Aug 06

Today’s News 6th August 2020

  • War Drums Beat In The Middle East After Thousands Of Casualties In Beirut Explosion
    War Drums Beat In The Middle East After Thousands Of Casualties In Beirut Explosion

    Tyler Durden

    Thu, 08/06/2020 – 02:50

    Submitted by SouthFront

    On the evening of August 4th, a massive explosion rocked the port of the Lebanese capital of Beirut, causing devastating damage and leaving thousands of casualties. The explosion sent a shockwave across the city and blew out windows up to 10 kilometers away. It was felt as far away as Cyprus in the Mediterranean Sea.

    As of the morning of August 5th, the number of reported fatalities exceeded 100, with at least 4,000 people reported  injured. At least 48 staff members of the United Nations and 27 members of their families were among the injured. 10 rescuers involved in the operation to contain the damage and to help people have been reported killed.

    Initial reports suggested that the explosion may have been caused by an incident in the firework storage area. However, later, Lebanon’s Prime Minister Hassan Diab said that 2,750 metric tons of ammonium nitrate, which is typically used as an agricultural fertilizer, had been stored for six years at a port warehouse without proper safety measures, “endangering the safety of citizens.”

    This statement was backed by General Security chief Abbas Ibrahim, who said a “highly explosive material” had been confiscated years earlier and stored in the warehouse, just minutes’ walk from Beirut’s shopping and nightlife districts.

    It is still unclear what caused the explosion itself thus laying the ground for various speculations in mainstream media outlets and on social media platforms. In particular, reports suggested that a number of Hezbollah members were in the port area at the moment of the explosion. This immediately caused reports that this may have been a result of some Israeli attack, for example sabotage actions or a somehow unnoticed missile strike, and that the site of the explosion was in fact a part of the Hezbollah military infrastructure.

    The Israeli Defense Forces did not officially comment on these speculations. Israeli media, which are often eager to promote supposed Israeli military victories, claimed that Israeli forces did not attack Beirut. In their turn, Hezbollah denounced reports that the explosion happened on one of their sites saying that there was no Israeli attack on August 4.

    Nonetheless, it seems that the US leadership has a quite different point of view. Commenting on the situation after a meeting with military officials, President Donald Trump claimed that the incident was an attack. “They seem to think it was an attack. It was a bomb of some kind,” Trump said.

    Whatever the real cause of the tragedy turns out to be, the Beirut explosions have already fueled tensions in the region. And despite comments by Hezbollah and Israeli media that it was not a military incident, the warring sides are actively accusing each other. Comments by the US President about a supposed attack on the Beirut port do not make the situation any easier.

    Taking into account the recent series of military incidents on the Israeli-Lebanese contact line, and in the Israeli-occupied area of the Golan Heights, any new border provocation may easily lead to a larger escalation. The years of war propaganda and military confrontations together with increased tension within Israeli and Lebanese society respectively have already created conditions in which a further, even small, military incident may appear to be enough to provoke a larger war in the region. This large war is in no interest of Tel Aviv or Hezbollah because it will obviously have a devastating impact on both Israel and Lebanon. In this light, it is especially interesting that the Trump administration is making statements that would contribute to this scenario. There is a chance that in a time of a deepening social and political crisis in the US on top of a complicated economic situation in the runup to the next US Presidential election, some hotheads may believe that a new, theoretically ‘victorious’ war in the Middle East, could help them to remain in power.

  • UK Gives Town Councils Power To Bulldoze 'Contaminated' Homes To Contain Outbreak
    UK Gives Town Councils Power To Bulldoze ‘Contaminated’ Homes To Contain Outbreak

    Tyler Durden

    Thu, 08/06/2020 – 02:00

    Britons were shocked and angered this week when an internal government guide meant to inform local councils and town authorities on possible strategies in dealing with rising coronavirus cases throughout the country explored scenarios wherein demolition of ‘contaminated’ homes would be allowed. 

    It’s unclear if the UK guide, called Covid-19 Contain Framework and produced by the Department of Health and Social Care, was intended to gain broad public circulation, given it contains what’s widely seen as oppressive overkill measures that are absolutely Orwellian and downright tyrannical in terms of the power assumed by local councils.

    Here’s the headline in The Telegraph that went viral late in the day Tuesday: Councils can demolish contaminated buildings under powers to stop second coronavirus wave.

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    Illustrative file image, via Inside Edition

    This as London fears greater spread from a second wave and hopes to avoid another nationwide lock down. The idea behind the government strategy is that by giving local councils unprecedented powers to curb local spread, more sweeping national measures could be avoided. 

    But citizens are not impressed, given ‘demolition orders’ could theoretically be issued for the very roofs over people’s heads. The Telegraph report detailed shockingly of the government document:

    Local authorities will be able to order the demolition of buildings at the centre of coronavirus outbreaks under draconian powers to contain a potential second wave.

    Cars, buses, trains and aeroplanes could also be destroyed subject to the approval of magistrates.

    The report flatly states that even retirement or nursing homes and private residences could be “bulldozed” if such interventions are deemed necessary.

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    The report continues by quoting a passage that seems straight out of some banana republic dictatorship, which it appears the UK is on its way toward becoming (with laws like this):

    The document, published by the Department of Health and Social Care, advises councils that, under the Public Health (Control of Disease) Act 1984, they can apply to a magistrate “to impose restrictions or requirements to close contaminated premises; close public spaces in the area of the local authority; detain a conveyance or movable structure; disinfect or decontaminate premises; or order that a building, conveyance or structure be destroyed“.

    It raises the possibility that care homes, factories, offices or even private homes could be bulldozed as a last resort if the virus starts to run out of control, although such measures have not been considered necessary during the outbreak.

    We wonder, with such immense decision-making authority in the hands of local councils, who will provide checks and balances over those local bodies? 

    Bulldozers ready to roll through living rooms? It appears that London literally foresees that as a “legitimate” scenario given reference to the Public Health (Control of Disease) Act 1984, and applied within the context of the COVID-19 pandemic.

    Currently the UK has over 300,000 confirmed COVID-19 cases, including more than 46,000 deaths. A moderate increase in infections has been observed over the past days, further worrying officials and the public that the next round of drastic lock-down measures are in store.

    But hopefully no one’s house is getting bulldozed anytime soon. 

  • Antifa Protesters Sue Seattle Over 'Forced' Armor Upgrades
    Antifa Protesters Sue Seattle Over ‘Forced’ Armor Upgrades

    Tyler Durden

    Wed, 08/05/2020 – 23:30

    A lawsuit has been filed against the city of Seattle by several protesters, who claim that the Seattle Police Department’s “indiscriminate” us of chemical and less-lethal crowd control measures forced them to buy “expensive” protective gear in order to withstand the tactical response to their violent resistance, according to KIRO7.

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    Oakland, CA Antifa members John Cookenboo and Vincent Yochelson aren’t doing much better…

    “Because the Seattle Police Department has acted above and outside the law in dispensing its unbridled force, and the City has failed to prevent same, the government effect is to establish a de facto protest tax,” reads the legal complaint, filed Monday. “Individual protesters subjected to SPD’s unabated and indiscriminate violence now must purchase cost-prohibitive gear to withstand munitions – even when peacefully protesting – as a condition to exercising their right to free speech and peaceable assembly.”

    The suit, filed on behalf of five protesters who attended the July 25 protest on Capitol Hill that police later declared a riot, seeks an order from a judge to stop the city from using controversial crowd control tactics on protesters, including blast balls and pepper spray.

    It’s the latest lawsuit against the city of Seattle for its handling of protests that have continued in the wake of George Floyd’s killing. In response to a separate case related to these tactics, involving Black Lives Matter Seattle-King County, the city has argued officers’ actions were directed at individuals and were not indiscriminate. –KIRO7

    “But the continued misuse of war munitions by SPD against civilians turns the streets – a public forum and site of protest – into a pay-to-protest racket where only a privileged few who are wealthy enough or popular enough to crowdsource funds to purchase gear akin to that used by the police department they fund can truly be in the streets,” the lawsuit continues.

    The Seattle City Attorney’s Office told KIRO7 that they would be looking into the claims, adding “The relief these plaintiffs seek is related to recent orders issued by Judge Robart and Judge Jones, so we’ll be filing a Notice of Related Cases with the court.”

    Perhaps they need to speak with thir Comrades to the South and borrow some shields and whatnot:

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  • US Cruise Operators Halt Voyages Until Oct. 31 After 2 Ships Hit By Outbreaks Amid Restart
    US Cruise Operators Halt Voyages Until Oct. 31 After 2 Ships Hit By Outbreaks Amid Restart

    Tyler Durden

    Wed, 08/05/2020 – 23:00

    No doubt among the hardest hit industries globally has remained cruise ships. As late as May and June there were still cruise ships essentially stranded as ports refused them entry while outbreaks on board raged among passengers and crew.

    Even as some companies have tepidly tried to resume operations in the past weeks, the moment a single COVID-19 case appears on board, all operations have had to be suspended as we noted days ago with the Amundsen.

    “One of the first cruise ships to resume overnight sailing in U.S. waters since the coronavirus shut down the cruise industry earlier this year has reported one case of COVID-19 on board,” USA Today reports Wednesday.

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    It happened on board UnCruise Adventures’ Wilderness Adventurer ship, and all aboard have been ordered to remain in their rooms on ship “until the State of Alaska deems it safe for them to return home,” according to an alert on the cruise line’s website.

    And then there’s this ongoing disaster first reported Monday:

    At least 41 passengers and crew on a Norwegian cruise ship have tested positive for Covid-19, officials say.

    Hundreds more passengers who travelled on the MS Roald Amundsen are in quarantine and awaiting test results, the company that owns the ship said.

    The ship, which belongs to the Norwegian firm Hurtigruten, docked in the port of Tromso in northern Norway on Friday.

    That number has since grown, and is expended to rise as more tests come back in.

    The fact that already two ships have been hit by separate outbreaks a mere few weeks after the industry attempted to restart has resulted in US cruise operators, through the Cruise Lines International Association (CLIA), jointly agreeing to suspend all ocean voyages with passengers until at least October 31.

    Reuters reports of the major Wednesday announcement:

    The Cruise Lines International Association said its members, which include the three biggest U.S. cruise operators Carnival Corp, Norwegian Cruise Line Holdings Ltd and Royal Caribbean Group, would revisit a possible further extension on or before Sept. 30.

    The U.S. Centers for Disease Control and Prevention (CDC) has a no-sail order for all cruise ships through next month’s end.

    The cruise industry has been among the worst hit by the pandemic, with ships in Japan, Australia and California making headlines for the spread coronavirus cases onboard.

