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[Markets] How The Race For A COVID-19 Vaccine Could Go Horribly Wrong For The Market How The Race For A COVID-19 Vaccine Could Go Horribly Wrong For The Market Tyler Durden Tue, 08/04/2020 - 21:05

The research departments at Wall Street investment banks have every incentive to provide clients with a stream of worrisome (but not too worrisome) reports about the future trajectory of the global coronavirus outbreak. After all, too much unpleasant fearmongering, and they might instead go somewhere else, where another broker can tell them exactly what they want to hear. A lot of people are like that

Which is why a research note published by Goldman's top economist Jan Hatzius, who made his bones with a set of bearish calls just before the financial crisis, is so interesting. With public officials in the US, UK, China, Russia and elsewhere promising that a workable vaccine is just around the corner - Dr. Fauci has reassured Congress on multiple occasions that an FDA-approved vaccine by the end of the year is a realistic timeline - the market appears to be pricing in the best-case scenario. Stocks greet every new headline - even headlines that are simple rehashes of previously released early clinical trial data - with a modest rally.

At the very beginning of Hatzius's note, he points out that his 'base case' calls for a COVID-19 vaccine to be widely available throughout the US and Europe by the end of Q22021, or the end of Q32021, at the very latest. There are more than a hundred vaccine candidates in the making, but all the major candidates are targeting the same protein. This means that once a vaccine succeeds, there should be at least a modest surplus - though, to be sure, governments are striking deals for future vaccine supplies left and right.

This base case, in turn, supports Goldman Sachs' 'house view' for "above-consensus" global growth in 2021 (after all, so much of economics is influenced by perception).

But since most of the vaccine candidates are focused on the same approaches and are working off the same assumptions - that is, everything we currently know, or think we know, about SARS-CoV-2 - there is, of course, a risk that some unforeseen obstacle could disrupt this timeline.

And if that happens, things could go south in a hurry.

Or as Hatzius puts it: "the risks around this vaccine baseline...are clearly skewed...toward the downside..."

First, Hatzius starts off the note with a helpful summary of where most of what are seen as the biggest and most credible vaccine projects are at.

Then, Hatzius explains Goldman's research on vaccine approvals. The firm found that the race to discover a vaccine for HIV was perhaps the best comparable example. Since in the beginning, many competitors were working on similar projects. Typically, the more parties are working on vaccine candidates, the more quickly a vaccine is approved by the FDA. But HIV was one interesting example where this wasn't the case. Note: this isn't the only time we've brought up HIV in our writings on COVID-19. 

Since all the big vaccine projects are focusing on one of only a handful of approaches - for example, AstraZeneca/Oxford and Moderna are both focusing on vaccines that rely on messenger RNA (known as mRNA). Others are focusing on antibodies culled from the blood of survivors. Because the number of approaches is so small, the outcomes for these trials are likely highly correlated...

As the left panel of Exhibit 3 shows, a large number of industry sponsored vaccine attempts typically goes hand in hand with many approvals. This historical relationship would suggest an eventual approval of 43 vaccines. Furthermore, six candidates are already in Phase III. The historic approval odds of a given Phase III vaccine targeting the median disease is 79%. However, the history of trials and the fact that all major vaccines currently target the same spike protein also suggest that vaccine approvals are likely correlated, with either many succeeding or all failing, as for HIV.

We tentatively expect FDA approval of at least one vaccine this fall. First, six developers running late-stage trials following solid Phase II results are planning to seek approval in 2020Q4. Second, regulators have ramped up the transparency, flexibility, and speed. The FDA, for instance, has released specific safety and effectiveness standards, works directly with developers, analyzes interim results, and can provide Emergency Use Authorization as soon as studies have demonstrated safety and effectiveness. However, conflicting expert views on the odds of 2020 approval highlight the risk to our baseline timeline (Exhibit 4).

Increasing the risk of an outcome like what we see in the chart below for HIV.

Once a vaccine is discovered, Goldman expects the US, Europe and China will all experience a pronounced economic boost (though Goldman expects the boost to the US to be bigger, since the virus is more widespread).

By that logic, if a vaccine isn't forthcoming in the next year or two, the US is likely also the furthest along the path to herd immunity, if such immunity is even possible for COVID-19. Some studies appear to show some decay in antibody levels, though it's impossible to draw any solid conclusions at this point. Virologists insist that infection definitely confers some level of immunity.

On the other hand, it's also possible that another treatment will lessen the need for vaccines by proving to be a reliable and effective treatment for the disease. Dr. Anthony Fauci is now touting a new class of drugs called manufactured antibodies, as Reuters explained on Tuesday.

These "manufactured" antibodies are grown in bioreactor vats, and essentially replace the antibodies that your body naturally manufactures to fend off infections.

As the world awaits a COVID-19 vaccine, the next big advance in battling the pandemic could come from a class of biotech therapies widely used against cancer and other disorders - antibodies designed specifically to attack this new virus.

Development of monoclonal antibodies to target the virus has been endorsed by leading scientists. Anthony Fauci, the top U.S. infectious diseases expert, called them "almost a sure bet" against COVID-19.

When a virus gets past the body's initial defenses, a more specific response kicks in, triggering production of cells that target the invader.

These include antibodies that recognize and lock onto a virus, preventing the infection from spreading.

Monoclonal antibodies - grown in bioreactor vats - are copies of these naturally-occurring proteins.

Scientists are still working out the exact role of neutralizing antibodies in recovery from COVID-19, but drugmakers are confident that the right antibodies or a combination can alter the course of the disease that has claimed more than 675,000 lives globally.

"Antibodies can block infectivity. That is a fact," Regeneron Pharmaceuticals executive Christos Kyratsous told Reuters.

A timely vaccine will help drive a recovery and limit "scarring effects" on the economy, Hatzius said.

Since the race to find a workable vaccine is so intense, many are worried that a rushed job could produce a vaccine that's ineffective, or worse, harmful. Even if at least one vaccine is approved before the end of the year as Goldman expects (though it admitted it's still relatively uncertain on this) it's possible that we could later find its effectiveness limited. Studies have shown COVID-19 antibodies start to decline after a few months. It's likely that one's antibody count doesn't have much bearing on the body's ability to fend off infection, since the body can always produce more. But it's also possible that this could be a sign of fading immunity to the disease.

"An early approval does not imply full effectiveness or long-run protection," Goldman writes.

And even once a vaccine is approved, there's precedent for the FDA withdrawing its approval - however unlikely that might seem right now.

An early approval does not imply full effectiveness or long-run protection. On effectiveness, the FDA only requires the vaccine to show a difference of 50% between events, such as infection, in the vaccine versus control arms of the study. The effectiveness for the elderly also remains uncertain, with weaker antibody responses to the CanSino vaccine and no elderly testing for most other vaccine trials so far.4 On the length of protection, little reinfection so far and the potential of T-cells to provide long-lasting immunity are encouraging while a recent Nature study found that antibody levels started to decline after 2-3 months.

However, as noted by a recent NY Times Op-Ed by leading Yale immunologists, a waning antibody count does not necessarily indicate waning immunity because memory B cells can produce additional antibodies and lead to long-term immunity. Finally, approval could be overturned subsequently as happened with the yellow fever and rotavirus vaccines that were pulled from the market after rare severe side effects.

Thanks to all the government deals with big pharma, if most of the leading vaccines succeed and achieve their production and purchase targets, the US and the UK will probably have a big surplus, while the EU and Japan - which are currently reportedly in talks with producers - also should have large supplies.

Despite China's promise to dole out vaccines to the developing world, the lack of their own pipeline makes the outlook for the EM universe less certain.

Now, for an equally important question: is the market under-pricing the risk of some delay in the process of finding a vaccine? As Hatzius explained, the 'diversity' of vaccine projects doesn't confer as much security as some might be inclined to expect.

Published:8/4/2020 8:24:25 PM
[Markets] Your Phone Is Spying On You: Companies Are Generating Secret "Surveillance Scores" Based On That Data Your Phone Is Spying On You: Companies Are Generating Secret "Surveillance Scores" Based On That Data Tyler Durden Tue, 08/04/2020 - 20:45

Authored by Michael Snyder via The End of The American Dream blog,

Nothing that you do on your phone is private.  In this day and age, most of us have become extremely dependent on our phones, and most Americans never even realize that these extremely sophisticated little devices are gathering mountains of information on each one of us. 

Your phone knows what you look like, it knows the sound of your voice, it knows where you have been, it knows where you have shopped, it knows your Internet searches and it knows what you like to do in your free time.  In fact, your phone literally knows thousands of things about you, and all of that information is bought and sold every single day without you knowing. 

And as you will see below, there are lots of companies out there that use information collected from our phones to create secret “surveillance scores” that are used for a whole host of alarming purposes.

It is really important to understand that your phone is a surveillance device.  The reason why the advertisements on your phone seem so perfectly tailored for you is because of all the information that your phone has gathered on you previously.

To this day, many people are still amazed when they see an ad pop up for something that they were just talking with a friend about, but that doesn’t happen by accident.  The following comes from Fox News

Perhaps you’ve been talking to a friend about an island vacation, when suddenly deals for the Maldives or Hawaii pop up on your Facebook feed. Or you are talking to your co-worker about yard renovations when advertisements for lawnmowers litter your Twitter, or maybe you were talking about why you stopped drinking and a random sponsored article about the growing trend of “elective sobriety” is suddenly in front of your eyes.

Industry experts insist that our phones are not actively “eavesdropping” on us, but they do admit that our phones are “actually spying on us” in other ways…

“It’s easy to feel like our phone is spying on us. It is actually spying on us, but it is not eavesdropping,” Alex Hamerstone, Government, Risk and Compliance practice lead at information technology security firm, TrustedSec, told Fox News via email. “The reason why we see ads pop up that seem to be correlated to the exact thing we were just talking about is because technology and marketing companies gather extensive amounts of personal and behavioral data on us, but it’s not from eavesdropping — it’s from surfing the web, shopping, posting on social media, and other things people do online.”

Most Americans have come to accept targeted ads as a part of life, but what most people don’t realize is that the information our phones gather is being used for far more intrusive purposes.

“Surveillance scores” are being created, and these “surveillance scores” seem quite similar to the “social credit scores” that China has been compiling since 2014.

In China, if you do good things like paying your taxes or taking a parent to the doctor, your social credit score will go up.

But there are also lots of things that will cause your social credit score to go down…

It aims to punish for transgressions that can include membership in or support for the Falun Gong or Tibetan Buddhism, failure to pay debts, excessive video gaming, criticizing the government, late payments, failing to sweep the sidewalk in front of your store or house, smoking or playing loud music on trains, jaywalking, and other actions deemed illegal or unacceptable by the Chinese government.

And if your social credit score gets too low, the consequences can be quite dramatic

Punishments can be harsh, including bans on leaving the country, using public transportation, checking into hotels, hiring for high-visibility jobs, or acceptance of children to private schools. It can also result in slower internet connections and social stigmatization in the form of registration on a public blacklist.

Here in the United States, private companies are doing something very similar.  Information collected from our phones is being used to create secret “surveillance scores”, and selling those scores has become very big business.  The following comes from the Houston Chronicle

Operating in the shadows of the online marketplace, specialized tech companies you’ve likely never heard of are tapping vast troves of our personal data to generate secret “surveillance scores” – digital mug shots of millions of Americans – that supposedly predict our future behavior. The firms sell their scoring services to major businesses across the U.S. economy.

And just like China’s system, high scores come with rewards and low scores come with punishments.

For example, your scores can determine whether or not someone will rent a property to you, whether or not you will be hired for a job, and even how long you will have to wait for customer service

CoreLogic and TransUnion say that scores they peddle to landlords can predict whether a potential tenant will pay the rent on time, be able to “absorb rent increases,” or break a lease. Large employers use HireVue, a firm that generates an “employability” score about candidates by analyzing “tens of thousands of factors,” including a person’s facial expressions and voice intonations. Other employers use Cornerstone’s score, which considers where a job prospect lives and which web browser they use to judge how successful they will be at a job.

Brand-name retailers purchase “risk scores” from Retail Equation to help make judgments about whether consumers commit fraud when they return goods for refunds. Players in the gig economy use outside firms such as Sift to score consumers’ “overall trustworthiness.” Wireless customers predicted to be less profitable are sometimes forced to endure longer customer service hold times.

To me, all of this is extremely creepy.

Eventually, it may get to a point where you are basically a societal outcast if you are not willing to conform to a particular set of politically-correct standards, values and behaviors.

You may not get thrown in jail the moment you do something “unacceptable”, but your phone will be watching you every step of the way.

Each mistake that you make will be recorded by your phone, and that information will be stored and used against you for the rest of your life.

I know that all of this sounds very strange, but without a doubt we are living in very strange times.

My advice would be to only use your phone when necessary, but of course the vast majority of the population will never listen to such advice.

Most of us have become highly addicted to these marvelous little devices, and in the process we are helping the elite construct a system of surveillance and control that is unlike anything ever seen before in all of human history.

Published:8/4/2020 7:56:34 PM
[Markets] 3 Reasons Treasury Rates Can Still Hit 0%: Part I, Inflation Vs Deflation 3 Reasons Treasury Rates Can Still Hit 0%: Part I, Inflation Vs Deflation Tyler Durden Tue, 08/04/2020 - 20:05

Authored by Eric Basmajian via,

  • Deflation remains the 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.

The inflation vs. deflation debate remains one of the more hotly contested ideas in the marketplace today. The inflation hawks argue precious metals are a one-way street higher while cash is trash, and bonds are worthless. The deflationary crowd continues to play with the multi-decade trend arguing that interest rates are not done falling, and more gains are left with nominal Treasury bonds. 

In this three-part series, I am going to highlight the main reasons behind why I believe that the path to 0% interest rates is more probable than an inflationary rise to higher yields. Three main factors support the conclusion for lower long-term rates, including:

  1. a more credible risk of deflation compared to inflation,

  2. high and positive FX-hedged Treasury yields,

  3. and a continued decline in trend economic growth. 

Each part will cover one of these factors in detail. 

While I reside in the disinflationary camp, I am not one to argue that an inflationary outcome should be disregarded. A blanket denial of the potential for inflation is unwise, but an over-exaggeration of the risks with faulty analysis of historical macroeconomic trends is more dangerous. 

The best path forward for the long-term, prudent investor is to start with a portfolio that is relatively balanced to each risk, inflation, and deflation. Depending on which risk is more probable over the next 12-36 months, tilting the portfolio from a balanced stance to an overweight stance in favor of the more likely outcome allows an investor to capitalize on the developing opportunity while allowing the possibility of the opposing scenario. 

A comprehensive review of macroeconomic trends firmly suggests that deflation or disinflation, not inflation, is a more credible risk. Many of the common inflationary arguments we hear today are repeats of decade-old analysis that came about during the first round of Quantitative Easing “QE” or “money printing,” which proved incorrect in assessing the direction of inflation and bond yields. 

In part I, we’ll review many of the common inflationary theses while arguing that deflation or disinflation is still a more credible threat. 

Having a balanced portfolio with bonds, gold, stocks, and commodities always makes sense, but it is still premature to rid your strategy of disinflationary bets such as Treasury bonds altogether. 

Deflation, Not Inflation, Is The Bigger Risk

Inflation is a highly consensus view among analysts. Typically this takes the form of “deflation now, but inflation later,” acknowledging the severe demand shock caused by the COVID lockdowns across the global economy. The “inflation later” part of the puzzle usually makes reference to Federal Reserve policy actions, including “printing” money and what is now a ubiquitous chart of money supply growth. 

The Federal Reserve cannot “print” spendable dollars but rather purchase assets using reserves. 

The inflation crowd has made frequent use of the following chart of money supply growth, quick to point out the record level. 

Decades ago, with profoundly different circumstances which will be outlined below, significant increases in money supply growth gave reason to be worried about rising inflation. Today, there quite literally exists no correlation between money supply growth and inflation. 

M2 Money Stock, Year over Year:

Source: Federal Reserve, FRED

The Federal Reserve quadrupled the size of its balance sheet over the last ten years before the COVID crisis, and the result was below average inflation and a decline in market-derived inflation expectations. Despite what should be considered a well-established fact now, the same arguments for rising Federal Reserve assets and inflation have reemerged. 

It is incomplete to present an argument regarding money supply growth and inflation without presenting a long-term chart of the velocity of money. To argue that a rise in money supply growth in insolation will cause inflation assumes that the rate at which money changes hands in the economy is stable. 

Velocity, noted below, has collapsed and will decline further in Q2 2020, which negates the inflationary impact of rising money supply growth. 

Velocity will undoubtedly rise in Q3 and possibly Q4 of 2020 as a pent-up demand recovery takes hold, but multi-decade secular trends must be respected and understood. 

It is easy to suggest that the velocity of money will suddenly break the near 30-year trend and start rising, along with a continued increase in money supply growth, but why? Putting money in the hands of consumers to spend on basic necessities such as rent, food, and clothing are not high-velocity uses of capital and will not meaningfully change the long-run trajectory of the ratio.

Velocity Of M2 Money Stock:

Source: Federal Reserve, FRED

High velocity uses of capital stem from productive investment into plant & equipment, products or properties that generate a lasting income stream. 

In order for the growth in money supply to have an increased chance of generating lasting inflation, the velocity of money has to be at least stable. 

Another consideration in the new era of QE is that the relationship between money supply and reserves in the banking system has meaningfully changed. Looking at the growth rate in money supply and jumping to an inflationary conclusion disregards the fact that the reserve multiplier is far from stable, and completely altered.  

The chart below is the reserve multiplier or the ratio of broad money supply to total reserves in the banking system. 

Reserve Multiplier:

Source: Federal Reserve, FRED

Another ratio that is assumed to be stable in the traditional money supply arguments is the relationship between broad money supply and the monetary base controlled by the Federal Reserve. The ratio of M2 money supply to the monetary base or the “money multiplier” is also highly unstable and has steadily declined over the last few decades. 

The money multiplier rose through the 1960s, 1970s, and peaked in the 1980s, a stark contrast to the recent multi-decade decline. 

The money multiplier ratio shows the ability and desire of private sector banks to turn high powered base money into broad spendable dollars. 

Money Multiplier:

Source: Federal Reserve, FRED

Dr. Lacy Hunt, in his Q1 2020 Quarterly Review, wrote about both the money multiplier and the velocity of money.

Two critical equations define the U.S. monetary structure. First, M2 = MB x m where MB stands for the monetary base and m stands for the money multiplier (known as little m). Second, GDP equals M2 multiplied by the velocity of money, or GDP = M2 x V and V is GDP divided by M2. It is important to note that both m and V are complex variables and their operation in determining economic activity is opaque. Our understanding is that the essence of m is that the banks and their customers must reach an agreement that a new loan will be profitable to both. Prior to reducing reserve requirements to zero, swings in currency and time deposits could change m, but that is no longer the case. As long as the required reserve ratio remains zero, total reserves and excess reserves are identical. Swings in Treasury deposits still have a role, albeit minimal. It appears that the key to V is whether a new loan is productive in the sense that it generates an income stream to pay principal and interest. It becomes apparent therefore that the Fed has extremely limited capacity to alter m or V. 

As a result of the weakening economy and high levels of public and private debt, banks are likely to maintain their reluctance in extending high quantities of new loans. Similarly, the capacity for borrowers to demand new loans for productive investment will remain low. 

The relationship between the monetary base and the money supply is unstable and currently in a declining trend. The relationship between money supply growth and inflation measured by either the Consumer Price Index or the Personal Consumption Expenditure Index is highly unclear. 

The chart below shows the relationship between the year over year growth rate in money supply and the year over year change in Core CPI, adjusted for a 12 and 18-month lag. 

Money Supply Growth Vs. Core CPI Inflation Rate:

Source: Federal Reserve, BLS, EPB Macro Research

Economists Stephen G. Cecchetti and Kermit L. Schoenholtz of the Money, Banking, and Financial Markets blog complied a more comprehensive chart of money supply growth and the core PCE inflation rate. They concluded:  

During the early period, when inflation temporarily rose above 10 percent, there was a positive relationship: increases in money growth were associated with higher inflation two years later. For the most recent decade, the period when the Fed’s balance sheet exploded, the two are nearly uncorrelated (see the red dashed line). In other words, at low levels of inflation, inflation appears to be unrelated to money growth. (While we do not show it here, another implication of this chart is that the velocity of money—the ratio of nominal GDP to money—is unstable.)

Money Supply Growth Vs. Core PCE Inflation Rate:

Source: Money, Banking, and Financial Markets

Cecchetti and Schoenholtz went on to note the lack of relationship between the size of the Federal Reserve’s balance sheet and long-term market-derived inflation expectations in a chart I recreated below. 

Fed Balance Sheet Vs. Market Derived Inflation Expectations:

Source: Bloomberg

Using the rate of money supply growth as the base of an inflationary argument has demonstrated poor results over the last ten years due to a multi-decade decline in the velocity of money and an unstable (currently falling) relationship between reserves, broad money and the monetary base (reserve multiplier and the money multiplier.)

While money supply growth is an unreliable determinant of inflation, the economic output gap has demonstrated a sound relationship to core inflation, particularly over the past two decades, when economic volatility dropped to record lows. 

The output gap is a measure of the potential growth in an economy relative to actual growth. When an economy is growing below trend potential, the difference is called the “output gap.”

The output gap is measured by using “potential GDP” and actual or projected GDP.

Potential GDP is published by the Congressional Budget Office “CBO” through a calculation of potential labor force growth and potential productivity growth.

The chart below shows nominal GDP in black, potential GDP in blue, and projected GDP through 2030 in red.

US GDP Vs. Potential GDP (Billions):

Source: Bloomberg, CBO, BEA, EPB Macro Research

The difference between potential GDP and actual or projected GDP is the “output gap,” graphed below. A negative output gap is deflationary because the economy has unutilized capacity, driving down the price of goods and services. Too many workers will drive down wages.

Using the projected estimates from the CBO, the output gap will reach nearly $2.5 trillion and will last through 2030.

The output gap after the 2008 recession lasted for roughly 39 quarters.

Using the projected GDP estimates from the CBO, the deflationary output gap is not only expected to be the largest in modern history but last more than 44 quarters, through 2030.

The chart below shows the output gap as a percentage of GDP.  

US Output Gap (% Of GDP):

Source: Bloomberg, CBO, BEA, EPB Macro Research

Over the past ~20 years, the output gap has demonstrated a strong correlation with core inflation. Typically, it takes about a year for underutilized capacity to flow through to consumer inflation.

The correlation between the output gap and core inflation has increased in recent years as overall economic volatility has compressed due to the increased use of automatic stabilizers such as government transfer payments as well as a general shift away from the more cyclical manufacturing sector.

Economic Volatility:

Source: Bloomberg, BEA, EPB Macro Research

At the trough in growth, the US economy will have an output gap of roughly -11% and a four-quarter average of approximately -7.7%.

Using the output gap for a point estimate of core inflation can be extremely imprecise and highly dependent on the variables in the analysis. Still, directionally the relationship makes a strong case for record low core inflation over the coming years.  

US Output Gap (% Of GDP) (4-Quarter Lag) & Core CPI:

Source: Bloomberg, CBO, BEA, BLS, EPB Macro Research

Using the output gap to determine the inflation bias over the coming 12-36 months is likely to have more success than arguments centered around the growth rate in money supply with variables that are far different than the 1970s, a common inflationary reference point. 

In the 1970s, the output gap was mild and oscillating between positive and negative. Over the last 15 years, the economy has been in a persistently negative output gap and expected to remain there through 2030 based on estimates from the CBO. 

US Output Gap 1960-1980 | US Output Gap 2005 – 2030:

Source: Bloomberg

From 1960-1980, the velocity of money was extremely stable, while the last two decades have shown a downward trend in velocity that hasn’t been experienced since the 1920-1930 period. 

Velocity Of M2 Money Stock:

Source: Federal Reserve, FRED

As noted above and presented again below, the money multiplier was stable and rising from 1960-1980 compared to unstable and falling sharply today. 

Money Multiplier:

Source: Federal Reserve, FRED

Lastly, total non-financial debt in the economy (government, household, and business) as a percentage of GDP was extraordinarily stable and below 140% from 1960-1980 compared to rising and north of 260% today, breaching critical thresholds discussed here

Total Non-Financial Debt To GDP Ratio:

Source: Z.1 Financial Accounts, Bloomberg, EPB Macro Research

High levels of public and private debt hinder economic growth and exert disinflationary pressure on the economy. 

Summary & Part II

Money supply growth is an important variable, but it must be used in context to explain future impacts to price inflation. Over the last decade, using the money supply growth or Federal Reserve balance sheet expansion to forecast inflation has been a losing proposition due to the consistent decline in velocity and the changing relationships highlighted by the reserve multiplier and the money multiplier. 

Commodity prices and other measures can provide a shorter-term indication regarding the direction of inflation, but the outlook over the next 12-36 months is most consistently identified by the output gap and long-term secular forces.  

Most of the arguments for higher inflation fail to consider rapidly changing relationships in the economy that more often than not stem from an extreme condition of overindebtedness. 

As mentioned at the start of this note, disregarding the possibility for inflation is unwise, and holding a portfolio with inflation-sensitive assets is a prudent decision for the conservative investor, particularly while short-term inflation indicators such as commodity prices are trending higher. 

The bias in the economy is still for deflation/disinflation, and holding an overweight investment in Treasury bonds continues to generate strong risk-adjusted returns as well as dampen the volatility of a balanced portfolio by offering a negative correlation to equity prices on average. 

In part II, we’ll take a look at another force that will keep downward pressure on US interest rates; FX-hedged Treasury yields. 

Many investors seek to make simple comparisons between US bond yields and foreign bond yields without adjusting for the cost of hedging the currency risk. This is a critical variable and one that we will tackle in the next part of this series. 

*  *  *

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

Published:8/4/2020 7:24:12 PM
[Markets] White House, Democrats agree to try to reach coronavirus-aid deal by week’s end White House, Democrats agree to try to reach coronavirus-aid deal by week’s end Published:8/4/2020 7:02:14 PM
[Markets] Trump suddenly supports mail-in voting — for the key swing state of Florida After weeks of bashing mail-in voting and even suggesting the 2020 election should be delayed. President Donald Trump has changed his tune — at least when it comes to the critical swing state of Florida. Now he’s for it.
Published:8/4/2020 7:02:14 PM
[Markets] Trump Calls Beirut Explosion "A Terrible Attack - A Bomb Of Some Kind" After Briefed By Generals Trump Calls Beirut Explosion "A Terrible Attack - A Bomb Of Some Kind" After Briefed By Generals Tyler Durden Tue, 08/04/2020 - 19:50

Lebanon's health ministry has raised the death toll to over 73 killed, including 3,700 wounded, after late afternoon a blast centered on Beirut's port unleashed a massive seismic shock and explosion that leveled an entire district of the city and was felt as far away as Cyprus in the Mediterranean. 

Later in the evening Lebanon's Prime Minister announced that the explosions were caused by an estimated 2,750 tons of ammonium nitrate left unsecured for 6 years in a warehouse. This came on the heels of a formal Israeli denial that it had anything to do with it, which also seemed be echoed by Hezbollah officials. 

With the official consensus growing that the massive explosion was horrible accident due to neglect, President Trump's words on the tragedy once again presented that it could be something more. He said early in the evening that after meeting with top military commanders: "They seem to think it was an attack. It was a bomb of some kind."

This after speculation and conspiracy theories were rampant throughout the day. After all it is Lebanon, which has witnessed decades of bombings, war, and covert intrigue, also as it borders Israel, war-torn Syria, as well as a corner of the Golan Heights. And the blast was so overwhelming in its force, destroying homes up to ten miles away, local residents thought they were under nuclear attack, especially given it briefly blocked out the sun and a mushroom cloud hovered over the city.

The president further said that it "looks like a terrible attack" — leaving people to again question whether there's intelligence he's seen that points to an attack or bombing. According to the AFP:

Trump says military experts tell him Beirut blast a 'bomb of some kind'.

His remarks were made during a Tuesday evening address to reporters:

Trump said he had been briefed by “our great generals” and that they “seem to feel” that the explosion was not an accident.

"According to them – they would know better than I would – but they seem to think it was an attack," Trump told reporters at the White House. "It was a bomb of some kind."

This has caused Israeli officials to be vehement in their denials that it could have been the result of Israeli attack, amid recent tensions with Hezbollah along Lebanon's southern border:

Did Trump just reveal classified information? Was he merely speculating like everyone else? 

Are his words based on legitimate intelligence information which contradicts the official story that it was an accident? It remains that he specifically invoked "our great generals" when citing the information. 

It will be interesting to see if the Pentagon issues a follow-up in the wake of the president's unexpected comments.

Meanwhile Beirut has been declared a 'disaster zone' by Lebanon's defense council, with countries around the world pledging emergency aid.

Secretary of State Mike Pompeo has also pledged aid after the "horrible tragedy".

The US Embassy in Lebanon was warned American citizens and residents in the surrounding area of the potential for toxic gases and chemicals in the air.

"There are reports of toxic gases released in the explosion so all in the area should stay indoors and wear masks if available," the embassy said on its website.

Published:8/4/2020 7:02:14 PM
[Markets] 300 ISIS Terrorists At Large: Mass Prison Break In Afghanistan After Hours-Long Firefight 300 ISIS Terrorists At Large: Mass Prison Break In Afghanistan After Hours-Long Firefight Tyler Durden Tue, 08/04/2020 - 19:05

What could be the largest ISIS jailbreak in the terror group's history didn't take place in Iraq or Syria, but just happened inside Afghanistan, where ISIS is attempting to make a come-back at a moment the US-Taliban truce deal is taking shaky effect.

It happened Monday after the Islamic State attacked a large prison complex in the eastern city of Jalalabad in which nearly 40 people were killed, among these 10 ISIS members, but some 300 escaped jihadists still remain a large.

Some international reports listed that as many as 400 terrorists may have escaped.

Afghan security personnel take position on the top of a building where insurgents were hiding, in the city of Jalalabad, east of Kabul, Afghanistan. Image source: AP

It reportedly began by a car bomb attack, after which ISIS gunmen surged into the prison area and ultimately overran the guards. ISIS held the prison throughout much of the day Monday as national defense forces laid siege, leading to a huge firefight. 

According to Reuters, hundreds escaped amid the chaos:

More than 300 prisoners were still at large, Attaullah Khugyani, spokesman for the governor of Nangarhar province, said, said. Of the 1,793 prisoners, more than 1,025 had tried to escape and been recaptured and 430 had remained inside.

“The rest are missing,” he said.

Jalalabad is an area known for heavy ISIS and other jihadist activity. The terror group got a foothold in central Asia years ago at the height of the Islamic State's short-lived territorial caliphate over western Iraq and eastern Syria.

Currently an Eid al-Adha ceasefire is said to be holding between the Taliban and the national government in Kabul, also amid broader talks aimed at securing a long term and final US troops exit.

Though there's been a number of ISIS prison break attempts in Syria of the past years, especially in Kurdish SDF-held territory, there's been nothing on this scale involving hundreds of escaped in a single day.

Afghan security forces are still reportedly hunting down the escapees, but at this point many of likely disappeared into the mountains.

Published:8/4/2020 6:26:09 PM
[Markets] Capitol Report: White House, Democrats agree to try to reach coronavirus-aid deal by week’s end After more than a week of almost daily face-to-face meetings, Trump administration officials and congressional Democratic leaders have agreed to try to reach a deal by the week's end.
Published:8/4/2020 6:26:08 PM
[Markets] Is Disney Stock A Buy, Following The Media Giant's Earnings Surprise? Disney stock is trying to rebound after coronavirus closures took a toll. Here's what fundamental and technical analysis says about buying Disney now. Published:8/4/2020 5:53:25 PM
[Markets] The Newest Demon In The Left's Sights: Woke White Women The Newest Demon In The Left's Sights: Woke White Women Tyler Durden Tue, 08/04/2020 - 18:45

Authored by J.Peder Zane via,

Torch-carrying neo-Nazis in Charlottesville were the face of white supremacy in 2017.

Today it’s “Nice White Parents.”

That’s the title of a new podcast distributed by the New York Times which argues that many black and brown children are not excelling in our public schools because of “what is arguably the most powerful force in our schools: White parents."

Specifically, liberal white parents who espouse enlightened views on race but then refuse to send their children to truly integrated schools - e.g. minority-majority without separate “gifted and talented” tracks - for fear they will be shortchanging their kids. Apart from the complex educational issues at play -- including the inflammatory suggestion that minorities need to be around whites to succeed – the podcast reflects the left’s broader effort to demonize an unlikely group as it seeks to reduce every issue in American life to questions of race: liberal white women.

Trump-supporting conservatives and “patriarchal white males” are still in their crosshairs, but these women, long considered key allies in the cause, have become chief targets.

One example is the prevalence of the “Karen meme,” a social media label applied to white women allegedly exercising their “white privilege.” In some cases – such as the New York City woman who called the police on an African American birdwatcher in Central Park – it describes people who actually engage in racist actions. More often it involves far more ambiguous conflicts and micro-aggressions. But the larger message is clear: Karen resides in the heart of all white women, who have a conscious or unconscious desire to dominate minorities.

New York Times columnist Charles M. Blow wrote in May that he was “enraged by white women weaponizing racial anxiety, using their white femininity to activate systems of white terror against black men.” Last month, Washington Post Global Opinions Editor Karen Attiah tweeted, “White women are lucky that we are just calling them ‘Karen’s.' And not calling for revenge.”

Ironically, it is their sensitivity to racial issues that makes white women easy targets. Many of them are powering the “Great Awokening” – the vast sea change in attitudes in which white liberals have moved farther to the left on a range of social and racial issues than even African Americans.

Some are paying $2,500 to host Race2Dinner meals at which their racial feelings are probed and their complicity in systemic injustice exposed by diversity experts.

Others have helped create a new genre of best-selling novels – what Naomi Schaefer Riley has described as “woke beach reads [that] infuse the best-selling template of white-bread chick lit with the consciousness of social justice warriors” in order “to educate whites about the deep racism that supports their privileged lives.”

Another best-selling book, “White Fragility” by Robin DiAngelo, explicitly singles out this group. As the white author told NPR, “My audience is the average, well-intended white person who sees themselves as open-minded, and yet cannot answer the question: ‘What does it mean to be white?’ I think white progressives can be the most challenging because we tend to be so certain that it isn’t us.”

Why are some women especially receptive and vulnerable to this guilt-tripping? At the risk of overgeneralizing, decades of research finds that women tend to experience guilt more frequently and deeply than men. These feelings may be intensified by social media, which appears to have contributed to growing rates of anxiety and depression, especially among younger women who are more likely to internalize criticism.

All women are not the same – just as all white people are not. But forces on the left have seen an opening they believe they can exploit.

If there is an endgame here besides the accrual of power and control, it is advancing the idea that being a nice person is no longer enough. Now that the vast majority of Americans are non-racists, the push is for everyone to become “anti-racist,” which is a whole different deal. Anti-racists are expected to actively strive each day to dismantle what they say is the systemic injustice that defines America. It means seeing every act as a political act that supports the existing tyranny if it doesn’t purposefully seek to dismantle it.

Racial reconciliation is yesterday’s goal; today’s is reparations, which doesn’t mean just a check from the government but personal sacrifice – of jobs, money and other tangible things. This apparently now includes sending one’s children to demonstrably lousy schools to serve the greater good.

Published:8/4/2020 5:53:25 PM
[Markets] Capitol Report: End of Paycheck Protection Program looms, but concerns are muted on Capitol Hill The Paycheck Protection Program, the initiative that gave forgivable loans to businesses in return for not laying off workers during the pandemic, appears on track to expire at week's end.
Published:8/4/2020 5:29:36 PM
[Markets] Daily Briefing - August 4, 2020 Daily Briefing - August 4, 2020
Tyler Durden Tue, 08/04/2020 - 18:25
Senior editor Ash Bennington is joined by Mike "Mish" Shedlock of to discuss gold and the looming fiscal cliff. Shedlock analyzes the purported "short squeeze" on gold, shining a light on the various players in the future as well as physical markets for gold during its ascendant rally. Bennington and Shedlock then analyze the dysfunction in Washington and gyrating asset markets through the lens of expiring unemployment benefits. Mish's work can be found at
Published:8/4/2020 5:29:36 PM
[Markets] Stock Market Today: Stocks, Stimulus Both Inch Forward A fresh round of COVID-related stimulus remains in limbo, but stocks managed to put up modest gains in Tuesday's session. Published:8/4/2020 4:51:51 PM
[Markets] Disney will release the long-delayed live-action 'Mulan' on Disney+ Disney will release the long-delayed live-action 'Mulan' on Disney+ Published:8/4/2020 4:51:50 PM
[Markets] Border Talks Stall: India Demands Total Withdraw Of PLA Troops As Beijing Urges End Of 'Boycott China' Campaign  Border Talks Stall: India Demands Total Withdraw Of PLA Troops As Beijing Urges End Of 'Boycott China' Campaign  Tyler Durden Tue, 08/04/2020 - 17:05

India-China military talks which have been ongoing (now at 5 rounds) since the deadly June 15 India-China border skirmish which had the highest casualties of any battle between the two along the Line of Actual Control (LAC) in fifty years have reportedly hit a road block this week.

The Indian Army has demanded that Chinese People's Liberation Army (PLA) forces conduct a full and rapid withdrawal from the Line of Actual Control (LAC) border in eastern Ladakh.

Weeks following the border clash which left at least 20 Indian soldiers dead and an unknown number of PLA casualties, the two sides agreed to establishing a one kilometre buffer zone. Subsequent photographs did suggest that PLA camps had been dismantled, but the situation remained stalemated amid negotiations, but also as India took significant steps to cut dependency on Chinese products, including a controversial ban on popular Chinese apps like TikTok, and turned toward imposing devastating economic consequences on Beijing.

The Hindustan Times quoted military sources Monday as citing a “lack of progress in the withdrawal of Chinese forces from several areas of Ladakh” which “required that a new round of negotiations be held with the participation of the 14th Indian Army Corps Commander General Harinder Singh and the commander of the South Xinjiang Military Region General Liu Ling.”

This despite the Chinese side claiming that the disengagement process was completed at most locations.

While the PLA has pushed for a mere return to the status quo, India has demanded Chinese troops depart some places they entered as recently as 2013, such as the Depsang area.

View of the Line of Actual Control (LAC) border and patrol point 14 in the eastern Ladakh sector of Galwan Valley: Source Maxar via Reuters

The statement said further: “Therefore, India insisted during the last meeting on the withdrawal of the Chinese army forces from the high mountain lake Panjung-Tsu as the Chinese military remained in their previous positions, despite the agreements on their withdrawal reached on July 15,” according to the Hindustan Times.

“After the withdrawal of the Chinese forces, India and China can begin to return matters to their previous position in this disputed area, and draw up a protocol on patrolling Indian and Chinese forces,” the military sources continued.

India's media is hailing Modi's "digital airstrike": 

Meanwhile after five rounds of formal talks which have led to an effective cooling, the potential for armed conflict remains, given that according to Indian media, "The Indian Air Force(IAF) has also moved air defense systems as well as a sizable number of its frontline combat jets and attack helicopters to several key air bases."

Both sides have continued flexing throughout the standoff, including China reportedly sending more jets and military hardware to its high-altitude bases along the border. 

China's foreign ministry has said India's move to boycott certain Chinese products has “artificially” damaged historically close economic ties, which does not serve India’s purpose.

