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[Markets] "Unreported Truths" - This Is The COVID-19 Book That Amazon 'Quarantined' "Unreported Truths" - This Is The COVID-19 Book That Amazon 'Quarantined' Tyler Durden Fri, 06/05/2020 - 23:20


Former New York Times reporter Alex Berenson has developed a wide following on Twitter for detailed posts that challenge some mainstream reporting and government declarations about COVID-19. 

Read the full thread here.

Thursday morning he tweeted that Amazon had refused to offer for sale his self-published book, “Unreported Truths about COVID-19 and Lockdowns Part 1: Introduction and Death Counts and Estimates.”

Among those responding in outrage over what they called blatant censorship were SpaceX CEO Elon Musk ("This is insane @JeffBezos") and journalist Glenn Greenwald. And late Thursday Berenson reported that Amazon had backed off and is now offering the book for sale on Kindle.

Before Amazon reversed itself (calling its earlier move an "error," according to Fox News), RealClearInvestigations asked the award-winning novelist to elaborate on his experience. Here’s his response, followed by an excerpt from the book: 

By Alex Berenson
June 4, 2020

The booklet was the first in a series of coronavirus pamphlets I plan to put out covering various aspects of the crisis. Readers of my Twitter feed encouraged me to compile information in a more comprehensive and easier-to-read format, and when I polled people on Twitter to ask if they would be willing to pay a nominal fee for such a pamphlet, the response was strong.

Originally I only planned to write one, but I had so much information I realized that the booklet would be an awkward length - longer than a magazine article but shorter than a book.  Also, doing so would take too long, and I wanted to put it out quickly. So I decided to split the booklet into pieces. Part 1 included an introduction and a discussion of death coding, death counts, and who is really dying from COVID, as well as a worst-case estimate of deaths with no mitigation efforts.

It is about 6,500 words, and I planned to sell it for $2.99 as an ebook or $5.99 for a paperback. It is called "Unreported Truths about COVID-19 and Lockdowns: Part 1, Introduction and Death Counts and Estimates."

I created covers for both and uploaded the book. I had published Kindle Singles (Amazon's curated program for short Kindle pieces, which now focuses more on fiction from established writers), so I was relatively familiar with the drill. I briefly considered censorship but assumed I wouldn't have a problem because of my background, because anyone who reads the booklet will realize it is impeccably sourced, nary a conspiracy theory to be found, and frankly because Amazon shouldn't be censoring anything that doesn't explicitly help people commit criminal behavior. (Books intended to help adults groom children for sexual relationships, for example, should be off-limits - though about 10 years ago Amazon did not agree and only backed down from selling a how-to guide for pedophiles in the face of public outrage.) 

I didn't hear anything until this morning, when I found the note I posted to Twitter in my inbox (shown below).

Note that it does not offer any route to appeal. I have no idea if the decision was made by a person, an automated system, or a combination (i.e. the system flags anything with COVID-19 or coronavirus in the title and then a person decides on the content). I am considering my options, including making the booklet available on my Website and asking people to pay on an honor system, but that will not solve the problem of Amazon's censorship. Amazon dominates both the electronic and physical book markets, and if it denies its readers a chance to see my work, I will lose the chance to reach the people who most need to learn the truth - those who don't already know it.

Here are the first 1,000 words of Chapter 1:

Maybe the most important questions of all:

How lethal is SARS-COV-2?

Whom does it kill?

Are the death counts accurate – and, if not, are they over- or understated?

Estimates for the lethality of the coronavirus have varied widely since January. Early Chinese data suggested the virus might have an “infection fatality rate” as high as 1.4 – 2 percent.

A death rate in that range could mean the coronavirus might kill more than 6 million Americans, although even under the worst-case scenarios some people would not be exposed, and others might have natural immunity that would prevent them from being infected at all.

As we have learned more about the virus, estimates of its lethality have fallen. Calculating fatality rates is complex, because despite all of our testing for COVID, we still don’t know how many people have been infected.

Some people who are infected may have no or mild symptoms. Even those with more severe symptoms may resist going to the hospital, then recover on their own. We have a clear view of the top of the iceberg – the serious infections that require hospitalization – but at least in the early stages of the epidemic we have to guess at the mild, hidden infections.

But to calculate the true fatality rate, we need to know the true infection rate. If 10,000 people die out of 100,000 infections, that means the virus kills 10 percent of all the people it infects – making it very, very dangerous. But if 10,000 people die from 10 million infections, the death rate is actually 0.1 percent – similar to the flu.

Unfortunately, figuring out the real infection rate is very difficult. Probably the best way is through antibody tests, which measure how many people have already been infected and recovered – even if they never were hospitalized or even had symptoms. Studies in which many people in a city, state, or even country are tested at random to see if they are currently infected can also help. Believe it or not, so can tests of municipal sewage. (I’ll say more about all this later, in the section on transmission rates and lockdowns.)

For now, the crucial point is this: randomized antibody tests from all over the world have repeatedly shown many more people have been infected with coronavirus than is revealed by tests for active infection. Many people who are infected with SARS-COV-2 don’t even know it.

So the hidden part of the iceberg is huge. And in turn, scientists have repeatedly reduced their estimates for how dangerous the coronavirus might be.

The most important estimate came on May 20, when the Centers for Disease Control reported its best estimate was that the virus would kill 0.26 percent of people it infected, or about 1 in 400 people. (The virus would kill 0.4 percent of those who developed symptoms. But about one out of three people would have no symptoms at all, the CDC said.) (

Similarly, a German study in April reported a fatality rate of 0.37 percent ( A large study in April in Los Angeles predicted a death rate in the range of 0.15 to 0.3 percent.

Some estimates have been even lower. Others have been somewhat higher – especially in regions that experienced periods of severe stress on their health care systems. In New York City, for example, the death rates appear somewhat higher, possibly above 0.5 percent – though New York may be an outlier, both because it has counted deaths aggressively (more on this later) and because its hospitals seem to have used ventilators particularly aggressively.

Thus the CDC’s estimate for deaths is probably the best place to begin. Using that figure along with several other papers and studies suggests the coronavirus has an infection fatality rate in the range of 0.15 percent to 0.4 percent.

In other words, SARS-COV-2 likely kills between 1 in 250 and 1 in 650 of the people whom it infects. Again, though, not everyone who is exposed will become infected. Some people do not contract the virus, perhaps because their T-cells – which help the immune system destroy invading viruses and bacteria – have already been primed by exposure to other coronaviruses. [Several other coronaviruses exist; the most common versions usually cause minor colds in the people they infect.] An early May paper in the journal Cell suggests that as many as 60 percent of people may have some preexisting immune response, though not all will necessarily be immune. (

The experience of outbreaks on large ships such as aircraft carriers and cruise liners also show that some people do not become infected. The best estimates are that the virus probably can infect somewhere between 50 to 70 percent of people. For example, on one French aircraft carrier, 60 percent of sailors were infected (none died and only two out of 1,074 infected sailors required intensive care).

Thus – in a worst-case scenario – if we took no steps to mitigate its spread or protect vulnerable people, a completely unchecked coronavirus might kill between 0.075 and 0.28 percent of the United States population – between 1 in 360 and 1 in 1,300 Americans.

This is higher than the seasonal flu in most years. Influenza is usually said to have a fatality rate among symptomatic cases of 1 in 1,000 and an overall fatality rate of around 1 in 2,000. However, influenza mutates rapidly, and its dangerousness varies year by year. The coronavirus appears far less dangerous than the Spanish flu a century ago, which was commonly said to kill 1 in 50 of the people it infected.

It appears more comparable in terms of overall mortality to the influenza epidemics of 1957 and 1968, or the British flu epidemics of the late 1990s. (Of course, the United States and United Kingdom did not only not shut down for any of those epidemics, they received little attention outside the health-care system.)

Published:6/5/2020 10:34:13 PM
[Markets] Iran's Nuclear Stockpile Rose By Over 50% During Three Months Of COVID Lockdown: IAEA Iran's Nuclear Stockpile Rose By Over 50% During Three Months Of COVID Lockdown: IAEA Tyler Durden Fri, 06/05/2020 - 23:00

Over the past three months of global lockdowns due to the coronavirus, Iran's nuclear development has been busy, apparently. The International Atomic Energy Agency (IAEA) on Friday circulated a confidential report seen by Associated Press which details the Islamic Republic's nuclear stockpile rose by a whopping over 50% in the three months prior to May 20.

"The agency said that as of May 20, Iran’s total stockpile of low-enriched uranium amounted to 1,571.6 kilograms (1.73 tons), up from 1,020.9 kilograms (1.1 tons) on Feb. 19," AP reports. 


Tehran months ago vowed to break from its commitments under the Obama-brokered JCPOA until the biting American-led sanctions regimen is eased. Officials warned Europe that if action weren't taken major nuclear milestones would be reached. 

This has also included enriching uranium up to a purity of 4.5%, blowing past the 3.67% ceiling stipulated under the JCPOA. The IAEA report also noted "with serious concern that, for over four months, Iran has denied access to Agency... to two locations."

Recently reports suggested IAEA inspectors were being blocked in part on Iranian authorities' concerns over the coronavirus pandemic

"The [IAEA] director general calls on Iran immediately to cooperate fully with the agency, including by providing prompt access to the locations specified," the report said, however like other warnings this is likely to fall on deaf ears, given Iran's economy has been decimated, further at a sensitive moment a large chunk of the population and failing health system have been ravaged by the COVID-19 pandemic. 

The report comes a mere day after President Trump suggested there could be a fresh opening with Iran to 'negotiate a better deal' - as he's long sought after withdrawing from the nuclear deal in May 2018. "Thank you to Iran, it shows a deal is possible!" Trump said in a rare positive tweet regarding the Islamic Republic on the occasion of the return of Navy Veteran Michael White from an Iranian prison. 

But the Iranians immediately poured cold water on that prospect, given Foreign Minister Javad Zarif reminded the US president, "we had a deal when you entered office."

The Iranian position has been that it will never reenter negotiations until Washington removes sanctions, and returns to the 2015 deal it signed in the first place. 

Published:6/5/2020 10:02:05 PM
[Markets] The Fed Just Unleashed A Trillion In New Debt: Companies Took The Money And Spent It On Dividends While Firing Millions The Fed Just Unleashed A Trillion In New Debt: Companies Took The Money And Spent It On Dividends While Firing Millions Tyler Durden Fri, 06/05/2020 - 22:23

It was all the way back in 2012 when we first described in "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement" that the era of ultra cheap money unleashed by the Fed is encouraging corporations not to invest in capex or growth or investing in a satisfied employee base, but to rush and spend it on cheap, short-term gimmicks such as buybacks and dividends which benefit the company's shareholders in the short term while rewarding management with by bonuses for reaching stock price milestones, vesting incentive compensation.

We concluded by saying that this was "the most insidious way in which the Fed's ZIRP policy is now bleeding not only the middle class dry, but is forcing companies to reallocate cash in ways that benefit corporate shareholders at the present, at the expense of investing prudently for growth 2 or 3 years down the road."

For years, nobody cared about what ended up being one of the most controversial aspects of capital mismanagement in a time of ZIRP/NIRP/QE, then suddenly everyone cared after the coronavirus crisis, when it emerged that instead of prudently deploying capital into rainy day funds, companies were systematically syphoning cash out (usually by selling debt) to rewards shareholders and management, confident that if a crisis struck the Fed would bail them out: after all the Fed bailed out the banks in 2008, and by 2020 US corporate debt had reached $16 trillion, or over 75% of US GDP, making it a systematic risk and virtually assuring that expectations for a Fed bailout would be validated.

Sure enough, that's precisely what happened.

But while none of this should come as a surprise to anyone following events over the past decade, what came next may be a shock, because in response to creating a massive debt bubble whose proceeds were used to make shareholders extremely rich at the expense of a miserable employee base and declining corporate viability, the Fed... doubled down and virtually overnight gave companies a green light to do everything they did leading to the current disaster.

In a Bloomberg expose written by Bob Ivry, Lisa Lee and Craig Torres, the trio of reporters show how, 12 years after we first laid out the "New Normal" capital misallocation paradigm, we are again back to square one as the Fed actions - which as even former NY Fed president Bill Dudley admits are brazen moral-hazard - have prompted a record debt binge even as corporate borrowers are firing millions of workers while using the debt to - drumroll - make shareholders richer.

Take food-service giant Sysco, which just days after the Federal Reserve crossed the final line into centrally-planned markets on March 23 when it assured that it would make openly purchase corporate debt, Sysco sold $4 billion of debt. Then, just a few days after that, the company announced plans to cut one-third of its workforce, more than 20,000 employees, even as dividends to shareholders would continue.

That process repeated itself in April and May as the coronavirus spread. The Fed’s promise juiced the corporate-bond market. Borrowing by top-rated companies shot to a record $1.1 trillion for the year, nearly twice the pace of 2019.

What happened then was a case study of why Fed-endorsed moral hazard is always a catastrophic policy... for the poor, while making the rich richer:

Companies as diverse as Sysco, Toyota Motor Corp., international marketing firm Omnicom Group Inc. and movie-theater chain Cinemark Holdings Inc. borrowed billions of dollars -- and then fired workers.

Just two weeks ago, Fed chair Powell testified before Congress, and when asked why the Fed is buying investment grade and junk bond debt, Powell responded "to preserve jobs." That was a blatant lie, because as Bloomberg notes, the actions of the companies that benefited from the Fed's biggest ever handout called into question the degree to which the U.S. central bank’s promise to purchase corporate debt will help preserve American jobs.

Unlike the Small Business Administration’s Paycheck Protection Program, which has incentives for employers to keep workers on the job and is only a grant if the bulk of the proceeds are used to retain workers, the taxpayer-backed facilities that the Fed and Treasury Department created for bigger companies have no such requirements. In fact, to make sure the emergency programs help fulfill one of the Fed’s mandates - maximum employment - the central bank is simply crossing its fingers that restoring order to markets will translate to saving jobs.

Instead, what the Fed's actions have unleashed so far is a new record debt bubble, with more than $1.1 trillion in new debt issuance in just the first five months of the year, even as companies issuing debt are quick to lay off millions!

“They could set conditions, say to companies, hire back your workers, maintain your payroll to at least a certain percentage of prior payroll, and we will help,” said Robert Reich, the former Secretary of Labor for President Bill Clinton who now teaches economics at the University of California, Berkeley. "It’s hardly clear that if you keep companies afloat they’ll hire employees."

Just don't tell the Fed Chair: in a May 29 webinar, Jerome Powell said that it's "really it’s all about creating a context, a climate, in which employees will have the best chance to either keep their job, or go back to their old job, or ultimately find a new job. That’s the point of this exercise."

The exercise has failed, because just as soon as the bailout funds expire, America will see a second wave of epic layoffs: the extra $600 a week in unemployment benefits that Congress approved in March stops on July 31, while the prohibition against firing workers in the $25 billion government rescue of U.S. airlines expires Sept. 30, and the biggest recipients have said they intend to shed employees after that date.

But where did all the hundreds of billions in newly issued debt go? Well, dividends for one. Without provisions for employees, “the credit assistance will tend to boost financial markets, but not the broad economic well-being of the great majority of the population,” Marcus Stanley, Americans for Financial Reform’s policy director, told Bloomberg.

Of course, when confronted with this reality, the Treasury Secretary did what he normally does: he lied.

“Our No. 1 objective is keeping people employed,” Mnuchin said during a May 19 Senate Banking Committee hearing after Senator Elizabeth Warren, a Massachusetts Democrat, accused him of “boosting your Wall Street buddies” at the expense of ordinary Americans. “What we put in the Main Street facility is that we expect people to use their best efforts to support jobs,” Mnuchin said.

The phrase “best efforts” echoes the original terms for the Main Street program, which required companies to attest they’ll make “reasonable efforts” to keep employees. The wording was subsequently changed to “commercially reasonable efforts,” which Jeremy C. Stein, chairman of the Harvard University economics department and a former Fed governor, called a welcome watering-down of expectations that the central bank would dictate employment policies to borrowers.

And while Stein said that it was "smart of them to weaken that", what ended up happening is that companies entirely sidestepped preserving employees and rushed to cash out - guess who - shareholders once again.

But in keeping with the Fed's overarching directive - that its programs are about lending, not spending in the words of Powell - once the Fed has triggered a new debt bubble with its explicit interventions in the secondary market, the Fed has no control over what companies do with the source of the virtually free funds:

"For the Fed to second-guess a corporate survival strategy would be a step too far for them,” said Adam Tooze, a Columbia University history professor. Putting explicit conditions on program beneficiaries would make the central bank “a weird hybrid of the Federal Reserve, Treasury, BlackRock and an activist stockholder," he added, clearly unaware that we now live in a world in which this "new normal" Frankenstein monster is precisely who is in charge of capital markets, as the helicopter money resulting from the unholy merger of the Fed and Treasury is precisely what BlackRock is frontrunning, in its own words. But heaven forbid some of the trillions in new debt are used for emplyees...

And while tens of millions of jobs have been lost since March - today's laughable and fabricated jobs report, in the BLS' own admission - notwithstanding, there has been one clear beneficiary: the S&P 500 has jumped 38% since March 23, the day the Fed intervened; on Friday, the Nasdaq just hit an all time high. Observers of the stock market wonder how it could be so bullish at the same time as the country faces an avalanche of joblessness unsurpassed in its history.

The choices companies are making - choices which we correctly predicted back in 2012 - provide an answer.

Since selling $4 billion in debt on March 30, Sysco has amassed $6 billion of cash and available liquidity, enabling it to gobble up market share, while cutting $500 million of expenses, according to Chief Executive Officer Kevin Hourican. Sysco, which is based in Houston, will continue to pay dividends to shareholders, Chief Financial Officer Joel Grade said on a May 5 earnings call.

Countless other companies are also splurging on debt-funded dividends, while some - such as Apple and Amazon - are now issuing debt to fund their next multi-billion buyback program.

Of course, it's not just investment grade debt: the Fed notoriously is also active in the junk bond space, buying billions in high yield ETFs (that now hold bonds of bankrupt Hertz).

Movie theaters were one of the first businesses to close during the pandemic. Cinemark, which owns 554 of them, shut its U.S. locations on March 17. Three days later, the company paid a previously announced dividend. It has since said it will discontinue such distributions. Cinemark borrowed $250 million from the junk-bond market on April 13, the same day it announced the firing of 17,500 hourly workers. Managerial staff were kept on at reduced pay, according to company filings. Cinemark, which is based in Plano, Texas, said it plans to open its theaters in phases starting June 19.

The theater chain opted to go to the bond market over seeking funding from the government because “it didn’t come with any of the strings attached that government-backed facilities can include,” CEO Mark Zoradi said on the April 15 earnings call. It “was really no more complicated than that.” And why did Cinemark find no trouble in accessing the bond market? Because with the Fed now buying both IG and HY bonds, there is no longer any credit risk, which is why spreads have collapsed back to all time lows; in effect the Fed is forcing investors to buy Cinemark's bonds, which then uses the proceeds to pay shareholders either a dividend or to buyback stock. As for the company's employees? Why they are expendable, and in a few month there will be millions of unemployed workers begging for work at or below minimum wage.

Win win... for Cinemark's management and shareholders. Lose for everyone else.

Actually, win win for all corporations: like Cinemark, Omnicom issued $600 million in bonds in late March. In an April 28 conference call to discuss quarterly earnings, CEO John Wren said the company was letting employees go but didn’t say how many. He said the company was extending medical benefits to July 31 for employees furloughed or fired.

Wren added: "Our liquidity, balance sheet and credit ratings remain very strong and we have no plans to change our dividend policy."

And once again, Dividends 1 - Employees 0, because everything will be done to prevent shareholders from dumping the stock.

Toyota borrowed $4 billion from investors on March 27. Three days later, the Japan-based car company said it would continue paying dividends to shareholders. Eight days after that it said it would drop roughly 5,000 contract workers who helped staff its plants in North America.

And so on, and so on, as companies issue hundreds of billions in debt without a glitch - now that the Fed has taken over the bond market - and use the proceeds to fund dividends, while laying off millions.

In a March 24 letter, 200 academics, led by Stanford University Graduate School of Business Professor Jonathan Berk, called lending programs aimed at corporations “a huge mistake.” Better to focus help directly on people living paycheck to paycheck who lost their jobs, it said.

"Bailing out investors who chose to take high-risk investments because they wanted the high returns undermines capitalism and makes it an unfair game," Berk said in an interview. "If you don’t have a level playing field in capitalism, it doesn’t work."

Why dear, misguided Jonathan: whoever told you the US still has "capitalism"?

Published:6/5/2020 9:37:14 PM
[Markets] "Worst-Case" Scenario - COVID Strikes Navy's New Submarine Program "Worst-Case" Scenario - COVID Strikes Navy's New Submarine Program Tyler Durden Fri, 06/05/2020 - 21:40

Without firing a shot, well maybe unleashing a virus pandemic across the world, China has severely disrupted US Naval operations, from shipbuilding to deployments. 

Breaking Defense reports, the Navy's USS Columbia nuclear missile submarine (SSBN 826) experienced months of construction delays thanks to virus-related issues.

A Navy depiction of the future USS Columbia nuclear missile submarine (SSBN 826). h/t Breaking Defense 

During lockdowns, the main problem for the build were workers' absences at a top supplier, which resulted in delayed work on missile tubes. At the moment, the service is struggling to make up for the lost time. 

Navy and Pentagon officials have become alarmed that large-scale work on the first of twelve nuclear-powered Columbia-class submarines, set to officially start in 2021, with deliveries, beginning in 2030, could now be fraught with timeline delays.

Rear Adm. Scott Pappano, executive program officer for the Columbia-class ballistic missile submarine program, said "a hiccup" during coronavirus lockdowns led to a serious decline in workers at UK-based Babcock Marine, leading to major delays in the work schedule. 

"There was an interruption in our ability to do work," Pappano said, calling the several month delays a "worst-case" scenario if no additional measures were taken to speed up the work going forward. 

"We're analyzing the plan right now," he added. "Prioritizing what tubes go where and then coming up with mid-term and long-term recovery plans to go deal with that."

The Navy is now "walking a tightrope on its Virginia and Columbia programs, and any slip on one program will affect the other," Breaking Defense said.

A major risk developing is that if any of the programs are delayed, it could give China and Russia a leg up in the global arms race. 

While the virus has affected the Navy's shipbuilding, there were deployment issues due to an outbreak of infections on several vessels. One ship, in particular, was the USS Theodore Roosevelt, which saw at least 1,000 soldiers contract the virus. The aircraft carrier had to divert from its mission in the Western Pacific to treat and isloate crew in Guam. 

And just like that, the Chinese virus has weakened the US Navy -- while China's Navy conducts war drills in the South China Sea

Published:6/5/2020 9:02:02 PM
[Markets] Trump Today: Trump claims that only ‘left wing’ policies will derail U.S. recovery as he celebrates return of jobs President Donald Trump on Friday celebrated the return of 2.5 million jobs to the U.S. economy in May, and went on the attack against Democrats as surveys show him trailing behind Joe Biden among voters in key states.
Published:6/5/2020 9:02:02 PM
[Markets] Signs of Green Shoots Appear in a Battered Car Industry. Everything Is Relative. May car sales were down from a year earlier, but beat expectations. That sent shares of car makers, dealers, parts suppliers, and specialty lenders up. They’re still in a hole, but they could see gains ahead. Published:6/5/2020 8:30:51 PM
[Markets] Crime... Is Crime! The Age Of Chaos Has Arrived Crime... Is Crime! The Age Of Chaos Has Arrived Tyler Durden Fri, 06/05/2020 - 21:20

Authored by Robert Gore via Straight Line Logic blog,

You can fool most of the people most of the time, but you can’t fool reality any of the time.

The reigning chaos reflects perfectly what passes for thought in millions of minds. Minds that have been taught that reality is whatever one believes it to be. That reason is a superstition and is inferior to random feelings and emotions. That observation, hypotheses, experimentation, discovery, and science itself are akin to voodoo rituals. That consumption precedes production and is morally superior to it. That anyone’s work, income and wealth are subject to anyone else’s proclaimed need. That actions have no consequences.

Rioters and looters are faithfully adhering to the distilled essence of what our rulers and intellectual have been telling them for decades: If you need it, or just want it, it’s yours to have or destroy. They are simply eliminating the government middleman. The only surprise is that it didn’t happen long ago.

The Age of Chaos has arrived. Violence is accomplishing what violence always accomplishes—destruction, ruin, and death. The only theoretical justification for government is that it employs force to protect its citizens from violence—invasion, violence against persons or property, and the indirect violence implicit in procuring and keeping value through fraud or extortion.

Modern governments don’t protect their citizens from violence, they subject them to it and are its chief instigator. The latest outrage is coronavirus totalitarianism. It is nauseatingly hypocritical for politicians to ritually and halfheartedly denounce looting and destruction after they’ve spent the last three months destroying millions of businesses and jobs.

There are other killers lurking out there: crime and mass unrest. The statistics for the former and the probability of the latter will only increase with the duration of lockdowns. Police are already reporting an uptick in crime. The death toll from a week of widespread urban rioting could easily surpass that of the entire coronavirus outbreak. There’s no mystery why President Trump has called up a million military reservists, and no assurance they will be able to prevent sporadic riots from deteriorating into total chaos and pandemonium. No mystery, either, why sales of firearms and ammo have jumped. By the way, rioters and looters don’t always social distance, so they may spread the coronavirus.

SLL, “Surrendered Without A Shot,” April 6, 2020

Let’s reach a conclusion that lockdown proponents will reflexively deny: the lockdowns have made the rioting worse. It’s not implausible to suggest that people stuck in their houses for three months might have joined in simply because they were going stir crazy…or were desperate and angry because they lost their jobs and can’t pay their bills.

Government now does everything except the one thing it’s supposed to do—protect the citizenry from violence. Some of the government officials who tossed people into jail for letting their kids play in parks or opening a barbershop are now assuring rioters and looters they feel their pain and are doing little to stop them. It’s the perfect inversion: persecute the innocent, succor the criminals.

Politics is an exercise in criminal demagoguery, the promise of something for nothing in exchange for votes and power. That something has to be stolen from someone by the government. Governments don’t protect against the criminal element because they are the criminal element. Theft, extortion, and fraud can’t produce wealth. They only redistribute and ultimately reduce or eliminate it by destroying the rights of those who produce it.

Rioters have screamed, “Eat the Rich!” and have looted high end stores as an appetizer. To the extent that they’ve announced a program, this appears to be it: install a government that will eat the rich, and by implication anyone who produces wealth. Left open is the question: after they eat the rich and productive, where does their next meal come from?

The present government is already devouring producers and its debt is extortion, theft, and fraud all rolled into one. The full faith and credit of the United States is the full faith and credit of its present and future producers, whose production is and will continue to be extorted and stolen under threats of fines and imprisonment. Creditors are holding debt the value of which the government will do everything to fraudulently undermine via debt monetization, inflation, and currency depreciation.

You can fool most of the people most of the time, but you can’t fool reality any of the time. Reality never grants something for nothing, not even on credit. To get something out, you have to put something in.

The utterly incompetent and incoherent response by government officials to the nationwide rioting, in both word and deed, was inevitable. They can neither speak nor act with intellectual, philosophical, or moral clarity given the dominant political creed—that reality can be subverted, something can be had for nothing, and the rights of some are justifiably destroyed for the benefit of others. That creed obliterates the concept of individual rights and the principles that logically flow from that concept. Yet, only the intellectual vantage point afforded by that concept and its concomitant principles offers clarity.

A policeman in Minneapolis knelt on an already-subdued and handcuffed suspect’s neck for approximately eight minutes and the suspect died shortly thereafter. Three other police did nothing to either stop the policeman or aid the suspect. Based on the video evidence, which will probably not be the complete evidentiary record, the kneeling policeman should be charged with murder and the three other police should be charged as accomplices. All four should have the legal protections afforded all criminal defendants and receive a fair trial before either a judge or a jury. Verdicts would then be reached and any defendant who was found guilty, punished.

Anyone enraged by the police’s behavior, or by the way police treat people or specific groups of people, or any other conduct by the government or its agents has the right to peaceably protest and take other political action, either as an individual or as a member of a group. The key word is peaceably. Nobody has the right to initiate violence against anyone else or their property. The government’s duty is to protect its citizens from such violence and destruction. When it erupts en masse, as in a riot, the government must stop it, with force if necessary, up to and including deadly force. The motivations or justifications of those engaging in the violence and destruction are irrelevant.

Every year governments steal trillions of dollars from their productive citizens. Some of it remains with governments or their agents, some of it is bestowed as unearned largess to the politically favored. Foreign and military policy has degenerated into nonstop war whose only purpose is to feed the military-industrial-intelligence complex and enrich it’s contractors. People can be tossed in jail if they refuse to accept as legal tender a fiat-debt currency backed by nothing, one which the government’s central bank continuously debases, in part to reduce the real value of the government’s debt.

Industry after industry has been turned into government-sponsored predatory cartels, with the military-industrial-intelligence complex and the financial-banking complex at the head of the pack and the medical-pharmaceutical-insurance complex coming on strong. Regulation is an instrument of government extortion and a means for the cartels to exclude potential competition by making entry into cartelized industries prohibitively expensive. No industry is so inconsequential that it can escape regulation; the government has its arbitrary and grasping fingers in every pie.

Under a contradictory-on-its-face rationale of “equality,” governments have created unequal-by-law quotas, preferences, and set-asides for favored groups. Taking the next giant step towards the eradication of whatever remains of individual rights, governments have locked “unessential” people in their homes and prevented them from opening their businesses or working at their jobs. Virtually every government activity and job has been deemed “essential.” There are no individual rights when inequality is written into the law.

Adding insult to injury, attending schools, gathering in groups, or even breathing clean air have also been prohibited in response to a dramatically and intentionally overblown medical danger. When government destroys rather than protects individual rights, its law enforcement arm inevitably does the same. Enforcement becomes a matter of caprice, whim, and the personal predilections and prejudices of its agents. The multitude of laws give law enforcement virtually unlimited power to harass, arrest, brutalize, incarcerate, and kill. The coronavirus measures only increase that power.

There are so many laws and regulations that no person can possibly be aware of or comply with them all, yet government exempts law enforcement from even the most basic strictures against criminality. Under asset forfeiture laws, it can steal property arbitrarily deemed to be involved in the commission of a crime and it is then up to the owner to prove that it was not. Incidents like the one in Minneapolis are commonplace, but the chances the police who commit crimes will be imprisoned, or even lose their jobs, is minimal. The glaring inequity of a system in which innocent citizens are routinely treated as criminals but government exempts itself from justice has not been lost on the citizenry. It has not been lost on police forces, who have been militarized not to protect themselves and the government from criminals, but from an increasingly subjugated and enraged citizenry.

To believe that a government that has destroyed individual rights while enshrining its own criminality can speak or act with any kind of moral authority towards criminal rioters and looters is absurd. The apex of absurdity—so far—is the Minneapolis police force’s abandonment of its own precinct station to rioters. Criminals will attack soft targets, and those who agree with them in principle are soft targets. If a government won’t protect its own property from criminals, it’s certainly not going to protect law abiding citizens’ lives or property.

The rioting makes a mockery of arguments that the government should control or eliminate citizens’ right and access to firearms, which would make them soft targets. A government that refuses to protect individuals and their rights hasn’t a leg to stand on when it tries to restrict individuals from defending themselves. Such restrictions are clearly seen for what they are: another government destruction of individual rights.

How long can governments that outlaw businesses, jobs, and education—in short, production—and engage in and legitimize theft, fraud, extortion, vandalism, violence, and murder—in short, destruction—survive? Reality cannot be fooled. Production is survival—for both producers and the governments they support—destruction its antithesis. The bell tolls.

WE hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness—That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its Foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness.

The Declaration of Independence, 1776

Our government effects only terror and misery. To effect our Safety and Happiness, it’s past time to withdraw “the Consent of the Governed” and “to alter or to abolish” it. That is our right, enshrined in our Declaration.

Published:6/5/2020 8:30:51 PM
[Markets] Black Lives Matter Melbourne Tells White People: "No Selfies" Black Lives Matter Melbourne Tells White People: "No Selfies" Tyler Durden Fri, 06/05/2020 - 20:40

Authored by Paul Joseph Watson via Summit News,

Black Lives Matter Melbourne has issued a list of required behavior from white people attending their protest, which includes no selfies and the demand that, “If a black person tells you to do something, you do it immediately without question.”

Up to 40,000 people are expected to attend the demonstration in Australia, which the potential for riots high given the city’s militant left-wing nature.

In anticipation of that, BLM Melbourne issued a lengthy list of requirements for how white people are allowed to behave during the rally.

“DO NOT TAKE SELFIES,” states the guide. “Ask to take pictures or videos of individuals. You are there to witness only. Film the police as much as possible. Your goal is documentation to ensure that the true narrative is told.”

The guide also instructs white people to show deference and obedience to black people at all times.

“FOLLOW DIRECTIONS. If a black person tells you to do something, you do it immediately without question. You respect the authority and decisions of the black protestors at all times.”

White people are also not allowed to lead chants and will be required to stay at the back of the protest until they are called forward, with the guide telling them, “WHEN YOU ARE AT THE FRONT, YOU ARE SILENT.”

The no selfies rule is funny because it’s likely to keep many protesters at home given they won’t be able to properly virtue signal for the purposes of their Instagram page, which for some is the most important thing.


The other irony is that protest leaders are basically enforcing racial segregation by keeping the white attendees away from the main demonstrators.

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Published:6/5/2020 7:59:57 PM
[Markets] Journalist Who Busted Illinois Governor's Wife Violating Lockdown Sues After Briefing Ban Journalist Who Busted Illinois Governor's Wife Violating Lockdown Sues After Briefing Ban Tyler Durden Fri, 06/05/2020 - 20:20

An Illinois journalist who broke the story that Gov. J.B. Pritzker's wife violated the state's "stay-at-home" order by traveling to the family's equestrian estate in Wisconsin has sued after she was barred from Pritzker's coronavirus press briefings.

On Friday, May 15, Jacobson broke the story that Pritzker’s family had traveled to their equestrian estate in Wisconsin amid Illinois’s stay-at-home order – weeks after it was reported that his family was at another estate in Florida. The news raised questions about why the stay-at-home order did not apply to the governor’s family.

On the day of the governor’s next press briefing, Pritzker’s press secretary told Jacobson she was banned from the briefings because she had attended a rally advocating for Illinois to end its lockdown. When questioned by reporters about Jacobson’s exclusion the next day, Pritzker told the press corps that Jacobson could not attend because advocating for Illinois to end its stay-at-home order represents an “extreme position.” The governor went on to say: “That is not a reporter … once upon a time she was a reporter but she proved that she is no longer a reporter.” -AP

The lawsuit, filed by attorneys from the Liberty Justice Center, asks the court to take immediate action to allow Jacobson back into the press briefings

"Gov. Pritzker has been in the hot seat over his handling of the coronavirus pandemic, and it’s visible from his reactions to Amy Jacobson’s questions that her reporting made him uncomfortable. But what the governor appears to not understand is that Americans have a right to hold their elected officials accountable, and one of the ways they do this is through a vibrant, free press," said Liberty Justice Center president and co-founder, Patrick Hughes.

"It’s not up to Gov. Pritzker to pick and choose which reporters can cover him based on how much he agrees with their coverage or their points of view. And keeping reporters out of the room because he disagrees with their line of questioning or point of view is a gross violation of the First Amendment."

Jacobson has worked for television and radio stations nationwide for over 25 years - the last decade of which has been spent as a reporter and morning show host on Salem Media's Chicago AM 560 The Answer.