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    “This is a difficult decision as we recognize the crushing impact that this pandemic has had on our community and every other industry,” CLIA said. “CLIA cruise line members will continue to monitor the situation with the understanding that we will revisit a possible further extension,” the statement said. “At the same time, should conditions in the U.S. change and it becomes possible to consider short, modified sailings, we would consider an earlier restart.” 

    Norway and some other European countries have also taken steps to stop or at least limit cruise ships from disembarking temporarily.

    While the airline industry has also suffered major slowdowns and setbacks, passenger airplanes have remained largely immune from the types of clearly traceable outbreaks that have devastated the cruise ship industry. 

    Many speculate that its not only the long term close quarters nature of a cruise ship, including buffets, tight hallways, and elevators, but also possibly the common ventilation systems aboard. 

  • How Central Banks Made The COVID Panic Worse
    How Central Banks Made The COVID Panic Worse

    Tyler Durden

    Wed, 08/05/2020 – 22:35

    By Kristoffer Mousten Hansen of Mises,org

    Historical events are complex phenomena, and monocausal explanations are therefore by definition wrong when explaining history. Many factors go into explaining why people and the world’s governments reacted as they did to the coronavirus. It is, however, my contention that examining the inflationary policies pursued by central banks and governments are fundamental to understanding how the current corona hysteria developed.

    Calling it hysteria may sound harsh. When the coronavirus first started to draw attention back in February, and when most Western countries instituted extremely restrictive measures in March, one could make a plausible argument that the world was dealing with an unknown and seemingly catastrophic disease and that therefore extreme measures were justified. To be sure, this does not mean that the measures implemented were in any way effective, nor that the sacrifices imposed were morally justified; but there was at least an argument to be made.

    At this point in time, however, the Centers for Disease Control and Prevention (CDC) has repeatedly cut the COVID-19 fatality rate, and it is now comparable to a bad year of the seasonal flu (see the useful aggregation of studies and reports by Swiss Propaganda Research). The glaring question therefore is: Why do governments across the West act as if they were still dealing with an unprecedented threat? It is no good to simply reply that what politicians really want is power and that they are just using coronavirus as an excuse for extending government control. While a plausible claim, it does not explain why vast majorities in most countries support whatever policies their rulers have thought good. Given the extreme restrictions placed on social and economic life and the mendacious, ever shifting narrative used to justify them, one would think that there would be widespread opposition after four months. So why is there practically none?

    Inflation in the Age of Corona

    We can better understand this strange phenomenon if we consider the inflationary policies pursued by central banks across the world. I’ll here cleave to the old definition of the term inflation and the one still favored by Austrian school economists: an increase in the quantity of money. The rise in prices which is commonly referred to as inflation is simply the effect of such an increase. While the complexities of modern central banking can sometimes obscure the realities of the process, there can be no doubt that the last couple of months have seen very high levels of inflation.

    Modern central banks are no longer content with the classic role of lender of last resort. As the financial system has evolved, central banks have assumed the role of market maker of last resort—that is, they have either implicitly or explicitly assumed the responsibility of making sure that there is always a buyer for financial assets—and first of all government bonds. Thus the Federal Reserve’s balance sheet has ballooned from just over $4 trillion at the beginning of March to now just below $7 trillion; the Bank of England’s has increased from about £580 billion in March to about £780 billion; and the European Central Bank has increased its holdings from about €4.6 trillion to about €6.3 trillion. The balance sheets of the largest central banks thus expanded by between 35 and 75 percent in about five months.

    Inflated central bank balance sheets suggest inflation is coming, but actual inflation of the money supply naturally lags behind, since central bank purchases of bonds and securities do not necessarily result in an immediate expansion of the stock of money. The American money stock (measured by the monetary aggregate M2) grew from $15.5 trillion to $18.4 trillion (March–July 13), the British one from £2.45 trillion to about £2.67 trillion (January–May) and the euro area money stock from €12.4 trillion to almost €13.2 trillion (January–June). The annualized rates of inflation in the major monetary areas during the corona episode is then between about 13 (eurozone) and about 50 (USA) percent, well above the norm.1 If we look at the Austrian, “true” measure of the money supply (TMS) for the United States, we see a similar picture, as the TMS in June grew 34.5 percent year over year (YOY).

    The Effects of the Present Inflation

    Inflation is not an act of God; it is the outcome of a determined policy on the part of governments and central banks. Such a policy has both long-run and short-run effects, which brings us to the first and most obvious way in which inflation has fueled corona hysteria: by essentially putting freshly printed money at the disposal of governments, these latter have been able to first shut down their countries and then pose as saviors as they distributed largesse to workers and businesses. The states have often reimbursed the costs of furloughing employees, either directly or through (sometimes forgivable) loans to companies, or they have distributed generous unemployment benefits to the workers. This, and not any economic collapse, is the story behind the unprecedented spike in unemployment claims in the United States. The central bank has also created facilities to lend to municipal governments and the Main Street Lending Program to “support lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.”

    The effect of these programs and policies and others like them in other countries has been to mitigate the direct impact of government-imposed shutdowns. Businesses may have no revenues, but government aid and loans allow them to meet their contractual payments; workers may be unemployed, but generous unemployment subsidies allow them to maintain themselves comfortably; government support of furloughing schemes hides the true extent of unemployment caused by the shutdowns. And all this seemingly at no cost, since no one notices the inevitable dilution of the purchasing power of the monetary unit.

    In the absence of these inflationary policies, the consequences of the shutdown would be much more immediately apparent. Workers would have to spend out of their saved cash and liquidate their savings, while businesses earning no revenues would start to default on their contractual payments. A drastic fall in the prices of real and financial assets would have resulted. The pressure to end the restrictions would have been much stronger. Instead, it looks to most people as if they can go on at their old standard of living indefinitely—or at least as long as they continue to receive their government checks. The economic effects of the shutdown are still the same, however: dislocation of the production structure and capital consumption on a vast scale, but these have been hidden—papered over by inflation and government support.

    To the individual business owner and worker, the economic reality is hidden. Inflation leads to a fundamental disconnect with reality. Paul Cantor has previously described “the web of illusions endemic to the era of paper money” and how inflation destroys people’s sense of reality.2 In our case, inflationary monetary policy has hidden the costs of engaging in pandemic hysteria, and hence people do not—indeed, cannot—take account of economic realities when assessing the coronavirus and the shutdowns. Governments at all levels can continue to pose as saviors, inventing new mandates and restrictions to combat the nonexistent threat. Germophobes and busybodies can obsess over other people trying to go about their normal lives, since both the costs to them personally and to society as a whole are completely hidden. How many Karens would have the time to boss peaceful citizens around if they had to actually work to earn a living?

    Eventually and pretty quickly, these policies will result in price inflation and a hollowing out of the standard of living. Not only has production been severely restricted, as seen in the drastic fall in US GDP figures; insofar as the newly printed money is used on unemployment compensation in different forms, it will quickly reach normal consumers and be spent on consumer goods. If the programs go on much longer, consumer price inflation, as a result of the fiat money inflation, cannot be far off. Once that happens, only increased rates of inflation can keep the programs going—for a time.

    The Effects of the Inflationary System

    The effects of the inflationary system as such are much more far-reaching than economic dislocation and destruction, however. Fiat money produced out of thin air by central bankers leads to a long-run change in social attitudes and personal character. Joseph Salerno in a stimulating paper discusses how hyperinflation leads to the destruction of personality,3 and following Guido Hülsmann,4

     

     I would argue that fiat inflation entails the erosion of culture and character. This is perhaps most fully in evidence in Japan, where people have suffered under artificially low interest rates for decades. What are some of the consequences of an inflationary fiat standard and the culture it brings about, and what is the connection to the corona crisis? There is first of all a change in time preferences, as inflation leads to repressed interest rates and hence less incentive to save and invest. People’s time horizons change, as they increasingly discount long-run value creation and instead focus on present enjoyments and short-run yields. The changing role of central banks only intensifies this development. Instead of “lenders of last resort,” central banks are now “market makers of last resort.” That is to say, stock markets and bond prices cannot be allowed to fall, and it is the role of the banks to make sure they don’t. As a consequence, investors increasingly turn to the pursuit of short-run yields.

    This change in time preference has effects beyond the market. Since a premium is placed on short-term thinking in market affairs, naturally people transfer the same attitude to their nonmarket pursuits. Present benefits and present dangers are both emphasized at the expense of future costs and benefits, respectively. It is not hard to see the connection to the virus: since there is a possibility that the virus may potentially be very dangerous, people get frightened and act to make the fear go away. No matter the future consequences of their actions, the present danger of the virus trumps all.

    Closely connected to this change in time preferences is a skewed perception of reality. Inflation alters what constitutes successful action, since it is increasingly no longer productive endeavors but closeness to the source of inflation that determines the individual’s success in life. Since the ability of the central banks to create paper wealth seems virtually boundless, naturally people come to have unrealistic expectations of what is possible. Of course we can have a shutdown. We’ll have a central bank–fueled “v-shaped” recovery once it’s over. Of course governments can and should do whatever it takes to protect us from the virus. They can just finance spending with paper money for however long it takes. Whatever costs there are to these courses of action are hidden or far in the future.

    Conclusion

    There are many reasons for the corona crisis and the present almost total government control of the economy and society. But if we want to understand why states across the Western world have met virtually no resistance in their quest for power, we need to understand the role of inflation in enabling governments: directly through hiding the real costs and pain of the shutdowns, but also more fundamentally by distorting culture and personal character.

    • 1. Trading Economics, www.tradingeconomics.com; Federal Reserve Bank of St. Louis, FRED, www.fred.stlouisfed.org.
    • 2. Paul A. Cantor, “Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics,” Review of Austrian Economics 7, no. 1 (1994): 3–29.
    • 3. Joseph T. Salerno, “Hyperinflation and the Destruction of Human Personality,” Studia humana 2, no. 1 (2013): 15–27.
    • 4. Jörg Guido Hülsmann, “Cultural Consequences of Monetary Interventions,” Journal des économistes et des études humaines 22, no. 1 (2016).​

  • Study Finds 98 "Long-Term" COVID-19 Symptoms Including Baldness
    Study Finds 98 “Long-Term” COVID-19 Symptoms Including Baldness

    Tyler Durden

    Wed, 08/05/2020 – 22:10

    Epidemiologists readily admit that viruses are chock full of puzzles. And COVID-19 is no exception. Earlier today, Dr. Fauci himself lamented the fact that nearly half of those who get the virus don’t see symptoms, which is one reason why young people have been so reckless, purportedly helping to spread the virus.