Published:8/4/2020 4:22:24 PM
[Markets] Beyond Meat stock falls 7% after plant-based food maker reports bigger loss Beyond Meat stock falls 7% after plant-based food maker reports bigger loss Published:8/4/2020 4:02:19 PM
[Markets] UNT Faculty Targeted For Saying Music Theory Isn't White Supremacist UNT Faculty Targeted For Saying Music Theory Isn't White Supremacist Tyler Durden Tue, 08/04/2020 - 16:46

Authored by Maria Copeland via Campus reform,

The University of North Texas College of Music will investigate a faculty-run academic journal responsible for showcasing critical responses to a claim that music theory is white supremacist.

A group of graduate students in the Division of Music History, Theory, and Ethnomusicology at the UNT College of Music released a statement recently, condemning the Journal of Schenkerian Studies (JSS), a publication run by faculty in the MHTE department.

According to the school’s page on the JSS, the journal focuses on “facets of Schenkerian thought, including theory, analysis, pedagogy, and historical aspects” - essentially, a discrete branch of music theory centered on theories developed by Austrian musician Heinrich Schenker. 

UNT professors Timothy Jackson and Stephen Slottow oversee the JSS. Students are criticizing the journal’s Volume 12 issue of “platforming racist sentiments” because assorted members of UNT faculty published in it their responses to a presentation by music theorist Philip Ewell.

In 2019, Dr. Ewell spoke at the Plenary Session of the Society for Music Theory’s 2019 meeting, exploring what he called “music theory’s white racial frame.”

Following his presentation, several UNT professors wrote responses that took issue with Ewell’s claims regarding Schenker and Schenkerian thought. They brought several arguments against Ewell, including that music theorists should not neglect Schenkerian analysis because of the original theorist’s prejudices, and that Ewell had in fact misrepresented the role of racism in the development of Schenker’s theories. These were published in the 2019 issue of the JSS. 

The MHTE graduate students reacted to the publication with the accusation:

“We condemn the egregious statements written by UNT faculty members within this publication. We stand in solidarity with Dr. Philip Ewell and his goals to address systemic racism in and beyond the field of music theory.”

Their statement also sets forth a list of demands they ask of the College of Music, including requests to the school to dissolve the JSS and hold every person responsible for its publication accountable. Jackson, one of the faculty members who runs the JSS, has received particular condemnation for his role:

“The actions of Dr. Jackson—both past and present—are particularly racist and unacceptable,” the statement reads. 

A group of music theorists has initiated an open letter to the Society for Music Theory (SMT), asking that it support Ewell because he has been singled out for criticism by the UNT faculty. The writers suggest a number of advanced anti-racist actions; heading the list is a request that the president of the society issue a public statement affirming that American music theory is historically rooted in white supremacy, that such white supremacy has resulted in racist policies, and that nonwhite musicians have consequently suffered injustice. 

The letter additionally asks  SMT to demonstrate support for the UNT graduate students in their “call for accountability” and to censor the members of the JSS advisory board. So far, it has gathered numerous signatures from academics across the United States. 

Faculty members at UNT have also expressed approval of the graduate students’ actions.

The UNT College of Music announced Friday that the school has opened a formal investigation of the journal. 

“The University, the College of Music, and the Division of Music History, Theory, and Ethnomusicology reaffirm our dedication to combatting [sic] racism on campus and across all academic disciplines,” the Dean of the College of Music and the Chair of the MHTE division wrote.

“We likewise remain deeply committed to the highest standards of music scholarship, professional ethics, academic freedom, and academic responsibility.”

Published:8/4/2020 4:02:19 PM
[Markets] Bonds & Bullion Bid To New Records As Stocks See-Saw On Stimulus Scares Bonds & Bullion Bid To New Records As Stocks See-Saw On Stimulus Scares Tyler Durden Tue, 08/04/2020 - 16:01

Spot Gold prices settled above $2,000 for the first time in history today...

Source: Bloomberg

After a series of confusing headlines about virus relief talks sparked anxiety (in some) stocks, and sparked a bid in bonds and bullion and selling of the dollar.

  • 1142ET Pelosi: "doesn't think there will be a deal this week."





Algos were crazy on words like "hope" and "nope" pinging markets around like a f**king cannabis/blockchain penny-stock...

Nasdaq underperformed most of the day (but the machines managed to get it green late on) as Small Caps were just panic-bid at every excuse.

And in case you wondered why - which you really shouldn't by now - it was another major short-squeeze day...

Source: Bloomberg

FANG Stocks have been unable to extend after the huge gap higher on last Thursday night's earnings...

Source: Bloomberg

Treasury yields tumbled led by the long-end (30Y -5bps, 2Y -0.5bps)...

Source: Bloomberg

With 10Y Yields back to a 50bps handle - a record closing low...

Source: Bloomberg

In fact, record low closing yields for the entire curve aside from 30Y...

Source: Bloomberg

But stocks still don't care...

Source: Bloomberg

The Dollar mirrored Monday almost perfectly with a buying panic during the European day and selling in the US session...

Source: Bloomberg

Ripple and Ethereum are up on the week with Bitcoin and Litecoin just in the red from Friday...

Source: Bloomberg

Bitcoin continues to hold half its flash-crash loss...

Source: Bloomberg

Gold futures surged and closed above $2,000

Gold is notably overbought but the last few times it has been this overbought there has been consolidation and new high...

Source: Bloomberg

Silver futures hit $26...

Spot Silver is back at its highest since April 2013...

Source: Bloomberg

Silver's outperformance sent the Gold/Silver ratio back to its lowest close since June 2018...

Source: Bloomberg

Oil prices chopped around as algos followed the same stock algos on headlines and ended higher ahead of tonight's API inventory data (also helped by the dollar's demise during the US session)...

Finally, as nominal gold reaches a record high...

Source: Bloomberg

...on an inflation-adjusted basis, it has room to run...

Source: Bloomberg

And if the world's central banks keep doing what they're doing (and does anyone really believe there will ever be a normalization now), then negative-yielding global debt will force allocations increasingly to bullion and bitcoin...

Source: Bloomberg

Published:8/4/2020 3:23:02 PM
[Markets] The pandemic has been a boon for online dating, and Match Group earnings show it The pandemic has been a boon for online dating, and Match Group earnings show it Published:8/4/2020 3:23:02 PM
[Markets] Nikola stock falls 7% after electric-vehicle maker’s wider Q2 loss Nikola Corp. shares fall in the extended session after a wider-than-expected loss in the second quarter.
Published:8/4/2020 3:23:02 PM
[Markets] Kodak shareholders were not the only beneficiaries of the sudden stock surge — holders of convertible bonds also saw tidy gains Eastman Kodak Co.’s share price rally after news of a $765 million government loan to help it make drug ingredients at its U.S. factories has offered shareholders and executives with stock options a tidy windfall. But they’re not alone.
Published:8/4/2020 2:58:41 PM
[Markets] Teens Trash Trump For Destroying TikTok "Safe Space" As 'Influencers' Migrate To Instagram Teens Trash Trump For Destroying TikTok "Safe Space" As 'Influencers' Migrate To Instagram Tyler Durden Tue, 08/04/2020 - 15:55

Across the US, millions of 'Generation Z' believe that evil ol' Donald Trump is about to take away their favorite new toy - TikTok - after a brave cadre of courageous young people took to their keyboards and sabotaged his big campaign comeback event.

For the past few days, gen x influencers purportedly worried about the blowback to the influencer economy from the collapse of TikTok have been whining to reporters at the New York Times and Bloomberg, and those reporters have been publishing the choicest bits with nary an eye to accuracy.

Bloomberg reports that there's been a "mass migration" to Instagram, where the veteran TikTokers have been sharing a funereal procession of their greatest hits from the if a sale to Microsoft would somehow end the freewheeling atmosphere allowed by the Communist Party. One such user described TikTok as "fundamentally an escape for a generation right now in isolation, especially, that needs it."

Late last week, the president said he planned to shut down Facebook's most formidable challenger: Chinese-owned video-sharing app TikTok. That threat sparked a panic among users that their digital clubhouse would soon be taken away or sold to Microsoft Corp. - and sent many popular TikTokers racing to move their creative endeavors to Instagram, the rival mobile app owned by Facebook.  But shifting to Instagram is an unsatisfying solution, said Max Beaumont, who built a following on TikTok documenting his journey of self-improvement with videos about diet and skin care. TikTok has become "fundamentally an escape for a generation right now in isolation, especially, that needs it," he said. "Just because you can have a massive following on something like TikTok doesn't necessarily translate over to YouTube or to Instagram or to some of these others."

Another source, 25-year-old Brooklynnn Shrum, from Nashville, Tennessee, claims the app was a "safe and welcoming place for people in the LGBTQ community" (the implication is, Twitter, Facebook and other US-based social media platforms aren't).

"TikTok gave an entire generation a voice, a platform, and power and that terrifies a lot of people, including President Trump," said Brooklynn Shrum, 25, who downloaded TikTok earlier this year. "If you're banning it because of a cyber security risk is one thing, but if you don't let an American company buy it, that's pure politics."

Shrum lives outside of Nashville, Tennessee, and said TikTok provided a safe and welcoming place for people in the LGBTQ community like herself  "to be themselves, without judgement." It also gave young people a platform for activism, even though some of them can't vote.

Shrum, who goes by @brooklyn322 on TikTok, posted an online tribute to the app last month and directed her followers to Instragram. "Follow me there in case the app goes down," she said. "It's been real."

But the real gems were found in the NYT story, written by ace millennial reporter Taylor Lorenz, a social media star who has amassed a sizable social media following (which apparently qualified her to write about the topic for the NYT).

One of Lorenz's sources, a 21-year-old named "Hootie Hurley", complained that TikTok has helped "put food on the table"...and now mean old President Trump is going to cast them adrift in the middle of an election.

“If TikTok did shut down, it would be like losing a bunch of really close friends I made, losing all the progress and work I did to get a big following,” said Ashleigh Hunniford, 17, who has more than 400,000 followers on the app. “It’s a big part of who I’ve become as a teenager. Losing it would be like losing a little bit of me."

There are also those for whom TikTok is their livelihood. “It has put food on our table,” said Hootie Hurley, 21, who has more than 1.1 million followers on the app. He said that a TikTok ban would be particularly devastating right now.

Even more ridiculous, Lorenz helped peddle a narrative that TikTok was an important source of pro-BLM content, helping to mobilize an army of teenage "activists", and implying that this might be another reason Trump wants it shut down.

In addition to giving young people a place to meet and entertain each other, TikTok has also been a platform for political and social justice issues.

“I think this will drastically affect political commentary among teenagers,” Ms. Hunniford said. “TikTok is an outlet for a lot of protest and activism and people talking about their political beliefs. Banning that would not carry well among people my age."

Lorenz's reporting also suggested that hopping from one platform to another would be nearly impossible. While that's true for some, any TikToker making good money on their following is probably already well diversified across platforms. A whole generation of social media influencers has endured the death of Vine.

Influencers who watched the fall of Vine, another popular short-form video app, in 2016 learned the importance of diversifying one’s audience across platforms. But even for TikTok’s biggest stars, moving an audience from one platform to another is a huge undertaking.

“I have 7 million followers on TikTok, but it doesn’t translate to every platform,” said Nick Austin, 20. “I only have 3 million on Instagram and 500,000 on YouTube. No matter what it’s going to be hard to transfer all the people I have on TikTok.”

So why have both Bloomberg and the NYT so willingly parroted these adolescent narratives about TikTok, lending credibility to the notion that the Trump Administration is targeting the app in retaliation for the Trump's Tulsa rally. As we reported at the time, reports of teens actually using the app to interfere with the event were overblown by a mainstream press willing to boost these ridiculous narratives for the sake of traffic.

To be clear: the notion that the Trump administration is barring TikTok in retaliation for Tulsa is as much of a 'whimsical conspiracy' as anything readers might find on Zero Hedge, if not more.

Published:8/4/2020 2:58:41 PM
[Markets] Florida Man Shoots And Kills Burger King Employee After Order Takes Too Long Florida Man Shoots And Kills Burger King Employee After Order Takes Too Long Tyler Durden Tue, 08/04/2020 - 15:25

Today in "2020 couldn't even surprise us if it tried anymore" news...

A woman in Orange County, Florida was so upset about the time it took for her to get her order at a Burger King, she commissioned a man to return to the restaurant and shoot one of its employees.

Deputies said that when they arrived, they found 22 year old employee Desmond Armond Joshua suffering from a gunshot wound in the parking lot. He was then taken to the area hospital where he was pronounced dead. 

Video recovered from the scene showed Joshua in a physical altercation with a "male who had him in a headlock," according to Click Orlando. One witness said the restaurant was busy the night of the incident and the drive-thru was backed up, causing customers to have to wait longer than usual. 

One woman was so mad about waiting, she got out of her car and threatened to have "her man" return to the restaurant. The Burger King refunded her $40 and asked her to leave. She waited in the parking lot in her black sedan for a few minutes before driving away. Later, she returned in a white truck with 37 year old Kelvis Rodriguez-Tormes, who demanded that Joshua fight him.

A witness intervened in the fight when Rodriguez-Tormes put Joshua in a headlock and started to choke him. 

Deputies then said Rodriguez-Tormes then went to his truck and got his gun, telling Joshua: "You got two seconds before I shoot you."

Shortly thereafter, he shot Joshua and fled in the white truck. In an interview with police after the shooting, Rodriguez-Tormes said he dismantled the gun and placed it "in a location which cannot be located".

Rodriguez-Tormes is now being charged with first-degree murder with a firearm, destruction of evidence and possession of firearm by a convicted felon. The woman has not been arrested.

Authorities said Joshua had just started working at the Burger King, days earlier. 

Burger King commented: “We are deeply saddened to hear of the tragic incident that took place at the Burger King on 7643 E. Colonial Drive and passing of team member Desmond Joshua. At Burger King, the safety of team members and guests is our top priority. The franchisee who owns and operates the restaurant is fully cooperating with authorities on this matter. Any questions should be directed to local authorities.”

Published:8/4/2020 2:31:49 PM
[Markets] Gold ends above $2,000 an ounce for the first time in history Gold ends above $2,000 an ounce for the first time in history Published:8/4/2020 1:53:01 PM
[Markets] "V For Vendetta" - Was V's 2005 "Sermon" Warning Us Of COVID-19(84) Tyranny? "V For Vendetta" - Was V's 2005 "Sermon" Warning Us Of COVID-19(84) Tyranny? Tyler Durden Tue, 08/04/2020 - 14:40

Authored by John Manley via,

The movie V for Vendetta  is set in an alternative reality where neo-fascist totalitarian regime has subjugated the United Kingdom under the guise of protecting the people from war, terror and disease. Yes, disease. Indeed, the following clip from this 15-year-old dystopian film looks awfully like the world we now live in today, does it not?

At the film’s catalyst, a freedom fighter (codenamed “V”) hijacks the feed for a major TV network in London and broadcasts a “sermon” to the nation wearing a Guy Fawkes mask. See how his words apply to the governments’ reaction to COVID-19:

“And the truth is, there is something terribly wrong with this country, isn’t there? Cruelty and injustice, intolerance and oppression,” says V as his masked face appears across television sets around the nation.

“And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission.

“How did this happen? Who’s to blame? Well, certainly, there are those who are more responsible than others, and they will be held accountable. But again, truth be told, if you’re looking for the guilty, you need only look into a mirror.”

“I know why you did it. I know you were afraid. Who wouldn’t be? War, terror, disease.”

Starting around 1:00:

Are we not seeing this today? Where several billion people have been scared into voluntarily handing over their freedoms so that they can be kept safe from a virus.

There were a myriad of problems which conspired to corrupt your reason and rob you of your common sense. Fear got the best of you, and in your panic you turned to the now high chancellor, Adam Sutler. He promised you order, he promised you peace, and all he demanded in return was your silent, obedient consent. “

I pray this not be a sermon we will deserve to hear in the years to come.

Please listen to Hugo Weaving’s incredible recital of this speech and heed its words while it’s still relatively easy to do so.

Already they have “conspired to corrupt your reason and rob you of your common sense.”

Let us remember that being “silent” is the same as giving our “obedient consent” to such totalitarian trickery.

As V says:

“Because while the truncheon may be used in lieu of conversation, words will always retain their power. Words offer the means to meaning, and for those who will listen, the enunciation of truth.”

Published:8/4/2020 1:53:01 PM
[Markets] Dow Jones Rises as Disney Earnings Loom, Home Depot Expands Distribution Network Disney's numbers are going to be rough this afternoon, and Home Depot is building three new distribution centers to handle increased demand. Published:8/4/2020 1:53:01 PM
[Markets] The Tell: Why this investment could be ‘one of the dominant assets’ of the decade Will Rogers once said “Don’t wait to buy real estate. Buy real estate and wait.” If you follow that Hollywood legend’s advice in the current climate, you could be in store for a nice windfall over the next 10 years, according to Ben Carlson.
Published:8/4/2020 1:22:41 PM
[Markets] Democrats Up Stimulus Demand To $3.4 Trillion In Odd Negotiating Tactic Democrats Up Stimulus Demand To $3.4 Trillion In Odd Negotiating Tactic Tyler Durden Tue, 08/04/2020 - 14:15

House Speaker Nancy Pelosi just revealed that Congressional Democrats not only won't budge on their $3 trillion stimulus package passed by the House in May - she's upped the demand to $3.4 trillion in order to 'settle' on a deal.

Asked by CNN's Manu Raju if she still wants a stimulus deal this week, and if she has a price tag she'd be willing to settle on, Pelosi replied "Yeah, $3.4 trillion."

White House Press Secretary Kayleigh McEnany described Pelosi's new demand as 'a mockery' of the process.

Meanwhile, Senate Majority Leader Mitch McConnell (R-KY) - who has called the $3 trillion Democratic proposal "another big laundry list" - has flat out rejected the left's package, and has instead defended the Senate GOP's $1 trillion stimulus bill.

The top Democratic and White House negotiators have held hours of talks this week in hopes of reaching a deal on another round of stimulus spending as key deadlines on extending a federal eviction moratorium and federal unemployment benefits have come and gone.

Pelosi, when asked if it's really feasible to get a deal this week given how far apart the two sides are, said, "At some point you just have to freeze the design." -CNN

The Speaker said she hopes lawmakers can reach a bipartisan agreement this week in order to hold a vote in the House by next week - which will require a Rules Committee meeting to determine the parameters for debate over the bill on the House floor.

"We are just right now identifying the justification for what we're saying it costs -- how the money would be spent," said Pelosi. "And we're asking the same for some of the things they are talking about, so that we have a clear understanding. So it's productive in that regard. And now we just have to negotiate what comes next."

Published:8/4/2020 1:22:41 PM
[Markets] Raytheon Announces Deal To Make Israel's Iron Dome Defense System In US Raytheon Announces Deal To Make Israel's Iron Dome Defense System In US Tyler Durden Tue, 08/04/2020 - 13:45

Authored by Jason Ditz via,

Major US armsmaker Raytheon Technologies has announced a joint venture with Israel’s Rafael to make Israel’s Iron Dome missile defense system inside the United States, with an eye toward sending it to “allies across the globe.”

Raytheon emphasized how successful Israel says Iron Dome is, citing a 90% success rate. That’s used to intercept the makeshift Palestinian rockets, and it is broadly untested with respect to proper missiles or other weapons.

“This will be the first Iron Dome all-up-round facility outside of Israel, and it will help the U.S. Department of Defense and allies across the globe obtain the system for defense of their service members and critical infrastructure,” vice president of Raytheon Missiles & Defense’s land warfare and air defense Sam Deneke said.

Iron Dome system file image, via DefPost

According to Defense News:

The U.S. Army has chosen Iron Dome as an interim capability to counter cruise missiles while it continues to develop a future Indirect Fires Protection Capability, or IFPC, to counter those threats as well as enemy drones, rockets, artillery and mortars. Congress mandated the service buy two batteries to cover urgent cruise missile defense gaps, and another set of two if the Army didn’t come up with a way forward for its enduring IFPC.

MIT has done studies on Iron Dome as an interceptor missile, concluding that the success rate is a “deception” and that it is a system which “hardly works,” and almost certainly would have a success rate less than 10 percent.

Collection of archived clips of Iron Dome in action over Israel:

Historically this was important because US aid is used to pay for the Israeli system. If the system doesn’t work, however, it’s likely something other potential customers may want to be aware of.

Published:8/4/2020 12:51:17 PM
[Markets] Key Words: Four ex-FDA commissioners urge U.S. to step up efforts to collect blood plasma for clinical trials as COVID-19 treatment A group of four former U.S. Food and Drug Administration commissioners is arguing for the U.S. to step up efforts to collect blood plasma from patients who have recovered from the coronavirus illness COVID-19 and to push ahead with clinical trials.
Published:8/4/2020 12:51:17 PM
[Markets] Antitrust questions bruise but don’t break Big Tech CEOs in historic hearing It was a bruising day tech’s biggest names on Capitol Hill.
Published:8/4/2020 12:24:42 PM
[Markets] Apple denies report it's set to bid against Microsoft on TikTok takeover Apple denies report it's set to bid against Microsoft on TikTok takeover Published:8/4/2020 11:52:54 AM
[Markets] China Steps Up Massive 'Combat Readiness' Aerial Drills Over South China Sea China Steps Up Massive 'Combat Readiness' Aerial Drills Over South China Sea Tyler Durden Tue, 08/04/2020 - 12:49

China has conducted massive aerial drills over the South China Sea at a moment of all-time high tensions with the United States. 

Described as air combat readiness exercises, regional media details that three of China's five main military regions are active as part of the drills. It comes on the heels of even larger exercises off the Leizhou Peninsula in southern China which wrapped up days ago.

“Our aim is not to push the limit or break a record. All our exercises are aimed at [preparing for] actual combat,” a state media video said of the drills, which lasted over ten hours.

Illustrative file image, via Chinese Ministry of National Defense

The aircraft made use of some of its man-made islands which have been at center of controversy with regional allies of the US, given the artificial land masses have been used to expand China's maritime claims over the whole area.

South China Sea detailed of the new drills that "the Southern Theatre Command sent various aircraft, including an Su-30 fighter and an aerial refuelling tanker, to Subi Reef, a South China Sea atoll that China expanded into an artificial island."

During the exercise, one foreign aircraft was said to be chased away from the area, but it's unclear whether it was military or what nation it belonged to.

Subi Reef is in the Spratly Islands — lately an area where tensions run high, also given the significant uptick in US overhead military overflights of the past months, and especially the fact that Vietnam is locked in a territorial dispute with Beijing over the island chain.

Meanwhile, the Pentagon has plans for its own future drills in the contested South China Sea; however, some allies like the Philippines have said of late that they don't plan to participate for fear of sparking inadvertent military conflict. 

Published:8/4/2020 11:52:54 AM
[Markets] Deep Dive: These fast-growing companies that track key consumer trends have produced a nearly 50% gain for one fund in 2020 The Sparrow Growth Fund is designed to shift quickly to wherever the most growth is taking place.
Published:8/4/2020 11:52:54 AM
[Markets] Massive explosion shakes Beirut port area Massive explosion shakes Beirut port area Published:8/4/2020 11:28:03 AM
[Markets] The Ratings Game: How acquiring TikTok could hurt Microsoft Microsoft Corp. has a chance to scoop up the hottest craze in social media at a potentially attractive price, but analysts think a TikTok deal threatens the simple yet successful story that has pushed Microsoft’s valuation past $1.6 trillion.
Published:8/4/2020 11:28:03 AM
[Markets] Gold Soars To Record Highs, Stocks Erase Gains After Pelosi Warns 'No Deal This Week' Gold Soars To Record Highs, Stocks Erase Gains After Pelosi Warns 'No Deal This Week' Tyler Durden Tue, 08/04/2020 - 12:17

While The Dow is holding gains thanks to the insane dominance of AAPL; Nasdaq, Russell 2000, and the S&P are all tumbling into the red on the day after House Speaker Nancy Pelosi said she "doesn't think there will be a deal this week."

Treasury yields are tumbling to fresh record closing lows...

And Gold is soaring to new record highs... Spot gold tops $2,000 for the first time...

What does gold see coming? A Democrat-driven $3 trillion stimulus that breaks the world's confidence in any fiscal restrainst behind the world's reserve currency?

Published:8/4/2020 11:28:03 AM
[Markets] Illinois Rep Wants To Abolish History Classes As Racist Illinois Rep Wants To Abolish History Classes As Racist Tyler Durden Tue, 08/04/2020 - 11:30

Authored by Mike Shedlock via MishTalk,

State Rep. LaShawn K. Ford said current history teachings overlook the contributions of women and minorities.

His solution is to Abolish History Classes until an adequate remedy is in place.

Leaders in education, politics and other areas gathered in suburban Evanston Sunday to ask that the Illinois State Board of Education change the history curriculum at schools statewide, and temporarily halt instruction until an alternative is decided upon.

At a news conference, State Rep. LaShawn K. Ford said current history teachings lead to a racist society and overlook the contributions of women and minorities.

Before the event Sunday, Rep. Ford's office distributed a news release "Rep. Ford Today in Evanston to Call for the Abolishment of History Classes in Illinois Schools," in which Ford asked the ISBOE and school districts to immediately remove history curriculum and books that 'unfairly communicate' history "until a suitable alternative is developed."

Calls for Censorship

Who gets to decide which history books are unfair? 

And what about statues?

Logical Solution

I came up with the logical solution to this problem on July 24.

Let's just ban statues and be done with it. Books too. I am sure every book ever printed offends someone. Does the word Pizza offend anyone? If so, we need to ban pizzas.

I am really tired of all this nonsense.

Suitable Alternative Needed

We need a suitable alternative to state reps. 

How about an outright ban on these overpaid, underworked bureaucrats who are the primary reason people leave Illinois.

It Takes 3 Weeks to Escape Illinois

We escaped Illinois and if you live here you should consider doing the same. We chose Utah.

Bear in mind that It Takes 3 Weeks to Escape Illinois.


All the U-Hauls are leaving. It takes three weeks to reserve a one-way out of the state. 

"Everyone is leaving. No one is coming," a U-Haul agent told us when we reserved a truck.

Why Utah?

I discussed Utah in my October 5, 2019 post Escape Illinois: Get The Hell Out Now, We Are

Published:8/4/2020 10:50:19 AM
[Markets] Census Bureau set to close 2020 data-collection window a month early Census Bureau set to close 2020 data-collection window a month early Published:8/4/2020 10:50:19 AM
[Markets] Encore: Department of Labor comes down hard on social investing Proposed rule says that private pension plans cannot sacrifice return for other considerations
Published:8/4/2020 10:50:19 AM
[Markets] WHO Conducted "Extensive Interviews" With Wuhan Scientists Amid Efforts To Prove Virus Didn't Escape Lab WHO Conducted "Extensive Interviews" With Wuhan Scientists Amid Efforts To Prove Virus Didn't Escape Lab Tyler Durden Tue, 08/04/2020 - 11:15

The World Health Organization - which praised China's early efforts at 'containing' COVID-19, parroted CCP propaganda about transmissibility, and refused to declare a pandemic until March 11 (allegedly at the request of Chinese President Xi Jinping) - has conducted "extensive discussions" with scientists in Wuhan to piece together the 'natural' origin of the outbreak, according to Reuters.

WHO Director-General Tedros Adhanom Ghebreyesus shakes hands with Chinese President Xi Jinping

The 'fact finding mission' included talks on animal health research, according to a WHO spokesman.

"The team had extensive discussions with Chinese counterparts and received updates on epidemiological studies, biologic and genetic analysis and animal health research," said the WHO's Christian Lindmeir, who added that the investigation included video discussions with Wuhan virologists and scientists.

The three-week advance mission comprising two specialists in animal health and epidemiology was tasked with laying the groundwork for a broader team of Chinese and international experts that will seek to discover how the virus that causes COVID-19 jumped the species barrier from animals to humans. -Reuters

The WHO's official position is that COVID-19 crossed over from bats to humans through an unknown intermediary animal - and has ruled out the possibility that the Wuhan-based virus escaped the Wuhan Institute of Virology, whose lead bat scientist Shi Zhengli sparked an international ethics debate in 2015 over the genetic modifyication of bat coronaviruses for human transmissibility.

In mid-April, the Washington Post reported that the US State Department received two cables from US Embassy officials in 2018 warning of inadequate safety at Wuhan Institute of Virology, which was conducting 'risky studies' on bat coronaviruses, according to the report - which noted that the cables "fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus."

And so, the WHO' three-week 'advance mission' led by two specialists in animal health and epidemiology, have been "tasked with laying the groundwork for a broader team of Chinese and international experts that will seek to discover how the virus that causes COVID-19 jumped the species barrier from animals to humans," according to the report.

Notably - US experts have been excluded from the WHO mission, while the organization's chief of emergencies, Mike Ryan, offered a hint as to the direction this 'natural origin' hunt is going - saying in a statement "The fact that that fire alarm was triggered (in Wuhan) doesn’t necessarily mean that that is where the disease crossed from animals to human."

We wonder if the WHO asked why Beijing ordered labs across China to destroy coronavirus samples in early January?

Published:8/4/2020 10:22:41 AM
[Markets] Coronavirus update: U.S. case tally at 4.72 million and New Jersey, Massachusetts and Connecticut see infections climb again The U.S. case tally for the coronavirus illness COVID-19 rose by fewer than 50,000 on Monday for a second straight day, data aggregated by Johns Hopkins University showed, although cases were rising in some states that had seemed to get the spread under control earlier this year.
Published:8/4/2020 10:22:41 AM
[Markets] U.S. factory orders climbed more than 6% in June U.S. factory orders climbed more than 6% in June Published:8/4/2020 10:02:07 AM
[Markets] King Dollar? Rabobank Warns "Staying On Thrones Means A Battle At Some Point" King Dollar? Rabobank Warns "Staying On Thrones Means A Battle At Some Point" Tyler Durden Tue, 08/04/2020 - 11:00

Authored by Michael Every via Rabobank,

“The King is dead. Long live the King!”

TikTok now has 44 days (and counting) to arrange a sale to Microsoft or be banned, which is legally known as “forced divestment”, I believe, and will naturally never be considered by China as a form of retaliation against US firms based there. At least that’s what the US firms still based there are no doubt telling themselves as they continue to say “This is fine” over and over despite all manner of worrying developments in the Chinese economy and US-China relations. Muddying the waters, the White House now wants a slice of the action for rewarding Microsoft with such a juicy deal – because when one thinks of cool kids sharing 15-second ADHD-driven mini-videos that make adults groan, one does not traditionally think of traditional firms like Microsoft. Moreover, China hawk Navarro is attacking Microsoft for being in China at all, albeit critics point out often in the form of pirated software. He’s suggesting Microsoft should divest their China business. Which is at least symmetrical. It’s also deep decoupling.

In short, you thought China was the new tech king? Perhaps it is, yet the old US king --who comes across to some like the one in the 1977 film ‘Jabberwocky’ (“King Bruno the Questionable”)-- has just shown it can still take off more than a few heads too with just a wave of a hand.

Meanwhile, with US 10-year yields up only a few basis points from their year-to-date closing low, it’s worth wondering if one of the ‘kings’ of recent trades, long bond duration, is really over or not. The US tech titans who testified to Congress last week tried to portray the US as vibrant. Well, it is for them. Facebook CEO Zuckerberg in particular stressed that there is a rapid turnover among the largest US firms, like his, which proves that innovation and dynamism and competition are still there. Well, imagine a medieval peasant. He doesn’t have the best of times of it under his king. However, once every ten years or so, a new knight rides in, kills the king and takes the throne. As the peasant shovels old muck for the new king, I am sure the first thing he says to himself is “What a vibrant, dynamic, meritocratic economy we have!” It’s a structural economic problem – and we are being offered neither a structural solution nor an adequate cyclical response. There is still no white smoke on stimulus from Congress, for example.

Less muck, more brass. Do we have a dynamic recovery from the virus we can point to? No. Yes, PMIs are over 50. No, that does not mean anything at the moment, as this measures month-to-month changes in sentiment, which is obviously up, but which is still massively down year-on-year on almost any measure. Yes, you can give people 50% of the price of a burger to eat one, and they will go and do so, as the UK government now shows is the case; but, no, ask them to pay full-price to risk illness to do so and the restaurants and cafes will likely be too empty again. That’s a pretty deflationary backdrop if you ask me. At least one king is not dead.

And neither is another – the USD. King Dollar, who has seen so much talk of dethroning of late, has had a good few days, even if it is leaning on its sword breathing heavily right now. EUR/USD is currently at 1.1770 when it was over 1.19 last week; and against a wobbly EM benchmark like ZAR it is at 17.19 when it was at 16.70 last Friday. The USD is almost certainly oversold and, as our own Piotr Matys points out, at a critical technical support level. We shall see if he can keep his throne or not.

However, this is not just about lines on charts. It’s about lines on maps. Staying on thrones usually involves battle of some kind at some point.

Kings should get that: it used to be called statecraft and grand strategy: one to stay in power over internal rivals, and one to and ensure one’s power was not challenged externally either. Economics was always a subset of that world view, not the world view itself. Those not solely focused on Bloomberg or on selling cars or cheese should look at the geostrategic game playing out between the US and China from Hong Kong to the South China Sea to the East China Sea to the Indian border to Iran to Syria to Lebanon to Djibouti, and realise that this is deadly serious. Perhaps deadly weapons can be avoided, although this is the old king’s comparative advantage over the new one. However, to avoid doing so is surely still going to require usage of the “US Dollar weapon” via sanctions and access to the US we already see in the case of TikTok.

In short, there is more of this to come. Much more. So tick-tock more like. Which suggests long USD and long duration is still a king of trades.

Australia’s in-no-way regal RBA have underlined this with news that their bond buying will begin again tomorrow to ensure that the Aussie 3-year yield stays where they want it at 0.25%. A pity they can’t keep the virus where they (don’t) want it; or jobs where they want them, or house prices, or retail sales (-3.4% q/q in Q2 excluding inflation); or US-China relations; although they will be happy that exports were still up 3% y/y in June, while imports were up 1%.

Oh, and Spain’s former king Juan Carlos has just had to flee the country to avoid becoming embroiled in a corruption scandal.

Published:8/4/2020 10:02:07 AM
[Markets] U.S. stock benchmarks reverse early declines to post narrow gains U.S. stock benchmarks reverse early declines to post narrow gains Published:8/4/2020 9:22:23 AM
[Markets] "Disconnects" Everywhere... "Disconnects" Everywhere... Tyler Durden Tue, 08/04/2020 - 10:15

Authored by Richard Breslow via Bloomberg,

For years the disconnect between financial market performance and what’s happening in the “real” world has been a much discussed topic. At first we were confused by it. Then amazed. Periodically incensed. And then we came to just accept it as the way the system is set up and things are.

There isn’t much debate any longer as to why it is the case. Nor that there is anything we are going to do to change it. But, at least we, almost, all agree the phenomenon exists and have no trouble publicly saying so. We may not all like it, yet there is some comfort to be taken from everyone recognizing it as a fact.

Maybe it’s because so many of our ills are new. Perhaps it is because there are so many of them. But it seems we are going through a period where we refuse to agree on the most fundamental of issues. There’s an extreme level of divisiveness and it is turning the world, not to mention the financial markets, into a casino where no one really has a handle of the odds of either the game or what is ultimately at stake.

We hear that everything economic rides on the path of the pandemic from no less than the Chairman of the Federal Reserve Jerome Powell. Eminent scientists remain fearful and are increasing their calls for precautions. One Fed president has speculated about locking us all down again to finally get a handle on the spread of the disease. Put the economy back to sleep to save it.

Other people are insisting we open up faster and get things going. That time will cure our problems. A vaccine is rapidly going to be available. That enough is enough. We can’t afford to wait. Open the schools, keep them shut. Work from home indefinitely or back to work, already. Masks, visors and gloves versus party time at the beaches. Take out only or tattoo parlors. Those are some big bid/offer spreads.

And these sorts of disconnects are everywhere. Social unrest. Perhaps starting sports again will calm the people down. The economy is facing depression-like unemployment and relief benefits are at risk. Manufacturing is coming back strong and we are setting up for a boom. The world is the enemy. We all need to pull together. The stock market is going to new highs. Happy days. Bond yields are going to keep plummeting. Official rates could eventually go below zero. Batten down the hatches. As long as the number of bankruptcies remains low, we’ll be fine. Brace for a slew of companies going under.

The world, and markets, are meant to have disagreements and varying opinions. That’s often healthy. It can lead to progress. But this is too much to be constructive for much of anything. And, apologies for bringing really important issues back to trading, it’s not good for our financial health. We used to trade on small differences. A beat that some would say wasn’t as good as the headline. And the like. Now everything allegedly has huge significance and will carry on to an extreme. You don’t just sell some dollars anymore, you prepare for the end of it being the world’s reserve currency. Every popular position is meant to represent a matter of global significance. And they get angry with you, if you don’t see it. Sometimes a trade is just a cigar.

Overnight, one of the big movers was the Hang Seng Index. It was up nicely. The number of explanations for why have been as long as your arm. Real estate, global tensions, mainland investment flows, virus fears ebbing, etc. Frankly, I’m embarrassed to admit, the ones I liked best, as a breath of fresh air, anyway, were, “It had been down three days in a row, so they bought it”. “I told you it was due for a bounce”. And the winner was, “Analysts saw no apparent reason for the surge”. I would usually rail against such an explanation as entirely inadequate. But it was curiously refreshing. And, sometimes, it’s just the reality.

Opinions differ. No problem with that. But we need to narrow the gap or making sense of things may remain outside of our grasp.

Reality does, in fact, lie somewhere in the middle.

Published:8/4/2020 9:22:23 AM
[Markets] Economic Report: U.S. factory orders climb 6.2% in June, signaling steady manufacturing recovery U.S. factory orders rose 6.2% in June to mark the second increase in a row, pointing to a steady rebound after widespread shutdowns in the early stages of the pandemic.
Published:8/4/2020 9:22:23 AM
[Markets] Main U.S. stock indexes dip 0.2% in opening minutes of Tuesday trading Main U.S. stock indexes dip 0.2% in opening minutes of Tuesday trading Published:8/4/2020 8:52:03 AM
[Markets] 45 Florida ICUs Have Zero Available COVID Beds; UCLA Says Only 8% Of Fall Classes Will Be In-Person: Live Updates 45 Florida ICUs Have Zero Available COVID Beds; UCLA Says Only 8% Of Fall Classes Will Be In-Person: Live Updates Tyler Durden Tue, 08/04/2020 - 09:47


  • 45 Florida hospitals see ICUs hit capacity
  • Poland weighs lockdown after another record COVID reading
  • UCLA releases plans for fall
  • Global COVID outbreak slowest spread in 3 weeks
  • Death toll nears 700,000
  • US deaths finally start to edge lower
  • Hong Kong extends lockdown measures, builds temporary hospitals
  • Tokyo reports 300+ new cases
  • India reports more than 50,000 new cases
  • China reports 36 new cases
  • Philippines suffers another record jump in new cases

* * *

Update (0940ET): Poland has recorded yet another record jump in new COVID-19 cases, with 680 reported Tuesday, the largest increase since the beginning of the pandemic. As a result of the rising numbers, the government is considering whether to impose quarantine restrictions on travelers returning from certain countries.

