shutting down air travel across the globe, procuring a flight to transport the metal became nearly impossible.
If they somehow managed to get a flight, there was another major problem. Futures contracts in New York are based on 100-ounce bullion bars. The gold that’s rushed in from abroad is almost always a different size.
The short-seller needs to pay a refiner to re-melt the gold and re-pour it into the required bar shape in order for it to be delivered to the contract buyer. But once again, the virus intervenes: Several refiners, including three of the world’s biggest in Switzerland, have shut down operations.
“I realized it was going to be an extremely volatile day,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets in New York, said of Tuesday. “We watched this panic develop literally over the course of 12 hours. Having seen enough market dislocations, you recognize that the frenzy wasn’t likely to last, but at the same time you also don’t know how long it would extend.”
By the end of the week, the shorts had sourced the metal and chartered flights, reverting the spot-futures spread…
But Morgan Stanley’s Exchange-For-Physical Index shows a large physical premium remains…
The real price.. for real gold? Nearer $1,800. If you can get it.
“There’s no gold,” says Josh Strauss, partner at money manager Pekin Hardy Strauss in Chicago (and a bullion fan).
“There’s no gold. There’s roughly a 10% premium to purchase physical gold for delivery. Usually it’s like 2%. I can buy a one ounce American Eagle for $1,800,” said Josh Strauss. “$1,800!”
“The case for gold is simple,” says Strauss.
“You want to own gold in times of financial dislocation and or inflation. And that’s been the case since time immemorial. And gold behaves well in those cases. In those cases stocks behave poorly. It’s a great portfolio hedge. Gold does poorly when you’ve got strong economic growth and low inflation. Tell me when that’s going to happen. Gold held its value during 2008 and after all that money printing it tripled over the next three years.”
And in case you doubted this, the cost of an American Eagle one ounce coin at the US Mint is now $2,175…
But now we can see more details of what is behind this ‘shortage’ as SKWealthAcamdemy’s J.Kim details, the latest COMEX Issues and Stops reports expose conditions behind the COMEX physical gold supply problems. Though I have written about the various reasons why physical gold supply problems manifest many times in the past, this topic still remains one rarely discussed by financial journalists, and never discussed by the mass financial media.
For client accounts, when bullion banks stop more notices than issued, they, will lose physical inventory.
For house accounts, the opposite is true.
When bullion banks issue more notices than stops, then they will lose physical inventory as well. Normally, when bullion banks manufacture waterfall declines in paper gold and silver prices, as they did earlier this month, with the complicity of the CME’s largely unreported rampage in raising initial and maintenance margins on futures contracts many times within a 2-month period in the midst of a stock market crash, they load up on physical gold and silver for their house accounts while ensuring that their clients take almost zero delivery of physical gold and silver ounces. However, if they are unable to execute this clever strategy, this is when physical gold supply problems can manifest.
In fact, I have not seen a single news site in the entire world, except for my own, mention the relentless increase in initial and maintenance margins in gold and silver futures contracts (the 100-oz gold futures contract and the 5000-oz silver futures contract) for the past two months, in a desperate attempt to knock long positions out of the game and thereby prevent an increasing amount of physical delivery requests.
Just recently, the CME raised margins yet again for 100-oz gold futures contracts to $9,185/$8,350 for initial/maintenance margins, representing a massive 86% increase in margins, and for 5000-oz silver futures contracts to $9.900/$9,000 for initial/maintenance margins, representing a gigantic 73% increase in margins, in just a couple months’ time. Normally, such relentless increases in initial/maintenance margins in gold futures markets is sufficient to prevent physical gold supply problems from afflicting futures markets, but the fact that even this reliable manipulation mechanism failed recently is a sign of additional tectonic earthquakes to come in the global financial system.
However, as you can see for the data I have compiled for the behavior of issues and stops for client and house accounts for bullion banks in gold and silver from December 2019 to March 2020, this pattern of normal behavior, in which bullion banks take advantage of their own artificially manufactured paper gold and silver price plunges to load up on physical metals at the expense of their clients, has strongly reversed during this four-month time span. I have only included data for the major gold (100-oz) and silver (5000-oz) futures contracts below and not for the mini gold (10-oz) and mini silver (1000-oz) silver futures contracts.
Furthermore, I only separated out the bullion banks by name that had several hundred to a few thousand contracts stopped or issued, and compiled all other data under the category of “all others”. For those of you that don’t understand the terminology “stopped” and “issued”, the categories refer to the number of delivery notices that were “issued” (short positions issuing notification that underlying gold/silver would be delivered) and “stopped” (long positions receiving a delivery notice).
Therefore, when delivery notices are “issued” in house accounts, the issuing bank is on the hook for delivering the physical ounces associated with the underlying contracts. On the contrary, when notices are “stopped”, then the stopping bank would receive notification of the future delivery of the physical ounces associated with the underlying contracts. The same holds true for client accounts. Thus, all bullion banks desire more stopped than issued notices for their house accounts, and desire more issued versus stopped notices for their client accounts. This way they accumulate more physical inventory during artificially engineered paper price crashes.
As you can see, the massive engineered drop in paper silver prices versus the massively higher physical silver prices for the past month backfired on the bullion banks, as it led to a frenzy of clients asking for physical delivery, whereas in the past, bankers had been able to chase client long positions out of the market without ever being on the hook for physical delivery. Thus the amount of contracts stopped versus issued for clients was nearly break even for silver futures contracts, a pattern I have not witnessed in a long time during a banker raid on paper silver prices. And in regard to house accounts, under past similar circumstances, I had always observed JP Morgan bankers taking a tremendous amount of physical silver delivery during engineered collapses in paper silver prices. However, during the last four months, this situation did not materialize, perhaps due to the stress on physical stores of silver created by so many clients asking for physical delivery. As you can see in the data I complied above, this time around, JP Morgan bankers were nearly absent in taking physical silver delivery for their house account. In fact, for the bullion bank house accounts, the amount of stopped versus issued contracts, net, was only 74 contracts, or a mere 395,000 AgOzs for their House accounts. As a basis of comparison, during similarly engineered collapses in paper silver prices in the past, JP Morgan alone was able to accumulate and take delivery of many millions of physical silver ounces.
In regard to real physical gold delivery, the situation was even worse for bullion bankers than their situation with real physical silver delivery, which likely has given rise to physical gold supply problems at the current time. In their client accounts, physical delivery requests exploded, with the net (stopped minus issued) totaling 8,095 contracts representing 800,950 AgOzs of real physical gold requested for delivery. In their house accounts, the bullion banks were unable to yield a positive net situation either, with issued contracts exceeding stopped contracts by 6,107 contracts, representing 610,700 AgOzs. Thus, when adding these two figures together, the bullion banks are on the hook for delivering more than 1.4M AgOzs.
This unexpected demand on bullion bank physical gold reserves has undoubtedly led to a disruption of physical gold delivery associated with the gold futures markets, though various COMEX spokespeople have claimed there is no shortage of physical gold whatsoever, and that the disruption of delivery is simply due to a disruption in the supply chain caused by the coronavirus pandemic, i.e., when in doubt, blame the coronavirus pandemic for all manifested stresses revealed in the global financial system. Earlier, here, on 24 February, I speculated, well before US stock markets started to crash, that the coronavirus pandemic would be scapegoated for the market crash, and I was 100% right. Is it possible that the coronavirus pandemic is now being scapegoated for shortages of physical gold as well?
Oddly, a gold analyst, Ole Hanson stated in response to the shortages of gold physical supply in the futures markets: “There is plenty of gold in the market, but it’s not in the right places. Nobody can deliver the gold because we are forced to stay home.” The explicit function of COMEX warehouses is to store the physical gold that backs gold delivery associated with gold futures contracts. Consequently, why is the physical gold “not in the right places” and in these warehouses, as if it is stored where it is supposed to be stored, and the data is accurate (1.76M registered AuOzs and an additional 6.98M eligible AuOzs in COMEX warehouses as of 26 March 2020), there should be no physical gold shortages to meet physical demand right now? Did Mr. Hanson, in his statement that gold is “not in the right places” unwittingly reveal that the reported COMEX warehouse data is fraudulent?