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    And in a study published recently by the University of Indiana School of Medicine happened on a surprising finding: those who suffer from long-term symptoms of the coronavirus – a group that the researchers nicknamed “long haulers” after a Facebook group where many go for help – can experience all kinds of surprising symptoms, including baldness (for both men and women).

    The study was conducted by a doctor at the Indiana University School of Medicine and the grassroots COVID-19 survivor group Survivor Corps using a Facebook poll that was shared with a group of “long haulers”, whom the researchers thanked for sharing their time and experience.

    The CDC has identified only 17 persistent COVID-19 symptoms, but the survey of more than 1,500 patients found 98 possible symptoms, according to Dr. Natalie Lambert, an associate research professor who worked on the study.

    “The new symptoms our study identified include severe nerve pain, difficulty concentrating, difficulty sleeping, blurry vision and even hair loss,” Lambert said in a written statement.

    While the CDC guidelines are helpful for the vast majority of COVID-19 sufferers, for those who are severely affected by the virus, a much broader world of potential symptoms opens up. Many of these symptoms aren’t included on the CDC’s list of common COVID-19 symptoms. And until now, the medical community hadn’t really recognized these symptoms as potentially tied to SARS-CoV-2.

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    In the report, the authors wrote that “the mismatch between the health problems people are experiencing and the information that they can find from official health sources is noticeable and a potential cause for concern,” outlining the motivation for their study.

    To be sure, media reports have documented a degree of versatility in virus symptoms. Some seriously ill patients experienced damage to their hearts along with the lungs and the vascular system – these symptoms, and the puzzle they presented for epidemiologists, were widely reported.

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    But the team from the Indiana University School of Medicine wrote that other symptoms, including “brain, whole body, joints, eye, and skin symptoms are also frequent-occurring health problems for people recovering from COVID-19”, they wrote in the study.

    Another finding of the survey is that many “long haulers” who suffer from these extended symptoms report high levels of pain – 26.5% reported painful symptoms.

    Read the rest of the study below:

    2020+Survivor+Corps+COVID-19+’Long+Hauler’+Symptoms+Survey+Report+(revised+July+25.1) by Zerohedge on Scribd

  • Is Turkey Drilling For Oil & Gas In The Wrong Sea?
    Is Turkey Drilling For Oil & Gas In The Wrong Sea?

    Tyler Durden

    Wed, 08/05/2020 – 21:45

    By Viktor Katona of OilPrice.com

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    Whilst most of European media have narrowed down the deterioration in EU-Turkey relations to the issues of the “refurbished” Hagia Sophia and the protracted Libyan proxy war, their energy ties were just as crippled by Turkey’s intensive drilling campaign in Cyprus’ offshore, generating bad blood between the Old Continent and Ankara.

    Driven by its purported objective to drill 26 wells in the Eastern Mediterranean, every one of Turkey’s wildcats in Cypriot waters has gauged Europe’s unity and shed light on its ill-preparedness to confront Turkish actions. Now Turkey has started to drill its initial objective along its northern coast, the Black Sea – the one offshore area that is undeniably Turkish.

    The reticence of Turkish authorities to drill their Black Sea first might explain a lot as to why drilling in the Mediterranean might be more beneficial.  The Turkish Fatih drillship has started prospecting works within Turkey’s Black Sea shelf this July and is assumed to have spud the Tuna-1 wildcat on July 20. Tuna-1 will be drilled in water depth of more than 2km, having been pinpointed as a potential drilling site following 3D seismic surveying in the area in April-May 2019 (by means of the Polar Empress vessel). The location of the Tuna-1 well is peculiar as TPAO has decided to go at it right next to the quadrangle of the Romanian-Bulgarian-Ukrainian-Turkish maritime border, within the deepwater Block 26. It seems that the wildcat’s location not far away from Ukraine’s Skifsky block and (perhaps more importantly) from the largest-so-far offshore discovery of the Black Sea deepwater, the OMV-operated Neptun field in Romania, is a deliberate attempt to maximize the success potential of the well by drilling as close as possible to proven commercial discoveries.

    At first glance, TPAO is taking the correct step politically – it was the Fatih drillship that has become Turkey’s first-ever own drillship (until 2018 the vessel was operated on the Norwegian Continental Shelf), it was the first to drill a Turkish wildcat in the Eastern Mediterranean (in waters that are internationally recognized as belonging to Cyprus). Moving the ominous drillship into waters that are actually internationally recognized as Turkish alone might shift the prevailing focus a bit. As of today, TPAO owns 2 similar drillships – Yavuz (the sister ship of Fatih) and Kanuni (built a year after the two in 2012, also in South Korea) – so continuing its objectionable drilling program in the Eastern Mediterranean need not come at the detriment of other activities in the Black Sea. 

    The Turkish upstream segment is quite interesting in that it defies the prevailing logic of the Eastern Mediterranean. Ever since the first exploration well was drilled in 1954, more than 250 companies were active in its upstream sector yet throughout the years Turkey’s national oil company TPAO remained the main driller, surveyor and appraiser (75-80% of all exploratory and development works have been done by TPAO). There have been sporadic surges in interest, be it Turkey’s alleged shale bounty or its continental shelf, however the country’s fast-growth prospects were marred by the mostly viscous, low-gravity barrels it wields (Turkey’s largest oil fields have an API gravity of 13-15°). Moreover, Turkey’s recovery rate hovers around a meagre 20% – no surprise then that as of today, Turkey’s own oil production meets 9% of its consumption and 2% of its natural gas needs (already accounting for the COVID-induced demand drop, otherwise would be even lower). 

    Turkey’s focus on its Black Sea potential emerged in the 2000s as the country’s energy needs surged amidst stagnant (and low) production rates. TPAO joined ranks with BP to spud the Hopa-1 wildcat in Block 3534, the easternmost of Turkey’s Black Sea offshore next to the maritime border with Georgia, assuming a 10 TCf gas potential, however they were compelled to abandon the drilling as poor reservoir quality and overpressure issues have rendered further activities pointless. At the heyday of Black Sea appraisal, ExxonMobil, Chevron, Petrobras, BP were all involved, making it the Black Sea’s hottest region in terms of major participation. Despite some minor discoveries in the shallow waters of the Black Sea (Akcakoca), the Turkish authorities’ ambitious claims of 10 billion barrels lying at the bottom of the sea waiting to be discovered turned out to be largely pipe dreams as no deepwater drilling wielded any commercial discovery so far. 

    Turkey’s dedication to its Black Sea acreage serves a double purpose. First and foremost, drilling the Tuna wildcat and any other exploration well distracts the layman from Turkey’s activities in the Eastern Mediterranean – concurrently to the Tuna-1, TPAO drilled another deepwater well in the Mediterranean Sea (Seljuk-1) by means of its Yavuz drillship, located within Cyprus’ Block 06 that is jointly held by Total and ENI. By searching for Seljuk-1, one barely finds any media mention of it, perhaps attesting to the media becoming indifferent to the seemingly inextricable Cyprus dilemma. All the while obfuscating its Cyprus-related dealings, the second reason for launching the Black Sea drilling is non-political: underexplored and out of majors’ sight, consolidating its internal powers to assess the Black Sea’s potential might still spring an implausible surprise. 

  • Yates Throws "Rogue" Comey Under The Bus Over Flynn Investigation
    Yates Throws “Rogue” Comey Under The Bus Over Flynn Investigation

    Tyler Durden

    Wed, 08/05/2020 – 21:20

    Former Deputy Attorney General Sally Yates threw former FBI Director James ‘higher loyalty’ Comey under the bus on Wednesday, telling the Senate Judiciary Committee that the FBI’s January, 2017 interview of former national security adviser Michael Flynn was done without her authorization – and she was upset when she found out about it.

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    “I was upset that Director Comey didn’t coordinate that with us and acted unilaterally,” Yates said.

    We would note that Yates wasn’t too upset to warn the incoming Trump administration about Flynn just 48 hours after the FBI launched a perjury trap against him.

    Committee Chairman Lindsey Graham (R-SC) asked Yates: “Did Comey go rogue?” – to which Yates replied “You could use that term, yes.“

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    Yates said she also took issue with Comey for not telling her that Flynn’s communications with then-Russian Ambassador Sergey Kislyak were being investigated and that she first learned about this from President Barack Obama during an Oval Office meeting. Yates said she was “irritated” with Comey for not telling her about this earlier.

    That meeting, which took place on Jan. 5, 2017, was of great interest to Graham, who wanted to know why Obama knew about Flynn’s conversations before she did. Graham and other Republicans have speculated that Obama wanted Flynn investigated for nefarious purposes. Yates claimed that this was not the case, and explained why Obama was aware of the calls at the time. –Fox News

    Yates testified that Obama wanted to find out why the Kremlin suddenly backed down from threats to retaliate against sanctions over 2016 election meddling, leading to the DOJ’s discovery of the communications between Flynn and the ambassador, Sergei Kislyak.

    “The purpose of this meeting was for the president to find out whether – based on the calls between Ambassador Kislyak and Gen. Flynn – the transition team needed to be careful about what it was sharing with Gen. Flynn,” said Yates – who suggested that the meeting was not about influencing an investigation, which she added would have “set off alarms for me.“

    Logan Act

    Yates was also asked whether former VP Joe Biden brought up the 1799 Logal Act at a January 5 Oval Office meeting about the Flynn investigation, which prohibits American citizens from communicating with foreign governments or officials without authorization “in relation to any disputes or controversies with the United States, or to defeat the measures of the United States.”

    Yates said she couldn’t recall if Biden mentioned it – but had a vague recollection of Comey bringing it up either at the Oval Office meeting or later.

    FISA Fiasco

    Later during testimony, Yates said that she had no idea that the FISA applications to spy on the Trump campaign were riddled with false evidence – and also denied knowledge that her own deputy, Bruce Ohr, had facilitated meetings between the FBI and UK operative Christopher Steele, who assembled the infamous Clinton-funded dossier which was used to support the FISA warrant against former campaign aide Carter Page.

    Yates claimed that if she knew this was the case, she wouldn’t have signed off on the warrant.

    Meanwhile, Sen. Hawley called for a “cleaning of house” at the FBI and DOJ. 