Jacobson has been attending the governor’s COVID-19 press briefings on behalf of the station since April. While some reporters have used the daily briefings to ask softball questions, such as how the governor is holding up, Jacobson has asked notably tough questions. -AP

"The reason we sent Amy to these press briefings is because she is a dogged reporter with a reputation for holding public officials accountable. Over the last two months Amy has done her job well, asking the tough questions that are on the minds of so many of our listeners," said AM 560 regional VP and general manager, Jeff Reisman. "We’re disappointed that the governor would retaliate against her and take the unprecedented step of blocking her from his press briefings. We had hoped litigation would not be necessary, but it’s imperative for Amy to get back into the room and keep doing her job."

Published:6/5/2020 7:37:10 PM
[Markets] Trump claims that only ‘left wing’ policies will derail U.S. recovery as he celebrates return of jobs President Donald Trump on Friday celebrated the return of 2.5 million jobs to the U.S. economy in May, and went on the attack against Democrats as surveys show him trailing behind Joe Biden among voters in key states. Published:6/5/2020 7:37:10 PM
[Markets] 2 National Guardsmen Struck By Lightning During Washington DC Protest 2 National Guardsmen Struck By Lightning During Washington DC Protest Tyler Durden Fri, 06/05/2020 - 19:40

In a freak occurrence during Wednesday night's protests, two National Guardsmen were badly injured after being struck by lightning near the White House, officials said early Friday. The two service members were struck shortly after midnight within the Lafayette Park perimeter, where protests over the death of George Floyd continued for a seventh day (note: it was the ninth day of demonstrations in Minneapolis).

Both officers were taken to a nearby hospital with non-life-threatening injuries.

Video of the aftermath went viral.

Despite the heavy rain and flood warnings, a core group of protesters returned Thursday night despite the weather after Washington DC Mayor Muriel Bowser rescinded a planned curfew after there were zero arrests the night before.

The DC area saw some pretty intense lightning during last night's storm.

Probably not an ideal time to be standing outside carrying a bunch of metal.

Published:6/5/2020 6:59:52 PM
[Markets] NFL condemns racism, Goodell says league was wrong about player protests NFL condemns racism, Goodell says league was wrong about player protests Published:6/5/2020 6:59:52 PM
[Markets] Rickards: You May Never See "Normal" Again Rickards: You May Never See "Normal" Again Tyler Durden Fri, 06/05/2020 - 19:20

Authored by James Rickards via The Daily Reckoning,

American cities are burning, there’s a lethal pandemic and we’re in a new Great Depression.

Other than that, everything’s fine...

People often ask me when things will “get back to normal.” Well, the answer could be never (or at least not for a long time).

Germany was not “normal” from 1914–54, for example. Social disorder is like a virus; it goes away eventually but not necessarily soon.

Meanwhile, we’re now in our third month of a national lockdown, with perhaps another month to go, depending on your locality.

Some states and cities are beginning to reopen, but they’re doing it in “phases,” so maybe your hair stylist reopened last week and your favorite restaurant will reopen next week.

The lockdown has certainly been painful for many. Even under the best of circumstances, anxiety levels went up, patience wore thin and tempers flared at trivial things. Cabin fever is a real disease.

Was it all worth it?

I’ve done a deep dive on this and the answer is almost certainly no.

The lockdown did slow the spread of the virus and did save some lives, that’s true. Yet the gains may only be temporary.

“Flattening the curve” does not mean reducing total infections and deaths. It just means stretching them out over a longer period so the hospital system is not overwhelmed.

There were much better solutions for this, including temporary hospitals and sending doctors and nurses from low-infection areas to those areas most in need, like New York City.

The biggest problem with the lockdown was that everyone counted the benefits but no one calculated the costs.

Many may have died and still could die from suicide, drug overdoses, alcoholism, domestic violence and other untreated medical conditions like cancer and heart attacks because patients were afraid to go to hospitals for fear of getting the virus.

In short, the lockdown may end up costing more lives than were saved.

That’s on top of trillions of dollars of lost wealth and lost economic output. That’s what happens when you put doctors in charge of the economy. Next time, it might be a good idea to let a few economic analysts into the room also.

But don’t worry, the optimists say. We’ll see a “V”-shaped recovery once the lockdowns are fully lifted.

You probably know the theory of a “V”-shaped recovery. The idea is that the economy fell sharply in March and April 2020 but it’s ready to bounce back with a record recovery this summer and fall.

The crash is one side of the “V” and the recovery is the other. The result is you end up recovering all of your losses and are ready for new growth from the old levels.

You’ll hear this a lot, but don’t believe it.

Remember “green shoots” in 2009 and 2010? They turned out to be brown weeds. Yes, the economy eventually recovered and the stock market went on to new highs, but it was the weakest recovery in U.S. history and those stock market highs took almost seven years to appear.

Things are much worse now.

Yes, we will hit a bottom this summer. And yes, a recovery will begin. But it will be long and hard.

Output may not get back to 2019 levels until 2022 or later. Unemployment will come down, but it is still expected to be higher than the worst of the 2008 crisis in 2023. The bankruptcies are just starting.

We’ve seen J. Crew, J.C. Penney, Neiman Marcus, Pier 1 Imports and Hertz all file for bankruptcy in recent weeks. There is a long line of name-brand companies right behind them preparing to go bankrupt also.

Not only will we not have a V-shaped recovery, but it will probably be an “L” (down and then sideways).

The 2009–2020 recovery was an “L” where the new trend for growth was 2.2% instead of the post-1980 trend of 3.2%.

Now the new recovery (when it begins) may have output of only 1.9% or less.

When each recovery is weaker than the one before and debt goes up faster than growth, it’s just a matter of time before you go broke — or eventually break out in inflation.

We probably won’t see inflation for a while because inflation has a strong psychological component and right now a deflationary mindset prevails.

That may change — it probably will — but we’re not there at this point.

Meanwhile, people are looking for “safe havens” right now.

Stock and Treasury market behavior can be explained as much by “safe haven” demand as fundamentals. But what happens when the safe haven doesn’t look so safe?

There’s still one place to go — gold.

Published:6/5/2020 6:31:36 PM
[Markets] Devouring Its Own: How Many On The Left Fostered The Violent Movement Now Rioting Across The Country? Devouring Its Own: How Many On The Left Fostered The Violent Movement Now Rioting Across The Country? Tyler Durden Fri, 06/05/2020 - 18:40

Authored by Jonathan Turley,

Attorney General Bill Barr acknowledged yesterday that there is a “witches’ brew” of groups fostering violations, including an anarchist group from the right. The anarchists on the left or right are opportunists who will strike at any time of unrest to seek the breakdown of order. However, police are reporting a high number of Antifa and anarchist members arrested in various states.  These are groups that are all too familiar to some of us on college and university campus.  While I have opposed efforts to declare Antifa a terrorist organization, the role of all of these groups in the recent violence should be a cautionary tale for academics and politicians alike in the tolerance shown for such anti-free speech movements.

Ian Fleming famously lamented that history often moves so quickly that “heroes and villains keep on changing parts.” Our media and politicians are now struggling with the same problem today, following the killing of George Floyd. As rioting and looting continue across the country, the question is who to blame for the mayhem. Ultimately, the response was strikingly familiar and telling. Maybe white supremacists were behind it. Maybe the Russians were. It could be anyone except people in the rioting communities or, worse yet, groups lionized or tolerated by the left.

While most protesters remained peaceful, the narrative quickly spiraled glaringly out of sync with images of burning buildings in the background. Although “Today” show host Craig Melvin tweeted out a guide not to refer to them as rioters but rather as protesters, that narrative has since broken down. Indeed, news outlets have been reporting that “outsiders” have been fueling the rioting and that the destruction might be the work of nefarious groups of white supremacists or Russians.

Minnesota Governor Tim Walz and other officials there claimed a majority of those arrested were outsiders. Walz estimated the figure at 80 percent. National Urban League President Marc Morial ratcheted up the outrage in a cable news interview. He demanded an investigation to confirm “if it is white supremacists, if it is Russians, if it is other foreign actors who have tried to exploit the pain and exploit legitimate protests.”

It was manifestly implausible to suggest the rioting was the work of white supremacists or Russians. Arrest data showed a majority of those arrested in Minneapolis were from the city. The four people arrested in New York in fire bombing attacks were all state residents. The problem is that the most obvious culprits are all too familiar. A movement of anarchist, antifascist, and extreme left wing groups has been building for years, with violence from Washington to Berkeley. The most prominent is antifa, but there are also groups like By All Means Necessary with similar histories.

This is a broad movement, not one group, which makes the suggested designation by President Trump of antifa as a terrorist organization both constitutionally and practically dubious. However, the growing antifascist movement has attacked conservative speakers and events for years, with far less media attention than their right wing counterparts receive. Just as many critics have accused Trump of not doing enough to denounce extreme right wing groups, many Democratic leaders have been conspicuously silent in denouncing these antifascist groups.

Indeed, when Attorney General William Barr correctly observed that the rioting shows “antifa like tactics,” politicians and media figures both balked at the suggestion, as opposed to accepting the white supremacist or Russian option. Despite reports of antifa followers and anarchists being arrested, White House correspondent Yamiche Alcindor objected that there was “no evidence” of any activity sparked by anarchists.

Antifa, By All Means Necessary, and other militant or anarchist groups have disrupted universities across the country, including my own, for years. They have found many political and academic allies. Dartmouth Professor Mark Bray wrote a book on antifa, defining the movement as committed to the silencing of opponents and the rejection of classic concepts of free speech. The movement has since found open or passive acceptance with many on the academic left. In fairness, however, many Democratic politicians have denounced past violent attacks.

Yet despite its violent history, some Democratic leaders have been enablers or outright supporters of the antifa movement, insisting that such groups cannot be compared to extreme right wing groups.

While criticizing antifa members three years ago, House Speaker Nancy Pelosi insisted the group has “been there forever” and that “some people may have infiltrated” it. This was not viewed as her Charlottesville moment of claiming there are “very fine people” in antifa. It was a commonly held view that antifascists are by definition better than fascists.

Other Democratic leaders have been much more direct in their support, including the former deputy chair of the Democratic Party, Representative Keith Ellison. Although Germany has banned an antifa website, Ellison posed with the antifa handbook to show support at a Minneapolis bookshop and said it would “strike fear in the heart” of Trump.

Ellison, now the Minnesota state attorney general, was under fire this week for telling protesters they should not attack the National Guard on the streets or “react to them the way you might react to the Minneapolis Police Department. Their job is to try to bring peace and calm back again.” His son Jeremiah Ellison, a Minneapolis city council member, declared support for antifa even as the city endured rioting and looting.

Meanwhile, some media coverage has the uncomfortable feel of a new type of Russia collusion theory. Susan Rice, former national security adviser to President Obama, said that she suspects Russia is behind the effort “to hijack those protests and turn them into something very different” and that “this is right out of the Russian playbook.”

It is likely that racist or foreign actors will try to exploit the unrest on the internet. The same was true, on a larger scale, with Russian interference in the 2016 election. While most of us denounced that Russian interference, it was never plausible that the work of a dozen internet trolls in Saint Petersburg or a dozen military hackers in Moscow had a measurable, let alone meaningful, impact on the outcome of the election.

The same is true with these protests. The rioting began due to deep seated and legitimate anger over police brutality and the tragic death of Floyd. Young people and others did not rush to the streets because they read a posting from some skinhead on the Stormfront website. Yet the references to white supremacists or Russians continued even as reports filtered in of antifa and anarchists being arrested in various cities.

Some politicians in the past sought to tap into the antifascist movement. Others completely avoided denouncing the group. After all, for years, the movement threatened or attacked conservatives. They were not treated as an outside element but rather as this grassroots movement outraged by Trump and his policies. However, the same tactics and likely some of the same people are now burning buildings and cars, attacking police officers and business owners, and destroying property across the country. This is why, during the French Revolution, the journalist Jacques Mallet Pan warned, “Like Saturn, the revolution devours its children.”

Published:6/5/2020 6:00:21 PM
[Markets] Daily Briefing - June 5, 2020 Daily Briefing - June 5, 2020
Tyler Durden Fri, 06/05/2020 - 18:25
Real Vision CEO Raoul Pal and senior editor Ash Bennington discuss a roaring day on Wall Street as the U.S. labor market breathed a sigh of relief. Looking at everything from tech valuations to the AUD/USD trade, Raoul and Ash dive deeper into this jam-packed news day to see whether the economy really is on the mend. In the intro, Jack Farley touches on these themes and previews Raoul’s interview with Gerard Minack.
Published:6/5/2020 5:29:43 PM
[Markets] Currencies: How the U.S. dollar’s ‘almost silent slide’ is juicing the stock-market rally Investors might not have noticed amid all the excitement, but a stealthy slide by the U.S. dollar should get some of the credit for the stock market’s stunning rally.
Published:6/5/2020 5:29:43 PM
[Markets] Few black families will benefit from the historic stock market rally Most black families will not see the benefit from a historic stock market rally, one that has persisted despite a global pandemic and nationwide protests. Published:6/5/2020 5:23:07 PM
[Markets] Key Words: No more social distancing for media in Rose Garden as White House decides it ‘looks better’ when reporters bunch together Why, asked the White House Correspondents’ Association, were reporters being asked to violate established best practices, with 1,000 Americans perishing daily from COVID-19 and states including Arizona, Arkansas, Texas and Tennessee continuing to see new peaks in cases?
Published:6/5/2020 5:23:06 PM
[Markets] Chicago Mayor Begs Walmart, Other Looted Retailers Not To Abandon City Chicago Mayor Begs Walmart, Other Looted Retailers Not To Abandon City Tyler Durden Fri, 06/05/2020 - 18:20

While Chicago officials give slaps on the wrist to arrested protesters, Mayor Lori Lightfoot is begging Walmart and other major retailers who were hit by looting and vandalism to reopen their doors despite riots over the killing of George Floyd by a Minnesota police officer who now faces charges for second-degree murder.

Lightfoot held a conference call with Walmart and the other retailers when she pleaded with them not to abandon Chicago, according to WBBM.

"I think in the case of Walmart, what they were focused on was assessing the damage. They are doing an effort to donate fresh produce, to the extent of what's left so it doesn't perish, and other perishables, and they are talking their time, as I would expect," she said.

There were earlier reports that Walmart expected to rebuild all stores trashed by looters and vandals, but company officials later said they would open some stores and would not say which ones. 

The Mayor said most of the others said they are committed to Chicago. She said she hopes Walmart follows suit. -WBBM

"My hope is that they will come back," said Lightfoot. "But I got a resounding, 'Mayor, this is our city, this is our home,' from a lot of other retailers and I would hope that Walmart would follow suit."

Published:6/5/2020 5:23:06 PM
[Markets] The recovery is happening, right? Why $9 billion of student loan bonds just got downgraded Ratings on billions worth of student loan bonds are being slashed by credit-rating firm Moody’s, which expects debt payoffs to be further derailed over the next 24 months. Published:6/5/2020 4:31:56 PM
[Markets] Even the worst-case scenario for U.S. stocks doesn’t look bad Fast rebounds in the stock market tend to be favorable for future prices.
Published:6/5/2020 4:31:56 PM
[Markets] Rasmussen: Black Approval For Trump Surges To Over 40% Rasmussen: Black Approval For Trump Surges To Over 40% Tyler Durden Fri, 06/05/2020 - 16:45

Authored by Paul Joseph Watson via Summit News,

Despite the recent riots over police brutality, Rasmussen has indicated that black approval for the job President Trump is doing is now over 40%.

“Our Daily Presidential Tracking poll today shows Black Likely Voter approval of the job @realDonaldTrump is now over 40%,” tweeted the polling agency.

The full results of the poll are yet to be published, but the number suggests that the media’s campaign to frame Trump’s response to the riots as draconian and racist has completely failed.

For comparison, back in August 2019, Rasmussen’s numbers showed black support for Trump hovering at around 26%.

Several polls conducted in December 2019 also showed black support for Trump over 30%.

With the economy starting to bounce back and May seeing a record 2.5 million jobs added, the numbers will be encouraging for Trump, who as recently as last month saw his overall job approval job sink to a two-year low.

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Published:6/5/2020 3:59:56 PM
[Markets] Apple stock fully recovers from coronavirus decline, returns to record highs Apple stock fully recovers from coronavirus decline, returns to record highs Published:6/5/2020 3:59:56 PM
[Markets] This week in Trumponomics Yahoo Finance's Rick Newman joined The Final Round to discuss the May jobs report and also gave this week's Trumpometer reading. Published:6/5/2020 3:59:56 PM
[Markets] The Conversation: How to stay safe from coronavirus in a public bathroom Touch as little as possible inside the restroom, wash your hands but don’t use the hot-air dryer.
Published:6/5/2020 3:59:56 PM
[Markets] Dow finishes up over 800 points as stocks soar on strong jobs report Dow finishes up over 800 points as stocks soar on strong jobs report Published:6/5/2020 3:30:34 PM
[Markets] How the U.S. dollar’s ‘almost silent slide’ is juicing the stock-market rally Investors might not have noticed amid all the excitement, but a stealthy slide by the U.S. dollar should get some of the credit for the stock market’s stunning rally. Published:6/5/2020 3:30:34 PM
[Markets] In Rare Statement, Soros Denies Paying Protesters To Riot In Rare Statement, Soros Denies Paying Protesters To Riot Tyler Durden Fri, 06/05/2020 - 16:30

Following accusations that paid protesters are hijacking the George Floyd protests and inciting riots, George Soros' Open Society Foundation has issued a rare statement claiming that he - nor anyone else, is funding the chaos.

Introducing the statement, Spokesman Michael Vachon writes:

Facebook, Twitter, and other social media platforms are being used to spread the now familiar and thoroughly debunked conspiracy theory that George Soros and the Open Society Foundations are paying people to protest, in this case over the murder of George Floyd. We are appalled by this attempt to delegitimize the genuine outpouring of anger and concern from people in the U.S. and around the world.

Open Society's statement claims that "We abhor violence of any kind, and will not allow the destructive acts of a few to distract us from the crucial work of coming together and forging a better future for all of our neighbors."

Soros then claims that the Open Society Foundation nor "any other" are funding protests.

"Those protesting the death of Mr. Floyd and police brutality across the nation do so out of a deep and abiding concern for their country; they don't do so for pay from these foundations or any other, as some cynics claim. Such assertions are false, offensive, and do a disservice to the very bedrock of our democracy, as enshrined in the First Amendment."

Many began to question whether the protests have an organized, staged component after piles of mysterious bricks were discovered in major protest towns, and a video of what appears to be an organizer paying a protester emerged. 

Soros' statement comes days after a hoax flyer appeared in Washington State claiming that the Thurston County Democrats was seeking "a professional anarchist" with funding supplied by the Open Society Foundation.

While that was , this wouldn't be the first time leftists have conspired to disrupt otherwise peaceful events. In 2016, Clinton operative Robert Creamer - who visited the Obama white house nearly 350 times - 'stepped back' from his role as an organizer after a Project Veritas undercover video revealed a discussion on paying agitators to incite violence at Trump rallies in 2016.

"One of the things we do is we stage very authentic grassroots protests right in their faces at their own events. Like, we infiltrate," said Creamer's former minion, Scott Foval.

Soros has donated early $90 million to feminist groups which were behind January, 2017 protests of Donald Trump's inauguration.

Published:6/5/2020 3:30:34 PM
[Markets] Corporations step up commitments to minority communities SoftBank has created $100 million fund to invest in entrepreneurs of color. Head of Diversity, Equity and Inclusion at Airtable Albrey Brown joins Yahoo Finance’s Kristin Myers to discuss how companies can best go about addressing racial, economic inequality. Published:6/5/2020 3:01:34 PM
[Markets] US Consumer Credit Crashes As Americans Repay A Record Amount Of Credit Card Debt US Consumer Credit Crashes As Americans Repay A Record Amount Of Credit Card Debt Tyler Durden Fri, 06/05/2020 - 15:47

One of the striking changes to US consumer behavior spawned by the economic shutdowns from the coronavirus pandemic, was the unprecedented surge in personal savings which as we learned last week, exploded to a record 33% of disposable personal income...

... as the annualized amount of Personal Savings soared by a mindblowing $4 trillion in May, rising from $2.1 trillion to $6.1 trillion.

Now, thanks to the latest consumer credit data released by the Fed, we know what much of that saving went to: paying down debt.

According to the Fed's latest G.19 statement, in April total consumer credit plunged by a record $68.8 billion, smashing  expectations for a modest $20 billion drop sparked by last month's $6.8 billion (revised) drop, and more than 3x greater than the biggest consumer credit drawdown observed during the financial crisis.

Just like March, the bulk of the credit repayment took place in revolving credit although to a far greater degree as Americans repaid a record $58 billion on their credit card bills as US consumer society literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can't afford, US consumers repaid the most on their credit cards ever.

However, in perhaps a more notable departure from March when total consumer credit also tumbled even as non-revolving credit rose, in April non-revolving credit - auto and student loans - also posted a sharp drop. In fact, the drop, while not the biggest on record, was the biggest since the financial crisis. It wasn't immediately clear if this particular drop was due to shrinkage in student or auto loans: the full detail will be published in two months time when the Fed reveals the quarterly change in those two series.

And that's how the US consumer died with a bang: because in a time of virtually no visibility on job prospects and how the pandemic is resolved, instead of doing what they do best, i.e. spend, Americans not only saved money but also went into credit paydown mode, crippling an economy where 70% of total output is a direct result of consumer spending; and needless to say, the tens of millions of Americans (depending on whether one believes the initial claims or the BLS jobs report) who have lost their jobs are not going to go out and spend like drunken sailors any time soon.

So how long until this shocking plunge in consumer spending reverses? The answer is that nobody knows, but until US consumers feel comfortable enough to once again "charge it", there can be no recovery.

What we find most surprising, however, is that in this day and age when the Fed has effectively institutionalized moral hazard and where failure is no longer punished as capitalism is now officially dead and zombie existence is rewarded, Americans still care enough about their credit rating to pay down their own debt even as corporations and the country go on a historic debt issuance spree which everyone knows will never be repaid.

Our advice to Americans with credit cards: go crazy, after all if everyone defaults it's the same as nobody defaulting.

Published:6/5/2020 3:01:34 PM
[Markets] U.S. consumer credit plummets in April as credit-card use tumbles by record amount Consumer borrowing declined in April by the fastest rate since 1943 as credit card use saw a record decline, according to Federal Reserve data released Friday. Total consumer credit decreased at a 19.6% rate or $68.8 billion in April. Economists has been expecting a $14 billion fall, according to Econoday. Revolving credit, like credit cards, dropped a record 64.9% in April. Nonrevolving credit, typically auto and student loans, fell 4%. The data does not include mortgage loans. The savings rate hit a record high in April as spending dropped and Americans received stimulus checks from the government. Published:6/5/2020 3:01:34 PM
[Markets] Shift4 Payments stock surges after IPO in vote of confidence for economic recovery Investors voiced a big sign of enthusiasm Friday for a payments business highly levered to an economic rebound.
Published:6/5/2020 3:01:34 PM
[Markets] American Airlines stock set for a weekly gain of more than 75% after record run American Airlines stock set for a weekly gain of more than 75% after record run Published:6/5/2020 2:30:55 PM
[Markets] U.S. needs to 'double down' on COVID-19 testing efforts: Harvard Global Health Institute Doctor As Americans head back to work, medical professionals are worried about the possible rise in COVID-19 infections. Assistant Professor in the Department of Health Policy and Management at the Harvard Global Health Institute Dr. Tom Tsai joins Yahoo Finance's Kristin Myers to discuss. Published:6/5/2020 2:30:55 PM
[Markets] "I'm The World's Greatest Day Trader": Barstool's Dave Portnoy Epitomizes Retail's Takeover Of Rigged Markets "I'm The World's Greatest Day Trader": Barstool's Dave Portnoy Epitomizes Retail's Takeover Of Rigged Markets Tyler Durden Fri, 06/05/2020 - 15:29

"I’m being modest when I say I’m the world’s greatest day trader. My unlimited money has upgraded to infinity money," Barstool Sports founder Dave Portnoy tweeted out on Friday morning, after a surprise jobs number sent the market soaring. 

A living example of how Fed policy widens the wealth gap in real time, as markets surge higher, "Davey Day Trader" took to Twitter on Friday morning to post a video of himself bragging about his portfolio's performance.

"Between this and my private account, within two months, I'll probably be up close to 5 million," he says to start the video. "I don't have to work anymore, this could be my full time job: the best day trader you've ever seen!"

Portnoy has been livestreaming his daytrading since the sports world came screeching to a halt as a result of the coronavirus lockdowns. He's also been featured on CNBC Fast Money on more than one occasion to offer his take on the markets - which he admittedly only started getting his feet wet in recently. 

Portnoy is also a major investor in Penn National Gaming, which trades under "PENN". The stock is well off its mid single digit lows that it touched in March and has since traded back to all time highs. 

"PENN is over 40?" he exclaims. "I am making so much money I can't spend it fast enough! I am making too much money, too fast! My net worth is just exploding!"

"You know why PENN is over 40? Me! Because Wall Street is paying attention to the greatest day trader!" he proclaims. "Corona couldn't beat him, riots couldn't beat him, so get on the train!"

We wonder if Neel Kashkari and Jerome Powell similarly brag when markets skyrocket. 

"Do you know how much PENN stock I have? Infinity PENN stock. I got it at 26.2, it's at 40? Do the math! What's infinity stock when it goes up that much? It's infinity money. I have infinity money. I'm the infinity man."

Published:6/5/2020 2:30:55 PM
[Markets] Here’s another reason for the stock market rally — the U.S. dollar’s ‘almost silent slide’ Investors might not have noticed amid all the excitement, but a stealthy slide by the U.S. dollar should get some of the credit for the stock market’s stunning rally. Published:6/5/2020 2:01:40 PM
[Markets] Victoria's Secret U.K. becomes the latest retailer to collapse into administration After struggling for years, the U.K. arm of the lingerie brand has been taken into administration
Published:6/5/2020 2:01:40 PM
[Markets] The Price Of Half The World's Staple Food Is Up 70% In 2020 The Price Of Half The World's Staple Food Is Up 70% In 2020 Tyler Durden Fri, 06/05/2020 - 15:00

First the good news: after soaring to record highs one month ago due to widespread shutdowns of meat processing plants and supply chain impairments, wholesale beef prices have tumbled sharply and are just barely higher than where they were before the coronavirus pandemic struck.

Now the not so good news: as Bank of America's Michael Hartnett notes in his Flow Show today, while beef may be affordable again, rice - the staple food for half of world's population - is becoming increasingly unaffordable, "surging 70% since Jan on COVID-19 labor supply chain hit & stockpiling."

Should rice prices not revert to normal and soon, how long before the protests, riots and looting that are currently sweeping the US and various European countries spread across the entire world, this time over a far more tangible cause: hunger. As a reminder, it was the surge in food prices in late 2010 and early 2011 that precipitated the Arab Spring protests that toppled numerous political regimes and eventually culminated with the mass exodus of migrants from northern Africa and the middle east toward Europe.


Published:6/5/2020 2:01:40 PM
[Markets] Apple stock is heading for a record close Apple stock is heading for a record close Published:6/5/2020 1:29:55 PM
[Markets] Boxed CEO on surge in online grocery as company sees sales increase 89% YOY since March Boxed CEO Chieh Huang joins Yahoo Finance’s Zack Guzman to discuss the company’s growth due to coronavirus shelter-at-home mandates. Published:6/5/2020 1:29:55 PM
[Markets] "Seeding Event" For Fresh COVID-19 Explosion: CDC Chief Urges Protesters To Get Tested "Seeding Event" For Fresh COVID-19 Explosion: CDC Chief Urges Protesters To Get Tested Tyler Durden Fri, 06/05/2020 - 14:30

The director of the Centers for Disease Control and Prevention has called mass protests in the wake of George Floyd's gruesome death at the hands of police a "seeding event" for the rapid spread of coronavirus

CDC chief Robert Redfield in testimony at a House appropriations subcommittee on Thursday said the sheer size and frequency of the past nine days of protests leaves cause for alarming concern. “I do think there is a potential, unfortunately, for this to be a seeding event,” he said according to The Washington Post.

CDC Director Robert Redfield, via AP

He repeated the call of some county and state health officials across the nation, who have warned protesters they need to get tested. 

Redfield testified in a direct appeal to people protesting in the streets:

“And the way to minimize it is to have each individual to recognize it’s to the advantage of them to protect their loved ones, to [say]: ‘Hey, I was out. I need to go get tested.’ You know, in three, five, seven days, go get tested. Make sure you’re not infected.”

He identified specifically events unfolding in Minnesota and Washington D.C. as potential super-spreader events. 

When pressed also on riot control measures such as tears gas as related to coronavirus, he said this can significantly add to the level of fluids and droplets people are collectively exposed to: “Definitely, coughing can spread respiratory viruses, including COVID-19,” he said.

Image via AP

“We have advocated strongly the ability to have face coverings and masks available to protesters so that they can at least have those coverings,” Redfield added in his testimony.

Last weekend after protests and riots gripped parts of downtown Atlanta, the city's mayor Keisha Lance Bottoms, also addressed this issue, warning demonstrators: “If you were out protesting last night, you probably need to go get a COVID test this week.” She added: “There is still a pandemic in America that’s killing black and brown people at higher numbers.”


And last week Minneapolis health commissioner warned protestors that the large-scale gatherings and crowd riot behavior will “very predictably accelerate the spread.”

Published:6/5/2020 1:29:55 PM
[Markets] "Optimism Has Become Excessive" - Speculators Are The Most Levered Long In A Decade "Optimism Has Become Excessive" - Speculators Are The Most Levered Long In A Decade Tyler Durden Fri, 06/05/2020 - 13:44

While many have applauded the fact that VIX is back below 25, that remains an extremely elevated level historically speaking and has decoupled from the exploding price levels of the broad market...

Source: Bloomberg

This decoupling - relative demand for 'options' - is typically interpreted as a more risk averse perspective. However, instead of put demand (protecting soaring profits), the decoupling could signal call demand (levered long and all in) and that is exactly what we are seeing.

The Put-Call ratio has crashed to its lowest since

Source: Bloomberg

Which, while not an imminent indicator of peril, has not ended well in the past...

Source: Bloomberg

However, as Bloomberg reports, exuberance in American stocks is spurring speculators to unleash bullish bets in the options market at a rate unseen in almost a decade.

Volumes in levered bets on individual stocks going higher exploded this week to a massive 2.3 million calls trading yesterday - the most since 2011...

Source: Bloomberg

So it appears the Millennial masses have discovered that while making money in stocks is "easy", making more money from "levered" bets on stocks is awesome...

What could go wrong?

“We are seeing a lot of bullish options speculators, and I think the ‘message board flow’ is playing a part,” he said, referring to retail speculation typified on the Reddit forum r/wallstreetbets.

The demand for hedges is almost non-existent as traders chase the greatest stock surge in 90 years with levered money...

“A high level of equity call volume as we are seeing now becomes a warning sign to me that optimism may have become excessive,” said Mike Shell, founder of Shell Capital Management LLC.

This won't end well.

Published:6/5/2020 12:59:39 PM
[Markets] Number of U.K. COVID-19 deaths surpass 40,000—underscoring country’s status as one of the worst-hit The U.K. department of health said Friday that the number of deaths after positive coronavirus tests jumped to 40,261 as of June 4, confirming the country’s position as one of the worst-hit in the world by the pandemic.
Published:6/5/2020 12:59:39 PM
[Markets] Apple stock heads for new record close Apple Inc. shares are up 2.6% in Friday afternoon trading and on track to record a new all-time closing high if the gains hold through the end of the session. The stock needs to close above $327.20 to reach that milestone. The stock is on pace for its first record close since Feb. 12. "With roughly 350 million of...iPhones in the pent up 'window of an upgrade opportunity' we believe [Apple] has a unique opportunity to capture this delayed super cycle opportunity with a major 5G cycle on the horizon which will include a host of new smartphone versions/models for iPhone 12," Wedbush analyst Daniel Ives wrote in a note to clients late Thursday. He said Apple's stock represents his "best 5G play into the next year." Apple shares have added 11% over the past month as the Dow Jones Industrial Average has gained 14%. Published:6/5/2020 12:59:39 PM
[Markets] Quant Carnage: Momentum Melts Down By Most On Record As Yields Spike Quant Carnage: Momentum Melts Down By Most On Record As Yields Spike Tyler Durden Fri, 06/05/2020 - 13:10

The "large gatherings" across the nation appear to have crushed any fears of COVID contagion and today's jobs data (heavily impacted by massive swings in the birth/death model adjustment) has removed all fear from FOMO-minded investors as they chase stocks (and bond yields) higher.

Dow futures up over 2000 points from Sunday night's open...

This dramatic acceleration in investors’ willingness to take on risk has become evident at the level of equity market factor preferences, with value (low-P/B over high-P/B) staging a rebound and momentum (12-month winners over 12-month losers) losing ground.

Source: Bloomberg

Similarly, cyclicals are outperforming defensives in a way that dovetails neatly with the rise in yields...

Source: Bloomberg


Source: Bloomberg

In context the regime shift in momentum vs value has been dramatic...

Source: Bloomberg

In fact, the biggest weekly collapse in the momentum factor alone on record as quant funds must be bleeding...

Source: Bloomberg

But... the soaring stock market (and collapsing momentum) may have run its course as positioning has 'corrected' and reflation trades have recoupled.

First, CTAs broadly speaking appear to have finished the job of covering their short positions in Russell 2000 futures and DJIA futures


And the dramatic decoupling in momentum/value relative to bond yields has finally unwound, rather dramatically... driving the correlation between the two series to near record highs...

Source: Bloomberg

A critical level to monitor is around 84bps in the 10Y which puts CTAs’ long positions in UST futures (TY) under pressure. If CTAs start exiting their long TY positions in earnest, the 10yr UST yield jump could cause a momentum crash much like the one that occurred last September.

What does all this mean? Simple, as Nomura's Masnari Takada warns, "We see a growing possibility that these developments will lead to tectonic shifts beneath the surface of the US equity market."

Published:6/5/2020 12:28:26 PM
[Markets] Coronavirus update: Case and death tolls keep rising, but shock increase in jobs another sign suggesting the worst may be over, for now While the number of confirmed cases that causes COVID-19 and death tolls keep rising, a “shock” increase in jobs and drop in unemployment in the U.S. in May add to signs suggesting the worst of the pandemic is over as the easing of lockdown measures continues nationwide.
Published:6/5/2020 12:28:26 PM
[Markets] Patrol Officer Set On Fire During Raging Police Brutality Protests In Mexico Patrol Officer Set On Fire During Raging Police Brutality Protests In Mexico Tyler Durden Fri, 06/05/2020 - 12:40

As the second week of George Floyd demonstrations in America actually begin to shift toward being mostly peaceful, sporadic violent spin-off protests and clashes have been observed in various parts of the world, as we noted previously.

Arguably the most horrific incident involving an attack on police has come out of Mexico. On Thursday a video went viral on social media which showed police confronting a crowd in the city of Guadalajara.

Amid the mayhem, a man approaches a motorcycle patrol officer from behind while dousing him in gasoline or a flammable liquid, and proceeds to set the officer on fire

The masked attacker then sprints from the scene as dozens of other police rush to put the flames out. Fortunately, the officer appears to survive the attack, walking away without severe injury.

The unrest came amid protests sparked by the death of 30-year old Giovanni Lopez, in what's believed to the Mexico's own latest controversial 'police brutality death'. He reportedly died a mere hour into police custody after being detained for merely not wearing mask amid mandated COVID-19 social distancing measures.  

The Guardian details

Giovanni López, a 30-year-old bricklayer, was detained on 4 May by municipal police officers in the town of Ixtlahuacán de Los Membrillos near Guadalajara.