A communications officer for the Ministry of Health told CNN on Tuesday that the 680 cases mainly came from three regions in the country. At least 30% of these (222 cases) came from the Silesia region, known for its coal mines. Another 88 cases were recorded in the Malopolska region in southern Poland. At least 94 cases were confirmed in the Wielkopolska region in central Poland.

Finally, UCLA said it will only offer about 8% of fall course on campus in a new hybrid model that will require nearly all classes to shift to remote delivery after Thanksgiving, according to an announcement last night. In June, UCLA planned to offer up to 20% of classes in some sort of in-person format. But "with Los Angeles county experiencing a dramatic rise in COVID-19 infections and hospitalizations, we have found it necessary to adjust our plans to reduce the health risks to our campus community," according to a statement from the school.

* * *

Update (0930ET): Hospital capacity across the state of Florida has improved over the past couple of weeks according to data from the Agency for Health Care Administration. Per the latest update, shared by CNN, at least 45 hospitals in the state have reached ICU capacity and have no ICU beds available. 7 of these are in Miami-Dade, 5 are in Broward County.

Another 34 hospitals have ICU capacity of 10% or less, which, as we've explained in the past, isn't unusual, since hospitals typically run their ICU units as close to full capacity as possible (since these are typically the most profitable beds).

Fortunately, according to County-level data, 1,000 ICU beds are available across Miami-Dade County.

Across the state of Florida, 19.6% of ICU beds are available.

* * *

*CORRECTION*: Earlier, we reported that the global number of COVID deaths was nearing 7 million. The number of COVID-19 deaths is, in fact, nearing 700,000.

We apologize for the error.

* * *

Globally, the number of new cases reported on Monday (remember, these cases are reported typically with a 24-hour delay) tumbled to the slowest rate of expansion in nearly three weeks, while the global death toll neared 700,000.

In the US, the death toll surpassed 155,000 yesterday. That comes five days after the US first broke above 150,000 deaths. Though experts like Dr. Fauci and others have warned about the potential for deaths in the US to accelerate, the number of daily deaths has remained anchored at around 1,000.

Over the past two weeks, the worst-hit countries, including the US and Brazil, have seen new cases turn mercifully lower after a streak of record-shattering single-day infection numbers.

Even the number of daily deaths in the US have moved off their highest levels since April and May, despite experts warnings about a further spike.

Most of the big news out so far on Tuesday comes out of Asia.

One day after placing Manila and its surrounding area on a strict two-week lockdown, the Philippines reported a record 6,352 new coronavirus infections, a new single-day record, bringing the total to 112,593. The 11 new fatalities reported raised the death toll to 2,115.

Yesterday, the WHO's Dr. Tedros revealed during a press briefing (where he also noted that there may be "no silver bullet" vaccine, at least not right away) that the team of independent scientists from the WHO had finished the first part of their fact-finding mission to Wuhan to investigate the origins of the outbreak. According to a Reuters report published Tuesday morning, the team had "extensive discussions" with scientists in Wuhan and "received updates on epidemiological studies, biologic and genetic analysis and animal health research."

The mission is the first part of a broader international probe that was demanded by the Trump Administration, Australia, EU and others.

In Japan, Tokyo Gov. Yuriko Koike announced another 309 new infections, up from 258 on Monday. The SCMP reports that the Hong Kong government is building at least 2 new makeshift hospitals that will add 2,400 new beds to the territory's COVID-19 capacity. The government announced on Monday that it would extend its social distancing restrictions for another week. Hong Kong's "third wave" of the virus has also been its deadliest yet. Fortunately, the city reported just 80 cases on Tuesday, on par with yesterday's number. Yesterday, the city's health authorities reported fewer than 100 new cases for the first time in nearly 2 weeks. Chief Executive Carrie Lam has sought help from the mainland to increase testing and hospital capacity.

India reported more than 50,000 cases for the sixth straight day, bringing total infections to over 1.85 million.

The world's second-most-populous country also reported another 803 deaths, bringing its total to 38,938.

China reports 36 new cases, down from 43 the previous day. Of those, 28 were in the northwestern region of Xinjiang and two in Liaoning Province in the northeast. Another six were from Chinese arriving from overseas.

After imposing a curfew earlier this week and shuttering a large swath of its economy in another lockdown, new legal measures go into effect on Tuesday whereby anyone caught outside in breach of Victoria's isolation orders will face fines from AUS$1,652 ($1,200) to AUS$5,000 ($3,559).

Officials warned that noncompliance with quarantine and social distancing rules is widespread. Random checks by police on 3,000 infected people had found more than 800 were not home isolating, as they were supposed to be.

However, the Australian press, for whatever reason, focused on Chief Commissioner Shane Patton's complaints about a small number of self-declared "sovereign citizens" who have hectored - and in at least one case, attacked - police officers trying to enforce the new orders.

Victoria Police had seen an "emergence" of "concerning groups of people who classify themselves as 'sovereign citizens'", the BBC reported Tuesday.

Under the current "stage four" lockdown, Melbournians can leave home only to shop, exercise and provide essential medical care, or do frontline work. Residents must shop and exercise within 5 kilometers (3 miles) of their home, and for no longer than 1 hour at a time.

This, despite a growing body of evidence that the lockdown in Victoria is having little impact on suppressing the growth of cases.

Published:8/4/2020 8:52:02 AM
[Markets] Need to Know: Here’s what history tells us about U.S. stocks in a close election race and why the polls matter, Deutsche Bank says U.S. stocks look set to dip slightly on Tuesday after Monday’s rally, as U.S.-China tensions rise over TikTok.
Published:8/4/2020 8:52:02 AM
[Markets] Houston Mayor Orders $250 Fines For People Who Refuse To Wear Masks Houston Mayor Orders $250 Fines For People Who Refuse To Wear Masks Tyler Durden Tue, 08/04/2020 - 09:06

Authored by Paul Joseph Watson via Summit News,

Democratic Houston Mayor Sylvester Turner has announced that police will begin issuing citations against people not wearing masks, hitting them with a fine of $250 dollars.

“For months, we have been focusing on education and not citations, but now I am instructing the Houston Police Department to issue the necessary warnings and citations to anyone not wearing a mask in public if they do not meet the criteria for an exemption,” the mayor said Monday at a press briefing.

Police said that the wouldn’t respond to call outs reporting people for not wearing masks, but they would issue the fine if they saw someone not covering up during regular patrols.

Turner asked residents to not “get mad” at police officers, asserting, “It’s all about public health and driving our numbers down.”

As we highlighted yesterday, Dr. Deborah Birx suggested that Americans should wear masks inside their own homes to protect elderly loved ones from coronavirus.

The efficacy of masks is far from the settled science that the mainstream media purports it to be, with the Netherlands refusing to enforce the wearing of masks, while health authorities in Sweden have described them as “pointless.”

Last week, Dr. Anthony Fauci raised the prospect of face coverings becoming even more cumbersome when he suggested Americans may wish to start wearing eye goggles in addition to a mask.

*  *  *

There is a war on free speech. Without your support, my voice will be silenced. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.

Published:8/4/2020 8:19:34 AM
[Markets] Ford announces Oct. 1 retirement of CEO Jim Hackett Ford announces Oct. 1 retirement of CEO Jim Hackett Published:8/4/2020 8:19:34 AM
[Markets] Dow futures slump as caution surfaces in wake of technology-led run-up Dow futures slump as caution surfaces in wake of technology-led run-up Published:8/4/2020 7:51:11 AM
[Markets] These companies have been hit hard as coronavirus causes earnings to plunge Earnings at major European companies sank in the second quarter of the year, revealing the impact of the COVID-19 pandemic on the economy and reflecting major uncertainties about the region’s continuing recovery.
Published:8/4/2020 7:51:11 AM
[Markets] In Paniced Scramble, Turkey Hikes Lira Overnight Rate To 1,024% To Crush Shorts As Currency Implodes In Paniced Scramble, Turkey Hikes Lira Overnight Rate To 1,024% To Crush Shorts As Currency Implodes Tyler Durden Tue, 08/04/2020 - 08:48

One week ago, the Turkish Lira which had flatlined for the better part of a month on what strategists said were an unprecedented array of novel capital controls and bank selling of dollars, suffered a sharp hiccup as local authorities briefly lost control of the currency, with USDJPY spiking briefly from its "pegged" level of 6.85 to as high as 7.00 before instantly reversing.

And while a precarious balance had returned in the subsequent few days, the lira resumed its gradual drift lower in what many saw an ominous deja vu of what happened in the summer of 2018 when the lira plunged only to see the central bank hike funding costs in an attempt to crush shorts.

Sure enough, with Turkey ostensibly running out of reserves to sell and keep the TRY quasi pegged, overnight Turkey resorted to the currency bazooka when it unexpectedly ramped up the interest rate on Turkish lira overnight swap transactions in the London market, which initially soared to 280% on Tuesday from 6.8% on July 29, according to Refinitiv data, before exploding as high as 1024bps, the highest on record.

Turkish banks have previously cut funding to the London swap market, effectively making it impossible to short the lira, in order to curb falls in the currency.

Needless to say, for Turkey to resort to such draconian "Plan Z" measures where it effectively nationalizes the FX market, it means that its economy is on the verge of collapse, a view reaffirmed overnight by the FT which writes that Turkey's tourism sector - a key source of economic growth - continues to reel due to convid.

At this time of year, Murat Tugay, who runs the 240-room Hotel Aqua in the Mediterranean resort of Marmaris, should be dealing with a packed guestbook and all the challenges of peak season. Instead, the hotel is closed and Mr Tugay is banking on a late summer recovery. “We still have August. We still have September,” he says.

This implosion in Turkey's tourism sector comes at a time when President Recep Tayyip Erdogan has been desperately seeking to assure the population (and much needed foreign investors) that all is well, hailing a sharp fall in interest rates and praised measures taken to block “malicious” attacks on the Turkish lira. Such steps, he said, were “strengthening the immune system of our economy against global turbulence.”

That could not be further from how most economists see the Turkish picture. The collapse in tourism as a result of the coronavirus pandemic has left a gaping hole in the country’s finances. Foreign investors have fled, pulling out a large volume of funds from the country’s local-currency bonds and stocks over the past 12 months.

In the face of those outflows, the country has burnt through tens of billions of dollars of reserves this year in a bid to maintain an unofficial currency peg — a move that marks a rupture with a two-decade policy of allowing a free float. But, in a sign that those efforts are floundering, as we showed last week, the lira lurched towards a record low against the dollar even as authorities spent billions trying to defend it.

And now, it appears that Turkey is running out of reserves to sell and "control" the lira, and instead it is resorting to the bazooka approach, one which it can use to nuke the occasional short here and there, but which in the longer run will cripple the Turkish economy, and merely accelerate its downfall.

Published:8/4/2020 7:51:11 AM
[Markets] Futures Slide On US-China Tensions, Fiscal Stimulus Worries, Poor Earnings Futures Slide On US-China Tensions, Fiscal Stimulus Worries, Poor Earnings Tyler Durden Tue, 08/04/2020 - 08:09

S&P futures posted a rare overnight drop alongside shares in Europe as President Trump’s moves to force China-owned TikTok into a sale of its U.S. operations drew a sharp rebuke from Beijing, ratcheting up tensions as the world slides into a pandemic-fueled recession; at the same time a string of poor earnings illustrated the continuing hit from the pandemic while jittery investors also awaited news on whether fresh fiscal stimulus in the U.S. will get approval. The dollar reversed overnight losses and 10Y yields tumbled back to all time lows.

On Monday, the S&P 500 closed Monday within 3% of its all-time high, powered over the past four months by a stimulus-led rebound and a rally in tech-related stocks including Apple Inc, Netflix Inc and Inc. In earnings-related news, insurer AIG fell 2.8% in premarket trading after posting a 56% fall in quarterly adjusted earnings. Take-Two Interactive Software Inc O) rose 4.7% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”. Rival Activision Blizzard Inc gained 3.8% ahead of its results due after the closing bell.

"We see U.S. stocks at risk of fading fiscal stimulus," BlackRock Investment Institute strategists led by Mike Pyle wrote in a note. “U.S. employment figures are in focus this week as this fiscal cliff nears and the pandemic’s spread in Sunbelt states is starting to affect economic activity.”

The MSCI world equity index was up 0.4% after reaching a five-month high on Tuesday morning. Friction between the world’s top two economies took a back seat in the first half of 2020 as the COVID-19 pandemic crushed global growth, and an escalation now would hamper the recovery of some exporters and importers and fan fears of a deeper economic slump. With Microsoft Corp looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price. On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company. Investors are also focused on whether U.S. Congress will approve fresh stimulus. The pressure is building, with the Senate set to leave on a break Friday, when crucial job data is due.

Europe's Stoxx 600 reversed an early gain of as much as 0.6%, dropping 0.4%, and London's FTSE 100 flat on the day with defensives shares among the worst performers. Disappointing earnings reports from the world’s largest spirits maker, Diageo Plc and German drugs and pesticides giant Bayer took the shine off growth-linked cyclical stocks. Food-and-drink shares fall the most after Diageo slumps on sales miss. Health-care shares also lag, while autos and banks outperform and BP boosts oil-and-gas shares. Shares in BP jumped after it cut its dividend and posted a record loss that was in line with expectations. On the other end, the Stoxx 600 Automobiles & Parts Index rises as much as 2.4% after Renault’s CEO outlines a focus on margins, Bankhaus Metzler double-upgrades Daimler on profitability prospects and Jefferies analysts say 2Q results support current terms for the PSA Group-Fiat Chrysler merger. The automotive index was +1.7% at 1:35pm in Paris, with Renault +5.5%, Nokian Renkaat +4.1%, PSA +3.7%, Fiat Chrysler +3.4%, BMW +2.2%; non-index member Schaeffler +8.6%. The sector has second-biggest gain in Stoxx Europe 600 Index, which is down 0.4%

Earlier in the session, stocks in most Asian markets rose, with gauges in Japan, Hong Kong, Shanghai, Taiwan and South Korea advancing led by energy and industrials, after rising in the last session. All markets in the region were up, with Japan's Topix Index gaining 2.1% and Hong Kong's Hang Seng Index surged in afternoon trade, with property stocks leading gains. The gauge rose as much as 2.2%, the most since July 21, before paring the gain to 1.9% led by Wharf Real Estate Investment +7% and New World Development +4.1%. Japan's Topix gained 2.1%, with GSI Creos and Plant rising the most. The Shanghai Composite Index rose 0.1%, with Heilongjiang Interchina Water Treatment and North Navigation Control Technology posting the biggest advances.

As noted above, U.S.-China tensions worsened as President Donald Trump said that he will ban Chinese app TikTok in the U.S. unless a tech company such as Microsoft buys it. China said it would not accept the “theft” of a Chinese company and that is has "plenty of ways to respond if the administration carries out its planned smash and grab."

"This kind of rhetoric lines up with our view that U.S.-China frictions may increase into the U.S. elections, injecting volatility into related assets like China tech ADRs (American Depository Receipts) while also supporting insurance assets like gold," wrote UBS Global Wealth Management’s chief investment officer, Mark Haefele.

The United States and China are also clashing over Chinese journalists working in the United States, who may be forced to leave the country if their visas are not extended.

Elsewhere, investors were waiting for Washington to make progress in talks over the next round of fiscal stimulus. A $600-per-week enhanced unemployment benefit, which provided a lifeline for the tens of millions of Americans who lost their jobs due to the pandemic, expired on Friday. Lawmakers said they had made "progress" in the talks, and U.S. House Speaker Nancy Pelosi will meet again with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows on Tuesday, raising hopes for a breakthrough.

“A second wave of Covid-19, contested elections, civil unrest and escalating tensions with China could provide a toxic cocktail for the final quarter of the year,” Philip Marey, senior U.S. strategist at Rabobank, wrote in the bank’s monthly outlook. Marey said that he expects another economic contraction, or at least a “substantial slowdown” in the fourth quarter, which could force the Federal Reserve into action.

“If they don’t want to cut policy rates below zero, yield curve control is the next logical step,” he said. “Meanwhile, any failure by Congress and the White House to provide sufficient fiscal stimulus going forward will only speed up the Fed’s thinking process.”

In FX, the dollar rebounded from a new bout of overnight selling, as traders re- balanced their portfolios in the run-up to key U.S. economic data releases this week. The Australian dollar’s rally followed the central bank’s pledge to resume quantitative easing from Wednesday; the euro and Swiss franc also climbed. Japanese government bonds edged higher after an auction of 10-year debt attracted decent demand, while the yen halted a two-day loss

In rates, 10-year TSY yields were around 0.54%, richer by ~2bp vs Monday’s close; Bunds outperformed slightly with ten-year German bond yields edged down to -0.5400%, but remained above the two-month lows reached at the end of last week. European peripherals outperform, led by Portugal and Spain.

Long-end Treasuries were near session highs after catching a bid in London hours as S&P 500 E-mini futures pared gains, flattening the yield curve. Price action has been broadly muted ahead of Wednesday’s supply announcement, however, while another heavy IG credit issuance slate is possible following Monday’s strong start to the week. Yields lower by 1bp to 2.5bp from belly out to long end, flattening 2s10s spread by nearly 2bp, 5s30s by 1.4bp

Spot gold edged down from all-time highs, at $1,974.3033 per ounce, amid mounting COVID-19 cases and a warning from the World Health Organization that the road to normality would be long. Oil prices slipped on fears that a new wave of COVID-19 infections could curtail a pick-up in fuel demand, just as major producers ramp up output. WTI crude futures fell 59 cents, or 1.44% to $40.42 a barrel. Brent crude futures fell 59 cents, or 1.3% to $43.56 a barrel

Looking at the day ahead, economic data include June factory orders and final reading for durable goods. Disney, Fox Corp, Activision Blizzard, Twilio and KKR are due to report earnings

Market Snapshot

  • S&P 500 futures down 0.3% to 3,279.25
  • STOXX Europe 600 down 0.2% to 362.90
  • MXAP up 1.7% to 168.02
  • MXAPJ up 1.5% to 558.93
  • Nikkei up 1.7% to 22,573.66
  • Topix up 2.1% to 1,555.26
  • Hang Seng Index up 2% to 24,946.63
  • Shanghai Composite up 0.1% to 3,371.69
  • Sensex up 1.6% to 37,535.54
  • Australia S&P/ASX 200 up 1.9% to 6,037.55
  • Kospi up 1.3% to 2,279.97
  • Brent futures down 1% to $43.72/bbl
  • Gold spot unchanged at $1,976.95
  • U.S. Dollar Index down 0.06% to 93.49
  • German 10Y yield fell 1.0 bps to -0.533%
  • Euro up 0.1% to $1.1776
  • Brent Futures down 1% to $43.72/bbl
  • Italian 10Y yield fell 0.5 bps to 0.882%
  • Spanish 10Y yield fell 3.7 bps to 0.299%

Top Overnight News

  • House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin head into another round of negotiations on a new virus relief package after talks on Monday yielded “a little bit” of progress
  • With the talks dragging on, President Donald Trump on Monday said he was considering executive action to restore a moratorium on evictions that expired, and the White House was looking at other steps the administration could take without action by Congress
  • China’s government may take action against Washington, if a sale of TikTok’s U.S. operations to Microsoft Corp. is forced, the state-run China Daily said in an editorial
  • California and Arizona reported fewer new coronavirus cases after battling a surge in infections last month, while Germany and Poland recorded increases
  • BP Plc slashed its dividend for the first time in a decade after the coronavirus pandemic upended the oil business

Asian equity markets traded positively as the region took its cue from the constructive handover from Wall St where sentiment was underpinned by strong ISM Manufacturing PMI data and with advances led by a continued tech rally after Apple shares extended on record highs and with Microsoft the biggest gainer in the DJIA amid a potential TikTok acquisition. ASX 200 (+1.9%) outperformed and broke above the 6000 level as tech names found inspiration from their counterparts stateside and a potential WFH boost due to the impending tougher lockdown restrictions in Victoria state, with notable strength also seen in the top-weighted financials sector. Nikkei 225 (+1.7%) remained underpinned by favourable currency flows and with slight encouragement also provided by firmer than expected Tokyo inflation data, as well as comments from BoJ Governor Kuroda that the central bank could extend the period of corporate support. Hang Seng (+2.2%) and Shanghai Comp. (+0.1%) conformed to the upbeat tone but with less conviction in the mainland after another notable liquidity drain by the PBoC and continued US-China tensions with the US attempt to force a sale of TikTok being branded by Chinese press as a robbery and with allegations from US Secretary of State Pompeo that the Chinese Communist Party is running an espionage operation in the US. 10yr JGBs were initially flat with demand sapped by the gains in Tokyo stocks and as participants were sidelined ahead of the 10yr JGB auction which saw mixed results but nonetheless attracted higher prices and eventually spurred 10yr JGBs in late trade.

Top Asian News

  • RBA Keeps Key Rate, Yield Unchanged, Will Resume Bond Purchases
  • Modi Reimposes Kashmir Clampdown a Year After Autonomy Ended
  • Most Valuable Indian Lender Gets New Chief After 26 Years
  • China’s Hottest Stocks Stumble in Push Toward Five Year- High

The initial optimism seen in Europe at the cash open somewhat petered out – with the region now posting a mixed performance despite a lack of fresh fundamental catalysts and a positive APAC handover. No major under/outperformers are seen across major European bourses, but DAX saw a notable reversal into negative territory from a firm positive performance earlier in the session – potentially on the back of heavyweight Bayer (-3.3%) extending on post-earnings losses after cutting its guidance, whilst the turnaround in the tech sector prompted SAP (-2.5%) to tumble to the bottom of the index, albeit Infineon (+4.7%) remains positive despite the broader erosion in the tech sector after raising its revenue guidance.. Sectors are now mixed as earlier gains recede, albeit the detailed breakdown sees cyclical sectors Oil & Gas, Autos, Bank and Travel & Leisure retaining their top positions whilst defensives hold onto losses. The auto sector has seen little by way of fresh news, although pre-market, the German Ifo institute noted that the auto industry business expectations rose significantly for a second straight month, thus potentially underpinning the sector. Individual movers largely consist of earnings: BP (+7.5%) extends on gains despite a 50% cut to dividends after posting a smaller than expected loss and noting that the current financial breakeven is at USD 40/bbl. Diageo (-5.5%) holds onto losses after missing on expectations across the main metrics whilst refraining from providing guidance. Easyjet (+12%) drifts higher after upping its Q4 capacity to 40% from the prior 30%, with the performance also supporting the likes of Air France-KLN (+5.5%), Lufthansa (+3.5%) and peers. Other earnings-related movers include Hugo Boss (+2.1%), Fraport (+0.3%), Evonik (+3.6%) and Metro AG (+4%).

Top European News

  • Bond Titans Led by Pimco Double Down on Their Bet on Europe
  • Former King Abandons Spain in Disgrace as Legal Woes Pile Up
  • Schaeffler Mulls More Cost-Cutting to Deal With Covid Crisis
  • German Bonds Fated to Stay Rich If ECB Has Any Say: Markets Live

In FX, it remains to be seen whether the Buck stops retreating and stages another rebound, but for now it looks as though yesterday’s narrow failure to recapture the 94.000 level in DXY terms was telling from a psychological standpoint if nothing else. Indeed, the index has drifted down from a lower 93.612 high through 93.500 to 93.268 and lost inverse correlation with broad risk sentiment that briefly returned yesterday. Ahead, relatively 2nd tier data scheduled and unlikely to have a major impact given the lack of meaningful or last reaction to Monday’s manufacturing ISM that was largely better than expected in headline and sub-component terms. However, technical factors may direct trade given near term support at 93.169 and resistance at 93.997 ahead of last Friday’s 94.007 high.

  • AUD/EUR/CHF/CAD - The Aussie has taken advantage of Greenback’s pull-back to reclaim 0.7100+ status and the 10 DMA (0.7144) in wake of the RBA policy meeting that maintained rates and guidance, but in acknowledgement of the COVID-19 resurgence in Victoria will see the Bank resurrect its QE program from Wednesday. Elsewhere, the Euro has retested 1.1800 from Monday’s low just under 1.1700 and the Franc is back over 0.9200, with the former topping out ahead of Fib resistance at 1.1823 and the latter into 0.9150, while the Loonie is meandering between 1.3404-1.3360 parameters in the run up to Canadian manufacturing PMI.
  • JPY/NZD/GBP/NOK/SEK - Lagging their G10 counterparts, albeit to varying degrees, as the Yen pivots 106.00, Kiwi straddles 0.6600 in advance of NZ jobs data and Pound fades within a 1.3107-1.3047 range having failed to get close enough to stir or arouse stops said to be waiting for a break of 1.3120. Similarly, the Scandinavian Crowns have slipped both slipped from best levels against the Euro, though in tight bands of 10.7675-7200 and 10.3045-2740 respectively and the Nok eyeing softer crude prices.
  • EM - Try in focus due to Turkish inflation data, but not deflated even though CPI slowed more than forecast on the headline and core measures, with the Lira hovering towards the upper end of 6.9170-9795 extremes vs the Usd. The aforementioned weaker Dollar is clearly a factor, while Usd/Try may also be taking on board Turkey’s manufacturing PMI extending its rising trend to 3 months in a row and reaching its best level since early 2011. Over in Asia, the HKMA has been active again to keep the Hkd pegged, selling over 1.16 bn of the local currency.            

In commodities, WTI and Brent front month futures remain subdued in early European trade as investors weigh the impact a second COVID-19 wave could have on lockdown impositions and reopening delays alongside rising OPEC supply with the implications as reflected by prelim numbers. Aside from that, traders will be eyeing the weekly Private Inventory figures – with expectations currently positing to a headline draw of 3.5mln barrels, with a draw seen in gasoline and a build in distillates. WTI and Brent futures trade ~40.50 (vs. high 40.99/bbl) and around 43.50/bbl (vs. high 44.11/bbl) respectively. Elsewhere, precious metals are uneventful with spot gold trading on either side of 1975/oz, whilst its silver counterpart remains contained below 24.50/oz. Data compiled by Bloomberg showed that ETFs increased gold holdings for a 27th straight session yesterday – equating some USD 580mln at yesterday’s spot price, whilst UBS expects spot gold prices to rise to around USD 2000/oz in H2 2020. In terms of base metal prices, Dalian iron ore saw another day of gains amid concerns regarding Brazilian miner Vale’s ability to increase production of the raw material, whilst London copper prices continue to ease, in-fitting with the performance in sentiment.

US Event Calendar

  • 10am: Factory Orders, est. 5.0%, prior 8.0%; Factory Orders Ex Trans, prior 2.6%
  • 10am: Durable Goods Orders, est. 7.3%, prior 7.3%; Durables Ex Transportation, est. 3.3%, prior 3.3%
  • 10am: Cap Goods Orders Nondef Ex Air, prior 3.3%; Cap Goods Ship Nondef Ex Air, prior 3.4%

DB's Jim Reid concludes the overnight wrap

Yesterday it was Bronte’s turn to provide the high drama at home as on a dog walk with my wife and three kids she ate a whole discarded chocolate bar in one sitting having come across it on the floor. She is totally food obsessed but never goes for chocolate as there must be some knowledge that it is potentially lethal for dogs. We must be starving her. Anyway a trip to the vets, forcing her to be sick, and a big bill later and all was well. That wasn’t the only big bill yesterday. We are looking to convert a dilapidated building in our garden at some point over the next year and require planning permission. As part of this we need to do a bat survey to check there are none living in it as they are a protected specie. We were confident there weren’t. On the day of the survey yesterday the “bat man” found fresh bat droppings and says we now have to send it off for analysis and then have a team camp out overnight in the garden to “track and trace” the bat and find a way of protecting Mr or Mrs Bat and any offspring. When I saw the potential bill for this I went a bit batty. Think of a suitable number and then times it by about 7 and you’ll be at around the right ballpark. So an expensive animal led day yesterday.

With slightly better than expected PMIs in major countries and technology stocks continuing to lead the way, US equities started August on the front foot. The S&P 500 rose +0.72%, led by a mix of Software (+2.90%), Autos (+2.17%), and Tech Hardware (+2.03%), while defensives like Real Estate (-1.47%) and Utilities (-1.14%) lagged. With the strength in technology stocks it was another record close for the Nasdaq, finishing +1.47% higher. In line with PMIs, equites in Europe outpaced those in the US with the STOXX 600 finishing +2.05% higher, the biggest 1 day rise since mid-June with every sector finishing higher. With the economic optimism from macro data, cyclical sectors like autos (+3.76%) and construction (+3.15%) led the index higher yesterday. Bank underperformed, but were still up (+1.57%), with poor earnings results from SocGen and HSBC who cited trading losses and a weak economic outlook respectively.

On those final July PMI data points, similar to the flash PMI readings roughly two weeks back, final July manufacturing PMI readings showed stronger economic momentum in Europe than in the US. Although the US PMI impressed. In general PMIs mostly beat estimates or the recent flash levels, which is good news for the recovery, but there is one note of caution. A recurring theme from the data was a weaker employment component, showing that there is still fragility on this front. The Euro area saw an upward revision from the flash estimate, up to 51.8 from 51.1, with gains in output overcoming continued job cuts as corporates report they are operating under capacity. It was the first time the measure was in expansion for the Euro area as a whole since January 2019.

Germany also came in above the flash estimate at 51 vs. 50, with new orders driving the improvement from June, however again the rate of job losses was near the largest since 2009. France’s final July PMI was only marginally higher than the flash (52.4 vs 52.0), as both softer demand and employment levels dragged on the index. Italy (51.9 vs. 51.2) and Spain (53.5 vs. 52.3) saw their strongest levels since Q2 2018. The UK was one of the few countries that was slightly lower, with the final manufacturing PMI 0.3 lower than the 53.6 flash print. In the US, the ISM manufacturing index rose to 54.2 from 52.6 last month, (vs. 53.6 estimates), which was the fastest pace since Mar 2019. The US Markit PMI measure was at 50.9, under the 51.3 flash print, but still the best print since January and just slightly in expansionary territory.

Back to markets and core sovereign bonds were slightly higher or unchanged as risk sentiment improved yesterday. German 10yr yields were largely unchanged (+0.1bps) at -0.52%, while US 10yr yields were +2.6bps higher at 0.554%. The dollar rose +0.21%, rising for consecutive sessions for the first time since 29 June.

Asian markets have largely tracked Wall Street this morning with the Nikkei (+1.42%), Hang Seng (+0.83%), Kospi (+1.06%) and ASX (+1.82%) all posting decent gains but with the Shanghai Comp trading flat. Futures on the S&P 500 are marginally down at -0.08%.

On the virus, Norway’s government is banning cruise ships from entering all ports for two weeks after an outbreak on board a cruiseliner led to about 40 new cases, according to Trade Minister Nybov yesterday. Meanwhile, the UK is in talks with Portugal to ease quarantine rules on travelers returning from the country on the Iberian Peninsula. The UK are looking into more closely tailoring rules for specific regions, according the government. This comes while the government has put together plans to lockdown London in case of another surge of cases, according to Prime Minister Johnson’s Spokesman Slack. The plan, he said, sets out “the possibility of a power to restrict people’s movement and potentially close down local transport networks.” Concerns across the continent are rising as daily case growth is again starting to accelerate from low levels in much of Europe, even as it's gently falling from high levels in the US. Across the other side of the world, state of Victoria in Australia has announced that it will start imposing on the spot fines of as much as AUD 5,000 on anyone who flouts isolation rules while repeat and serious offenders could attract a court imposed penalty of AUD 20,000. The move comes as the state is battling to control the spread of virus.

Back to the US and the main late-June/mid-July hot spots are continuing to cool down with California reporting the fewest new cases in four weeks (4,982), which is well below the average increase of 8,700 over the past 7 days. Arizona also saw new cases hit the lowest levels since the end of June, with just over 1030 versus the 7-day average of over 2400. Regardless of the improving news, as highlighted above the overall numbers are still high with economic restrictions in place to reduce these case numbers. This continues to encourage focus on the fiscal stimulus package that Congress is debating. Republican and Democratic leaders have still been unable to agree on the specifics of the latest stimulus bill ahead of their month long recess from this Friday. There was a little more positivity yesterday but nothing concrete yet.

Here in the UK, Bloomberg has reported overnight that the government will invest c.GBP 1.3bn in building projects and provide GBP 2bn in energy efficiency grants in an effort to create jobs and rally the pandemic-hit UK economy. Relatively small numbers but the direction of travel is clear.

Finally to the day ahead, markets will receive data on the Euro Area June PPI while, manufacturing PMI from Canada will be seen alongside US June factory orders, and final durable goods orders. In terms of earnings, there will be results from Bayer, Diageo, Fidelity, BP, Walt Disney and Activision Blizzard.

Published:8/4/2020 7:23:06 AM
[Markets] Ralph Lauren shares slide after first-quarter results Ralph Lauren shares slide after first-quarter results Published:8/4/2020 7:23:06 AM
[Markets] Metals Stocks: Gold prices edge higher but march to $2,000 hamstrung by rising dollar Gold futures were trading near break-even levels to slightly higher on Tuesday, with a renewed buoyancy in the U.S. dollar capping the precious metal’s gains for a second session as the commodity attempts to power above the $2,000 threshold.
Published:8/4/2020 7:23:06 AM
[Markets] Market Snapshot: Dow futures inch lower Tuesday morning as investors turn cautious after tech-driven rally U.S. stock-index futures on Tuesday tilt lower, a day after a rally in shares of technology and e-commerce companies propelled the Nasdaq to its 29th record close of 2020. Investors continue to watch halting negotiations between Democrats and Republicans over a new round of coronavirus relief for Americans that have been put out of work due to the COVID-19 pandemic.
Published:8/4/2020 6:19:28 AM
[Markets] Argentina Strikes Deal With Creditors Over $65BN Debt After 3rd Default In 20 Years Argentina Strikes Deal With Creditors Over $65BN Debt After 3rd Default In 20 Years Tyler Durden Tue, 08/04/2020 - 06:43

In a break with tradition that probably came as a welcome relief to the country's creditors, who may have been gearing up for a 16-plus-year odyssey in what would have been the economically troubled South American nation's third sovereign default in 20 years, Argentina has struck a deal with its creditors to restructure a $65 billion debt. 

And in the spirit of the global COVID-19 outbreak, during which the IMF has urged developed nations to help ease the financial burden faced by poorer nations as it doles out billions of dollars in loans around the world, Argentina and its perennially troubled economy - which has been rattled over the years by spats with creditors following the severe economic mismanagement of reckless left-wing populists - will evade the brunt of repercussions for debt that was accrued long before COVID-19 emerged.

Committees representing Argentina's creditors, based mostly in the US and Europe, have agreed to exchanged their defaulted bonds for new bonds under a settlement worth roughly 55 cents on the dollar. While most institutions and investors who have agreed to lend money to Argentina have lost out, a cadre of distressed investors who bought the Argentinian bonds for pennies on the dollar stand to make a handsome profit from the new bonds.

Per WSJ, major investors in Argentine bonds include Fidelity Management & Research Co., Monarch Alternative Capital LP, VR Capital Group, Greylock Capital Management and Pharo Management LLC.

Ecuador and Lebanon have already turned to the IMF for bailouts this year, and Argentina's economy minister had threatened to start negotiations with the IMF if creditors didn't come to a deal.

According to media reports, a willingness by the Argentine economy minister to accelerate series of payments due next year helped lead to the breakthrough with creditors. The payments were moved to January and July, from March and September. And here's a breakdown of the new bonds and their amortization schedules.

  • New USD, EUR bonds due 2030 to start amortizing in July 2024, mature in July 2030
  • New USD, EUR bonds due 2038 will be offered in exchange for discount bonds, start amortizing in July 2027 through January 2038
  • Bond included in the offer for unpaid interests will begin amortization in 2025 and mature in 2029

Markets rejoiced in the decision as Argentina's "Century Bond", the poster-child for the global thirst for yield, rallied to its highest price in five months.

For those who aren't familiar with Argentina's 20-year history of battling with international creditors, here's a brief summary: In 2001, Argentina stopped payment on more than $80 billion in debt, the largest sovereign default in history at that time.

During negotiations, most bondholders settled for roughly 30 cents on the dollar, but a minority battled for full repayment, eventually winning a US court ruling that eventually led to another default in 2014 (the second in this series of three), before a settlement in 2016 that delivered enormous gains to the holdouts, including Paul Singer's Elliott Management.

Having witnessed the ruthlessness and determination that Singer brought to bear over more than a decade of negotiations with Argentina just to get his money (or rather, the money lent by the original lenders) back, one would think investors approached the country with a heightened degree of scrutiny once it made its triumphant return to international capital markets.

Nope. Its first global issuance in 20 years was 3x oversubscribed.

Published:8/4/2020 5:49:03 AM
[Markets] FDA Expands List Of Dangerous Hand Sanitizers To Over 100 FDA Expands List Of Dangerous Hand Sanitizers To Over 100 Tyler Durden Tue, 08/04/2020 - 06:00

The US Food and Drug Administration's list of potentially harmful hand sanitizers has now been expanded to a whopping 100+

Warnings first surfaced in June, at which point less than a dozen were named. This after an explosion of new, cheap sanitizers hit the market following an initial run on alcohol-based sanitizing cleaning products in March, when coronavirus lockdowns took effect.

Initially the FDA's warnings were focused on products that are potentially toxic when absorbed through the skin, given some contained methanol. This makes the sanitizers possibly deadly if swallowed as well.

Shutterstock image

"We remain extremely concerned about the potential serious risks of alcohol-based hand sanitizers containing methanol. Producing, importing and distributing toxic hand sanitizers poses a serious threat to the public and will not be tolerated. The FDA will take additional action as necessary and will continue to provide the latest information on this issue for the health and safety of consumers," the agency said previously.

But the hugely increased list topping 100 is due to most of the new additions containing insufficient levels of alcohol, making them ineffective against the virus and germs.

In its updated warning issued days ago it said: "FDA test results show certain hand sanitizers have concerningly low levels of ethyl alcohol or isopropyl alcohol, which are active ingredients in hand sanitizer products."