Secondly, some would suggest that ever since the COMEX mandate that paper gold could be used to close out physical delivery requests through EFP (Exchange For Physical) transactions by Exchange Rule 104.36 enacted on February 18, 2005, which allowed for the substitution of gold ETFs for physical gold, that no physical shortage of gold could ever result.
Since paper was allowed to replace physical, could not bullion banks just literally “paper over” any physical supply deficit? And if the answer to this question is yes, then why is the COMEX experiencing physical shortages of gold right now? Well, as I explained in an article that I published on my news site in June 2011, in which I explained how EFP transactions operate (which you can read here), “the Related Position [Physical] must have a high degree of price correlation to the underlying of the Futures transaction so that the Futures transaction would serve as an appropriate hedge for the Related Position [Physical].” Consequently, since there has been a massive price decoupling between physical and paper gold prices, perhaps this price decoupling has enabled the underlying holder of longs in gold that asked for physical delivery to reject any EFP transaction, since there is no longer a “high degree of price correlation” between paper and physical gold, and to insist on physical gold delivery with no substitution for this request. And this rejection of EFPs and EFS (exchange for swaps) as acceptable behavior is perhaps what is causing the physical gold supply problems in the futures markets right now.
Tyler Durden
Sat, 03/28/2020 – 19:35 - $9,000,000,000,000: Former Fed Strategist Now Expects Fed's Balance Sheet To Double This Year
$9,000,000,000,000: Former Fed Strategist Now Expects Fed’s Balance Sheet To Double This Year
Late on Thursday, we calculated that as of the end of this turbulent week, the Fed will have added a record $625 billion to its balance sheet, bringing the total to $5.5 trillion, an increase of $1.3 trillion in two weeks (6% of GDP), which was the amount the Fed monetized during all of QE1 in response to the financial crisis, but which took place over a period of almost 2 years.
That’s just the start of what will soon become the most aggressive expansion in Fed balance sheet history because according to BofA’s Fed guru Mark Cabana, who was a former officer in the New York Fed’s Markets Group, the Fed’s balance sheet is now set to double to $9 trillion by the end of the year, to wit:
We acknowledge there is elevated uncertainty around the outlook for the balance sheet, but anticipate it will approximately double in size from end ’19 to end ’20.
The estimates for the Fed’s balance sheet “after unlimited QE and new programs” currently imply that between end ’19 & end ’20:
- Fed balance sheet to US GDP will rise from 20% to 40%, in the process unleashing an unprecedented liquidity tsunami that will send asset prices soaring once the pandemic is over yet the Fed refuses to shrink its balance sheet (Chart 2)
- Fed UST as percentage of marketable debt will rise from 20% to 50%, in other words the Fed will now monetize all US Treasury issuance and then some (Chart 4)
- Fed UST holdings will increase by $1.8tn and agency MBS by $700+bn
- Reserves will increase three- to four-fold
All of the above in table format:
To arrive at these estimates, Cabana make the following assumptions about Fed purchases and use of the Fed’s facilities:
UST and MBS purchases: expect two phases:
- (1) initial bazooka to support market functioning. The Fed has purchased $75bn/day of USTs and $50bn/day of MBS. Through next week Cabana anticipates an average of $60bn/day of USTs and $40bn/day of MBS, which is fascinating because Cabana published this report in the early morning hours of Friday, and just a few hours later the Fed announced that it would follow precisely this schedule, tapering TSY QE from $75BN to $60BN and MBS from $50BN to $40, which announcement sent stocks sharply lower in the last 30 minutes of trading on Friday.
- (2) standard QE from April through December with $75bn/month of USTs and $50bn/month of MBS; this would help with the glut of upcoming UST supply.
Fed facilities – The Fed has announced five facilities: CPFF, MMLF, PMCCF, SMCCF and TALF. Treasury made an initial investment of $10bn in these facilities, which can be 10x levered. Congress is set to allocate another $454bn to the Fed facilities, which can be 10x levered. This implies the max size of these facilities is roughly $5tn, and BofA anticipates 50% takeup spread across three months. In ’08, TALF saw 35% takeup, so assume about 1.5x takeup of facilities now vs ’08 levels.
Discount window and PDFC – Assume discount window and PDCF use peaks at around $120bn in the near term then gradually declines.
FX swap lines – Assume FX swap line use peaks around $200bn, and current 84 day operations roll off in June.
While the former NY Fed staffer acknowledges that there is an elevated uncertainty around these estimates, he sees the risks to his estimates “as skewed to the high side.”
In short, once you start helicopter money you never stop.
* * *
Finally, what are the market implications from the Fed going full BOJ. There are three, as the Fed’s launch of helicopter money in conjunction with the treasury should support:
- liquidity – the sharp reserve increase will allow for funding markets to operate in state of abundant liquidity
- low long-term US rates – As even Cabana admits, “the Fed’s large holdings of US Treasuries will amount to COVID-19 stimulus debt monetization and support low longer-term UST yields”, in short after 11 years of debate whether the Fed is or isn’t monetizing debt, we finally have a clear answer and guess what, the tinfoil conspiracy blog won.
- Corporate bonds (i.e. LQD) will benefit from Fed credit programs.
One final point: buy physical gold, lots of it (pay whatever premium over spot is asked), because the real purpose behind the Fed’s helicopter money which miraculously came at the “right” time – just as the economy was about to tailspin into a recession even without covid-19- courtesy of a virus which prompted a coordinated global reset and the launch of helicopter money, will allow the Fed to commence the endgame of fiat currencies. In the process, the Fed will inject $4.5 trillion into capital markets which will eventually trickle down to the economy.
The endgame is simple: an initial deflationary bust followed by hyperinflation, first in asset markets and soon after, as the Fed triples down on helicopter money until it eventually buys gold outright in the final dollar devaluation, everywhere else.
Tyler Durden
Sat, 03/28/2020 – 19:10 - Trump Says "No Quarantine Necessary" For NY, NJ And CT As US Death Toll Tops 2,000: Live Updates
Trump Says “No Quarantine Necessary” For NY, NJ And CT As US Death Toll Tops 2,000: Live Updates
Summary:
- Global case total tops 600k
- Global COVID-19 death toll tops 30k
- US death toll tops 2k
- After Trump earlier said he was weighing enforceable quarantine order for all the tri-state area, late on Sunday he said that “on the recommendation of the White House CoronaVirus Task Force, and upon consultation with the Governor’s of New York, New Jersey and Connecticut” he would not be imposing a quarantine.
- Japan fast-tracks approval of treatment drug for COVID-19
- Third UK minister self-quarantines after showing symptoms of virus
- Calif. death toll tops 100
- Trump tells NBC reporter that quarantines of New York, NJ & Conn. were “possible”
- Axios reports infant dies in Chicago after testing positive for COVID-19
- Italy case total surpasses China
- Spain reports deadliest day yet
- UK case total climbs north of 17k
- France reports another 5k cases
- Navy hospital ships leave for New York, LA
- Abe says he’s “just barely avoiding” declaring a national emergency
- Yale University slammed for denying aid to city of New Haven
- Shinzo Abe promises unprecedented stimulus package
- Trump gives Pentagon power to call up retired soldiers and reservists
- NYPD detective dies from COVID-19
- Italian centennarian survives battle with COVID-19
* * *
Update (2025ET): Have sparked fears earlier that Trump would impose a full blown quarantine on the tri-state area, late on Sunday the president tweeted that a “quarantine will not be necessary” (for now).
Trump’s decision is likely in response to Governor Andrew Cuomo’s fiery objection, who said that any federal quarantine on metropolitan New York would wreak havoc on commerce and markets and be a declaration of war against the states. “It would be chaos and mayhem,” Cuomo said Saturday on CNN, responding to President Donald Trump’s suggestion that such a move could be made very soon. ”I don’t think it’s legal.”
….Federal Government. A quarantine will not be necessary. Full details will be released by CDC tonight. Thank you!