Video of the incident emerged on Wednesday, and shows the police officers with assault rifles forcing López into a police pickup truck as bystanders plead for his release.

“Just for not a wearing a mask?” asks one witness, incredulously. “He was resisting,” answers an officer.

López’s family later found his dead body at a hospital, where he showed signs of possible torture

The unrest is expected to continue given the arrest video sparked widespread condemnation and outrage.

And the latest fire attack on the police officer was also met with widespread condemnation. But some radical elements in the US actually sided with the violent attacker who sought to murder the officer in the street.

It appears that some Antifa accounts in the US are spreading the video while actually praising the attacker, taking "inspiration" from the heinous attempt to kill police.

In the past days in places like New York and California, law enforcement officers responding to riot and looting situations have been killed by gunfire. 

In at least two other instances, police have been targeted by vehicles, leaving officers hospitalized with serious injuries. 

Published:6/5/2020 11:58:11 AM
[Markets] Dispatches from a Pandemic: ‘Sticking to social distancing rules is incredibly difficult:’ The perils of navigating a world with coronavirus as a blind person Sarah Stephenson-Hunter, who works at the University of Oxford advising disabled staff, writes about her worries returning to work.
Published:6/5/2020 11:58:11 AM
[Markets] Dow reclaims 27,000 level as it extends Friday rally to 900 points Dow reclaims 27,000 level as it extends Friday rally to 900 points Published:6/5/2020 11:32:54 AM
[Markets] Illusion Of Prosperity Shattered As California Makes Its Case For Federal Bailout Illusion Of Prosperity Shattered As California Makes Its Case For Federal Bailout Tyler Durden Fri, 06/05/2020 - 12:28

Authored by John Rubino via,

Just a few months ago, California was running surpluses and spreading the wealth around — at least to its affluent voters and public sector employees — as if the good times were here to stay.

Fast forward to the present and it’s all over. Tech stock IPOs – a huge source of capital gains tax revenue for the home of Silicon Valley – have evaporated. Those “unicorn” companies – not yet public but worth over a billion dollars each – are doing “down rounds” that value them as the risky start-ups most of them are. The formerly booming housing market has ground to a halt. And millions of service industry businesses like restaurants and nightclubs have closed permanently.

But the state government still has to pretend to balance its books, so now comes the tragicomedy of negotiations between the governor and state legislators over where to find the needed $50+ billion. Here’s how the Associated Press covers it in an article bafflingly titled California lawmakers agree to close $54.3 billion budget gap:

SACRAMENTO, Calif. (AP) — California’s Legislative leaders on Wednesday rejected billions of dollars in budget cuts to public schools and health care services that Gov. Gavin Newsom had proposed, setting up a fight with the governor over how to close the state’s estimated $54.3 billion budget deficit.

Flush with cash just six months ago, California’s revenues have plummeted since March after Newsom ordered everyone to stay home to slow the spread of the coronavirus. Since then, more than 5 million people have filed for unemployment benefits.

Newsom, a Democrat, and the state’s Democratic-dominated Legislature have pleaded with Congress to send the state more money to help cover that shortfall — so far without success. Last month, Newsom proposed a new spending plan that would cut billions from public schools and eliminate some health benefits for people unless Congress sent the state more money by July 1.

But the 2020-2021 budget plan legislative leaders announced Wednesday rejected those cuts. Instead of cutting money for public schools, lawmakers agreed to delay $9 billion in payments to districts. That would give school districts permission to go ahead and spend the money and have the state pay them back in a future budget year. The state has done this before during previous recessions, but never this much at one time.

Newsom’s plan also would have saved money by eliminating some health benefits for low-income adults and children and making fewer older adults eligible for government-funded health insurance. The Legislature rejected those cuts because they think Newsom overestimated by about $4 billion how much it will cost to pay for the state’s health insurance programs.

Still, much of the budget proposal is just a guess. In a normal year, most Californians would have filed their state tax returns by now, giving lawmakers a good idea of how much money they have to spend. But because of the coronavirus, the state delayed the tax filing deadline until July 15.

That’s why Assembly Speaker Anthony Rendon said “all the budget plans being discussed acknowledge the possibility that more difficult cuts will be necessary.”

Lawmakers must approve an operating budget by June 15. If they don’t, the state constitution says they don’t get paid.

But whatever the Legislature passes, the governor has the authority to either sign it into law or veto all or parts of it. Legislative leaders will negotiate with Newsom over the next few days, which could lead to changes.

Newsom’s budget is prepared by the California Department of Finance. Wednesday, spokesman H.D. Palmer called the legislative plan “progress” and said both sides will continue their discussions to reach an agreement that balances the budget while “advancing our efforts for federal support to maintain core services.”

Comments from legislative leaders suggest they won’t bend on the cuts to education and other programs.

“Our economy has been pummeled by COVID-19, but thanks to a decade of pragmatic budgeting, we can avoid draconian cuts to education and critical programs, or broad middle-class tax increases,” said Senate President Pro Tem Toni Atkins, of San Diego.

The legislative plan announced Wednesday also would:

  • Reject Newsom’s proposal to slash $119 million from a program that helps keep 45,000 people out of nursing homes.

  • Offer government-funded health insurance to low-income adults 65 and older who are living in the country illegally, but not until 2022.

  • Expand the state’s earned income tax credit to immigrants with at least one child age 6 or younger.

  • Close two state prisons “with legislative guidance.”

  • Give $350 million to local government to pay for homeless services.

Notice a couple of things:

  • Pensions, by far the biggest cost for a profligate state like California, are not just uncut, but unmentioned. Right there you know that this is not a serious effort.

  • Instead of accepting some of the governor’s proposed spending cuts, the legislature increased spending on a bunch of things and “paid” for it like this: “Instead of cutting money for public schools, lawmakers agreed to delay $9 billion in payments to districts. That would give school districts permission to go ahead and spend the money and have the state pay them back in a future budget year.”

It’s clear that the needed cuts are political poison and will therefore never happen. Which makes these negotiations a charade designed to frame the state’s coming request demand for an epic federal bailout.

The country is thus left with two alternatives:

1) Have states like California cut services to the point where very little education, healthcare or public safety is actually provided, leaving such places looking a lot like today’s Venezuela. Or…

2) Have the federal government create several trillion more dollars out of thin air and hand them more-or-less directly to public sector pensioners with no real benefit for public services – which, given the likely impact on national finances and, yes, the value of the dollar – might leave the entire US looking like today’s Venezuela.

Either way, the descent from the illusion of prosperity to the reality of bankruptcy continues.

Click here for the other articles in this series.

Published:6/5/2020 11:32:54 AM
[Markets] Dow Jones Soars 1,000 Points On 'Amazing' Jobs Report; Apple Hits All-Time High, While Boeing Surges 17% The major stock indexes were sharply higher early Friday after a strong jobs report. Slack plunged 19% on earnings. Published:6/5/2020 10:57:40 AM
[Markets] Project Syndicate: This moment is not 1968 all over again, but the similarities are frightening Could the United States be facing a reprise of the summer of 1968, when scenes of popular rage helped to put a conservative Republican in the White House?
Published:6/5/2020 10:57:40 AM
[Markets] US Drops Ban On Chinese Carriers, Says Limit Of 2 Flights Allowed Per Week US Drops Ban On Chinese Carriers, Says Limit Of 2 Flights Allowed Per Week Tyler Durden Fri, 06/05/2020 - 11:55

Yesterday, a puzzling headline hit the tape that felt incongruous to us because instead of retaliating against the White House for a new ban on Chinese carriers, Beijing instead appeared to turn the other cheek by allowing foreign carriers to return to China's skies.

Now we know why.

With the Dow up 1000 points and the Trump Administration eager to pump stocks even further with news of a deescalation, however tenuous, the Trump administration announced on Friday that it had scrapped plans to ban Chinese carriers from the US; instead, the DOT will allow Chinese airlines to re-start two flights per week.

The DOT said the limitations are there "to restore a competitive balance and fair and equal opportunity among U.S. and Chinese air carriers in the scheduled passenger service marketplace."

Meanwhile, Larry Kudlow said during an interview Friday that there's "more to come" from the White House regarding China and its crackdown on Hong Kong. Kudlow added that the US is "engaging" with China on the 'Phase 1' trade deal.

Published:6/5/2020 10:57:40 AM
[Markets] Trump celebrates surprise jobs rebound and goes on to assail Democrats Trump celebrates surprise jobs rebound and goes on to assail Democrats Published:6/5/2020 10:29:14 AM
[Markets] Buchanan Blasts "Liberal Mush" From The 'Mad Dog' Buchanan Blasts "Liberal Mush" From The 'Mad Dog' Tyler Durden Fri, 06/05/2020 - 11:16

Authored by Patrick Buchanan via,

In his statement to The Atlantic magazine, former Defense Secretary General James Mattis says of the events of the last 10 days that have shaken the nation as it has not been shaken since 1968:

“We must not be distracted by a small number of lawbreakers.”

Is “a small number of lawbreakers” an apt description of wilding mobs who have showered cops with bottles, bricks and rocks in 40 cities, looted stores in the hundreds, torched police cars, and injured dozens of Secret Service personnel defending the White House?

Is “a small number of lawbreakers” the way a patriot would describe anti-American anarchists who desecrated the Lincoln Memorial, the World War II Memorial on the Mall and the Korean War Memorial and tried to burn down the Church of the Presidents in Lafayette Square?

Was the sacking of Georgetown, Rodeo Drive in LA, 5th Avenue in New York and 40 city centers, the work of a few “lawbreakers”?

Is that a good description of the people who gravely wounded that cop in Las Vegas and shot four cops and murdered that retired black police chief in St. Louis?

The protesters, says Mattis, are “rightly demanding … Equal Justice Under Law.” This is a “wholesome and unifying demand — one that all of us should be able to get behind.”

But what does the general think of the methods and means the “protesters” have used — the massive civil disobedience, the blocking of streets, the vilification of police, the contempt for curfews. What does the general think of protesters who provide moral cover for insurrection?

“Donald Trump is the first president in my lifetime who does not try to unite the American people,” says Mattis. Trump “doesn’t even pretend to try. Instead he tries to divide us.”

But it was not Trump who divided America in this racial crisis.

The nation was united in revulsion at the criminal cruelty that led to George Floyd’s death. The nation was united in backing an enraged people’s right to protest that atrocity.

What divided America were the methods and means protesters began using in the first hours of the Minneapolis riot — the attacks on cops with bottles, bricks and Molotov cocktails.

In Mattis’ statement, one finds not a word of sympathy or support for the police bearing the brunt of mob brutality for defending the communities they serve, while defending the constitutional right of the protesters to curse them as racist and rogue cops.

“Keeping public order rests with civilian state and local leaders who best understand their communities and are answerable to them,” not to the military, says the general.

Correct. But what happens when mobs run wild to where a governor of New York is denouncing the NYPD for failing to protect the city from anarchy and is threatening to replace the mayor for failing to put down the insurrection.

In July 1967, the 82nd Airborne was sent into Detroit to put down the riot. In 1968, there were federal troops in D.C. to stop the rioting in the wake of Dr. King’s assassination. In the violent protests of the Nixon era, U.S. airborne troops were brought into the basement of the Executive Office Building.

The general quotes James Madison:

“America united with a handful of troops, or without a single solider exhibits a more forbidding posture to foreign invaders than an America disunited.”

And how, General, did that work out for Madison when the “foreign invaders” arrived in Maryland in August 1814, marched up Bladensburg Road, and burned the Capitol and White House and Alexandria, while “Little Jimmy” fled out the Brookville Road?

If memory serves, it was Gen. Andrew Jackson and the troops he pulled together for the Battle of New Orleans who defeated the British and saved the Union.

“Society cannot exist,” wrote Edmund Burke, “unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without.

“It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.”

That is where we are now. Society and civilization are on the line.

If mob tactics are now how we change laws and alter public policy, the democratic republic is dead and we have gone full Third World.

Some of us do not believe America is a racist society or that the nation’s police, numbering a million men and women, are shot through with anti-black racism.

Some of us believe the police are the last line of defense we have against that “small number of lawbreakers” Mattis tells us are no problem.

Did the general actually produce this pile of mush that reads like something out of Ramsey Clark in the 1960s?

My guess: Mattis, an obedient servant of President Trump for two years, has been persuaded that the wind is blowing the other way and his “place in history” demands that he get himself on the correct side.

The general has just defected to the resistance.

Published:6/5/2020 10:29:14 AM
[Markets] Outside the Box: ‘Welcoming the chaos’ — what the coronavirus quarantine taught this C-suite couple about leadership and work-life balance This CEO and CFO have let down their guard — and employees have responded.
Published:6/5/2020 10:29:13 AM
[Markets] Dow Jones Surges 900 Points On 'Amazing' Jobs Report; Apple Hits All-Time High, While Boeing Soars 15% The major stock indexes were sharply higher early Friday after a strong jobs report. Slack plunged 19% on earnings. Published:6/5/2020 10:29:13 AM
[Markets] The Margin: Fox News host Laura Ingraham famously told LeBron James to ‘shut up and dribble’ — so what’s her take on Drew Brees? The New Orleans Saints QB came under fire this week for reiterating his opposition to kneeling during the national anthem. Ingraham defended him by saying “he’s allowed to have his view about what kneeling and the flag mean to him.” She had a different take on LeBron James a couple years back.
Published:6/5/2020 9:58:49 AM
[Markets] BLS Admits "Survey Error" May Have Reduced Unemployment Rate By Up To 3% BLS Admits "Survey Error" May Have Reduced Unemployment Rate By Up To 3% Tyler Durden Fri, 06/05/2020 - 10:58

Earlier we pointed out some statistical aberrations that helped explain some of the shocking surprise in today's jobs report. But none other than the BLS itself admitted that a "misclassification error" led to the unemployment rate being some 3% higher than reported.

Here is what the BLS said about adjustments to the household survey as a result of the Coronavirus shutdowns:

... there was also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified.

If the workers who were recorded as employed but absent from work due to "other reasons" (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis).

So the BLS knows there is an error and is hoping to fix it...

"BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue."

... but not yet:

"However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses."

The key phrase from the above: "data integrity"


Published:6/5/2020 9:58:49 AM
[Markets] The Finns Are Revolting - ECB Suffers Another Einstein Moment The Finns Are Revolting - ECB Suffers Another Einstein Moment Tyler Durden Fri, 06/05/2020 - 10:14

Authored by Bill Blain via,

“Finland, Finland, Finland, it’s a great place to be…”

The Finns are revolting.  They are good Europeans, but the Frugal Four just became Five.  Their parliament has apparently rejected the EU’s 750 bln Coronavirus Next Generation Recovery Fund proposals – in its current form.  The Finns say they are willing to talk, but want something that is largely loans, much shorter in duration, and much much smaller. 

The Finns are unique among the Axis powers from the last European Unpleasantness – they paid their debts after finding themselves on the losing side, and their economy wasn’t rebuilt and bailed out through the Marshall plan.  They aren’t convinced they should be paying for the woes of Southern Europe.  One comment this morning summed up a growing Eurosceptic thread: “We don’t have the Mafia, we pay our debts, and our bridges don’t fall down.”  

As the song about Finland says; “You’re so sadly neglected, and often ignored. A poor second to Belgium when going abroad.” Finland is certainly not foremost in the minds of the Brussels Eurocratocracy. 

But unhappy Finns (you will know because they will be smiling – Finns are generally happy when they have something to be unhappy about), are just one problem for the EU this morning. ECB President Christine Lagarde is juggling a lot of balls in the air after Europe’s Central Bank announced yet another few hundred billion of QE Infinity to stem the crisis, juice inflation and pull Europe together. 

Yet, the ECB is doing essentially what its been doing ever since Mario Draghi set “whatever It takes” as the EU’s one and only guiding principal about a million years ago (July 26 2012). Whatever it takes – yep, that’ll sort it every time.. 

Except doing whatever it takes hasn’t solved much... 

Lagarde would do well to recall the Einstein principle: “The definition of insanity is doing the same things over and over again, but expecting different results.” 

The brutal reality is while Draghi might have been right – his words saved the Euro, no one is actually willing to ask what that “Whatever” is. What is the whatever that Europe has to do to sort itself? 

It’s not neccessarily more and more QE Infinity and Negative Interest Rate Policies (NIRP). To be blunt, these two monetary confabulations have achieved the square root of f*** all for European growth and recovery over the past 8 years. While ECB policies haven’t been impressive or effective – their tenacity has been! 

It’s not the ECB’s fault. The truth that no one dares speak across Europe is that the ECB is great idea, but fatally flawed unless monetary union is matched by fiscal and political union (the two have to go together), which is only possible if Europe is truly united. Which it isn’t and isn’t likely to be with this generation. (I have high hopes for the future tho.. which I will touch on below.)

In the absence of political union, all the ECB has done is treat Europe’s gaping monetary wounds with sticky plasters. QE saved Europe from bleeding out over the Sovereign debt crisis of 2012 – but it hasn’t addressed the symptoms underlying that sovereign crisis - it has no mandate to do so, except urging austerity as defined by Euro rules about GDP debt ratios.

When the media report the market’s joy at Italian bond yields tightening after Lagarde through another pile of money at the problem – they weren’t cheering because Italy’s dismal economic underperformance is cured.. Nope the market was cheering because all that free money is going into their pockets. 

And dare I suggest it, but I suspect Christine Lagarde tells Porky Pies. (Non English Readers – a porky pie is a mistruth, a lie.) The ECB is telling us this plan is going to work – European growth will be right back on post-virus track by 2022. Well of course Largarde lies.. she was a French politician for years! (Which might be why she got the ECB gig – last thing Macron wants is a better pie baker in Paris than himself…)

There is nothing "awe-inspiring" about the numbers the ECB is banding about anymore. They are just numbers. Their comments about inflation are meaningless and imaginary. They aren’t achieving very much except creating rising doubt as problems pile up under the carpets they’ve been swept under. 

Across Europe nationalists are asking difficult questions. In the face of the European dream, they remain very much a minority – but an important one. The reason the Frugal Five are unwilling to sign blank queues to bail out the South is not because they are bad Europeans… it’s because they are good Europeans and know it has to change. They know if Europe can’t move the Union narrative forward, then eventually the monetary façade of the Euro is going to crack. 

Everyone wants European Unity, but who wants to pay for it? Everyone agrees Europe needs rules, but not these rules.  

And if Finland is a problem, then Germany is the planet sized asteroid heading for Brussels. What about the Germans? The German constitutional court is still waiting for a justification of QE policies. They’ve made clear they consider the actions of the ECB to be “potentially” ultra vires. Yesterdays chuck another “few hundred billion” into the QE Infinity Pot isn’t likely to have impressed them… 

As Marcus Ashworth of BBerg pointed out y’day Lagarde only expects European inflation to hit 1.3% in 2022 – she was saying the increase in QE Infinity Bond Buying is directly linked to her inflation forecasts, a bland attempt to satisfy the Germans and their inflation fears. Politics, politics.

After explaining above why Europe is such an awful mess, what is the right market strategy?

Cleary it’s to embrace this latest “Whatever it Takes” moment and buy more Italian bonds!  Keep buying them as long as the euphoria lasts, and then sell them. Wait for them to widen as doubts emerge, wait for Lagarde to say something positive (some iteration of “Do Whatever it Takes”) and buy them again. Repeat. 

At some point…. 

At some point Europe is going to have an enormous mess to clean up.. but not tomorrow…. 

Back on Planet Earth. 

I’ve held off from saying much about the riots in the US. They’ve been shocking – but there has been an incredible amount of media hype around the violence, and a spectacular amount of fake news about legions of Ultra-Right Survivalists pretending to be Antifa Anarchists, while the Antifa are dressing as Red-necks. If it wasn’t so serious it would be funny. Its distracting from the real issue – which is justice. If we want efficient markets, then social justice and equality in all things is a critical component. Adam Smith said it in the Theory of Moral Sentiments. 

What’s interesting is how the anger has quickly spread around the globe – embraced by young people of every hue and race. Black Lives Matter demonstrations are taking place everywhere. My kids – in their 20s – feel very strongly about this – Jenny was making placards last night to demonstrate tomorrow. I’m rather pleased about that.  How strongly Jack and Jenny feel about racism, equality and that Black Lives Matter gives me hope that racism will be cured. 

40 years ago I was carrying a “Maggie Maggie Maggie! Out Out Out!” banner as we marched down Princess Street in Edinburgh complaining about Education Cuts, the treatment of miners or whatever. Social justice was important, but racism wasn't something on the Scottish agenda back then. When I moved to London and stumbled into the City… I evolved into a “Things Can Only Get Better” Champagne Socialist in 1997, before losing my faith last year because of Corbyn. Yet the beliefs I held in my 20s remain an essential part of me today.

Racism won’t be cured overnight. For instance, it’s taken 50 years for Homophobia to become utterly repellent. Racism has been around for millennia, but perhaps in 40 years time, the emphasis young people are now putting on it, equality and social justice will see Racism finally eradicated. 

And I’m also encouraged to see that young people across Europe tend to count themselves European first… perhaps a truly united Europe is idea that’s time will yet come! 

Published:6/5/2020 9:29:48 AM
[Markets] The Tell: This indicator shows investors are worried about a November ‘Blue Wave,’ and Democratic corporate tax hikes, Goldman says While the S&P 500 has rallied 39% from its March 23 low, the market for long-dated dividend futures has risen just 7%, according to a Thursday note from Goldman Sachs, reflecting concerns over earnings growth and rising chances that a Democratic sweep in November will lead to a reversal of the 2017 corporate tax cuts.
Published:6/5/2020 9:29:48 AM
[Markets] Dow Jones Surges 750 Points On 'Amazing' Jobs Report; Apple Hits All-Time High, While Boeing Soars 11% The major stock indexes were sharply higher early Friday after a strong jobs report. Slack plunged 19% on earnings. Published:6/5/2020 9:29:48 AM
[Markets] Dow surges 750 points as U.S. stocks rally after nonfarm-payrolls shock Dow surges 750 points as U.S. stocks rally after nonfarm-payrolls shock Published:6/5/2020 8:59:13 AM
[Markets] The insurance bill for damage and looting during protests over George Floyd’s death will be at least $25 million — and that’s just in Minnesota ‘It’s going to take a bit of time for the insurance industry to understand the full implication of this.’
Published:6/5/2020 8:59:13 AM
[Markets] "Nothing Like This Has Happened Before": A Shocked Wall Street Responds To Payrolls, Offers 3 Options What Happened "Nothing Like This Has Happened Before": A Shocked Wall Street Responds To Payrolls, Offers 3 Options What Happened Tyler Durden Fri, 06/05/2020 - 09:54

"Nothing like this has happened before."

That was the response of Bloomberg commentator John Authers to today's jobs report, pointing out that the spread of the unemployment rate compared to the lowest estimate was the greatest on record.

He wasn't the only person shocked by today's BLS report showing that nonfarm payrolls gained by 2.5 million on expectations of a 7.5 million drop with most sectors flat to up, as the unemployment rate dropped to 13.3% vs expectations of a surge to 19.1%. And, as we first noted earlier, while the report clearly confirmed Trump's political message of a V-shaped recovery, the shock was that the surge in jobs came before lockdowns ended. Adding to the confusion is that ongoing Unemployment Claims surged after the April survey period and then they retreated by the end of the May survey period, but even here the increase was 3M+ in ongoing claims.

One explanation for this bizarre divergence came from SouthBay Research which noted that it had previously pointed out problems with Jobless Claims numbers, pointing to the 37 million jump in cumulative claims which included:

  • Fraud: 3.7M (extrapolating from Washington State anecdote)
  • Seasonal Adjustment: 4M
  • Run-rate: 2M

By these estimates, SouthBay calculates that 27 million in non-seasonal Initial Jobless Claims were filed. However, the BLS only recognized only 18M lost Private Payroll jobs (March-May)

This led Southbay to propose the following three options about what is going on:

  • Option #1: Employers added 9M jobs from April 13th-May 12th.  Somehow, the partial slight re-opening in some states in early May led to an unprecedented hiring spree
  • Option #2: The BLS data is just...wrong
  • Option #3: The Jobless Claim data is horribly flawed.  Incorrect or fraudulent claims ran closer to 30% and not 10% of the total

And echoing what we said earlier, SouthBay concludes that "Today's report confirms what we already knew: that business is back to hiring.  The surprise is that it came roaring back BEFORE lockdown ended."

Other Wall Street strategists were no less surprised, as the following collection of soundbites courtesy of Bloomberg indicates: 

Jeffrey Rosenberg, BlackRock Inc. senior portfolio manager:

“The message just appears to be about the pace of returning workers relative to the pace of additional layoffs and that’s a clear positive trend that the opening up in the economy across the various states had been better than what everyone was expecting to see out of this report. This is clearly a good sign that the markets had kind of been telling you for a while that we’re getting back to work.”

Kathy Jones, chief fixed income Strategist for Schwab Center for Financial Research:

“This is a big surprise and a good one, but we’re taking these numbers with a grain of salt. It’s a faster pace as the economy opened up than anyone knew. All of this is subject to a lot of revision and recalculation, but the trend indicators would suggest that as states reopen we’re getting people back to work and that’s a good sign for the economy. It’s definitely a positive surprise. I would think if this is an accurate representation of what’s going on, I would expect we would get more positive than negative numbers moving forward. The payroll protection program is maybe working better than people thought and that’s a good thing.”

Seema Shah, chief strategist at Principal Global Investors:

“Jobless claims and ADP data have all pointed to an increase in the unemployment numbers, so these numbers will need to be digested. But certainly the initial signs suggest that the reopening of economies has already started to heal the labor market. Average earnings fell over the month, indicating that the lower paid workers that had initially borne the brunt of the crisis are returning to work – another very positive sign for the US economy. The market response will be resoundingly positive, but it also raises the question: Does the US really need as much policy support as it is receiving?”

Sameer Samana, senior global market strategist at Wells Fargo Investment Institute:

“Payrolls growth came in well ahead of expectations, and showed growth, while most were expecting another sharp loss. The rebound was confirmed by a bounce-back in weekly hours, participation rate, and manufacturing and private job growth. The unemployment and underemployment rates also seem to have peaked. If confirmed by readings in the coming months, this would suggest the worst is over for the labor market, which would be a positive for the consumer, consumption, and economic growth, which we expect to trough in the second quarter. Stocks, rates and the U.S. dollar rose, while gold fell, which tells us that equity markets may have further to run. It’s too soon to tell what level of yields and yield curve steepness can be handled by markets. Past rallies have eventually found themselves struggling with higher rates and higher dollar, both of which tighten financial conditions.”

Tony Bedikian, head of global markets at Citizens Bank:

“Businesses in several states have begun to reopen under new health and safety guidelines, but in the past few weeks, looters have taken advantage of peaceful protests and posed another setback to businesses that were trying to get back on their feet following Covid-19 shutdowns. Barring a second surge of Covid-19, the overall U.S. economy may have turned a corner, as evidenced by the surprise job gains today, even though it still remains to be seen exactly what the new normal will look like.”

Paul Krugman also chimed in, suggesting that Trump was cooking the books:

Well, the BLS reports a GAIN in jobs and a FALL in unemployment, which almost nobody saw coming. Maybe it's true, and the BLS is definitely doing its best, but you do have to wonder what's going on. I've been through a number of episodes over the years in which official numbers tell a story at odds with what more informal evidence suggests; often it turns out that there was something quirky (NOT fraudulent) about the official numbers. This being the Trump era, you can't completely discount the possibility that they've gotten to the BLS, but it's much more likely that the models used to produce these numbers — they aren't really raw data — have gone haywire in a time of pandemic. Whatever happened, these numbers should make you more, not less, pessimistic about the economic outlook. Why? Because they will reinforce the White House inclination to do nothing and let emergency aid expire.

In any case, we are confident that Trump will explain everything that we need to know why the US economy is now fixed. Well... almost.

Published:6/5/2020 8:59:13 AM
[Markets] U.S. Added 2.5 Million Jobs Last Month, Defying Expectation for Huge Losses. Stock Futures Jump. The Labor Department said payrolls rose by 2.5 million last month, stemming massive pandemic-related job losses, and the unemployment rate fell to 13.3%. Both figures were better than economists had expected. Published:6/5/2020 8:29:52 AM
[Markets] Watch Live: President Trump Holds News Conference To Discuss "INCREDIBLE" Jobs Number Watch Live: President Trump Holds News Conference To Discuss "INCREDIBLE" Jobs Number Tyler Durden Fri, 06/05/2020 - 09:20

After today's historic job's report, where the US unemployment rate unexpectedly dropped to 13.3% in May, down from depressionary levels in April, President Trump has tweeted he will host a press conference at 10:00ET. 

While today's numbers are certainly questionable, the labor report showed employers added 2.5 million jobs, crushing expectations, and indicating that already in May, when the country was under widespread lockdowns, jobs came soaring back. 

President Trump immediately tweeted after the job's report as this was the first big break in negative news flow since social unrest broke out across the US on May 25/26. 

Minutes after the number's hit, the president tweeted: "Really Big Jobs Report. Great going President Trump (kidding but true)!"

He then quoted Fox Business' Maria Bartiromo, who said, "these numbers are incredible!" 

The president also quoted Bartiromo as saying, "I am so stunned. I've never seen numbers like this, and I've been doing this for 30 years! Steve M." 

President Trump said the news conference would be held "at 10:00 A.M. on the Jobs Numbers! White House."

Judging by the president's tweeting -- this is a mega pump to send the stock market higher because, at the end of the day, it's all about the stock market with this president. 

And one last thing, if millions of jobs came back, as government data insists, wouldn't restaurant activity across the country be surging into positive territory? 

Mission accomplished Mr. President... 

Published:6/5/2020 8:29:52 AM
[Markets] Economic Report: ‘The biggest payroll surprise in history’ — economists react to May jobs report Here are some initial reactions from analysts and economists to the surprising May jobs report, which shows the U.S. economy added 2.5 million jobs last month, with the unemployment rate declining to 13.3% from 14.7%
Published:6/5/2020 8:29:51 AM
[Markets] Dow futures surge nearly 650 points as May payrolls data shows surprise job gain Dow futures surge nearly 650 points as May payrolls data shows surprise job gain Published:6/5/2020 7:57:22 AM
[Markets] U.S. regains 2.5 million jobs in May, BLS says, and unemployment falls to 13.3% in shockingly upbeat report The U.S. regained 2.5 million jobs in May and the unemployment rate fell to 13.3%, confounding Wall Street expectations for another big wave of layoffs and sending stocks sharply higher in premarket trading. Published:6/5/2020 7:57:22 AM
[Markets] Market Snapshot: Dow futures up more than 500 points after jobs report shows surprise jump in payrolls U.S. stock-index futures pointed to more gains Friday, as investors look to the monthly labor market report that could show an unemployment as high as 20% in May, even though businesses in some states have begun to reopen as the coronavirus pandemic slows.
Published:6/5/2020 7:57:22 AM
[Markets] Biden Has 'Deplorables' Moment; Says '10 to 15 Percent' Of Americans 'Not Very Good People' Biden Has 'Deplorables' Moment; Says '10 to 15 Percent' Of Americans 'Not Very Good People' Tyler Durden Fri, 06/05/2020 - 08:56

Former VP Joe Biden had a 'basket of deplorables' moment on Thursday, when he suggested that "probably anywhere from 10 to 15 percent of the people out there" are "just not very good people."

"The words a president says matter, so when a president stands up and divides people all the time, you’re going to get the worst of us to come out," Biden said during a discussion moderated by actor Don Cheadle - who failed to ask him why he thinks black Trump supporters 'ain't black.'

"Do we really think this is as good as we can be as a nation? I don’t think the vast majority of people think that," Biden added. "There are probably anywhere from 10 to 15 percent of the people out there that are just not very good people, but that’s not who we are. The vast majority of the people are decent, and we have to appeal to that and we have to unite people — bring them together. Bring them together."

It was unclear whether Biden was referring to Trump voters, or young Democrats rioting across the country following the death of George Floyd - a Black man who died after white Minneapolis police officer, Derek Chauvin, knelt on Floyd's neck for over eight minutes. Chauvin now faces a second-degree murder charge - upgraded from third degree murder as a spate of looting, vandalism, shootings and arson has gripped the nation in response to Floyd's death.

Biden repeated himself several times during the discussion, saying that he doesn't know what it's like to be discriminated against because of his race, but that his childhood stutter helped him understand "what it's like to be humiliated."

"I’m a white man," Biden said. "I think I understand but I can’t feel it. I feel it but I don’t know what it’s like to be a black man walking down the street and be accosted, or to be arrested or, God forbid, something worse."

Biden also made sure everyone knew, three times, that 'the act of protesting should never overshadow the reason for the protest.'

The debates are going to be fun, if Biden makes it that far.

Published:6/5/2020 7:57:21 AM
[Markets] Circuit-Breaker Triggered As Treasury Yields Spike Above CTA Liquidation "Red Line" Circuit-Breaker Triggered As Treasury Yields Spike Above CTA Liquidation "Red Line" Tyler Durden Fri, 06/05/2020 - 08:22

US Treasury yields are blowing out once again this morning with 10Y yields now above 85bps and well out of their 3-month trading range...

Crucially, as we detailed previously, this break above 84bps means trend-followers are likely becoming forced sellers and creating a self-perpetuating surge in yields...

According to Nomura's CTA position index (representing our estimate of the positioning of CTAs based on real-time data) CTAs to still have a net long position in 10yr UST futures, "although with a conspicuous notch recently where that position appears to have hit a ceiling." This means that should the pressure created by global macro hedge funds’ sell-off of USTs increase to the point that the 10yr UST yield climbs above the "red line" that exists at around 0.84%, CTAs would likely be drawn into exiting their long positions in TY to cut their losses.

The stress is most obvious in the Ultras, which triggered circuit-breakers this morning...

As the yield curve steepening accelerates...

Is March's chaotic bond market about to make a reappearance?

Published:6/5/2020 7:36:13 AM
[Markets] London Markets: FTSE 100 joins global rally with major oil companies surging on OPEC hopes London markets weren’t left out of a global rally on Friday, with the FTSE 100 poised for its best weekly return in around a month, as energy shares surged on hopes for a pact by major oil producers to extend production cuts.
Published:6/5/2020 7:36:13 AM
[Markets] U.S. unemployment rate fell in May, says Bureau of Labor Statistics U.S. unemployment rate fell in May, says Bureau of Labor Statistics Published:6/5/2020 7:36:13 AM
[Markets] Minneapolis City Council Mulls Plan To "Abolish" Police Department, Ninth Night Of Demonstrations Largely Peaceful Minneapolis City Council Mulls Plan To "Abolish" Police Department, Ninth Night Of Demonstrations Largely Peaceful Tyler Durden Fri, 06/05/2020 - 07:49

As protests continue with no end in sight, marchers returned to the streets for a ninth night of demonstrations on Wednesday for what were largely peaceful demonstrations, marred by a couple of examples of police violence. According to the AP, Wednesday marked the second night that protests were "subdued", following elevated charges against the officers involved in Floyd's killing, as well as a start-studded memorial service in Minneapolis that featured the Rev. Al Sharpton and many of George Floyd's family members.

According to the AP, the quieter mood was inspired by the new and upgraded criminal charges against the officers involved in Floyd’s arrest, a more conciliatory approach by police (in many areas, police marched with them); along with the realization that the burst of violence following Floyd's killing wasn't sustainable.

"Personally, I think you can’t riot everyday for almost a week," said Costa Smith, 26, who was protesting in downtown Atlanta.

Still, protesters have shown no signs that the marches will stop any time soon. And with millions of unemployed Americans, we wouldn't be surprised to see the reaction to Floyd's killings become an entrenched movement that continues for months, like Occupy Wall Street.