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  • LA Mayor Threatens To Shut Off Water And Power At Homes Hosting Parties: Virus Updates
    LA Mayor Threatens To Shut Off Water And Power At Homes Hosting Parties: Virus Updates

    Tyler Durden

    Wed, 08/05/2020 – 21:18

    Summary:

    • Another US lawmaker tests positive for COVID
    • Texas positivity rate hits 3-week high
    • California suffers second deadliest day
    • NC ‘pauses’ reopening plans
    • US cases climb 1.1%
    • Gilead issues info on remdesivir pricing
    • California new cases, deaths climb
    • France suffers biggest jump in new cases in 2 months
    • California has been “significantly” undercounting numbers for weeks
    • Dr Fauci says people without symptoms are driving infections in US
    • Dr. Fauci says FDA won’t cut corners on approving vaccine
    • NJ Gov says positivity rate is “too high”
    • Florida cases top 500k
    • NYC institutes “check points” for travelers
    • Chicago public schools to reopen online only this fall
    • UK invests $18mil in Scottish vax factory
    • JNJ strikes huge vax deal with White House
    • COVID deaths top 700k
    • US to send DHHS Secretary Alex Azar on historic visit to Taiwan
    • Czech Republic reports biggest jump in new cases since June
    • Poland suffers record deaths
    • WHO sends team of 43 to South Africa
    • Uganda is Africa’s standout COVID success story
    • WHO says first “confirmed” North Korea COVID cases “inconclusive”
    • Queensland, Australia bars travelers from all Eastern states

    * * *

    Update (2115ET): Okay, maybe public officials’ fixation with young partiers as the primary source of new COVID-19 infections is starting to become counter productive.

    As a bevy of states ratchet up fines on anyone found hosting parties or other events where large numbers of people are violating social distancing rules, LA Mayor Eric Garcetti warned during his Tuesday briefing that he would shut off the water and power of any homes suspected of throwing house parties.

    The briefing started off by recognizing what may have been the first teenage death in LA County.

    Here’s more on that from KTLA:

    Los Angeles Mayor Eric Garcetti opened his daily briefing Tuesday recognizing what may have been the first teenage COVID-19 death in L.A. County and went on to announce actions against nonessential businesses that don’t close and a new portal for recruiting medics.

    He reminded young people that the virus can hit them too, urging them to stay at home and practice social distancing.

    “Your behavior can save a life and take a life,” Garcetti said. “And that life could be yours.”

    The mayor addressed President Trump’s remarks from earlier Tuesday about having the nation “opened up and just raring to go by Easter.” Garcetti said he didn’t think L.A. would be back to normal “in that short time.”

    “We won’t extend it one day longer than we need to,” Garcetti said, but emphasized that the “safer at home” measure had to be followed through.

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

    “The peak is not here yet,” he said. “It will be bad.”

    Garcetti emphasized the need for medical workers who can test, treat, heal and tend to coronavirus patients. He announced that together with L.A. County, the city has opened up a portal for medical personnel recruitment, with both paid and pro-bono positions.

    “We need to be prepared for some of the darkness that is ahead,” the mayor said. “Each one of us can be a light. We can light a match of hope. We can navigate that tunnel with each other and not alone. And more importantly, what we do can ensure that more people exit that tunnel together… and that our city will rise again.”

    The mayor went on to announce the “business ambassadors program” — an effort to get nonessential businesses to close.

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

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

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

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

    We look forward to the chorus of apoplectic critics howling about “he can’t do that!”. Yeah…we know.

    * * *

    Update (2100ET): Another member of Congress – Illinois Rep. Rodney Davis, a Republican – has tested positive for COVID, becoming 15th member to do so (7 Dems and now 8 GOP have been sickened).

    Here’s more from WaPo:

    Rep. Rodney Davis (R-Ill.) has tested positive for the coronavirus, becoming the latest lawmaker to be infected by the virus that is dominating Capitol Hill’s legislative agenda.

    Davis announced his positive test on Wednesday evening, saying that he has a higher-than-normal temperature but is otherwise symptom-free.

    “My staff and I take covid-19 very seriously,” Davis said in a statement. “My wife is a nurse and a cancer survivor, which puts her in an at-risk category like so many Americans. My office and I have always followed and will continue to follow CDC guidelines, use social distancing, and wear masks or face coverings when social distancing cannot be maintained.”

    The congressman has been wearing a mask while working on the Hill, a practice that House Speaker Nancy Pelosi (D-Calif.) recently mandated.

    Davis’s district is in central Illinois, beginning southeast of Peoria and stretching down to just north of St. Louis. He said his office will cancel public events while he quarantines at home.

    “During these challenging times, protecting the public health is my highest priority,” Davis said. “If you’re out in public, use social distancing, and when you can’t social distance, please wear a mask. All of us must do our part. That’s what it will take to get through this pandemic.”

    According to a tally by Reuters, at least 14 other members of the House and Senate — seven Democrats and seven Republicans — have tested positive.

    Only a matter of time before his colleagues lambast him for not wearing masks enough.

    * * *

    Update (1750ET): This is not great.

    As President Trump insists that the outbreak in the Sun Belt is finally starting to ‘go away’, Texas just reported its highest positivity rate in weeks.

    The number of deaths reported Wednesday was also alarmingly high.

    Texas’s positive-test rate climbed for a 4th-consecutive day to 15.58%, the highest reading in almost three weeks, according to state health department data.

    The state reported another 8,706 new cases, bringing the Lone Star state’s total to 459,887.

    235 new deaths were reported, bringing the state’s total to 7,497, though thanks to recent changes in the way deaths are counted (which critics allege was intended to obscure a rising rate of fatalities) it’s difficult to tell how many of these are really from the last 24 hours.

    In other news, cases in the US increased by 1.1% to 4.79 million, according to the early reading from JHU and BBG.

    That’s compared with an average of 1.3%. Deaths rose 0.8% to 157,416.

    North Carolina has paused its reopening plan, announcing that it will stay in ‘Phase 2’ for another 5 weeks.

    * * *

    Update (1545ET): Gilead has released its latest pricing info for its drug remdesivir, eliciting accusations of price gouging from angry twitter lefties, one of whom accused the pharma company of being the “Vampire Squid” of Big Pharma (a reference to Goldman Sachs’ nickname).

    * * *

    Update (1405ET): California just reported its latest daily COVID-19 numbers, with both deaths and cases rising at a faster pace than the prior day. The state reported 5,295 new cases, and 202 new deaths, its second-highest reading on deaths since the outbreak started.

    This comes one day after a top California official admitted that a technical problem had caused a lag in California’s tally of coronavirus test results, causing “significant undercounting of virus cases for weeks” and casting doubt on the accuracy of recent data showing improvements in the infection rate and number of positive cases, said Health and Human Services Secretary Dr. Mark Ghaly. He added that, in recent weeks, California has not been receiving a complete accounting of tests and tests conducted due to unresolved issues.

    * * *

    Update (1345ET): Dr. Fauci gives a lot of interviews, but a sit-down interview with Dr. Sanjay Gupta at Harvard’s school of public health (named after Mark Zuckerberg’s wife), is making headlines on Wednesday.

    As more attention is paid to the virus’s means of transmission as schools start to reopen for the fall semester, Dr. Fauci told his interviewer that the issue of aerosol and airborne transmissions definitely require closer study – although we’re fairly certain that the virus spreads via droplets in the air. But to “prove” that the virus transmits via aerosols – ie large droplets that linger in the air after a person coughs or sneezes – requires rigorous scientific standards and a Biosafety Level 3 facility.

    Fauci said that he and the team at the task force are looking closely at aerosol transmission, and he also reminded people to keep windows open when possible.

    Responding to Trump’s insistence that the virus will “go away as all things go away”, Dr. Fauci insisted that the US has been hit as hard as anyone, if not harder. “When you look at the number of infections and the number of deaths, it really is quite, quite concerning.”

    The doctor also complained about a “degree of anti-science feeling in the US” and said he and his family had to hire security due to a flood of “death threats” they have received.

    Finally, Dr. Fauci said the fact that 40% of people are asymptomatic is actually a huge factor in why the virus has proven so difficult to contain. That’s because it has allowed many people – even many who have been infected or know people who have been infected – not to take it seriously. He also insisted the FDA isn’t cutting corners on safety.

    “As long as you have any member of society, any demographic group, who’s not seriously trying to get to the end game of suppressing this, it will continue to smolder and smolder and smolder, and that will be the reason why, in a non-unified way, we’ve plateaued at an unacceptable level,” he said.

    Meanwhile, coronavirus cases ticked higher in France in one of the biggest single-day increases seen in more than two months.

    • CORONAVIRUS – FRANCE SAYS NUMBER OF CONFIRMED CASES UP BY 1,695 OVER 24 HOURS, AT 19, VERSUS +1,039 ON TUESDAY
    • CORONAVIRUS – FRENCH HEALTH MINISTRY SAYS TOTAL DEATH TOLL (HOSPITALS AND NURSING HOMES) RISES TO 30,305 FROM 30,296 ON TUESDAY

    It’s simply the latest sign that European infection numbers are making a comeback.

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    It comes as the Times of London reports on the hard-partying atmosphere as “hordes of youthful French sunseekers” have flocked to vacation hotspots and parties after the strict lockdown was lifted. Videos of packed beach parties in places like St Tropez led one French magazine to quip “here’s how infections are born.”

    Here’s a recap from the Times of London about how party hotspots have been driving the outbreak.

    The supposed irresponsibility of youth was much in the news in France last week as a sharp rise in new cases was blamed in several regions on young people behaving badly. Of 68 new cases reported in Brittany on Wednesday, almost half were among people aged 18 to 25.

    The mayor of the Breton port of Saint-Malo issued a decree on Thursday requiring all visitors to wear masks outdoors as well as indoors — even on the walled city’s windswept ramparts. On the peninsula of Quiberon on the Atlantic coast, access to beaches was restricted after an outbreak of 72 cases, more than half of them in the 18-25 age group. France’s health minister, Olivier Véran, lamented that “young people are paying less attention” as official figures showed a 54% spike in new cases, with the most worrrying rise for those aged 20-30.

    Then, the writer asked.

    So, are French kids somehow managing to have fun without endangering the nation’s health? Is dancing and drinking outdoors safer than it looks on a magazine page? Or will Mediterranean madness soon land France — and European visitors — with more lockdown misery?

    That question has apparently been answered.

    It appears that young people would prefer to live “a short and interesting life” rather than a “long and boring one”, one official says.

    * * *

    Update (1255ET): New Jersey Gov. Phil Murphy has been beating the “impending disaster” drum for a little over a week now as the positivity rate and New Jersey’s “R” – a variable measuring the rate of spread/contraction – have crept higher. And during Wednesday’s press briefing, he complained that the state’s positivity rate is “too high”.

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    New Jersey reported 378 new cases and 8 additional deaths on Wednesday, Murphy said.

    The state’s positivity rate is 2.57%, which is “too high because it’s over 2%,” Murphy said.

    New Jersey has a statewide total of 183,327 cases of COVID-19 and 13,989 deaths from the virus.