— Donald J. Trump (@realDonaldTrump) March 29, 2020
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Update (1845ET): After doubling in two days, the death toll from COVID-19 in the US has finally topped 2,000.
Meanwhile, in New York, the state worst hit by the outbreak, Gov. Cuomo has said that the outbreak will peak in “14 to 21 days.” While the situation in New York worsens, the surgeon general warned that Detroit, New Orleans and Chicago are quickly developing into “hot spots,” New Orleans in particular has been trending in a worrying direction for days.
Of the 17,412 tests run by New York State on Friday, 44% of them (7,681) were positive.
* * *
Update (1700ET): Calif. Gov. Gavin Newsom just announced that California’s death toll from COVID-19 has topped 100, with 101 deaths statewide.
Meanwhile, in Chicago, Axios reports that an infant less than 1 year old has died of COVID-19 in the city. After state officials in California denied reports earlier in the week about an infant reportedly passing away in LA County after testing positive for the virus, this would be the first confirmed infant death in the US…if it’s confirmed, that is.
Most recorded cases in Illinois have been found in the Chicago area and surrounding counties. The state health department has reported 3,491 COVID-19 cases as of Saturday, including 47 deaths.
* * *
Update (1624ET): COVID-19 has killed more than 30,000 human beings around the world.
It looks like those last 300+ deaths out of France pushed it over the top.
Though Italy has been carrying a lot of weight on the deaths front lately…
* * *
Update (1600ET): Want to see something funny? Watch what happens when journalists from Taiwan question the WHO about comments it made regarding Taiwan’s response to the virus.
oh. my. god. pic.twitter.com/GAwEj5yvT0
— masks work (@wilfredchan) March 28, 2020
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* * *
Update (1500ET): France reports just shy of 5k new cases, bringing its total to 37,575, and another ~300 deaths, bringing its death toll to 2,314.
Meanwhile, the number of Italian cases of COVID-19 climbed by 6.9%, the slowest daily rate of increase since Italy’s lockdown began.
Italian cases of #COVID19 rise 6.9%, the slowest daily rate of increase we have seen during the lockdown period https://t.co/140SeQbEgT
— Conor (@Conor_Coops) March 28, 2020
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Two weeks since reporting its first case, Cameroon total cases climbed to 99 on Saturday, as African countries report surprisingly slow spread of the virus despite their relatively poor infrastructure.
* * *
Update (1420ET): As the death toll skyrockets, Spanish officials said they would need to tighten quarantine rules, and are now ordering all people to stay indoors at all times, unless they’re going to work at an “essential” job. We expect the bare minimum of exceptions (trips outside permitted to get food) will continue.
Meanwhile, in France, large numbers of the public continue to ignore the quarantine.
Spreading coronavirus in France — This is what the 12th day of “confinement” means for some people in Parispic.twitter.com/LGkaZP4Jal
— Alfons López Tena (@alfonslopeztena) March 28, 2020
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Though France’s health minister said Saturday that the country could soon face shortages of critical drugs, he assured the public that an order for 1 billion masks had recently been put in to ‘China’.
In Italy, the tone was far more somber.
WATCH: Italian police officers salute those who died of coronavirus as their bodies are transported in military vehicles pic.twitter.com/Lifk5pWiYc
— BNO Newsroom (@BNODesk) March 28, 2020
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* * *
Update (1412ET): The coronavirus outbreak has pitted many interests against one another in the scramble for resources. But some of the most flagrant examples of communal selfishness so far have occurred in ritzy Connecticut, where a town full of wealthy bankers and doctors shut down a drive thru testing center (well, they stopped it from opening in the first place), and now, Yale University is at the center of a controversy after refusing to allow the town access to any of its (now empty) facilities to help the community fight off the virus.
Last fall, a gang of idealistic Yale students interrupted the Yale-Harvard Game, one of the few traditions that locals actually enjoy, with an lengthy “interruption” to protest climate change, or whatever. But on this issue, they have been oddly silent (maybe because they’re all back home living in their parents’ basements right now).
One reporter remarked on twitter that this would be an excellent opportunity for Yale alumni to pressure the school into doing the right thing and helping the community.
Huge opportunity here for Yale alums to publicly pressure the university into doing the right thing while also getting to note in passing that you went to Yale https://t.co/rPnpyywvAr
— Tom Gara (@tomgara) March 27, 2020
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* * *
Update (1400ET): Abe said Saturday that he’s at a precarious stage, and that the government is only barely avoiding declaring an emergency, he said told reporters Saturday evening.
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Update (1355ET): Trump just confirmed that he’s strongly considering quarantines…after he told a reporter with a camera exactly that.
So in case you didn’t get the memo…
I am giving consideration to a QUARANTINE of developing “hot spots”, New York, New Jersey, and Connecticut. A decision will be made, one way or another, shortly.
— Donald J. Trump (@realDonaldTrump) March 28, 2020
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Cuomo says he hasn’t heard anything about a quarantine order.
And the governors of Connecticut and New Jersey haven’t said anything.
Nothing yet from @GovNedLamont on President Trump considering quarantine for part of CT, along with NY and New Jersey. https://t.co/Gj10CKC5hu
— Nick Rondinone (@nickrondinone) March 28, 2020
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Gov Phil Murphy has been tweeting up a storm, but nothing about the quarantine issue.
* * *
Update (1245ET): As the US scrambles to contain COVID-19 as New York emerges as the nation’s No. 1 hotspot, US media are reporting that President Trump is considering a national “quarantine” order affecting the entire tri-state area – that is, all of NYC, the greater New York area, north and most of central New Jersey and all of southern Connecticut.
NBC News described it as an “enforceable” quarantine, implying that the national guard, which has been deployed in the area, might be tasked with enforcing it.
In a video that surfaced a few minutes later, Trump can be heard telling an NBC reporter that he was looking at quarantines of New York, and “probably” New Jersey and parts of Connecticut. “They’re having problems down in Florida…and we don’t want that,” Trump said.
A few minutes later, Gov. Cuomo chimed in, telling a reported that he had no idea what Trump was talking about, even though Trump claimed to have just spoken to the governor, presumably about the possibility of a quarantine, which Trump said might be announced “some time today.”
JUST IN: President @realDonaldTrump now says he’s considering implementing a “quarantine” of hot spots in northeast, like New York City, and restricting travel.pic.twitter.com/3qnzHTCCWx
— The First (@TheFirstonTV) March 28, 2020
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Meanwhile, in New York, the NYPD has confirmed the death of a detective, the first on-duty serviceman to die from the virus. Another ~500 or so NYPD employees (that includes officers and civilians) have also been diagnosed.
* * *
Update (1220ET): In Lombardy, the number of confirmed cases climbed by 2,117 to 39,415, a sign that the outbreak might be starting to slow. But the death toll climbed by a startling 542 to 5,944.
* * *
Update (1100ET): The Pentagon is taking steps to clarify its powers now that it has the ability to call up reservists and retirees.
- PENTAGON SAYS IT HAS ACCELERATED THE PROCESS FOR HOW DEPARTMENT OF DEFENSE AUTHORIZES THE USE OF NATIONAL GUARD FORCES UNDER TITLE 32
Additionally, Italy has now passed China in total infections, with 86,498 to China’s 81,996. Following several days of back-and-forth criticism with Michigan Gov. Gretchen Whitmer, whom President Trump infamously referred to as “that woman” and criticized for not taking the outbreak seriously enough, the president finally granted her request for a disaster declaration, as well as one for Massachusetts, according to White House statements released Saturday. And the Italian death toll has passed 10,000, hitting 10,023.
Finally, some good news out of Italy: A centenarian from northern Italy has reportedly been released from a hospital after a battle with COVID-19 that he managed to survive despite being a high-risk candidate with a weak immune system..
The man, identified only as “Mr. P”, was admitted to the hospital last week and released on Thursday, according to Gloria Lisi, the deputy mayor of the city of Rimini, told the local Italian language press.
* * *
Yesterday, the US reached a critical milestone: it became the first country to record more than 100,000 cases of COVID-19, the illness caused by the novel coronavirus.