On protester in NYC told an AP reporter that there are "a lot more nights to go" of marching because protesters hadn’t got what they wanted." Floyd’s brother Terrence appeared in Brooklyn, energizing the marchers.

During the first in a series of memorials for Floyd, the Rev. Al Sharpton urged those gathered Thursday "to stand up in George’s name and say, 'Get your knee off our necks!'"

In Texas, protesters welcomed Fort Worth officers joining the front of a march, while police in Austin also walked with dozens of members of the University of Texas football squad as they made their way from campus to the state Capitol to honor Floyd’s memory. After arriving, they all took a knee for the 8 minute 46 seconds, which symbolizes the amount of time Floyd was on the ground.

"This protest won’t just stop here," junior safety Caden Sterns said. "To the white community...if you want change like you say you do, you must change. What I mean is, you must realize, and the oppressor must realize, you are oppressing."

Atlanta Mayor Keisha Lance Bottoms marched with protesters downtown and told the crowd through a megaphone that "there is something better on the other side of this."

"We are in the midst of a movement in this country," she said. "But it’s going to be incumbent upon all of us to be able to get together and articulate more than our anger. We got to be able to articulate what we want as our solutions."

In spite of all of these positive feelings, the evening was marred by two incidents of police violence, one of which led to the immediate suspension of two officers in Buffalo after they pushed a frail elderly citizen to the ground, causing him to start bleeding out of his ear and likely nearly killing him.

In Vallejho, a city in the Bay Area, an officer shot and killed a protester who was kneeling with his hands up. The officer later said he believed a hammer in the man's pocket was a firearm, according to the Guardian.

Meanwhile, back in Minneapolis, the city council said they're looking into a plan to "dismantle" the Minneapolis Police Department and replace it with a new "public safety" organization. One council member suggesting replacing the traditional police department with a more holistic "public safety" department geared toward violence prevention and community services. Social workers or medics could respond to situations once handled by police, she suggested, like drug overdoses, according to the Minneapolis Star Tribune.

Around the White House, the Washington Post reports that the perimeter has continued to expand with each passing night. Here's an infographic depicting the perimeter as of Thursday evening.

Source: WaPo

Mayor Jacob Frey says he’d support "deep, structural reforms" to the department, but not complete abolition of the agency. The level of support among the council members for the abolition vote is unclear.

Whatever the case may be, we should know soon enough as the city council prepares to vote Friday on reforms related to the police department.

Published:6/5/2020 6:57:31 AM
[Markets] Futures Movers: Oil prices rise as OPEC+ seen setting stage for weekend meeting Crude-oil futures climb Friday morning, supported partly by reports that major oil producers are tentatively expected to convene over the weekend to outline plans to extend productions cuts.
Published:6/5/2020 6:28:23 AM
[Markets] Need to Know: This contrarian strategist recommends chasing bears in these hard-hit sectors One strategist explains why he likes the sectors that bearish investors are betting against.
Published:6/5/2020 5:55:35 AM
[Markets] Dow Jones Futures Rise Before Jobs Report In Coronavirus Market Rally; Tesla Back In 'Friend Zone,' Slack, RH Lead Earnings Movers Dow Jones futures: Coronavirus stock market rally sector rotation continued, with airlines soaring and growth names falling. Tesla is in the friend zone. Slack and RH led earnings movers. Published:6/5/2020 5:55:35 AM
[Markets] Global Equity Rally Gets Back on Track as U.S. Jobs Data Looms A fresh bout of optimism is driving gains for European stocks and U.S. equity futures, with reports of potentially more U.S. stimulus, as investors wait for an important U.S. jobs report. Published:6/5/2020 5:26:08 AM
[Markets] May Jobs Report Threatens Great Depression-Era Unemployment Rate, But Analysts See Upside Potential From ADP Data Wall Street economist are forecasting an unemployment rate of nearly 20%, the highest since the Great Depression, from the Commerce Department's May jobs report. Published:6/5/2020 4:55:40 AM
[Markets] Dow Futures Surge Ahead of May Jobs Report As Global Stocks Push Higher; Great Depression-Era Unemployment Rate In Focus Wall Street looks to extend its strongest 50-day rally on record ahead of data that could cement the worst headline unemployment rate since the Great Depression. Published:6/5/2020 4:25:16 AM
[Markets] Swedish Policewoman Takes A Knee, Cries After "Protesters" Attack Her Vehicle Swedish Policewoman Takes A Knee, Cries After "Protesters" Attack Her Vehicle Tyler Durden Fri, 06/05/2020 - 05:00

Authored by Paul Joseph Watson via Summit News,

A policewoman in Sweden has gone viral after she responded to “protesters” attacking her vehicle by taking a knee, crying and holding a sign that read “white silence is violence.”

A video clip shows the woman submitting to the mob before she is hugged by black people and a Muslim woman wearing a hijab.

“The significance of the gesture is reinforced by the fact that her police car was attacked the seconds before she chose to submit to them,” commented Tobias Andersson.

Similar scenes have been documented in both the United States and the United Kingdom.

In each case, the person prostrates themselves so as not to get harassed, or in the worst case scenario, physically attacked by the mob.

Two police officers in London were photographed kneeling before protesters yesterday, only for their colleagues to be violently attacked moments later.

If these are the people tasked with the responsibility of defending us from violent mobs, is it any wonder that armed vigilante groups in America are now protecting their own neighborhoods?

Meanwhile, Sweden maintains its reputation as the most embarrassing, pathetic country in the world.

*  *  *

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Published:6/5/2020 4:25:16 AM
[Markets] Europe Markets: European stocks climb as hopes for more stimulus get rally back on track European stocks were poised for a strong finish to the week on Friday, as investors appeared ready to shake concerns over a powerful rally since the March lows with hopes for more stimulus.
Published:6/5/2020 4:25:16 AM
[Markets] Spanish Porn Star Arrested After Participant In "Mystic Ritual" Dies After Inhaling Psychedelic Toad Venom Spanish Porn Star Arrested After Participant In "Mystic Ritual" Dies After Inhaling Psychedelic Toad Venom Tyler Durden Fri, 06/05/2020 - 04:15

We know what you're thinking: Isn't this just another "Spanish porn star arrested on manslaughter charges after inhaling psychedelic toad venom" story? It seems like they are just a dime a dozen nowadays.

But such is life: the latest case comes from Madrid, where a porn star named "Nacho Vidal" (of course) was arrested not only on manslaughter charges, but also for crimes against public health.

Nacho was detained last week in Valencia in connection with the death of a man that occurred in July 2019, according to AFP. The man who died was identified as fashion photographer Jose Luis Abad. The arrest comes after an 11 month inquiry into Abad's death and Vidal.

Nacho Vidal, looking totally normal

A police statement said: "The police operation began following the victim's death during the celebration of a mystic ritual based on the inhalation of venom of the bufo alvarius toad."

The toad "secretes venom containing a very powerful natural psychedelic substance known as 5-MeO-DMT," AFP wrote. The effects of the toad venom have been compared to DMT or ayahuasca. 

Authorities have said rituals like this one have been carried out "regularly" on the grounds that they offered medicinal benefits. Instead, authorities said it posed a "serious health risk" and lured in those who were "easily influenced, vulnerable or who were seeking help for illnesses or addictions using alternative methods."

Vidal, described by AFP as "a media-savvy porn star in his mid-40s whose Twitter feed is full of ads for his 25-centimetre aromatic candles of the male genitalia," (we swear we are not making this up) would host the rituals in his home.

Published:6/5/2020 3:25:47 AM
[Markets] Are Diamonds The Future Of Energy Storage? Are Diamonds The Future Of Energy Storage? Tyler Durden Fri, 06/05/2020 - 03:30

Authored by Tsvetana Paraskova via,

The advance of renewable energy and electric vehicles (EVs) has incentivized scientists to look into various ways to solve the problem with efficient energy storage, which is the key to wider adoption of green energy technologies.

Most research focuses on batteries—how to make lithium-ion batteries safer and more efficient or how other, cheaper elements, can be used in batteries.

Most previous research has focused on the chemical storage and the electrochemical reactions in batteries.  

Now researchers at Australia’s Queensland University of Technology (QUT) are proposing a design based on the mechanical properties of nanostructures containing diamonds that could potentially be used in mechanical energy storage devices, including batteries, biomedical sensing systems, wearables, and small robotics and electronics.

The mechanical functions of a diamond nanothread (DNT) bundle have the potential to store and release energy when stretched or twisted. These diamond nanothread bundles consist of one-dimensional carbon threads.

“Similar to a compressed coil or children’s wind-up toy, energy can be released as the twisted bundle unravels,” Dr. Haifei Zhan from the QUT Centre for Materials Science said in a statement.

Zhan and his colleagues have found that the diamond bundles have high energy density—that is how much energy a system contains compared to its mass. The team have successfully modeled the mechanical energy storage and release capabilities of a DNT bundle and published their research paper in Nature Communications.

The model is just a first step in the team’s research into the potential of mechanical energy storage as compared to electrochemical energy storage. The scientists now plan to design an experimental nanoscale mechanical energy system as proof of concept and will spend the next two-three years building the system that will control the twisting and stretching of the nanothread bundle.

Despite the fact that research into diamond nanothreads is in very early stages, initial experiments show promising results. Compared to lithium-ion batteries, the diamond nanothread bundle has up to three times the energy density, according to the QUT scientists.

“Energy dense materials are very important to many applications, which is why we are always looking for lightweight materials that still perform well,” said Dr. Zhan.  

High energy density and low weight of materials used could be a major breakthrough in solving the issue of how to pack high energy potential into a lightweight energy storage system.

Because of its low weight, the diamond nanothread could find applications in aerospace electronics. Because of the mechanical—not electrochemical—nature of its energy storage potential, the diamond bundles could be used for implanted biomedical sensing systems monitoring heart and brain functions, the researchers at the QUT say. And, for batteries, the mechanical nature of the energy would be safer than the electrochemical reactions in lithium-ion batteries.

“Unlike chemical storage such as lithium-ion batteries, which use electrochemical reactions to store and release energy, a mechanical energy system itself would carry much lower risk by comparison,” Dr. Zhan said.

Mechanical energy storage systems are one of the many recent research projects and innovations in energy storage. Heat, gravity, or geothermal energy could be used to store and release energy, scientists and companies have set to prove.

While lithium-ion batteries are currently the most popular and widely used energy storage solution, the future may lie in nanostructures using mechanical rather than chemical energy forces.  

According to the National Renewable Energy Laboratory (NREL) of the U.S. Department of Energy, the constantly falling costs of available renewable technologies have spurred great interest in energy storage and various solutions to improve energy storage systems.

“There’s a misunderstanding. Storage is often looked upon as electrochemical storage or battery storage,” says Adarsh Nagarajan, the group manager for Power System Design and Planning at NREL, who works on integrating renewables onto the grid.

“Storage is beyond batteries. It’s beyond electrochemical. It’s much broader.”

Published:6/5/2020 2:57:12 AM
[Markets] Asia Markets: Asian shares rise after jobless data halts rally on Wall Street hares were mostly higher in Asia on Friday after U.S. unemployment data gave the S&P 500 its first loss in five days.
Published:6/5/2020 1:56:48 AM
[Markets] Has Sweden's COVID-19 Strategy Backfired? Has Sweden's COVID-19 Strategy Backfired? Tyler Durden Fri, 06/05/2020 - 02:45

Anders Tegnell, Sweden's chief epidemiologist, has acknowledged that too many people have died in the country due to COVID-19. Tegnell was key in developing Sweden's more relaxed strategy which saw bars, shops, cafes and gyms remain open while the rest of Europe locked down, which he criticised as being unsustainable.

Some restrictions were indeed imposed in Sweden with schools closing for over-16s but, as Statista's Niall McCarthy notes, the public were generally trusted to remain responsible and carry out physical distancing without government enforcement.

During a radio interview, Tegnell said that:

"if we were to encounter the same disease again, knowing exactly what we know about it today, I think we would settle on doing something in between what Sweden did and what the rest of the world has done."

His comments come as figures show Sweden's per capita death rate being the highest worldwide in the seven days to June 02.

The government has now given in to opposition pressure and said it will launch an investigation into how COVID-19 was handled.

So how does Sweden's more relaxed approach to the pandemic compare with neighbouring countries?

Infographic: Has Sweden's COVID-19 Strategy Backfired? | Statista

You will find more infographics at Statista

The latest data from the Johns Hopkins University shows that as of June 01, Sweden had 43.24 deaths per 100,000 of its population. That's in stark contrast to Denmark and Finland who have recorded less than 10 deaths per 100,000 inhabitants and Norway which has had less than 5. Last week, Denmark and Norway said they would reopen tourism between their two countries from June 15 but that Sweden would continue to face restrictions.

Published:6/5/2020 1:56:48 AM
[Markets] Prof. Karl Friston: "80% Of Brits Not Even Susceptible To COVID-19" Prof. Karl Friston: "80% Of Brits Not Even Susceptible To COVID-19" Tyler Durden Fri, 06/05/2020 - 02:00


As the threat of COVID-19 quickly fades from foreground and the damage from governments’ experimental panic-driven ‘lockdown’ measures, some experts are now asking an important question: why do different countries achieved such vastly different results in terms of fatalities due to Coronavirus?

The answers to this question will undoubtedly destroy official claims that the COVID lockdown was somehow science-based, let alone justified.

As it turns out, a large percentage of the population were never susceptible to this virus.

In other words: the threat was completely overblown, and lockdown and social distancing policies have never been based in reality.

UnHerd reports…

Professor Karl Friston is a computer modelling expert, world-renowned for his contributions to neuroscience. He has been applying his “dynamic causal modelling” approach to the Covid-19 pandemic, and has reached some startling results.

– The differences between countries are not primarily down to government actions, but due to ‘intrinsic’ differences in the populations

– We don’t yet fully understand what is driving it, although there are theories ranging from levels of vitamin D to genetic differences

– In each country, there appears to be a portion of the population that is ‘not even in the game’

– that is, not susceptible to Covid-19. This varies hugely between countries

– In the UK, Professor Friston estimates that portion to be at least 50%, and probably more like 80%

– The similar mortality results between Sweden (no lockdown) and the UK (lockdown) are best explained by the fact that in reality there was no difference – the impact of the legal lockdown in Professor Friston’s models “literally goes away.”

This is a highly informative interview with UnHerd host Freddie Sayer and Professor Karl Friston. Watch:

Published:6/5/2020 1:25:09 AM
[Markets] Dow Jones Futures Signal Solid Coronavirus Market Rally; Tesla Back In 'Friend Zone,' Slack, RH Lead Key Earnings Movers Dow Jones futures: Coronavirus stock market rally sector rotation continued, with airlines soaring and growth names falling. Tesla is in the friend zone. Slack and RH led earnings movers. Published:6/5/2020 1:25:09 AM
[Markets] The Moneyist: My estranged husband filed a joint tax return without my knowledge. He got my family’s stimulus payment — what can I do? ‘He has used the pandemic to commit emotional and economic abuse.’
Published:6/5/2020 12:55:17 AM
[Markets] Escobar: Why America's Revolution Won't Be Televised Escobar: Why America's Revolution Won't Be Televised Tyler Durden Fri, 06/05/2020 - 00:05

Authored by Peper Escobar via The Asia Times,

The Revolution Won’t Be Televised because this is not a revolution. At least not yet.

Burning and/or looting Target or Macy’s is a minor diversion. No one is aiming at the Pentagon (or even the shops at the Pentagon Mall). The FBI. The NY Federal Reserve. The Treasury Department. The CIA in Langley. Wall Street houses.

The real looters – the ruling class – are comfortably surveying the show on their massive 4K Bravias, sipping single malt.

This is a class war much more than a race war and should be approached as such. Yet it was hijacked from the start to unfold as a mere color revolution.

US corporate media dropped their breathless Planet Lockdown coverage like a ton of – pre-arranged? – bricks to breathlessly cover en masse the new American “revolution.” Social distancing is not exactly conducive to a revolutionary spirit.

There’s no question the US is mired in a convoluted civil war in progress, as serious as what happened after the assassination of Dr Martin Luther King in Memphis in April 1968.

Yet massive cognitive dissonance is the norm across the full “strategy of tension” spectrum. Powerful factions pull no punches to control the narrative. No one is able to fully identify all the shadowplay intricacies and inconsistencies.

Hardcore agendas mingle: an attempt at color revolution/regime change (blowback is a bitch) interacts with the Boogaloo Bois – arguably tactical allies of Black Lives Matter – while white supremacist “accelerationists” attempt to provoke a race war.

To quote the Temptations: it’s a ball of confusion.

Antifa is criminalized but the Boogaloo Bois get a pass (here is how Antifa’s main conceptualizer defends his ideas). Yet another tribal war, yet another – now domestic – color revolution under the sign of divide and rule, pitting Antifa anti-fascists vs. fascist white supremacists.

Meanwhile, the policy infrastructure necessary for enacting martial law has evolved as a bipartisan project.

Protesters jump on a street sign near a burning barricade near the White House during a demonstration against the death of George Floyd on May 31, 2020 in Washington, DC. Photo: AFP

We are in the middle of the proverbial, total fog of war. Those defending the US Army crushing “insurrectionists” in the streets advocate at the same time a swift ending to the American empire.

Amidst so much sound and fury signifying perplexity and paralysis, we may be reaching a supreme moment of historical irony, where US homeland (in)security is being boomerang-hit not only by one of the key artifacts of its own Deep State making – a color revolution – but by combined elements of a perfect blowback trifecta:Operation PhoenixOperation Jakarta; and Operation Gladio.

But the targets this time won’t be millions across the Global South. They will be American citizens.

Empire come home

Quite a few progressives contend this is a spontaneous mass uprising against police repression and system oppression – and that would necessarily lead to a revolution, like the February 1917 revolution in Russia sprouting out of the scarcity of bread in Petrograd.

So the protests against endemic police brutality would be a prelude to a Levitate the Pentagon remix – with the interregnum soon entailing a possible face-off with the US military in the streets.

But we got a problem. The insurrection, so far purely emotional, has yielded no political structure and no credible leader to articulate myriad, complex grievances. As it stands, it amounts to an inchoate insurrection, under the sign of impoverishment and perpetual debt.

Adding to the perplexity, Americans are now confronted with what it feels like to be in Vietnam, El Salvador, the Pakistani tribal areas or Sadr City in Baghdad.

Iraq came to Washington DC in full regalia, with Pentagon Blackhawks doing “show of force” passes over protestors, the tried and tested dispersal technique applied in countless counter-insurgency ops across the Global South.

And then, the Elvis moment: General Mark Milley, chairman of the Joint Chiefs of Staff, patrolling the streets of DC. The Raytheon lobbyist now heading the Pentagon, Mark Esper, called it “dominating the battlespace.”

Well, after they got their butts kicked in Afghanistan and Iraq, and indirectly in Syria, full spectrum dominance must dominate somewhere. So why not back home?

Troops gather during a demonstration on June 1, 2020 in Washington, DC. Photo: Joshua Roberts/Getty Images/AFP

Troops from the 82nd Airborne Division, the 10th Mountain Division and the 1stInfantry Division – who lost wars in Vietnam, Afghanistan, Iraq and, yes, Somalia – have been deployed to Andrews Airbase near Washington.

Super-hawk Tom Cotton even called, in a tweet, for the 82nd Airborne to do “whatever it takes to restore order. No quarter for insurrectionists, anarchists, rioters and looters.” These are certainly more amenable targets than the Russian, Chinese and Iranian militaries.

Milley’s performance reminds me of John McCain walking around in Baghdad in 2007, macho man-style, no helmet, to prove everything was OK. Of course: he had a small army weaponized to the teeth watching his back.

And complementing the racism angle, it’s never enough to remember that both a white president and a black president signed off on drone attacks on wedding parties in the Pakistani tribal areas.

Esper spelled it out: an occupying army may soon be “dominating the battlespace” in the nation’s capital, and possibly elsewhere. What next? A Coalition Provisional Authority?

Compared to similar ops across the Global South, this will not only prevent regime change but also produce the desired effect for the ruling oligarchy: a neo-fascist turning of the screws. Proving once again that when you don’t have a Martin Luther King or a Malcolm X to fight the power, then power crushes you whatever you do.

Inverted Totalitarianism

The late, great political theorist Sheldon Wolin had already nailed it in a book first published in 2008: this is all about Inverted Totalitarianism.

Wolin showed how “the cruder forms of control – from militarized police to wholesale surveillance, as well as police serving as judge, jury and executioner, now a reality for the underclass – will become a reality for all of us should we begin to resist the continued funneling of power and wealth upward.

“We are tolerated as citizens only as long as we participate in the illusion of a participatory democracy. The moment we rebel and refuse to take part in the illusion, the face of inverted totalitarianism will look like the face of past systems of totalitarianism,” he wrote.

Sinclair Lewis (who did not say that, “when fascism comes to America, it will come wrapped in the flag and waving the cross”) actually wrote, in It Can’t Happen Here (1935), that American fascists would be those “who disowned the word ‘fascism’ and preached enslavement to capitalism under the style of constitutional and traditional native American liberty.”

So American fascism, when it happens, will walk and talk American.

George Floyd was the spark. In a Freudian twist, the return of the repressed came out swinging, laying bare multiple wounds: how the US political economy shattered the working classes; failed miserably on Covid-19; failed to provide affordable healthcare; profits a plutocracy; and thrives on a racialized labor market, a militarized police, multi-trillion-dollar imperial wars and serial bailouts of the too big to fail.

Instinctively at least, although in an inchoate manner, millions of Americans clearly see how, since Reaganism, the whole game is about an oligarchy/plutocracy weaponizing white supremacism for political power goals, with the extra bonus of a steady, massive, upwards transfer of wealth.

US President Donald Trump walks back to the White House escorted by the Secret Service after appearing outside of St John’s Episcopal church across Lafayette Park in Washington, DC, June 1, 2020. Photo: AFP/ Brendan Smialowski

Slightly before the first, peaceful Minneapolis protests, I argued that the realpolitik perspectives post-lockdown were grim, privileging both restored neoliberalism – already in effect – and hybrid neofascism.

President Trump’s by now iconic Bible photo op in front of St John’s church – including a citizen tear-gassing preview – took it to a whole new level. Trump wanted to send a carefully choreographed signal to his evangelical base. Mission accomplished.

But arguably the most important (invisible) signal was the fourth man in one of the photos.

Giorgio Agamben has already proved beyond reasonable doubt that the state of siege is now totally normalized in the West. Attorney General William Barr now is aiming to institutionalize it in the US: he’s the man with the leeway to go all out for a permanent state of emergency, a Patriot Act on steroids, complete with “show of force” Blackhawk support.

Published:6/4/2020 11:34:30 PM
[Markets] Dow futures rise ahead of week’s final test for market — Friday’s jobs report Dow futures rise ahead of week’s final test for market — Friday’s jobs report Published:6/4/2020 11:34:30 PM
[Markets] Searching Twitter For "Racist" Returns Donald Trump As Top Result Searching Twitter For "Racist" Returns Donald Trump As Top Result Tyler Durden Thu, 06/04/2020 - 23:44

For some strange reason, when one types the word "racist" into Twitter's people search, Donald Trump is the top result - a discovery made days after Trump took action against biased social media platforms.

According to The Independent, Twitter search results are affected by the data they collect on you - including political leaning and your interests, however their search of the word in a private browsing session using Brave browser was the same on both iPhone and Android app.

Other users on the social media site have reported the same result.

It is not immediately clear why Twitter’s search algorithm promotes the result. Other results in the “People” section when searching for the word “racist” include accounts who have mentioned the word in their display names, such as the “Yes, You’re Racist” account which raises awareness of racial issues. -The Independent

Twitter claims it's unintentional - explaining that when an account is mentioned frequently alongside certain terms it can affect search recommendations.

While unclear how long this has been going on, the discovery comes just days after Trump signed an executive order which chips away at the "liability shield" contained within Section 230 of the Communications Decency Act of 1996, which protects neutral social media companies from being sued over content posted by their users. Last week Rep. Matt Gaetz (R-FL) told Breitbart:

A lot of people don’t see that Facebook and Twitter … you see Twitter disadvantaging the president, they enjoy liability protections that are not enjoyed by your local newspaper or your local TV station, or Fox News, or CNN, or MSNBC. They have special benefits under Section 230 of the Communications Decency Act as digital platforms because they’re not creating content for which they should be liable. They’re not making decisions about content, they’re simply saying come one, come all with your content. And as a consequence of that, they’re getting a bunch of protections. 

This isn't the first time Silicon Valley has deemed themselves the arbiters of information.

After they were busted trying to help Hillary Clinton in the 2016 election - and were beside themselves after she lost, Google employees discussed whether to bury conservative media outlets in the company's search function after Donald Trump became president, according to the Daily Caller.

Communications obtained by TheDCNF show that internal Google discussions went beyond expressing remorse over Clinton’s loss to actually discussing ways Google could prevent Trump from winning again.

This was an election of false equivalencies, and Google, sadly, had a hand in it,” Google engineer Scott Byer wrote in a Nov. 9, 2016, post reviewed by TheDCNF.

Byer falsely labeled The Daily Caller and Breitbart as “opinion blogs” and urged his coworkers to reduce their visibility in search results.

How many times did you see the Election now card with items from opinion blogs (Breitbart, Daily Caller) elevated next to legitimate news organizations? That’s something that can and should be fixed,” Byer wrote.

I think we have a responsibility to expose the quality and truthfulness of sources – because not doing so hides real information under loud noises,” he continued. 

“Beyond that, let’s concentrate on teaching critical thinking. A little bit of that would go a long way. Let’s make sure that we reverse things in four years – demographics will be on our side.” -DCNF

Not everyone at Google agreed with muting ideological opponents. Senior software engineer Uri Dekel - a self-described Clinton supporter, suggested that it was the wrong approach.

"Thinking that Breitbart, Drudge, etc. are not ‘legitimate news sources’ is contrary to the beliefs of a major portion of our user base is partially what got us to this mess. MSNBC is not more legit than Drudge just because Rachel Maddow may be more educated / less deplorable / closer to our views, than, say Sean Hannity," Dekel wrote Byer in a reply, adding "I follow a lot of right wing folks on social networks you could tell something was brewing. We laughed off Drudge’s Instant Polls and all that stuff, but in the end, people go to those sources because they believe that the media doesn’t do it’s job. I’m a Hillary supporter and let’s admit it, the media avoided dealing with the hard questions and issues, which didn’t pay off. By ranking ‘legitimacy’ you’ll just introduce more conspiracy theories."

Another engineer, Mike Brauwerman, suggested that the company could avoid "accusations of conspiracy or bias" by using technology to "trace information to its source, to link to critiques of these sources, and let people decide what sources they believe." 

If only senior leadership at Google were as interested in allowing people to find, consume, and judge content on their own.

Meanwhile, Trump and his family still dominate Google image search results for the word "idiot."

Published:6/4/2020 10:55:09 PM
[Markets] "The Data Is Likely To Be Horrific": Previewing The Worst Jobs Report In US History "The Data Is Likely To Be Horrific": Previewing The Worst Jobs Report In US History Tyler Durden Thu, 06/04/2020 - 23:11

Tomorrow's jobs report will be one for the history books: with a record 19% Unemployment, and an additional 7 million job losses added to the 20 million from last month, the labor picture will be far worse than anything observed before in US history, eclipsing the darkest days of the Great Depression.

Indeed, as NewsSquawk writes in its payrolls preview, "the data is likely to be horrific, although it tells us what we already know." So will stocks close green? Probably, since the extent of the pandemic gloom has already been heavily discounted by the market which is expecting a miraculous V-shaped recovery, and instead traders’ focus is on the direction and speed of travel. Furthermore, there is little in the BLS report that will offer any forward-looking insight – that will depend on progress regarding the reopening of economies, and official support measures. With that said, a ‘solid’ ADP report which was much better than expected stoked a rally in risk assets, which resulted in significant curve steepening and equity upside along the lines of a reflation trade, offering hope that the economy may be more resilient than feared (the more likely explanation is that the ADP report was once again massively wrong).

Meanwhile, as US data surprises have improved over the last two weeks, and risk assets seem more asymmetrically sensitive to ‘re-opening and recovery’ developments, progress on treatments, testing and tracing, as well as stimulus from global policymakers; this has underpinned the recent rally in the S&P 500 despite historically stretched p/e valuations, negative headline risk (US/China), and a limited appetite in Washington for another hefty fiscal injection.

Here's what Wall Street expects tomorrow, courtesy of

  • Nonfarm Payrolls exp. -8.25mln (range -17mln to -1.7mln), prev. -20.5mln);
  • Unemployment rate exp. 19.8% (range: 17.0-27.0%), prev. 14.7%;
  • U6 unemployment prev. 22.8%;
  • Participation prev. 60.2%;
  • Private payrolls exp. -7.5mln, prev. -19.5mln;
  • Manufacturing payrolls exp. -0.4mln, prev. -1.3mln;
  • Government payrolls prev. -0.98mln;
  • Average earnings M/M exp. +1.0%, prev. +4.7%; Average earnings Y/Y exp. +8.4%, prev. +7.9%;
  • Average workweek hours exp. 34.3hrs, prev. 34.2hrs.


Backward-looking non-farm payroll trend-rates offer little insight in this environment. Updates on how the US labor market is progressing will likely be seen first in the weekly jobless claims/continuing claims data, regional prints and anecdotal reports from corporations bringing workers back from furlough (uncertainty remains over how many workers will be recalled) rather than the BLS Employment Situation Report. At present, analysts are eyeing how soon weekly claims can fall below the arbitrary 1mln level (it is estimated to do so around the end of June), and then the evolution of joblessness; Fed voter Kaplan expects the unemployment rate to fall to 10-11% by the end of this year, and back beneath 7.0% by the end of 2021, assuming consumers are willing to resume activity. The Fed will make economic projections in June, and although they will be subject to large caveats, they will still be useful as a barometer to gauge how quickly progress is being made in lowering unemployment in the months ahead, and by extension, what further support the economy needs.


According to Morgan Stanley, the unemployment rate will move up from 14.7% to 17.0% in May, a stronger than consensus forecast, and a number which according to the bank will likely peak in unemployment rate for this cycle. In reality, as we noted last month, the shadow unemployment rate, which includes people absent from work for other reasons, is much higher (closer to 25.5% in April). There is considerable uncertainty as to how high the shadow unemployment rate could be due to compositional and categorization noise. For example, some people that were absent from work for other reasons are counted as employed, but are presumed to be unemployed. The Bureau of Labor Statistics (BLS) can re-categorize this at any time, which could lift the unemployment rate to as high as 25%, in our view.


The participation rate is expected to remain unchanged at 60.2%, after declining 2.5% in April. There is downside risk to the unemployment rate if labor force participation moves lower. For example, if participation declines 20bp to 60.0%, the unemployment rate would be 16.7% instead of 17.0%. The flows from employment to outside the labor force are higher than ever before, due to the provision under the CARES Act that does not require workers to actively seek work to qualify for unemployment insurance benefits.


The high frequency weekly numbers offer a mixed signal: initial jobless claims data corresponding to the BLS jobs report survey period is yet to show that the easing of lockdown measures has resulted in any large scale return to work for furloughed workers (note: the data does not count those claiming the new Pandemic Unemployment Assistance Benefits). The corresponding continuing claims report, however, surprised by falling for the first time since the pandemic, suggesting that the reopening of states was in fact pushing businesses to rehire some of the people let go when the virus hit.


The sharp rise seen in April’s earnings metrics is a quirk due to the data not adjusting for those on low incomes who lost jobs – these people are removed from the sample, resulting in a higher average wage of those that remain in employment. The sharp rise is therefore not a positive, and if unemployment remains elevated, there will be pressure on wage growth during the recovery. As MS further explains, in the April Payrolls report, job losses were broadly based across sectors but the incidence of unemployment fell most heavily on lower-wage segments of the labor market. This created a compositional bias in the data that caused a +4.7%M increase in earnings. Layoffs in May are expected to be more evenly distributed across the pay scale.

Consumers' appraisal of the job market was mixed, but there were signs of stabilisation, according to the Conference Board’s gauge. Whether consumers re-emerge from the pandemic with confidence to return to work will depend on stronger testing, tracing and quarantine measures needed to give consumers confidence to engage in activity; additionally, how quickly the case count declines, how soon economies can reopen, and how soon hiring picks up. For now, consumers’ short-term earnings outlook is stable, but they will likely need – and are still expecting – more fiscal
support over the coming 12-months.


Recent government stimulus has not merely offset consumers’ lost earnings, in many cases it has exceeded them, and balances in checking accounts that had fewer than USD 5,000 of funds 12-weeks ago now have between 30-40% more money in them given minimal economic activity taking place, according to Bank of America, while BEA data last week showed the savings rate surging to a record high. Whether Americans draw savings and resume consumption in the months ahead will be a function of how confident they ultimately are that a ‘second wave’ more disruptive than the first can be avoided, particularly amid some messaging from lawmakers averse to more fiscal largesse. However, it is worth being cognizant of a potential ‘stimulus cliff’; weekly federal unemployment benefits will end in July, and there seems to be a lack of political will to extend it amid concerns of ballooning deficits. The US is still expected to follow-up with further stimulus possibly in June, likely sized around the USD 1trln mark – significantly smaller than USD 3trln in the bill that the House recently passed. And while the fiscal support might not contain another round of cheques to Americans, there could be ‘back to work bonuses’ incentivising a return to work.


The manufacturing ISM report saw the employment sub-index pickup by 4.6 points to 32.1. But the ISM said employees returning to work in late May will positively impact the index in June. Meanwhile, the non-manufacturing ISM report showed employment conditions improving to 31.8 from 30.0, in contraction for the third straight month, with no industry reporting a  rise in employment. Comments from respondents include: “Furloughed as much staff as possible to reduce costs due to COVID-19” and “Terminations, furloughs, hourly reductions [and] forced vacations.”


ADP reported 2.76mln jobs were lost from the US economy in May, better than the 9mln of losses that the Street was expecting; the prior was also revised up to -19.56mln from the initially stated -20.24mln. This decline would be less than has been implied by the 12.2mln initial jobless claims registered between April and May, according to Pantheon Macroeconomics, but is consistent with the 3.1mln increase in continuing claims in that window. “This suggests that the re-hiring of people in states beginning to reopen was very substantial, even though reported job postings on Indeed fell further between the two surveys,” and “presumably, most people were simply rehired by email, text or phone call.” Pantheon reminds us that the ADP measure is generated by a model which incorporates macro variables as well as official payroll data from the previous month, in addition to the information gleaned from firms which use ADP’s payroll processing services. “It’s possible that ADP’s numbers are unrepresentative for May, or that the model is unreliable given the step-shift in the state of the labour market, but the safest approach probably is to assume that Friday’s official payroll numbers will be much less bad than the current consensus, -8mln, and June payrolls likely will increase substantially.”


Challenger announced US-based employers intend to cut 397,016 jobs in May (209,147 directly a result of COVID), easing from April’s total of 671,129. "Although we saw a significant drop in May over April, we are still in record territory and the cumulative number of cuts since the pandemic began is staggering," Challenger said, "as states and cities re-open, we can expect to see these numbers decrease as more people return to work. But many lost jobs will not return soon, if ever."

Published:6/4/2020 10:23:46 PM
[Markets] Students Demand Lax Grading For Black Students. University Agrees... Students Demand Lax Grading For Black Students. University Agrees... Tyler Durden Thu, 06/04/2020 - 22:45

Authored by Jessica Custodio via Campus Reform,

Students at the University of Washington are demanding that black students be given leniency on finals because they are too “busy fighting for [their] rights to sit down and study.”