    “Let’s keep up what we are doing to keep the virus down,” Murphy said.

    He shared the latest data in a series of tweets as well:

    His remarks come after the state added Rhode Island (but removed Washington DC and Delaware) from its quarantine list.

    * * *

    Update (1110ET): In other big vaccine-related new from Wednesday, the UK agreed to invest $18 million in a Scottish vaccine-manufacturing plant early Wednesday.

    Here’s more on that from The Scotsman:

    The UK Government and the drugs firm are investing in the Livingston plant, with 75 new jobs expected to be created. The Government had struck a deal for early access to Valneva’s “promising” vaccine candidate.

    If clinical trials are successful, the site could provide up to 100 million doses of the vaccine across the UK and internationally.

    Business Secretary Alok Sharma will visit the factory this afternoon to hear about plans to scale-up production.

    Valneva’s vaccine, which is called VLA2001, is one of four potential vaccines which the UK Government has secured rights for.

    Mr Sharma said: “I’m incredibly grateful to our highly-skilled scientists and technicians in Livingston who are supporting the global effort to research, develop and manufacture a safe and effective coronavirus vaccine.

    “The multimillion-pound upfront investment we have agreed with Valneva today means that their vaccine can be manufactured in quantity right here in Scotland.

    “If clinical trials are successful, millions of people in priority groups across the UK will be protected by their life-saving vaccine.”

    Speaking on the BBC’s Good Morning Scotland radio programme ahead of his visit, Mr Sharma said the French company hoped to secure regulatory approval for its vaccine in the second half of next year.

    Meanwhile, Moderna announced Wednesday that it has already booked $400 million in deposits from various governments for quantities of its vaccine, as the world waits to see if the US (via BARDA) will reward Moderna with even more money via vaccine preorders, after already pumping nearly $1 billion into the company for its vaccine (which is reportedly being priced at a premium, despite all the government aid).

    In New York, Andrew Cuomo released the latest data from the city.

    The more interesting news out of the city on Wednesday comes from the New York City Test and Trace Corps, (aka de Blasio’s contact tracing army) which says that 1/5th of all new cases have been linked to travelers coming in from other states, according to Dr. Ted Long, the head of the service. In response, Mayor de Blasio said he will enforce travel “checkpoints” to monitor visitors from the 35 states and territories on the quarantine list. Travelers will need to complete a “travel disclosure form” before passing through these checkpoints back into the city.

    Travelers will need to disclose their information, or face a $2,000 fine. Here’s more from de Blasio:

    “Travelers coming in from those states will be given information about the quarantine, they will be reminded that is required and not optional. They will be reminded that failure to quarantine is a violation of state law and it comes with serious penalties.” de Blasio said.

    The checkpoints will be at major bridge and tunnel crossings, according to New York City Sheriff Joseph Fucito.

    The announcement comes after Mayor de Blasio said that the New York City’s positivity rate has been below 3% since June 10.

    “This is serious stuff and it’s time for everyone realizes it. If we are going to hold at this level at health and safety in this city and get better we have to deal with the fact that the quarantine must be applied consistently” de Blasio added.

    The checkpoints will be set up Wednesday, de Blasio said.

    Chicago Public Schools will start the upcoming school year with fully remote learning for all its students, the district announced Wednwsday during in a press briefing. The decision is expected to stave off a strike from the Chicago teacher’s union. The school district will rely on 100% remote learning through the first quarter, which ends Nov. 9.

    Florida reported 502,739 virus cases on Wednesday, up 1.1% from a day earlier, compared with an average 1.7% increase over the last week, making it the second state (after Cali) to surpass 500,000 cases.

    Deaths among residents reached 7,627, an increase of 225, or 3%, according to the report, which includes data through Tuesday. The rate of people testing positive for the first time was steady at 10.9%, though the state reported a record 621 new hospitalizations, despite trends showing ICU and bed occupancy falling in most areas across the state. Arizona, meanwhile, reported another 1,698 new cases.

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    While ICU occupancy declined to 83%, the lowest level since late June.

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    * * *

    Update (0910ET): JNJ shares are soaring in premarket trading after the company announced that it had struck a deal for 100 million doses of its COVID-19 vaccine candidate, the latest in a string of blockbuster deals for vaccine candidates as governments, including the US, UK, EU and Japan, scramble to stockpile vaccine doses before they’re even approved.

    BARDA, the US agency in charge of these deals, is pledging $1 billion+ for this deal, at roughyl $10/dose, making JNJ’s one of the cheaper vaccine candidates.

    Here’s more on that from Reuters:

    Johnson & Johnson announced Wednesday that it will develop and deliver 100 million doses of its coronavirus vaccine for the U.S. in a deal totaling more than $1 billion.

    The deal gives the U.S. the option to order an additional 200 million doses, the company said.

    “We are scaling up production in the U.S. and worldwide to deliver a SARS-CoV-2 vaccine for emergency use,” said Paul Stoffels, chief science officer at Johnson & Johnson, in a statement.

    * * *

    As new COVID-19 cases continued to slow in the US and Brazil on Tuesday, the number of confirmed deaths worldwide passed the 700,000 mark, while the number of confirmed cases hit, according to data from JHU and Bloomberg.

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    Perhaps the biggest news overnight comes out of the US, where Health and Human Services Secretary Alex Azar said he plans to visit Taiwan to discuss the international response to the pandemic. The trip will happen in the coming days. It will almost certainly lead to a further deterioration in the relationship between the US and China, as Azar’s visit will be the highest-level visit by an American Cabinet official since the break in formal diplomatic relations between Washington and Taipei in 1979.

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    The Czech Republic reported its biggest daily jump in cases since the end of June on Wednesday. The 290 new cases pushed its national total to 17,286, with 383 deaths. Roughly 1/4th of the new cases – 77 – were in the eastern region of Moravia-Silesia, bordering Poland, where many miners and their families have been infected. It comes as Poland reported several consecutive days of record case numbers. Poland, meanwhile, reported 18 new virus-linked deaths, the most in a day since June 30, raising the country’s death toll to 1,756

    North Korea’s suspected first coronavirus patient – a defector who recently snuck back in to the closed off country – has tested inconclusive for the virus, according to the WHO rep who works with North Korea (a reliable, independent, source of information, we’re sure.

    “The person was tested for Covid-19, but test results were inconclusive,” Dr Edwin Salvador, the WHO representative for North Korea, told Reuters on Wednesday.

    As many as 64 first contacts and 3,571 secondary contacts of the suspected case have been identified and quarantined in government facilities for a period of 40 days, Salvador said. Kaesong remains under lockdown and household doctors continue to conduct surveillance in the city, he said.

    Australia has tightened its lockdown in the troubled state of Victoria to resemble the restrictions that forced hundreds of millions of Europeans to remain indoors for months. While it could take weeks for these measures to have some impact, the state is already nearly 4 weeks in to a ‘partial lockdown’ imposed when the latest cluster in Melbourne first emerged.

    The Associated Press described how Australia’s streets “drained of life” this week as the state of Victoria imposed the country’s toughest lockdown yet.

    And despite all of this, Victoria premier Daniel Andrews announced 725 new cases in the state and 15 new deaths, making the last 24 hours the deadliest day yet for the Australian outbreak, and the second-worst day for new cases across the country (it was the worst day for Victoria). Though, to be sure, South Australia processed a record number of COVID-19 tests on Tuesday, and are expected to exceed that again today, as thousands flock to testing.

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    The outbreak in Victoria is creating more paranoia nationally as the state of Queensland on Wednesday announced that it would shut its state border with the rest of Australia’s East Coast, after having already banned travelers from Victoria. Travelers from New South Wales and the Australian Capital Territory won’t be allowed to travel to Queensland starting Aug. 8. This despite the fact that the ACT currently has no active cases.

    NSW also announced that all residents returning from Victoria will need to hotel quarantine for 14 days at their own expense.

    As WHO plays down the outbreak in North Korea, its Africa arm is sending a team of 43 specialists to South Africa, a country that has quietly climbed the coronavirus rankings as Africa’s most industrialized nation is also home to its largest outbreak – or, to put it more accurately, the continent’s largest number of confirmed infections: As of Wednesday morning, the country had 521,318 cases, the fifth-highest number in the world, and more than half of all reported infections in Africa, which is now close to the 1 million milestone. South Africa’s health minister on Wednesday heralded the country’s decreasing infection rate, but warned that the people must stay vigilant to stave off “a renewed surge”. SA has recorded 8,884 COVID-19 deaths, although studies of excess mortality rates indicate the actual toll could be higher.

    Like in India and many other poor countries, the virus spread like wildfire through South Africa’s overcrowded urban slums in Cape Town, Johannesburg and other cities. For weeks, it threatened to overwhelm public hospitals, but Health Minister Zwelini Mkhize told reporters Wednesday that the health care system in the country will be able to cope.

    “Our hospitals have been battered but we have not breached our hospital capacity,” he said. “Our wards are full and our ICU beds are full, but not to complete capacity. And the field hospitals that we constructed still have space.” There have been adequate supplies of oxygen for severely affected patients, he said.

    After reporting the latest updates from South Africa, Reuters on Wednesday published a lengthy story about Uganda, one of the largest countries in Africa, and how its experience with deadly viruses like Ebola and Marburg shaped its handling of coronavirus. Uganda – a nation of 42 million – has recorded just a handful of deaths due to the restrictive and sometimes brutally enforced lockdown imposed by the authoritarian government.

    Despite crumbling public hospitals, doctors’ strikes and corruption scandals, the African nation has largely succeeded in containing the virus: It has recorded just 1,200 cases and five deaths since March. Per Reuters, Uganda’s experience “shows what can be accomplished when a government with a firm grip on power acts quickly and enforces a strict lockdown. But its success came at a cost, critics say.
    Jobs were lost, and economic growth is set to plunge to as low as 0.4% in 2020, from 5.6% last year, according to the World Bank.”

    Meanwhile, Africa’s 54 countries have recorded a total of roughly 975,000 cases and 21,000 deaths from the virus.

    As a result of the lockdown, some pregnant women died in labor, unable to reach hospitals in time due to travel restrictions, while security forcesbeat and arrested some scofflaws who disobeyed the lockdown.

    “A jobless person is better than a dead person,” state minister for health Robinah Nabbanja told Reuters. “The lockdown was completely justified.”

    Not everyone agreed: “I go hungry sometimes and eat only once in a day,” he said. “Coronavirus hasn’t killed us but the hell of going hungry is not that far from death.”