Though more people were almost certainly infected in China – epidemiologists have estimated that hundreds of thousands were likely infected in Wuhan alone – the surge in America’s testing capacity, something that’s only going to continue to improve thanks to a slate of new rapid-response tests are hitting the market, means the US will almost certainly record the largest number of infected patients going forward.
Already, the global total of confirmed cases surpassed 600,000 overnight, thanks mostly to the US, though Spain and Italy also reported large numbers of new cases and deaths reaffirming that the lockdowns in each of their respective countries are far from over.
A chart produced by the New York Times and published last night sparked a heated debate online as journalists, scientists and other wannabe ‘experts’ weighed in on the possibility that the outbreaks in New York City, Detroit and New Orleans might be more severe than what Italy has seen in Lombardy.
Source: New York Times
Meanwhile, Spain recorded its deadliest day so far, but new infections are slowing after two weeks of lockdown. The Spanish Health Ministry reported 832 new deaths, bringing the country’s death toll to 5,690 as of early Saturday, a 17% jump. The number of confirmed cases climbed to 72,248 from 64,059. Spain now has the second-highest number of deaths, outside of Italy.
In the latest hint at how the outbreak-induced recession will reverberate through secondary and tertiary industries, Airbnb confirmed on Friday that it’s suspending all third-party marketing work in an attempt to save some $800 million, one of several initiatives that it hopes will save the company lots of money during the crisis. As UK Prime Minister Boris Johnson and his Health Secretary Matt Hancock struggle to continue performing their duties after being diagnosed with COVID-19, Fitch downgraded the UK’s credit rating from AA to AA-, citing the budget impact of the coronavirus pandemic and continued uncertainty over Brexit.
Source: FT
As a third UK cabinet minister, Scottish Secretary Alister Jack, announces plans to quarantine after showing mild symptoms, Japanese Prime Minister Shinzo Abe pledged on Saturday to fight the coronavirus outbreak with an economic package of “an unprecedented scale” as Japan reports a sudden resurgence of cases, many of which have been travel-related.
On Saturday, the UK case total climbed to 17,089, while 160 new deaths were confirmed, bringing the UK death total above 1,000, to 1,019.
According to Nikkei Asian Review, Abe said that in addition to pushing through his “boldest-ever” economic stimulus package, his government will deliver speedy approval of the flu drug Avigan as a treatment for those infected with COVID-19.
“We are on the brink,” Abe said at a news conference, referring to the possibility of an explosion of COVID-19 cases in Japan after 63 new infections were confirmed on Saturday in Tokyo, a third-consecutive day where authorities confirmed more than 40 new cases.
Abe also stressed that Japan must be ready for a “long-term battle” to keep COVID-19 from surging out of control and overwhelming health care systems, as it’s beginning to do in Italy and other places, like NYC.
Still, he said “now is not an emergency” and called on citizens to continue taking steps such as avoiding large gatherings to limit infections.
Abe
Regarding the economy, Abe said that his government will formulate a “strong stimulus package of unprecedented scale” to lessen this blow to businesses and individuals brought about by the coronavirus. All of this comes after Tokyo’s governor warned about the prospect for an “unprecedented” outbreak if nothing is done.
In addition to boosting spending on medical infrastructure and other necessities, Abe said a special measure will be established to allow for the deferral for up to one year of tax and social insurance premium payments to support corporations suffering from constricted cash flow. Also, interest-free and unsecured lending will be expanded to assist them, he said. All of this should trickle down to deferred tax payments for individuals as well.
Meanwhile, the New York Post has been keeping careful track of how many New Yorkers have been dying from COVID-19, and on Saturday, the paper determined that for the past two days, New Yorkers have been dying at a rate of “one every 17 minutes”. That’s up from one an hour nearly a week ago.
On both Thursday and Friday, another 84 people died in the city from the coronavirus, as the number of positive cases and of those who are critically ill also climbed. Total citywide coronavirus cases rose to 26,697, a 4.4% increase from the 25,573 reported Friday morning.
Over in Asia, Japan, South Korea, Singapore, and Hong Kong have recorded unnerving bursts of new cases over the past couple of weeks, but these ‘aftershock’ outbreaks appear to have quieted down in South Korea, while more cases have been confirmed in Singapore, Hong Kong and Tokyo.
Meanwhile, In Seoul, authorities marked a new milestone in the fight against the virus as, for the first time since the start of the outbreak, the number of coronavirus patients being discharged has outnumbered those currently undergoing treatment. Some 4,811 South Koreans have recovered from the virus as of Saturday, while 4,500 patients still remain in isolation and are undergoing treatment.
In the US, Trump signed the CARES Act into law last night, approving direct payments of $1,200 to millions of Americans, including those earning up to $75,000, and an additional $500 per child. It will substantially expand jobless aid, providing an additional 13 weeks and a four-month enhancement of benefits, and for the first time will extend the payments to freelancers and gig workers, an extraordinary step that will go a long way toward quelling the concerns of all those freelance writers who live off handouts from their parents and the occasional paycheck in Brooklyn.
However, across the US, experts are pointing at Abe and Japan as examples of what might happen if the entire country starts going back to normal before the outbreak is truly under control.
As Navy hospital ships head to New York and the West Coast, President Trump on Friday night gave Defense Secretary Mark Esper the power to call up national guardsmen and army medics to serve in the effort to combat the virus. The president said Friday night that the decision will “allow us to mobilize medical, disaster and emergency response personnel to help wage our battle against the virus by activating thousands of experienced service members including retirees.”
The ships will travel to New York and Los Angeles.
WHAT A BEAUTY: The USNS Mercy, one of the #Navy‘s two hospital ships, will begin taking patients from pierside in Los Angeles to relieve overburdened medical facilities in the city as it struggles to handle the coronavirus outbreak. https://t.co/Qc1RCoPLWn#covid19 #losangeles pic.twitter.com/lprLxGLxg1
— wdsu (@wdsu) March 27, 2020
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The order will affect reservists and “certain Individual Ready Reserve” members, chief Pentagon spokesman Jonathan Rath Hoffman said in a statement released just after midnight on Saturday morning. The Individual Ready Reserve comprises former active-duty and reserve service members who are commonly considered ‘out of the military’ and thus rarely recalled.
It almost sounds like the start of an action movie: somewhere, in the remote mountain west, a former ace army medic is hearing the sound of tires crunching gravel in his driveway…
After President Trump’s approval rating jumped to record highs in the wake of the crisis, some early poll results from this past week suggest that Trump’s insistence that the US get back to work “by Easter” has dented confidence in his handling of the crisis.
Per WaPo, Trump didn’t clarify whether anyone will be involuntarily recalled to duty, but said some retirees have “offered to support the nation in this extraordinary time of need.”
A Pentagon spokesman told WaPo that the order was still being reviewed, and that generally, these members will be persons in Headquarters units and persons with high demand medical capabilities whose call-up would not adversely affect their civilian communities.
“It’s really an incredible thing to see,” Trump said. “It’s beautiful.”
Though we suspect that, like his decision to invoke the Defense Production Act, though he finally did invoke it to try and boss around GM.
Tyler Durden
Sat, 03/28/2020 – 18:51 - "It's A Different World Now" – The Global Solvency Issue Is Becoming Systemic
“It’s A Different World Now” – The Global Solvency Issue Is Becoming Systemic
Via Doug Noland’s Credit Bubble Bulletin blog,
Being an analyst of Credit and Bubbles over the past few decades has come with its share of challenges. Greater challenges await. I expect to dedicate the rest of my life to defending Capitalism. One of the great tragedies from the failure of this multi-decade monetary experiment will be the loss of faith in free market Capitalism – along with our institutions more generally.
Somehow, we must convince younger generations that the culprit was unsound finance.
And it’s absolutely fixable.
Deeply flawed, experimental central banking was fundamental to dysfunctional markets and resulting deep financial and economic structural impairment. The Scourge of Inflationism. If we just start learning from mistakes, we can get this ship headed in the right direction.
Over the years, I’ve argued for “rules-based” central banking that would sharply limit the Federal Reserve’s role both in the markets and real economy. The flaw in “discretionary” central banking was identified generations ago: One mistake leads invariably to only bigger blunders.