The university is advising professors to do just that.

An online petition calls for laxed grading and accommodations, specifically for Black students. So far, the petition has amassed more than 26,000 signatures.

“...give Black students a break! We are already DISPROPORTIONATELY impacted by this pandemic in terms of health care access and financial hardship. Now add state-sanctioned violence, how do you expect us to enter finals in this headspace?!” reads the petition.

"You need to encourage and demand professors to accommodate their black students during this time. If UW truly understands our pain, UW will be a part of alleviating it,” the petition continues. “We can’t sit back and watch as injustices unfold before our eyes. We don’t have the privilege that white and non-black students do to ignore what’s happening and stay at home to study for finals," the petition added.

We are busy fighting for our rights and for the rights of future black children and students to sit down and study. The least UW could do is demand professors to accommodate us during this time”

“I recognize that this institution and others across the country were not built to serve marginalized students, specifically Black students. Still to this day, institutions such as UW, do not serve Black students to the same capacity that white students benefit from,” student government president Kelty Pierce told The Daily.

template to help professors announce these accommodations has been circulating on social media, reading “Dear Students, I am writing to you to offer accommodations for black students in this class during the end of this class and finals.”

Many black students are not just using this time to cope emotionally, but to fight on the front lines of these protests and actively work and take action on what has been happening to the black community.” it continues.

Nicole McNichols, UW Psychology Professor provided Campus Reform with a copy of the email she sent to her own students. 

“I sent this on Sunday before I knew about the petition,” McNichols said. “Obviously, I support the petition and absolutely believe the accommodations it requests should be honored by all faculty. Students need all of the support and compassion we can afford to give them right now.”

The email sent by McNichols to her students reads, “I wanted to reach out and acknowledge the incredible grief, fear, and loneliness that I know many of you are experiencing in light of recent (and not so recent) events. These are frightening times and I know that many of you are struggling emotionally as our country suffers not only from a pandemic but also from abhorrent racism, overwhelming violence, and palpable rage. These events are terrible and it is completely understandable to feel scared and alone right now.”

“Last, I think we all could use a break right now as these times certainly call for compassion. Given this, there will be a following change to the course policies. First, the remaining homework chapters are being put into review mode. Everyone will receive full points. Second, I have decided to drop everyone’s lowest exam score. This means that you may opt-out of taking Exam 3 if you just don’t feel up to it, (or if you [are] happy with your scores from exam 1 and 2), the email added.”

UW Senior Director of Media Relations Victor Balta directed Campus Reform to a message that was sent to all instructors Monday asking them “to consider that while we are together as a community, some are being affected more than others.”

“I think the statement clearly lays out a couple of examples of what instructors could provide to their students, such as extra time to finish assignments or a ‘final-examination optional’ approach,” said Balta.

In the message, the university told professors “in these final weeks of the quarter, as assignments become due and exams are taken, to be especially responsive to the needs that your students, especially those who are members of the Black community, may have for accommodations as we conclude the school year.”

Accommodations might include extra time to finish assignments or providing a 'final examination optional' pathway, for example,” the memo continued.

Published:6/4/2020 9:54:22 PM
[Markets] The June 4 Tiananmen Square Massacre: Five Truths That Still Aren't Widely Known The June 4 Tiananmen Square Massacre: Five Truths That Still Aren't Widely Known Tyler Durden Thu, 06/04/2020 - 22:05

Via The Epoch Times,

Following the sudden death of a beloved political reformer, Hu Yaobang, 200,000 students gathered at Tiananmen Square on April 22, 1989, to await the hearse carrying Hu’s body - but it never arrived. The mass of students were angered, and their burning desire for freedom could be contained no more.

For the next few weeks, Tiananmen Square was occupied by these student protesters, who aimed at making reality their dream of ridding the country of communist tyranny and bringing democratic reform to China. Their non-violent demonstration perhaps brought a glimmer of hope … until the army moved in. Although martial law was declared on May 20 that year, what caused the army to suddenly go on a killing rampage on June 4?

L: Thousands of Chinese gather on June 2, 1989, in Tiananmen Square around “The Goodness of Democracy,” demanding democracy despite martial law in Beijing. (CATHERINE HENRIETTE/AFP via Getty Images). R: “The Goddess of Democracy,” a 10-meter replica of the Statue of Liberty created by students from an art institute to promote the pro-democracy protest against the Chinese government. (TOSHIO SAKAI/AFP via Getty Images)

1. Mass-Murdered by the Chinese Regime

At least 10,454 people were mass-murdered by the Chinese communist regime on Tiananmen Square, according to an unnamed source from the Chinese State Council. The figure is far greater than the “official” fatality count of 200.

On June 4, 1989, students were gunned down in droves and “mown down” by tanks. “APCs (Armored personnel carriers) then ran over bodies time and time again to make ‘pie’ and remains collected by bulldozer. Remains incinerated and then hosed down drains,” reads part of a declassified statement, which was obtained by Alan Donald, Britain’s ambassador to China in 1989.

It’s still unconfirmed how many more were massacred during and after the students’ unarmed protest.

Waving banners, high school students march in Beijing streets near Tiananmen Square on May 25, 1989, during a rally to support the pro-democracy protest against the Chinese regime. (CATHERINE HENRIETTE/AFP via Getty Images)

2. The Ringleader Is Still Alive

In addition to rolling over the students with tanks, the army fired high-explosive shells that expand on impact, also known as dum-dum bullets, (forbidden by the Geneva Convention) to kill the students in the most harm-inflicting way possible.

The question remains—what kind of a human being would order such a brutal mass murder of freedom-seeking civilians?

Former leader of the Chinese Communist Party Jiang Zemin (Feng Li/Getty Images)

Former paramount leader of the party Deng Xiaoping was impressed with Jiang Zemin’s iron-fisted proposition to use the army to crack down on the students, and promoted him from Party Chief of Shanghai to General Secretary of the Chinese Communist Party days before the massacre, giving him free rein to do as he liked.

Jiang Zemin, the mastermind behind the massacre, ordered the army to carry out his bloody strategy on June 4. The “gate of heavenly peace” was suddenly turned into hell on Earth.

Taken care of by others, an unidentified foreign journalist (2nd-R) is carried out from the clash site between the army and students on June 4, 1989, near Tiananmen Square. (TOMMY CHENG/AFP via Getty Images)

3. Ruthless Abuse of Power

The Tiananmen Square Massacre was just the start of Jiang’s ruthless abuse of power. He went on to commit the most heinous crimes that couldn’t bear the light of day. In the bloody wake of the massacre, Jiang became Deng’s ideal heir for the next Party Chief, a position Jiang secured in 1993.

Jiang, a Marxist hardliner and ex-senior spy for the KGB’s Far-East Bureau, had only begun to show his true colors with how he dealt with the protesting students and went on to orchestrate even bloodier campaigns. In 1999, Jiang sought to “eradicate” Falun Gong—a popular spiritual practice—after the number of people practicing it rose some 100 million, outnumbering the then 70 million Party members, according to state-run reports at the time.

Falun Gong practitioners doing the group exercise in Guangzhou, China, in 1998. (Minghui)

Under Jiang’s rule, an adroit misinformation campaign inundated China, turning public opinion against Falun Gong by subjecting the spiritual practice to extreme vilification—including the infamous Tiananmen Square “self-immolation” hoax, which successfully deceived the nation—paving the way for Jiang’s next phase: to forcibly “transform” or “eliminate” the meditators who refused to give up the practice.

In response to Jiang’s genocidal policy, believed to have caused a widespread yet unascertainable amount of state-approved killings, including forced organ harvesting, over 209,000 lawsuits have since been filed against Jiang, making him the most sued dictator in history.

Falun Gong practitioners at a rally in front of the Chinese embassy in New York City on July 3, 2015, to support the global effort to sue Jiang Zemin. (Larry Dye/The Epoch Times)

4. Horrifying Accounts Kept Secret

A Blacklock’s Reporter obtained secret telex messages concerning horrifying accounts of what really happened on Tiananmen Square that day via access-to-information laws.

“An old woman knelt in front of soldiers pleading for students; soldiers killed her,” the Canadian embassy in Beijing reported at the time.

Blacklock’s writes: “A boy was seen trying to escape holding a woman with a 2-year old child in a stroller, and was run over by a tank”; “The tank turned around and mashed them up”; “Soldiers fired machine guns until the ammo ran out.”

An unbelievable amount of bullets were fired on civilians at Tiananmen that “they ricocheted inside nearby houses, killing many residents.”

“The embassy described the killings as ‘savage,’” according to Blacklock’s Reporter.

“They are now entering a period of vicious repression during which denunciations and fear of persecution will terrorize the population,” reads another cable obtained.

Chinese onlookers run away as a soldier threatens them with a gun on June 5, 1989, as tanks took position at Beijing’s key intersections next to the diplomatic compound. (CATHERINE HENRIETTE/AFP via Getty Images)

Diplomats added that some 1,000 executions took place following the massacre, but an exact figure is unconfirmed. “It was probably thought that the massacre of a few hundreds or thousands would convince the population not to pursue their protests. It seems to be working,” reads a statement by the diplomats.

The secret British cable, obtained by news website HK01, reveals more detail about the crimes of the 27 Army of Shanxi Province on the day.

“27 Army ordered to spare no one and shot wounded SMR soldiers. Four wounded girl students begged for their lives but were bayoneted. A 3-year-old girl was injured but her mother was shot as she went to her aid as were six others who tried.”

“A thousand survivors were told they could escape via Zhengyi Lu but were then mown down by specially prepared M/G (machine gun) positions.”

Ailing student hunger strikers from Beijing University receive first aid treatment under a makeshift tent set up on May 17, 1989, at Tiananmen Square as students enter the 5th day of a marathon hunger strike as part of a mass pro-democracy protest against the Chinese government. (CATHERINE HENRIETTE/AFP via Getty Images)

5. “June 4”: A Highly Taboo Subject in China Today

Despite Hong Kong lighting up every evening on June 4 in an annual candlelight vigil to commemorate the victims of the massacre, Chinese mainlanders across the border are without such freedom of speech. Talking about the Tiananmen Square Massacre, or even mentioning “June 4,” or “6.4,” could have one disappear.

In 2007, Zhang Zhongshun, a lecturer from Yantai University, showed his class a video of the massacre he obtained from an overseas website. He was subsequently jailed for three years by Laishan City Court on Feb. 28, 2008.

Tens of thousands of people hold candles during a vigil in Hong Kong on June 4, 2018, to mark the 29th anniversary of the 1989 Tiananmen crackdown in Beijing. (ANTHONY WALLACE/AFP via Getty Images)

“I imagined that the worst case would just be that the university president would criticize me in front of my colleagues in a meeting. I would not have thought that the communist regime would imprison me,” Zhang told The Epoch Times in an interview after his release from the detention.

“Is it illegal even if I include a historical event into my lecture?” he asked.

A student displays a banner with one of the slogans chanted by the crowd of some 200,000 pouring into Tiananmen Square on April 22, 1989, in Beijing in an attempt to participate in the funeral ceremony of former Chinese Communist Party leader and liberal reformer Hu Yaobang. His death in April triggered an unprecedented wave of pro-democracy demonstrations. The April-June 1989 movement was crushed by Chinese troops in June when army tanks rolled into Tiananmen Square June 4, 1989. (CATHERINE HENRIETTE/AFP via Getty Images)

Who’d dare raise this for discussion in China knowing the consequences? This year marks the 31st anniversary of the Tiananmen Square Massacre. Will the current Chinese leaders redress the issue and bring Jiang Zemin to justice for his litany of crimes? Only time will tell.

Published:6/4/2020 9:24:01 PM
[Markets] "It's Pretty Obvious This Will End Badly": In Historic Reversal, Grantham's GMO Goes Short US Stocks "It's Pretty Obvious This Will End Badly": In Historic Reversal, Grantham's GMO Goes Short US Stocks Tyler Durden Thu, 06/04/2020 - 21:45

With retail investors taking over the extremely illiquid market,  resulting in crazy intraday swings where the horde of robinhood retail traders alone has can send a stock soaring (and tumbling)...

... many veteran investors are throwing in the towel on what is emerging as the most furiously ridiculous rally in history in what is now better known as "Jay's market" (with 73% of Wall Street claiming that the market is only up due to the artificial gimmick of the Fed's balance sheet explosion and not due to fundamental factors). And with one after another investing legend such as Warren Buffett, Stanley Druckenmiller, David Tepper boycotting the artificial rally, and either selling or pulling out of the market, today GMO's Jeremy Grantham became the latest to bail on what Bank of America calls a "fake market."

In a letter to GMO investors, Grantham writes that "we have never lived in a period where the future was so uncertain" and yet "the market is 10% below its previous high in January when, superficially at least, everything seemed fine in economics and finance. And if not “fine,” well, good enough. The future paths include many that could change corporate profitability, growth, and many aspects of capitalism, society, and the global political scene." 

Jeremy Grantham.

In short, the veteran value investor known for calling several of the biggest market turns of recent decades admits he has lost his faith in an upside case - unlike the retail daytrading army - and his sense of direction in a world of record uncertainty "which in some ways seems the highest in my experience" and as a result "in terms of risk and return – particularly of the worst possible outcomes compared to the best – the current market seems lost in one-sided optimism when prudence and patience seem much more appropriate."

Grantham also highlights the obvious: that the market and the economy have never been more disconnected, and points out that while "the current P/E on the U.S. market is in the top 10% of its history... the U.S. economy in contrast is in its worst 10%, perhaps even the worst 1%.... This is apparently one of the most impressive mismatches in history."

As a result of this total loss of coherence driven by trillions in central bank liquidity that have propelled a massive wedge between fundamentals and stock prices, GMO, the Boston fund manager Mr Grantham co-founded in 1977, cut its net exposure to global equities in its biggest fund from 55% to just 25%, near the lowest levels it reported during the global financial crisis, according to a separate update from GMO's head of asset allocation, Ben Inker.

That decision, according to the FT, slashed GMO's Benchmark-Free Allocation Fund exposure to US equities from a net 3-4% to a net short position worth about 5% of the $7.5bn portfolio, said Inker, perhaps the first time the fund has turned net short US stocks since the crisis. This, after GMO loaded up on stocks during the sell-off but has since cut offloaded its exposure to the US market following the unprecedented 40% rally in the past 2 months.

"The Covid-19 pandemic “should have generated enhanced respect for risk and it hasn’t. It has caused quite the reverse,” Grantham told the Financial Times. He noted that trailing price-earnings multiples in the US stock market were “in the top 10 per cent of its history” while the US economy “is in its worst 10 per cent, perhaps even the worst 1 per cent”, echoing what he said in his quarterly letter.

And while markets seem to be taking all the negative news in stride, Grantham is worried that the wave of devastation that is coming is unlike anything experienced before:

At GMO we dealt with three major events prior to this crisis, and rightly or wrongly, we felt “nearly certain” that sooner or later we would be right. We exited Japan 100% in 1987 at 45x and watched it go to 65x (for a second, bigger than the U.S.) before a downward readjustment of 30 years and counting. In early 1998 we fought the Tech bubble from 21x (equal to the previous record high in 1929) to 35x before a 50% decline, losing many clients and then regaining even more on the round trip. In 2007 we led our clients relatively painlessly through the housing bust. In all three we felt we were nearly certain to be right. Japan, the Tech bubbles, and 1929, which sadly I missed, were not new types of events. They were merely extreme cases akin to South Sea Bubble investor euphoria and madness. The 2008 event also was easier if you focused on the U.S. housing euphoria, which was a 3-sigma, 100-year event or, simply, unique. We calculated that a return trip to the old price trend and a typical overrun in those extreme house prices would remove $10 trillion of perceived wealth from U.S. consumers and guarantee the worst recession for decades.All these events echoed historical precedents. And from these precedents we drew confidence.

But this event is unlike all those. It is totally new and there can be no near certainties, merely strong possibilities. This is why Ben Inker, our Head of Asset Allocation, is nervous and this is why you are nervous, or should be.

While the uncertainties are indeed large, one can triangulate a sufficiently material dose of "certainty" about what is coming, and as Grantham explains further, it is not pretty, especially with the US economy already on the back foot heading into the crisis:

We had U.S. and global problems looming before the virus: an increasingly disturbed climate causing global floods, droughts, and farming problems; slowing population growth, in the developed world, soon to be negative; and steadily slowing productivity gains, especially in the developed world, and therefore a slowing GDP trend. In the U.S., our 3%+ a year trend is down to, at best, 1.5% in my opinion. It is closer to a 1% maximum in Europe. We had, as mentioned, top 10% historical P/Es in the U.S. and much the highest debt level ever in the U.S. for both corporations and peacetime government. So, after a 10-year economic recovery, this would have been a perfectly normal time historically for a setback.

And then the virus hit.

Simultaneously, it is causing supply and demand shocks unlike anything before. Ever. It is generating a much faster economic contraction than that of the Great Depression. And unlike 1989 Japan, 2000 Tech (U.S.), and 2008 (U.S. and Europe), it is truly global. The drop in GDP and rise in unemployment in four weeks have equaled what took one to four years to reach in the Great Depression and were never reached in the other events. Rogoff & Reinhart, Harvard Professors who wrote the definitive analysis of the 2008 bust, agree that this event is indeed completely different and suggest it will take at least 5 years to regain 2019 levels of activity. But this is a guess. We really don’t know how long it will take. Nearly certain is that a V-shaped recovery looks like a lost hope. The best possible outcome would be that there will be, almost miraculously, billions of doses of effective vaccine by year-end. But most viruses have never had a useful vaccine and most useful vaccines have taken well over five years to develop and when developed have been only partially successful. Yes, this time there will be an enormous effort with unprecedented spending. But still, a leading vaccine expert says quick success would be like “drawing successfully to several inside straights in a row.” And even if all works out well with a vaccine there will remain deep economic wounds.

Meanwhile, as the world waits for a vaccine, and buys stocks confident one is imminent, the "bankruptcies have already started (Hertz on May 22nd) and by year-end thousands of them will arrive into a peak of already existing corporate debt. It will need spectacular management, which it may get. But it may not. Throwing money – paper and electronic impulses – at the problem can help psychology and, particularly, the stock market, where extra stimulus money can end up but does not necessarily put people back to work; there will be up to 20% unemployment for at least a moment."

In response to this historic economic collapse, central banks' unprecedented stimulus efforts have "temporarily overwhelmed" underlying economic realities but "it’s hard to believe that will continue."

And when it stops, watch out below: Grantham told the FT in an interview that after seeing markets price in “total recovery” over recent weeks, "my confidence that this will end badly is increasing."

Speaking as protests against police brutality and racism filled the streets of US cities, Grantham said previous outbreaks of social instability had had few lasting effects on the US economy, but "there are more things going wrong than normal".

However, the value investing legend's most dire prediction was that "if you look back in two to three years and this market turns around and drops 50%, the history books will say ‘That looked like one of the great warnings of all time. It was pretty obvious it was destined to end badly," Grantham said, adding: "If it does end badly the history books are going to be very unkind to the bulls." For the sake of an entire generation of Robinhooders who will lose everything if there is a 50% crash, one hopes Grantham is wrong.

Finally, Grantham also chimed in on the "most important question in finance right now", revealing that he was proud of not having "made a fuss about inflation" in 20 years of writing his widely followed letters, but said that record amounts of monetary easing from central banks had now created the possibility of inflationary pressures.

"With a generous stimulus program in many countries you can just about daydream about inflation for the first time in 30 years."

To this, all we can add is that in the very near future that daydream will become a nightmare.

Published:6/4/2020 8:54:43 PM
[Markets] These are the 154 stores that J.C. Penney will soon close J.C. Penney Co. Inc. said late Thursday it will be closing 154 stores in the near future as part of its “store optimization strategy” after filing for bankruptcy protection last month.
Published:6/4/2020 8:29:56 PM
[Markets] Looters, Lockdowners, & The Law Looters, Lockdowners, & The Law Tyler Durden Thu, 06/04/2020 - 21:25

Authored by Jeffrey Tucker via The American Institute for Economic Research,

"Coronavirus hasn’t been a thing since Friday,” said a friend.

“The new story is racism.”

Following American media culture can make one’s head spin. 

For three months, all we heard was the danger to life and civilization presented by a novel virus. Millions will die! Few will be spared! There will be unprecedented suffering unless we completely shatter the normal functioning of life. Lock down, shelter in place, and stand six feet apart – very strange exhortations never before heard in the modern history of annual viruses or any public policy in many lifetimes. 

All of it enforced by the police power. The same police power that eventually landed on the neck of George Floyd.

They screamed that we had to close schools, shopping centers, sports, and only allow “essential” business to function even if tens of millions lose their jobs, because lives – lives that the police power has utterly disregarded during the protests – are just that important. Lockdown required that the law change on a dime, in violation of every legal precedent, every slogan in American civic mythology, and contradicting the whole of what made America great. 

In three days in mid-March 2020, everything we previously believed had to end because we had to implement a new experiment in social control as cobbled together by “public health officials” some 14 years ago. They sat around for a decade and a half, bored and waiting to use the new way to combat viruses. Any old virus would do so long as it was a slow news day. COVID-19 was as good an excuse as any. Out was every foundational belief in liberty, property, and free association, in the blink of an eye. 

That was 75 days ago. People were surprisingly compliant, but what could they do? They were scared, thanks to media frenzy, and they weren’t allowed out of their houses to protest in any case. When they did defy the orders to protest in front of capitol buildings, instead of staying home and watching CNN, they were derided by CNN as disease spreaders and enemies of public health. 

I’m looking at the headlines today and all the news on the coronavirus is below the fold or in its own section. It’s all about the protests, riots, and looters. Racism.

Trump is screaming for a crackdown while the media demands justice for police brutality. As for social distancing, this was absolutely yesterday’s news. Now a new ethos has taken hold: gather in the largest possible groups to demand social justice. And loot. 

Absolute hymns to the glory of protestors and even rioters are the rule of the day, as if the public health threat of COVID-19 is so last week. “Each night, tens of thousands exercise their right to assemble in protest and millions of Americans follow along at home,” writes the New York Times rhapsodically and correctly, failing to point out that this same venue said the opposite about lockdown protestors a few weeks ago. 

Weeks! Is it an indication of the extremely short attention span of the American public or a demonstration of the sheer cynicism of media culture? 

Meanwhile, on the corona front – yes that still exists even if you have to dig for information on it – states are still (still!) gradually ending the lockdown with cockamamie rules: you can sit (or stand) in bars but you can’t stand (or sit). Customers can buy things but not try on clothing. People can buy perfume but not spray on samples. In daycare facilities, the kids can play together in groups of more than 10 and they must stay apart, even though there is near zero threat to the kids from the virus. 

These states that are imposing these crazy rules are four days behind the times. You look at the protests and you see free people doing what they believe they should do in the face of injustice. Many wanted to do this months ago but they were prohibited by law. The law eventually had to acquiesce to people’s sense of their human rights. 

Why states do not instantly and immediately end all restrictions they wrongly imposed indicates the sheer stupidity of public policy, and the myth that it can ever be scientific. Instead we get curfews, even in the city that never sleeps. 

The same governments that were only recently controlling your movements to protect you from a virus are now blasting people with tear gas. 

As for lockdown “science,” the Centers for Disease Control keeps lowering its infection fatality rate. It’s becoming normalized like any virus: bad but not the end of the world. Best treated by medical professionals, not politicians – as we long knew until very recently. 

The lockdown carnage from missed cancer diagnostics and forgone elective surgeries are only now presenting themselves. Then there are the 100 thousand wrecked businesses, the 40 million unemployment, the blown budgets of every government, the scary monetary policies. SWAT teams were entering bars to arrest people — in the name of health. Churches were shuttered on Easter. No restaurants, no shopping, no sports, no theaters, no gyms, no outdoor activities. We were all treated like animals, and told to cage ourselves in our homes. And so on it went for 75 days. 

It’s hard to imagine a better recipe for social unrest. 

Then the protests began. They were about the death of George Floyd, an unemployed man but they were also what he represented: the overwhelming presence of state violence in all of our lives. 

Then the looting started. That too should not be a surprise. Lockdowners and looters use the same method (violence) to destroy property and commerce. One class of criminals learns from another class of criminals. It’s copycat criminology. 

Now, as if to take that next step on the Road to Serfdom, all major cities have curfews. 

Based on the speed and duplicity of the news cycle, we can predict with confidence that within six months, you won’t find a single person in public life willing to defend the lockdown. And yet it was this event that laid the foundation for the rest of the tragic unfolding of events that is wrecking this country. 

There should be justice. There should be compensation. Political heads should metaphorically roll, along with the “public health officials” who advised them. And then we need a completely new direction: one that rejects the unscientific use of state force to battle a disease, recognizes the wisdom of the Bill of Rights and freedom, and treats people with the dignity that is inherent to every human life. 

If we understand this desperate need – if we see what went wrong these months and the right way forward – we can rebuild. If we do not, the destruction and rights violations will continue. 

Published:6/4/2020 8:29:55 PM
[Markets] Blain: The Tragedy Of HSBC Blain: The Tragedy Of HSBC Tyler Durden Thu, 06/04/2020 - 20:45

Authored by Bill Blain via,

“A waiter, again unbidden, brought the chessboard and the current issue of The Times, with the page turned down at the chess problem.”

While America burns, the dollar tumbles, stock markets soar, Germany announces a massive bailout programme which dwarfs the pennies Italy desperately needs, the ECB gets ready for another money dump, and UK politicians grumble about queues… life goes on...

There is something deeply tragic about yesterday’s announcements from HSBC and Standard Chartered supporting the imposition of China’s Security Law in Hong Kong. We can all act shocked and damn them for supping with the devil, but neither bank had any real choice but to make the unpalatable decision to support the unsupportable. Both know their futures depend too much on China’s patronage to survive without kow-towing. 

Yesterday, they each wrote the first lines of the final few paragraphs of their own obituaries.  

10-years ago I wrote in the Porridge why HSBC was my top bank stock. I said something along the lines of while other banks will remain vulnerable, HSBC had the franchise, strength and depth to survive and thrive. Its dividend policy was strong and would provide dull, boring, predictable returns for the long-term. The Long-term is so over. 

Read the comments following any article about the two Hong Kong banks this morning and are they full of earnest virtue signalling from angry clients who say they will close their accounts. I will probably switch mine.. but only because now there is zero chance the service will get any better.

Timing is everything. I laughed out loud at a post on Linked-In from HSBC claiming leadership in ESG matters and Green funding. Really… this is not the time for HSBC to be bragging about its ethical credentials.

The sad reality is HSBC has become a patron of the Chestnut Tree Café – the bar where the purged characters from 1984 spend their last few months in isolation, irrelevancy and waiting for the axe to fall. HSBC and Standard Chartered’ future is window dressing the new Hong Kong. HSBC has become as yesterday as Deutsche Bank. 

It could have been so different.

In the early 2000s HSBC’s tag line was The World’s Local Bank. The Hexagon Logo dominated airports and appeared everywhere. Its ambition was to generate one third of its profits from each of the main global markets; Asia, Europe and North America. By market capitalisation it was the largest bank on the planet. When it bought US sub-prime credit lender Household in 2002, it was a clear signal the bank was on the move with expansion plans everywhere. 

I joined HSBC in 2002. It was a bit of a shock after 10 years at an aggressive but highly innovative US investment bank. 

HSBC people were lovely. They were friendly, they were nice. Yet, they were fiercely tribal and regional in their mindset. There was a cadre of International Officers who’d been drilled in the HSBC tau of things since they joined straight from school. The regarded outside hires as mere hired hands. You could not argue with the IOs - they knew best. And then there were the old Hong Kong hands, trading hotshots from Hong Kong who knew even better. They’d been big fish in the small pool that was then Asia. They couldn’t grasp that Wall Street and City traders swam in much larger more aggressive oceans. The firm was naturally hierarchical in the way only a thoroughly English bank could be - even though its DNA was broadly Presbyterian Scots!  

Yet, the bank failed to make much a mark on the global markets. It owned multiple diverse and unconnected business, united only by the logo. The way the bank’s independently minded German operation operated had nothing to do with the London hub. The Paris operation delighted in doing things differently. Asia had little interest in what New York or London were doing. It sold global clients a grand vision of access to Asia – but any second rate US firm knew more of the top Asian accounts. 

Successive waves of hired guns were hired to enliven its sub-par investment banking activities, but without much enthusiasm from across the firm which remained siloed. The senior management were good, knew the issues and the bank– they were some of the best in the business. But they were trying to run an enormous bloated bureaucracy of dissimilar banking businesses, investment and commercial banking operations, consumer banking around the globe, an Asian franchise, while trying to grow new businesses in areas they perceived the bank understrength. They faced pushback from local fiefdoms, and became jacks of all and masters of nothing. 

The crunch came following the global financial crisis in 2007/08. HSBC was the only UK bank that avoided disaster and bailout. (So did Barclays, but by the skin of their teeth and some dubious chicanery which Amanda Stavely will no-doubt shortly reveal in court.) Household went from being an inspired purchase to toxicity overnight – and dragged the whole North American operation down. A succession of banking scandals in Latin America followed – HSBC discovering to their shock that putting the logo on a Mexican bank did not suddenly cleanse it of endemic corruption and drug money laundering. 

The result was a bank that was no longer managed from growth and the future, but in order to placate the regulators.  

This is the critical lesson of HSBC. The brand was brilliant but hollow. Its’ businesses were individually good, but collectively poor. Rationalising them into a strong single force was a massive ask – and would have required more than the best banking management on the planet. But that management was totally focused on placating the regulators to avoid them purging the bank. At one time the board seriously feared the US SEC might close them down as more South American scandals came to light. 

While US banks thrived through the 20-Teens HSBC plodded and became more bloated. Its ambitions a global bank vanished like an early morning mist. It contracted. Asia’s share of profitability – to be blunt, Hong Kong savers - rose through 80%. It became classically squeezed in its home market. The levels of dissatisfaction with its consumer banking division means it’s among the most complained about banks. 

I figured out how bad things were a few years ago when I walked into the Premier Branch of HSBC at its Canary Wharf Global HQ a few years ago. No one greeted me. There were last week’s papers sprawled across a table, and dead pot plant in the corner coated in dust. I pressed the desk bell, and a bored looking girl sauntered out to tell me to go downstairs to the public branch because she was too busy to help. I sold all my stock soon after.

Except that it is, it wasn’t the fault of senior management. They tried. But the bureaucracy won. Banks run to please regulators rather than customers seldom thrive. Across the bank the middle management are shuffling papers and waiting for the a long-delayed axe to fall as cuts are finally enacted. 

It’s a shame. The Home for Scottish Bank Clerks will join the list of other banks that once were contenders…..

Published:6/4/2020 7:53:57 PM
[Markets] 'A Child Mob Is In Charge Of The NYT': Cotton Slams Paper Of Record After Op-Ed Turmoil 'A Child Mob Is In Charge Of The NYT': Cotton Slams Paper Of Record After Op-Ed Turmoil Tyler Durden Thu, 06/04/2020 - 20:12

Update (2003ET): A 'child mob' is in charge of the New York Times according to Senator Tom Cotton (R-AK), who appeared on Fox News to discuss the paper's internal civil war in which young, 'woke' staff are revolting over Cotton's Op-Ed calling for the military to support US police forces during civil unrest, while older NYT staff argue that divergent opinions from their own deserve a platform.

"My Op-Ed doesn't meet the New York Times' standards," said Cotton. "It far exceeds their standards, which are normally full of left-wing, sophomoric drivel," he added.

Cotton then slammed the paper's editor and publisher for flip-flopping on their decision to stand behind publishing Cotton's commentary, only to fold like a cheap suit "in the face of the woke mob of woke kids that are in their newsroom."

"The New York Times has run editorials from Vladimir Putin, Recep Erdogan, by the Taliban - no problem there. But run one editorial from Tom Cotton on a position that's supported by 58% of the American people - that we have a duty to protect our citizens' lives and livelihoods, well, 'we're gonna have to review our processes and we're gonna cut the number of Op-Eds that we run,' said Cotton.

"A child mob truly is in charge at the New York Times tonight."

*  *  *

While the New York Times self-immolates over the Tom Cotton Op-Ed - which they now say "did not meet its standards due to a rushed editorial process," a new Morning Consult poll shows that 58% of voters - including 48% of Democrats, say they support the use of US troops to supplement city cops amid the protests.

Clearly the Times is far too woke for their own good.

*  *  *

A long-simmering culture war at the New York Times, once the undisputed national paper of record, has burst into public view on Thursday as a group of young "woke" staffers at the paper denounced the opinion section's decision to publish a column penned by GOP Sen. Tom Cotton urging President Trump to call in the military to restore order in cities across the US where violence and looting have broken out.

By now, more police officers have been killed since George Floyd's murder after a Minneapolis police officer kneeled on his neck, cutting off circulation. An autopsy report blamed the officer's decision to pin Floyd to the ground by his throat as the cause of death. The office is now facing second degree murder and manslaughter charges. But leftists continue to insist that all opposition to the looting in violence is a fascist dog whistle. Whether you think Cotton is an incorrigible fascist, or you agree with his position, the notion that a small but vocal minority of the body politic is pushing for the active suppression of political speech.

In a twitter thread, NYT columnist Bari Weiss - who has frequently attracted the ire of the "woke"/DSA/Bernie Bro faction, which hates "neoliberals" just as much as it hates "conservatives" (aka fascists, since everybody who isn't a "democratic" socialist is a fascist, in their view) - explains the division between the younger "woke" reporters/staffers, and the older liberals, with executive editor Dean Baquet, the paper's first black executive editor, caught in the middle.

Of course, many of the NYT reporters and staffers who denounced the op-ed also denounced their colleague's take. One reporter even said the very decision to print the op-ed put the paper's black reporters "in danger".

In a post weighing in on the debate, the Columbia Journalism Review argued that Cotton's views shouldn't have been published because it was "built on lies". However, the sections of the paper that it described as lies weren't lies at all, but descriptions of the chaos across the country, recounted with perhaps a touch of hyperbole. But leftists frequently test the bounds of what's believable, like when they accuse crime reporters of "spreading false narratives" when they report on black-on-black crime statistics.

The problem with this idea of the Times as an open forum for views of all stripes — no matter how abhorrent — is that by opening the door to all “operative opinion” (as a member of the Opinion section described it to me a couple of years ago), the Times becomes a platform for those who are hostile to its core values and at direct odds with the New York Times Company mission to “seek the truth and help people understand the world."

The core problem with Cotton’s column, it seems to me, isn’t that its arguments are painful or dangerous (though they are those things too). It’s that it’s built on lies. “This week, rioters have plunged many American cities into anarchy, recalling the widespread violence of the 1960s,” it begins, before trotting out hyperbolic (and false) phrases like “the riots were a carnival for the thrill-seeking rich as well as other criminal elements,” “orgy of violence,” and “cadres of left-wing radicals like Antifa infiltrating protest marches."

Recent days have been marked by looting and violence. But the violence has sometimes been prompted by the police themselves, and the incidents getting the most attention have been isolated to a few commercial districts. The areas around the protests (to say nothing of the entirety of “American cities”) have been relatively calm and peaceful. As Davey Alba, a Times reporter who covers misinformation, pointed out on Twitter, the paper’s news side has already reported how promoting claims of unbridled urban unrest is part of the “untruths, conspiracy theories, and other false information…running rampant online” and being pushed by Trump and his allies.

Remember: These are the same people who forced their employers to describe riots as "protests" and looters as "demonstrators" leading to jarring headlines like "Violence and looting rage as George Floyd protests lead to clashes with cops in several states".

The notion that we can trust them to be arbiters of the truth as simply laughable.