    Moving on to Asia, perhaps the biggest news overnight amounts to a disturbing echo of the initial coronavirus outbreak in Wuhan. Japanese Economy Minister Yasutoshi Nishimura warned on Wednesday that Japan is facing a “second wave”, and that Japanese citizens should exercise caution when traveling for the upcoming Obon Holiday that starts next week. He asked any Japanese with symptoms to please stay home. The holiday – like the Chinese New Year holiday that coincided with the initial phase of the outbreak – typically sees millions of Japanese return to their hometowns to visit family.

  • Millions Worth of PPP Loans Went to Chinese-Owned Companies, Report Finds
    Millions Worth of PPP Loans Went to Chinese-Owned Companies, Report Finds

    Tyler Durden

    Wed, 08/05/2020 – 20:55

    Authored by Cathy He via The Epoch Times

     

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    A man looks at a J-31 gyrfalcon stealth fighter plane model designed by Aviation Industry Corporation of China (AVIC) at the Beijing International Aviation Expo in Beijing on Sept. 17, 2015. (WANG ZHAO/AFP via Getty Images)

    Hundreds of millions of U.S. taxpayer dollars went to Chinese companies from the Paycheck Protection Program (PPP), which was designed to help small businesses survive during the pandemic, according to a new report.

    A review of public PPP loan data by consultancy firm Horizon Advisory found that $192 million to $419 million in loans were given to more than 125 Chinese-owned or -invested companies operating in the United States. Many of the loans were substantial, with at least 32 Chinese-owned firms receiving more than $1 million under the program, totaling between $85 million and $180 million, it found.

    The recipients included Chinese state-owned enterprises, companies that supported Beijing’s military development program, firms identified by the United States as national security threats, and media outlets controlled by the Chinese Communist Party (CCP), the report said. Many were based in critical industries such as aerospace, pharmaceuticals, and semiconductor manufacturing. These are sectors that the CCP has slated for aggressive development to achieve global dominance, with the goal of supplanting competitors in the United States and other countries.

    The report concluded that “without appropriate policy guardrails and monitoring of U.S. tax dollars intended for relief, recovery, and growth of the U.S. economy, there is a significant risk that funds will support foreign strategic rivals, namely China.”

    Many of these Chinese-linked firms could have tapped into other sources of capital from public or private markets to support their American operations, the report said.

    “Their PPP participation saved U.S.-based jobs, but likely at the expense of other U.S. small businesses.”

    Horizon Advisory’s findings come amid rising scrutiny of Chinese companies, particularly tech firms, in the United States. President Donald Trump said on Aug. 3 that he would ban Chinese-owned short video app TikTok on Sept. 15 if it’s not sold to Microsoft or another American company. His administration is also considering barring other Chinese social media apps, citing national security risks. U.S. officials have raised the alarm that these apps could be used to spy on Americans, given that Chinese laws compel all companies to cooperate with security agencies when asked.

    Meanwhile, the Trump administration is also reviewing whether Chinese companies listed on American exchanges should be compelled to abide by U.S. audit laws. The Chinese regime denies U.S. regulators access to audit books of Chinese firms, citing the information as state secrets.

    About $517 billion of PPP loans have been issued since March, when the measure was introduced to help businesses with 500 or fewer workers pay their staff and bills during the economic downturn as a result of the COVID-19 pandemic. The program drew criticism after reports that large companies that could have had access to other forms of credit received loans, prompting the Treasury Department to warn that bigger companies could face penalties if they couldn’t show the loan was essential.

    The report said that loans went to affiliates of three Chinese companies that featured on a Pentagon list of 20 firms that are owned or controlled by the Chinese military. It found that six recipients were affiliated with state-owned companies that supply arms to China’s People’s Liberation Army, including Aviation Industry Corp. of China, China Aerospace Science and Industry, and China North Industries Group Corporation (Norinco Group).

    Chinese-linked biotech companies were also identified, including California-based Dendreon Pharmaceuticals, which received between $5 million to $10 million in PPP loans. Dendreon is owned by Nanjing Xinbai, a Chinese state-invested company that is controlled by a tech conglomerate with close ties to the CCP.

    California-based robotics and AI company CloudMinds Technology Inc. received between $1 million to $2 million in loans. It is a subsidiary of Beijing-based CloudMinds, which was added to the commerce department’s trade blacklist over their ties to the Chinese military back in May.

    Loans also went to a U.S. subsidiary of Hong Kong-based Phoenix TV, a pro-Beijing media outlet. While the company is private, a 2019 report by the Hoover Institution at Stanford University said Phoenix TV is “fully controlled by [the] Chinese government.”

    Congress and the Trump administration are currently negotiating a second stimulus package that is likely to include more funding for PPP. A Senate Republican recently proposed that the stimulus bill disqualify entities affiliated with China from the loan program, though it remains to be seen if this will be included in the final package.

    The Treasury Department did not respond to a request for comment.

    Follow Cathy on Twitter: @CathyHe_ET

  • Massive Beirut Explosion Sinks Nearby Cruise Ship
    Massive Beirut Explosion Sinks Nearby Cruise Ship

    Tyler Durden

    Wed, 08/05/2020 – 20:30

    Tuesday’s massive explosion in Beirut, Lebanon, has so far claimed the lives of 135 people and injured around 5,000. The cause of the explosion was 2,700 tons of ammonium nitrate, sitting unsecured in a warehouse at the Port of Beirut. 

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    Beirut’s governor, Marwan Abboud, said damage from the blast is widespread and extends over half of the city, with the cost of the damage estimated to be more than $3 billion. 

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    For more color on the sheer destruction, Dutch newspaper De Telegraaf cited Lebanese news agency National News Agency (NNA), which reports the blast also sunk a nearby cruise ship.

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    The Orient Queen, owned by Abou Merhi Cruises, measures an overall length of 400 feet long, was sunk by the ammonium nitrate explosion.

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    After the explosion, the vessel was severely left listing to the starboard, with two crew members killed and several injured.

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    The vessel eventually capsized hours later. 

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    Here’s a video of the capsized vessel.

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    A satellite image via Maxar captured the sunken cruise ship. 

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    One can only speculate this wasn’t a normal ‘explosion’.  

  • The Difference Between Good Economics And Bad
    The Difference Between Good Economics And Bad

    Tyler Durden

    Wed, 08/05/2020 – 20:05

    Submitted by Michael Lebowitz and Jack Scott of Real Investment Advice

    The Difference Between Good Economics and Bad

    “Real protection means teaching children to manage risks on their own, not shielding them from every hazard.” ― Wendy Mogel, The Blessing of a Skinned Knee

    In the five weeks from February 19 to March 26, 2020, the S&P 500 fell 33.9%. Because of all the bizarre things we have seen since then, that seems like such a long time ago. Despite serious questions about how quickly the economy will ultimately rebound from the global shutdown, investors are pricing the stock and bond markets for perfection. Many individual stocks sit at new all-time highs, and credit spreads are tighter today than before the COVID-19 outbreak.

    Meanwhile, Treasury yields have fallen to levels well below those seen before the pandemic. Mortgage rates for a 30-year term are below 3.00%. Eerily, equity volatility remains quite elevated suggestive of investor anxiety and illiquidity.

    As investors, we tend to draw conclusions based on market behavior. When Treasury yields fall, for example, it is not unreasonable to think it portends undetected economic weakness. If credit spreads tighten, it is plausible to believe that the cause is strengthening corporate revenue and earnings.

    What if, however, signals are misleading as described above? What if the market’s traffic lights are green and red at the same time? Dare we ask, what happens when good economics become bad.

    The Visible Hand

    Beginning in February, the Federal Reserve (Fed) initiated several policy programs resulting in massive surge of their balance sheet. In just 13 weeks, the Fed provided over $3 trillion of liquidity to financial markets. The Fed’s efforts in 2008 pale in comparison.

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    While such a policy did not forestall a recession, the objective is clearly to mitigate damage in risky asset markets. Actions of this sort are becoming increasingly routine for frightened policymakers. In the name of expedience, they aim to “rescue” financial markets.

    On the other hand, in Congressional testimony (those with whom oversight of the Fed resides) and in media appearances, Fed members apply vacuous counter-factual arguments. “Had we not taken forceful action, things would be much worse,” always goes uncontested by elected officials. Uncontested because wealthy individuals and corporations are their primary source of campaign funds. Re-election odds for incumbents correlate well with market direction.

    Secondary Consequences

    The other issue, the one we write about here, is how that policy response sets the table for other problems. Henry Hazlitt, in his profound book, Economics in One Lesson, describes it this way.

    “…a main factor that spawns new economic fallacies everyday…is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”

    Hazlitt immediately continues-

    “In this lies the whole difference between good economics and bad.”

    The Federal Reserve’s pragmatism is driven by the influence of wealthy men, corporate executives, and political donors. By insisting that every action be taken with no regard for long-term effects makes certain the influencers’ wealth is protected.

    Using the opening quote as an analogy, the Fed has become a notoriously overprotective helicopter parent to the stock market since the financial crisis, shielding it from every hazard. Just as in the case of child-rearing, their actions are responsible for producing an extraordinarily petulant and fragile system.

    Drawing again from Wendy Mogel –

    “If a child is distressed and sees Mom react with panic, he knows he should wail; if she’s compassionate but calm, he tends to recover quickly.”

    This long-term “parental” panic pattern results in a variety of adverse consequences. The worst of them may be the extreme surge in passive investing. As we wrote in a Passive Fingerprints are all over This Crazy Market, the influence of passive investing on the current market is extreme.

    Other Factors

    In 2014 Steve Bregman at Horizon Analytics, enlightened us to what he calls the ETF (exchange-traded fund) divide. His argument highlights the passive, indiscriminate nature of ETF investors. The monumental shift away from discretionary (active) value-oriented strategies was well underway but not yet diagnosed in a way that Bregman astutely observed.

    Since then, the wave of passive investing has become a tsunami. Passive, or index strategies, attract massive capital at the expense of discretionary or active mutual fund managers.

    That re-allocation means two things:

    1. Money is leaving active managers who regularly hold 5% cash on average and is going into passive ETFs which hold less than 0.10% cash
    2. Active managers have historically been the cops on the beat patrolling overvalued stocks and selling them when those conditions are clear. Those cops are being systematically “defunded,” and there is no consideration of “value” in the passive index world.

    Seismic Shift

    Why are these issues so important?

    First, when $3 or 4 trillion dollars move from funds managed with 5% cash  to funds with near-zero cash, $150 to $200 billion of “new money” leads to an explosive upside effect on individual stocks targeted in passive funds.