What commenced with Alan Greenspan’s market-supporting assurances of liquidity and asymmetric rate policy this week took a dreadful turn for the worse: Open-end QE, PMCCF, SMCCF, MMLF, CPFF, MSBLP, TALF… They’re going to run short of acronyms. Our central bank has taken the plunge into buying corporate bond ETFs, with equities ETFs surely not far behind. The Fed’s balance sheet expanded $586 billion – in a single week ($1.1 TN in four weeks!) – to a record $5.25 TN. Talk has the Fed’s new “Main Street Business Lending Program” leveraging $400 billion of (this week’s $2.2 TN) fiscal stimulus into a $4.0 TN lending operation. Having years back unwaveringly set forth, the ride down the slippery slope of inflationism has reached warp speed careening blindly toward a brick wall.
…
The Fed “very alert about financial risk”? What exactly has the Fed been “looking at at much more detail”? Financial excess? Speculative leveraging? Mounting vulnerabilities in the derivatives complex, the ETF universe, corporate leverage? Global hedge fund leverage? Highly levered mortgage companies? We’ve now witnessed two historic bouts of market illiquidity and dislocation – exposing massive speculative leveraging – and Dr. Bernanke sticks resolutely with his “global savings glut” thesis. Central banks have during this cycle created more than $16 TN of new “money,” for heaven’s sake. Of course it’s been “a monetary policy thing.”
I’ve always viewed Bernanke as a decent man. But as a central banker – as the mastermind for the terminal phase of a runaway global monetary experiment – he’s been a disaster. His analytical framework is so flawed it’s difficult to comprehend the amount of power and discretion placed in his hands. It was Bernanke that invoked the government printing press to resolve whatever might ail the markets or economy. His crackpot theories that the Fed’s failure to print sufficient money supply after the ’29 stock market crash caused the Great Depression should have been sternly rebuked years ago. Worst of all, Dr. Bernanke specifically used the risk markets (stocks, corporate Credit, derivatives and such) as the primary mechanism for post-Bubble system reflation. The former Fed chief is the father of “QE,” “helicopter money,” and the ETF complex that took the world by storm.
Documenting for posterity the ever-lengthening list of lending facilities, this week from the Federal Reserve:
“The Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.”
“The SMCCF will purchase in the secondary market corporate bonds issued by investment grade U.S. companies and U.S.-listed exchange-traded funds whose investment objective is to provide broad exposure to the market for U.S. investment grade corporate bonds.”
“The Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit.”
“Facilitating the flow of credit to municipalities by expanding the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities.”
“…A Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.”
“The TALF is a credit facility authorized under section 13(3) of the Federal Reserve Act intended to help meet the credit needs of consumers and small businesses by facilitating the issuance of asset-backed securities (“ABS”) and improving the market conditions for ABS more generally… The TALF SPV initially will make up to $100 billion of loans available.”
The Fed was to expand its assets by at least $625 billion this week. In concert with global central bankers, unprecedented liquidity operations coupled with a massive U.S. fiscal program was sufficient to reverse collapsing global markets. Once reversed, there was more than ample fodder from the reversal of short positions and market hedges to power a historic market spike (“biggest three-day surge since 1931”).
Chairman Jay Powell, appearing Thursday on the Today Show: “There’s nothing fundamentally wrong with our economy. Quite the contrary. The economy performed very well right through February. We’ve got a fifty-year low in unemployment for the last couple years. So, we start in a very strong position. This isn’t that something is wrong with the economy.”
Powell’s optimism was echoed by regional Fed presidents: Dallas’s Robert Kaplan: “We were strong before we went into this, and we believe that we’ve got a great chance to come out of this very strong.” Atlanta Fed President Raphael Bostic: “The economy started at a great place.”
The Fed believes it has “temporarily stepped in to provide loans” – for a system considered fundamentally sound and robust. I am an analyst and not a pessimist. But, most unfortunately, the opposite holds true. U.S. and global economies were unstable “Bubble Economies” fueled by Credit and financial excess, most notably by unprecedented asset market speculative leverage. Fed assets surpassed $5 TN this week, and I’ll be stunned if they ever again fall below this level. I am reminded of Fed officials having actually expected in 2011 that its “exit strategy” would return the Federal Reserve balance sheet to near pre-crisis levels – only to double assets again in about three years to $4.5 TN.
The Austrian “Bubble Economy” concept will be invaluable as we analyze dynamics going forward. From the economic perspective, a decade of ultra-loose financial conditions incentivized businesses to over-borrow – from multinational corporations, to mid- and small business to sole proprietorships. Tens of thousands of unprofitable (and negative cashflow generating) enterprises proliferated throughout the economy – from Silicon Valley “tech Bubble 2.0,” to shale, alternative energy, biotech, media, entertainment and leisure, and so on. Ultra-loose financial conditions stoked over- and malinvestment, while generally distorting business spending patterns.
Confounding post-Bubble financial and economic landscapes will create investment decision mayhem.
U.S. and global economies are severely maladjusted – and ravenous Credit gluttons. Importantly, this ensures Trillions of monetary stimulus along with Trillions of fiscal spending will be absorbed as if dumping buckets of water onto the scorching desert sand.
Stimulus will for a time sustain scores of uneconomic enterprises, at the cost of prolonging the workout process. Nonetheless, with Bubbles popping in shale, technology, leisure and entertainment and elsewhere, millions of job losses will prove permanent.
Negative wealth effects will also wreak havoc on consumer spending patterns. From the Fed’s Z.1 report, Household Net Worth (Assets less Liabilities) ended 2019 at a record $118.4 TN, having ballooned $23 TN, or 21%, over the past three years. Household Net Worth ended 2019 at a record 545% of GDP, up from previous cycle peaks 492% (Q1 2007) and 446% (Q1 2000). Household holdings of Equities (Z1: Equities and Mutual Funds) ended Q4 at $30.8 TN, a record 142% of GDP (up from 2007’s 102% and 2000’s 117%).
Now comes the downside.
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Easy gains from asset inflation are spent more freely than incomes.
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Changing spending patterns will expose the fragile underbelly of the “services” and consumption-based U.S. economy.
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Meanwhile, some of the most expensive real estate markets in the country will suffer collapsing demand, with major effects on construction, spending and confidence (not to mention loan losses).
One of the many lasting pandemic consequences will be a reassessment of living in New York City, San Francisco, Los Angeles and other densely-populated urban centers. Beyond negative asset market wealth effects, I expect a prolonged impact on high-income earners (i.e. Wall Street compensation, executive pay, company stock rewards, Silicon Valley, entertainment and media, real estate-related, etc.). Expect some upper-end real estate Bubbles – having persevered even through the last crisis – to finally succumb. The bursting of an unprecedented nationwide commercial real estate Bubble will have major impacts on construction and the finances of owners of real estate, as well as on the underlying loans, securitizations and derivatives.
Every segment of the economy will be impacted – many deeply. Expectations for a quick recovery are wishful thinking. And I doubt it will be possible for the Fed and global central bankers to step back from market liquidity support operations. We should not be surprised by ongoing weekly Fed balance sheet growth of several hundred billion. Household, business and market confidence have been shaken – and will be slow to recover. Markets have been conditioned over recent decades to anticipate rapid recovery. Confidence was bolstered this week by incredible “whatever it takes” measures. I’m just not convinced the necessity for ongoing rapid central bank expansion will prove as confidence inspiring.
New York state reported its first coronavirus infection on March 1st. In less than four weeks, cases multiplied to 45,000. From the February 22nd CBB: “Cases tripled to nine Friday in Italy, with the first death reported.” Italy reported 919 deaths Friday, with total deaths of 9,134 and cases of 86,498.
Governments have made very unfortunate missteps managing this pandemic. Many now look to the trajectory of China’s outbreak for hope that cases elsewhere will begin declining soon – with economic normalization commencing in earnest. Yet Western democracies have a major disadvantage in managing a pandemic. Societies would not tolerate health authorities going door to door checking for symptoms and removing those with fevers (sometimes kicking and screaming) for immediate transport to isolation facilities.