Published:6/4/2020 7:23:50 PM
[Markets] Shenzen Adopts China's First Personal Bankruptcy Laws As Small Businesses, Freelancers Face Financial Ruin Shenzen Adopts China's First Personal Bankruptcy Laws As Small Businesses, Freelancers Face Financial Ruin Tyler Durden Thu, 06/04/2020 - 19:45

Surprisingly enough, considering that it's a Communist State founded - at least, in theory - on the principles of social justice and equality, China doesn't have personal bankruptcy laws, and individuals who are saddled with debt, medical or otherwise, are typically held liable for these debts until death.

However, back in 2007, as Beijing shifted its drift toward 'economic liberalization' into hyperdrive, the country adopted corporate bankruptcy laws. Corporate bankruptcies have surged in recent years, and earlier this year, we discussed expectations that the number for 2020 would be even higher, as the coronavirus upends the Chinese economy.

Now, Shenzhen, known as the "Silicon Valley" of the mainland, has drafted China’s first personal bankruptcy laws as the southern city prepares for what's expected to be a wave of bankruptcies, particularly among the freelancers and smaller contractors common in China's tech sector. The rules are intended to give "honest and unfortunate" debtors the chance to escape the mire of debt and make a comeback.

Despite corporate bankruptcy laws nationwide since 2007, individuals are still held personally liable for business debts, which makes it virtually impossible for entrepreneurs to be 'okay' with failure, like American entrepreneur gurus have advised.

China's personal bankruptcy process bears certain - shall we say - "Chinese characteristics". For example, the state will monitor the finances of those who file for personal bankruptcy for three years.

The draft rules, open for public comment until June 18, allow Shenzhen residents who cannot pay their debts to apply for personal bankruptcy if they have paid social insurance in the city for at least three years.

Once approved, applicants will spend at least three years in a supervised “probation” period before all or part of their debts are wiped clean. During this time their expenditure will be supervised, the draft rules said.

Other major Chinese cities are expected to follow in Shenzen's footsteps as Beijing cranks up the stimulus and hastily reopens its economy. To prevent a second wave, it has embraced dramatic tactics like mass surveillance testing, which were used to test every citizen of Wuhan, something China purportedly finished doing last week (affording to state media).

Reuters claimed 76 companies filed for bankruptcy with the Shenzhen Intermediate People’s Court in May, up 85% from a year earlier. So-called individual businesses (in many cases freelancers) making up 3.3 million of the province's commercial entities, and accounted for a large share of those filing.

"After the epidemic, it’s unclear just how many business owners will be forced on to the country’s defaulter list if they fail," said Yin Yanrong, a partner in the Guangdong Baocheng law firm.

On the other hand, creditors who owe more than 500,000 yuan ($70,228.66) will also be able to petition for liquidation of debtor companies.

China has built its explosive growth on a mountain of bad debt. What's going to happen when investors in the country are forced to take losses on "safe" securities for the first time?

Published:6/4/2020 6:53:16 PM
[Markets] Market Extra: Hormel’s $1 billion debt deal sees demand amid COVID-19 battle at meat processing plants Pork-products giant Hormel taps the corporate bond market to borrow $1 billion on Thursday, as the company and others work to tamp down new infections of COVID-19 at meat-processing plants.
Published:6/4/2020 6:32:12 PM
[Markets] Top NYC Health Official Says "Racism" To Blame For Imminent COVID Spike (Not 1000s Of Demonstrators Gathering in Close Proximity) Top NYC Health Official Says "Racism" To Blame For Imminent COVID Spike (Not 1000s Of Demonstrators Gathering in Close Proximity) Tyler Durden Thu, 06/04/2020 - 19:25

Authored by Paul Joseph Watson via Summit News,

A top health official in New York says that if there is a second spike in coronavirus cases, “racism” will be to blame, not thousands of demonstrators gathering in close proximity.

Yes, really.

Mark D. Levine, the Chair of the New York City council health committee, tweeted, “Let’s be clear about something: if there is a spike in coronavirus cases in the next two weeks, don’t blame the protesters. Blame racism.”

This is the same guy who back in February urged New Yorkers to congregate in large numbers to celebrate the Chinese Lunar New Year parade as a show of “defiance” against the COVID-19 “scare”.

For weeks, the left and the media denounced and publicly shamed anti-lockdown protesters for “killing granny” because they violated the ‘stay-at home’ order.

They did this despite many of the protesters across the country staying inside their vehicles during the protest.

The media also venerated health workers for counter-protesting the ‘stay-at-home’ dissidents.

Meanwhile, literally thousands upon thousands of Antifa and Black Lives Matter demonstrators staged mass protests, some of them violent, and were lauded by the left and the mainstream press.

As we document in the video below, health workers even staged a photo-op where they applauded left-wing activists for flagrantly violating ‘social distancing’ rules.

Because, apparently, coronavirus is ‘woke’ and takes a break from infecting people, so long as they’re championing anti-American causes.

*  *  *

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Published:6/4/2020 6:32:12 PM
[Markets] Dow Jones Futures: Coronavirus Market Rally Rotation Continues With Tesla Back In 'Friend Zone'; Slack, RH Lead Key Earnings Movers Late Dow Jones futures: Coronavirus stock market rally sector rotation continued, with airlines soaring and growth names falling. Tesla is in the friend zone. Slack and RH led earnings movers. Published:6/4/2020 5:53:23 PM
[Markets] Police Use Contact Tracing And Big Tech To Identify Protesters Police Use Contact Tracing And Big Tech To Identify Protesters Tyler Durden Thu, 06/04/2020 - 18:45

Via Mass Private I blog,

Countless warnings about how law enforcement could use contact tracing apps to monitor people have gone unheeded.

As revealed, police are using contact tracing to identify protesters’ affiliations.

According to Minnesota Public Safety Commissioner John Harringon, officials there have been using what they describe, without going into much detail, as contact-tracing in order to build out a picture of protestor affiliations — a process that officials in the state say has led them to conclude that much of the protest activity there is being fueled by people from outside coming in.

A Twitter feed titled “Minnesota Contact Tracing” revealed how police are using contact tracing to identify and arrest protesters. “Minnesota Public Safety Commissioner John Harrington says they’ve begun contact tracing arrestees.”

Recently, 100 human rights groups warned that an Apple/Google contact tracing app could be used as a cover to identify activists and minorities.

An increase in state digital surveillance powers, such as obtaining access to mobile phone location data, threatens privacy, freedom of expression and freedom of association, in ways that could violate rights and degrade trust in public authorities—undermining the effectiveness of any public health response. Such measures also pose a risk of discrimination and may disproportionately harm already marginalized communities.

So despite all assurances to the contrary, it appears that 100 human rights groups were right; law enforcement can and will use contact tracing to identify protesters.

As NBC News noted, contact tracers also use geofencing to help identify protesters.

“Geofencing” captures the social media posts of people entering a specific area. The technology locates any cellphones that cross into the area by locking onto their geolocation systems, and then records social media posts and sometimes other data from the phones.

Time exposed how the military (National Guard) uses a classified system called “Secret Internet Protocol Router” or SIPR to monitor protesters. (To learn about Perspecta Inc.’s role click here & here.)

Big Tech’s hands are dirty with federal money paying for new ways to monitor Americans.

A recent Business Insider article describes how police use Big Tech to monitor activists and protesters the moment they walk out their door.

Law enforcement agencies have made full use of high-tech surveillance tools as protests sweep the country following the death of George Floyd. A predator drone operated by Customs and Border Patrol circled above protesters in Minneapolis.

Buzzfeed News warns,

law enforcement has a wide breadth of surveillance technologies that could be used to monitor and target protesters — including controversial facial recognition software Clearview AI, license plate readers, body cameras, and video analysis tools.

Both of these articles reveal a frightening array of Big Tech surveillance devices being used by police nationwide.

Minneapolis police and the Minnesota Fusion Center are also using Clearview AI, BriefCam, Ring doorbell cameras, Axon police body cameras, ShotSpotter and license plate readers to create an intimate view of people’s lives.

BuzzFeed’s article also revealed how police use Arxys “Milestone” software which uses video detection and analytics to identify people.

The Minneapolis Police Department said in a surveillance white paper that it uses Arxys [Milestone] software — a video management tool that claims to offer “video motion detection” and “video analytics” — to analyze CCTV footage.

While both articles do a great job of revealing some of the ways law enforcement can monitor anyone, it really did not go into detail about how invasive Big Tech’s surveillance devices truly are.

Let’s say you use your smartphone for everything; texts, phone calls, pictures, music, etc. — if you also use Alexa or a NEST thermostat or any smart device in your home, these devices collect, store and transmit all that personal data, which police can use to identify a person. Police can also identify people who use a tablet or laptop, because like a phone they have an IP and MAC address.

If you use any of these devices to make online purchases, police can ask those companies to provide details of what you bought and when. Anytime you use a credit/debit or customer rewards card, someone is compiling a database of everything you purchased.

Let’s say you drive or take public transit, police can track your vehicle and they can use facial recognition to identify where you work or which bus or train stops you use.

If you drive or take an Uber or Lyft, chances are your personal information is being recorded and used to build a massive database of your comings and goings. From the moment you step outside of your home, your neighbor’s Ring doorbell or Flock cameras have identified you, your family and your vehicle.

And if they are any social distance snitches in your neighborhood, they have recorded you and reported you to police via Ring Neighbors or Nextdoor.

Thanks to Big Tech, a person’s everyday life is no longer private. Now everything we do is being recorded in real-time. Things like what and where you eat, who your friends and family members are, who your family doctor is or where you worship are all available to law enforcement.

Despite what Big tech, politicians and law enforcement say, AI and smart devices are being used to identify activists and protesters.

Published:6/4/2020 5:53:23 PM
[Markets] The Tell: The market rally will ‘end in tears,’ but for now ‘betting on humanity’ remains the best bet in history, analyst says Riots, disease, joblessness widespread despair — and the S&P 500 index just closed the books on its best 50-session stretch ever. Make sense? Doesn’t even have to anymore?
Published:6/4/2020 5:53:23 PM
[Markets] Daily Briefing - June 4, 2020 Daily Briefing - June 4, 2020
Tyler Durden Thu, 06/04/2020 - 18:10
Senior editor Ash Bennington joins managing editor Roger Hirst to discuss the latest developments in macro, markets, and coronavirus. Bennington and Hirst talk about the trajectory of the global recovery and growth—specifically, they explore the exponential increase in the savings rate, the vicious cycle the Fed might find itself in as they continue to support asset prices, and the potential for "zombification" of corporations through misallocated capital. They also dive into how sentiment is currently driving financial markets, why passive investors may not be prepared for the air pockets of potential drawdowns, and how easy monetary policy actually encourages growth deflation. In the intro, Nick Correa analyzes today’s ECB announcement to expand its Pandemic Emergency Purchase Program (PEPP).
Published:6/4/2020 5:24:26 PM
[Markets] Stock market news live updates: Stock futures edge higher ahead of May jobs report Stock futures rose slightly Thursday evening, drifting higher as investors awaited the Labor Department’s May jobs report and digested very early signs of recovery in the virus-stricken economy. Published:6/4/2020 5:24:26 PM
[Markets] Stock Market Wrap-Up: Why Luckin Coffee and ZoomInfo Were Big Winners Early on, it looked as though Thursday would continue the long winning streak for the stock market. For the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC), however, modest losses were in the cards as investors seemed to curb their enthusiasm after a huge bull market run. For the second day in a row, IPO stocks were in the news, and this time, ZoomInfo Technologies (NASDAQ: ZI) was the star of the show. Published:6/4/2020 4:53:22 PM
[Markets] PagerDuty shares drop 5% despite narrowing loss, big revenue spike PagerDuty Inc. shares were initially up 4% in after-hours trading Thursday after the digital operations management platform reported fiscal first-quarter results that exceeded Wall Street estimates. However, shares slid 5% in the extended session.
Published:6/4/2020 4:28:08 PM
[Markets] When Institutions Fail, Fragmentation And Decentralization Become Solutions When Institutions Fail, Fragmentation And Decentralization Become Solutions Tyler Durden Thu, 06/04/2020 - 17:25

Authored by Charles Hugh Smith via OfTwoMinds blog,

That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history.

The chapter titles of Michael Grant's excellent account of The Fall of the Roman Empire identify the core dynamics of decline:

  • The Gulfs Between the Classes

  • The Credibility Gap

  • The Partnerships That Failed

  • The Groups That Opted Out

  • The Undermining of Effort

Every one of these is a manifestation of institutional failureThe Gulfs Between the Classes (see chart of soaring inequality below) manifests a completely broken economic and social order, and the abject failure of core institutions (for example, the source of wealth inequality, the Federal Reserve).

The Gulfs Between the Classes also reflects our pay-to-play political system, in which wealth buys political power and everyone else gets to watch a pantomime of democracy.

The Credibility Gap is as wide as the Grand Canyon, as unaccountable insiders comfortably secure in institutions do what serves their interests, which can be summarized as: Truth Is What We Hide, Cover Stories Are What We Sell.

Government agencies widen The Credibility Gap with bogus, rigged statistics and complexity thickets ("We have to pass the bill so that you can find out what is in it.") designed to make accountability and transparency effectively impossible.

The Partnerships That Failed include the alliances of various warring elites and the pantomime partnerships of elites and constituencies ("We pretend to obey and you pretend to listen to us.")

The Groups That Opted Out are as yet largely invisible because all the small business owners who closed down and stopped being Tax Donkeys are under the radar, and all the debt-serfs who have renounced their debts are carefully hidden by the appropriate bureaucracies, lest the enormity of the debt-serf opt-outs becomes visible.

The Groups That Opted Out include those who have lost trust in the corporate media, the government's statistical claims and the leadership of failing institutions.

The Undermining of Effort manifests as the impossibility of reforming the institutions that have lost their legitimacy due to self-serving looting, incompetence and the disavowal of accountability, a topic I addressed in my books Why Things Are Falling Apart and Why Our Status Quo Failed and Is Beyond Reform.

When institutions have lost public trust and thus their legitimacy, the solution is fragmentation and decentralization so the unit size is reduced to the point where accountability and transparency can be enforced by the citizenry and/or members.

Management author Peter Drucker (Post-Capitalist Society) noted that in the transition to a post-capital economy, legacy institutions in everything from higher education to healthcare are the wrong unit size, meaning that they are too large to be effective, accountable and transparent, as their sheer mass encourages processes and thickets insiders can use to avoid accountability and transparency.

When fiat currencies fail, fragmentation and competition between transparently priced currencies will be the solution. The ideal solution is a spectrum of currencies ranging from bitcoin and other mined cryptocurrencies to privately issued gold-backed currencies, state-issued gold-backed currencies, local currencies intended for use in local economies, and my proposed labor-backed currency which I outlined in my book A Radically Beneficial World.

Politically, city-states on the model of the Hanseatic League may prove to be the appropriate unit size, a topic Mark, Jesse and I discuss in our latest podcast AxisOfEasy Salon #6: The Hanseatic League of Decentralized Crypto-States (55:44).

That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history. The current travesty of a mockery of a sham system will fragment no matter how desperate the looters, parasites and predators are to maintain their swag.

*  *  *

My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

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Published:6/4/2020 4:28:08 PM
[Markets] Slack revenue tops $200 million for first time, but stock tumbles on forecast Slack revenue tops $200 million for first time, but stock tumbles on forecast Published:6/4/2020 3:54:24 PM
[Markets] Ideas For Righteous Revolution - Deeper Into The Fourth Turning, We Go Ideas For Righteous Revolution - Deeper Into The Fourth Turning, We Go Tyler Durden Thu, 06/04/2020 - 16:45

Authored by Adam Taggart via,

As protests continue across America, it’s clear that there’s widespread frustration and anger held by a large percentage of the population who feels downtrodden by the status quo and demoralized by slim prospects for things getting better.

I’m by no means an experienced revolutionary, so take everything that follows with a massive boulder of salt. But watching the nightly riots raises the question: Is there a more effective way to create positive societal change?

I spend a lot of time analyzing and criticizing the worsening and morally unjust equality divide that has accelerated over recent decades. In my opinion, most of the major ills in today’s society have their roots there. The recent death of George Floyd has served to emphasize how certain communities bear more of the brunt of this inequality than others. And very understandably and predictably, more and more of these communities are reaching their breaking point.

So, if the objective is to engage the current power structure and influence it to change, presented below is a preliminary exploration of several methods that may offer better odds for success than what we’ve seen over the past week.

Focus On The Cracks In The Armor

The current system is not going to willingly change. Those who control it receive too much benefit from the status quo to give up their advantage by choice.

As John Kenneth Galbraith aptly put it:

“People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.”

Therefore, success in changing the status quo lies in making it too painful to continue.

Which leads to the questions: How can we, the oppressed masses, do that? What agency do we have?

Riots, with their violence and destruction, are often counter-productive. Yes, they generate media coverage, but they also galvanize central control. Political leaders now see themselves involved in a just crusade against mob rule; so they commit more tightly to ‘restoring order’ and to not letting ‘thugs’ direct the action. Police and/or military involvement ramps up and a lot of demonstrators can become collateral damage with little change to the system to show for it.

So, how can the populace create enough discomfort for those at the top to effect change?

By strategically focusing their collective power on weak points within the system. By targeting the cracks in the armor and pressing them hard via coordinated action that is — and this is essential — peaceful and legal.

Chris and I want to be clear on this: while we understand the tremendous fear, anger and frustration many of the seriously aggrieved rightly feel, and while we completely agree that the deeply unfair status quo needs massive and immediate reform, we don’t support violence against others nor the destruction of property and livelihoods. Not only do those tactics undermine the moral authority of any protest, we don’t think they’re effective in producing long-term positive change.

Ideas For A Righteous Revolution

Elements of a righteous revolution for our modern era could include:

1. Boycotting The Big Banks

The lifeblood of today’s economy is credit (i.e. debt).  Or to be more accurate: exponentially increasing credit.

As growth in credit slows, economic instability skyrockets.

As a visual of this, note the period in the below chart where Total US Credit barely dipped from 2008-2009. That little wiggle nearly destroyed the global economy:

Therefore a social movement that impairs the growth of credit is one that will get attention.

The biggest engine of credit growth is the banking system, which is in the business of making loans. In fact, banks are able to generate 10x more loans than they hold in deposits through the process of fractional reserve lending.

The big national and international Too Big To Fail banks are by far the most important institutions for maintaining the status quo. They fund and grease its smooth operation.

So anything that throws sand in those gears, like a national boycott of the big banks, will get noticed.

If a meaningful percentage of US households suddenly moved our savings and banking services out of Bank of America, JP Morgan Chase, Citibank and Wells Fargo, and into small local savings banks and credit unions, that would send a powerful message.

Those four banks hold more than $4 trillion in customer deposits. Let’s assume 5% of that, $200 billion, walked out the door. Given the 10x nature of fractional reserve lending, that equates to $2 trillion(!) in lost loan potential.

That’s hitting the banks, and the US economy, where it hurts. Imagine the pain if 10% or even 20% of deposits left this way?

And imagine the beneficial impact this movement of capital would have at the local level. Today, the lion’s share of bank deposits goes to these TBTF institutions and are then loaned out to massive corporations to use in advancing their already grossly unfair advantage. Wouldn’t it be far preferable to fund development in your community instead?

Imagine further the signal such a “banking revolt” would have if orchestrated to happen on the same day. Banks are required to hold only a small fraction of reserves on hand at any given time. Enough withdrawal demands occurring simultaneously would essentially create a run on the bank (remember this scene from It’s A Wonderful Life?).

Co-incident runs at multiple TBTF banks will get a LOT of notice. From the media, from our political leaders, and from those running the system. And no one gets tear gassed, beaten, jailed, or killed.

2. Living Debt-Free

Complementing the idea above, another way to reduce total credit is to adopt a debt-free lifestyle.

US consumers currently hold over $20 trillion in mortgage, credit card, auto and student loans. Decreasing that by even just a few trillion would be exceptionally concerning to the banking industry.

Debt is extremely hard to avoid taking on in today’s world — given our current way of living. And once in debt, most households are wage-slaves to the bank until their balances are paid off (which they aren’t, ever, for most).

But there are ways to change our lifestyles to be debt independent. They are not easy at present. But the personal freedom that results, as well as the financial freedom that grows with savings that otherwise would have been directed to interest payments, are immense.

A social movement that elevates debt-free living as a driving cause will unleash all sorts of creativity for how to make it possible and enjoyable: co-habitation, communal resource pooling, new models for education/health services/commerce, and many others.

And by making ourselves less captive to the system currently controlling us, we gain more bargaining power with those running it.

3. Converting The Media

Right now, the mass media has proven itself little more than a parrot of what its corporate backers tell it to report.

Criticism of the status quo and worthy ideas for its evolution are often derided, demonized or simply not mentioned.

How do you influence a corrupted media to report on the ideas you want? Speak to its self-interest.

Most large mainstream media companies are in financial straits. The digital era destroyed the old publishing business models and the survivors are struggling to find a sustainable way to operate profitably.

Here’s one way a citizen movement could use that to its advantage:

  1. Have 100,000 people sign up for the New York Times print+digital package on the same day.

    • Given current promotions, that’s an immediate out of pocket cost per person of $40. Total immediate revenue to NYT: $4 million; total projected customer value to the NYT over the next two years: $156 million

  2. Have those people then send the executive editor of the NYT an email saying they will immediately cancel and demand a refund if the news organization doesn’t start balanced reporting on key topics important to the movement (e.g., the economic and social inequality being created by the Federal Reserve’s actions, or exposing injustice when corrupt politicians/executive/cops aren’t held accountable for their crimes)

Staring at an unexpected windfall of millions of dollars and many thousands of new subscribers, one that could disappear in a moment, the executive staff at the NYT would consider this opportunity very seriously. Even if they rejected it, the commercial power of the topics being requested will shape their future thinking and coverage.

This simple strategy is scalable and can be deployed to nearly any major media organization. And it uses the weight of the collective to press hard in a peaceful, legal way on the weak spot of an influential player in the system — providing both a carrot and a stick for constructive change without anybody exposed to the threat of violence.

4. Exposing The Villains

Government and corporate institutions control the world we live in. But it’s important remember these institutions are run by people — people who have daily commutes, social outings, dogs to walk, etc, just like the rest of us.

Continuing on the idea of applying collective pressure to the weak points of the system, it’s easy to make decisions with far-reaching impact from the perch of a boardroom table. It’s a lot harder to do so when staring into the judging eyes of the people who will suffer from the repercussions of those decisions.

The members of the Federal Reserve Open Market Committee, the managing editors of the major media outlets, the C-level executives of the TBTF banks, — these are real people.

40 million US workers (that we know of) have lost their jobs over the past two months. Imagine if just a few thousand of these folks peacefully lined both sides of the streets that a few of these senior policymakers take to work, holding signs asking the tough questions like “Why Is The Fed Killing Savers?” “Is Blackrock Really More Important Than Black Lives?”

Candelight vigils in their neighborhoods. Photos mailed to their homes of the victims pushed further into despair by the growing inequality their current policies create. Questions asked respectfully from a non-threatening distance on the street, in the grocery store, at a restaurant — anywhere public and where legally allowed.

It may not work on every target, but most humans can’t ignore and remain insensitive to such visible pain of so many others for long. Most, if not all, of these people believe they are “doing god’s work” and don’t see themselves as villains. A large and persistent demonstration like this can be quite effective in shaking their faith in their current beliefs and opening the door for them to realize their actions are responsible for much more damage than they’ve realized.

Again and especially here, peaceful non-violence is essential. To have credibility and integrity, the movement needs to be far above the evils it’s rejecting. Should it devolve into the abuse of a single individual at mob hands, the movement loses its moral legitimacy.

What Is The Platform?

The above are just ideas. None of them is a silver bullet. There may be, and probably are, many better ones out there for the righteous revolutionary to adopt.

The point of this piece is to demonstrate that there are effective options for protest and rebellion that don’t require bloodshed, looting and property damage. And that may prove materially more effective than confrontation in the streets at resulting in positive change.

But whatever tactics are ultimately pursued, it’s key to have an ideological platform underlying the revolution. You can’t just be “against” the current order; you need to stand “for” a constructive vision or set of principles for doing things better.

As Buckminster Fuller said:

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Your platform sets the north star that your movement will organize behind and orient itself against. Distill your message into a small number of clear, big principles (“Equal treatment under the law”, “Govern within our means”, and “Main Street over Wall Street” are a few good ones to consider) and make sure everybody rallying to your banner knows what they are.

Should you indeed be successful in bringing the existing power brokers to the negotiating table, or replacing them completely in the case of extreme revolution, these principles will determine your resulting programs and policies. Be sure to put as much effort into clarifying these up front as you do into your protest of the current regime.

Deeper Into The Fourth Turning We Go

Look, as I admitted up front, I’m no experienced social warrior. The ideas above are conceptual; I can’t speak with the authority of having led people to put them into practice (though I do live debt-free and am a big advocate for that lifestyle).

We have warned for years in our writing here at that we are all now well into a Fourth Turning, where the old order breaks down and a new one, often violently, replaces it.

The protests and riots we’re now seeing are not unexpected. In fact, we anticipate growing social unrest over this next decade as those in control become more desperate in their actions to preserve their advantage while the rest of society rebels harder for a new and better order.

Our general advice to concerned individuals is to prioritize staying safe and reducing your vulnerability profile to crime and violence. That remains the case.

But collectively, if we’re against much of what’s happening around us and to us, we need to stand for something better if we want a brighter future.

Chris and I plan to take Buckminster Fuller’s advice and devote some serious brain cycles to what principles we’d like to see in a new model to replace the imperfect one we’ve currently got. In the process, we’ll welcome any suggestions you may have to offer.

Published:6/4/2020 3:54:24 PM
[Markets] Wall St. pro says the current rally reminds him of March 2009 As the S&P 500 (^GSPC) hovers around 40% from its March 23rd low, one veteran strategist is reminded of the massive rally that took place when the markets were emerging from the financial crisis 11 years ago. Published:6/4/2020 3:54:24 PM
[Markets] Slack revenue tops $200 million for first time, but stock tanks after slight forecast change Slack Technologies Inc. revenue topped $200 million in a quarter for the first time, but the stock still sank hard Thursday afternoon after closing at record highs in recent days.
Published:6/4/2020 3:54:23 PM
[Markets] Gold Gains As Investors Dump Dollars, Bonds, & Stocks Gold Gains As Investors Dump Dollars, Bonds, & Stocks Tyler Durden Thu, 06/04/2020 - 16:01

The Nasdaq 100 reached a new all-time record high today... because, fun-durr-mentals...

Source: Bloomberg

This is Madness...

...No, This is The Fed!!

1. What is driving the swift recovery of equities?

a) Fed – 73%

b) Earnings Optimism – 0%

c) Labor market recovery – 6%

d) Further fiscal stimulus – 5%


But, after the Nasdaq 100 tagged all-time record highs, sellers were quick to appear...

...but as the afternoon rolled around, dip-buyers were back lifting The Dow to unchanged, but another wave of selling hit in the afternoon...only to be rescued by another 1550ET apnic-bid pushing The Dow marginally green...

Airlines exploded higher today - seriously, come on!!!

Source: Bloomberg

Here's why! Because they are the 4th and 5th most widely held stocks on Robinhood...

Here's what JPMorgan's Baker said: "investors appear to be confused on AAL today."

Bank stocks continued to surge this week

Source: Bloomberg

While stocks slipped, Bonds were also dumped with a significant steepening intraday...

Source: Bloomberg

With the 10Y back above 80bps...

Source: Bloomberg

Driving 10Y yields up out of their 3-month range...

Source: Bloomberg

Notably, equity momentum is significantly underperforming value, reverting back to yields...

Source: Bloomberg

The dollar was dumped yet again today (after some gains overnight)...

Source: Bloomberg

This is the biggest 14-day drop in the dollar since Oct 2011 as the EUR explodes higher for the 8th straight day (on higher than expected ECB QE...?) This is the longest streak of gains for euro since 2011

Source: Bloomberg

Cryptos managed gains on the day...

Source: Bloomberg

As the dollar slid, gold rallied back above $1700...

Silver also gained ground, back above $18...

With gold/silver rising for the 3rd day in a row...

Source: Bloomberg

Finally, Bloomberg's Eddie van der Walt points out that raw material and equity prices have become severely disconnected. A correction will probably entail both lower stocks and higher commodity prices.

Source: Bloomberg

The Nasdaq Composite Index is trading at a 152x multiple of the Bloomberg Commodity Index, surpassing even the highs seen during the Dot Com bubble. The average since the end of 2001 is nearer 37. That divergence stems from the Nasdaq approaching record highs set earlier this year while commodities languish near pandemic-crisis lows.

And then there's this utter bullshit... Small Caps are the most overvalued... ever... by a bloody mile! (h/t @BiancoResearch)

Source: Bloomberg

As a reminder - this is what none other than Jay Powell said in 2012:

"I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy."

Trade accordingly.

Published:6/4/2020 3:21:53 PM
[Markets] Dow ekes out gain for fourth session as S&P 500 snaps winning streak Dow ekes out gain for fourth session as S&P 500 snaps winning streak Published:6/4/2020 3:21:53 PM
[Markets] Dow ekes out 4th straight daily gain ahead of May jobs report Stocks ended mostly lower Thursday, though the Dow Jones Industrial Average eked out a tiny gain to extend its win streak to four sessions. The S&P 500 and Nasdaq Composite, meanwhile snapped a four-day run of gains. Equities had rallied strongly this week, boosted by signs the economic contraction caused by the COVID-19 lockdown was beginning to ease. The Dow ended the day up around 12 points, or less than 0.1%, near 26,282, while the S&P 500 gave up around 11 points, or 0.3%, to close near 3,112, according to preliminary figures. The Nasdaq gave up 67 points, or 0.7%, to finish at 9,615. Earlier, the Nasdaq 100 touched an all-time intraday high. It ended the day down 75 points, or 0.8%. Another 1.9 million U.S. workers applied for first-time unemployment benefits in the week ended May 30, the Labor Department reported Thursday, slightly higher than the 1.8 million consensus among economists polled by MarketWatch. The data suggest that the economy may have seen the worst of the impact of the epidemic. The May jobs report due Friday morning is expected to show the U.S. economy shed another 7.25 million jobs last month. Published:6/4/2020 3:21:53 PM
[Markets] Capitol Report: Trump’s protest response undermines U.S. fight against China’s Hong Kong crackdown, Democrats say The Senate Banking Committee held a hearing Thursday on potential U.S. sanctions against Hong Kong for China’s recent approval of legislation that could undermine democratic freedoms in the region, but Democrats and expert witnesses argued a first important step is President Trump to lead by example.
Published:6/4/2020 3:21:53 PM
[Markets] Amazon Bolsters Its Shipping Ambitions. Here What That Means to FedEx and UPS. Amazon is leasing more planes from its logistics partner, demonstrating its commitment to controlling more of its own logistics as online shopping volumes grow. Published:6/4/2020 2:53:39 PM
[Markets] Airlines, retailers, even companies from Germany — these are the businesses borrowing billions from the Bank of England The Bank of England has lent more than £16 billion of coronavirus loans to 53 U.K. and overseas companies so far.
Published:6/4/2020 2:53:39 PM
[Markets] The Staggering "Powell Bubble" In Just One Amazing Chart The Staggering "Powell Bubble" In Just One Amazing Chart Tyler Durden Thu, 06/04/2020 - 15:50

With three in four finance professionals convinced that Fed is behind the current rally thanks to an unprecedented firehose of liquidity which is anywhere between $8 and $12 trillion based on asset purchases, backstops, and guarantees, there is no denying that what we are experiencing now is a continuation of the bubble spawned by Bernanke in 2008, nursed by Yellen and now desperately defended by the same Powell who back on October 23, 2012 said "I think we are actually at a point of encouraging risk-taking... investors really do understand now that we will be there to prevent serious losses."

So how does one quantify or visualize just how big the "Powell Bubble" is? While there are many ways to represent the bubble spawned by the Fed across all asset classes which have become the receptacle of the Fed's unlimited liquidity torrent, but a fascinating one was proposed today by Bloomberg's Eddie van der Walt who writes that "raw material and equity prices have become severely disconnected" adding that "a correction will probably entail both lower stocks and higher commodity prices."

As the Bloomberg commodity analyst notes, the Nasdaq is trading at a 152x multiple of the Bloomberg Commodity Index, surpassing the highs seen during the Dot Com bubble by almost a factor of two!

In other words, the bulk of newly created liquidity has flooded into stocks even as commodities - which tend to be a far better representation of the overall economic state - languish. The average ratio since the end of 2001 has been nearer 37. That divergence  stems from the Nasdaq approaching record highs set earlier this year while commodities languish near pandemic-crisis lows.

As van der Walt concludes, "And while the tech-heavy shares in the Nasdaq aren’t big consumers of industrial metals and oil, this matters because it shows just how disconnected stock prices have become from the real economy. Something has got to give."

He's absolutely right, but that "something" won't give without an existential fight from the Fed's Powell: while we excerpted from his comments above, below is all one needs to know courtesy of the Oct 2012 FOMC Minutes, in which Powell explained precisely what is going on:

The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated. And we will be able to tell ourselves that market function is not impaired and that inflation expectations are under control. What is to stop us, other than much faster economic growth, which it is probably not in our power to produce?

I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.

Incidentally, for those who want to fight the Fed, well there's your pair trade: short the Nasdaq and go long the Bloomberg commodity index.

Published:6/4/2020 2:53:39 PM
[Markets] Retail stock investors are the least bearish since the S&P 500 hit a record high Retail stock investors are the least bearish since the S&P 500 hit a record high Published:6/4/2020 2:22:39 PM
[Markets] Risk-averse investors ‘cannot ignore’ this path to profits, analyst says Bitcoin enthusiasts generally aren’t known as conservative mom-and-pop type investors. One look at this chart and it’s pretty clear the kind of stomach it takes to play the game: Published:6/4/2020 2:22:39 PM
[Markets] Tesla Model 3 is the top-selling car in the U.K. for a second month but as showrooms reopen it could be overtaken Elon Musk’s Tesla has had the top-selling car in the U.K. for two months in a row as car sales have been severely hit by coronavirus
Published:6/4/2020 2:22:39 PM
[Markets] JPMorgan Is "Counting The Days" Until The Second Covid Wave JPMorgan Is "Counting The Days" Until The Second Covid Wave Tyler Durden Thu, 06/04/2020 - 15:20

As governments ease lockdown restrictions, attention is focused on the risk of a second wave of COVID-19 infections. And, as JPMorgan writes, "the message from most people is: so far, so good, although as everyone also recognizes the lags with COVID-19 are long, so that three-to-four weeks need to pass in order to see how easing restrictions will impact new infections."

Encouragingly, as JPM economist David Mackie points out, we have passed that point for a number of European countries. For example, Denmark started to ease lockdown restrictions 49 days ago without any sign of a second wave of infection. But, in JPM's view, "this way of counting the days is misleading, and it will take a while longer before we know whether restrictions have been eased too much or not."

In a report titled "Counting the days: risks of a COVID-19 second wave", Mackie writes that the collapse in mobility when lockdown restrictions were imposed played a key role in driving the reproduction number (R-naught) below one. But, mobility has not been the only development weighing on the reproduction number, with JPM claiming that a number of other developments, including the buildup of immunity in the population, the reduced susceptibility of young people, the prospect of self-isolation of vulnerable individuals, the impact of weather and the impact of wearing masks and increased hygiene, all exert downward pressure on the reproduction number as mobility increases.

The bank's analysis suggested that only when mobility increases more than halfway back from full-lockdown levels to pre-lockdown levels is there a risk of the reproduction number moving back above one. This suggests that, in assessing the risk of a second wave (or counting down the days to one), we should start counting the days from the moment that mobility in each country returns to the halfway mark.