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    Second, when money is removed from discretionary hands and reallocated to index funds, there is no consideration for price, ever. When a passive S&P 500 or NASDAQ 100 fund receives one dollar to invest, it immediately invests in all of the underlying stocks. It does so at whatever price is available. The top decile, ranked by market cap, perpetually benefits the most as the inflows occur. The bottom decile also benefits via overvaluation, but to a lesser extent.

    Stocks that do not benefit are those not in passive ETF/indexes. Those are stocks that enjoy none of the indiscriminate flows of capital and frequently become undervalued.

    Blame Game

    The Fed is responsible for market inefficiencies in the same way a parent is responsible for the demeanor of an entitled child. If policymakers repeatedly rush to the care of markets anytime difficulties arise, then investors never see problems. Prudence and risk management are put aside and neglected.  The buy-the-dip mentality goes beyond a humorous meme, it becomes a doctrine.

    Over time and with plenty of Fed parenting, passive investors outperform the prudence and diligence of discretionary value managers. When the pattern repeats for a decade, then the chart above of net flows is the result. The concentration of passive investing becomes acute, and its effects on valuations extreme.

    As Bregman pointed out in 2014, a proliferation of the ETF divide had, even then, begun to reveal itself in unhealthy ways. Those circumstances persist. The strong correlation of large S&P 500 components to the S&P 500 is now stark. The table below adds recent data from 2020 to Bregman’s original table.

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    The dramatic rise in correlation means there is less benefit to diversification than historically has been the case. Owning a variety of stocks and being well-diversified makes sense unless the benefits of that strategy no longer exist. Based on current data, diversification using index funds is futile. 

    Summary

    Central bankers are prone to applying a convenient narrative to justify their actions. Their dialogue is usually laced with contempt for those who cast doubt. That is not a sign of confidence; it is a sign of deep insecurity. A sign of confidence would be humility, a characteristic one never sees out of Fed leadership.

    Markets are more fragile today because of a hovering Fed parent, shielding investors from every hazard. The second and third-order effects continue to evolve, but the volatility in the first quarter offered a glimpse of disturbing possibilities.

  • Hezbollah Linked To Stockpiles Of Ammonium Nitrate Uncovered In Europe: Report
    Hezbollah Linked To Stockpiles Of Ammonium Nitrate Uncovered In Europe: Report

    Tyler Durden

    Wed, 08/05/2020 – 19:40

    In the immediate aftermath of the massive explosion that rocked Beirut yesterday, killing over 100 and leaving more than 4,000 injured while leveling an entire district of the city, and leaving destruction up to miles away, both the Israeli government and Hezbollah denied having anything to do with it, or that it was the result of missile attack, sabotage, or bombing.

    The official Lebanese government explanation emerged after the prime minister identified that the blast that produced a shockwave and mushroom cloud that even briefly blocked out the sun, was linked to 2,750 tons of ammonium nitrate which had unsafely sat in storage on the port going back to 2013.

    But now Israeli and Western media sources are taking a fresh look at Hezbollah’s activities related to the chemical compound commonly used in fertilizer, and which it should be noted was the same used in the Oklahoma City bombing on April 19, 1995.

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    Via BBC/Reuters: An ammonium nitrate explosion can release toxic gases, feared in the wake of the Beirut explosion that leveled parts of the city.

    The Jerusalem Post reports Wednesday:

    Hezbollah kept three metric tons of ammonium nitrate, the explosive thought to be behind the mega blast in Beirut this week, in a storehouse in London, until MI5 and the London Metropolitan Police found it in 2015.

    The Lebanese terrorist group also stored hundreds of kilograms of ammonium nitrate in southern Germany, which were uncovered earlier this year.

    While ultimately the report presents no evidence that Hezbollah stores were involved or to blame in Tuesday’s tragic disaster which wiped out the economically vital port area, Israeli media is strongly suggesting there could be a link.

    And the report details further based on UK media sources:

    A source was quoted in The Telegraph saying the ammonium nitrate was to be used for “proper organized terrorism” and could have caused “a lot of damage.”

    MI5 arrested a man in his 40s for allegedly planning terrorist attacks, but did not find evidence that the terrorists were planning an attack in the UK.

    …A foreign government reportedly tipped off MI5 to the explosives stockpile. KAN reported that the Mossad gave the UK the information.

    “MI5 worked independently and closely with international partners to disrupt the threat of malign intent from Iran and its proxies in the UK,” an intelligence source told The Telegraph.

    The investigation that uncovered alleged Hezbollah stockpiles of ammonium nitrate had the involvement of Mossad as well.

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    Via IRNA

    All this suggests of course that the narrative surrounding the precise cause of the blast is anything but settled. In the coming days accusations and counter-accusations will likely continue to grow as old enemies in the region find new suspicions and reasons to accuse.

    Add to all this that President Trump added fodder in terms of suspicions there was terrorism, foul play, or even a state actor at work when he said Tuesday evening that his generals “seem to think it was an attack. It was a bomb of some kind.”

    Given the new UK and Israeli media accusations that Hezbollah has long been seeking and storing highly explosive ammonium nitrate, it will be interesting to see if Pompeo’s State Department runs with any of this. Will the accusations be used to bring Hezbollah in Washington’s cross hairs once again?

    However, we struggle to see what Hezbollah could stand to gain in blowing up its own country, where the Shia paramilitary group even has members represented in parliament, and maintains hospitals in Beirut.

  • Robot Uses Face Scanning AI To Ask People To Wear A Mask
    Robot Uses Face Scanning AI To Ask People To Wear A Mask

    Tyler Durden

    Wed, 08/05/2020 – 19:15

    By Paul Joseph Watson of SummitNews

    With masks now becoming mandatory in many countries inside supermarkets, public buildings and transport systems, SoftBank Robotics Europe has reprogrammed its “cutesy” Pepper android to help enforce the new rules.

    A video demonstration shows the robot scanning people’s faces and then telling individuals not wearing a mask to put one on, while thanking those who are already wearing them.

    “Using an image recognition AI and Single Shot Detector, Pepper can scan the faces of up to five people at once,” reports Engadget.

    “On Pepper’s tablet, a green circle will appear around an image of anyone wearing a mask, and a red circle will appear around the image of anyone without a mask. Pepper can thank people for wearing masks or remind someone to put a face covering on.”

    The company asserts that no personal data is used or stored, although face scanning technology is widely used by both companies and governments in dictatorial states like China to enforce compliance and punish social credit score dissenters.

    The efficacy of masks continues to be hotly debated, with experts in both the Netherlands and Sweden saying they are pointless while others arguing that they may even help spread the disease because wearers touch them often and are more likely to ignore social distancing.

    In a wider context, the mask has become a symbol of compliance while also facilitating many to virtue signal and express righteously indignant and sometimes violent vitriol towards refusniks.

  • Twitter Follows Facebook, Deletes Trump Campaign Post Over COVID-19 "Misinformation"
    Twitter Follows Facebook, Deletes Trump Campaign Post Over COVID-19 “Misinformation”

    Tyler Durden

    Wed, 08/05/2020 – 18:44

    Update (2052ET): Hours after Facebook nuked a clip of President Trump telling “Fox & Friends” that children are “almost immune” to COVID-19, Twitter has followed suit – reportedly locking the Trump campaign account and deleting the offending tweet, according to the Washington Post (which erroneously reported that Twitter had banned Trump’s personal account).

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    Twitter spokesperson Liz Kelley told the Post that the tweet “is in violation of the Twitter Rules on COVID-19 misinformation. The account owner will be required to remove the Tweet before they can Tweet again.”

    As of this report, the tweet appears to have been removed from the @teamtrump timeline. It is unclear if the account can post once again.

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    *  *  *

    Just when Mark Zuckerberg really looked to be making inroads with Trump and his inner circle by resisting a corporate ad boycott on the grounds that it was a misguided attempt to push more conservative voices off the world’s most popular social media platform, Facebook on Wednesday removed a post from the president’s page for containing allegedly “false and misleading” information about the coronavirus.

    The post that was removed contained a snipped from a Fox & Friends morning interview with Trump from earlier Wednesday where the president claimed young children are “almost immune” to the virus.

    “This video includes false claims that a group of people is immune from COVID-19 which is a violation of our policies around harmful COVID misinformation,” a Facebook spokesman said.

    Twitter kicked off the trend of tagging, altering or removing Trump’s social media posts, alleging lies and inaccuracies that have always existed in political communication, but are now, for some reason, considered “harmful” or otherwise wrong.

    Then again, the partisans alleging “harm” here are the same ones who slammed the NYT for “putting black journalists lives in jeopardy” by running an editorial written by a sitting US Senator.

    Trump responded to Twitter’s practice of tagging his tweets with an executive order threatening to remove a liability shield from social media platforms that interfere with the content of users.

    This is the first time Facebook has removed any content posted by the president’s official or campaign account for allegedly violating the social network’s policies.

     

     

     

     

  • Leftists Go After Two Plus Two Equals Four
    Leftists Go After Two Plus Two Equals Four

    Tyler Durden

    Wed, 08/05/2020 – 18:25

    By Andrea Wilburg

    In George Orwell’s dystopian Nineteen Eighty-Four, the concept that two plus two equals four had extraordinary symbolic weight.  The State, as embodied in Big Brother, controlled everything that people could think or say.

    Part of how the rebellious Winston Smith fought back against this totalitarianism was to remind himself that, no matter what the State said, two plus two does, in fact, equal four.  To the all-powerful State, though, Smith’s belief in objective math was a threatening form of insanity.  The State therefore used a mixture of torture and cajoling to force Smith to embrace a State-sanctioned “sanity” that denied reality:

    “You are a slow learner, Winston.”

    “How can I help it? How can I help but see what is in front of my eyes? Two and two are four.”

    “Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.”

    By the novel’s end, with the State’s torture having broken him, Smith readily conceded that, yes, if the State said that two plus two equals five, that would be the correct answer.

    Judging by a comprehensive Twitter thread, we have reached the Orwellian world of Big Brother.  This is a world in which those who represent power for the sake of power are working overtime to convince their fellow Americans to dismiss reality and concede that two plus two does not equal four but, instead, equals five:

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    The left knows, and truly hates, the fact that reality tells Americans some important things:

    • Humans cannot control the enormousness of our climate.
    • Except for a minute subset of people born with damaged DNA, boys are boys and girls are girls.
    • Penalties help deter criminal activity.  Without penalties, crime gets worse, and people engage in vigilante conduct that is worse for criminals than the rule of law.
    • Race is real, but it’s only as a superficial construct (different skin color, different eyes, etc.).  What is infinitely more important is that we are all members of the same human species, and that’s true whether or not one believes we are made in God’s image or reached this point through pure evolution.
    • America has raised up more people around the world from poverty and into liberty than any other country in history.
    • Socialism has failed everywhere it’s been tried.  As a reminder, socialism succeeded in Europe as long as it did only because America funded Europe during the Cold War.  All of you, with your 80-hour work weeks, helped bring Europeans their 35-hour work weeks and mediocre cradle-to-grave “free” medical care.