One has only to view photos of a bustling Central Park or videos of crowded NYC subways to realize that “lock down” means something quite different in the U.S. than it does in Wuhan and Hubei Province. And only China has 170 million cameras and a sophisticated surveillance system – that in one case provided the ability to track an infected individual “down to the minute” as he traveled between provinces and along public transit in Nanjing.
Bill Gates’ comments (CNN Coronavirus Townhall, March 26th) resonated. Having warned of pandemic risk in a 2015 TED talk, and after years of being fully immersed with the Bill and Melinda Gates Foundation’s efforts in infectious disease control, vaccines and other global health initiatives, Gates possesses deep understanding of the subject matter. His view is that nationwide shutdowns and social distancing efforts must be strictly maintained until the number of active coronavirus cases declines to a low and manageable level. A cursory glance at one of the nationwide outbreak maps is sufficient to appreciate that the outbreak is currently out of control throughout the country.
We’ll learn more next week, but it appears the White House is moving forward with a plan to gauge the outbreak across the country in a county by county effort to get the economy moving back toward capacity as soon as possible. It’s difficult for me to see governors, mayors, local government officials and vulnerable healthcare systems around the country supporting any relaxation of pandemic management efforts.
Unfortunately, there will be no speedy economic recovery. Let’s hope the change of season offers some relief. But then there’s the loaming prospect for a second wave next fall and winter. Various experts, including Bill Gates, say a vaccine is a year to 18 months out. There’s going to be a hell of a battle in deciding how best to move the economy forward from here.
As for the markets: markets will do what markets do. And global market dynamics are incredibly unsound. Count me skeptical that the biggest three-day rally (in the DJIA) since 1931 is a sign of health. I fully appreciate that “buy the dip, don’t be one” has been richly rewarding for a long time now. “There couldn’t be a better time to start investing [than] right now… Fortunes are going to be made out of this time… I can guarantee you that if you stay in and you just stick with it, three years from now you will be very, very happy that you did.” I’d be especially cautious with guarantees. Suze Orman (and most) have little appreciation for what is now unfolding. The younger generation has yet to experience a grueling protracted bear market. “Buy the dip” and “buy and hold” are poised to dishearten.
Incredible central bank liquidity operations yanked global markets back from the precipice.
In the three sessions, Tuesday to Thursday, the Dow surged 21.3% (ending the week up 12.8%). The week saw the S&P500 rally 10.3%, lagging the Japanese Nikkei’s 17.1% surge. Brazil’s Bovespa recovered 9.5%, as emerging equities bounced back. Mexico’s peso rallied 4.6%, leading an EM currency recovery. In “developed” currencies, the Norwegian krone rallied 11.6%, in another week of acute market instability.
After spiking 44 bps the previous week, investment-grade Credit default swaps (CDS) this week sank 40 to 112 bps. The iShares investment-grade corporate bond ETF (LQD) surged 14.7%, more than reversing the previous week’s extraordinary 13.3% decline.
The Fed’s move to open-ended QE coupled with corporate bond and bond ETF purchases was instrumental in arresting market collapse and sparking upside dislocation. This, along with expanded central bank swap arrangements, reversed global market illiquidity and panic.
If I believed global markets were chiefly facing liquidity issues, I would be more hopeful.
Illiquidity was pressing, and global central bankers responded with “whatever it takes” (and it took a lot). Believing the global Bubble has burst, I see the overarching issue more in terms of a developing Solvency Problem. Burning the midnight oil in homes around the globe, rating agency employees enjoy enviable job security. And that would be Credit analysts for corporations, financial institutions, municipalities, investment-grade bonds, junk debt, structured products and nations. Credit and Solvency issues will turn systemic.
It’s a different world now. And while “whatever it takes” can accommodate speculative deleveraging and generally support market liquidity, The Solvency Problem will prove a historic challenge. The global economy has commenced a major downturn, hitting an already impaired global financial system. While markets enjoyed a recovery this week, EM debt is turning toxic. Energy-related debt is already toxic. Risk of general business and real estate debt turning toxic is growing rapidly.
As I posited last week, I see an environment hostile to speculative leverage. This ensures a fundamental tightening of financial conditions and attendant downward pressure on global asset markets – securities and real estate, in particular. And with Bernanke’s 40-year bond yield “ski slope” at the end of a historic run, central banks have today little capacity for using rate cuts to reflate asset prices.
The U.S. economy is in trouble. Europe is in greater trouble. EM economies face a disastrous combination of financial and economic hardship. And just as China moves to restart its economy, the massive Chinese export sector is confronting collapsing global demand. How long Beijing can hold things together is a critical issue. In the theme of bursting Bubble economies and unfolding Solvency Problems, no country faces greater challenges than China (with its deeply maladjusted economy and gargantuan financial sector).
Tyler Durden
Sat, 03/28/2020 – 18:45 -
- This Is The Only Question Goldman's Clients Are Asking
This Is The Only Question Goldman’s Clients Are Asking
Let’s face it: after the fastest bear market crash in history, which saw the S&P500 tumble 35% from an all time high in less than a month, a faster and more chaotic decline than the crashes of either 1987 or 1929 which set off the Great Depression, culminating with the S&P500 hitting its lowest level since 2016 on Monday…
… this however was followed by the fastest “bull market” in history (as the WSJ declared), with the S&P surging 21% in just four days after the Fed used not a bazooka but a “nuclear bomb“, only to be followed by another near-limit down plunge on Friday…
… nobody knows what is coming next, as policy makers literally throw everything – some $12 trillion of everything so far to be precise- in hopes of avoiding a second Great Depression, if not for the economy then certainly for stocks.
Sure, professional traders, strategists, analysts, and drive-by market tourists can speculate, as they have been all of last week …
- Is The Bottom Finally In: Bridgewater Puts On $14 Billion Short
- “It Is Likely Too Soon To Declare A Lasting Bottom“
- The 1930s Guide To Whether The Rally Can Continue
- Market Bottom Indicators #1 – VIX Futures Term Structure
- Market Bottom Indicators #2 – Financials To Utilities Ratio
- Stocks Suggest a Bottom is Forming
… but the reality is that the market is now making it up day by day, watching how many
billionstrillions in new monetary and fiscal stimulus will be thrown at it, and flailing wildly as what happens next is quite literally never seen before: an attempt to kill the global economy, only to restart it a few week (hopefully) later when the coronavirus pandemic is over.So great is the confusion among even professional traders, that according to Goldman’s chief equity strategist, David Kostin, after the S&P’s 18% rally this week, there is just one thing Goldman’s clients want to know: “are we past the bottom” and “has a new bull markets started.”
Goldman’s answer is that even though the bank still retains its 3000 SPX price target, “tactically, we believe it is likely that the market will turn lower in coming weeks.” To justify its bearishness, Goldman looks back at the global financial crisis and reminds us that “between September and December 2008, the S&P 500 experienced six distinct 1-6 trading day bounces of 9% or more, with some rallies as large as 19%. However, the actual market bottom did not occur until March 2009.”
Here is how Kostin describes the unprecedented action of the past week:
The pattern of market extremes continued this week. After closing at the lowest level since 2016 on Monday, the S&P 500 rallied by 9% on Tuesday. Stocks continued to rise on Wednesday and Thursday – amounting to the best three-day return since 1933 – as Congress passed a $2 trillion fiscal stimulus package meant to support workers and businesses in the wake of the COVID-19 pandemic. While initial jobless claims spiked to a record 3.3 million, investors have focused on the slowing of the virus’ spread in Italy and Washington state along with the apparent “do whatever it takes” stance of US monetary and fiscal policymakers.
So, perhaps unsurprisingly, after the swift 18% rally in the earlier part of the week, Kostin says that the most common investor question this week was “has a new bull market started?”, an optimistic query which echoes the positive tone in most of Goldman’s conversations with clients alongside the bullish reversal in positioning, including a sharp rise in hedge fund net leverage and a steep decline in put/call ratios:
For bulls, the combination of policy support and nascent discussion in Washington, D.C. of ending shutdowns within the next month, along with encouraging commentary from firms such as NKE and MU about early business resumption in China, has been enough to reduce the perceived downside risk.