* * *

Here's the full list of hand sanitizers the FDA is warning consumers to avoid:

  • Blumen Clear Advanced Hand Sanitizer with 70% Alcohol
  • Blumen Advanced Instant Hand Sanitizer Clear Ethyl Alcohol 70%
  • BLUMEN Advanced Instant Hand Sanitizer Clear
  • BLUMEN Advanced Instant Hand Sanitizer Clear
  • KLAR AND DANVER Instant Hand Sanitizer
  • MODESA Instant Hand Sanitizer Moisturizers and Vitamin E
  • BLUMEN Advanced Hand Sanitizer
  • BLUMEN Advanced Hand Sanitizer
  • BLUMEN Advanced Hand Sanitizer Aloe
  • BLUMEN Advanced Instant Hand Sanitizer Lavender
  • BLUMEN Clear Advanced Hand Sanitizer
  • BLUMEN Clear Advanced Hand Sanitizer
  • BLUMEN Clear LEAR Advanced Hand Sanitizer
  • BLUMEN Clear LEAR Advanced Hand Sanitizer
  • The Honeykeeper Hand Sanitizer
  • BLUMEN Advanced Hand Sanitizer Clear
  • BLUMEN Clear Advanced Instant Hand Sanitizer
  • BLUMEN Clear Advanced Instant Hand Sanitizer Aloe
  • BLUMEN Clear Advanced Instant Hand Sanitizer Lavender
  • BLUMEN Aloe Advanced Hand Sanitizer, with 70 Alcohol
  • BLUMEN Aloe Advanced Hand Sanitizer, with 70 Alcohol
  • Blumen Advanced Hand Sanitizer Lavender, with 70% alcohol
  • Blumen Advanced Hand Sanitizer Aloe, with 70% alcohol
  • Blumen Antibacterial Fresh Citrus Hand Sanitizer
  • Blumen Hand Sanitizer Fresh Citrus
  • KLAR and DANVER Instant Hand Sanitizer
  • Hello Kitty Hand Sanitizer
  • Assured Instant Hand Sanitizer (Vitamin E and Aloe)
  • Assured Instant Hand Sanitizer (Aloe and Moisturizers)
  • Assured Instant Hand Sanitizer Vitamin E and Aloe
  • Assured Instant Hand Sanitizer Aloe and Moisturizers
  • BLUMEN Instant Hand Sanitizer Fragrance Free
  • BLUMEN Instant Hand Sanitizer Aloe Vera
  • Assured Aloe
  • bio aaa Advance Hand Sanitizer 
  • LumiSkin Advance Hand Sanitizer 4 oz
  • LumiSkin Advance Hand Sanitizer 16 oz
  • QualitaMed Hand Sanitizer  
  • NEXT Hand Sanitizer
  • Clear Advanced Hand Sanitizer with 70% Alcohol extra soft with glycerin and aloe
  • NuuxSan Instant Antibacterial Hand Sanitizer
  • NuuxSan Instant Hand Sanitizer
  • Assured Instant Antiseptic Hand Sanitizer with Aloe and Moisturizers
  • Assured Instant Antiseptic Hand Sanitizer with Vitamin E and Aloe
  • Modesa Instant Antiseptic Hand Sanitizer with Moisturizers and Aloe Vera
  • Modesa Instant Antiseptic Hand Sanitizer with Moisturizers and Vitamin E
  • Herbacil Antiseptic Hand Sanitizer 70% Alcohol
  • Herbacil Antiseptic Hand Sanitizer 70% Alcohol
  • Herbacil Antiseptic Hand Sanitizer 70% Alcohol
  • Earths Amenities Instant Unscented Hand Sanitizer with Aloe Vera Advanced
  • Hand Sanitizer Agavespa Skincare
  • Vidanos Easy Cleaning Rentals Hand Sanitizer Agavespa Skincare
  • All-Clean Hand Sanitizer
  • Esk Biochem Hand Sanitizer
  • Lavar 70 Gel Hand Sanitizer
  • The Good Gel Antibacterial Gel Hand Sanitizer
  • CleanCare NoGerm Advanced Hand Sanitizer 80% Alcohol
  • CleanCare NoGerm Advanced Hand Sanitizer 75% Alcohol
  • CleanCare NoGerm Advanced Hand Sanitizer 80% Alcohol
  • Saniderm Advanced Hand Sanitizer
  • Hand sanitizer Gel Unscented 70% Alcohol
  • Medicare Alcohol Antiseptic Topical Solution
  • GelBact Hand Sanitizer
  • Hand Sanitizer
  • TriCleanz
  • Sayab Antisepctic Hand Sanitizer 100
  • Jaloma Antiseptic Hand Sanitizer Ethyl Alcohol 62% with Vitamin E
  • Leiper's Fork Distillery Bulk Disinfectant per 5 gallon and Leiper's Fork Distillery 16 oz bottle
  • Andy's Best
  • Andy's
  • NeoNatural
  • Plus Advanced
  • Optimus Instant Hand Sanitizer
  • Optimus Lubricants Instant Hand Sanitizer
  • Optimus Instant Hand Sanitizer
  • Selecto Hand Sanitizer
  • Shine and Clean Hand Sanitizer
  • Hand Sanitizer Disinfectant Gel 70% Ethyl Alcohol
  • Hand Sanitizer Disinfectant Gel 70% Ethyl Alcohol Rinse Free Hand Rub
  • Mystic Shield Protection hand sanitizer
  • Born Basic. Anti-Bac Hand Sanitizer 70% alcohol
  • Born Basic. Anti-Bac Hand Sanitizer 65% Alcohol
  • Scent Theory -- Keep It Clean -- Pure Clean Anti-bacterial Hand Sanitizer
  • Cavalry
  • ENLIVEN Hand Sanitizing Gel
  • Lux Eoi Hand Sanitizing Gel
  • Scent Theory -- Keep It Clean -- Pure Clean Anti-bacterial Hand Sanitizer
  • Bersih Hand Sanitizer Gel Fragrance Free
  • Bersih Antiseptic Alcohol 70% Topical Solution hand sanitizer
  • Purity Advanced Hand Sanitizer
  • Hand Sanitizer Gel Alcohol 70%
  • TriCleanz Tritanium Labs Hand Sanitizer
  • Britz Hand Sanitizer Ethyl Alcohol 70%    
  • Parabola Hand Sanitizer  
  • Urbane Bath and Body Hand Sanitizer    
  • Cleaner Hand Sanitizer Rinse Free 70%    
  • Handzer Hand Sanitizer Rinse Free
  • Kleanz Antibacterial Hand Sanitizer Advanced
  • Be Safe Hand Sanitizer
  • Wave Hand Sanitizer Gel
  • DAESI Hand Sanitizer 
Published:8/4/2020 5:29:22 AM
[Markets] Argentina says it's reached a restructuring agreement with foreign creditors Argentina says it's reached a restructuring agreement with foreign creditors Published:8/4/2020 5:29:22 AM
[Markets] Key Words: The man who warned in 2018 that America was unprepared for a pandemic says: ‘The U.S. squandered every possible opportunity to control the coronavirus’ On the anniversary of the 1918 flu, Ed Yong warned of another pandemic. He says the U.S. must learn the lessons from the past seven months, adding, ‘COVID-19 is merely a harbinger of worse plagues to come.’
Published:8/4/2020 5:29:22 AM
[Markets] "Something's Rotten!" "Something's Rotten!" Tyler Durden Tue, 08/04/2020 - 05:30

Authored by Sven Henrich via,

As $SPX is entering the February gap zone into 3300 (an area we’ve been mentioning for weeks in Straight Talk) and Nasdaq is again making new all time highs as investors keep relentless chasing into high cap tech, it may be worth pointing out that something’s rotten in the state of markets.

And no it’s not valuations although that’s a discussion on its own. Rather it relates to a specific component of equal weight namely the banks.

The price action is an absolute horror show. Just look at the year today performance versus the Nasdaq:

Which is odd considering all that is supposedly positive. Banks exceeded expectations in recent earnings. The Fed has been supporting the banks intensely including propping up the entire distressed debt sector by buying high yield debt and pushing $JNK prices back to near highs:

Not only that, but the Fed has managed to completely reverse the stress in financial conditions:

And now the Atlanta Fed is talking about nearly 20%+ GDP growth for Q3.

So why is there no sign of life in the banking index?

I’ll tell you why. Because things are much worse than they are advertised to be and investors better pay attention.

Indeed let me pull up a big picture chart to highlight how completely off this sector’s performance is:

First to note: The yield curve inversion of 2019. It, like many others before, precipitated a recession in the US. As did the weakening in equal weight ($XVG). None of this is unusual and it highlights how the broader business cycle (with Covid the historic trigger exacerbating everything) is actually performing no different than it has before. The only thing that’s different here is the historic asset bubble we have in some key stocks and the records amount of liquidity thrown at these markets.

Now you can argue the banks are hurting because of low yields, but we had low yields in 2016 and banks rallied just fine along with the rest of the market.

What you see in the big chart above though is that the market highs in 1998-2000 an 2006-2007 an even 2014/2015 all had the banking sector participate with either new all time highs or new cycle highs at the time.

Not this time. Not even close. $BKX can’t ever get to the June highs and remains far below all time highs. Rather $BKX is trading at the 2015 levels from 5 years ago. Maybe the price action will change with another stimulus package coming in the next few days.

But as it stands, the weakness in banks signals larger structural issues brewing that the market is currently ignoring. Indeed perhaps the bank stocks are signaling that the Fed’s interventions are not anywhere near as effective as record highs in $NDX and near record highs in $SPX suggest.

The previous, and smaller recessions in comparison, have had price consequences that lasted years. The current main index price action has you believe that price consequences only mattered for 4 weeks.

In my opinion this is a fantasy:

We’ll likely find out more following a decision on the next stimulus package. But if markets are supposedly forward looking then perhaps everybody should ask themselves: What are the bank stocks seeing that the rest of the liquidity drenched market is currently ignoring?

Something is rotten.

*  *  *

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Published:8/4/2020 4:50:45 AM
[Markets] Ireland's National Health Service Urges "Phone Sex Only" During Pandemic Ireland's National Health Service Urges "Phone Sex Only" During Pandemic Tyler Durden Tue, 08/04/2020 - 04:55

In yet more coronavirus lockdown absurdity, the Republic of Ireland is telling young people to stop having sex in order to stop the spread of the pandemic. 

Instead, health officials with Ireland's Health Service Executive (HSE) are urging that people should only have phone sex while foregoing the real deal. This is not The Onion, but words from a newly distributed HSE leaflet on coronavirus safety measures:

"If you decide to be sexually active with someone living outside of your household, limit it to as few partners as possible, preferably one regular partner. Consider masturbation or remote sexual activity (eg, online) as alternative to physical sexual activity with others."

Image: Shutterstock

It also advised that in the case of sex with a partner living in your house to "wash hands thoroughly with soap and water for at least 20 seconds before and after any sexual activity."

The leaflets are being posted at pharmacies, clinics, and public buildings throughout the country in response to fears that growing coronavirus case numbers are being driven by asymptomatic young people who are spurning social distancing measures.

The government is also giving out free "sexual health protection packs" which include a condom, strongly suggesting that health officials don't actually think many Irish will follow its "phone sex only" advice during the pandemic.

As expected, the bizarre official advisory resulted in widespread scorn and mockery online. "The Irish government promoting masturbation is not something I expected to see. Ever," one social media response was quoted as saying.

"So we can't stand beside each other, c [sic] each others faces, shake hands, have a drink together, look at each other, breathe fresh air, watch live sport or have sex. I have an answer, f**k off," another said.

Currently Ireland has over 26,000 cases of COVID-19, with a moderate increase observed in the past weeks.

Published:8/4/2020 4:19:09 AM
[Markets] : ‘We do not want to return to a time when parents had to worry their infant could die of meningitis’: Some kids still await routine vaccinations during COVID ‘We do not want to return to a time when parents had to worry their infant could die of meningitis — especially when we have a vaccine to prevent it.’
Published:8/4/2020 4:19:09 AM
[Markets] What makes one person more likely than another to believe #fakenews and conspiracy theories about COVID-19? Myths and misinformation about the coronavirus pandemic serve to politicize a global public-health emergency and distract from potentially life-saving measures, health professionals say.
Published:8/4/2020 3:48:34 AM
[Markets] Europe Markets: European stocks steady after big rally to start August European stocks were steady on Tuesday, after a wave of manufacturing reports suggested a stronger economic recovery across the globe.
Published:8/4/2020 3:23:36 AM
[Markets] BP shares jump while Diageo slumps in steady European trading BP shares jump while Diageo slumps in steady European trading Published:8/4/2020 3:23:36 AM
[Markets] Ron Paul: Europeans Are Waking Up To Government COVID Tyranny. Why Are Americans Still Asleep? Ron Paul: Europeans Are Waking Up To Government COVID Tyranny. Why Are Americans Still Asleep? Tyler Durden Tue, 08/04/2020 - 04:20

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Tens of thousands of Germans marched through Berlin on Saturday, proclaiming a “Day of Freedom” and demanding an end to government-mandated face masks and “social distancing.” The UK and Netherlands also saw large protests against their governments’ tyrannical actions in response to the coronavirus outbreak.

According to media accounts, the Berlin protesters held signs reading “We are being forced to wear a muzzle,” “Natural defense instead of vaccination,” and “We are making noise because you are stealing our freedom!”

Good for them!

The New York Times Tweeted that the masses of Berlin demonstrators were all “Nazis” and “conspiracy theorists.” Does the “paper of record” really want us to believe there were perhaps a million Nazis active in the streets of Berlin? Wouldn’t that be alarming?

The fact is, Europeans are realizing that their government-mandated lockdowns did little or nothing to protect them from the virus, while causing economic catastrophe and untold human suffering.

They likely looked around and noticed that Sweden, which never locked down its economy, rejected face masks, and kept its restaurants and other places of business open, did not fare any worse than the countries that have been turned into open air prisons for much of the year. In fact, Sweden had a lower death rate from the virus than strict lockdown states like the UK and France. No wonder people are starting to get angry.

Unfortunately, while the Europeans are waking up, Americans are still asleep as our freedoms continue to be trampled.

While Europeans demand an end to government tyranny, here we see states with minuscule new deaths returning to lockdown. It is as if all the wannabe tyrants from mayors to governors are finally realizing their secret dreams of ruling by decree. Their dreams are our nightmares!

New Jersey Governor Phil Murphy put citizens “on notice” that he will lock the state back down if people dare to go outside without a face mask or even to have guests inside their own homes!

What kind of politician puts his own constituents “on notice”?

It is not as if the “experts” are even looking into treatments for the viral infection. Doctors who report their own successful experience treating Covid patients with hydroxychloroquine, for example, are ridiculed, censored, and even fired from their jobs. The rush to silence “America’s Frontline Doctors” last week and to disappear their video down the memory hole should terrify anybody who still believes in free speech.

No, they say, we must keep locked down and masked until we have a vaccine. The US government is dumping billions into a vaccine that may be less than 60 percent effective to prevent a virus that has something like a 99.8 percent survival rate. What kind of math is that?

How many may be harmed more by the vaccine than helped? We’ll probably never know because the US government has just granted big pharma immunity from liability claims if the vaccine produces damaging side effects.

They keep moving the goal posts to keep us terrified and isolated. First it was body counts and then “cases.” The numbers have been so wildly off that it’s hard to trust any reporting. People are getting angry. They are confused. They are facing an economic depression of historic proportions. But worst of all, they are watching as Leviathan government snatches every last bit of freedom.

Three cheers for the Europeans! Let’s hope America wakes up soon!

Published:8/4/2020 3:23:36 AM
[Markets] Apple Demands UK Retail Landlords To Slash Rents By Half  Apple Demands UK Retail Landlords To Slash Rents By Half  Tyler Durden Tue, 08/04/2020 - 03:45

Apple Inc. soared 10% Friday after a blowout earnings report, adding $171 billion to its market capitalization, making it the world's most valuable company, at $1.817 trillion (surpassing Saudi Aramco). Despite positive earnings during coronavirus lockdowns, Apple has requested UK retail store landlords to slash rent by as much as 50%. 

The Sunday Times reports Apple is pushing for substantial rent reductions across 38 of its UK retail stores and asking for a "rent-free period." In return, the iPhone maker is expected to extend leases by a couple of years, something desperate landlords might have to agree too, considering the implosion of CRE

"Apple is seeking to bring its rents into line with other retailers, many of which are benefiting from cut-price deals as landlords struggle to keep their shopping centers occupied," The Times said. 

Apple said that, while its stores were closed, online demand for iPhones and iPads was "phenomenal" during the lockdown.

Its outlets are among the most profitable in the industry, and their popularity means that landlords are desperate to keep the Silicon Valley titan as a tenant.

The company's proposals are understood to relate to stores with several years left to run on their leases, meaning that landlords are not yet obliged to make a decision. Apple declined to comment. - The Times 

Apple is asking for rent reductions at a time when the UK has put the brakes on reopenings due to rising coronavirus infections in Europe. This means foot traffic of retail spaces are set to slump once more, will pressure brick and mortar shops, including Apple stores. 

Published:8/4/2020 2:48:13 AM
[Markets] The US Economy Is Stronger Than The Eurozone The US Economy Is Stronger Than The Eurozone Tyler Durden Tue, 08/04/2020 - 03:10

Authored by Daniel Lacalle,

The United States is showing resiliency and strength compared with other leading economies worldwide. 

The impact of the Covid-19 forced shutdown crisis is lower in the United States than in Japan, Germany, France, the average of the European Union 27 and the Euro-Area countries.

The recovery is also stronger and more sustainable. This does not mean that the economic impact is small. Recession is severe and its impact on jobs and growth cannot be underestimated, but it is important to show how other economies with larger government spending plans and important entitlement programs are showing a much weaker performance.

The second quarter GDP was much better than in the euro area (-9.5% quarterly compared to -12.1% in the eurozone), although it reflects a notable quarterly drop, and well below the one seen in 2008.

This comparison is important because most mainstream economists believe that higher government spending and public sector help offset the blow of a recession. They do not. The United States quarterly GDP fall, at -9.5%, is small compared to Germany’s -10.1%, France -13.8%, Italy -12.4%, Spain -18.5% and the European Union 27 at -11.9%.

You may have read the quarterly annualized -32.9% figure for the United States, but it is misleading to compare it with the European published figures which are not annualized. Annualized rate estimates how much the economy would grow or shrink if the rate of change seen in the quarter continued at the same pace for four consecutive quarters. If we compared apples with apples, the -32.9% United States quarterly annualized GDP collapse would be from -40% in Germany to -55% in Spain.

In any case, it seems relevant to insist on three points:

1) The United States GDP decline was smaller than consensus estimates; 

2) It is notably lower than the Eurozone figure, which was worse than consensus expected; and

3) The advanced U.S. data points to one of the strongest recoveries in the world.

The improvement in domestic demand that we already began to observe in the month of May has been confirmed in June. Retail sales registered an increase of +7.5% per month, the second highest number in the historical series after the May data, and this time with a less relevant “base effect”. In year-on-year terms, retail sales are already growing at +1.1% and, eliminating vehicle sales, this increase amounts to + 7.3% year-on-year. Still a lot to improve, though.

Advanced and leading indicators in the United States point to a third-quarter GDP rise of 18% to 20% in annualized terms, recovering more than half of the first half of the year decline in three months.

There is a lot to do and no one can be complacent. The U.S. economy could close the year at flat growth and 6% unemployment in the most optimistic scenario if consumption and investment progressed within potential.  However, it is more likely that the economy may end down 5% and unemployment at 8.5%, all according to our estimates. This compares with a eurozone that may likely fall more than 9% in 2020 with official unemployment and furloughed jobs reaching an average of 12.5% according to Bloomberg.

There are important warning signs to consider. Consumer confidence continues weak at 73.2 basis points in July 2020, a decrease of 5 points compared to June of this year and far from levels above 100 showed during the month of February.

Leading indicators are encouraging but not optimistic. The composite purchasing managers index (PMI) for the month of July has managed to reach the economic expansion zone, at 50. The main engine continues to be the industry, at 51.3 compared to 49.8 in June, reflecting a positive evolution into expansion but with numerous challenges ahead, including investment and hiring plans. Services, a critical sector for the United States economy, remains in contraction.

The United States industrial production has shown two months with positive monthly growth (+ 5.4% in June), although low year-on-year (-10.8% in June 2020). 

Employment is improving, but admittedly at a slower pace than would be desired. Jobless claims remain stubbornly above one million, and continuing jobless claims are falling at a slower pace than expected. Still, continuing jobless claims have fallen from a record 25 million to 17 million in two months. These need to fall faster, and decisive supply-side measures are needed to attract new jobs and investment.

Debt in the United States is a big challenge, but -again- metrics show a better situation than the eurozone. The accumulated deficit through June already exceeds $ 2.74 trillion, more than 10% of US GDP. Interestingly, debt to GDP in the United States is likely to rise to 98.5% according to Bloomberg consensus, but not even close to the levels of the Euro-area, at 103%, according to the ECB.

These figures contradict the calls for a stronger Euro vs the US Dollar. Despite the headline-grabbing U.S. figures, growth, debt, and employment are likely to show a better evolution than in the Euro-Area, and monetary metrics also show a stronger situation. The European Central Bank already has negative real rates and its balance sheet exceeds 53% of GDP compared to the Federal Reserve balance sheet of 33% of GDP. The US Dollar global demand is high and rising, and the world still has a US dollar shortage. That is not the case of the Euro, where demand is stable but much smaller, according to the Bank of International Settlements, and supply is rising much faster than the US dollar.

A stable and solid recovery will only be achieved with the right policies. Copying the European Union will only lead the United States to stagnation. The poor performance of the European economies in this crisis is also a reminder of why the United States should not implement similar policies.

If the United States government decides to raise taxes and increase intervention, the recovery will be slower and more painful than it is.

Published:8/4/2020 2:38:58 AM
[Markets] Spanish Stocks Break Support As Virus Concerns Reemerge Spanish Stocks Break Support As Virus Concerns Reemerge Tyler Durden Tue, 08/04/2020 - 02:35

Spain's IBEX 35 Index futures have slumped 11% in 9 trading sessions "as fears of new lockdowns coupled with weaker than expected macro data soured investors' sentiment," said Reuters' Stefano Rebaudo. 

"There is a combination of factors," said James McKenzie, head of research of Fidentiis in Madrid.

"Worries about possible new lockdowns as coronavirus cases keep rising, recent bad numbers for Q2 GDP and probably even worse data ahead as the UK quarantine for travelers to Spain will put under further pressure the tourism industry," McKenzie said.

Spain reported 1,525 new COVID-19 cases on Friday, making it the most significant increase in cases since June, which was around the time national lockdown was lifted. Countries in Europe are now advising citizens against travel to Spain. 

Virus cases have surged across Europe

Spain's GDP, like Germany and France, reported last week some of the biggest crashes ever for the second quarter. The eurozone economy contracted by 12.1% in 2Q YoY.

Depressing data in the eurozone, more importantly, Spain, highlights the collapse in the travel and tourism industry, fading any hopes a quick rebound will be seen. 

The selloff in Spanish stocks is an eye-opener for world stocks, currently powered by a bubble in US technology stocks. 

The virus is re-emerging across the world, maybe the souring of investors' mood in Spanish stocks is a precursor to a much broader sell-off. 


Published:8/4/2020 1:50:18 AM
[Markets] American Troops To Leave Germany: Is It Goodbye Or Just Auf Wiedersehen? American Troops To Leave Germany: Is It Goodbye Or Just Auf Wiedersehen? Tyler Durden Tue, 08/04/2020 - 02:00

Authored by Philip Giraldi via,

The continued presence of tens of thousands of American military personnel in Europe seventy-five years after the end of the Second World War is rarely questioned either by politicians or the mainstream media. Currently there is little recollection of how, after the war ended, soldiers from Britain, France, the U.S. and the Soviet Union occupied Germany, each in a designated zone. Germany’s capital Berlin was divided into four sectors, each with a foreign military occupying force. I was a part of that occupation force from 1968 through 1971, serving in the U.S. Army’s Berlin Brigade as part of the 430th Military Intelligence Detachment.


The initial intention to keep postwar Germany in check morphed into the Cold War with the Soviets. The Soviet sector of Berlin became the capital of communist East Germany while the U.S. led efforts to create a military union based in Western Europe that would resist further Russian expansion. That alliance became the North Atlantic Treaty Organization (NATO) in 1949, a structure that incorporated the newly minted Federal Republic of Germany, and the Soviets countered with the Warsaw Pact that included nearly all of Eastern Europe. Both the Organization and Pact were ostensibly defensive alliances and the U.S. active participation was intended to demonstrate American resolve to come to the aid of the Europeans. The Cold War between the two alliances continued until 1991 when the Soviet Union collapsed. Germany was reunited, the Berlin wall was torn down, the foreign troops went home and the city again became the country’s capital.

During my time in Germany the Cold War was decidedly hot, having relatively recently witnessed the Russian denial of Berlin’s occupied city status shared among the four victorious nations by building a wall and confronting U.S. forces at the new border crossing points. My recollection is that in 1970 there were more than 10,000 GIs in Berlin alone and about 200,000 more stationed in West Germany.

Today there are approximately 36,000 American soldiers and airmen based in a reunited Germany but President Donald Trump decided in early June to withdraw 9,500 of them and to also cap the total U.S. military presence in that country at 24,000, which would involve 2,500 more cuts and might go even deeper depending on what is eventually included in the numbers. Preliminary planning suggests that about 5,600 will be repositioned to other NATO countries, including Italy, Belgium and Poland, while 6,400 will be returned to the U.S., from which point they might go on to the Pacific theater to confront “Chinese ambitions.” Unlike previous Trump pronouncements on reductions in force in Afghanistan and Syria, neither of which has actually been achieved, this latest move regarding Germany appears to be serious.

As some of the soldiers that are being re-positioned elsewhere in Europe will undoubtedly be closer to the border with Russia, there should be no doubt but that the Kremlin is still the designated enemy. Whether Russia is an actual threat is questionable and many observers privately believe that NATO is an anachronism, kept going by the many statesmen and military establishments of the various countries that have a vested interest in maintaining the status quo.

In spite of the clearly diminished threat in Europe, NATO has expanded to 30 members, including most of the former communist states that made up the Warsaw Pact. The most recent acquisition was Montenegro in 2016, which contributed 2,400 soldiers to the NATO force. Since the demise of the Warsaw Pact, NATO has found work in bombing Serbia, destroying Libya and in helping in the unending task to train an Afghan army, tasks which were not envisioned when the treaty was signed in 1949.

Trump has also stated his intention to move the European Headquarters of U.S. forces from Stuttgart in Germany to Mons, near Brussels in Belgium. The move would seem to make some limited sense as NATO headquarters is also in Brussels, but there is also a political dimension to it. Trump has been sending the not unreasonable message that if the Europeans want more defense, they should pay for it themselves, though he has wrapped his proposal in his usual insulting and derogatory language. A wealthy Germany currently spends 1.1% of GDP on its military, far less than the 2% that NATO has declared to be a target to meet alliance commitments. That compares with the nearly 5% that the U.S. has been spending globally, inclusive of intelligence and national security costs.

Trump might actually have a reasonable U.S. perspective on the burden sharing issue, but the European concern is more focused on how Trump does what he does. For example, he announced the downsizing in June without informing any of America’s NATO partners. The Germans were surprised and pushed back immediately. German Foreign Minister Heiko Maas regretted the planned withdrawal, describing Berlin's relationship with the Washington as "complicated.” Chancellor Angela Merkel was reportedly shocked. And Trump made matters worse last week when he tweeted “Germany pays Russia billions of dollars a year for Energy, and we are supposed to protect Germany from Russia” before maladroitly observing that “The United States has been taken advantage of for 25 years, both on trade and on the military. We are protecting Germany. So we’re reducing the force because they’re not paying their bill. It’s very simple: They’re delinquent. Very simple.”

The timing of the decision has also been questioned, with many observers believing that Trump deliberately staged the announcement to punish Merkel for refusing to attend a planned G-7 Summit in the U.S. that the president had been trying to arrange. Merkel argued that dealing with the consequences of the coronavirus made it difficult for her to leave home and the G-7 planning never got off the ground, which angered Trump, who wanted to demonstrate his global leadership in an election year.

Predictably, the Democrats and also some Republicans are piling on Trump over the decision.

  • Joe Biden sees a “profound problem” in the withdrawal while

  • Senator Bob Menendez of the Senate Foreign Relations Committee quipped “Champagne must be flowing freely this evening at the Kremlin.” 

  • Republican Mitt Romney declared the move to be “grave error…a slap in the face at a friend and ally when we should instead be drawing closer in our mutual commitment to deter Russian and Chinese aggression. The move may temporarily play well in domestic politics, but its consequences will be lasting and harmful to American interests.”

The limited reduction in force actually makes no sense if one believes that NATO itself should instead be terminated due to its lacking any credible threat from Russia or from anyone else.recent opinion poll suggests that keeping U.S. troops in Germany is not considered desirable by the Germans themselves, only 15% of whom support their remaining on national security grounds. And moving troops to Belgium and Italy is going in the wrong direction if one actually considers that there is an active threat from Moscow.

Nor does moving soldiers from one country that is behind on its 2% “dues” to NATO to other countries that are likewise in arrears make any practical sense but for a president who feels personally affronted by a foreign leader and is choosing to react petulantly as punishment. The disruption to U.S. military facilities that currently provide support to elements in Africa and the Middle East will be considerable, and the move will also not be cost-free. According to the New York Times, “Repositioning the troops will cost several billion dollars. The withdrawal and shifting of forces is likely to take months, if not years.” 

And, of course, the real kicker is that if Joe Biden is elected president in a little less than three months the whole planned move will be scrapped by the victorious and persistently warlike Democrats.

No wonder Americans’ trust in the rationality of their government is at an all time low.

Published:8/4/2020 1:23:04 AM
[Markets] : BP slashes dividend in half after $16.8 billion loss Oil giant BP on Tuesday cut its dividend in half after reporting a $16.8 billion loss for the second quarter.
Published:8/4/2020 1:23:04 AM
[Markets] Parts Of France Impose Outdoor Mask Mandate In Controversial First Parts Of France Impose Outdoor Mask Mandate In Controversial First Tyler Durden Tue, 08/04/2020 - 01:20

The global pandemic lockdowns and social distancing regulations have produced many new controversial firsts, leading to both disputes between citizens and law enforcement, and among people often wrangling with each other over things like mask wearing or proximity, or even the ability to have gatherings at a park.

Though we thought we'd seen everything, here's yet another true first: municipal governments in France have begun mandating the wearing of masks outdoors.

"Beach resorts along France’s Atlantic coast, picturesque promenades on the Loire River, farmers markets in the Alps — they’re among scores of spots around France where everyone is now required to wear a mask outdoors," the Associated Press reports.

Mask at the beach? Image via Newsweek

The sure to be controversial policy in parts of the country comes as a national mask law goes into effect Monday; however, the mask law only mandates the wearing of a face covering indoors.

Currently, there are fears of a virus resurgence, with the French health authorities reporting 7,000 new cases over the course of the past week.

This second wave fear, such as the United States has been at the forefront of experiencing, is reportedly putting pressure on the government to go to the extreme of mandating the wearing of masks even outside.

The AP details further:

Several sites around France have started requiring masks outdoors in recent days. Starting Monday, 69 towns in the Mayenne region of western France imposed outdoor mask rules, as did parts of the northern city of Lille and coastal city of Biarritz in French Basque country.

Thus far there's been a clear scientific consensus that coronavirus is more easily spreadable indoors, while there's less danger for it's spread in the outside open air.

Mask while jogging? Getty Images

The idea that France could soon see a nationwide "outdoor" mask law would prove to be hugely controversial, given that it would require everyone from hikers to joggers to people just walking even in isolation to be masked up.

Published:8/4/2020 12:23:22 AM
[Markets] Indian Stocks Break Critical Support As Pandemic Accelerates  Indian Stocks Break Critical Support As Pandemic Accelerates  Tyler Durden Tue, 08/04/2020 - 00:40

Indian shares have reversed in the last four sessions, breaking critical support, following financials, energy, healthcare, and telecommunication services pressuring the NIFTY 50 lower on Monday.

Ahead of the interest rate decision this week, investors have been souring over the prospects of rising coronavirus cases

NIFTY 50 has fallen 4% since late last week, and this comes after a 50% increase in India's main equity index since mid-March after it plunged 38% on the eruption of the virus pandemic. 

India's interior minister said hospitalization with COVID-19 is surging as cases soared Monday above 50,000 for the fifth consecutive day. 

India's Ministry of Health and Family Welfare reported 52,972 new confirmed infections on Monday, pushing up the total to 1.8 million, just behind the US and Brazil. 

With 771 new deaths, the virus pandemic has killed 38,135 people in the country, including that of a minister on Sunday.

Zee Business financial analyst Anil Singhvi warned NIFTY 50 downside could be seen if the ?11,000-level support is violated. The index closed ?10,891, indicating further downside is ahead. 

Singhvi said investors should sell stocks if NIFTY 50 trends below ?11,000. After the correction, he believes stocks could zoom higher. 

"11000 most important level ... Anil Singhvi said - do not be afraid of a few digit correction after the boom ... If the market trades below 11000-10950, neutralize the position of the bull, said - for a big boom beyond 11300 Stay ready," tweeted Zee Business (translated into English). 

Perhaps waning Indian stocks is a warning sign for the MSCI World Index.   

Earlier on Monday, Spanish stocks broke critical support after new rounds of lockdowns feared. 

Published:8/3/2020 11:47:20 PM
[Markets] Health care will cost this much in retirement — but probably even more And with COVID lurking, here’s one employer benefit you should absolutely review
Published:8/3/2020 11:22:51 PM
[Markets] The Pentagon's New UFO Disclosures: 75 Years Of MK Ultra Psy Ops The Pentagon's New UFO Disclosures: 75 Years Of MK Ultra Psy Ops Tyler Durden Tue, 08/04/2020 - 00:05

Authored by Matthew Ehret via The Strategic Culture Foundation,

In my last few articles, I have found myself writing on the theme of the emerging new system and the battle between two paradigms (multipolar vs unipolar).

Within that theme, the important issue of psy ops, false solutions and epistemological warfare which is a part of everyone’s’ daily life (whether they know it or not) arose as well. Recent events and announcements have caused me to tackle another aspect of psychological warfare in the modern age.

UFOs and You

What would you do if the American and British governments both revealed that their secret UFO programs would declassify material from each nations’ respective National Archives?

What if you found out that leading politicians like former House Majority speaker Harry Reid had allocated $22 millions of tax payer dollars to UFO research and that Obama’s former chief counsellor (and rampant pedophile) John Podesta has openly called for UFO disclosure on several public occasions since 2002 or that Hillary Clinton herself called for UFO disclosure during her presidential campaign pledges of 2015?

Would you believe these claims or would you remain skeptical? How would you decide what to do?

With the July 23 public statement from the Pentagon that “off world vehicles not made on this earth” have been kept secret for decades, this question has become extremely important.

Major opinion-shapers like Joe Rogan, Tucker Carlson, and even Russia Today have promoted the cause of alien disclosure for the past few years and with the most recent Pentagon announcement, fascination in little grey men has spread like wildfire.

Who’s Playing this Game?

For the past several decades, government-sponsored UFO research has largely been driven by the work of private subcontractors like Bigelow Aerospace which was founded by billionaire real estate speculator Robert Bigelow who allocated large swaths of his fortunes to the creation of organizations like the National Institute for Discovery Science which have always worked in a private capacity with governments and academia. One of Bigelow’s biggest tools was Sen. Harry Reid who not only received generous campaign funds from the billionaire between 1998-2009 but also allocated tens of millions in national defense funds to his company starting in 2007.

In 2014, the creative force driving the “UFO-disclosure cause” has taken the form of a weird organization called To the Stars Academy of Arts and Science run by high level intelligence operatives and using a cardboard cut-out Tom Delonge (former lead singer of the punk band Blink 182). To the Stars has poured millions of dollars into cultural/educational and lobbying projects driven by books, movies, film and documentaries in the cause of “elevating global consciousness” in preparation for a new age of UFO disclosure.

As Delonge says in his promotional video

“through a series of meetings I was soon connected to a large group of U.S. government officials. From the CIA, to the Department of Defense to Lockheed Martin Skunkworks. These were the guys involved in the secretive government programs that dealt with these subjects.”

Some of the shadowy figures affiliated with To the Stars include a former CIA director of operations, former Deputy Assistant secretary for Defense Intelligence, former Director of Information for White House Technology, and former chief of the CIA’s counter-biological weapons program. Both Podesta and Bigelow’s Aerospace have also worked closely with Delonge’s strange group over the past six years.

Bigelow is not the only billionaire who has allocated their vast fortunes to the cause of “UFO truth”.

The Rockefeller Project

In 1993, the Disclosure Initiative was created by none other than financier Laurence Rockefeller (4th son of Standard Oil Founder John D. Rockefeller) which had a two-fold purpose:

  1. Unite all of the largest UFO research organizations in America under one umbrella organization which was promptly accomplished within one year and

  2. Massively lobby the Clinton Administration to declassify millions of documents which was done in 1994, revealing little more than mountains of anecdotal testimonies and correspondences.

During the heyday of the Rockefeller UFO Disclosure Initiative, the Clintons stayed at the Laurence Rockefeller ranch in Wyoming, during which time an early recruit to the “disclosure mission” was Clinton Chief of Staff John Podesta. Podesta started going public with calls for UFO disclosure in 2002 and has continued to work with figures like Bigelow and To the Stars Academy over the next 18 years.

A fuller overview of Laurence Rockefeller’s “other” civilization-shifting programs from the 1950s-1990s can be seen here.

During the Clinton White House years, Laurence Rockefeller recruited a bodybuilding biologist named Stephen Greer to become the controller of the Disclosure Project which has provided his meal ticket to this very day. Greer has given thousands of interviews promoting the narrative that NASA’s Apollo Lunar projects were stopped in 1972 merely because the aliens who have been stationed on the Moon for eons didn’t want the truth to leak out (but were at least kind enough to let U.S. keep the technology they gave U.S. earlier in Roswell in the 1950s). If you believe in Greer’s narrative (which gets much crazier I promise), then human creative thought is actually not as special as “the shadowy forces controlling the government” wanted you to believe since space technology only existed because we stole stuff from ETs. Pretty much any inspired awe in universal creation and the power of the human mind to discover this creation with the effect of making life better through scientific and technological progress would easily be killed from this outlook.

The questions an intelligent person should now ask are:

  • Why would a leading figure of the Rockefeller dynasty devote the last decades of his life to the cause of “UFO truth”?

  • Did Laurence Rockefeller or those on his payroll or those in the CIA actually care about the right of the people to know hidden truths, or is the plan just designed to mis-direct the minds of credulous and jaded citizens into an invisible cage?

  • Might such a mis-direction prevent people from dealing with issues of America’s conversion into Nazism and accelerating disintegration?

  • Is it possible that these pedophiles, globalists, and Malthusian billionaires care less about the truth and more about inducing Americans to fixate on aliens while the republic is destroyed under economic collapse and war?

Squaring the Crop Circle

A large portion of the Disclosure Project’s work has gone into the investigation of crop circles which were first recorded in the early 1970s in Britain, and which have the peculiar characteristic of becoming increasingly well executed and complex over the course of five decades. Live Science reported that “the first real crop circles didn’t appear until the 1970s, when simple circles began appearing in the English countryside. The number and complexity of the circles increased dramatically, reaching a peak in the 1980s and 1990s when increasingly elaborate circles were produced”.

My question is: If transcendental alien races travelling at faster-than light speed, have been leaving encoded messages to U.S., then why would their artistic skills have improved so dramatically over a few years? Just a question.

MK Ultra & UFOs

Most people know of the CIA/MI6-funded mass brainwashing operation known as MK Ultra which was launched in 1953. Very few people have recognized the connection between MK Ultra and the rise of the UFO movement that grew in spades throughout the Cold War.

While U.S. and UK government UFO investigations did occur in piece meal starting in 1947 under Project Sign (1947), and Project Grudge (1949), it wasn’t until 1950 that official tax payer-funded departments were created in both nations to pursue “UFO research”. These took the form of the USA’s Project Blue Book (1952) which itself was modelled on the work conducted by Britain’s 1950 “Flying Saucer Working Party” spear-headed by Sir Henry Tizard (Chief Science Advisor to the Ministry of Defense and Chairman of Britain’s Defense Research Policy Committee).