This is what the JPM strategist has done in the table below, and it presents a much more cautious picture. As Mackie writes, "if we assume that it takes up to 28 days before we will see clear signs of a second wave, then only Norway and Denmark are close to that point. For the rest of Western Europe, we need to wait a while longer. Indeed, although mobility has increased in the United Kingdom and Italy since the lockdowns were eased, neither country has seen it return to the halfway mark."

The bank's conclusion: "A second wave of COVID-19 infection may or may not come to Western Europe. But it is much too early to assume that it won’t."

One final note: we are confident that the largest US bank being one of the biggest beneficiaries of a new round of massive QE to be launched by the Fed if and when a second wave hits, had almost no impact on this analysis.

Published:6/4/2020 2:22:39 PM
[Markets] Liquor distiller briefly breaks banks’ stranglehold on China’s market-cap crown Baijiu producer Kweichow Moutai swipes crown on an intraday basis on Tuesday as the most valuable company in China.
Published:6/4/2020 1:54:18 PM
[Markets] "This Is Jay's Market": 73% On Wall Street Say The Fed Is Behind The S&P Rally "This Is Jay's Market": 73% On Wall Street Say The Fed Is Behind The S&P Rally Tyler Durden Thu, 06/04/2020 - 14:47

As BMO rates strategist Ian Lyngen writes in "Jay's Market, Just Trading in it", a core theme of trading has been "the remarkable resilience of the equity market despite a shuttered economy, historic job losses and civil unrest across the US."

So to get to the bottom of the question on every trader's mind - just who is behind this rally - BMO sent out a poll to its clients where the first question showed a clear consensus for the driver behind the move; "73% offered the Fed as the inspiration behind the S&P 500’s impressive rally", vastly more than those who cited labor market recovery/reopening optimism (6%) greater fiscal stimulus (5%), and progress on Covid-19 treatment (6%). And now that Powell owns this rally, he better not allow to reverse.

1. What is driving the swift recovery of equities?

a) Fed – 73%
b) Earnings Optimism – 0%
c) Labor market recovery – 6%
d) Further fiscal stimulus – 5%
e) Progress in treating/preventing Covid-19 – 6%
f) Other (please specify) – Reopening Optimism/ All of the Above/ Underinvestment

Less relevant to the market's ramp but just as interesting in terms of what markets expect for the Fed to unveil next in the central bank's creeping nationalization of capital markets, were responses to BMO's second special question - when, or even if the FOMC will roll out yield curve control - which were not nearly as clear cut with a wide variety of opinions. 3-6 months was the most common answer with 33%, which points to the September, November, or December meeting as the most probable venue for the introduction of the new policy tool. Within ‘3 months’ or ‘not this cycle’ both took a roughly equal share as the second most frequent reply, so as Lyngen notes, "clearly investors are split on whether YCC needs to be deployed rapidly, or not at all given the state of the economy and recovery. 6-9 months and 9+ months both rounded out the replies with 14% and 12%, respectively."

2. When will the Fed announce yield curve control?

a) Within 3 months – 21%
b) 3-6 months – 33%
c) 6-9 months – 14%
d) 9+ months – 12%
e) Not this cycle – 20%

Finally, an interesting snapshot on how investors respond to data is BMO's question how respondents will react to tomorrow's jobs report: In the event of a disappointment and a Treasury market rally, the clearest takeaway was a reluctance to take profits – only 25% would sell versus a 37% average and the lowest read since October 2019. Meanwhile 11% would join the rally and buy and 64% would do nothing compared to respective averages of 7% and 56%. The other meaningful takeaway was a positive skew on the belly of the curve as 36% thought the next 15 bp in 5-year yields will be higher; well below the 45% average and matching last month’s figure as the lowest since November 2019.


Published:6/4/2020 1:54:18 PM
[Markets] The Dow Is Down. Just Don’t Call It a Bad Day. It’s an upside-down on Wall Street, where winners are losers, losers are winners, and everyone is wondering if the momentum unwind is real. Published:6/4/2020 1:35:19 PM
[Markets] The Simple Case For "Buying Everything" Right Now The Simple Case For "Buying Everything" Right Now Tyler Durden Thu, 06/04/2020 - 14:26

Authored by Adam Button via,

Suspend your disbelief and embrace the free-money future...

The enthusiasm in markets at the moment is bordering on euphoria. Retail money is pouring into the flavour-of-the-day and now FOMO is taking over more broadly.

You have to decide if you're in or out. We all know the risks around the virus and the current economic data and it takes a huge leap of faith to pile in here but betting on humanity has been the best bet in world history.

1) We're in the post pandemic world

You can look at this a number of ways:

  • The virus is somehow weakening and hopitalizations/ICU admissions are falling even with infections high

  • It's only the elderly/sick getting very sick and the rare healthy person but numbers are low enough to be 'acceptable'

  • Summer is helping to cut the numbers

Naturally, you need to watch the data as they're reporting but at this point it's going to take a significant spike to reverse the sentiment on the virus.

2) Fiscal conservatism is dead

Fiscal conservatism died in March when the pandemic hit. I've been writing about it since then.

This is a wholesale generational secular change that is far more important than the virus. The US might have an $8 trillion deficit this year if another stimulus bill passes. At the same time, the Treasury is borrowing at 0.80% for 10-years.

Deficits don't matter anymore. Obviously there is no free lunch but fiscal conservatism doesn't win elections anymore. So why not another $8 trillion deficit next year? What's possible in the economy when government spending is unlimited?

The most-telling headline this week was that momentum had grown in Congress to hash out more stimulus because of the protests. The reaction function of governments is now to spend.

There will be a reckoning and it will mean currency debasement. The S&P 500 crossed 3000 last month on virus optimism but it will one day cross 6000 but not because of economic growth, but because of debasement.

I think this will go on far longer than almost anyone believes. I think it will define the decade as huge deficits everywhere become the new normal.

3) Low rates forever

The paradigm shift in central banks that was announced on Halloween is now complete.

Central banks spent the last decade forecasting inflation that never came. They hiked rates in anticipation of it coming or because they wanted a return to 'normal'. The failure of the policy and forecasts was a constant source of embarrassment.

Now they're flipping the script and the will keep rates low until the inflation actually arrives. Once it arrives they're also talking about letting the economy run hot to make up for the previous shortfalls.

That's a revolution in central banking and it means that zero-rates are here for the foreseeable futures.

There are so many knock-on effects from low rates. Namely, that they make bonds un-ivestible for the majority of investors. Savers have no choice but to pile into equities and hope for the best. The corporate debt-fueled buybacks will be return in no time.

What's so important about the low rates and fiscally unrestrained story is that it lasts way longer than the virus, no matter if it ends this year, in 2021 or 2022.

The other side

I get it. This is all madness. We're going to have 20% unemployment in tomorrow's non-farm payrolls report and it will still be around 10% at year-end. Business are closing at unprecedented rates and they're never coming back. The virus isn't dead and could rage in a second wave. It's all non-sense. The economy is aging and young people are crushed under student debt.

But the choice you have to is either believe in the bull case or get on the sidelines because this party is just starting. Of course it will end it tears and there will be an ebb and flow but unless virus numbers start to spike, it's not going to end soon.

Published:6/4/2020 1:35:19 PM
[Markets] The Most Important Question In Finance Today The Most Important Question In Finance Today Tyler Durden Thu, 06/04/2020 - 13:45

In his latest daily note to clients, DB's Jim Reid writes that it was interesting for him to look back on the note he wrote from 20th April (in what he says feels a lifetime ago) where he wrote the following

"…. when central banks have so far pumped in an annualised $23.4 trillion into the financial system you can see how it’s hard to get a feel for where markets can go. Clearly they won’t keep up that pace of liquidity injections unless economies fall even further but could you really have a situation in 1-2 months’ time where economies are still struggling to fully open and yet equity markets are back at record highs? I don’t think so but you couldn’t rule it out given the ginormous liquidity injections. Crazy times and we haven’t even mentioned the government injections."

Reid says the he has thought "a lot about the themes of this paragraph for the last 6-7 weeks and the only part of this that I now regret are the words I don’t think so" adding that "the rally has indeed been faster than surely anyone could have imagined but it was starting to be clear in late March and April that we were dealing with levels of stimulus that were going to be almost exponential relative to anything seen before in history."

Which bring Reid to what is perhaps the most important question in finance today: will the trillions in stimulus end up being inflationary or deflationary?

For what it's worth, Reid believes that the answer is inflationary, however to present a balanced take, below we lay out the cases for both inflation (by strategist Oliver Harvy) and deflation (by ... ), so readers can decide.

The case for inflation

By Oliver Harvey

The covid-19 crisis will be remembered for many things, and among them will be the long-awaited return of inflation in developed markets. Three factors will support this: macroeconomic policy, political preferences and structural trends.

Take macroeconomic policy first. The policy response to the coronavirus looks very similar to the last financial crisis, except on steroids. Central banks have injected unprecedented amounts of liquidity into the private sector through purchases of private and public sector securities, swap lines and direct lending to the real economy. The Fed’s balance sheet has expanded more in the space of less than two months – from $4.29tn to $6.42tn – than in the four years following the 2008 financial crisis. The fiscal response has been just as aggressive. One calculation suggests that front-loaded US stimulus amounts to 9.1 per cent GDP, more than double that for the last financial crisis. Germany’s discretionary fiscal response – when including deferred measures – amounts to a fifth of its entire economic output.

The problem is that this crisis is very different from 2008, or for that matter 1929, where much of the macro playbook being used by policymakers today was written. 2008 was a classic demand shock caused by a loss of confidence in the banking sector. In a demand shock, fiscal and monetary tools should be used aggressively to bring confidence back.

The current economic crisis is not a demand shock, however. It is first and foremost a supply shock which is now spilling over to demand. Consumers did not start staying away from shops and restaurants because they were worried about their future economic prospects, but because governments told them to. Holidays were not cancelled to shore up household finances but because countries closed their borders. Workers were not furloughed from factories just because of insufficient orders but also because employers were worried about the risk of spreading disease.

Understanding this has very important implications for the policy response to the coronavirus. Most of all, it tells us that massive stimulus is not the answer. In economic parlance, policymakers are attempting to shift the demand curve back to where it was before the virus started, at the same time as holding the supply curve fixed. Less technically, the government is handing out $100 bills when there is nowhere open to spend them.

Government attempts to keep household incomes stable – through job retention schemes announced in Europe for example – have the best of intentions, but the result will simply be more money chasing after significantly fewer goods and services. The result of this will be inflation. Evidence is already growing. Our economists note that food prices in the United Kingdom have risen 0.8 per cent in the last week according to the ONS (an annualised rate of 54 per cent). Pet food prices have risen a truly hyperinflationary 6.2 per cent (annualised: 2,575 per cent). Of course, these two factoids don’t settle the matter, but it is significant that prices on the few number of goods the statistical office can still collect appear to be gathering steam.

Critics of the view of higher inflation like to point out two big disinflationary forces: rising unemployment and an increase in precautionary savings. But unemployment doesn’t have to lead to downward pressure on wages if the unemployed are simply shut out of the labour force which, in the case of workers in sectors such as hotels, restaurants, airlines and retail, is presently the case. For all intents and purposes those industries do not currently exist, and there is a major question mark as to whether they will return in anything like recognisable form for months, if not years, to come.

As for rising precautionary savings, households’ spending and saving behaviour is, as every economist knows, about expectations. As soon as households perceive the price of everyday goods and services starting to rise, their rainy day funds will quickly be raided to buy them.

The second reason that coronavirus will lead to the return of inflation is political. At a very basic level, it is in governments’ interests to generate inflation.

Many have invoked the spirit of the first and second world wars in the present coronavirus crisis. These two episodes in fact provide a useful history lesson as to the consequences of deflationary versus inflationary policy after large shocks. After the First World War, the British government pursued a deflationary macroeconomic policy aimed at shoring up its borrowing credibility, reducing its debt and returning the pound to the gold standard. The consequence was a decade and a half of misery, with persistently high unemployment rates and widespread industrial unrest. Worse, due to the unforgiving arithmetic of weak nominal growth and high interest payments, debt to GDP stood at roughly the same level by the end of the 1930s as it had two decades earlier.

After the Second World War, the British government took a different approach. Rather than seeking to reduce the deficit, it founded the modern welfare state, nationalised swathes of industry and pursued an incomes policy aimed at full employment. The result of this policy was relatively high levels of post war inflation (constrained only by the continuation of rationing) and strong nominal growth. Combined, these far outweighed ongoing budget deficits and interest payments, leading to a fall in the national debt from a peak of well over 270 per cent to below 50 per cent in the late 1970s.

Put another way, policymakers in the West (and for that matter China) simply cannot afford to go the way of Japan following the bursting of its real estate bubble in the late 1980s. Lacking Japan’s high levels of GDP per capita, impressive social cohesion and rapidly declining demographics, perhaps with the exception of Italy in the latter case, a deflationary ‘lost decade’ would spell disaster both in terms of debt levels and at the ballot box.

And when it comes to the electorate, there is no doubt that maximum pressure will be applied on governments to maintain, if not increase, their generous handouts. That includes those for furlough schemes, deferred tax payments and unemployment benefit increases that have been enacted over the last two months to cope with the current and future economic shocks. The political zeitgeist had already turned firmly against austerity before this current crisis hit. Now a Pandora’s Box of government activism has been opened: Reinhart and Rogoff have been replaced by Modern Monetary Theory when it comes to the prevailing mood not just among political commentators but respected economic institutions such as the IMF, who have called for fiscal activism and debt moratoria for well after the initial containment phase.

The third reason to believe that inflation will be the standout macro result from the coronavirus concerns structural forces. Here, we can briefly discuss two: retreating globalisation and the distributional consequences of government policy.

It is now widely understood that one of the key factors behind the secular decline in developed market inflation from the mid-1980s onwards was globalisation. The effects of globalisation on supressing inflation were twofold: first, cross border immigration and the offshoring of production increased the global labour supply, putting downward pressure on workers’ wages in developed economies, particularly among the lower skilled. Second, enhanced competition in the manufacturing sector led to a decline in costs of many consumer products.

Both of these are under threat from the coronavirus. As the World Economic Forum discusses in a recent blog, major companies are re-evaluating the commercial benefits of far flung supply chains in light of their fragility over the last two months.4 Political forces are also at work, with the present US administration pledging to end the country’s reliance on pharmaceutical products from abroad. Finally, immigration regimes are set to become significantly more restrictive, if not closed altogether, until a vaccine inoculates countries against the prospect of a second wave of infections.

Turning to distributional effects, a second round impact from both retreating globalisation and more expansionary fiscal policies is likely to be at least a partial reversal in the recent decline of the labour share of income. This should put upward pressure on inflation: the loss of labour bargaining power has been one important factor behind the weak relationship between labour markets and inflation over recent years.

It is difficult to think of any global event that has such a clear read across into future macroeconomic trends. Policy, political and structural factors all point to rising inflation as a result of the coronavirus. Of course, this has not stopped many economists and commentators from claiming the risk is deflation. In the near term, their argument has been buttressed by a price war between oil producers. The worry, however, is that this is a classic case of looking in the rear view mirror.

And here is "the Case for Deflation", authored by Robin Winkler and George Saravelos

The case for deflation

By Robin Winkler, George Saravelos

Following the extraordinary event of oil prices turning negative, it seems odd to make a case against inflation. Yet a recent dbDIG survey found that a majority of our clients expect the pandemic to be ultimately inflationary. Remarkably, the disinflation argument is anything but consensus.

Don’t put the cart before the horse—this is a huge recession

Our starting point is that the current crisis is a bigger demand than supply shock. Let us assume that the virus disappears tomorrow or (more likely) a vaccine is in place by next year. Our ability to fly, build cars in factories, go to cinemas and football events will all be the same. Our willingness and ability to do so will not. Higher unemployment, more bankruptcies, greater “fear” of the unknown will scar our memories and wallets for many years to come. A group of Harvard economists that modelled the economy recently concluded the same.

Still, even many of those arguing for inflation agree this shock is deflationary in the short run. Eventually, the argument goes, a supply shock will dominate. The problem is that in the long run, as Keynes famously said, we are all dead. For many households and corporates, balance sheet repairs will be imperative for years to come. Corporate debt levels were high before the crisis and are now exorbitant. Government support has mostly come in the form of loans and guarantees —a perfect recipe for a severe debt overhang. Tens of millions of Western households will emerge from the crisis unemployed.

Once deflation takes hold, even in the short-term, it can become self-perpetuating in the long-run. It will clobber already weak inflation expectations and create an irresistible incentive to save. Large-ticket and capital expenditures will be deferred until the risk of further pandemic waves has vanished beyond doubt. With central banks unable to take rates lower, there is no penalty on hoarding cash—classic conditions for a liquidity trap. It will take years for confidence to be fully restored. In the meantime, everyone will spend less. As recent Fed research has shown, the main effect of pandemics over the last 1,000 years has been a big rise in precautionary savings.

Let’s not over-hype the fiscal boost – it is neither big or permanent

Governments have an enormous task on their hands. The fiscal numbers announced are large because the economic shock is huge. To argue that fiscal stimulus is a game-changer is to put the cart before the horse. The important question is not about current stimulus but whether huge deficits will continue deep into the future.

The starting point should be that a big chunk of the fiscal measures announced are loan guarantees rather than fresh new money. There is nothing stimulative about adding more debt to corporate balance sheets. But even the direct stimulus is designed to be temporary and self-calibrating. Consider the employment protection schemes in Europe whose size is purely a function of the unemployment rate and will disappear once employment goes back to normal. The bulk of the US fiscal stimulus is also temporary – households have received a one-off paycheck, more likely to be saved rather than spent, like in 2008. As things stand, the fiscal stance is set to be massively contractionary next year, not expansionary.

If stimulus is extended next year, it will be because unemployment and demand are still weak. Yet even the extension of the stimulus is not a given. The UK Chancellor is already in discussions about winding down the employment protection scheme. Germany suspending the debt brake to deal with a natural catastrophe doesn’t imply Germans are no longer committed to it or indeed bound by law. If things improve, the government will tighten back. Divided US government – as is likely following the US election – is just as likely to lead to partisan politics and restricted spending like the big fiscal tightening experienced during the Obama years. Austerity on public services may be more toxic than in the past. Indeed, the UK’s National Health Service is unlikely to ever be short on funding again. Yet, there is already a debate about raising taxes. This crisis has caused a massive redistribution of income from the young to the older generations. Higher taxation – especially on wealth – should be a far bigger concern than unlimited spending.

And let us not forget China. The Global Financial Crisis is a misnomer insofar as China came through it relatively unscathed thanks to truly massive stimulus. As the Chinese growth boom continued, it provided crucial support to the global economy in the wake of the financial crisis. The rise in commodity prices helped support inflation expectations. Today, China is a less reliable engine for global growth. For one, its growth mix has transitioned toward domestic services in the last decade. And more importantly, there is simply too much leverage in the Chinese system to pump prime the economy at the same rate as a decade ago. Other emerging markets, meanwhile, will likely face an even greater pandemic recession than the developed world. Add the global oil price war into the mix and the environment is highly deflationary. The West is truly on its own.

Deglobalisation — it is very slow

If the cycle won’t help inflation that leaves us with the trend. Where we have most sympathy with the inflation argument is that the pandemic will structurally raise business costs over time. Western manufacturers will need to reconsider their supply chains. The integration of global value chains reduced manufacturing costs by shifting production to locations with cheap labour (see our piece ‘Undermining global value chains’). Yet businesses will face pressure from shareholders, regulators, and governments to make supply chains more local and resilient to future shocks.

An unwinding of global value chains should strengthen the position of workers in Western economies. If Western workers have been the main victim of globalization, they stand to benefit from deglobalisation. But this structural effect will take decades, not years to feed through. It is unlikely to play any immediate role in driving up wages during the deepest labour market shock since the Great Depression. German trade unions will not emerge from this crisis pressing for higher wages just because the next generation of car factories is less likely to be built in Eastern Europe or South America.

And what about business costs? A negative productivity shock would indeed raise costs of production. But, in a recent paper, our economics colleagues have estimated that even a return to a pre-WTO trading regime will bump up inflation by a moderate amount. And it still doesn’t follow logically that higher costs will be passed on to consumers. With weak demand, price rises are more likely to be absorbed into profit margins. And even if they are passed on the last ten years have shown that weak and entrenched inflation expectations are extremely difficult to move up again--a very different story to the cost-push inflation of the 1970s.

Who really wants inflation?

Ultimately, to move back to a high inflation regime we need unlimited fiscal and monetary easing. Yet we would dispute the shift in thinking on both fronts. On the monetary side, central banks have not given up on their commitment to inflation targets and their independence does not seem jeopardised. Recently, the Bank of England governor authored a piece in the Financial Times emphasising the central bank’s independence. There is little reason to think that central banks could not turn around policy stance on a dime if inflation reared its head.

More importantly, what about politicians? The commitment to reduce unemployment rates should be indisputable. Yet to posit that this is the same as generating a shift in inflation thinking is an argument too far. Prime Minister Abe succeeded in reducing the Japanese unemployment rate to record lows and stepped off the fiscal gas pedal once this was achieved.

The thought of inflation in Japan did not prove very popular. The Germans – with very poor demographics - would almost surely not welcome inflation and neither would Italy with the tighter ECB policy and explosive debt paths it would entail. With the policy response already succeeding in averting an economic meltdown, the question is not whether policymakers will sign up to a 1920s depression but whether a disinflation environment similar to what prevailed in the global economy for centuries before the second world war would be attractive. As global demographics deteriorate, so disinflation becomes politically attractive; old people prefer low prices to protect their savings.

Monetary and fiscal policy-makers received much flak for rewarding moral hazard and sowing the seeds of inflation during the financial crisis. In the event, no advanced economy has managed to hit its inflation target. Today, critics argue this time is different because the pandemic is also a supply shock. That is true and will have ramifications for the global economy in the next decade. However, the demand shock is even greater, the slippage in inflation expectations is more dangerous, and the shift in fiscal policy over-hyped. If inflation did overshoot against all odds, there is little reason to think governments and central banks in particular would be more tolerant of it than in the last forty years. The world has lived with disinflation for centuries. We should worry about turning into Japan, not Zimbabwe.

Published:6/4/2020 12:52:49 PM
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Published:6/4/2020 12:52:49 PM
[Markets] Dow flat despite losses for UnitedHealth, Johnson & Johnson shares DOW UPDATE Shares of UnitedHealth and Johnson & Johnson are trading lower Thursday afternoon, dragging the Dow Jones Industrial Average into negative territory. Shares of UnitedHealth (UNH) and Johnson & Johnson (JNJ) are contributing to the index's intraday decline, as the Dow (DJIA) was most recently trading 9 points (0. Published:6/4/2020 12:52:49 PM
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[Markets] DoJ Launches Investigation As More Evidence Emerges That Someone Is Orchestrating The Violent Riots DoJ Launches Investigation As More Evidence Emerges That Someone Is Orchestrating The Violent Riots Tyler Durden Thu, 06/04/2020 - 13:05

Authored by Michael Snyder via,

The Department of Justice has announced that it is attempting to determine if there is a “coordinated command and control” behind the violent riots that have erupted all over the United States. 

In recent days, officials all over the country have used words such as “organized” and “organizers” to describe the orchestration that they have been witnessing in their respective cities.  And all over the U.S., law enforcement officials have reported finding huge piles of rocks and bricks pre-staged at protest locations in advance, and scouts have often been used to direct rioters to locations where police are not present.  In addition, something that we have been hearing over and over again is that many of the people that are involved in the violence are not known by any of the locals.  At this point, the evidence appears to be so overwhelming that some sort of national coordination is taking place that the Department of Justice has decided to launch a formal investigation

Federal law enforcement officials are probing whether “criminal actors” are coordinating violent activities during protests and are looking into reports that “rocks and bricks” have been dropped off to throw at police and other law enforcement as cities across the country grapple with the uptick in violence, a senior Department of Justice official said.

“You see the hallmarks… We’re trying to see if there’s a coordinated command and control, you see those bread crumbs and that’s what we’re trying to verify,” said the Department of Justice official.

The orchestration of the violence appears to be most advanced in major cities such as New York.  According to the head of the NYPD, “caches of bricks & rocks” have been strategically placed all over the city during the past several days…

The New York Police Department’s top cop is calling out “organized looters,” who he says are “strategically” leaving piles or buckets of debris on street corners citywide.

“This is what our cops are up against: Organized looters, strategically placing caches of bricks & rocks at locations throughout NYC,” NYPD Commissioner Dermot Shea wrote in a Wednesday morning tweet, along with a video showing four blue boxes filled with gray debris.

Of course it is entirely possible that someone is buying bricks for the rioters, but Shea has pointed out that several construction sites in the city have had bricks stolen from them

“Pre-staged bricks are being placed and then transported to ‘peaceful protests,’ which are peaceful protests, but then used by that criminal group within,” he said. “We’ve had construction sites burglarized in recent days in Manhattan … during a riot, it’s interesting what was taken – bricks.”

Shea explained how bricks had previously been thrown at NYPD members in the Bronx, and water bottles filled with cement have also been used as weapons.

So it would appear that someone has been stealing bricks and leaving them in pre-staged piles for the rioters.

But at this point we don’t know precisely who is doing this or why they are going to so much trouble.

It is also being reported that teams of looters armed with power tools are systematically working together to loot one location after another in New York City.  The following is how one eyewitness described what she has been witnessing

One of the numerous police reports from eyewitnesses came from Carla Murphy, who lives in Chelsea.

Murphy, in an interview Tuesday, said she started hearing commotion from mobs of people along her street and neighboring streets about 10:30 p.m. Monday night. She first watched from her building and then went down to the street and saw organized groups of people working together to break in to store after store in the West Side neighborhood.

“Cars would drive up, let off the looters, unload power tools and suitcases and then the cars would drive away,” she said. “Then the cars would come back pick them up and then drive off to the next spot. They seemed to know exactly where they were going. Some of the people were local, but there were a lot of out-of-towners.”

This isn’t just a few angry protesters smashing a few windows.

This is organized crime at a very high level, and these people know exactly what they are doing.

Meanwhile, more evidence of coordination continues to emerge in other major cities as well

In Tampa, there were reports that members of the bomb team found mortars in bushes downtown, and bricks and other items were hidden in trash cans to throw at police officers.

In Seattle, a video out up online by an anarchist shows that around midnight, a crowd of 100-150 nearly all-white agitators with umbrellas started throwing bottles at police.

And for several more examples of this sort of orchestration, please see the article that I posted a couple of days ago.

It appears to be obvious that some sort of coordination is taking place, but now federal authorities are faced with the daunting task of trying to prove who is behind it.

According to Fox News, Justice Department officials are hoping to find “ways in which we can exploit phones and data communications that could give us a mosaic to see if there’s a coordinated command and control, that’s what we’re looking for.”

It is believed that social media is being heavily used to direct the movement of rioters and looters, and that would mean that there should be digital trails for investigators to follow.

Needless to say, many Americans believe that “Antifa” is behind much of the violence, and a brand new Rasmussen Reports survey has found that 49 percent of all U.S. voters believe that it should be declared a terror organization…

The latest Rasmussen Reports national telephone and online survey finds that 49% of Likely U.S. Voters think the “antifa” movement should be designated a terrorist organization. Thirty percent (30%) disagree, while 22% are undecided.

Hopefully those responsible for the violence will be discovered and brought to justice, because what we have been witnessing over the past week has been absolutely horrible.

Unfortunately, the level of anger in this country is likely to continue to rise the closer we get to election day, and more eruptions of violence are likely in the months ahead.

Published:6/4/2020 12:21:17 PM
[Markets] Capitol Report: Congressional Democrats putting finishing touches on police-reform legislation House Democrats are close to unveiling legislation to reform policing standards, Speaker of the House Nancy Pelosi said Thursday.
Published:6/4/2020 12:21:17 PM
[Markets] ZoomInfo's stock indicated to open for trading at $40, or 90% above IPO price ZoomInfo's stock indicated to open for trading at $40, or 90% above IPO price Published:6/4/2020 11:51:12 AM
[Markets] Stocks Trade Lower Even as Jobless Claims Slow Stocks fall even after U.S. jobless claims continue dropping and the European Central Bank expands its monetary stimulus program. Published:6/4/2020 11:51:12 AM
[Markets] Florida Reports Largest Jump In New Cases Since April, NYC Says Restaurants Won't Reopen Until July: Live Updates Florida Reports Largest Jump In New Cases Since April, NYC Says Restaurants Won't Reopen Until July: Live Updates Tyler Durden Thu, 06/04/2020 - 12:45


  • NY to allow drive-in, drive thru graduations
  • NYC won't allow outdoor dining until next month
  • Florida reports most new cases since April for 2nd straight day
  • Global cases top 6.5 mil
  • Deaths top 485k
  • Hong Kong sees another alarming cluster
  • China allows foreign airlines to apply to return to service
  • Russia, Mexico, Brazil all see alarming jump in cases, deaths
  • Experts say Russia likely underestimating deaths in St. Petersburg by considerable margin
  • Backlash to the hydroxychloroquine backlash intensifies

* * *

Update (1240ET): After pulling back curfews and taking other steps to accommodate and encouraging both peaceful demonstrations (that widely violated the city's social distancing rules) and violence and looting, Mayor de Blasio said Thursday that he likely wouldn't allow restaurants to reopen for outdoor dining until next month, virtually guaranteeing that even more small businesses will change.

The mayor is preparing for the June 8 start of "Phase One" reopening and said he anticipates reaching the second phase in July.

For the restaurants that survive, at least the city’s Transportation and Planning Departments will help create "curbside restaurants" to allow eateries to convert adjacent parking spots into more seating for the first time. No permits will be needed to certify the street-side restaurants, de Blasio said.

"The restaurant industry is the wellspring for hundreds of thousands of New Yorkers," de Blasio said. More then 184,000 of the city’s 274,000 food and beverage industry workers have lost their jobs due to the forced shutdown of the city. While de Blasio's plan sounds nice on paper, in our experience, most NYC restaurants don't have much - if any - space for patron parking.

By comparison, both neighboring Connecticut and New Jersey have already OK'd restaurants to reopen for limited outdoor dining. 

* * *

Update (1120ET): As deaths and new cases reported in Florida over the last few days have increased, we warned that the market would eventually wake up to the uptick in new deaths and cases in certain states. The state reported its largest daily gain in six weeks yesterday as the number of cases neared 60k. Now, on Thursday, public health officials in the state have reported another multiweek high. Florida reported 1,317 new COVID-19 cases over the last day, the highest level since April 17.

New numbers released by the Florida Department of Health officials Thursday show the state has a total of 60,183 cases, and a death toll that on Thursday climbed to 2,607. Hospitalizations across the state increased to 10,652.

US stocks sold off a little on the news, suggesting investors are starting to worry again about a recurrence of the virus.

More than half of the state’s cases are concentrated in Miami-Dade, Broward, Palm Beach and Monroe counties in the southern part of the state.

Both Florida...

...and Georgia...

Source: New York Times

...have seen cases reported Thursday at 2x the level from the day before.

Meanwhile, in New York State, Gov Cuomo revealed that the state had expanded its testing capacity closer to its target, with the state now clocking 50k tests per day.

Watch his press briefing below:

The governor who helped perpetuate racist police tactics in his state by killing a push to legalize recreational marijuana - removing much of the pretext cops often use to unnecessarily stop young black and brown men also urged protesters to get tested for COVID-19, while adding that he stands with the protesters for "meaningful" reform.

Is that going to include reforming your state's drug laws, Governor?

Finally, after NJ and Conn. moved to allow schools to hold graduation ceremonies starting in July, Cuomo said.

Some couldn't help but let out a justified groan.

* * *

While investors have been too distracted by the violence and unrest unfolding in the streets of the US (and now several European cities, with more unrest expected in Hong Kong) to care much about the coronavirus outbreak. We suspect this shift in focus has helped fuel the market's astonishing rally over the last two weeks.

There's no question that the US has been transfixed by the tumult sparked by the police murder of George Floyd, even as the violence and looting has mostly hurt black communities and black-owned small businesses, while the legal system has dutifully proceeded with the prosecution of all four officers involved in the killing.

Investors ignore these developments at their own peril: because over the last few days, a surge in new cases and deaths reported in Russia, Brazil and Mexico has breathed new life into the international outbreak, even as many Americans speculate that perhaps President Trump had a point when he said the virus might run its course by the summer, lockdown or no lockdown.

More experts cast doubt on Russia's figures as its case total hit 441,108, as St Petersburg recorded 1,400 more deaths than average in May, according to official statistics cited by the Times of London, which which suggest that the government may have deliberately suppressed the true number of deaths. Officials say 177 people died last month of Covid-19 in St Petersburg, Russia’s second-biggest city. The majority of the “excess” deaths were likely to have been a result of pneumonia caused by coronavirus, even though many were labeled simply as pneumonia.

Globally, coronavirus cases topped 6.5 million as of Thursday morning, while deaths neared 400k, at 386,464.

According to figures released Thursday morning, Russia's total number of infections passed 440,000 cases, while deaths continue to mount. The coronavirus death tolls in Brazil and Mexico have soared to new daily records, with 1,349 and 1,092 confirmed deaths reported over the past day, even as the countries begin to ease lockdown restrictions. Brazil now has more than 32,000 deaths, while Mexico ha more than 11,000.

NBC News reports that the jump in deaths in Brazil has been driven by Brazil’s indigenous populations, through which the virus is spreading quickly, with deaths caused by the disease increasing more than five-fold in the past month.

At least two US senators have accused China of hiding potentially critical data from the WHO, data that could have changed the course of the outbreak abroad, even as a Chinese officias deny reports about the WHO's frustrations with prying early data from Chinese experts. 

As backlash to the hydroxychloroquine backlash intensifies, a new study published by the NEJM claimed the drug "proved ineffective" for that purpose in a study that tested people who were "in close contact with the disease". We're not sure what that means. However, the Lancet's decision to retract a warning about hydroxychloroquine elicited a triumphant editorial from WSJ, which outlines the history of how bias appears to have tinged the world's interpretation of these studies.

France's Bastille Day military parade is set to be replaced by a ceremony on the Place de la Concorde square in central Paris, President Emmanuel Macron's office announced on Thursday, angering millions of French citizens, who enthusiastically celebrate the dawn of the first French Republic every year.

China appears to have turned the other cheek after the US officially barred the return of Chinese airlines running flights in the US, China's aviation authority said that 95 foreign airlines that have suspended services in the country can now apply to resume flights. We're curious to see which airlines will get the green light.

While the UK continues to resist pressure to start reopening its borders, Spanish Tourism Minister Reyes Maroto said that all restrictions to border crossings with France and Portugal will be lifted beginning on June 22.

Hong Kong confirmed five new cases on Thursday, all of which it claimed were imported. But that number belies the alarm that prompted the evacuation of some tenants from a Sha Tin building after six people living in the building had tested positive "preliminarily". We're waiting to hear more on that.

Pakistan, meanwhile, registered its highest single-day rise in coronavirus cases for the third consecutive day on Wednesday, with 4,801 new cases taking the country's total tally to 85,264.

Published:6/4/2020 11:51:11 AM
[Markets] The Tell: Get ready for the Fed to deploy untested monetary policy plan in September, says analyst Get ready for the Federal Reserve to target bond yields as one of the many unprecedented measures the central bank has undertaken to support the economy.
Published:6/4/2020 11:51:11 AM
[Markets] Coronavirus update: California infections rise amid reopening and mass protests Coronavirus update: California infections rise amid reopening and mass protests Published:6/4/2020 11:20:48 AM
[Markets] US Exports, Imports Crater Most On Record As China Refuses To Comply With Trade Deal US Exports, Imports Crater Most On Record As China Refuses To Comply With Trade Deal Tyler Durden Thu, 06/04/2020 - 12:05

While today's trade balance print at $49.4 billion came generally in line as expected, the relative calm on the surface belies what has been a stunning collapse in absolute trade levels.