Finally, as we noted last week, the expectations of month-end equity demand from algorithmic and pension portfolio rebalancing further fueled the rally.
Among this client boom, Goldman – which “strategically continues to expect the S&P 500 will rise to 3000 by year-end 2020 as economic and earnings growth rebound from their 2Q trough” is far more subdued:
“We expect the equity risk premium will decline and valuations rise as investors gain visibility regarding the path toward the $170 of EPS we forecast for next year. Tactically, however, we believe it is likely that the market will turn lower in coming weeks, and caution short-term investors against chasing this rally.”
Kostin adds that from a historical perspective, if the worst is indeed behind us, it would mark the fastest and most volatile bear market decline on record, while as noted at the top of the post, the mere 23 trading days between the equity market peak on February 19 and the hypothetical trough this past Monday would mark the fastest peak-to-trough bear market on record.
Alas, the bear market is hardly over because since the middle of the 19th century, the median bear market has taken 17 months to decline from peak to trough, and none has made the trip in fewer than three months. However, history also shows that bear markets are often punctuated by sharp bounces before resuming their downward trajectory. For example, looking at the last great global capital markets crash, “between September and December 2008, the S&P 500 experienced six distinct bounces of 9% or more, with some rallies as large as 19%, during the course of between one and six trading days.”
Just like now, most bounces involved optimism around monetary or fiscal policy support. However, the market low did not occur until until March 2009, when the pace of economic contraction finally began to slow (and Obama came on TV saying to buy stocks, something Trump has been doing every single day for the past three years).
* * *
So when will the market bottom be hit? Here Goldman chimes in its own views around a potential turning point in the path of the market during this pandemic, focusing on a three-part checklist:
- The viral spread: While investors have been encouraged by trends in China, South Korea, and Italy, the viral infection “curve” in the United States remains unbent, with widespread disagreement about when to expect the number of cases to decline. Some investors believe that the virus will be under control within a matter of weeks, but others believe that containment measures will affect daily life for more than a year while vaccines are being developed and tested. While this uncertainty persists, Goldman sees little likelihood of significant further multiple expansion.
- Fiscal and monetary policy: Goldman’s political economists describe the “Phase 3” fiscal legislation passed by Congress this week as “large and well-targeted.” Meanwhile, the Fed’s most recent extraordinary measures have substantially reduced the risk of a “full-blown credit crunch.” However, while the willingness of policymakers to use all the tools at their disposal is clear, only time will tell to what extent the actions succeed in limiting defaults, closures, and layoffs.
- Positioning and flows: Absent improving fundamentals, Kostin looks to investor positioning for an indication that selling pressure will slow and help stocks to bottom. In recent weeks, Goldman has highlighted that its US Equity Sentiment Indicator, which combines nine measures of equity positioning, had declined to just -1.4 standard deviations vs. -2 to -3 standard deviation readings at the troughs of other corrections this cycle. This week, the metric rose to -0.7, suggesting more selling lies ahead.
There is one more factor to consider: the effective and indefinite shutdown of the what has been the single biggest source of stock buying for the past decade: buybacks.
As Kostin explicitly warns, in addition to investor money flow, reduced buyback activity from US corporates is also likely to be a headwind to US equities. By the count of the Goldman Sachs Buyback Desk, nearly 50 US companies have suspended existing share repurchase authorizations in the past two weeks, representing $190 billion of buybacks or nearly 25% of the 2019 total.
Worse, the ongoing collapse in cash flows and select restrictions mandated as part of the Phase 3 fiscal legislation suggest more suspensions are likely. Finally, repeated something we have said every single year since 2015, Kostin concludes that “buybacks have represented the single largest source of US equity demand in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced buybacks.” Now if only all those
idiots“experts” in the media, on twitter and elsewhere who professed for years that buybacks have no impact on stock prices would have the courage to respond.* * *
One final point from Hatzius: while he remains cautious from a tactical perspective, investors ask what to expect in terms of market performance if and when the S&P 500 has bottomed. According to the Goldmanite, “S&P 500 returns are typically strongest in the month following the trough, but remain above-average for an extended period of time. The S&P 500 has posted a median return of 15% during the month following the trough of eight bear or nearbear markets in the last 40 years. This has been followed by a 5% return between months 1-3 and another 5% from months 3-6.”
Unsurprisingly, cyclical sectors usually outperform coming out of bear market troughs. Although no S&P 500 sector has a perfect hit rate of outperformance in three-month windows following market troughs, the Info Tech, Materials, Industrials, and Consumer Discretionary sectors have outperformed most frequently. Utilities and Consumer Staples have almost always lagged.
Finally, from a factor perspective, small-caps and anti-momentum laggards have outperformed following each of the eight troughs in the past 40 years. In general, during these periods “high quality” stocks with strong balance sheets and high returns on capital underperform, while Value stocks typically lead.
Which means that if there are still any value investors left out there after the unprecedented devastation their P&L has gone through in the past decade…
… they may finally make a buck one of these years.
Tyler Durden
Sat, 03/28/2020 – 18:17 - 'Without Us, Instacart Will Grind to a Halt': Delivery Workers Threaten Strike Over Hazard Pay
‘Without Us, Instacart Will Grind to a Halt’: Delivery Workers Threaten Strike Over Hazard Pay
Authored by Julia Conley via CommonDreams.org,
Contract workers for Instacart, the Silicon Valley startup that employs 175,000 people to deliver groceries nationwide via its online platform, plan to walk off the job Monday if the company does not immediately provide them with hazard pay and increased safety precautions to protect them from the deadly coronavirus now ravaging the nation.
As Vice first reported Friday, Instacart’s delivery workers are demanding hazard pay of $5 per order, free hand sanitizer and disinfecting wipes, and paid sick leave for workers with pre-existing medical conditions that would make the coronavirus, officially known as COVID-19, more dangerous if they contract it.
Instacart employee in North Hollywood, California. (Photo: Frederic J. BROWN / AFP via Getty Images) Considering delivery and grocery workers are just some of the millions of Americans considered “essential” during the public health crisis, “it’s especially cruel to withhold these guarantees from the very workers keeping millions of people fed,” tweeted Joelle Stangler, a field director for Sen. Bernie Sanders’ (I-Vt.) presidential campaign.
Like millions of sanitation workers, pharmacy and grocery store employees, and healthcare workers across the country, said Instacart worker and strike organizer Vanessa Bain, the company’s shoppers “are working on the frontlines in the capacity of first responders” — all while many other Americans are able to work from home.
“Instacart’s corporate employees are provided with health insurance, life insurance, and paid time off and [are] also eligible for sick pay and paid family leave,” Bain told Vice. adding that the company’s gig workers “are afforded none of these protections.”
“We deserve and demand better,” Bain added. “Without [us], Instacart will grind to a halt.” Instacart’s current sick leave policy for its delivery workers allows them to take two weeks of paid leave only if they test positive for the coronavirus. With tests in short supply and many Americans being told by healthcare providers that they don’t qualify for testing, Instacart could be forcing many of its shoppers to work while ill — or at least contagious.
I’ve used Instacart, and am absolutely standing with every employee in demanding effective safety measures, fair compensation, and sick leave https://t.co/bZkEaP8cFg
— Rep. Ro Khanna (@RepRoKhanna) March 27, 2020
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Providing the workers with safety supplies and a fair paid sick leave policy “could actually save lives,” tweeted comedian Jon Hendren. Others on social media pledged solidarity with Instacart’s delivery workers and called on the company to meet the workers’ demands for safety measures.
Bain slammed the company for “profiting significantly off of this pandemic” and planning to hire 300,000 new shoppers to keep up with demand and capitalize on the unemployment crisis resulting from the pandemic, while failing to ensure the safety of its current workers.
“Instacart has been busy crafting a rather heroic public image as the saviors of families sheltered-in-place, and as the economic saviors of laid off workers,” Bain told Vice. “In truth, Instacart is providing no protection to its existing [gig workers].”