Journalist Naomi Klein stated in her book The Shock Doctrine that Tizard played a leading role in the creation and funding of MK Ultra during a high level meeting in Montreal and Tizard’s Wikipedia entry notes that:

“One of the most controversial meetings he had to attend in his capacity as chair of the National Research Commission would only emerge many years later with the de-classification of CIA documents, namely a meeting on June 1st, 1951 at the Ritz-Carlton Hotel in Montreal Canada, between Tizard, Omond Solandt (chairman of Defence Research and Development Canada) and representatives of the CIA to discuss “brainwashing”.

This Ritz-Carleton meeting would lay the seeds for MK Ultra that was not only designed to deal with brainwashing, but created LSD, and explored the matter of breaking down a human mind into a blank slate with the explicit intention of reconstructing minds from scratch. As Klein’s book eloquently showcases, the intention was to use these discoveries on a national scale in order to conduct “shock therapy” on nations in order to break cultures and nations from their historic memories and traditions with the purpose of reconstructing them under a post-nation state (and post truth) neo liberal world order. While MK Ultra was funded by the Americans, the guidance for this operation were always driven by London’s Tavistock Clinic. A bone chilling expose of this clinic was produced by EIR’s Jeffrey Steinberg in 1993 which may keep you up at night.

As one can imagine, the very act of providing government funds to investigate flying saucers was itself sufficient to legitimize the existence of aliens in the minds of millions of Europeans and Americans during the Cold War years. During these dark years, faith in honest government collapsed under the imperial wars of Korea, Vietnam abroad and the growth of the Military Industrial Complex and McCarthyism at home. The world of secret patents, secret weapons, secret R&D that developed during this period in facilities like Area 51 made the frequent sightings by civilians and even un-vetted military pilots of “unidentified flying aircraft” an expected occurrence.

Flying Saucers and Area 51

In her 2012 book Area 51 Uncensored, journalist Annie Jacobson provided lengthy detail of the Cold War experiments, aerospace technology and nuclear bomb testing that took place at Area 51 during this period which largely fed off the earlier social engineering experiment of H.G. Wells’ War of the Worlds emergency broadcast read aloud in 1938. The mass panic that ensued the broadcast provided an insight into the levers of mass psychology that certain social engineers drooled over.

What could account for observed UFO phenomena?

In an interview with NPR Radio, Jacobson stated:

“The UFO craze began in the summer of 1947. Several months later, the G2 intelligence, which was the Army intelligence corps at the time, spent an enormous amount of time and treasure seeking out two former Third Reich aerospace designers named Walter and Reimar Horten who had allegedly created [a] flying disc. 

...American intelligence agents fanned out across Europe seeking the Horton brothers to find out if, in fact, they had made this flying disc.”

During WWII, the Horten brothers were associated with the Austrian scientist Viktor Shauberger whose innovative designs for implosion (vs explosion) flying technology utilized water currents, and electromagnetism to generate flying machines that by all surviving accounts flew faster than the speed of sound. While much of his research was confiscated and classified by victor nations after WWII, Schauberger was promised government sponsorship in America which induced the inventor to move across the Ocean where Canada’s Avro Arrow program sought his designs for supersonic nuclear missile delivery aircraft. When he discovered that his work would only be used for military purposes, Schauberger pushed back and over the course of several months, his patents were essentially stolen, and he returned to Austria to die broke and depressed in 1958.

The Strategic Importance of Space

It was never a secret that the post-1971 globalized world order championed by the likes of Sir Henry Kissinger, David and Laurence Rockefeller and other Malthusians throughout the 20th century was always designed to collapse. With the mass shock therapy that such a collapse would impose upon the world, it was believed that a deconstruction of the Abrahamic traditions that governed western society for 2000 years could be accomplished and a new society could be socially engineered in the image of the Brave New (depopulated) World that would live like happy sheep forever under the grip of a hereditary alpha class and their technocratic managers.

The only problem which these social engineers have encountered in recent years is the re-emergence of actual statesmen who are unwilling to sacrifice their people and traditions on the altar of a new global Gaia cult. Such defenders of humanity’s better traditions have launched the multipolar alliance and have driven a policy of long-term growth and advance scientific and technological progress which is embodied brilliantly by the New Silk Road, and its extensions to the Arctic. The most exciting aspect of this New Silk Road/Multipolar Paradigm is the leap into space exploration as the new frontier of human self-development which has not been seen since the days of President Kennedy.

With China and Russia signing a pact to jointly develop lunar bases and the NASA Artemis Accords calling for international cooperation on Lunar and Mars resource development/industrialization, the age of unlimited growth that was lost with the LSD-driven mass psychosis of 1968’s “live in the now” paradigm shift may finally be recaptured. Programs designed to put humanity’s focus on real objective threats like Asteroid collisions, and solar-induced new ice ages are seriously being discussed by leaders of Russia, China and the USA.

There are billions of suns and potentially billions of galaxies, and chances are there is indeed life on many of the planets orbiting some of the stars within our growing, creative universe… and there is also a fair chance that cognitive life has also emerged on some of those planets. The best way to find out however is not to sit at home while the world economic system collapses under a controlled disintegration thinking about Rockefeller-funded conspiracy theories, but rather to fight to revive humanity’s open system destiny starting with a cooperative space program to extend human culture and economy to the Moon and Mars, and then onto other planetary bodies followed by missions to deep space.

If other civilizations exist, maybe it is our duty to take up the torch left to U.S. by JFK and go find them.

Published:8/3/2020 11:22:51 PM
[Markets] MarketWatch First Take: Trump has no right to demand money from Microsoft-TikTok deal The move by the U.S. government to attempt to get the Chinese company ByteDance to divest the U.S. version of its popular TikTok social media app is not without recent precedent, but President Donald Trump’s demand for a cut of the deal is completely bizarre.
Published:8/3/2020 10:48:32 PM
[Markets] Shootings, Murders Spike By Record In Portland After Disbanding 'Gun Violence Reduction Team' Shootings, Murders Spike By Record In Portland After Disbanding 'Gun Violence Reduction Team' Tyler Durden Mon, 08/03/2020 - 23:45

Violent crime in US metro areas surged this summer amid the pandemic, recession, and social unrest: A perfect storm of distress that is unraveling society.  

From Atlanta to Baltimore to New York City to Chicago to Houston to some major Californian metro areas, many of these democratically-controlled cities are facing an eruption in violent crime, including murders and thefts.

Readers may recall some of the cities listed above are the usual suspects when referring to metros with the most out of control crime in the US. Now Portland's liberal utopia appears to be imploding, as murders in July jump. 

Portland Police Bureau has responded to 15 homicides in July, which is a three-decade high, reported The Oregonian. The Portland Metropolitan Area has seen approximately 24 homicides this year. Besides homicides - assaults, burglaries, and vandalism are also increasing over last year's figures. 

Verified Non-Suicide Shootings In Portland 

Police Chief Chuck Lovell is concerned by the increase in violent crime. He's shifted officers from patrols to aid in ongoing homicide investigations. 

“That’s very concerning. I mean, to know that that many people have been killed in such a short period of time,” Lovell said at a recent virtual press conference.

At the same time, Lovell said Portland City Hall slashed its budget, which resulted in the massive defunding wave in early July that forced a sizeable cut in its Gun Violence Reduction Team. Also, there's been at least a month of lawless anarchists destroying property in the area. The federal government sent in personnel to squash the uprising.

Since the Gun Violence Reduction Team was disbanded on July 1, Lovell has repeatedly linked it with the struggle to police the city.

The loss “forced us into a position where we have to really look at what resources we can bring to bear, absent that structure that we had with the Gun Violence Reduction Team,” he said.

In another recent press conference about the rise in homicides, Portland Mayor Ted Wheeler admitted the city had seen “an unprecedented escalation of gun violence.”

In the first 12 days of the month, officials witnessed an over 380 percent spike in such violence, compared to the same time period in 2019.

“This is the city we live. Portlanders, our neighbors, are being hurt by this violence. They’re being killed. The violence and the loss of life are unacceptable,” Wheeler added.

Liberal cities, ones that have defunded police and allowed anarchists to run wild, are seeing a perfect storm of distress flare up as the virus-induced downturn has unleashed a social-economic bomb. 

Published:8/3/2020 10:48:32 PM
[Markets] It's Now Virtually Impossible To Get A Bank Loan As Lending Standards Soar It's Now Virtually Impossible To Get A Bank Loan As Lending Standards Soar Tyler Durden Mon, 08/03/2020 - 23:05

One quarter ago we pointed out something concerning: shortly after JPMorgan reported that its loan loss provision surged five fold to over $8.2 billion for the first quarter, the biggest quarterly increase since the financial crisis, in preparation for the biggest wave of commercial loan defaults since the financial crisis (a number which in the latest quarter surged to $10.5 billion along with all other banks' loan loss provisions)...

... the bank hinted that things are about to get much worse when it first halted all non-Paycheck Protection Program based loan issuance for the foreseeable future (i.e., all non-government guaranteed loans) because as we said "the only reason why JPMorgan would "temporarily suspend" all non-government backstopped loans such as PPP, is if the bank expects a default tsunami to hit coupled with a full-blown depression that wipes out the value of any and all assets pledged to collateralize the loans."

Shortly after, the bank also said it would raise its mortgage standards, stating that customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value, a dramatic tightening since the typical minimum requirement for a conventional mortgage is a 620 FICO score and as little as 5% down. Reuters echoed our gloomy take, stating that "the change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market, after measures to contain the virus put 16 million people out of work and plunged the country into recession."

Finally, just days later, JPM also exited yet another loan product, when it announced that it has stopped accepting new home equity line of credit, or HELOC, applications. The bank confirmed that this change was made due to the uncertainty in the economy, and didn't give an end date to the pause.

In short, JPM appeared to be quietly exiting the origination of all interest income generating revenue streams over fears of the coming recession, which prompted us to ask  "just how bad will the US depression get over the next few months if JPMorgan has just put up a "closed indefinitely" sign on its window."

On Monday, we got confirmation that it was not just JPMorgan but all US commercial  banks that are making the issuance of almost all new credit (with one notable exception) virtually impossible, when the Fed's July senior loan officer survey showed that banks tightened lending standards across the board for C&I (commercial and industrial loans), CRE (commercial real estate), consumer (credit card and auto loans) and residential real estate (RRE) loans. The loan standards for most products - such as C&I loans, residential mortgages and credit cards - were hiked so much they nearly matched the standards during the financial crisis when it was virtually impossible to get any new loans.

This was the second quarter in a row in which loan officers reported sharply tighter financial conditions.

Just as concerning, demand for many loan products also slumped, and in the case of auto loans to record lows, with the exception of jumbo (both conforming and non-confirming) loans, which were roughly flat with demand boosted by record low interest rates.

Here are the details:

According to the July Fed’s Senior Loan Officer Opinion Survey (SLOOS), lending standards for commercial and industrial (C&I) loans tightened in the second quarter with a near record 71% of banks on net tightened lending standards for large and medium-market firms (vs. only 42% on net in the previous quarter), while 70% of banks on net tightened lending standards for small firms (vs. 40% on net in the previous quarter). 59% of banks on net increased spreads of loan rates over the cost of funds for large firms, while 54% on net increased spreads for small firms. In short, anything that is not explicitly guaranteed by the government such as PPP loans, banks won't go near with a ten foot pole for one simple reason: they have zero visibility if and when they will get repaid.

For banks that tightened credit standards or terms for C&I loans or credit lines:

  • 22% cited a deterioration in the bank’s capital position as playing a role,
  • 97% cited a less favorable or more uncertain economic outlook,
  • 85% cited a reduced tolerance for risk,
  • 31% cited decreased liquidity in the secondary market for loans,
  • 7% cited a deterioration in the bank’s own liquidity position,
  • 26% cited increased concerns about the effects of legislative changes, supervisory actions, or changes in accounting standards.

More ominously for a consumer driven economy, demand for C&I loans from large- and medium-sized firms weakened after strengthening in Q1. 23% of banks on net reported weaker demand for C&I loans for large and medium-market firms, compared to 8% on net reporting stronger demand in the previous survey.

The biggest hit was for commercial real estate (CRE) loans, where standard tightened significantly in Q2. 81% (+29pp) of banks on net reported tightening credit standards for construction and land development loans, 78% (+26pp) on net reported tightening standards for loans secured by nonfarm nonresidential properties, and 64% (+15pp) on net reported tightening lending standards for loans secured by multifamily residential properties. Demand for CRE loans fell significantly across all three categories.

While demand for mortgages rose modestly, banks made it more difficult to get a mortgage by significantly tightening lending standards for mortgage loans. Lending standards for GSE-eligible (+53pp to +55%), non-jumbo, non-GSE eligible (+48pp to 59%), Qualified Mortgage jumbo (+50pp to 69%), non-Qualified Mortgage jumbo (+55pp to 70%), non-Qualified Mortgage non-jumbo (+49pp to +64%), and subprime (+29pp to t43%) mortgages all tightened. In other words, all those pleading the case that housing is exploding due to surging loan demand, are forgetting that there is also supply they need to consider, and contrary to conventional wisdom, banks have rarely been less willing to hand out mortgage loans.

Finally, banks’ willingness to make consumer installment loans declined significantly in Q2 (-41% on net vs. -20% on net previously). At the same time, credit standards for approving credit card applications tightened (+72% on net vs. +39% previously), while a modest share of banks also tightened standards for auto loans (+55% vs. +16% previously). Demand for credit card loans declined (-65% on net vs. -23% previously), as did demand for auto loans (-49% vs. -35% previously).

Published:8/3/2020 10:16:44 PM
[Markets] Earnings Watch: Uber earnings: ‘A tale of two businesses’ as Postmates comes on board The COVID-19 crisis has hit ride-hailing hard, but food delivery has become a lifeline for many. Can gains for UberEats overshadow the decline of Uber's core business as it looks to devour Postmates?
Published:8/3/2020 9:48:26 PM
[Markets] Global Markets: Asia stocks rise as upbeat factory data lifts confidence MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9%, while shares in China nudged up 0.1%. Tokyo shares also jumped by more than 1%. Oil futures gave up their overnight gains and fell in Asia due to nagging worries about an increase in the supply of crude. Published:8/3/2020 9:48:26 PM
[Markets] Shaping Eurasia: Russia – China Bilateral Trade And Cooperation Shaping Eurasia: Russia – China Bilateral Trade And Cooperation Tyler Durden Mon, 08/03/2020 - 22:45

Submitted by SouthFront

Relations between Russia and China have gone from strength to strength over the last 10 years. This development is not exclusively due to the increasingly hostile attitude of Western countries, and the US in particularly, to Russia and China, but it has certainly been a major contributing factor. The deepening and diversification of their strategic relationship is apparent in all spheres, but is particularly notable in their economic and military relations.

There are many factors underpinning the expansion and diversification of trade relations and other forms of economic cooperation between Russia and China. The most important ones include the imposition of sanctions on Russia by Western countries in 2014, the economic stagnation that has characterized most European countries for much of the last 10 years while the Chinese economy has continued to grow, symmetry in economic characteristics of both countries (surpluses in one and corresponding shortages in the other in a variety of sectors), US pressure bringing both countries closer together geo-strategically (which has also produced a mutual interest in shifting away from the US dollar in all transactions), and the consolidation and harmonization of the Chinese ‘One Road One Belt’ initiative and the Eurasian Economic Union

After a relatively flat period marked by what could be characterized as benign indifference and neglect, the trade relationship between Russia and China has grown rapidly since 2009 in terms of both imports and exports, although there was a sharp decline during 2014-2015 corresponding to a sharp decline in Russia’s overall GDP and trade volumes.

However, at least as importantly, the growth in trade and other forms of economic cooperation has not just been quantitative but also qualitative, as the governments of both countries have elaborated detailed industrial development strategies and plans over long periods which have channelled both public and private sector investment and production into priority areas.

This is in sharp contrast to the peculiar form of haphazard, opportunistic and hyper-militarized disaster capitalism that has reigned in the US for many years – arguably at least since the 1990s, when US companies began dismantling the US industrial capacity and offshoring production en masse to raise corporate profits, and the US Congress began to dismantle the anti-trust and financial regulatory frameworks that had been established during the Great Depression of the 1930s to limit the volatility and excesses of the financial sector. (It is also approximately the same period that the US began its post Cold War military adventurism in earnest.)

Most recently the Trump administration’s ambitious infrastructure investment fund (which appeared to be yet another corporate and political slush fund to a considerable extent, to be divided amongst political and corporate allies and withheld from opponents or intransigents) to modernize the US’ aging infrastructure never materialized, and the attempt to establish something resembling a coherent industrial policy complemented by a set of tariffs on selected imports to stimulate domestic production degenerated into an ad hoc series of punitive tariffs and charges whose main objective seemed to be to punish China for the US’ own economic and industrial failures.

The only thing the Republicans and Democrats have been able to agree on in recent times, apart from increasing the already astronomical level of military spending, was to establish another disaster capitalism multi-trillion dollar bailout fund (for the Coronavirus this time) for the financial and corporate sectors, which have increasingly fallen under the control of a very limited number of investment funds led by Vanguard and Black Rock.

In contrast, China’s long-running practice of elaborating and updating five year strategic economic development plans which are implemented by a combination of State-owned and private sector enterprises has proven to be a success. After a catastrophic period of experimentation with disaster capitalism under Boris Yeltsin, Russia has also adopted the strategy of developing a hybrid (or ‘mixed’) economy with substantial State and private sector involvement within the overall framework of strategic planning and industrial policies elaborated by the State in accordance with crucial national interests and objectives.

The underlying similarity in approaches and objectives – albeit obscured somewhat by China’s continued strong commitment to communism and Russia’s strong renunciation of the same – has provided a solid basis for both countries’ renewed interest in strengthening bilateral relations and cooperation in all spheres.

While the leadership of both countries have sought to develop and promote a wide range of bilateral trade, investment and R & D projects both by State entities as well as by the private sector, due to their vast scale the bilateral agreements and projects in the energy sector overshadow all others.

This should not however obscure the importance of cooperation in other sectors and the extent to which the different manifestations and forms of cooperation have continued to proliferate. Most Western analysts emphasize the excellent ties that have developed in terms of military cooperation, involving everything from basic R & D of new technologies and weapons systems to military training and exercises, but the bilateral cooperation goes far beyond these high profile sectors to include education, scientific and technical research, agriculture, manufacturing and services more generally.

Macroeconomic Data on the Russian Economy

To contextualize the changes that have taken place in the bilateral economic relations between Russia and China, they are placed against the background of economic developments in Russia more generally. As noted above, Russia’s economy has generally experienced solid if not spectacular growth since the disastrous decade of the 1990s, and although it was significantly impacted by the West’s sanctions imposed in 2014 (as well as by the fall in oil prices that ocurred around the same time) the economy soon stabilized and then recovered quantitative losses on an even more solid fundamental basis given the economy’s increased diversification, self-sufficiency and resistance to external shocks.

Russia’s total GDP and growth rate since 1989; Source

Overall Russia has performed at least as well as most Western countries since 2000, though of course China’s economic growth has far exceeded them.

China’s impressive economic growth therefore could explain the steady trend of increasing trade between the two neighbours by and of itself, however as mentioned above bilateral relations have been boosted by external factors (Western hostility and sanctions) and also nurtured and guided by internal factors (strategic economic and industrial planning based on compatible national priorities and objectives, augmented by significant levels of direct State participation in key economic sectors).


Imports and Exports

The growing economic importance of China to Russia has largely been at the expense of Europe, in part due to the imposition of sanctions against Russia but also a natural consequence of China’s continued economic growth and Europe’s economic stagnation, as well as the complementarity that exists between the Russian and Chinese economies, sectors of comparative advantage and resource endowments.

The share of the 28 European Union countries in Russian exports dropped from 52% in 2014 to 45% in 2017, and the corresponding shares in Russian imports fell from 41% to 38%. Over the same period, the share of China in Russian exports increased from 7.5% to 12%, and in imports from 11.5% to 21%. Nonetheless, as of 2017 Russian imports from China (EUR 48bn) remained about half the value of imports from the European Union (EUR 87bn). Thus although trade reorientation away from the West and towards China is steadily increasing, Europe remains an integral trade partner for Russia.

The figures for 2019 were very similar. The top 10 sources of imports were:

China 21% (54 billion US$), Germany 10.1% (25 billion US$), Belarus 5.52% (13.6 billion US$), USA 5.43% (13.4 billion US$), Italy 4.41% (10.9 billion US$), Japan 3.62% (8.96 billion US$), France 3.47% (8.59 billion US$), Korea 3.23% (8 billion US$), Kazakhstan 2.31% (5.71 billion US$), Turkey 2.01% (4.97 billion US$).

The top 10 export destinations for Russian exports in 2019 were:

China 13.4% (57 billion US$), Netherlands 10.4% (44 billion US$), Germany 6.57% (28 billion US$), Belarus 5.08% (21 billion US$), Turkey 4.95% (21 billion US$), Korea 3.83% (16.3 billion US$), Italy 3.36% (14.3 billion US$), Kazakhstan 3.34% (14.2 billion US$), United Kingdom 3.11% (13.2 billion US$), USA 3.09% (13.1 billion US$). Source

The continued importance of Europe to Russia’s economy is particularly evident when the analysis goes beyond the level of trade volumes, to a consideration of the evolution of trade structures by sector, particularly in the case of Russia’s imports. Whereas Russian exports are dominated by mineral fuels in both directions (accounting for more than 76% of exports to the EU and 64% of exports to China), there are important differences in the structure of Russian imports from the EU and China.

“This reflects the fact that, in certain areas, Russia still needs products and equipment that it can only obtain from Western sources. For example, whereas the HS84 category (nuclear reactors, boilers, machinery and mechanical equipment) represents the largest import item from both the EU and China (with shares in total Russian imports of 23% and 28% in 2017, respectively), the second and third most important categories of imports from the EU: HS87 (vehicles, 11% of Russian imports) and HS30 (pharmaceuticals, 9%) are still largely absent in imports from China…

Nevertheless, import structures are also converging: between 2014 and 2017 these structural ‘import gaps’ were substantially reduced – most spectacularly in the above mentioned three largest import items. The structure of Russian imports from China is also becoming more sophisticated: the shares of machinery and electrical equipment are already higher than the corresponding shares in imports from the EU. As the EU-China import gap closes for Russia, one can conclude that China is gradually replacing the EU as an import source, even with respect to structural developments (although there remain gaps at more detailed commodity levels).” LINK

Key Sectors and Major Projects

The negotiation and execution of structural agreements and operational projects and transactions has taken place within the framework of existing strategic planning elements so as to maximize their compatibility with existing projects and activities and contribution to the realization of national priorities and interests. Although Russia’s efforts to increase economic diversification and self-sufficiency in key sectors received a great boost from the imposition of sanctions in 2014, it had already taken substantial steps in this regard. For instance, a ‘food security doctrine’ has been official government policy since 2010, and the doctrine has been a key element of subsequent government programs for the development of the agriculture and fisheries sectors and the regulation of agri-food markets during the period 2013-2020. LINK

In the same way, ambitious infrastructure projects announced in the framework of developing bilateral relations – such as the Moscow-Kazan high speed railway, which will eventually be part of a high speed rail network linking China (and probably even southeast Asia) to Europe – are being laid out within the framework of a broader Russian strategy to overhaul and upgrade infrastructure throughout the country. In April 2019 the Moscow Times reported:

“The Russian government is pursuing a 6.3 trillion ruble ($96 billion) six-year modernization plan to revamp the country’s highways, airports, railways, ports and other transport infrastructure through 2024.

The comprehensive plan is geared toward improving the connectivity of Russian regions, as well as developing strategic routes including the Europe-Western China transport corridor and the Northern Sea Route.

The plan stems from President Vladimir Putin’s ambitious domestic goals outlined after his inauguration last May. Under a presidential decree, a 3.5 trillion ruble investment fund was set up last summer to finance around 170 construction and other projects from 2019 to 2024.”

Of course, both the general plan and specific details have been subject to scepticism by some experts:

“Bloomberg columnist Leonid Bershidsky has argued that the infrastructure plan risks neglecting underdeveloped regions the Kremlin sees as a “social liability.” Economists interviewed by The Christian Science Monitor have said the revitalization plans are geared toward boosting the export potential of big business and are ill-equipped toward future economic development.” LINK

Nonetheless, at least Russia is committed to thinking and acting strategically with the intention of improving the country’s stock of assets and capabilities, and early indications are that most of the projects have been thoroughly evaluated for current and future economic and social utility and that implementation is progressing steadily. What would the detractors of Russia’s efforts in this respect make of the non-existent efforts of the ruling classes in the US to undertake a similar national infrastructure modernization project?

Early on in the preparations for a massive expansion in bilateral ties the underlying financial infrastructure was laid.

Although still heavily reliant on the US dollar for all bilateral transactions at the time, by 2014 around 100 Russian commercial banks were already offering corresponding accounts for settlements in yuan, and in some ordinary depositors could also open an account in yuan. On November 18 Sberbank became the first Russian bank to begin financing letters of credit in Chinese yuan.

The settlement in national currencies between China and Russia in bilateral trade amounted to about 2% in 2013. However, the use of the yuan in mutual settlements between China and Russia increased ninefold in annual terms between January and September 2014, according to the Chinese Ministry of Economic Development, and has continued to rise. LINK

The financial basis for greatly expanded relations has continued to evolve in accordance with progress in other areas.

Thus, in 2015 Sberbank – Russia’s biggest lender – signed a facility agreement with China’s Development Bank to the amount of $966 million.

The goal of the agreement is to develop the “long-term cooperation between Sberbank and China Development Bank in the area of financing foreign trade operations between Russia and China.”

Russia’s state-owned VTB Bank and the Export-Import Bank of China also signed a $483.2 million loan facility agreement to finance trading operations between Russia and China.

The financial architecture has been further consolidated by broader regional frameworks and agreements for mutually beneficial cooperation.

In 2015, Russian President Vladimir Putin and Chinese leader Xi Jinping signed a decree to formalize cooperation in linking the development of the Eurasian Economic Union with the “Silk Road” economic project. The Silk Road project is aimed at connecting China with European and Middle Eastern markets.

“The integration of the Eurasian Economic Union and Silk Road projects means reaching a new level of partnership and actually implies a common economic space on the continent,” Putin said after the meeting with his Chinese counterpart.

Major transport corridors of the Chinese Belt and Road Initiative

Trans-continental railways

Russia’s railway network is steadily undergoing a major program of extension and modernization

Also in 2015, China pledged to invest $5.8 billion in the construction of the Moscow-Kazan High Speed Railway. The railway will be extended to China, connecting the two countries through Kazakhstan. The total cost of the Moscow-Kazan high speed railroad project is $21.4 billion.

An agreement was signed to create a leasing company which will promote the sale of the Russian Sukhoi Superjet-100 passenger planes to the Chinese and South-East Asian markets, and the two countries agreed to develop a new heavy helicopter, called the Advanced Heavy Lift. LINK

The broadening of economic relations spearheaded by high profile State-led industrial projects is underpinned by a range of other initiatives. For example, in September 2018 Russian and Chinese businesses agreed to further develop trade and economic cooperation and increase mutual investments at the Eastern Economic Forum in Vladivostok.

According to a statement from the Russian Direct Investment Fund (RDIF), the sides are considering 73 investment projects worth more than $100 billion in total. The group overseeing the investments is the Russian-Chinese Business Advisory Committee, which includes more than 150 representatives from “leading Russian and Chinese companies.” RDIF said that seven projects worth a total of $4.6 billion have already been implemented as a result of the group’s activities.

The Russia-China Investment Fund was established in 2012 by China’s state-owned China Investment Corporation and RDIF to focus on projects that foster economic cooperation between Moscow and Beijing. LINK

Major China – Russia gas routes

The largest joint project that has been developed is the massive Power of Siberia gas project. In 2014 Gazprom and the China National Petroleum Corporation (CNPC) signed a $400 billion, 30-year framework agreement to deliver 38 billion cubic meters of Russian gas to China annually. According to Russian energy major Gazprom, 119 operational gas wells had been completed by 2017 at the Chayandinskoye field in Yakutia, and the 3,000km of pipelines from Yakutia to the Russian-Chinese border, connected to the Chinese grid via a two-thread underwater crossing of the pipeline across the Amur River, started deliveries as scheduled late in 2019. The deal on the ‘Eastern Route’ took more than a decade to negotiate.

While Western experts are trying to downplay the merits and prospects for the Power of Siberia project – and the bilateral strategic relationship more generally – the project started supplying gas on schedule and at this stage it appears that the claims of the detractors consist of logistical and operational challenges that the Russians have ample experience in confronting or are largely wishful thinking (the terrain is very inhospitable and operating costs and risks are therefore very high, the project will crowd out smaller producers, Russia is locking itself into an arrangement that eliminates other opportunities, Chinese market power means Russia will have to accept unfavourable conditions, the Asian giant will inevitably swallow up its northern neighbour, bilateral relations are founded on a ‘marriage of convenience’, etc.). LINK

As the US has continued to intensify its hostility and associated geopolitical and economic pressure on China and Russia, the two countries have continued to expand their military cooperation as well as a strong high-tech partnership spanning telecommunications, artificial intelligence and robotics, biotechnology and the digital economy based on the exploitation of existing and potential synergies.

The deepening of the bilateral relationship includes more dialogue and exchanges of information, increased academic cooperation and the development of joint industrial science and technology parks. In addition, Russian President Vladimir Putin said Russia would help the Chinese build their own missile early-warning system – a technology that only Russia and the U.S. have successfully implemented so far. LINK


The crucial role of strategic economic and industrial planning and direct State participation in key sectors has been emphasized throughout this report. This is not to suggest that such planning and participation has been perfect; of course, significant errors have been made in both planning and execution, unforeseeable external shocks or factors that could have been predicted but were not taken into account have disrupted progress, as in all other countries.

One area of particular concern is the adverse material impact and effect on morale caused by corruption, which continues to plague both State and private sectors suggesting that the systems of accounting and accountability applying to both require further improvement in both design and implementation. Also, it is arguable that the vision of public forms of economic ownership and participation remains somewhat limited to a strict State/ private company dichotomy and to elitist management structures and procedures within each.

One aspect of this is that more forms of State participation could be considered at the regional and local levels; another is in terms of inclusion of the workforce of each enterprise in the planning, management and accountability structures and decisions of existing State-owned enterprises.

Beyond this, there may be scope for the promotion of other forms of organization, such as producer, professional or community-based cooperatives and collectives that can provide an organizational basis for economic projects and activities in a manner that can incorporate other values and objectives beyond the profit motive.

The basic data for foreign capital flows also suggest a major structural defect which is inherent to the ‘actual existing’ international economy: a vastly disproportionate amount of capital arrives from and departs for small countries that have no clear trade significance or investment capacity of their own, meaning that such capital flows are routed via these jurisdictions either to avoid taxes and other regulations or to deliberately obscure the identity of the owners and beneficiaries of the resources involved.

According to UNCTAD, between 30% and 50% of all ‘foreign direct investment’ worldwide passes through “conduit” countries, making it hard to determine the source.

According to data from the Central Bank of Russia for 2017, Russia receives 36.8% of ‘foreign direct investment’ (or more accurately, international capital flows) from Cyprus, 5.8% from the Bahamas, 7.2% from Bermuda, 0.8% from China, 3.4% from France, 4.1% from Germany, 0.5% from Japan, 0.4% from Korea, 4.4% from Luxembourg, 9.2% from Netherlands, 3.7% from Singapore, 2.9% from Switzerland, 4.2% from the UK, 0.7% from the US and 0.8% from the Ukraine.

According to estimates compiled by UNCTAD, approximately 6.5% of Russia’s ‘FDI’ stock — about $28.7 billion worth based on 2017 data — was actually of Russian origin. The UNCTAD estimates also showed a significantly increased amount of European and US investment. According to the estimates produced, the US is actually the biggest foreign investor in the Russian economy, worth about $39.2 billion.

While such features of international capital flows can be useful to, for example, elude punitive sanctions from hostile states, they greatly restrict efforts to reduce corruption and improve planning and accountability. The Russian government is no doubt well aware of both the potential advantages as well as the drawbacks involved. For example, Bloomberg reported last year:

“For Russia, meanwhile, repatriating the capital that’s recorded as foreign but isn’t remains an important policy goal. In the 2019 World Investment Report, Unctad attributes the 2018 drop in Russia’s investment inflows to the government’s effort to get Russian business owners to redomicile their holdings to the home country.” LINK

While some aspects and consequences of this inimical structural feature of the international economy have been addressed, it remains a major challenge not just for Russia but everywhere.

Overall, however, the available macro-economic data and preliminary results of major joint projects between Russia and China suggest that their approach has been successful as the Russian economy has withstood the external shocks of sanctions imposed by major trading partners as well as large falls in oil and gas prices, and continued on the path of diversification, deepening and constant improvement of existing production capacities to ensure a core level of resilience and self-sufficiency without going to the other extreme of going xenophobic and renouncing foreign trade and cooperation.

Published:8/3/2020 9:48:26 PM
[Markets] NYC Mayor Admits City Did Not Submit Application To Paint 'Black Lives Matter' Murals NYC Mayor Admits City Did Not Submit Application To Paint 'Black Lives Matter' Murals Tyler Durden Mon, 08/03/2020 - 22:05

Authored by Janita Kan via The Epoch Times,

New York Mayor Bill de Blasio said on Monday that the Black Lives Matter murals painted around the five boroughs were painted without going through the application process for public art projects.

His comments come after the city is facing scrutiny for refusing to let other groups to paint similar murals on city streets, with the groups accusing the mayor of depriving them of their First Amendment rights.

De Blasio told reporters in July that he would not allow Blue Lives Matter and other groups to paint similar messages. He justified his decision by saying that “Black Lives Matter” represents a “seismic moment” in the nation’s history and transcends the message of any one group.

Meanwhile, a conservative women’s group, Women for America First, sued De Blasio and Transportation Commissioner Polly Trottenberg in July for allegedly blocking their request to paint a mural with the message “Engaging, Inspiring and Empowering Women to Make a Difference!”

During a press conference, De Blasio appeared to backtrack on his comments, saying that he hadn’t said “no to people.”

“We’ve said, if you want to apply, you can apply, but there’s a process,” he said.

New York Mayor Bill de Blasio (third from left) participates in painting Black Lives Matter on Fifth Avenue in front of Trump Tower in Manhattan, N.Y., on July 9, 2020. (Mark Lennihan/AP Photo)

The mayor added that the decision to paint the Black Lives Matter murals came out of a meeting at Gracie Mansion with community leaders and activists who urged the mayor to declare the message official. He justified the decision to not follow the normal permit process, saying that that message “transcends all normal realities because we are in a moment of history where this had to be said and done.”

“That’s a decision I made,” he said.

“But the normal process continues for anyone who wants to apply.”

Trottenberg told reporters during the same press conference that anyone can apply for the public art program but added that the city has the discretion on picking those projects.

De Blasio drew an inflammatory response from President Donald Trump in June when he decided to paint “Black Lives Matter” in large yellow letters on the street outside of the Trump Tower. City officials have portrayed the location chosen as a way to rebuke the president for his response to the protests in the wake of George Floyd’s death.

The mayor has previously defended the mural, saying that the Black Lives Matter movement “transcends any notion of politics.”

“This is about righting a wrong and moving us all forward,” he added.

City councilors in Tulsa, Oklahoma, are also facing similar requests from groups after a Black Lives Matter mural was painted on a city street. The officials on July 29 agreed to remove a “Black Lives Matter” mural from its Greenwood District, which was painted without a permit, saying that allowing the Black Lives Matter mural to remain on the street would invite other groups to request to have their own messages painted. One of the councilors said he had already received requests from several pro-police groups about painting the words “Back the Blue” in another area in the city, in support of the Tulsa Police Department.

Published:8/3/2020 9:18:14 PM
[Markets] Minneapolis Authorities Warn Residents "Prepare" To Be Robbed & Obey Criminals Minneapolis Authorities Warn Residents "Prepare" To Be Robbed & Obey Criminals Tyler Durden Mon, 08/03/2020 - 21:25

Authored by Paul Joseph Watson via Summit News,

Authorities in Minneapolis sent out a letter to residents telling them to ‘prepare’ to be robbed and to obey criminals following a recent surge in robberies and carjackings.

“Be prepared to give up your cell phone and purse/wallet,” states the email, which also says that if a resident encounters a criminal, they should “do as they say.”

The advisory comes off the back of over two months of rioting, protests and unrest following the death of George Floyd.

h/t  @KyleHooten2

Minneapolis has experienced a 46% increase in carjackings and a 36% increase in robberies compared to this same time last year, while “Police in the city’s Third Precinct alone have received more than 100 reports of robberies and 20 reports of carjackings in just the last month,” reports Alpha News.

Minneapolis’ Congressional representative Ilhan Omar has also repeatedly called for the police force to be dismantled and replaced with an army of glorified social workers.

It appears as though authorities in the city have waved a white flag to criminals who will now be emboldened to target more victims who are less likely to put up any resistance.

*  *  *

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Published:8/3/2020 8:48:07 PM
[Markets] Soros Infuses $116K Into McCloskey Prosecutor's PAC Days After Charges Filed Soros Infuses $116K Into McCloskey Prosecutor's PAC Days After Charges Filed Tyler Durden Mon, 08/03/2020 - 21:05

Just eight days after St. Louis Circuit Attorney Kim Gardner filed charges against a wealthy couple who defended their home against trespassing protesters, George Soros donated $116,000 to a Political Action Committee (PAC) established for the activist prosecutor, according to JustTheNews.

A Saturday filing with the Missouri Ethics Commission revealed the donation made directly from Soros to the Missouri Justice and Public Safety PAC - for which Soros is the only donor so far. The PAC has already spent at least $104,393 - including $77,804 directly on Gardner, and a payoff of accumulated debt. Of note, Gardner has a primary this Tuesday.

Soros spokesman Michael Vachon told Just The News that Soros has made no secret that he supports prosecutors like Gardner for criminal justice reform.

Gardner slapped charges on personal injury lawyers Mark McCloskey, 63, and his wife Patricia, 61, who armed themselves and stood outside their mansion as a group of roughly 100 protesters broke down a gate to march down their private road.

For defending their property, the McCloskeys were each charged with a felony count of unlawful use of a weapon. Days after the charges were filed, it emerged that Gardner's staff ordered a crime lab to tamper with evidence, by reassembling the 'prop' pistol Patricia was waving in order to make it "capable of lethal use."

This isn't the first brush with shoddy evidence for Gardner's office;

Gardner, a Democrat, was elected in 2016 and supported by Soros-funded PACs, which financially back several prosecutors across America on a progressive criminal justice reform platform. 

She drew national attention when she filed criminal charges against then-Republican Missouri Gov. Eric Greitens, forcing him to resign, only to reveal later she did not have evidence to substantiate her allegations. She is facing investigation for her conduct in the Greitens case, and her former chief investigator is awaiting trial on tampering charges. -JustTheNews

Gardner's decision to prosecute the McCloskeys ignited a controversy over Second Amendment rights, a well as Missouri's "Castle Doctrine" which governs use of firearms to defend one's home. Those defending the couple include President Trump, Missouri GOP Senator Josh Hawley, Missouri AG Eric Schmitt, and Gov. Michael Parson (R) who says he'll pardon the McCloskeys.

Their attorney, Joel Schwartz, has filed a motion to dismiss both Gardner and her office from moving forward with their prosecution - claiming a conflict of interest, as "that Gardner's campaign has used the McCloskeys' incident to further her own financial, personal, and professional gain because Gardner sent out campaign solicitations for her re-election mentioning the McCloskeys," according to the report.