    If leftists are to convince Americans that socialism has succeeded, they must convince them to deny all those other things that Americans know are true and real.  If boys aren’t boys, if race is the only thing that matters, and if America is evil, then socialists can also make us accept that socialism is a workable system that just “hasn’t been done right before.”

    In 2020, as the election looms, Americans must have a death grip on reality.  Two plus two equals four, no matter how much the critical race theorists (the ones who hold that the only reality is power and what the powerful deem true) claim otherwise.  If we do not hang on to the life raft of reality, socialism offers no life vest and we will all drown.

  • Daily Briefing – August 5, 2020
    Daily Briefing – August 5, 2020


    Tyler Durden

    Wed, 08/05/2020 – 18:25

    Senior editor, Ash Bennington, joins managing editor, Ed Harrison, to discuss some of the latest data coming out, revealing the health of the US economy. They go over the July ADP Nonfarm Payroll number, what the disappointing results say about where the economy stands, and why the pandemic really is something to seriously consider as a market driver. They also talk about the uptick of coronavirus cases globally, the Swedish outcome, and how the world would get closer to a new normal. They wrap up their discussion by exploring bifurcation, the divide between the real economy and the financial economy, and when that reality becomes important to markets as well as the bifurcation between the market winners and losers during the pandemic.

  • Jeff Bezos Just Sold Over $3 Billion In Amazon Stock
    Jeff Bezos Just Sold Over $3 Billion In Amazon Stock

    Tyler Durden

    Wed, 08/05/2020 – 18:12

    In a sale which we are confident will be defended as just “selling for tax purposes” or “considering charitable giving” and certainly not “an admission that Amazon is overpriced”, Jeff Bezos took to the open market this week to dump a million shares of Amazon stock, worth just over $3 billion, company SEC filings revealed on Wednesday.

    Bezos sold the majority of the shares between $3,106 and $3,167, decreasing the number of shares he beneficially owns from 55,488,700 to 54,488,700. The company’s CEO of Amazon Web Services, Andrew R. Jassey, also sold 6,945 shares on August 3, 2020 at a price of $3,183, netting him about $2.2 million.

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    The latest sales comes after Bezos dumped $1.8 billion worth of stock back between January 31 and February 3.

    Bloomberg calculated back in February that in the 15 years after Amazon went public, Bezos sold a fifth of the company for $2 billion. So in February he sold shares equal to roughly one-hundreth of this stake for similar proceeds. Today, he sold about two tenths of a percent of the company for 1.5x times the same proceeds.

    The 54.5 million shares that Bezos still owns are worth about $174 billion. Other recent transaction by Bezos include the sale of $2 billion in 2017 and $2.8 billion in 2019.

    Here is a look at Bezos’ sales prior to today:

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    To account for this week’s sale, just add another $3.1 billion to the 2020 total.

  • 3 Reasons Treasury Rates Can Still Hit 0%: Part II
    3 Reasons Treasury Rates Can Still Hit 0%: Part II

    Tyler Durden

    Wed, 08/05/2020 – 17:40

    By Eric Basmajian of EPB Macro Research

    • Deflation remains a more credible risk, not inflation. The output gap suggests core inflation could sink below 0.5% in the coming years.
    • FX hedged Treasury yields remain higher than yields at home. This will increase foreign appetite for US rates.
    • From a longer-term secular standpoint, economic growth will fall into a new regime, sub 2%, which will weigh on bond yields.
    • Further stimulus from the fiscal side will delay the full extent of the deflationary output gap but will not change the end result in the final analysis.
    • As part of your balanced portfolio, long-term Treasury bonds are still a valuable holding as the path to 0% remains a probable scenario.

    In Part II of this three-part series, we continue to explore three main factors that will continue to push Treasury rates lower, possibly near 0% on the long-end of the curve. 

    In Part I, we covered the inflation vs. deflation debate and argued that deflation was the more immediate risk. First, we covered a variety of the common inflationary arguments and debunked many of the poorly formed hypotheses before highlighting the output gap as the most reliable variable for long-run inflation analysis. 

    Part II will cover FX-hedged Treasury yields and show that US yields are higher than yields at home for Japanese and European investors after considering the currency hedge. Many analysts make the mistake of comparing US yields to Japanese yields without accounting for the currency hedge, which is not an “apples to apples” comparison. 

    Below we’ll cover the current situation regarding FX-hedged US rates and why this is another factor that will help keep a lid on US interest rates or continue to push them closer to the zero-lower-bound “ZLB.”

    FX-Hedged Treasury Rates

    When comparing cross border investments, accounting for fluctuations in the currency cross rate is a critical yet overlooked part of the puzzle. 

    If an investor in Japan wants to consider buying 10-year Japanese government bonds “JGBs” or 10-year US Treasury bonds “USTs,” comparing the yield on each is not sufficient. 

    If a Japanese investor buys JGBs, they take on interest rate risk. If the same Japanese investors cross the border and buy USTs, they now take both US interest rate risk and the risk of currency fluctuation between the US Dollar and the Yen. Therefore, we cannot compare two risks to one risk. 

    The chart below shows the 10-year US Treasury yield (white) and the 10-year JGB yield (yellow). 

    For the last 10-years, UST yields were higher than JGB yields, but this does not mean that “Japanese yields were keeping US rates low” as the common argument flows. 

    US Rates Vs. Japanese Rates (10-Year %):

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    Source: Bloomberg

    To make a direct comparison between one risk factor, interest rates, we must account for the cost of hedging the currency fluctuation between the US Dollar and the Yen. 

    This applies less to individual retail investors looking to invest their savings in various global bonds as compared to institutional investment funds allocating billions of dollars. 

    If we net out the cost of the currency hedge and therefore remove the currency risk of the USD vs. Yen, we can see that the remaining yield on a UST drops from its current ~60bps to ~11bps (red line). The Japanese investor now can consider US interest rate risk and a yield of ~11bps or Japanese interest rate risk for a yield of ~1bps. The currency risk is hedged. 

    The bottom panel in the chart below takes the difference between US yields after the currency hedge and Japanese yields. When the bottom panel is in green, UST yields are higher than JGB yields even after accounting for the currency hedge. A set up in which foreign investors can take no currency risk but gain extra yield with US rates will increase flows into US assets, all else equal. 

    US Rates (Hedged) Vs. Japanese Rates (10-Year %):

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    Source: Bloomberg

    A similar dynamic can be observed below when comparing UST yields to German Bund yields and accounting for the cost of hedging the moves between the USD and the Euro. 

    US Rates (Hedged) Vs. German Rates (10-Year %):

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    Source: Bloomberg

    While the same concepts apply, for the rest of this note, we’ll be analyzing USTs vs. JGBs. 

    A classic currency hedge takes the difference between 3-month LIBOR rates and adds the cross-currency basis.

    The chart below shows USD 3M LIBOR (in pink), JPY 3M LIBOR (in yellow), and the difference between the two rates (in green). 

    When US short-term interest rates were rising, the spread between USD 3M LIBOR and JPY 3M LIBOR was several hundred basis points wide, adding to what was a costly currency hedge. 

    USD 3M Libor vs. JPY 3M LIBOR:

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    Source: Bloomberg

    The chart below shows the JPY-USD basis, the last factor in the standard currency hedge. 

    A “blow-out” in the currency basis in March increased the hedging cost for foreign investors and may have contributed to a sharper sell-off in US Treasury bonds. 

    JPY-USD BS (3M v 3M) 3M:

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    Source: Bloomberg

    The chart below shows the estimated cost of the currency hedge for a Japanese investor in US Treasury bonds. At the end of 2018, when US short-term interest rates peaked and held the widest spread over Japanese short-term rates, the currency hedge was over 300bps. 

    Chris Whalen of The Institutional Risk Analyst recently wrote an article on MMT and negative interest rates. In that article, Whalen quotes Ralph Delguidice of Pavilion Global Markets discussing the interplay between the Treasury General Account “TGA,” the Federal Reserve Balance Sheet, and USD funding markets. 

    Delguidice forecasts: 

    ”The key takeaway here now becomes clear. If a 25% contraction in system-wide reserves was insufficient to raise USD funding costs in any of the money markets used to provide leverage to buyers of US assets, what is the likely impact of a huge reversal in these liquidity flows when the Treasury spends down the account? Funds will flow back into a global USD market still saturated with cheap funding, and carry trades will become that much more attractive to foreign buyers as hedge costs fall and even go negative.”

    Estimated Cost of Currency Hedge JPY-USD (Bps):

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    Source: Bloomberg, EPB Macro Research

    Delguidice is suggesting that the cost of the currency hedge, which has fallen from over 3% to under 50bps, may continue to fall and even move into negative territory. 

    Such a development would entice foreign buyers to push UST rates lower until the hedged rate no longer looked attractive. 

    The chart below shows the difference between unhedged UST rates and JGB rates (in pink) and hedged UST rates vs. JGB rates (in green/red). The effective Federal Funds rate is graphed in blue. 

    Despite the widest spread between unhedged yields (in pink) at the end of 2018, the spread between hedged yields was negative and thus suggested that foreign buyers found US rates unattractive. Federal Reserve custody data of Foreign holdings of USTs corroborated that view. 

    10-Year Yield vs. 10-Year JBG Yield (Nominal & Hedged) & EFFR:

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    Source: Bloomberg

    The following chart shows the spread between the market-implied policy rate two years ahead for the US and Japan. As the bond market becomes increasingly convinced that the Fed will be unable to raise short-term interest rates again, the spread between the US and Japan implied policy rates will converge to zero. 

    US & Japan 2-Year Forward Market Implied Policy Rate (Spread):

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    Source: Bloomberg

    As Delguidice notes, among other factors, this will continue to reduce the hedging cost and allow foreign investors to pick up “free” extra yield with US rates until the market removes the delta between hedged USTs and JGBs. If the hedging cost moves closer to 0%, this implies that UST rates may also compress near JGB yields around the ZLB. 

    Other factors play into UST rates, including future policy expectations and inflation expectations. If the market becomes convinced that US short-term rates are going to be stuck at zero, and the US continues on a path of disinflation outlined in Part I, we should see the belly of the UST curve compress to the ZLB.

    To read more and learn how we translate this research into a low-volatility portfolio, click the link for a two-week free trial of EPB Macro Research on Seeking Alpha.

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