The workers’ plan to strike—one which could bring Instacart’s business to a halt on Monday, said Medium writer Sarah Emerson, proves that “low-wage workers make the country run.”
“Not CEOs in Silicon Valley who style themselves as benevolent dictators,” she tweeted. “Companies like Uber, Lyft, and Instacart would be nothing without the laborers they treat so poorly—people now deemed ‘essential’.”
Tyler Durden
Sat, 03/28/2020 – 17:55 - 4 Passengers Die Aboard Carnival Cruise Ship Stranded Near Panama As Company Begs For Bailout Cash
4 Passengers Die Aboard Carnival Cruise Ship Stranded Near Panama As Company Begs For Bailout Cash
As cruise lines bitch about potentially being excluded from the US government bailouts passed as part of the US CARES act, one cruise ship owned by a Dutch company has reported some of the worst news we’ve heard aboard a cruise ship since the Diamond Princess departed Yokohama.
On Friday, Holland America Line announced that four passengers had died aboard its cruise ship, the Zaandam, after it was refused entry into Chile nearly two weeks ago.
The ship, which had 53 passengers and 85 crew members aboard displaying symptoms, was denied passage through the Panama Canal to allow easy access to Florida.
The company, which, of course, is owned by cruise industry conglomerate Carnival Corp., didn’t say how many passengers and crew were tested, but said 53 passengers and 85 crew members are exhibiting symptoms consistent with the coronavirus. There are more than 1,800 people aboard the ship, the company said, along with four doctors and four nurses.
The Zaandam, which is currently anchored off the coast of Panama, is at least the third Carnival-owned ship to become the host of a COVID-19 outbreak. The Grand Princess, which made headlines after being barred entry to San Francisco, and the Diamond Princess, which required countries to evacuate passengers, including the US, are both run by Carnival-owned Princess cruises.
What’s more galling, though, is that the Zaandam still departed on the cruise from Buenos Aires on March 7 after the panic about COVID-19 had already started. The ship was at sea when Carnival suspended all operations later in the month. And the cruise was supposed to end March 21, but the ship was refused permission to dock in Chile, and it’s now anchored off the coast of Panama, as authorities refuse to let it pass through the Panama Canal.
The ship is telling the press it plans to disembark passengers in Florida, but exactly how it’s going to get there remains unclear.
Another Holland America ship, the “Rotterdam,” met the Zaandam at sea on Thursday, the company said, before adding that it plans to transfer healthy patients from one ship to the other before they are exposed to COVID-19. All passengers and crew currently exhibiting symptoms will remain on the Zaandam. The company said it is following guidance from the CDC.
In other words, everyone who has COVID-19 symptoms aboard that ship is screwed. They will be left twisting in the wind until the virus consumes virtually everybody on board. No one will take them in, at this point they don’t have the resources to sail around the tip of South America. Rumor has it that the State Department is planning another evacuation. That’s the last hope for the more than 100 people who are being virtually abandoned on board that boat.
Cruise Lines have been criticized for their poor handling of the crisis. Former passengers of the Costa Luminosa have died after the company and captain of the ship did little to protect passengers. As the Miami Herald reported in partnership with ProPublica, the cruise lines that are now begging for bailouts did little or nothing to shield passengers once news of the outbreak became public. Once the ship made a stop, in Puerto Rico, passengers said the cruise officials didn’t let them know about the sick people on board until they were out at sea again the next day.
“If the ship had told everyone what was going on, my dad and stepmom would have gotten off in Puerto Rico and flown home,” said Kevin Sheehan, Tom’s son. “But they didn’t tell them. So they stayed on the ship.”
Because he stayed on the ship, Tom Sheehan died at sea, away from his family, as COVID-19 shut down all of his organ systems one by one.
The ship couldn’t make its planned next stop in Antigua, so it continued across the Atlantic for a full week with no stops. Passengers were allowed unfettered access to the pools, gym and buffet the entire time, even after news broke at the end of the week about the test results – and the people still used them! They assumed it was safe since the company wasn’t saying anything.
Tyler Durden
Sat, 03/28/2020 – 17:30 - NPR Station Is Censoring Trump As MSM Pushes Totalitarian Propaganda
NPR Station Is Censoring Trump As MSM Pushes Totalitarian Propaganda
Authored by Mac Slavo via SHTFplan.com,
A Seattle-based NPR station has stated that it will no longer be airing President Donald Trump’s coronavirus briefings because of “misinformation.” As we’ve learned over the past several years, misinformation is simply the information they don’t want you to hear.
So what is the “misinformation” Trump has been saying? Obviously things the mainstream media wants to avoid, like asking people to remain calm, look at the objective facts and statistics about the pandemic and stop playing into the fear-mongering of the mainstream media. Fear has boosted mainstream media’s ratings in the past few weeks, adding to their profits. Reopening the economy means people would be at work or at least out doing things instead of watching the panic-laced headlines scroll across the TV.
“KUOW is monitoring White House briefings for the latest news on the coronavirus – and we will continue to share all news relevant to Washington State with our listeners,” the station tweeted.
“However, we will not be airing the briefings live due to a pattern of false or misleading information provided that cannot be fact-checked in real-time.”
However, we will not be airing the briefings live due to a pattern of false or misleading information provided that cannot be fact checked in real time. (2)
— KUOW Public Radio (@KUOW) March 24, 2020
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This habit of censorship needs to end now. How about instead of censorship like totalitarian regimes resort to, we let people have access to all of the information and decide for themselves if it’s fact-based or not? It’s time to provide people with facts, not fear. This is simply another tactic to panic Americans, who are already scared to death about the pandemic and the aftermath they’ll have to live through.
Most recently, Trump has called for the lifting of social distancing guidelines in the near future, perhaps by Easter, even though public health professionals are still grappling with the spread of the virus. He also has made false claims about the availability of tests, the timeline for finding a vaccine and the potential benefits of a treatment that includes the ingredient chloroquine. While there is some promising study of its potential use, it has not been approved for treatment. NBC News reported on one Arizona man who died after ingesting chloroquine phosphate, and his wife said that they learned about its use after watching a briefing. –Yahoo
First, calling for the lifting of the economic shutdown is not “misinformation.” It should be done sooner and people should be responsible and not spread the disease, but destroying people’s lives to slow the spread is hardly a solution to the problem, which based on the objective statistics, isn’t that severe of a virus if you’re healthy. It sure seems like NPR should be more worried about making sure people are getting objective facts rather than scaring them with the “reopening” of the economy.
The news networks have been covering the briefings live, but CNN and MSNBC cut away from them on Monday, as the event stretched beyond an hour.
Deputy White House Press Secretary Judd Deere criticized the channels for the decision as “disgraceful,” but an MSNBC spokesperson said that “after airing the press conference for over an hour we cut away because the information no longer appeared to be valuable to the important ongoing discussion around public health.” A spokeswoman for CNN said, “If the White House wants to ask for time on the network, they should make an official request. Otherwise, we will make our own editorial decisions.” –Yahoo
Pretty disgraceful that @CNN and @MSNBC have both cut away from this @WhiteHouse briefing with @realDonaldTrump and @Mike_Pence during a global pandemic. Thank you to @FoxNews for keeping Americans informed. #COVID19
— Judd Deere (@JuddPDeere45) March 23, 2020
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The truth is, politicians rarely if ever tell the truth, and the majority of the public knows that. Censorship, on the other hand, is nothing more than a tool of totalitarian control. It comes out when the media desperately needs to control the narrative. Perhaps they fear that they are losing the attention of the public. It’s difficult to say, but censorship (like what China used at the beginning of the coronavirus outbreak) is never acceptable.
For an eye-opening take on why social distancing has become the “new normal,” check out James Corbett’s Propaganda Watch:
All that said, do the right thing and do not spread this virus around. Practice effective hand washing, teach your children how to properly wash their hands, and don’t be around other people if you’re sick. Keep a safe distance between people while in public to avoid the virus, and if you feel more comfortable, wear a face mask.
Tyler Durden
Sat, 03/28/2020 – 17:05
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