Published:8/3/2020 8:16:12 PM
[Markets] Unheard Stories Of Economic Despair From America's Worst Economic Downturn Since The Great Depression Unheard Stories Of Economic Despair From America's Worst Economic Downturn Since The Great Depression Tyler Durden Mon, 08/03/2020 - 20:45

Authored by Michael Snyder via The End of The American Dream blog,

The economic pain that we are witnessing right now is far greater than anything that we witnessed during the last recession.  U.S. GDP declined by 32.9 percent on an annualized basis last quarter, more than 100,000 businesses have permanently shut down since the COVID-19 pandemic first hit the United States, and more than 54 million Americans have filed new claims for unemployment benefits over the last 19 weeks.  Up until just recently, a $600 weekly unemployment “supplement” and a federal moratorium that prevented many evictions had helped to ease the suffering for millions of American families, but both of those measures have now expired. 

As a result, a tremendous amount of economic pain which had previously been deferred will now come rushing back with a vengeance.  Millions of American families are no longer going to be able to pay their bills, and experts are warning that we could soon see an “eviction crisis” that is absolutely unprecedented in American history.

48-year-old Thomas Darnell of West Point, Mississippi never thought that he would be in this position.  He had been a factory worker for over 20 years until he lost his job in May, and since then he hasn’t been able to find another.  And then on top of everything else, everyone in his house caught COVID-19…

First, he was furloughed for three weeks in April and then laid off in May. Then things got worse: His entire household of seven, including himself, his wife, three kids and daughter-in-law, along with his baby grandson, contracted coronavirus after they saw their immediate family over the Independence Day weekend.

“I’m tired and shaky. Even after a few weeks, I’m still trying to recover,” Darnell says, who has since been cleared of the virus but still has lingering symptoms.

He is concerned that employers will be scared away by his recent illness, and he is becoming desperate because he is running out of money.

With no health insurance and no paychecks coming in, Darnell and his wife have gotten to the point where they have to make a choice between buying insulin or buying groceries

He can’t afford health insurance, which has added to his anxiety because he and his wife are both diabetic, he says. Like Bolei, Darnell and his wife have been forced to make a grueling decision between either paying for their medications or keeping food on the table.

“Do we buy insulin or groceries? It’s a hard juggle,” Darnell says. “I’m willing to make less money and start working again to get health insurance, but no one is hiring.”

The weekly $600 unemployment supplements from the federal government had helped to keep them going for a while, but now those payments have ended, and the immediate future is looking quite bleak.

In Richmond, Virginia, a mother of eight named Shamika Rollins wasn’t sure how she was going to make it when her hours as a home health aid were reduced.  Unpaid bills started piling up, and then she got an eviction notice a few weeks ago.  The following comes from CBS News

Shamika Rollins’ eight children share two bedrooms in Richmond, Virginia. But she’s worried about losing their home after she says she received an eviction notice in June.

“First thing, I panic, and then next thing, I look, and I’m like, I got my kids. And it’s like, okay, now you gotta figure this out,” she told CBS News correspondent Adriana Diaz.

If a miracle does not happen, Rollins and her eight children will soon be out in the street, and this is causing her to have “a lot of sleepless nights”

“I have a lot of sleepless nights,” Rollins said. “My mind is constantly racing, you know, what’s your next move?”

Sadly, there are millions of other Americans in the exact same position.

In fact, experts are projecting that up to 40 million Americans could be evicted from their homes during this pandemic.

Many small business owners are also facing heartbreaking choices during this downturn.  A restaurant owner in Delaware named Alex Heidenberger “hasn’t paid the mortgage on his home the past four months” as he desperately tries to keep his once profitable restaurants alive…

Heidenberger, who typically draws about $20,000 a month in profit from the restaurant, now receives nothing. He says he hasn’t paid the mortgage on his home the past four months. He served lifeguard duty for a couple of weeks, mostly to help a beach crew depleted by COVID-19 quarantines but also to make some cash.

“I’m working harder than I have ever worked in my life,” he says, adding that he puts in about 80 hours a week at the two restaurants. Yet, “I have no money… This is all I think about. I don’t sleep.”

The COVID-19 pandemic has hit the restaurant industry particularly hard.  Americans are not eating out as regularly as they once did because of the virus, and it is probably going to remain that way for the foreseeable future.

In Massachusetts, a restaurant owner named John Pepper once had eight thriving locations, but at this point only two of them remain open

John Pepper used a PPP loan to pay employees and reopen four of his eight Boloco restaurants when Massachusetts lifted its shutdown order in early May. But with the money spent and business at the restaurants down as much as 70%, Pepper had to again close two locations. The staff of 125 he had before the virus outbreak is down to 50.

“A lot of this is out of our hands at this point,” Pepper says. “At this moment, I don’t see getting my full payroll back.”

Overall, we are facing a “restaurant apocalypse” in the U.S. that is unprecedented in size and scope.

According to one estimate, we could lose more than a third of all of our restaurants by the end of this calendar year

As many as 231,000 of the nation’s roughly 660,000 eateries will likely shut down this year, according to an estimate from restaurant consultancy Aaron Allen & Associates provided to Bloomberg News. This will bring the industry’s steady growth to a halt and mark the first time in two decades that U.S. restaurant counts don’t climb. Restaurants have already shed millions of jobs this year, economic data show.

What we are watching is truly horrifying.  So many hopes and dreams went into each one of those restaurants that are shutting down, and countless restaurant owners are going to be completely financially ruined by all of this.

For other Americans, this economic downturn has put their very lives at risk.  In Colorado, 70-year-old Catherine Azar was already dealing with heart problems and diabetes, and now she is in danger of being thrown out into the street

“It’s hard for me to conceive of someone being willing to put another person out in the street in the middle of a deadly pandemic, and I’m high risk. I’m 70. I have heart issues and I’m diabetic,” Azar said.

Rollins and Azar are just two of the 43 million Americans at risk of eviction in the coming months. For context, about 1 million Americans were evicted in 2010, the year after the Great Recession.

How long do you think that a 70-year-old woman with heart problems and diabetes would last on the street or in a shelter?

And as millions upon millions of Americans get evicted during the months ahead, the shelters are all going to fill up really fast.

America simply was not prepared for an economic downturn of this nature, and the truth is that much bigger challenges are still ahead.

So please do not look down on anyone that needs help right now, because soon you may find yourself in the exact same position.

Published:8/3/2020 7:48:05 PM
[Markets] Asia shares set to gain after manufacturing data, tech stocks boost Asian shares were on track to open higher on Tuesday, after strong manufacturing data and gains in tech stocks boosted global equities and the U.S. dollar overnight. Hong Kong futures were up 0.65% and Nikkei futures were above the Nikkei 225 index's <.N225> previous close, pointing to an opening gain of about 0.88%. Global equities, the dollar and oil futures kicked off the week with gains as manufacturing data from the United States, Europe and China indicated a factory recovery is holding up despite rising cases of COVID-19. Published:8/3/2020 7:23:15 PM
[Markets] The Spreading Feeling "This Is Happening All By Design" The Spreading Feeling "This Is Happening All By Design" Tyler Durden Mon, 08/03/2020 - 20:05

Authored by Bruce Wilds via Advancing Time blog,

As events unfold I have witnessed a growing opinion being batted around that something sinister is happening beneath the surface. This includes the feeling we are no longer in control of our fate. More and more the idea that form follows function and the winners were picked before all this started is being injected into the mix. This theory embraces the proposition the bottom half of society is destitute and totally dependent on the government which means they have been removed from the battlefield. Now that these people are no longer a threat, corporate and government collaborators are consolidating power and control.

Is This All happening By Design?

Like many of the people watching this slow-moving train wreck, I'm beginning to lose perspective. My insight has become blocked by the increasingly irrational actions taking place. The uneasy feeling that things will get far worse is being heightened by the suggestion this is all by design, and when you don't get that 'you have no defense', it is indeed frightening. It is bolstered by the supporting argument we should not listen to what those in charge say but rather that we watch what they do. Much of the growing apprehension is rooted in the domino effects about to be unleashed upon the economy. An example is, the tenant doesn't pay the landlord and risks eviction. The landlord doesn't pay his mortgage and risks foreclosure. The bank doesn't get paid, but that's OK because taxpayers will bail them out.

With so much unresolved and hanging in the wind conspiracy theories are taking wing. While I do not endorse the theory this is all developing as planned, it is difficult to deny the situation is dire and the general population remains clueless as to the dangers ahead. Collectively this includes a Fed which is out of control and a polarized government that is dysfunctional at best. Add to this the market manipulation which has reached epic levels. This whole scheme has resulted in a massive huge transfer of wealth and the creation of social chaos. For the "greater good" we have seen rules to further restrict our freedom being instituted and more expected to be imposed in one way or another.

Economic Hardship Has Many Faces

Just how unkind the recent Covid-economy has been to the middle-class has been masked by the helicopter money flowing from Washington. This has skewed income and spending across America but little attention has been paid to those taking it on the chin. This includes the owners of small businesses and those making substantially more than before the pandemic hit. The evidence of the pain and damage being inflicted on the Main Street economy is going beginning to become apparent. It can be seen as we drive down the street and see move empty windows and for lease signs which are sprouting up like weeds.

Even the appearance of a coin shortage due to our government being inept is causing people to claim this is all an intentional part of a larger plan. It means businesses are using the coin shortage to stop taking cash. This has left some people wondering if those wanting the demise of paper money are using the virus scam to eliminate cash altogether. The pandemic and warning germs can be transferred on the surface of money mean that suddenly "money" has now been deemed "unsafe." The rumor is out that Nancy Pelosi has already inserted in one stimulus bill the seeds of "taking our currency digital."

This would force everyone into the banking system increasing the government's ability to tax, track, and control just about everything. The complete transformation to digital currency would mean if the government does not like your business or politics they could just lock you out of the system. They could even charge you to park your money while the bank would be allowed to lend it out and charge interest on it. Eliminating cash is the first step they must adopt for this to work. It would lock money into their system, they would eliminate or control all alternatives to money so it cannot be diverted from or moved out of the banking or financial system.

Is the plan to crash the US into the most devastating depression we have ever seen? While this could wipe out all US debt and clean the country of past obligations it would result in lost credibility and standing for generations to come. To construct such a calamity is simply insane and would shake the world economy and global financial system to its core. Many people claim a crash was coming anyway and the virus just sped things up. When looking at the alternative paths forward the importance of the forthcoming election could never be more crucial. These people point to the fact you can't have an economy that is solely built on fast food and shopping, you have to make stuff and export.

We should at least acknowledge claims by the "it is all happening by design" faction extend to saying that all efforts to halt the coming collapse will not be enough. They contend the question is whether the markets will implode before or after tens of millions of Americans hit rock bottom and become totally destitute and ruined. Judging by the failure of Congress to even grasp the urgency or just how enormous the threat to our future is, perhaps this is the way the entire evil system was designed to unfold.

Published:8/3/2020 7:23:15 PM
[Markets] : Twitter warns it may face $250 million fine by FTC for misusing user data Twitter Inc. warned Monday that it expects to face a fine of up to $250 million by the Federal Trade Commission for using personal security data to target ads to users.
Published:8/3/2020 6:47:54 PM
[Markets] The US Has Started To Identify The Mystery Seeds Being Sent From China The US Has Started To Identify The Mystery Seeds Being Sent From China Tyler Durden Mon, 08/03/2020 - 19:45

It was just about week ago that we highlighted a mysterious trend that was sweeping the U.S.: citizens were receiving unsolicited packages of seeds, with return addresses from China, for apparently no reason at all.

Now, the U.S. has started to identify "14 types of plants" that the seeds belonged to, revealing a “mix of ornamental, fruit and vegetable, herb and weed species,” according to the NY Times. Cabbage, hibiscus, lavender, mint, morning glory, mustard, rose, rosemary and sage have all been identified. 

Osama El-Lissy of the U.S. Department of Agriculture Animal and Plant Health Inspection Service said: “This is just a subset of the samples we’ve collected so far.”

Art Gover, a plant science researcher at Penn State University said the "risk is low" of the plants being involved in biological warfare, but that the seeds "can be troublesome because they can introduce problematic weeds and diseases".

Lisa Delissio, a professor of biology at Salem State University in Massachusetts, said: "If any of the unidentified seeds turned out to be invasive species, they could displace native plants and compete for resources and cause harm to the environment, agriculture or human health."

Bernd Blossey, a professor in the department of natural resources at Cornell University commented: “Obviously planting rosemary or thyme in your garden isn’t something that will endanger our environment. But there may be other things in there that have not been identified yet. Any time you gain something unknown, my suggestion is burning them, not even throwing them in the trash.

As of now, it seems too early to tell whether or not something nefarious is taking place. But, like Blossey says, we wouldn't take any chances either. In our prior report, we suggested the mailings could be some sort of agricultural warfare brewing between the U.S. and China - where agriculture remains a key point of trade tensions - and where a cold war of sorts appears to be bubbling up under the surface. 

After multiple reports in the U.S. media regarding the seeds, China's Foreign Ministry responded last week by saying that China Post (the country's state owned mail service) "has strictly followed regulations that ban the sending and receiving of seeds," according to Bloomberg.

Further, Chinese Foreign Ministry spokesman Wang Wenbin says that the parcels were "forged" and "not from China". China has supposedly requested that the U.S. mail the seeds back to China so they could investigate further.

We noted last week that the response is anything but re-assuring. We're not postmaster generals but we find the idea of being able to forge mailing labels - and get products to their final destination - in this day and age where even the decrepit U.S. postal service is mostly digital, as a difficult one. 

Recall, we wrote days ago that Americans across the country were starting to report receiving unsolicited packages of different types of seeds that they didn't order - and don't know anything about - at their door. The return address on the packages is always from China. 

The Washington State Department of Agriculture wrote about the phenomenon on their Facebook page on July 24, 2020 and said that the seeds are being shipping in packaging that identifies the contents as jewelry. Similar advisories have been issued in Virginia, Utah, Kansas, Arizona and Louisiana.

Facebook users have been adding photos in the comments section of the post sharing photographs of seeds they have received from China. “It’s not a joke. I got some the other day!!!” one user commented, stating that the package identified the contents as a "Rose flower stud earring".  

“Look’s like it’s all across the country,” stated an Indiana resident who also received seeds in the mail unsolicited. 

At least 40 residents in Utah were said to have been mailed the unsolicited packages, according to the Daily Mail. The Kansas  Department of Agriculture and the Arizona Department of Agriculture also addressed the phenomenon, as did the Louisiana Department of Agriculture and Forestry, who said: 

"Right now, we are uncertain what types of seeds are in the package. Out of caution, we are urging anyone who receives a package that was not ordered by the recipient, to please call the LDAF immediately. We need to identify the seeds to ensure they do not pose a risk to Louisiana’s agricultural industry or the environment."

There had been similar reports from Virginia's Department of Agriculture and Consumer Services. "The seeds have yet to be identified, but officials speculate that the seeds may be of an invasive plant species and are advising residents not to use them," Fox News reported.

"Taking steps to prevent their introduction is the most effective method of reducing both the risk of invasive species infestations and the cost to control and mitigate those infestations," VDACS wrote in a press release.

Public Asked To Report Receipt of any Unsolicited Packages of Seeds. Learn more:

— VDACS (@VaAgriculture) July 24, 2020

Twitter is also littered with reports of people receiving these seeds:

We have received 2 of those packages here in Indiana. One from China, and one from Kyrgystan.

— Don ??? (@SmallTownIndy) July 26, 2020

The Washington State Department of Agriculture has advised people on its Facebook page:

1) DO NOT plant them and if they are in sealed packaging (as in the photo below) don’t open the sealed package.

2) This is known as agricultural smuggling. Report it to USDA and maintain the seeds and packaging until USDA instructs you what to do with the packages and seeds. They may be needed as evidence.

Anyone who has received seeds in the mail can report them to the United States Department of Agriculture by visiting their website here. The site says:

If individuals are aware of the potential smuggling of prohibited exotic fruits, vegetables, or meat products into or through the USA, they can help APHIS by contacting the confidential Antismuggling Hotline number at 800-877-3835 or by sending an Email to

USDA will make every attempt to protect the confidentiality of any information sources during an investigation within the extent of the law.

Published:8/3/2020 6:47:54 PM
[Markets] Is Disney Stock A Buy Ahead Of Its Earnings Report Due Tuesday? Disney stock is trying to rebound after coronavirus closures took a toll. Here's what fundamental and technical analysis says about buying Disney now. Published:8/3/2020 6:38:26 PM
[Markets] Chicago Man Arrested For Spitting In Cop's Coffee At Dunkin' Donuts Chicago Man Arrested For Spitting In Cop's Coffee At Dunkin' Donuts Tyler Durden Mon, 08/03/2020 - 19:25

Authored by Jonathan Turley,

We recently discussed the arrest of a Starbucks employee for spitting in the coffee of a police officer. Now, Vincent J. Sessler, 25, has been arrested for the same act at a Chicago Dunkin' Donuts.

The Illinois State Trooper spotted the spit when he opened the coffee to let it cool.  Later surveillance cameras reportedly showed Sessler spitting in the coffee.  

What is interesting is the comparison of the charges in the two cases. There is also an issue as to whether such crimes constitute tampering with a food product.

The officer was in uniform and using a marked police car when he visited the Dunkin’ Donuts. According to a social media post, it was a surveillance camera that captured the despicable act.

According to CBS 2 Chicago, Dunkin Donuts fired Sessler after he was arrested and the owner conducted an independent investigation.

What drew my attention to the story (besides being my home town) were the charges: disorderly conduct, reckless conduct, and battery to a peace officer.

Battery is the most serious offense .

Now consider the three charges in North Carolina: subjecting a law enforcement officer to bodily fluid, purposely tampering with a law enforcement officer’s drink and creating a hazardous environment.

previously expressed surprise over the North Carolina charges. The Chicago charges are more predictable in these cases. We have seen the use of bodily fluids as a form of battery in attacks on police officers.

One question that I had was whether the battery would be elevated for aggravated battery under Section 5/12-2:

§ 12-2. Aggravated assault.

(a) Offense based on location of conduct. A person commits aggravated assault when he or she commits an assault against an individual who is on or about a public way, public property, a public place of accommodation or amusement, or a sports venue.

(b) Offense based on status of victim. A person commits aggravated assault when, in committing an assault, he or she knows the individual assaulted to be any of the following:

(4.1) A peace officer, fireman, emergency management worker, or emergency medical services personnel:

(i) performing his or her official duties;

(ii) assaulted to prevent performance of his or her official duties; ?or

(iii) assaulted in retaliation for performing his or her official duties.

The language appears mandatory but there is the key qualification of “performing his or her official duties.”  Is getting coffee while on duty part of his official duties?  The law appears directed as interference with a police activity so, as a criminal defense attorney, I would argue that it does not.

However, this case would seem an example of “retaliation for performing his or her official duties.”

Notably, the Chicago charges do not try to use the same COVID angle in North Carolina. In neither case was the person known to be COVID positive, but the prosecutors still used the pandemic as a foundation for the charges.  Even without COVID contamination, it could be argued that saliva carries other dangers but those would also seem to depend on the defendant’s health status.

What is interesting is also the comparison to product tampering laws.  These laws are designed to not only punish culprits who do things like post videos of licking ice cream in stores. It is also to product stores and businesses from the loss of sales from consumers who are concerned with the safety and purity of products. Such acts can devastate a manufacturer or even an industry.  Notably, in this case, the police said that they will no longer use Dunkin’ Donuts.  That is precisely the reaction that these laws seek to avoid.  However, these defendants allegedly committed these acts with the intent of that the contamination would not be public. Such acts are committed to secretly take joy from knowing that the officer drank contaminated coffee. That makes it different from many cases like the ice cream licking cases where the culprits post videos of the act.

In Illinois the tampering charge also would raise the foregoing question of the actual risk from saliva:

Sec. 12-4.5. Tampering with food, drugs or cosmetics.

(a) A person who knowingly puts any substance capable of causing death or great bodily harm to a human being into any food, drug or cosmetic offered for sale or consumption commits tampering with food, drugs or cosmetics.

(b) Sentence. Tampering with food, drugs or cosmetics is a Class 2 felony.
(Source: P.A. 96-1551, eff. 7-1-11.)

It is not clear if saliva in a hot cup of coffee present a “capacity” (rather than a threat) of “great bodily harm.”

The Chicago charges are, in my view, a better avenue to avoid such appellate issues.  In the end, these are all serious charges, as they should be.

Published:8/3/2020 6:38:26 PM
[Markets] Personal Finance Daily: Here’s where things stand on the extra $600 a week in unemployment benefits that expired Friday, and why are ‘Karens’ so angry? Monday’s top personal finance stories
Published:8/3/2020 5:56:22 PM
[Markets] : Ant Group says it’s shooting for a record-breaking $30 billion IPO by October Fintech likely to list 10% of shares in Shanghai and 5% in Hong Kong, Chinese media report
Published:8/3/2020 5:46:39 PM
[Markets] Garrison: The Revenge Of "Real Money" Or "Cashless Enslavement Of Humanity"? Garrison: The Revenge Of "Real Money" Or "Cashless Enslavement Of Humanity"? Tyler Durden Mon, 08/03/2020 - 18:45

Authored by Ben Garrison via,

Just over 10 years ago I drew several pro-silver cartoons. One of them showed a giant, fast-moving silver coin cutting the JP Morgan ‘paper tiger’ in half. For years, JPM had shorted silver and has been doing it illegally and collusively. I knew this, but I went ‘all in’ on silver anyway because I thought JPM would have to cover and spark a massive short squeeze. I was convinced my long positions would make me a fortune. Instead JPM drove the price of silver down from almost $50 early in 2011 all the way down to $13 just a few years later. Paper covered rock. Needless to say, I learned a hard lesson about putting all my eggs in a silver basket.

Now silver is back up over $20 and some are predicting much higher prices on the horizon, just like they said over 10 years ago. Gold is also close to making ‘all-time highs,’ which is incorrect because inflation needs to be factored into such a high due to years of incessant dollar printing. Silver and gold have broken out higher due to a weaker dollar and some experts such as Peter Schiff claim ‘King Dollar’ will die due to over-printing.

I have my doubts.

The dollar is still greatly desired by America’s poor and the middle classes, whose wages have not risen much in nearly 30 years. They are not getting more dollars like citizens did in Weimar Germany. You won’t see dollars in wheelbarrows any time soon. Most of the Federal Reserve’s dollar printing goes directly to a handful of fantastically wealthy people at the top of the pyramid.

Many of them own the Federal Reserve. The Fed is propping up a market that is mostly owned by the top.

We The People are not receiving what the Fed is buying whether it is treasuries, corporate bonds, or ETFs, but we are forced to pay for it. Citizens must cough up more taxes to pay the interest on the absurdly high debt in order to make sure the fabulously rich get fabulously richer.

Until those at the very top start giving their money away to the rest of the country, the dollar will be fine.

No, I’m not advocating class warfare and it’s not socialism. What we’re seeing is not capitalism.

The top 1 percent is getting their money by ill-gotten means. It’s fascism when their Fed gets to pick and choose which globalist company or sector to prop up.

I took some time off in Idaho last week and I visited one of my favorite places on Earth: Wallace. It’s a mining town in northern Idaho. It’s just off I-90 and has a long, storied history. It’s also known as the center of the universe and it is—at least when it comes to silver. There are many silver mines in the surrounding area, also known as ‘The Silver Valley.’ A total of 1.2 billion ounces of silver came out of those mines over the years and there’s still plenty of silver left.

It costs a lot of dollars to run a gold or silver mine. Sometimes it costs lives. 91 miners died of carbon monoxide exposure at the Sunshine Mine in 1972 after a ventilation system caught fire.

Precious metals are not easy to find. Gold is rare. It takes a lot of money to start a mine. Equipment, labor, environmental permits—all very expensive. Once the ore is removed it must be milled and smelted. Gold in particular is very hard to find. I know—I drove many miles to do some gold panning on a claim in eastern Idaho and got skunked. I could not find gold with my metal detector, either. Compare this to how easy it is for the Federal Reserve to create debt dollars with a flip of a switch.

Gold and silver remain Constitutional money, but they are no longer in common circulation. Gold and silver (and copper, too) have been the best form of money throughout the ages, but no longer. They have become anachronisms and are incompatible with the digital age. There will be no revenge. Sure, the dollar can become gold backed once more, but that’s not likely.

What’s likely is the Fed will convert us to a cashless society and adopt a social credit system.

This will be the worst form of money because it will mean the total enslavement of humanity.

Published:8/3/2020 5:46:39 PM
[Markets] Outside the Box: This chart reveals what matters most as schools announce COVID-19 reopening plans Is it local health conditions or or local politics beliefs?
Published:8/3/2020 5:19:51 PM
[Markets] Twitter Shares Slide As Company Faces $250 Million FTC Fine Twitter Shares Slide As Company Faces $250 Million FTC Fine Tyler Durden Mon, 08/03/2020 - 18:13

Twitter shares shed more than 3% of their value in after-hours trading Monday evening when the company revealed in its 10-Q, filed Monday afternoon, that it had set aside between $150 and $250 million for a FTC fine allegedly over violations of a 2011 agreement to respect users' data privacy.

A Twitter spokesperson told the Verge that the company only received word of the violation and potential fine on July 28, which is why it wasn't included in its Q2 earnings report. Twitter reported its earnings for the quarter ended in June on July 23.

Under a section of its 10-Q entitled "Legal Proceedings", Twitter revealed the allegations and potential fine, which are tied to the use of "phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019.

On July 28, 2020, the Company received a draft complaint from the Federal Trade Commission (FTC) alleging violations of the Company’s 2011 consent order with the FTC and the FTC Act. The allegations relate to the Company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019. The Company estimates that the range of probable loss in this matter is $150.0 million to $250.0 million and has recorded an accrual of $150.0 million. The accrual is included in accrued and other current liabilities in the consolidated balance sheet and in general and administrative expenses in the consolidated statements of operations. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.

The Company is also currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business. These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Litigation accruals are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable. Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure. As of June 30, 2020, except for the above referenced class actions, derivative actions and FTC matter, there was no litigation or contingency with at least a reasonable possibility of a material loss. Except for the aforementioned accrual of $150.0 million recorded in relation to the FTC matter, no other material losses were recorded during the three and six months ended June 30, 2020 and 2019 with respect to litigation or loss contingencies.

It's just the latest piece of bad news for twitter, which is still reeling from last month's embarrassing bitcoin hack.

We just recently learned that this attack was orchestrated by a 17-year-old from - where else? - Tampa, Florida.

Published:8/3/2020 5:19:51 PM
[Markets] Stock Market Today: A Red-Hot Start to August Microsoft's (MSFT) interest in TikTok sends the blue chip's shares soaring Monday; EV makers such as Nio (NIO) and Workhorse Group (WKHS) jump, too. Published:8/3/2020 4:47:50 PM
[Markets] The Tell: A 10% selloff in the stock market is most likely, says expert who called March lows: ‘Something has to give’ Michael Wilson, chief U.S. equity strategist at Morgan Stanley, and his colleagues believe that the narrow breadth of winners in the stock market will likely result in a 10% correction before giving way to a renewed rally.
Published:8/3/2020 4:47:50 PM
[Markets] US Treasury Set To Spend Trillions In The Next Few Months US Treasury Set To Spend Trillions In The Next Few Months Tyler Durden Mon, 08/03/2020 - 17:45

Three months ago, in its then latest estimate of Marketable Borrowings published on May 4, the US Treasury shocked markets when it unveiled that in the April-June quarter it would borrow a humongous $2.999 trillion, exponentially higher than what it had expected to borrow during the quarter in its previous estimate in February when it forecast a $56 billion decline in debt. And while the projected debt number stunned the market, it barely registered on the price or yield of US Treasurys for the simple reason that just weeks earlier the Fed announced it would monetize all gross debt issuance for the US when it unveiled Unlimited QE, something it has been doing since.

This massive surge in debt issuance would also result in a far higher Treasury cash balance which would be used to pre-fund various fiscal stimulus programs, and as the chart below shows, that's precisely what happened with the Treasury cash balance exploding from $400BN at the end of March to an record high just above $1.7 trillion currently, an amount that is just waiting to be spent as soon as Congress gives the green light.

In retrospect the cash surge was too much: in fact, more than double what the Treasury had expected on May 4. While the Treasury had forecast a $3 trillion increase in marketable borrowing for the quarter ending June 30, it also expected the cash balance to grow to $800 billion on that same date (shown highlighted in yellow on the table below).

And yet the final number ended up being over $922 billion higher, meaning that the Treasury had substantially overshot its funding need and had a cash buffer of nearly $1 trillion more than it had anticipated. 

So with all this extra cash in hand, did the Treasury reduce its debt need for the current quarter? As shown above, three months ago the Treasury expected that it would need to borrow $677BN in the final fiscal quarter of the year ending Sept 30, which while a massive number, was still well below the $2.753 trillion it ended up borrowing (just shy of the $2.999 trillion initial forecast, a number which was not hit due to "lower-than-projected expenditures and higher receipts largely offset by the increase in the cash balance.")?

The answer, it will shock exactly nobody, was a resounding no because as it disclosed in its latest estimate of Marketable Borrowing needs, the Treasury once again surprised markets by announcing it would borrow a whopping $947BN this quarter, $270BN more than it had forecast a quarter ago, even though the Treasury started this quarter with a cash balance that is $922 billion higher than it had expected one quarter ago!

Source: US Treasury

Why this unexpected increase in debt even though the Treasury was starting off with nearly $1 trillion more in cash than originally budgeted? This is how it explains it.

During the July - September 2020 quarter, Treasury expects to borrow $947 billion in privately-held net marketable debt, assuming an end-of-September cash balance of $800 billion.  The borrowing estimate is $270 billion higher than announced in May 2020.  The increase in privately-held net marketable borrowing is primarily driven by higher expenditures, due to a shift from the prior quarter and anticipated new legislation, largely offset by the higher beginning-of-July cash balance and higher receipts.

In other words, not only will the Treasury draw down on $922 billion in cash in the calendar quarter the ends in less than two months...

... but it will also sell enough debt to raise an additional $881 billion (net) which will also end up being spent, suggesting that in the current quarter the Treasury plans on spending a gargantuan $1.8 trillion!

But that's not all, because in its first glimpse of Oct-Dec quarter funding needs, the Treasury now expects to borrow another $1.216 trillion in privately-held net marketable debt, once again assuming that the end-of-December cash balance remains unchanged from the Sept 30 balance of $800 billion. This means that the Treasury will spend an additional $1.2 trillion in the quarter ending Dec. 31, assuming every dollar it raises in the open market is then promptly spent (since the cash balance remains unchanged).

According to the Treasury, "these estimates assume $1 trillion of additional borrowing need in anticipation of additional legislation being passed in response to the COVID-19 outbreak."

So what does this mean?

First, when putting together the actual data for the first three quarters of fiscal 2020 and adding the Fiscal Q4 estimate of $947BN in new issuance, the Treasury will borrow a record $4.5 trillion in Fiscal 2020, more than it borrowed in the previous view years combined!

Second, it means that for calendar Q3 and Q4, the Treasury will spend almost $3 trillion consisting of:

  • i) a drawdown in cash from $1722 billion to $800 billion, for $922 billion, in the quarter ending Sept 30
  • ii) new debt issuance of $947 billion in the same quarter and
  • iii) new debt issuance of $1,216 billion in the quarter ended Dec 31

... for a grand total of $3.085 trillion in new funds (either from spending cash or raising debt).

And even if the Treasury uses some of this cash to pay down maturing Bills (which we doubt as it will most likely keep rolling this short-term debt indefinitely with rates at all time lows), it still means that there will be nearly $3 trillion left for Congress and Trump to spend as they fit in order to boost the economy in the next few months to make sure there is no imminent economic crash. It also means that for all the posturing about whether the $1 trillion Republican or $3 trillion Democrat stimulus package is accepted, the Treasury is already budgeting for the latter.

Finally, with the presidential elections are looming, we hope that we don't need to answer "why" - despite the Congressional theater - it is only a matter of time before this massive spending tsunami is unleashed.

Published:8/3/2020 4:47:50 PM
[Markets] Germany, Denmark Are Models For How To Reopen Schools In The Age Of COVID-19 Germany, Denmark Are Models For How To Reopen Schools In The Age Of COVID-19 Tyler Durden Mon, 08/03/2020 - 17:05

With the fall semester officially starting this week in some parts of the US, the question of how public schools will reopen for the fall semester, and how much in-person learning to allow, if any, is weighing on the minds of millions of Americans.


And while we await to learn more about New York's plans for reopening its schools, a team of economists at Goldman Sachs took a close look at the existing data surrounding the virus's ability to spread in schools, and among younger children, along with the economic costs of keeping schools closed, in an attempt to answer a critical question: How exactly should the US go about reopening its schools?

Looking at the problem from a strictly medical perspective is difficult enough. The research that exists is often contradictory. One large study based on comprehensive contact tracing in South Korea found that children under 10 were roughly half as likely as adults to transmit the virus to others, while children between the ages of 10 and 19 transmitted the virus at similar rates to adults.

Other studies appear to show children spreading the virus at similar rates to adults, including one study focusing on a summer camp in Georgia.

Another study found that children may carry higher viral loads, suggesting that they could put adults around them at high risk of infection. 

It's fair to assume at this point that children are at less risk of infection and death, but that's about all we can say for sure. As always, the bigger problem is what are the societal ramifications in terms of infection numbers?

The usefulness of these studies is clearly limited. With that in mind, governments should instead look to the handful of examples where schools successfully have reopened without triggering the virus to come roaring back.

We've repeatedly cited the experience of Denmark as a potential guiding light for the US, and the rest of Europe, when it comes to reopening schools. Goldman takes this analysis a few steps further, looking at an even broader scope of countries that have reopened schools cautiously and carefully, despite having only limited numbers of the infected.

Still, Belgium, France and Germany certainly saw substantial outbreaks, even if the virus may not have penetrated as deeply, in as many parts of their countries, as it did in the US.

American states could probably learn a thing or two from the judicious approach favored by Germany, France and Belgium. And if that isn't enough to drive home the point, Goldman argues that Israel's approach stands in stark contrast to Europe: Israel reopened classes with as many as 40 students, and few restrictions. Cases quickly flared back up, suggesting that reopening must be carefully monitored.

Here's a more detailed breakdown of how various countries approached reopening their schools.

Sweden, as Goldman points out, never closed its schools. And although it's not a focus of the report, its example certainly warrants close scrutiny.

To be sure, the process of reopening schools in the US will require a much more detailed explanation. Approaches will vary widely from state to state, with Georgia, Indiana and a handful of other states pushing ahead with the return to in-person instruction, even as cases from the outbreak's second wave have only just begun to decline.

But motivated by the second wave and parents' lingering fears, a growing number of states are pushing back start dates for in-person learning. Some states have left the decision up to individual counties - and some counties like Miami-Dade have been steadfast in their opposition to pressure from the statehouse and Washington.

In many cases, local school districts will decide when to reopen.

Like with many other aspects of the government response to the pandemic, keeping schools closed places the biggest strain on the most vulnerable members of society, especially single parents...

...but also married couples. Regardless, without schools open, a large chunk of the labor force will require support in the form of child care to make a return to full-time work plausible.


While keeping schools closed comes with a tremendous economic pricetag, since not only are educators out of work, but parents, too, struggle to secure affordable childcare, putting their jobs at risk. This can seriously suppress productivity and labor-market growth. But in the worst-hit states, the risks of thousands of preventable deaths are simply too great to justify pressing ahead.

Successfully reopening schools will ultimately depend less on infection rates among students, but on infection rates among parents, teachers and coaches.

Published:8/3/2020 4:15:12 PM
[Markets] The Fed: Fed’s Evans says the power to get the economy going lies with Congress Chicago Fed President Charles Evans said Monday Congress is in the drivers seat in policy decisions needed to ensure economic growth in the near term.
Published:8/3/2020 4:15:11 PM
[Markets] The Nasdaq Composite stock index closed at a record high Monday The Nasdaq Composite stock index closed at a record high Monday Published:8/3/2020 3:46:31 PM
[Markets] Virgin Galactic plans to sell more stock after reporting no quarterly revenue; shares fall Virgin Galactic Holdings Inc. reported no revenue in the second quarter and has collected less than $200,000 in 2020, as its valuation topped $5 billion and the company prepares to take tourists into space.
Published:8/3/2020 3:46:31 PM
[Markets] Photos Of Stephen Hawking On Epstein's 'Pedo Island' Subject Of New Court Order Photos Of Stephen Hawking On Epstein's 'Pedo Island' Subject Of New Court Order Tyler Durden Mon, 08/03/2020 - 16:45

Authored by John Vibes via,

The document releases that have been taking place in relation to the crimes of Jeffrey Epstein and Ghislaine Maxwell are comprised of testimonies and other evidence that was introduced in a previous civil lawsuit that was filed against Maxwell by Virginia Giuffre, one of Epstein’s most outspoken victims.

Most of the evidence that was presented during the civil trial was sealed as a part of a protection order and as a condition of the settlement, which is why much of the information revealed during the trial was not made public when the case was settled in June of 2017.

Some details did leak to the press during the civil case though, including details about events that Epstein hosted with affluent scientists, including Stephen Hawking. In January of 2015, a few photos of Stephen Hawking on Epstein’s private island surfaced in the media. The photos are believed to be from the Giuffre vs Maxwell civil case.

One of the photos shows the famous physicist at a barbecue on the island, while another photo shows him on a submarine tour off the coast of the island. According to the Telegraph, Epstein paid to have the submarine modified for the professor’s wheelchair, because he had never been underwater before.

Photo: Tim Stewart / News Limited

The photos were reportedly taken in March of 2006, which is shortly before Epstein was first charged with sex crimes against minors. Epstein is said to have invited 21 internationally-renowned scientists, including Hawking, to the island for a conference that he funded. The conference was held at a Ritz-Carlton hotel on the neighboring St. James Island, but the attendees were invited back to Epstein’s private island as well.

Photo: Tim Stewart / News Limited

Judging from the information that is already publicly available there is no way to know for sure if Hawking was aware of Epstein’s crimes or if he participated in them during his time on the island, but as more documents from the civil trial are unsealed, it is possible that more details will come to light.

NewsWeek reported that Stephen Hawking’s name appeared in a list of individuals who were seen in photos and videos on the island with Giuffre. Attorneys recently sent Giuffre a request for photo and video evidence with high profile figures, including Stephen Hawking, Ghislaine Maxwell, Alan Dershowitz, Jeffrey Epstein, Prince Andrew, Ron Eppinger, Bill Clinton, and Al Gore.

After Giuffre went public with her accusations in 2010, she faced a storm of very public denials and attacks from Epstein’s associates which lasted for years.

As a result, Giuffre filed defamation lawsuits against those who attacked her in the media. The lawsuit against Maxwell was settled in June of 2017, but a suit against Alan Dershowitz is still ongoing.

Maxwell’s attorneys have fought to keep the details of the civil trial sealed, but their requests were denied by a judge who determined that a criminal case takes precedent over a civil case and ordered the documents to be unsealed. Similar revelations are expected to come as the criminal trial approaches.

Published:8/3/2020 3:46:31 PM
[Markets] Stocks start August with solid gains, with the Dow rising 235 points Stocks start August with solid gains, with the Dow rising 235 points Published:8/3/2020 3:16:04 PM
[Markets] Nasdaq Surges To Another Record High Despite Dollar Surge Nasdaq Surges To Another Record High Despite Dollar Surge Tyler Durden Mon, 08/03/2020 - 16:01

Another day, another nicely engineered short squeeze...

Source: Bloomberg

Oh and a panic bid into the world's biggest market cap company (after it already rose over 10% on Friday), but a lot of that faded as the day went on...

And a better than expected ISM print (ignoring the decline in the Markit PMI) sparked a bid in value/cyclical stocks...

Source: Bloomberg

All helped lift the broad markets today (despite a late-day drop on McConnell comments about the Democrats "not budging" on negotiations... (Small Caps managed to outgain tech on the day thanks to that late drop)

NOTE the cash open saw an immediate panic-bid in Nasdaq and dump of Small Caps, but the latter quickly reversed.

AAPL & MSFT accounted for more than half of The Dow's gains today, but gun stocks surged more on the back of huge surge in background checks...

Source: Bloomberg

Momentum continues to keep the dream alive...

Source: Bloomberg

The rally in stocks held up despite a big surge in the dollar (which has been highly inveresely correlated with stocks for much of the last four months)...

Source: Bloomberg

Biggest 2-day jump in the dollar since early June (though it started to give back some gains after Europe closed...

Source: Bloomberg

But the bounce was from a serious point of support...

Source: Bloomberg

Bitcoin continued to recover from its flash-crash over the weekend...

Source: Bloomberg

And Ethereum even more so...

Source: Bloomberg

Treasury yields were higher on the day skewed to long-end underperformance amid the massive Google issuance (2Y +0.5bps, 30Y +4bps)...

Source: Bloomberg

But even with those rate-locks and rotation, 10Y yields barely budged by the close...

Source: Bloomberg

Gold scrambled into the green as the dollar started to leak lower...

Source: Bloomberg

Finally, there's this: Bloomberg reports that income-oriented investors have less reason than ever to favor U.S. corporate bonds over stocks. The gap between the yield on the Bloomberg Barclays U.S. Corporate Bond Index and the dividend yield for the S&P 500 Index shows as much. Both yields were about 1.9% at the end of last week, according to data compiled by Bloomberg.

Source: Bloomberg

Corporate yields have been as much as 11 percentage points higher on a monthly basis since the 1970s, as shown in the chart. The most recent peak was 2.4 points, reached in November 2018. But then again with The Fed's foot on the throat of all price discovery, it makes sense that everything is the same, no matter the risk differentials.

That's all that matters.

Published:8/3/2020 3:16:04 PM
[Markets] In One Chart: Like Warren Buffett half a century ago, quant firm admits to being ‘out of step’ with today’s bubbly conditions Kailish Concepts, a quantitative analysis firm, borrowed words from the Berkshire boss in a note taking a deep dive into the “death of valuation” in today’s market.
Published:8/3/2020 3:16:03 PM
[Markets] Where things stand on the extra $600 in unemployment benefits that ended Friday Where things stand on the extra $600 in unemployment benefits that ended Friday Published:8/3/2020 2:46:26 PM
[Markets] Coronavirus update: U.S. death toll climbs to 155,000, as COVID-19 enters ‘dangerous new phase’ The U.S. tally for new confirmed cases of the coronavirus that causes COVID-19 continued its march toward 5 million, with the death toll closing in on 150,000, as White House coronavirus task force coordinator Dr. Deborah Birx warned that the pandemic has entered a “new phase.”
Published:8/3/2020 2:46:26 PM
[Markets] "August Snoozer" On Deck With Dealers Back In "Long Gamma" But Everything Changes In September "August Snoozer" On Deck With Dealers Back In "Long Gamma" But Everything Changes In September Tyler Durden Mon, 08/03/2020 - 15:37

Charlie McElligott's prediction from last week that the Nasdaq could suffer from a nasty spill as dealer gamma had turned increasingly negative...

... was foiled by the blockbuster earnings from the mega tech companies which sent the Nasdaq to new all time highs, forcing dealers - and frankly everybody else - to chase the year's best performing sector into the stratosphere.

And indeed, in his latest note from this morning, the Nomura strategist concedes that despite the overnight bear-steepening in USTs which typically is positive for Value and negative for Momentum stocks such as tech, "we see further NQ futs outperformance so far vs ES and RTY, as the “if it ain’t broke, don’t fix it” trade keeps going in a world of seemingly perpetually low yields/flat curves which benefits the “secular growth” Tech universe." For confirmation, look no further than Apple which this morning hit a new all time high of $446/share, sending its market cap higher by as much as $230BN in just two days to a record $1.9 trillion!

And since the gamma overhang is no longer an issue, looking ahead McElligott now believes that "it’s likely we see secular "Growth" factor Tech/NDX outperform into what I expect to be an August local “peak” for USTs/flatteners/ duration-sensitives Equities (particularly with a pretty negative seasonal for risk-assets over next few weeks alongside historic outflows for US Equities)."

However, just like BofA, the Nomura strategist sees the party ending some time in September, when there is a "high potential" for Treasury/Rate downtrade due mostly to heavy fixed-income issuance coming to market and into Q4’s very "risk-on" cross-asset/sector/factor seasonality.

If one then traces the sequence of key market catalyst, McElligott expects the August Treasury peak to transition into a "short" into September, which could then create a "cross-asset crowded trade reversal impulse as Autumn begins, as an up-move in both nominal- and real- yields would also likely see a Gold pullback, steeper curves reverse flattening as the long-end feels the issuance, which then drives a “Value over Growth/Momentum” factor pain-trade in US Equities."

What about volatility as a driver of returns?

Here McElligott calculates us that with trailing realized equity vol windows collapsing following a series of key drop-offs from the worst of the Feb/Mar VaR shocks, vol control funds have been "real" buyers of US Equities amounting to $72.1BN over the past 3 months (and $30.8B over the past month/$11.7B over the past 2 weeks). However, looking ahead the Nomura quant sees markets entering a period where this demand from vol control funds slowing to a trickle even if the tape were to to trade sideways, "and perversely, would see selling on sustained “up” daily returns." Needless to say, if volatility were to spike, the trapdoor under the market will open as described last week in "Why Even A Small Uptick In Volatility Could "Kick-Start A Massive And Painful Domino-Like Liquidation Event" for the simple reason that the market is "massively" short volatility. 

Finally looking at options positioning for US Equities Index & ETFs, McElligott sees both NDX (via the QQQs) and SPX/SPY consolidated showing some proper length again, after the Nasdaq escaped its close encounter with negative gamma last week, and as a result QQQ net Delta is now up to the 93rd %ile (after having turned sharply lower last week as we pointed out) while dealer gamma in SPX/SPY is at 83%ile...

... as last week’s rallies put both deep inside "long Gamma" territory, meaning it would require a powerful (and fast) blast down to risk opening-up something more insidious from a Dealer "pile-on" perspective.

Published:8/3/2020 2:46:25 PM
[Markets] Key Words: Judge Esther Salas speaks about the ‘madman’ who fatally shot her son and calls for greater privacy rights ‘The monster knew where I lived and what church we attended’
Published:8/3/2020 2:14:24 PM
[Markets] "No Silver Bullet" - WHO's Tedros Warns COVID-19 Vaccine May Never Be Found "No Silver Bullet" - WHO's Tedros Warns COVID-19 Vaccine May Never Be Found Tyler Durden Mon, 08/03/2020 - 15:06

As a growing chorus of seemingly impartial observers (including sell-side analysts at JP Morgan and Goldman) suggests that returning to lockdowns might not be the smartest way to sustainably fight SARS-CoV-2, WHO Director-General Dr. Tedros said Monday during the organization's latest briefing from its headquarters in Geneva that a cure for the virus might never be found, and that there is "no silver bullet."

More than 100 vaccine candidates are in various stages of development and study, but only six tracked by the WHO have entered Phase 3 clinical trials, the most comprehensive series of trials yet designed to closely measure safety and efficacy.

But even without a vaccine, falling mortality rates in the US and globally suggest that doctors have made serious progress in treating the disease.

"A number of vaccines are now in phase three clinical trials and we all hope to have a number of effective vaccines that can help prevent people from infection."

"However, there’s no silver bullet at the moment and there might never be," Dr. Tedros said.

Still, the world has tools to stop the spread of outbreaks. Lockdowns, masks, social distancing, contact tracing. "Do it all," Dr. Tedros - who, remember, isn't a medical doctor, but holds a PhD in philosophy with a focus on community health - advised.

For now, stopping outbreaks comes down to the basics of public health and disease control.

Testing, isolating and treating patients, and tracing and quarantining their contacts. Do it all.

Inform, empower and listen to communities. Do it all.

For individuals, it’s about keeping physical distance, wearing a mask, cleaning hands regularly and coughing safely away from others. Do it all.

The message to people and governments is clear: do it all.

And when it’s under control, keep going!

Leaders must remember: When fighting COVID-19, lifting restrictions too early is the biggest mistake a country can make.

Keep strengthening the health system.

Keep improving surveillance, contact tracing and ensure disrupted health services are restarted as quickly as possible.

Keep safeguards and monitoring in place, because lifting restrictions too quickly can lead to a resurgence.

Keep investing in the workforce and communicating and engaging communities.

We have seen around the world, that it’s never too late to turn this pandemic around.

If we act together today, we can save lives, we can save livelihoods if we do it all together.

And even if a workable vaccine is found, it's still possible that the best we can accomplish is a seasonal shot like the flu vaccine.

When it comes to fighting COVID-19, governments should stick to what has worked. However, some suspect that the strict lockdowns that have worked in places like China and Europe in the past aren't the best way forward: For example, Melbourne's outbreak has only worsened since the city and some of its suburbs were placed on lockdown three weeks ago, making the immense economic damage seem superfluous.

Keep in mind, that as American scientists insist that masks should be made mandatory due to a preponderance of evidence showing they can stop infected people from spreading the virus via the air, the WHO has dragged its feet, saying more research on aerosol transmission is needed. The accepted ways the virus is spread include via close contact with droplets expelled when an infected person coughs, sneezes, breathes or speaks, through the expulsion of small microdroplets that might have the capacity to spread via long distances (up to 30 feet or more, in the right environment, according to at least one study) and via contact with contaminated surfaces.

Published:8/3/2020 2:14:24 PM
[Markets] Should you volunteer for a COVID-19 vaccine trial? Here's who can qualify Should you volunteer for a COVID-19 vaccine trial? Here's who can qualify Published:8/3/2020 1:45:38 PM
[Markets] Kashkari Says Only Way To "Save Economy" Is To Lock It Down "Really Hard" For 6 Weeks Kashkari Says Only Way To "Save Economy" Is To Lock It Down "Really Hard" For 6 Weeks Tyler Durden Mon, 08/03/2020 - 14:35

With Shepard Ambellas of Intellihub

Minneapolis Fed President (as well as former Assistant Secretary of the Treasury for Financial Stability under the Bush and Obama administrations, former PIMCO and former Goldman Sachs employee) Neel Kashkari said the only way to save American lives from COVID-19 is to fully lock down the entire nation and all of its inhabitants.

“That’s the only way we’re really going to have a real robust economic recovery,” the American banker told CBS’s Face the Nation. “Otherwise, we’re going to have flare-ups, lockdowns, and a very halting recovery with many more job losses and many more bankruptcies for an extended period of time, unfortunately.”

Kashkari said that the path of the economy would hinge on success in getting the pandemic under control, and suggested that while very unpopular, a stringent economic lockdown might be the lesser of two evils to more quickly restore growth and hiring, rather than waiting for the eventual arrival of a vaccine.

"I mean if we were to lock down really hard, I know I hate to even suggest it, people will be frustrated by it, but if we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it the way that it’s happening in the Northeast right now”, Kaskhari said.

However, the truth of the matter is that the Federal Reserve banker just wishes to secure another stimulus package bailout for the Fed worth trillions of dollars in a last-ditch effort to prop up the economy one last time before it becomes fully blown out.

To top it all off, Kashkari believes he can convince the general public that having their businesses shut down and forcing people to stay at home with no pay will somehow get the economy bustling again when in all actuality the diabolic plan makes no sense and even JPMorgan now advising against a broad lockdown, to wit:

In our opinion, re-imposing city lockdowns at this stage might be not be the ideal solution to control infection, from a cost/ benefit perspective, especially for developed countries. Even for developing countries, an overall cost-benefit analysis indicates that, in a potentially bigger second wave, lockdowns may not be the ideal approach.

Even Bloomberg admits a new shutdown woutd be catastrohic, with strategist Richard Jones writing that "fresh lockdowns would hurt risk assets in a big way and would test the limits of policy makers’ capacity to enact fiscal and monetary stimulus."

This will be bad news for equities in general, but it could be that the outperfomers during the initial economic shutdown would do so again (eg, tech, basic staples). In order for this to happen, however, it would require another round of unprecedented policy responses.

For the Fed and BOE, the markets would probably look to price negative policy rates more aggressively, and lots more QE. For the ECB, QE expectations would also ramp higher, and lower policy rates could not be ruled out either. On the fiscal side, spending of a similar magnitude of what already was conducted would likely be needed again.

Which appears to be precisely what the Fed wants: another tsunami of liquidity following a second self-inflicted suicide of the economy.

The bottom line is, the Fed - which after failing catastrophically at hitting its inflation objective has now switched to being an expert in such matters as climate change and racial inequality - is setting the stage for another multi-trillion-dollar bailout which would be promptly catalyzed by another economic shutdown, which in turn would set the stage for the next major economic crisis, one in which as discussed yesterday, the Fed would proceed to send money directly to US households, sparking a long-overdue inflationary conflagration.

Published:8/3/2020 1:45:38 PM
[Markets] The Tell: The stock market could be facing ‘multiple decades’ of ‘deleterious’ economic after-effects, analyst warns The stock market’s ability to shrug off the economic destruction and gloomy coronavirus headlines continues to enrich emboldened bulls and baffle even some of the savviest Wall Street pros. A big dose of reality, however, looms large, if Solomon Tadesse, the global head of quantitative research at Societe Generale, has it right with his recent outlook.
Published:8/3/2020 1:45:38 PM
[Markets] Here's how you can avoid the massive retirement mistakes these boomers made Here's how you can avoid the massive retirement mistakes these boomers made Published:8/3/2020 1:15:16 PM
[Markets] COVID-19 Vaccine Could Mean Regular Injections, No Guarantee Of Immunity COVID-19 Vaccine Could Mean Regular Injections, No Guarantee Of Immunity Tyler Durden Mon, 08/03/2020 - 14:05

While Dr. Anthony Fauci says he's hopeful that a COVID-19 vaccine will be available 'by late fall or early winter,' it may not be as simple as one jab for a lifetime of immunity, according to the LA Times.

For starters, a COVID-19 vaccine can be released if it's 'safe and proves effective' on as few as 50% of those who receive it, according to recently released federal guidelines. What's more, the definition of "effective" means that it simply has to 'minimize the most serious symptoms,' according to the report.

"We should anticipate the SARS-CoV-2 vaccine to be similar to the influenza vaccine," said Dr. Kathleen Neuzil, director of the Center for Vaccine Development at the University of Maryland. "That vaccine may or may not keep people from being infected with the virus, but it does keep people out of the hospital and the ICU."

Because of this, experts say that the first round of COVID-19 vaccines probably won't eliminate the need for masks, social distancing and other measures. So - after all the promises made by government officials, a vaccine may only reduce symptoms, and may turn into a recurring shot that only works on half the population.

Developing a vaccine capable of inducing “sterilizing immunity” — that is, the ability to prevent the virus from causing an infection — takes time and research, which might not be possible as death tolls continue to rise and the recession grows deeper. Yet with so many companies on the hunt for that vaccine, there is hope one of them might actually achieve it.


Scientists had studied other coronaviruses — SARS and MERS — and mapped the novel coronavirus' genome not long after the first COVID-19 deaths were recorded. They identified the spike protein on the virus’ outer shell, which the virus uses to infiltrate the host cell and created a three-dimensional model of the virus to see how antibodies block infection by binding onto the spike protein.

Even so, scientists don't yet know what immunity against the virus looks like. That information typically comes from studying the body’s natural response to disease. The number of T-cells and neutralizing antibodies that fight off an infection can become a blueprint for a vaccine. -LA Times

The problem is that "the novel coronavirus hasn't been around long enough," according to Dr. Mark Feinberg, CEO of the International AIDS Vaccine Initiative - who noted that an Ebola vaccine went from Phase 1 to Phase 3 clinical results in just 10 months and was nearly 100% effective within 10 days of a single dose being administered.

On the bright side, it could reduce the spread of the virus, creating pockets of immunity throughout the country according to Dr. Peter Hoetz, dean of Baylor College of Medicine's National School of Tropical Medicine.

"Ideally, you want an antiviral vaccine to do two things," said Hotez. "First, reduce the likelihood you will get severely ill and go to the hospital, and two, prevent infection and therefore interrupt disease transmission."

For the current pandemic, "the bar does not seem that high," he added.

Meanwhile, Operation Warp Speed - the Trump administration's program to accelerate a vaccine, has a goal of delivering 300 million doses by January. The program has identified 14 'promising candidates' - of which seven have been identified as front-runners. Of those, three have had early clinical trials evaluated independently.

The vaccine being developed by Moderna and the National Institutes of Health was deemed “promising in an editorial published in the New England Journal of Medicine, and two studies in the Lancet delivered a similar message for vaccines being developed at Oxford University and by the Chinese company CanSino.

These vaccines have induced an immune response in people participating in early tests, but inducing an immune response does not always mean success in fighting a disease. For instance, scientists recently developed a vaccine for another respiratory virus that increased antibodies but failed its Phase 3 clinical trial. -LA Times

Other issues puzzling vaccine researchers include why some people produce high levels of neutralizing antibodies to COVID-19, while others do not.

"What’s interesting is that all have recovered, and we do not know how they did this," said Feinberg - former chief public and health science officer at Merck.

Moreover, scientists don't know how long immunity lasts, and whether a noted decline in antibodies after just 2-3 months will complicate efforts to find a lasting cure.

"If we get a vaccine that is 60% efficacious, we can use the information to identify what distinguishes people who are protected from those who are susceptible," Feinberg added. "Then we will know what the minimum target is for an immune response."

No wonder 70% of Americans are planning to wait to get the vaccine - or won't get one at all, according to a poll from CBS News - which notes that just 27% of those over 65 would get the vaccine right away, while liberals are twice as likely than conservatives to get one immediately.

Read the rest of the report here.

Published:8/3/2020 1:15:16 PM
[Markets] Coca-Cola launching Topo Chico Hard Seltzer as brands from Sam Adams parent and Molson Coors soar Coca-Cola said it would be investing in brands and products with growth potential, like Topo Chico, and shutting down other “zombie brands.”
Published:8/3/2020 1:15:16 PM
[Markets] Google Virtue-Signals With Record ESG Bond Issue To "Fight Racial Inequality" Google Virtue-Signals With Record ESG Bond Issue To "Fight Racial Inequality" Tyler Durden Mon, 08/03/2020 - 13:35

Alphabet, Google's parent, just put its stamp on the 'S' in ESG.

It was already a Top 5 holding among ESG funds...

But after today's massive virtue-signalling, we suspect investors (who refuse to consider the reality of the ESG 'scam') will be piling into both the debt and equity of this tech behemoth to signal their own virtues.

After blowing a massive $6.9 billion in Q2 to buyback their own shares, up 92% YoY (and widen the wealth inequality gap among Americans), Alphabet is seeing strong demand for new bonds with record low yields, in a rare debt sale that will help combat racial inequality, among other sustainability projects.

The parent company of Google is looking to fund organizations that support Black entrepreneurs, small and medium businesses impacted by Covid-19, as well as affordable housing, among other eligible proceeds listed in bond documents seen by Bloomberg. The borrowings can also be used to finance clean energy projects and green buildings.

Bloomberg reports that Alphabet may sell the debt in six parts, according to the person with knowledge of the matter. The longest security, a 40-year bond, may yield between 1.25 and 1.3 percentage points above Treasuries, the person said.

Investors have already placed as much as $31 billion in orders for the sale, according to a person with knowledge of the matter, with deal size expected to be around $5.75 billion.

That is the largest ESG bond issuance yet.

The bond sale comes as so-called "sustainable" debt issuance has exploded higher during the pandemic, most notably via "social" bond sales. Supply will almost double this year compared to last as more borrowers raise debt to respond to the humanitarian crisis presented by Covid-19, according to HSBC Holdings Plc.

So,to sum up: "Q2 Google" strategically used its balance sheet to widen the wealth-inequality-gap, but "Q3-Google" is all about reparations and wants to solve the racial-inequality-gap.

Published:8/3/2020 12:44:42 PM
[Markets] : Should schools reopen amid the coronavirus outbreak? The downside of keeping kids home is pretty severe, Goldman says It may be difficult for some parents to imagine sending their children into a potentially dangerous situation, but the economic costs of not doing it may be a compelling reason in favor of re-opening schools, these analysts write.
Published:8/3/2020 12:44:42 PM
[Markets] Market Extra: Nasdaq Composite’s record rally takes it toward fastest 1,000-point milestone in 20 years The Nasdaq Composite is starting August off on a high note, which could push the technology-laden benchmark to its fastest 1,000-point milestone in the past 20 years.
Published:8/3/2020 12:16:39 PM
[Markets] Roubino: Why So Many Cities Are Paralyzed Roubino: Why So Many Cities Are Paralyzed Tyler Durden Mon, 08/03/2020 - 12:30

Authored by John Rubino via,

Sympathy for America’s big-city mayors and their allies is evaporating – generally for good reason. Portland and Seattle, for instance, seemed willing to give rioters a free hand before belatedly stepping in. And of course there’s the amazing quote from Chris Cuomo, the brother of New York’s Governor : 

“Please, show me where it says protesters are supposed to be polite and peaceful.”

The worst-run cities will pay a huge price for this indecision when rioters finally leave but shoppers and merchants don’t come back.

But like most things in this increasingly messy world, the big-city mayor story is way more complicated (and maybe more sympathetic) than it seems at first glance.

Let’s take it in stages.

Many US cities were already headed for bankruptcy

It’s easy to forget that less than a year ago – when the national economy seemed pretty strong and people were borrowing and spending with abandon – the unfunded liabilities of Chicago, Los Angeles, New York and a long list of other venerable cities were already out of control and threatening those governments’ solvency.

In the next recession and/or equities bear market, big pension plans like California’s CalPers and Chicago’s Teachers Pension Fund, were going to topple into some form of default, taking local bond ratings into junk territory and forcing draconian cuts in public services. On there’s a 30-part series called Welcome To The Third World that chronicles the deterioration of public finance and how it will leave many US cities looking more like Caracas than Zurich.

Today’s big-city mayors are just the latest in a long line of leaders who bought labor peace and public sector votes by paying teachers, police, and firefighters way more than was mathematically possible in the long run. But the way can-kicking works is that the people who start the game get out with their reps and fortunes intact while the people in charge at the end get all the blame. In other words, today’s mayors were in deep trouble even in a normal business cycle.

Then came the pandemic

Depending on who’s pontificating, covid-19 is either a deadly health threat or a catastrophic overreaction by ignorant and panicked governments.

Either way, it produced much higher-than-expected health care costs and vastly lower tax revenues, ripping city budgets to shreds. So the inevitable end-of-cycle recession has been replaced by its bigger, meaner, butt-ugly brother, and cities that were teetering on the edge of insolvency are now demonstrably, undeniably broke.

Public workers, in short, were going to be fired in droves and services curtailed on a scale that even the biggest critics of municipal finances didn’t see coming this soon.

Then came the riots

The past few weeks’ civil unrest exploded seemingly out of nowhere — but was actually the inevitable result of an aristocracy systemically impoverishing regular people, combined with a multi-month lockdown that prevented millions from paying for health care or housing, and in many cases food.

Overwhelming burden

Add it all up and the result is an overwhelming financial and political burden for a typical mayor. But the nature of this civil unrest presents a completely different kind of challenge – which takes us to the part that you may not like because it calls for a bit of empathy.


Most big-city mayors are liberals, which isn’t surprising given the voting patterns of urban populations. And not just any old liberals, but hard-core, all-in civil-rights-obsessed liberals who remember (or grew up on tales of) the civil rights movement of the 1960s and have modeled their political lives accordingly.

Most of them fantasize about being this generation’s Marin Luther King, leading a massive march on Washington that forces historic changes in how the least among us are treated.

They thought they’d finally gotten their chance when the current protests erupted, and gleefully tried to get in front of the crowd, no doubt hoping to not just encourage it but lead it.

That’s an admirable goal. But this is not Martin Luther King’s movement.

When, for instance, the mayor of Portland showed up expecting to be welcomed with open arms – he was one of them after all – the reaction was just slightly different.

Now Portland and Seattle look like the set of a Mad Max film, and their mayors, along with many others across the country, are confronting not just riots, but a repudiation of their life’s work. If they’re not civil rights leaders, what are they?

That – not their supposed hard-core Marxism — explains the mayors’ indecision: They know they’re required to protect their small businesses and peaceful citizens. But to do that they have to cross their people, who, until just a couple of weeks ago, defined the mayors’ political careers. They’d sooner arrest their own children.

Put another way, big-city Democrat mayors have gone from being – in their own minds – exactly the right people for this historical moment to being exactly the wrong people. They have no idea how to reconcile their self-image and life’s work with this baffling new world, and they’re paralyzed.

And their cities – already headed for catastrophe – might never be the same.

Published:8/3/2020 11:44:58 AM
[Markets] Rabobank: Is Judge Dredd A Vision Of What Awaits Our Society Rabobank: Is Judge Dredd A Vision Of What Awaits Our Society Tyler Durden Mon, 08/03/2020 - 11:55

By Michael Every of Rabobank

Elon and Eloi

It was just a few short weeks ago that governments in Australia and the UK were congratulating themselves on how they had performed under Covid-19, and both were enthusiastically looking ahead to getting life back to normal. Today Victoria, Australia is under new lockdown and Melbourne faces six weeks of virus curfews, while in the UK a state of emergency has been declared in Manchester, a trial balloons have been floated to cut-off London from the rest of the country if needs be --which we were recently told would never happen-- and for the over 50s to have to stay at home to allow everyone younger to get back to normal - which were again told would never happen. Oh, for a time machine back to when all was well with the world! (Which was a time when the virus was still out of control in the US, and Brazil, and Mexico, and India, and South Africa, but never mind.)

On which note, the dwindling band of US-China optimists who can remember how recently “Chimerica” was the future should note that the US has placed new Magnitsky sanctions on China over the treatment of Uighurs in Xinjiang. This time it is not just individuals but the Xinjiang Production and Construction Corps (XPCC), a paramilitary organization that employs almost 12% of Xinjiang's total population, is involved in the production of one-third of China's cotton, and which data show back in 2014 comprised 17% of the Xinjiang’s economy. That’s a move with huge implications – and potentially even for Hong Kong, where the September LegCo election has been cancelled, a move dubbed possibly illegal by its bar association.

Meanwhile, the sword of Damocles hangs over the head of Chinese apps in the US. President Trump has made it clear that TikTok is either going to be banned outright or forced to divest to an American owner: and it is also being reported that the ubiquitous WeChat may go the same way. If that were to occur, and given Western alternatives are banned in China, it literally stops much US-China on-line communication. Decoupling it is then; and despite July having seen a surge in Chinese imports of US agricultural goods. Not that China isn’t doing its part on that front, aside from app banning. General Secretary Xi Jinping declared late last month that the economic situation is “complicated and grave”, and spoke of the need for a “dual circulation” approach to growth: this means a focus on the vast domestic market over exports - and importing less too. Because you must contract imports if you are going to see lower exports and still want to maintain a trade surplus.

On a more meta-level, a time machine might also be needed when one sees the “This is so 2020” headline that Elon Musk has been invited by the Egyptian government to come and see that the pyramids were not built by aliens. Presumably Musk is too buy landing astronauts or preparing for his cage-fight with Johnny Depp.

Of course, it was H.G Wells who first wrote of ‘The Time Machine’ back in the late 1800s, a novel which bears a quick summary here for those unfamiliar with it. A British Time Traveller travels from Wells’ time to London in 802,701AD, where he meets the Eloi, a society of small, elegant, childlike adults. They live in small communities within large and futuristic yet slowly deteriorating buildings, and adhere to a fruit-based diet. His efforts to communicate with them are hampered by their lack of curiosity or discipline. He concludes the entire planet has become a garden, with little trace of human society or engineering from the hundreds of thousands of years prior. The Time Traveller theorizes that intelligence is the result of and response to danger; with no real challenges facing the Eloi, they have lost the spirit, intelligence, and physical fitness of humanity at its peak.

Later in the dark, he is approached menacingly by the Morlocks, ape-like troglodytes who live in darkness underground and surface only at night. Exploring the Morlocks' dwellings, he discovers the machinery and industry that makes the above-ground paradise of the Eloi possible. He alters his theory, speculating that the human race has evolved into two species: the leisured classes have become the ineffectual Eloi, and the downtrodden working classes have become the brutal light-fearing Morlocks. Who says that old-school science fiction isn’t about society (or prophetic)?

We should all consider The Time Machine’s lessons as we drift through ‘Eloi’ markets rife with a lack of curiosity and discipline, and where spirit and intelligence appear absent. Especially as danger is still all-too real, albeit due to efforts --quite understandably-- being made to prevent the emergence of future Morlocks in the first place.

Meanwhile, as millions get ready to stay at home again because of the virus we had beaten just weeks ago, and some speculate that an Eloi-esque policy of a universal basic income might be a solution to that problem, let’s consider another work of science fiction from 80 years after Wells, 2000AD’s Judge Dredd. In that dystopian future there is no working class anymore because there is no work, just mass unemployment in post-apocalypse megacities, and a struggle to maintain any kind of social control over a bored-and-frustrated-to-madness population forced to live on a utilitarian universal income. Police, judge, jury, and executioner are now combined in one role to keep control: a bit like social media, eh?

Note that while this might seem a silly season summer Daily, the underlying points it makes are deadly serious. What will our society look like ahead? The odd couple or decoupled? Elois lie Elon, and more Morlocks, or not? And if not, how and what instead? Those are questions markets should ask a lot more frequently than “Is the USD going up or down?” if they want to understand whether the USD will be going up or down.

And for those Eloi who can’t be bothered to do the reading, the recent news-flow pointing to imminent changes both within and between our societies suggests the Greenback might be close to finding a floor, and it being EM FX’s turn to start to swoon again.

Published:8/3/2020 11:15:40 AM
[Markets] Outside the Box: Boomers are doing retirement their own way The ubiquitous generation is redefining life's 'third age' — would you expect anything else?
Published:8/3/2020 11:15:40 AM
[Markets] Kodak Granted Chairman 1.75 Million Options The Day Before Trump's $765 Million Loan To Company Kodak Granted Chairman 1.75 Million Options The Day Before Trump's $765 Million Loan To Company Tyler Durden Mon, 08/03/2020 - 11:35

The day before a $765 million loan from the government was announced, Kodak granted its executive chairman Jim Continenza 1.75 million options as the result of what is being called an "understanding" with the Board of Directors. The options had not been listed in his employment contract, nor were they made public, according to Reuters

The announcement of the loan the next day took shares of Kodak from about $2.50 on Monday to, at one point, $60. Shares now trade at $22. Kodak's executive chairman's options are now worth tens of millions of dollars, as a result.

The decision to grant executive chairman Continenza the options was "never formalized or made into a binding agreement, which is why it was not disclosed previously," the report says. They were reportedly granted to "shield Continenza’s overall stake in the company from being diluted by a $100 million convertible bond deal clinched in May 2019".

The idea of granting options simply for this reason is unusual, as raising capital and the resulting dilution is a run-of-the-mill part of business and because options are usually for long-term incentives. For example, off the top of our heads, we cannot recall ever seeing an options issuance for this reason in the past. 

Most companies have "wide latitude" in assigning these options but three corporate governance experts told Reuters that Kodak's move was "unusual". 

Jim Continenza has $83 million reasons to smile

Sanjai Bhagat, a finance professor at the University of Colorado said: "The compensation committee’s job is not to protect the CEO from every adverse effect on the stock price. It’s to get the CEO to think about long-term value.”

Regardless, the approach is "permissible", according to the report. Kodak disclosed the award in an SEC filing, but one source says the options grant happened because of an "understanding with the board". 

The company also granted options to three other executives on Monday, worth about $712,000 each.

The chairman's paper gains amounted to about $83 million at the end of this week, compared to $53 million in gains he would have made if it wasn't for his additional options. About 29% of the options he received on Monday vested immediately. 

One person close to the company said: “The issue is the board wanted to make sure the CEO had the same economic alignment as was contemplated when he took the job.” 

Kodak's spokeswoman said Continenza “is a strong believer in the future of the company, and has never sold a single share of stock.”

We bet he's an even stronger believe after Monday.

Published:8/3/2020 10:45:23 AM
[Markets] Dwayne ‘The Rock’ Johnson buys defunct football league XFL Dwayne ‘The Rock’ Johnson buys defunct football league XFL Published:8/3/2020 10:45:23 AM
[Markets] Key Words: A record high for the Nasdaq ‘would all come crashing down,’ says Trump in a tweet ‘including your jobs, stocks, and 401(k)s’ if Biden wins presidency President Donald Trump’s latest tweet touts record gains for the Nasdaq Composite Index and suggests a rebound in the market from coronavirus -induced lows is in jeopardy if former Vice President Joe Biden, and presumptive Democratic presidential nominee, wins the 2020 election.
Published:8/3/2020 10:45:23 AM
[Markets] Economic Preview: Job trouble? Wave of rehiring after economy reopened to fade in July after viral spiral The engine of the U.S. economy may have gotten clogged again — no thanks to the recent acceleration in coronavirus cases. And once again American workers are on the frontlines.
Published:8/3/2020 10:15:08 AM
[Markets] Florida COVID-19 Cases Decline As Testing Centers Close; Global Cases Top 18 Million: Live Updates Florida COVID-19 Cases Decline As Testing Centers Close; Global Cases Top 18 Million: Live Updates Tyler Durden Mon, 08/03/2020 - 11:11


  • New Florida cases decline as testing stations closed
  • More schools reopen in Indiana, Georgia, elsewhere
  • Global COVID cases top 18 million
  • Australia imposes tighter lockdown on Melbourne
  • Duterte revives Manilla lockdown
  • COVID US cases slow
  • HK reports 80 new cases, first reading below 100 in two weeks
  • Gottlieb says lockdowns may not always be most appropriate solution

* * *

Update (1100ET): With more testing centers closed, Florida reports 4,752 new cases of COVID-19 on Monday, along with another 73 deaths. It's the fewest number of new cases reported since June 23, though it comes after a weekend when many test sites were closed.

The state has 491,884 total cases, the most in the country after California, which has more than half a million cases. The death toll hit 7,279.

We'll likely need to wait a few days to see whether the trend of declining new cases remains intact.

In other news, more states around the country are sending staff back to school for the first time since education shut down around the country back in the spring.

Already, over the weekend, just days after public schools reopening in Indiana for the first time, at least one student and one school staff member have tested positive for the coronavirus, according to reports that emerged over the weekend. The infections occurred in the Greenfield-Central Community School Corporation, 20 miles east of Indianapolis. A student tested positive on his first day back in class, meaning he likely contracted the virus elsewhere.

Parents at another early-open school district in Georgia complained to CNN in a story published last week before schools reopened with only staff allowed on-site.

* * *

New coronavirus flareups that have emerged over the past few weeks across Europe, Asia, Africa, Latin America and Australia have driven global infection rates to their highest levels yet. By early Monday morning in New York, the number of confirmed cases of COVID-19 had surpassed 18 million... the world reports roughly 250,000 new cases a day, leaving the world on track to surpass 19 million by the end of the week.

Lockdowns initially helped Europe, China, South Korea and parts of the US to suppress the virus. But similar measures adopted by Australia's Victoria State - home of the country's second-biggest city, Melbourne - have failed to suppress a second-wave of the outbreak.

While analysts at JPM question whether lockdowns are the smartest strategy to confront outbreaks in the second wave, Australia’s Victoria state has doubled down, announcing Monday that it would shut down large parts of its retail and manufacturing sectors for another six weeks.

One day after declaring a state of disaster, Premier Daniel Andrews also announced that construction firms must radically reduce the number of workers on-site across the city. While essential services such as banks, supermarkets, pharmacies and petrol stations remain open, production at meat-processing plants across Victoria will be reduced by one-third, potentially limiting supplies of meat and driving up food prices during already trying times.

The new measures - which follow lockdowns, curfews and other restrictions - will further limit movement and activity, especially at night, and ultimately force 1 million workers to stay home, according to the BBC.

Workers forced to stay home can apply for benefits to compensate them for some of their lost wages, up to

Despite imposing a strict lockdown three weeks ago (these new measures add to the restrictions already in place), the outbreak in Victoria has continued to worsen. Until about 4 weeks ago, Australia held the title of one of the most successful virus response efforts of any anglophone country. But a seemingly unstoppable outbreak centered around Melbourne has brought the country to its worst place yet.

Elsewhere in Asia, Philippines President Rodrigo Duterte has ordered the country's capital, Manila, back on lockdown starting Aug. 4 after the country recorded its biggest single-day jump in new cases yet, with 3,226 new infections confirmed and 46 additional deaths. That marked the fourth straight day that the Philippines had recorded a new record jump in infections, putting it on track to surpass Indonesia as the country with the biggest outbreak in Southeast Asia.

Health officials announced that the country's total confirmed cases had reached 106,330 confirmed cases and 2,104 deaths.

In the US, which saw the number of new cases reported decline again on Sunday, Dr. Birx warned last night that the virus is more widespread than ever across the country, while Dem leader Nancy Pelosi said she didn't have much confidence in Dr. Birx, whom she denounced as an unreliable Trump appointee.

Another silver lining: Hong Kong reported 80 new cases, the first time in 12 days that the SAR reported a daily rise of fewer than 100 new cases. A team of Chinese officials are rolling out a new mass-testing regime in the quasi-autonomous territory that is still reeling from a new national security law imposed by Beijing that cracks down on political dissent.

Finally: During his daily appearance on CNBC's "Squawk Box", former FDA head Scott Gottlieb said  governments should work toward a "happy medium" of closures and restrictions that does the least amount of damage to the economy while keeping the virus mostly at bay.

"The question is: can they hang on to those gains, or are they being quietly seeded right now"...the bottom line question is targeted mitigation - you close move activities outside - combined with universal that enough to keep the virus at bay,"

"If it can, then we may have found some kind of happy medium if you will between lockdowns and unfettered spread."

Watch the clip below:

Published:8/3/2020 10:15:08 AM
[Markets] Nasdaq Overcomes Resistance, but How Troublesome Is Breadth? The Nasdaq continues to lead and grab the headlines. However, recent market action is not all lollipops and roses. While the Nasdaq Composite Index and Nasdaq 100 closed above their near-term resistance levels, their progress was marred, in our opinion, by a general deterioration in overall market breadth as participating stocks became more selective. Published:8/3/2020 9:42:22 AM
[Markets] China Behind On Trade Deal Purchase Commitments As Trump Forgets About Phase Two  China Behind On Trade Deal Purchase Commitments As Trump Forgets About Phase Two  Tyler Durden Mon, 08/03/2020 - 10:35

China is severely lagging behind purchase commitments laid out in phase one trade agreement with the US.

The Peterson Institute for International Economics' (PIIE) trade tracker of China's monthly purchases of US goods covered by the deal through June reveals purchase levels were only at 47% of year-to-date targets. 

According to the agreement, China would purchase goods and services by a combined $200 billion over 2020 and 2021 from 2017 levels. This PIIE Chart below tracks China's monthly purchases from July show China hasn't bought enough American goods. 

China's year-to-date total imports of covered products from the US are around $40.2 billion, compared with a prorated year-to-date target of $86.3 billion. This means China is behind $46.1 billion in purchases. 

As a result of Beijing's inability to uphold the flimsy trade agreement, President Trump recently said he's not focused on the next phase of the trade deal, otherwise known as "Phase Two."

Since the coronavirus pandemic, bilateral relations between both superpowers have been severely damaged. President Trump routinely blames China for releasing the "plague" that has crashed the US economy. The status of the trade deal agreement appears to be a dud ahead of the US presidential election. 

Even before the phase one deal was signed, in early January, we warned: "Why The "Phase One" Trade Deal Is Impossible, In One Chart." 

Published:8/3/2020 9:42:22 AM
[Markets] Need to Know: A stock market correction may be imminent, JPMorgan says. Here’s why you shouldn’t panic The typically muted month of August is upon us but there’s still a lot for investors to digest.
Published:8/3/2020 9:42:22 AM
[Markets] Don't break up tech conglomerates: CEO of content-management cloud company Box Don't break up tech conglomerates: CEO of content-management cloud company Box Published:8/3/2020 9:15:53 AM
[Markets] Nasdaq at Intraday High - Economic Stimulus Talks to Continue Stocks climb as economic-stimulus talks are scheduled to resume and tech advances. The Nasdaq Composite touched an intraday record. Published:8/3/2020 9:15:53 AM
[Markets] US Manufacturing PMI "Worryingly Weak" As ISM Spikes To 16-Month Highs US Manufacturing PMI "Worryingly Weak" As ISM Spikes To 16-Month Highs Tyler Durden Mon, 08/03/2020 - 10:05

Following more rebounds in 'soft' manufacturing survey data in Europe and Asia (and LatAm - Brazil Manufacturing PMI exploded to a record in July), both ISM and Markit's measures of US manufacturing sentiment were expected to continue their v-shaped recovery (despite hard data refuses to follow suit).

However, while the July surveys improved over June, Markit's PMI notably dropped from the flash print but ISM's report showed major gains...

  • Markit US Manufacturing PMI MISS 50.9 vs 51.3 exp and 49.8 prior (51.3 flash)

  • ISM US Manufacturing BEAT 54.2 vs 53.6 exp and 52.6 prior

This is the highest ISM manufacturing print since March 2019

Source: Bloomberg

So take your pick - disappointing intra-month decline (as reopenings are rolled back) or best month in 16 months (because nothing matters)?

ISM New Orders have exploded higher to best since Sept 2018 but employment is not catching up to the "V"...

Source: Bloomberg

On ISM, the company's spokesperson said:

“The PMI® signaled a continued rebuilding of economic activity in July and reached its highest level of expansion since March 2019, when the index registered 54.6 percent. Four of the big six industry sectors expanded.

The New Orders and Production indexes returned to strong expansion levels. The Supplier Deliveries Index remained at a more normal level of tension between supply and demand. Seven of the 10 subindexes registered expansion, up from five in June,”

But on PMI, Chris Williamson, Chief Business Economist at IHS Markit notes:

Although indicating the strongest expansion of the manufacturing sector since January, the IHS Markit PMI remains worryingly weak. Much of the recent improvement in output appears to be driven merely by factories restarting work rather than reflecting an upswing in demand.

Growth of new orders remains lacklustre and backlogs of work continue to fall, hinting strongly at the build-up of excess capacity. Many firms and their customers remain cautious in relation to spending in the face of re-imposed lockdowns in some states and worries about further disruptions from the pandemic.

"Encouragingly, business optimism about the year ahead has revived to levels last seen in February, but many see the next few months being a struggle amid the ongoing pandemic, with a more solid-looking recovery not starting in earnest towards the end of the year or even into 2021.

Further infection waves could of course derail the recovery, and many firms also cited the presidential elections as a further potential for any recovery to be dampened by heightened political uncertainty."

Finally, as a reminder, the euphoric (phew, thank the lord that's over) rebound has sent 'soft' survey data hopes to a level that has historically not portended a good reaction in markets...

Source: Bloomberg

Published:8/3/2020 9:15:53 AM
[Markets] Peter Morici: There’s a far simpler way to help struggling Americans and businesses than a rehash of the convoluted CARES Act and PPP program These steps would provide clear incentives and rewards to seek and create jobs.
Published:8/3/2020 9:15:53 AM
[Markets] CFIUS Gives Microsoft 45 Days For TikTok Deal Talks As ByteDance Shifts HQ To London CFIUS Gives Microsoft 45 Days For TikTok Deal Talks As ByteDance Shifts HQ To London Tyler Durden Mon, 08/03/2020 - 09:25

Just weeks after abandoning a planned move to London - a cancellation that was reportedly politically motivated, according to myriad reports in the British press (more on that here) - ByteDance will reportedly shift its headquarters to London from Beijing.

The decision, which was motivated by the Trump Administration's threats to bar TikTok from the American market on national security grounds, follows a quiet agreement between British government ministers and ByteDance. Last night, we reported the confirmation that Microsoft had restarted talks with ByteDance regarding a possible acquisition of TikTok.

The company confirmed the reports Monday, and it appears ByteDance has finally shown itself willing to play ball with the US, despite the brief period of uncertainty over the weekend after ByteDance and Microsoft reportedly broke off talks pending more guidance from the administration.

Whoever buys TikTok will control the app and its global operations, but ByteDance will retain ownership of a separate app called Douyin ("TikTok") which is Chinese-language and built for the Chinese internet.

Microsoft says it's aiming to wrap up talks by Sept. 15, giving us a 6-week timeline during which we expect the White House to tone down its rhetoric a little bit, even if the administration does move ahead with imposing new restrictions on apps like WeChat, and companies like Huawei.

As investors tried to piece together exactly what was happening behind the scenes, Reuters came through last night with exactly that: a deeply-sourced report citing White House officials who explained that President Trump's comments on Friday - that the US would move to ban TikTok - elicited serous pushback from his advisors and Republican lawmakers like Lindsey Graham. Trump initially opposed the idea of allowing ByteDance to sell TikTok to Microsoft. But he quickly relented, and by Sunday night, GOP lawmakers had provided enough assurances to BD and Microsoft CEO Satya Nadella that a deal to buy TikTok would receive the administration's blessing when the time comes for the CFIUS review.

For decades, American law has required a government board to weigh in - and ultimately approve - every foreign deal involving major American assets and ensure that the deal doesn't impact American national security priorities. China's wave of ambitious buyouts around the world over the past 10 years - remember, China owns Smithfield foods, one of the biggest pork producers in the world, and a company that's technically an American company - has made western governments wary of Beijing's "neo-imperialist" approach.

Once Trump assented to the deal, CFIUS reportedly gave the two companies 45 days to work out a deal (hence the Sept. 15 deadline shared by Microsoft).

Lindsey Graham tweeted over the weekend that a Microsoft buyout of TikTok would be a "win-win" for America and China.

TikTok has roughly 100 million users in the US, and has been valued at $50 billion, reportedly. Though it's unclear what prices MSFT is looking at.

For some reason, we suspect Beijing doesn't see things Graham's way. And as Reuters pointed out, whether Microsoft can successfully separate TikTok's technology from ByteDance in a way that would successfully assuage security concerns remains to be seen. It's probably one of the biggest risk factors standing in the way of any eventual deal.

A key issue in the negotiations will be separating TikTok’s technology from ByteDance’s infrastructure and access, to alleviate U.S. concerns about the integrity of personal data. ByteDance owns a Chinese short video app called Douyin that was based on the same code used for TikTok.

Not to say that it can't be overcome. But it certainly explains the intense government scrutiny at every stage in the process, as CFIUS told Reuters it intends to monitor the negotiations.

The negotiations between ByteDance and Microsoft will be overseen by CFIUS, a U.S. government panel that has the right to block any agreement, according to the sources, who requested anonymity ahead of a White House announcement. Microsoft cautioned in its statement that there is no certainty a deal will be reached.

One idea under consideration is to give Microsoft and ByteDance a transition period to develop technology for TikTok that will be completely separate from ByteDance, one of the sources said.

Microsoft said it did not intend to provide further updates until there was a definitive outcome in the negotiations.

The scrutiny facing TikTok isn't unprecedented: Scrutiny from CFIUS and the White House recently forced a Chinese company to divest its ownership stake in the American LGBTQ-focused hookup app "Grindr".

But we can't help but suspect that Trump's Friday remarks about barring the app from the US have left a bad taste in Beijing's mouth. We fear the deal talks might be fraught with ongoing conflict as both companies struggle to balance their own priorities with the demands of their respective governments.

As much as we appreciate a good compromise...

Published:8/3/2020 8:46:58 AM
[Markets] U.S. stocks gain at open as question mark hangs over pandemic relief legislation U.S. stocks gain at open as question mark hangs over pandemic relief legislation Published:8/3/2020 8:46:58 AM
[Markets] Dow Futures Gain As Congress Ends Stimulus Talks Without A Deal; Gold Hits Fresh All-Time High The expiration of emergency unemployment benefits, worth around $18 billion, has markets looking to Congress for follow-up stimulus package, but weekend talks passed without a deal and investors are growing concerned. Published:8/3/2020 8:12:30 AM
[Markets] Kansas City Southern rally continues in Monday premarket trades Kansas City Southern rally continues in Monday premarket trades Published:8/3/2020 8:12:30 AM
[Markets] US New Vehicle Sales Are Expected To Keep Rebounding In July Despite Virus Resurgence US New Vehicle Sales Are Expected To Keep Rebounding In July Despite Virus Resurgence Tyler Durden Mon, 08/03/2020 - 09:05


Analysts expect U.S. new vehicle sales to keep rebounding in July after increasing by 42.3% MoM in May and 6.9% in June according to Wards data.

However, June’s level remained quite low at 13.05m (SAAR), far below February’s level of 16.83m, which offers room for another rise in July:

1- According to Cox Automotive, “ the seasonally adjusted annual rate (SAAR) of auto sales in July is expected to be 13.3 million, up from last month’s 13.0 million pace, but down from last year’s 16.9 million level..”

2- ALG, Inc., a subsidiary of TrueCar, Inc. projects “total new vehicle sales will reach 1,098,960 units in June 2020, down 24% from a year ago when adjusted for the same number of selling days. This month’s seasonally adjusted annualized rate (SAAR) for total light vehicle sales is an estimated 14 million units.”

3- Industry consultants J.D. Power and LMC Automotive said “The seasonally adjusted annualized rate (SAAR) for total sales is expected to be 14.3 million units, down 2.5 million units from a year ago..”

4- Finally, Wards Intelligences noted “Sales have continually surprised on the upside”. More precisely, they expect sales to reach 14.1 million SAAR.

Published:8/3/2020 8:12:30 AM
[Markets] Futures Movers: Oil prices edge higher but kick off August on an unsteady note as traders brace for OPEC+ output boost Oil futures begin August wavering between modest gains and losses on Monday, with OPEC and its allies scheduled to relax curbs on output against a backdrop of nervousness over rising COVID-19 cases.
Published:8/3/2020 8:12:29 AM
[Markets] Why Apple's Stock Split Truly Shocked Shareholders Tech giant Apple (NASDAQ: AAPL) has broken all the rules of stock market investing. Its market capitalization of nearly $1.8 trillion seems too large for further gains, yet Apple keeps breaking the law of large numbers to push ever higher. Now, Apple has once again flown in the face of convention, this time with its stock. Published:8/2/2020 12:58:03 PM
[Markets] Caterpillar’s stock swings lower as downbeat dealer inventory outlook, retail sales data follow earnings beat Shares of Caterpillar Inc. fell on Friday, reversing early gains following the construction and mining equipment maker’s post-earnings conference call with analysts, in which the company provided a downbeat outlook with regard to dealer inventories.
Published:8/2/2020 12:58:03 PM
[Markets] Democrats Reject One-Week Extension Of $600 Unemployment Boost Amid Otherwise 'Productive' Talks Democrats Reject One-Week Extension Of $600 Unemployment Boost Amid Otherwise 'Productive' Talks Tyler Durden Sun, 08/02/2020 - 13:40

The Trump administration and Democratic leadership say that while they are nowhere near a deal on the next COVID-19 stimulus package, they made "progress" during a three-hour meeting on Saturday.

Treasury Secretary Steven Mnuchin said that the meeting was the "most productive we've had to date," echoing comments by Senate Minority Leader Chuck Schumer (D-NY), who told reporters after the meeting "We’re not close yet, but it was a productive discussion. Now each side knows where they're at."

The rhetoric following the weekend meeting marked a notable thaw between Democrats and administration officials following days of heated remarks, including on Friday when Speaker Nancy Pelosi (D-Calif.) and White House chief of staff Mark Meadows traded barbs during dueling press conferences.

Meadows — who had previously told reporters that he was not optimistic about the chances of a deal in the upcoming week — called Saturday the "first day of a good foundation." -The Hill

"We're still a long ways apart, and I don't want to suggest that a deal is imminent, because it is not. But like with any deal, as you make progress, I think it's important to recognize you're making progress," said Meadows.

That said, Democrats wouldn't budge on temporary relief for struggling Americans - balking at a White House proposal for a one-week extension on the $600 supplemental benefit, which lapsed two days ago.

"We proposed a one-week extension at $600 so while we negotiate, at least those people won’t lose their money," Mnuchin told ABC News' "This Week" on Sunday, adding "I’m surprised Democrats don’t want to agree with that. They’re insistent on having this as part of a larger deal."

According to Rep. Richard Neal (D-MA), Chairman of the House Ways and Means Committee, Democrats are seeking a comprehensive package, and not "a piecemeal approach."

Senate Majority Leader Mitch McConnell (R-KY) and the GOP have proposed a $1 trillion plan, while Democrats are holding steady at a $3 trillion package they approved over eight weeks ago.

"There’s obviously a need to support workers, to support the economy and people who, through no fault of their own, are shut down because of this terrible disease," said Mnuchin. "On the other hand, we have to be careful about not piling on enormous amounts of debt for future generations."

On Sunday, House Speaker Nancy Pelosi (D-CA) told ABC's "This Week" that Democrats may be flexible on the $600 unemployment bonus - which Republicans seek to set at 70% of pre-pandemic income. Pelosi cited a Yale study suggesting that there was "no evidence that recipients of more generous benefits were less likely to return to work," a study which the Yale-educated Mnuchin rejected.

"Many of the Republicans don't want any stimulus," added Pelosi. 

Mnuchin, meanwhile, said he and Meadows would go back to Capitol Hill "every day until we reach an agreement," according to

Published:8/2/2020 12:58:03 PM
[Markets] Is It Time to Buy the Dow Jones' 3 Worst-Performing July Stocks? The market's rising and falling tide isn't going to lift or lower every single name with it. Published:8/1/2020 7:58:50 AM
[Markets] English Ignore Social Distancing Pleas And Pack Beaches On Hottest Day Of Summer English Ignore Social Distancing Pleas And Pack Beaches On Hottest Day Of Summer Tyler Durden Sat, 08/01/2020 - 08:45

Millions of Britons across northern England have been placed under partial lockdown as a handful of hotspots have emerged in Manchester and other areas. But despite a pervasive sense of trepidation as outbreaks in Catalonia, Poland and elsewhere revive fears about a second wave hammering Europe, many in the UK are crowding on to beaches as temperatures reach record summer highs.

Footage going viral on social media shows packed beaches along the south coast of England as temperatures notched the hottest day of the year.

At Bournemouth, a resort town in southwestern England not far from Southampton, a major incident was declared last month because the beach became so packed, social distancing became impossible.

That's happening again, it appears.

Here's more from the Guardian, which documented groups of as many as 50 people, mostly consisting of teenagers and people in their early 20s.

Despite the warnings, groups of up to 50 teenagers, and men and women in their early 20s gathered. Security guards removed some men who were drinking under the pier but no attempts were made to close the beaches or to to ask people to leave.

One sun-seeker, 18-year-old Lizzie Jones from Portsmouth, who was on the beach with a dozen friends, said she felt perfectly safe and didn’t feel she was putting anyone at risk. “We’re out here in the fresh air. People are a bit close but I don’t think there’s much of a danger,” she said.

Some car parks were full, prompting scores of people to abandon their vehicles illegally.

A digital sign informed people that the beach was "too busy." A new app produced by the local authority, Bournemouth, Christchurch and Poole council, urged people to avoid long stretches of the beaches with the message: "Avoid, safe social distancing not possible."

Further east, the city council of Brighton and Hove expressed alarm over the number of people crowding its beaches.

Officials also warned visitors to some of the most popular beaches in Kent to find a less-crowded spot, or consider returning at "a quieter time".

Another anonymous young man who spoke to the Guardian said he and his friends had taken public transit to the beach at Bournemouth: "It feels safe to me. I don’t know anyone who has had coronavirus. Until I do I don’t think it will feel real to me."

Published:8/1/2020 7:58:50 AM
[Markets] The Eurozone's Financial Disintegration The Eurozone's Financial Disintegration Tyler Durden Sat, 08/01/2020 - 08:10

Authored by Alasdair Macleod via,


The Euro Crisis Monitor (below) shows the increasing imbalances in the TARGET2 settlement system between all its members: the ECB (itself with a €145bn deficit) and the national central banks in the Eurozone.

Other than minor differences reflecting net cross-border trade not matched by investment flows going the other way, these imbalances should not exist. But following the Lehman crisis and as the Eurozone developed its own series of crises, imbalances arose. Commentators have grown used to them, so have more or less given up pointing them out. But in the last few months, the apparent flight into the Bundesbank (€995,083m surplus) has gathered pace, as have the deficits for Italy (€536,722m) and Spain (€451,798m). It is time to take these rising imbalances seriously again.

Target2 — the ECB’s flexible friend

Target2 is the settlement system for transfers between the national central banks. The way it works, in theory, is as follows. A German manufacturer sells goods to an Italian business. The Italian business pays by bank transfer drawn on its Italian bank via the Italian central bank through the Target2 system, crediting the German manufacturer’s German bank through Germany’s central bank.

But since the Lehman crisis, and more noticeably the last eurozone crisis, capital flows appear to have gravitated from Portugal, Italy, Greece and Spain (the PIGS — remember them?) to principally Germany, Luxembourg, Netherlands and Finland in that order. Before 2008, the balance was maintained by trade deficits in Greece, for example, being offset by capital inflows as residents elsewhere in the eurozone bought Greek bonds, other investments in Greece and the tourist trade collected net cash revenues.

In this sense, it would be wrong to suggest that trade imbalances have led to Target2 imbalances. But part of the problem must be put down to the failure of private sector investment flows to recycle.

Then there is the question of “capital flight”, which is not capital flight as such.

The problem is not that residents in Italy and Spain are opening bank accounts in Germany and transferring their deposits from domestic banks, but more an example of the tragedy of the commons. The origin of this phrase applied to common grazing rights, where everyone in the parish can graze their livestock on common ground, but no one has the incentive to ensure it is properly managed, not overgrazed, and maintained free of gorse and bracken. Consequently, the ground becomes less productive over time. Similarly, the national central banks that are heavily exposed to potentially bad loans know that their losses, if materialised in a general banking crisis, will end up being shared throughout the central bank system, according to their capital keys.

The capital key relates to the national central banks’ equity ownership in the ECB, which for Germany, for example, is 26.4% of the total. If Target2 collapsed for any reason, the Bundesbank, to the extent the bad debts in the Eurosystem are shared, could lose a significant part of the trillion euros owed to it by the other national central banks. But it would be a step too far to say that some national central banks, such as those of Spain and Italy, are gaming the system. It appears to be a problem that simply arises as an unintended consequence of Target2.

If one national central bank runs a Target2 deficit with the other central banks, it is almost certainly because it has loaned money on a net basis to its commercial banks to cover payment transfers, instead of them progressing through the settlement system. Those loans appear as an asset on the national central bank’s balance sheet, which is offset by a liability to the ECB’s Eurosystem through Target2. But under the rules, if something goes wrong either with its own lending or another NCB’s lending, the costs are shared out by the ECB on the pre-set capital key formula. In theory, it is therefore in the interest of a national central bank to run a greater deficit in relation to its capital key by supporting its own banks. It is not necessarily a deliberate act of the Bank d’Italia or the Banco de España to make dodgy loans to their commercial banks; it is just how the system works, and the consequence of national pressures.

To understand how and why the problem arises, we must go back to the earlier crises following Lehman, which have informed national regulatory practices. If the national banking regulator deemed loans to be non-performing, the losses would become a national problem. Alternatively, if the regulator deems them to be performing, they are eligible for the national central bank’s refinancing operations. A commercial bank can then use the questionable loans as collateral, borrowing from the national central bank, which spreads the loan risk with all the other national central banks in accordance with their capital keys. Insolvent loans are thereby removed from the Italian and Spanish banking systems and dumped on the Eurosystem.

In Italy’s case, the very high level of non-performing loans peaked at 17.1% in September 2015 but has now been reduced to 6.9%. As PWC Italia wryly put it,

“Italian banks in response to market and regulatory pressure have halved the total stock of non-performing loans to €135bn in 2019 (vs €341bn in 2015) and at the same time they have set up their NPL platform and organisational controls that will allow to manage non-performing loans more quickly and efficiently and thus to face the incoming economic crisis in a more resilient way.”

Given the incentives for the regulator to deflect the non-performing loan problem from the domestic economy into the Eurosystem, it would be a miracle if much of the reduction in NPLs is genuine.

In the member states with negative Target2 balances such as Italy there has been a trend to liquidity problems for legacy industries, rendering them insolvent. With the banking regulator incentivised to remove the problem from the domestic economy, loans to these insolvent companies have been continually rolled over and increased. The consequence is that new businesses have been starved of bank credit, because bank credit in the member nation’s banks is increasingly tied up supporting businesses that should have gone to the wall long ago.

Officially, there is no problem, because the ECB and all the national central bank Target2 positions net out to zero, and the mutual sharing of liabilities between the national central banks keeps it that way. To its architects, a systemic failure of Target2 is inconceivable. But, because some national central banks end up using Target2 as a source of funding for their own balance sheets, which in turn funds their own dodgy commercial banks, some national central banks have mounting potential liabilities not of their own making, but rather the making of national bank regulators.

The Eurosystem member with the greatest problem is Germany’s Bundesbank, now owed close to a trillion euros through Target2. And the risk of losses is now accelerating both in their quantity, and given the economic consequences of Covid-19, the quality of the underlying loan-assets is rapidly deteriorating as well. The main culprits, the national central banks of Italy and Spain, at the same time are seeing their deficits increase rapidly. The Bundesbank should be very concerned. Its directors will be aware of the problem, particularly since it is now in the public domain.

One may ask how this “mythical surplus” fits in with the Bundesbank’s own balance sheet. As an asset, the surplus was about half of the Bundesbank’s total assets at 31 December 2019, and it finances, among other things, current accounts and deposit facilities of €560bn for its own risk-averse commercial banks. The Bundesbank’s silence in this matter is increasingly untenable.

Commercial banks are in deep trouble

The position for commercial banks in the eurozone, to say the least, is extremely fragile. For years, they have operated in the strait jacket of negative interest rates imposed by the ECB, which operate as a tax on the commercial banks’ liquidity. They can only offset it by buying government and other bonds with less of a negative yield, or with a positive yield. Alternatively, they can lend revolving capital to business customers and consumers for positive margin. And lastly, they can deploy balance sheets for purely financial purposes, which given underlying fundamentals is becoming a likely source of credit contraction.

One would have thought lending bank credit into the real economy would be the most urgent objective of monetary policy, but as we have seen, the increasing support for zombie corporations to prevent national write-offs precludes other lending for economic benefit. And the ECB’s policy objectives are divorced from this problem, which is the responsibility of the national central banks.

The ECB operates on a higher plain. The real consideration that sets the ECB’s interest rate policy is different: it needs to nurse the finances of insolvent member state governments. It does this through various asset purchase programmes, which allow the ECB to set and supress the cost of funding national deficits. Under its charter the ECB is not allowed to fund member states directly, but it can buy bonds in the secondary market. By buying government bonds, almost entirely from commercial banks, balance sheet space is created for the banks to buy further new issues of government bonds, thus resolving the funding problem.

On the face of it, this is a win-win for the governments which are now being paid to borrow, and also for the banks. The yield on national government debt is always set to ensure that a positive return is obtained for the banks by subscribing for new bonds and selling them to the ECB at what amounts to a guaranteed price. But this zero-risk business comes with wafer-thin margins, which encourages excessive balance sheet expansion to compensate. Deutsche Bank, for example, has a ratio of total 2019 assets to equity of 21.4 times, Credit Agricole 28.1 times, BNP Paribas 20.1 times, and Société Generale 21.4 times. These high rates of leverage can only be borne by banks who can demonstrate very low rates of non-performing loans, a situation that will have changed fatally for all Eurozone banks as a consequence of COVID-19 lockdowns.

Other banks, such as UniCredit in Italy, have lower asset to equity ratios (14.4) and Santander in Spain (15.2), reflecting higher lending risks on their balance sheets as well as problems with non-performing loans. But these ratios are still far too high in the context of a contracting European and global economy. Even though the flood of money unleashed by the ECB and other central banks in response to the coronavirus has broadly remained in the financial economy and therefore is puffing up share prices everywhere, the market’s rating of the equity value of eurozone banks is very low. Table 1 shows how this affects balance sheet gearing from a shareholder’s point of view in the global systemically important banks in the eurozone — the GSIBs.

Even though they permit them to be outrageously high, the regulators focus on total asset to equity ratios becomes positively frightening when the true value of balance sheet equity judged by the market is taken into account. For the eurozone’s banking regulators to ignore the market ratings for these banks is a negation of their primary responsibility, to protect the public from bad banking practice.

The whole regulatory thing is a giant banking sham. As far as the ECB is concerned, the role of the commercial banks is to act as agents in its funding of member states’ budget deficits. But that problem has escalated suddenly in recent months putting additional strains on the whole Eurosystem. Yet the ECB continues to drive the commercial banks into the ground by forcing them towards yet higher ratios on the slimmest of margins in its quest to fund member government deficits.

To summarise the problems now faced through the creation of the Eurosystem:

  • The national central banks in the PIIGS are now using the Target2 settlement system as a means of their own balance sheet funding in excess of their capital key, which has the effect of burdening the central banks of Germany, Luxembourg, Finland and the Netherlands with excess liabilities in the event of a partial or complete systemic failure.

  • Instead of non-performing loans being dealt with at a national level, banks are encouraged to continually finance them and carry them on their balance sheet as being solvent. These loans are then used as collateral for funding from the Italian and Spanish central banks as well as those of Portugal and Greece, which are in turn financed through Target2 imbalances.

  • This situation surely should not be tolerated by the Bundesbank in particular, being exposed to close to a trillion euros in a settlement system that is being progressively corrupted by its users.

  • Funding government deficits, being the ECB’s primary and now exclusive objective, has led to extreme levels of operational gearing for the eurozone’s commercial banks, which can only result in an eventual collapse of the whole system. Share prices for the region’s GSIBs are in effect trying to discount this outcome.

  • The Eurosystem is unsuited to deal with a systemic shock on the scale it now faces and, on its realisation, can be expected to collapse.

National solvency issues

The underlying problem for the eurozone and the ECB is government spending deficits will continue to grow, and no attempt is being made to address this problem. In the process, events have corrupted the banking and settlement systems, setting national central banks against each other as debtors and creditors, and encouraging commercial banks into unsound practices by not writing off bad debts. We should be in no doubt the financial system of the eurozone is heading towards an eventual crisis which will destroy it.

Before COVID-19, the ECB might have been expected by its critics to continue on its path towards financial oblivion for a few more years yet. After all, top-down control systems can persist for decades despite everything, as long as the control is strong enough. But we should be in no doubt that lockdowns have had an undermining impact that calls the survivability of the Eurosystem into more immediate question.

Table 2, which is of the relevant national statistics for Italy and Spain with the addition of highly indebted France, illustrates the problem emanating from lockdowns.

Forecasts for GDP in 2020 are consensus from Focus Economics. Debt to GDP statistics and their forecasts are from Trading Economics. From these, we can derive the economic effect on national private sectors. It is not widely appreciated that headline GDP numbers are bolstered by extra government spending, which when stripped out leaves the private sector exposed to significant falls in GDP on seemingly Panglossian forecasts. Thus, a 10.5% fall in consensus GDP expectations for Italy this year, after increased public spending in connection with the virus, translates into a fall of 28% in private sector GDP.

The effect on the Italian economy will simply lead to a new round of bankruptcies for all levels of Italian business, accumulating on the balance sheets of Italian banks. Similarly, we see Spain’s private sector contracting by 22.5%, and France’s by 24%. In all three cases, consensus forecasts for 2021 are for significant recoveries, conforming to a V-shape. With a second round of lockdowns increasingly likely, those forecasts are vulnerable to reality.

Forecasters are almost all Keynesian in that they expect government spending to stimulate economic recovery. But in reality, all that extra government spending can be expected to achieve is a statistical appearance of recovery through the creation of more bank credit to bolster government spending. But with the banking system commandeered to provide inflationary finance for governments and already having over-leveraged balance sheets (Table 1), prospects for economic recovery are remote.

As soon as it becomes clear that the recovery is going to take longer than anticipated we can expect the fragile confidence, that the ECB can continue to keep the show on the road, to evaporate. That is if, and not before, one or more of those highly leveraged eurozone banks does not face bankruptcy itself.

The consequences of financial dislocation

The developing situation embodied in the Target2 settlement system has concealed the rotten core of the Eurosystem. The consequences of imbalances, always dismissed by the authorities, are poorly understood and therefore ignored by financial commentators. But as we have seen, the Eurosystem and its Target2 settlement structure have fostered the concealment of bad debts at the national level, transferring them into the national central bank network.

The principal losers are Germany, Luxembourg, the Netherlands and Finland. Excepting Luxembourg, which can be expected to just go with the flow, the others could be determined enough to form the nucleus of a new currency area; but they are unlikely to do so before the Eurosystem implodes. To do so would actively destroy it, and the balance sheets of their own central banks as well.

The collapse of the Eurosystem would bankrupt the PIGS, and possibly other member states, cutting off all monetary financing. One would doubt, that even in such a crisis, there would emerge the political leadership with the strength, skill and determination to take these nations out of the crisis. As a centralising force, Brussels is utterly useless and will have lost all credibility. Furthermore, the collapse of the Eurosystem would mean the end of the euro as circulating money, so currency replacements, presumably on national lines, would have to emerge.

The ending of the euro will not be mourned. Those which it disciplined through its strength regretted the loss of a money they could print for themselves. And those who end up paying for its failure will have sacrificed all their peoples’ hard-won savings.

For the moment, the euro is strong against the world’s reserve currency. This strength comes partly from its moderate international trade surplus compared with the enormous US trade deficit, and the fact that the dollar is over-owned by foreigners while the euro is not. But in terms of purchasing power both currencies are on their different trajectories to purchasing power destruction.

The Fed’s policy of tying in the dollar to the fortunes of financial asset values is one form of currency destruction, but the euro will be destroyed if, and when, the flawed Eurosystem falls apart.

Published:8/1/2020 7:28:18 AM
[Markets] Market Extra: What does a stratospheric rally for gold mean for the stock market? The rush for bullion, unsurprisingly comes amid the worst public-health crisis in generations, but what does the climb in the centuries-old haven asset mean for stocks over the longer term?
Published:8/1/2020 7:28:18 AM
[Markets] Hurricane Isaias Barrels Towards Virus-Infected South Florida  Hurricane Isaias Barrels Towards Virus-Infected South Florida  Tyler Durden Sat, 08/01/2020 - 07:37

Hurricane Isaias has maximum sustained winds of around 85 mph Saturday morning, and strengthening is possible through the day as the storm barrels towards South Florida. The storm is slated to move up the East Coast later this weekend into next week, potentially unleashing torrential rain, high winds, and dangerous flooding in virus-infected states.

The Hurricane Center (NHC) latest Isaias update:

Hurricane warnings were posted for Boca Raton to the Volusia-Brevard county line. Miami Mayor Carlos Giménez told residents Friday that more than a dozen evacuation centers were ready to serve the community with social distancing measures. 

"We still don't think there is a need to open shelters for this storm, but they are ready," Giménez said.

NHC expects 2 to 4 feet storm surge from Jupiter Inlet to Ponte Vedra Beach, with 1 to 3 feet just north Miami Beach

Here's the current track of the storm. 

Daily Mail tweets the hurricane may prevent NASA astronauts from returning to Earth on Sunday. 

Florida has emerged as the epicenter of the COVID-19 outbreak, and the state registered a record 253 coronavirus deaths Friday with the hurricane fast approaching.

Florida Governor Ron DeSantis announced a state of emergency for counties along the Atlantic coast. He said the state is "fully prepared for this and any future storm during this hurricane season." 

Spaghetti models show Isaias' potential track is to ride the Florida coastline late Saturday through early Monday. The storm is expected to follow the East Coast, arriving in North Caroline early Tuesday, and New York City by Wednesday. 

Elsewhere in the Atlantic, NHC is "issuing advisories" for more potential storms to develop next week. 

Published:8/1/2020 7:09:14 AM
[Markets] Crossing The Rubicon: The UK Slips Into A Repressive State Crossing The Rubicon: The UK Slips Into A Repressive State Tyler Durden Sat, 08/01/2020 - 07:00

Authored by Mark Chapman via,

Julius Caesar’s crossing the Rubicon River in 49 BC in defiance of Roman law placed him and his army on a direct collision course with Rome, leading to the Civil War which established him as Roman dictator. It is a well-established metaphor for a point at which there is no going back and at which things will never be the same.

I predicted a few weeks ago that the UK Government would in the near future try to force everyone to wear facemasks in public.

Leave aside the plethora of information that makes it clear face masks are of practically zero benefit in everyday circumstances, and may in fact be dangerous, the forced wearing of facemasks is a transgression so fundamental and of such significance that it is difficult to adequately express.

It implicitly hands your body over to state control, and renders one of your most basic existential freedoms subject to state interference. For the first time, the right to exercise a choice of whether you should inhibit your respiratory faculties and hide your face in public is taken out of your hands. If you doubt the significance of this, try to remember the public outcry that followed a debate regarding banning the wearing of burkhas and hijabs in the face of Islamic terrorism, and the connotations this had for civil liberties at the time.

Facemask wearing is the visible hallmark of Asian states perceived in the West as repressive and authoritarian. It is a badge of serfdom, akin to the yellow star that Jews were forced to wear in Nazi Germany. There is no greater invasion of your person possible short of tattooing you with a number.

This astonishing about-turn in policy has not happened overnight or without preparation. It has been preceded by a cleverly-orchestrated media campaign which seeks to bizarrely turn established professional and scientific research on its head, making virologists, infection-control bodies and academics who have published papers for the medical profession into liars and charlatans.

This campaign has included editorials and blogs which talk in disapproving and accusatory tones of “mask-shirkers” and “mask-deniers” allegedly “refusing” to wear face masks. Leave aside the obvious fact that refusal cannot take place without a demand: in other words someone has to give you an instruction to which you reply, “No, thanks.”

Absent such a demand, you are not refusing anything, merely making a choice. And until now there has been no such demand. But those making this choice are now psychopaths and enemies of humanity without a shred of integrity, respect or regard for their fellow human beings.

When I returned from Asia early this year the advice was clear: face masks do not protect you from infection and it is not advised that you wear them.

What is more, face mask wearing was actively discouraged because of limited supplies required for hospital environments, where infection control is king and every precaution makes sense. Above all the only situation in which it is appropriate to wear a facemask in public is if you are unwell and have a cough, in which case why not stay at home?

But this piece of simple logic has been covered by the mask-advocates whose logic runs like this:

“You may have coronavirus without knowing it, and may infect others with your breath even at unlimited distances so you need to wear a mask.”

This covers all bases despite the evidence for this being at best negligible and at worst manipulated and dishonest.

It is part of the greater logic that renders every societal value worthless unless it contributes to the impossible task of making sure that not one single individual anywhere, ever, is infected with Covid-19. None of this means I think we should do nothing about this pandemic. But there is now a growing awareness that the cure proposed is not indefinitely sustainable and may in fact be worse than the disease.

The virtue-signalling of face-mask advocates is easily refuted. Facemasks have been available for decades for use in industry and ideas generally considered good are taken up by the public. Nobody needed the government to tell them to go out and buy a car or a television set.

So if you’re so convinced face masks are a good idea why has it taken the State to tell you before you came to this Eureka moment?

And for how many years or decades have you been going around disrespectfully infecting your fellow human beings by going out without a mask when you had a cold or the flu?

However, apparently all the established research is now wrong and face mask wearing is essential. It is a vast game of “Simon Says,” in which we only do anything when Simon says. And it won’t stop there. Expect newspapers like the Guardian to run sanctimonious editorials demanding that face-mask wearing be extended to pubs and restaurants, and eventually to every departure from your home.

Following this such a move will become policy: indeed, the British public will do what they are already doing, gleefully embracing this perverse doctrine, boasting of buying colourful face masks for their children, and showering anyone who has a different point of view with disapproval.

I’m forced now to doubt that we, the British people value our freedom as much as we profess to. We take to the streets in droves to embrace new forms of repression, such as an anarchistic movement that seeks to rewrite history and dismantle our police forces, or an anti-human death cult that seeks to suppress all human activity by frightening us all into believing we are destroying the Earth by existing.

But in the face of mounting attacks on our liberty and our freedom, we are silent. We have had our liberty taken away from us. Our movements are monitored. Our discussions are censored via social media. We are no longer free even to make fundamental choices about our bodies. A public that will silently accept these things has learned nothing from history, will accept anything and deserves its fate if that is a dystopian world-state.

We are no longer entitled to lecture other nations about being repressive states. Their representatives, quite rightly in my view would laugh in our faces. There is a growing fear in the minds of many of us that Western lockdowns may be permanent. The spectres of identity cards, martial law and forced vaccination now hover over us.

Dismissing this as “conspiracy theory” and accusing those who feel this way of an inhuman disregard for life is the rhetoric of fascism, a force that always thrives in the face of a perceived threat. I believe forced face-mask wearing in British streets is a brutal act that crosses the Rubicon, and finally signifies our descent into a de facto repressive state.

Published:8/1/2020 6:28:39 AM
[Markets] Big Tech stocks are on the cusp of creating a setback for indexes Strength in the likes of Amazon and Apple has become too much of a good thing.
Published:8/1/2020 6:28:38 AM
[Markets] : Trump looks to extend pause of student-loan payments as advocates warn: ‘Economic crisis has no end in sight’ The president's comments to reporters came days after Senate Republicans released the HEALS Act, which would allow student-loan payments to resume in October.
Published:8/1/2020 5:58:24 AM
[Markets] E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Major Support 25938, Resistance 26608 Simply stated, the 50% level at 25938 has to hold as support, and the buying has to be strong enough to overcome the minor Fibonacci level at 26608. Published:8/1/2020 12:57:28 AM
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