The problem is how the US got to that deficit print, and this is where it gets ugly: April exports were $151.3 billion, $38.9 billion less than March exports. In percentage terms, the 20.5% export drop was the biggest on record, going back to 1992. At the same time, April imports were $200.7 billion, $31.8 billion less than March imports, and a decline of 13.7%, also the most since records started in 1992.

The decline in merchandise exports was widespread with companies shipping less capital equipment, motor vehicles, consumer goods and industrial supplies such as oil. The nation also received fewer capital and consumer goods, vehicles and food from overseas producers as the US economy was put on ice.

Reflecting the global pandemic and lockdowns, the value of travel-related imports and exports slumped to $4.4 billion, an all-time low in data back to 1999.

Combined, the value of U.S. exports and imports decreased to $352 billion, the lowest since May 2010!

However, since both exports and imports tumbled by roughly a similar amount, the move in the total monthly trade balance was far more muted, sliding from $42.3BN to $49.4BN.

To be sure, foreign trade was already easing prior to the pandemic, and now, but faced with what Bloomberg called unprecedented supply-chain disruptions, a previously incomprehensible surge in U.S. unemployment and a drop-off in demand, the world’s largest economy has pulled back more dramatically.

Meanwhile, in a double whammy for the Trump administration, there was no sign of any real progress on the phase 1 deal with China, with soybean exports still lagging their 2019 pace.  

Source: Brad Setser

Furthermore, while China is generally obligated to elevate its imports from the US (on par with 2017 levels) as per the Phase 1 Trade deal, YTD data shows that there is virtually no pick up compared to 2018 or 2019.

Worse, food exports are at risk of declining after Chinese government officials this month telling state-run agricultural companies to pause purchases of some American farm goods including soybeans.

Meanwhile, in the latest slap for the Trump admin, the report showed the trade deficit with China growing as imports of merchandise from China rebounded in April to $35.2 billion from $24.2 billion in March, while exports edged up to $9.3 billion, leaving a deficit of $7.2 billion.

Published:6/4/2020 11:20:48 AM
[Markets] BookWatch: How to battle the bots on Facebook, Twitter and other social media and think for yourself On the internet you may be engaged, but you’re not necessarily informed.
Published:6/4/2020 11:20:48 AM
[Markets] Stock market news live updates: Stocks drift lower as early rally fizzles, Nasdaq 100 bounces off new high Stocks struggled to cobble together a fifth straight day of gains as data showed new unemployment claims totaled another 1.877 million last week. Published:6/4/2020 11:20:48 AM
[Markets] Dow clings to slight gain as U.S. unemployment seen peaking, while ECB injects more stimulus U.S. stocks were lower Thursday late morning, after a report on weekly jobless claims suggested unemployment may be peaking, while investors also parsed a decision by the European Central Bank to boost its emergency stimulus package. Published:6/4/2020 10:52:57 AM
[Markets] COVID-19 Triggers Transformation Into A New Economy COVID-19 Triggers Transformation Into A New Economy Tyler Durden Thu, 06/04/2020 - 11:45

Authored by Patrick Hill via,

This is Part 2 of a two-part article including sections 4 – and 5 – please read Part 1 for sections 1) COVID-19 Unique Event, 2) Virus Drives the Economy, and 3) Outlook for the U.S. Economy


The economy was a very nice photo, than the pandemic turned it into a jigsaw puzzle that’s all messed up, now we’re trying to put it together and figure out if all the pieces are still here or not.

- Mohammed A. El-Arian, Chief Economist, Allianz

The novel COVID-19 virus has driven the world economy into the deepest recession since the Great Depression while shattering the linkages that previously held it together. Two months into the crisis and economists are still trying to figure out what has happened to supply chains and demand channels. As El-Arian, notes key components of the economy may be missing.

Some components will need to be created. Then all these components will need to realign into a “New Economy.” The challenge of rebuilding the economy will be influencing consumer behavior. Consumer spending is 70% of GDP.  Thus, growing employment is crucial toward increasing consumer confidence and recovery.  The central question is: how will the economy shift a growth track? We’ll look at crucial signposts along the way in building a new growth track by presenting the following topics: (The first three are from Part 1)

  1. COVID-19 – Unique Event – Examines the unique characteristics of the pandemic and how they set up certain economic trends.  Part 1

  2. Virus Drives the Economy – Looks at how the virus is driving the economy, how it is out of control and what strategies are working toward containment – Part 1

  3. Outlook For U.S. Economy – Takes a new perspective by overlaying the virus cycle with a deep U shaped economic cycle and how economic activity changes during each stage.  – Part 1

  4. New Economy – Describes the transformation of our society and how these changes will create losing and winning new businesses and how consumers will likely have conservative spending and saving habits – Part 2

  5. What We Need To Do To Create a New Economy – Recommends a federal team of scientific experts to be authorized to lead virus containment, investment in self-renewing innovation centers in hard hit pandemic areas and focus employment development on climate change solutions – Part 2

New Economy

The New Economy will feel different, much more virtually driven by software, the Internet, and be home centric. All major aspects of consumer behavior will be affected by the panipression (combination of panic, recession, and depression) experience opening new opportunities for products and services. In contrast, others will see reduced demand and be forced to close. Investors will want to watch these social trends as they cluster into a set of needs where businesses can flourish and become profitable.

Similar to the deep psychological scars of the 1930s, it will take time to repair the emotional, social, and mental damage of the pandemic. Today, a social trend called the Ameri-Can spirit is helping to heal people in a wave of unifying, uplifting virtual programs. Celebrities, social groups, and crowdsourced teams are using Internet hashtags links to raise funding for charities to provide financial assistance to restaurant workers, hotel workers, farmworkers, meat processing staff, entertainment crews, and thousands of others that have been furloughed or laid off. This Ameri-Can spirit plus our culture of entrepreneurship will create a new economy that will be robust.

Businesses will provide new services or products targeted at a cluster of behaviors related to values, social styles, and desires. Social distancing will change our behaviors so groups of behaviors will disappear, be sustained, or begin to emerge. Socially people will have to be encouraged to take a trip, get on a plane, or have an experience outside of their home when they have so many alternatives.

Let’s look at key consumer and business segments and how they may be transformed:


Consumers will be seeking experiences they cannot get at home.  We expect to see more experience-based travel packages that include hotel, meals, and an experience like a Costa Rica eco tour as a destination. For sought after destinations like Hawaii, Europe or Disneyland, the attractiveness will still be there. However, for small resorts, villages, or towns with a singular appeal, they will have to differentiate and create traffic in innovative ways to hold out during the contraction and trough stages of the recession.  Airlines are already making ‘pandemic cleanliness promises’ and will continue to build on making passengers feel safe.  Hotels will need to make guests feel safe as well and focus on the destination appeal, amenities, and service to a far greater degree than they needed to in the past. Local restaurants that shifted to take out during the pandemic and survived will be able to go back to their usual food fare if it has new appeal.  The foodservice industry is likely to be even more competitive than before, with the major chains surviving and the local community restaurants failing during the lockdowns. The rental car industry has many choices with some firms with high debt levels, so we may see industry consolidation.

Work At Home

Home will become a central focus for new services.  More services will come to the home than ever before with added twists and features for:  meal delivery and pickup, car servicing, pet grooming, mobile dentistry, and laundry delivery.  As workers are likely to have little savings and limited credit, so car sales will likely drop, replaced by even more ride-sharing.  The auto industry will be faced with declining auto sales yet, there will be increased demand for cars by ride-sharing drivers and new autonomous car services.   Personal fitness or yoga training will be offered online, along with many personal development classes held virtually. The number of car trips to work will decline causing gasoline demand to drop lower than pre-pandemic levels. Car rentals for out-of-region trips will be in even higher demand as fewer consumers will own a car.   E-Commerce will continue to grow as people have become accustomed to most things being delivered to their homes. Retailers will need to differentiate their offerings by expertise that consumers can’t get online.  For example, going to a nursery to buy a plant means seeing the plant’s condition. To close the sale, the consumer will want to ask an expert gardener how to plant it and care for it.  Shopping malls will need to develop attractions or experiences to motivate consumers to leave their homes and shop. 

Work at Office or Plant

Companies will soon discover that having employees work at home as many days as possible will reduce their costs.  The need for office space will likely be reduced, and the need for a variety of support services like cafeterias, lounges, team rooms, etc. will decline.  The need for shared office tenant spaces will fall. After all, except for key meetings, it is cheaper to have their employees work from home and eliminate or reduce office space, computer systems, utilities, and all the overhead of an employee office. Manufacturers will figure out how to achieve the same level of production using fewer employees. Production management systems will continue to be installed with sophisticated automation systems using artificial intelligence features. As more robots are installed we expect they will stay in place so manufacturing employment will not return to pre-COVID-19 levels. Features like non-touch time clocks, automated employee temperature monitoring, and other pandemic related services will probably be kept in place post-COVID-19.

Technology Services

Consumers already using the internet 24 hours a day will be looking for more ways to use laptops and internet services.  Demand for high-speed internet services will be even greater. Many consumers use personal assistants like Alexa. We expect using personal assistants to gain new users after their shelter-in-home experience.  We can expect to see more artificial intelligence features added to ‘dumb’ devices like refrigerators to provide monitoring of food usage, make recommendations, and suggest food purchases based on usage. Home security systems do surveillance today like turning on lights while a person walks from room to room.  These systems may add employee temperature surveillance, so companies will know how healthy their employees are at home.  There is likely to be increased stress from the blurring of family versus home life, and issues related to child care. This stress may impact work from home so firms will be interested in monitoring work at home activity. Firms will be able to use retina scans to determine how focused a worker is on his screen. The scans will be reported back to companies to know when their employee was at their computer, and for hourly workers, how many hours they have worked.


After their pandemic experience, consumers will be obsessed with their fitness. Some consumers may look for their doctor to become a ‘health consultant’ helping them to stay healthy with a focus on preventive medicine, diet, and lifestyle management.  Artificial intelligence will be applied to diagnostics as medicine becomes ever more complex and expensive to reduce doctor’s hours and costs. Telemedicine will become the norm for visits as patients will want to stay home if they can.  In some cases, doctor’s offices and clinics will shrink in size as being ‘on-premise’ for doctor visits will be a premium service. Clinics will shift some services to urgent care. Consumers will take even more control of their health, use more online advice services, and drug delivery apps. The use of stress reduction virtual apps will soar to help people transition into normal life as they use mindfulness to go out ‘into the real world’ again.


The merging of the internet with television and streaming channels will be accelerated.  Internet applications like polling, audience interaction, and 3D experiences will merge with consumers doing things at home they would otherwise go out to do.  During quarantine, entertainers have opened their homes to produce programs they used to do from studios. We expect more mixing of these personal entertainer ‘home visits’ to create an artificial intimacy with audiences that are not with them in person. The boundaries between movies, television shows, and gaming will continue to blur. For example, group ‘Minecraft games’ with a host and multi-player options become the norm. The focus on delivering entertainment to the home means less need for studio space and expensive studio crews. Audiences will still demand live concerts, though we expect to see more tie-ins with virtual pre-concert events and games along with post-concert follow up with entertainers.


Higher education will transition into lower-cost online learning. College online learning will become the standard.  In person education will be ‘extra’ at the college level.  The emphasis online learning to the home in elementary grades will place new stress on teachers and require far more sophisticated software for learning than is available today.  Small colleges that focus on ‘in person’ learning experiences will be hard pressed to attract students during the lockdown or reopening phases of the pandemic control. We expect that many small colleges may be forced to close or merge their curriculum and teaching staff with other larger schools that have the ability to attract a large enough student base to be financially viable.


Home sales will take a long time to recover from the market contraction of the pandemic.  Millennials have often been the first to be laid off, have little savings, and spend more on experiences than saving for large purchases. Major incentives will have to be offered by builders and existing homeowners as the market will be slow to return to pre-pandemic sales levels. Homes will be remodeled, and new homes built to accommodate the home centric needs for office space, closed off family rooms, and sound dampening for video conferencing privacy.  Apartments that offer ‘work-at-home’ floor plans and capabilities will be in demand while smaller apartments will see reduced demand.  The pandemic may force home buyers to think about leaving the city and its density to suburbs or even further out since they can use the internet to do their job. An essential homebuyer requirement that their home is near their office will no longer be as crucial in locating a home for purchase.


Many banks have closed their retail offices due to social distancing.  We expect banks to close many retail offices as being too expensive. Thus, customers to see a banker will need to make an appointment to see their banker at a specific branch. Virtual banking relationships will be the norm. Direct digital transfer of funds will grow leaving banks out of money transfers, particularly between customers and small businesses. Tap and go credit cards will be a standard way of handing a transaction at stores without touching cards or receipts.  Digital wallets with financial account information will be readily adopted as tech savvy millennials become the dominant consumer group.

Consumers will think about money differently as a result of a panipression experience. Not having money for food, rent, or utilities will leave emotional scars and teach new habits.  Similar to the Great Depression generation, consumers are likely to use less credit, increase their savings and be careful about getting over-leveraged with significant purchases. They will make conservative investments similar to baby boomers after the 2008 recession, who did not reinvest in stocks. Building consumer spending will likely take three or more years to reach previous levels.

The New Economy will feel different, much more virtually driven by software, the internet and home centric. All major aspects of consumer behavior will be affected by the panipression experience opening new opportunities for products and services. In contrast, others will see reduced demand and be forced to close. Investors will want to watch emerging social trends as they cluster into a set of needs where businesses can flourish and become profitable.

What We Need To Do To Create A New Economy

Virus Containment

Challenge: The most crucial next step is to contain the virus and provide people with the confidence to go about their social life without the fear of becoming infected.

Proposal: Provide unifying intelligent leadership at the federal level to overcome the virus. The people need support, compassion, and hope, not divisive politics, bickering, and conspiracy theories as a basis of policy. A federal team of scientists using facts, research, and the latest techniques for pandemic containment needs to be authorized to bring the virus under control quickly. Other countries like Germany have focused their efforts on containment without politics leading to moderate success in virus containment.

Self-Renewing Economy Investment

Challenge: Rural areas of the country were already in recession from being hollowed out by manufacturing moving overseas.  The pandemic has ravaged inner-city areas where many hourly workers lived in tight quarters.  Small businesses across all regions are reeling from the lockdowns temporally shutting their businesses down, forcing them onto a financial cliff.

Proposal: Build New Economy innovation development centers using the Silicon Valley model. We see promise in using a Silicon Valley model of integrated partnerships between venture capitalists, company incubators, universities, and local government to build new businesses.  The model has been used in places like Portland, Oregon with their Silicon Forest and in Salt Lake City with their Silicon Slope to build successful self-renewing economies.  We recommend that this model be used to target inner-city regions, rural areas, or any area where the pandemic has taken a toll on the local economy.  Since the federal government has limited funding we recommend the government act as a ‘seed’ investor to jump-start these development centers with partner investments by venture capitalists and cash rich firms like Apple, Google, and Microsoft.  To ensure a well-trained labor force, the centers could be located near university campuses and integrated into degree or certification programs. The Department of Education could assist with scholarships for workers that need tuition and fees financial aid to study at the universities.

Climate Change Solutions

Challenge: While the focus over the next three to five years will rightly be on containing the virus and rebuilding the economy, the existential climate change problem continues to go unsolved.  The impact of climate change is already felt in rising seas flooding coast side cities and mega wildfires destroying millions of acres.

Proposal: Focus employment development in renewable industries.  The pandemic economic slowdown has reduced carbon emissions by 8% during the past two months, according to experts.  The latest U.N. climate change analysis recommends that an 8% a year reduction in emissions be continued until 2030 to achieve the global emissions reduction target of 2 degrees CelsiusA U.N. sponsored Science Based Targets Initiative organization of 890 companies has endorsed shifting investments and employment toward reaching the 2030 emissions reduction target. A diverse set of 165 U.S. companies are SBTI members including: WalmartTarget, Coca-Cola, Adobe, Microsoft, Hewlett-Packard, Owens-CorningWhirlpool, Proctor & Gamble, and Verizon. We should start now solving the next major global challenge by focusing on federal, non-government organizations, private research, and business development on innovative solutions to climate change problems.  Focusing on climate change for job creation ensures that we tackle two major issues: employment and climate change.  With so many workers unemployed we should shift their skills to a new industry that has been growing fast and is urgently needed while offering long term careers

Final Comment

We expect corporate leaders to take the lead in employment development for a long term economic transformation as political divisions will continue.  We noted in our post: A Pandemic Iceberg Hits the ‘Unsinkable’ US Economy’ that the fabric of a robust labor safety net needs to be built to mitigate the impact of an economic crisis like COVID-19 on labor in the future.  It is in the interest of executives to build businesses where workers are thriving, not just surviving. The focus must be on building an innovative economy that is creating new jobs through entrepreneurship. Otherwise, we are faced with a stagnating economy dependent on government transfer payments. We conclude with the following declaration from that post:

Americans built the most innovative, self-renewing, wealth building economy in the world.  It is the American spirit of entrepreneurship combined with invention, self-sacrifice, equal opportunity, and creativity that will build the businesses of the futureThese new businesses will adjust to new social realities and pave the way for workers to gain job security and become confident enough to spend at robust levels.”

Published:6/4/2020 10:52:57 AM
[Markets] Dispatches from a Pandemic: This Chicago neighborhood was already combating air pollution when the coronavirus pandemic hit it hard Little Village, a heavily Mexican-American neighborhood, has been a gateway to the Midwest for generations of immigrants.
Published:6/4/2020 10:20:40 AM
[Markets] Project Veritas Infiltrates Violent Antifa Cell Project Veritas Infiltrates Violent Antifa Cell Tyler Durden Thu, 06/04/2020 - 11:10

An undercover journalist with Project Veritas successfully infiltrated Portland's Rose City Antifa cell, capturing footage of a meeting in which members discussed how to "get out there and do dangerous things as safely as possible."

Antifa has been a fixture at the nationwide Black Lives Matter protests against police brutality (with varying degrees of success) which began after the May 25 death of 46-year-old black man George Floyd at the hands of white Minneapolice police officer Derek Chauvin, who pressed his knee to Floyd's neck for more than eight minutes as onlookers begged him to stop.

According to National Security Adviser Robert O'Brien on Sunday, the violence "is being driven by Antifa."

A protester with an antifa flag draped over his shoulders stands at a rally to demand justice for George Floyd and support of the Black Lives Matter movement in Boston on May 31. (Photo by Matthew J. Lee / The Boston Globe via Getty Images)

And in Portland, members of Antifa are actively plotting ways to commit violence against their enemies while not getting caught.

"Practice things like an eye gouge, it takes very little pressure to injure someone's eyes," member Nicholas Cifuni was recorded saying by the Project Veritas journalist.

"Police are going to be like: ‘Perfect, we can prosecute these [Antifa] fuckers, look how violent they are.' And not that we aren't, but we need to fucking hide that shit," he added. 

"Consider like, destroying your enemy. Not like delivering a really awesome right hand, right eye, left eye blow you know. It's not boxing, its not kickboxing, it's like destroying your enemy."

"The whole goal of this, right, is to get out there and do dangerous things as safely as possible," said Rose City Antifa member 'Ashes'.

"They do not hesitate to either push back or incite some kind of violence. In our classes and in our meetings, before we do any sort of demonstration or Black Bloc, we talk about weapons detail and what we carry and what we should have." -Project Veritas undercover journalist


"Project Veritas does not condone any violence whatsoever. It is a sad time in our nation’s history with Antifa activists hijacking #blacklivesmatter protests in cities across the country, attacking the police and engaging in violence," said Project Veritas Founder and CEO, James O’Keefe.

"In many places, it appears the violence is planned, organized & driven by anarchic left extremist groups — far-left extremist groups using Antifa-like tactics."

President Trump announced earlier this week that Anitfa would be designated a terrorist organization.

To that end, the Rose City Antifa cell has repeatedly planned for, and engaged in "direct confrontation" with participants in pro-Trump rallies. In 2018, they notably clashed with members of Patriot Prayer and the pro-Trump "Proud Boys," which resulted in a viral video of a member of Antifa being knocked out during a melee started by the violent "resistance" group. 

And in 2017, Berkeley police recovered several caches of weapons from members of Antifa who were had planned to attack Trump supporters.

You know, terrorist stuff... 

Published:6/4/2020 10:20:40 AM
[Markets] Jobs report preview: Unemployment rate expected to hit highest since the Great Depression The May jobs report is expected to show another historic print in non-farm payroll losses alongside a surge in the unemployment rate to the highest level since the 1930s, extending the virus-related labor market devastation of the past few months. Published:6/4/2020 10:20:40 AM
[Markets] Tech workers are trickling back into the office this month Tech workers are trickling back into the office this month Published:6/4/2020 9:54:06 AM
[Markets] Lea Michele apologizes after ‘Glee’ co-star accused her of making work ‘a living hell:’ How to respond to microaggressions Samantha Ware alleged Michele had subjected her to ‘traumatic microaggressions‘ after the ‘Glee’ star tweeted about George Floyd.
Published:6/4/2020 9:54:06 AM
[Markets] 1000s Descend On "Illegal Vigil" In Hong Kong's Victoria Park Honoring Victims Of Tiananmen Square Massacre 1000s Descend On "Illegal Vigil" In Hong Kong's Victoria Park Honoring Victims Of Tiananmen Square Massacre Tyler Durden Thu, 06/04/2020 - 10:45

Authorities may have banned an official peaceful demonstration honoring the anniversary of the Tiananmen Square massacre and passed a new law making "shows of disrespect" toward the Chinese National Anthem, but thousands of Hong Kongers are still finding ways to honor the 31st anniversary of a massacre where hundreds, or more likely thousands, of peaceful protesters were murdered by the Chinese military.

Beijing banned the peaceful vigil - an annual tradition - for the first time this year amid a crackdown on Hong Kong's freedoms spurred by the pro-democracy movement that brought chaos and disorder to the streets of HK.

Twice, pro-democracy lawmakers disrupted proceedings as the new national anthem law was being passed.

Despite the declaration, crowds poured into Victoria Park to light candles and observe a minute of silence at 2009PA (0809ET). Many chanted “Democracy now" and "Stand for freedom, stand with Hong Kong." Police stood by, playing recordings warning attendees not to engage in the vigil. Police also cited the need for social distancing to be maintained.

Police cited the need for social distancing during the coronavirus outbreak in barricading the sprawling park, but activists saw that as a convenient excuse.

"We all know the Hong Kong government and the Chinese government really don’t want to see the candle lights in Victoria Park," said Wu’er Kaixi, a former student leader who was No. 2 on the government’s most-wanted list following the Tiananmen Square crackdown.

Hundreds and possibly thousands of people were killed when tanks and troops moved in on the night of June 3-4, 1989, to break up weeks of student-led protests that had spread to other cities and were seen as a threat to Communist Party rule.

"The Chinese Communists want us all to forget about what happened 31 years ago," Wu'er told the AP in Taiwan, where he lives. "But it is the Chinese government themselves reminding the whole world that they are the same government...doing the same in Hong Kong."

Tiananmen Square itself was empty on Thursday, as Chinese police once again engaged in the practice of placing known dissidents under house arrest for the day.

Meanwhile, police arrested protesters in other parts of the city.

Published:6/4/2020 9:54:06 AM
[Markets] Boeing, Intel share gains lead Dow's 50-point jump DOW UPDATE The Dow Jones Industrial Average is trading up Thursday morning with shares of Boeing and Intel seeing positive momentum for the index. Shares of Boeing (BA) and Intel (INTC) are contributing about a third of the index's intraday rally, as the Dow (DJIA) was most recently trading 56 points (0. Published:6/4/2020 9:54:06 AM
[Markets] Las Vegas places bet on reopening casinos amid pandemic Las Vegas places bet on reopening casinos amid pandemic Published:6/4/2020 9:19:54 AM
[Markets] Bond Market On Edge Of Chaos As 10Y Yields Blow Out To CTA Liquidation Trigger Bond Market On Edge Of Chaos As 10Y Yields Blow Out To CTA Liquidation Trigger Tyler Durden Thu, 06/04/2020 - 10:17

After trading in a tight 20bps range for the past two months, 10Y yields are blowing out and have jumped to the highest level since March 26.

There have been a bevy explanations for the move, including that markets have now priced in virtually all of the monetary stimulus from central banks (after today's ECB QE expansion announcement) and that supply/demand fundamentals are once again going to matter (with trillions in new issuance coming in the US), or that the move is simply due to reopening optimism, with Nomura noting that investor sentiment—an expression of investors’ willingness to take on risk—has made its way up from pessimistic to neutral, and the improvement is starting to have an effect on where Nomura estimates that global macro hedge funds have backed out of the totality of their long positions in US government bonds, and now have a net position in the aggregate that is either flat or slightly to the short side. The improvement in the US economic surprise index may be helping to fuel this trend.

As a result of the actions of global macro hedge funds in the market, and following the latest push higher in yields, Nomura thinks that it is possible that CTAs (systematic trend-following investors with a top-down perspective) are being pressed into a further portfolio shift away from overweighting bonds towards overweighting equities. For the moment, CTAs’ positions still show a preferential tilt towards long positions in bonds (DM government bond futures). However, the prospect of a bottoming out in the economy (as pointed to by the improvement in the economic surprise index) has probably made bond-buying a less appealing idea from a technical standpoint as well.

Indeed, if we look at the one-month rolling correlations between actual CTA performance (as measured by the SG CTA Index) on the one hand and stock market or bond market performance on the other, we find that CTA performance has been inversely correlated with the performance of equities (normally an indication of short positions) and positively correlated with the performance of bonds (normally an indication of long positions). If nothing else, this would seem to make it clear that CTAs have been slow to get on board the current equity rally, and that a sell-off in bonds is still the pain side for them.

So at what level do CTAs capitulate on their bond longs and turn short, unleashing a selling cascade?

According to Nomura's CTA position index (representing our estimate of the positioning of CTAs based on real-time data) CTAs to still have a net long position in 10yr UST futures, "although with a conspicuous notch recently where that position appears to have hit a ceiling." This means that should the pressure created by global macro hedge funds’ sell-off of USTs increase to the point that the 10yr UST yield climbs above the "red line" that exists at around 0.84%, CTAs would likely be drawn into exiting their long positions in TY to cut their losses.

Moments ago, in what may be one giant CTA stop hunt to force CTAs to puke, we got as far as 0.82%: should yields rise another 2bps, the chaos in the bond market may observed in early and mid-March may make a triumphal reappearance.

Published:6/4/2020 9:19:54 AM
[Markets] Boeing's 5.4% surge helps moderate Dow decline early Thursday Boeing's 5.4% surge helps moderate Dow decline early Thursday Published:6/4/2020 8:52:07 AM
[Markets] Market Snapshot: Dow opens down 100 points as ECB injects more stimulus, 47 million Americans now seeking jobless benefits U.S. stock-index futures were trading slightly lower Thursday morning after a report on weekly jobless claims showed labor-market improvement, but not as much as analysts had hoped for. Investors also parsed a decision by the European Central Bank to boost its emergency stimulus package.
Published:6/4/2020 8:52:07 AM
[Markets] Chevron, Exxon Mobil share losses contribute to Dow's 80-point fall DOW UPDATE Dragged down by losses for shares of Chevron and Exxon Mobil, the Dow Jones Industrial Average is falling Thursday morning. The Dow (DJIA) was most recently trading 80 points, or 0.3%, lower, as shares of Chevron (CVX) and Exxon Mobil (XOM) have contributed to the index's intraday decline. Published:6/4/2020 8:52:07 AM
[Markets] Mish: Speculators Dumping Gold May Be Bullish Mish: Speculators Dumping Gold May Be Bullish Tyler Durden Thu, 06/04/2020 - 09:50

Authored by Mike Shedlock via MishTalk,

Speculators are dumping gold, which may actually be bullish. This judging from futures and alleged jewelry demand, the price of gold ought to be falling. But it isn’t. Let’s explore what’s happening with the price of gold and why.

The above chart is courtesy of Barchart. The anecdotes are mine.

In the futures world, for every long there is a short. Contracts net to zero.

The commercials are producers who sell their gold and the broker-dealers who are hedged.

COT Report Categories

Speculators Dump Gold But Price Goes Up Anyway

Note that commercials are down 111,290 contracts since February. This is not “covering shorts” as often claimed. Rather it reflects speculators dumping contracts. 

Managed money dumped 125,456 contracts. Yet, the price of gold rose from $1,644.60 to $1,751.70.

Let’s go back further, to August 2010.

Gold August 2010

I picked that date because the open interest to today is quite similar. 284,561 contracts short in August 2010 vs 274,322 today. The price of gold was then $1,249.

The level of shorts has little to do with the price of gold except as a measure of short-term price fluctuations. 

Normally when gold speculators add contracts, the price of gold rises and when speculators are liquidating contracts, the price falls. But not even that is happening now.

What About Jewelry?

According to the World Gold Council, demand for Gold jewelry in 2019 fell 6 percent overall to 2,107 tons. How did the price of gold react?

Gold vs Jewelry Demand

The price of gold does not follow marginal jewelry usage either.

Marginal Utility?

The subject of marginal utility of gold and jewelry came up in a Twitter discussion this weekend.

Misunderstanding the Supply of Bitcoin and Gold Leads to Silly Projections 

I covered the topic recently in Misunderstanding the Supply of Bitcoin and Gold Leads to Silly Projections

People confuse jewelry buying with the demand for gold and bitcoin mining with supply of Bitcoin. 

Contrary to popular myth, the supply Bitcoin goes up every day. This is why halving the mining rate of Bitcoin did nothing for the price. 

Similarly, people confuse demand for new gold jewelry as the demand for gold. 

Charts like this perpetuate all kinds of silliness.

That chart does NOT represent the demand for gold.

It says, 52.44% of incremental usage was used in Jewelry. So what? Did that set the price of gold or affect it at all?

Misconceptions About Gold

The best explantionation of the demand for gold comes from Pater Tenebrarum at the Acting Man blog. He was my teacher in Austrian economics.

Tenebrarum wrote Misconceptions about Gold as a guest post on my blog in June of 2007 under the pseudonym Trotsky, a name he regrets. 

Gold was $650 at the time.

Gold Supply and Demand

If gold’s price were determined by fabrication demand alone (jewelry and industrial uses), it could not possibly trade at a price of $650 oz.

Many gold analysts, from the mainstream to fringe groups such as the Gold Anti-Trust Action Committee (GATA) claim that they can predict what the gold price will do by adding up annual fabrication and investment demand (as well as dehedging demand by miners) and contrasting the resulting total with annual supply (mine supply, central bank selling, disinvestment and scrap). In short, they analyze the gold market in the same manner as they would analyze the copper market.

It should be immediately obvious that this can’t be correct. After all, nearly the entire gold ever mined (approximately 150,000-160,000 tons) is still here. In short, the total potential supply of gold is some 97-98% greater than the gold produced every year (approximately 2,600 tons).

Jewelry Demand vs. Monetary Demand

One can further illustrate gold’s unique nature as money with a study of gold prices vs. jewelry demand. If record fabrication demand for gold (jewelry) must be good for the price of gold, then a historic high in jewelry demand should in theory coincide with a high gold price.

However, record high jewelry demand in 1999 – 2000 in actual fact coincided with a 20 year bear market low in the gold price – the exact opposite of what traditional commodity supply/demand analysis would suggest.

We can therefore conclude that there must be a source of gold demand that is of far greater importance than the jewelry and industrial demand components, and that demand constitutes the true driver of the price of gold in terms of fiat money.

Indeed, there is. This demand component is called ‘monetary demand’. Monetary demand and the supply of gold is actually best described as the ‘degree of reluctance of the current owners of gold to part with their gold at current prices’ since, as mentioned above, some 160,000 tons are owned by somebody already.

Jewelry Usage

Jewelry demand is about 500 tonnes or so out of a supply total now up to 190,000 tons or so, minus some percentage lost or tied up in priceless art.

Assume 20,000 tons of gold lost or in art, and we can calculate new jewelry demand as 500/170,000 = .0029. 

The idea that jewelry has a meaningful impact on the price of gold is thus ridiculous.

Unfortunately, the World Gold Council itself spreads jewelry nonsense as the “demand for gold”.

Bloomberg, the Wall Street Journal, and countless other also perpetuate the myth so it’s no wonder people are confused.

Gold vs Faith in Central Banks

Demand for gold is a actually a reflection on faith in central banks.

When people believe central banks have everything under control, the price of gold falls. 

The best example is Greenspan’s great moderation when he was consider the maestro. Gold fell from $850 to $250.  

Mario Draghi’s “Whatever it Takes” speech is another key example.

Alleged Gold Shortage

The second widely perpetuated myth is that there is a shortage of gold. 

That’s pretty funny given there is roughly 190,000 tons of supply. 

The myth stems from short-term demand fluctuations for certain forms of gold, typically coins, resulting in price spikes for that form, but not gold itself.

Shills then come out of the woodwork and profess buy gold while you still can. 

What If?

Another popular shortage argument pertains to futures. 

The futures battle cry is “If only everyone would take delivery, we would run out of gold” and the commercials would be ruined. 

The commercials would not be ruined or they would have been ruined long ago. They were short the entire run from $250 to now. The commercials are either hedged or they are the producers who sell their production via futures.

Moreover, futures speculators do not reflect a demand to own gold, they reflect a demand to rent gold with leverage. 

We would not run out of gold if everyone took delivery, but the price would indeed rise.

Gold is Not the New Unobtanium

Even the Wall Street Journal falls into the trap of perpetuating these myths. 

For discussion, please see No WSJ, Gold is Not the New Unobtanium: Where to Buy?

Published:6/4/2020 8:52:07 AM
[Markets] Boeing's stock is alone among Dow components in posting premarket gain Boeing's stock is alone among Dow components in posting premarket gain Published:6/4/2020 8:21:12 AM
[Markets] Jobless claims climb 1.88 million at end of May, but there are growing signs U.S. unemployment is peaking Some 1.88 million Americans applied for traditional jobless benefits at the end of May and another 623,000 filed new claims under a federal-relief program, but the number of unemployed collecting government checks appears to have stabilized as more workers return to their jobs. Published:6/4/2020 8:21:12 AM
[Markets] Economic Report: U.S. trade gap widens in April masking steep declines in both exports and imports Trade into and out of the U.S. was depressed in April, leading to a wider trade gap in April, the government said Thursday.
Published:6/4/2020 8:21:12 AM
[Markets] Rabobank: "Don't Ask What The Final Destination For This Flight Is. You Really Don't Want To Know" Rabobank: "Don't Ask What The Final Destination For This Flight Is. You Really Don't Want To Know" Tyler Durden Thu, 06/04/2020 - 09:16

Submitted by Michael Every of Rabobank

Come Fly With Me

Last night before turning in the US was threatening to cease all inbound Chinese airlines if China would not open up to US airlines going the other way. On waking up, China has now allowed some limited US airlines to enter, matching the ones going the other way. “Negotiations will be short,” as they say. Bilateral reciprocity achieved through threats; don’t think that message goes unnoticed in the US. Indeed, just as Hong Kong does not hold its annual 4 June commemoration of 1989’s Tiananmen Square, Secretary of State Pompeo tweeted an image of himself standing next to a wanted Chinese dissident. (Imagine if the Chinese Foreign Minister was tweeting images with Edward Snowden.) Moreover, the Wall Street Journal editorial yesterday by former World Bank head Paul Wolfowitz argued the US should instigate investigations into the foreign assets of senior members of the Chinese Communist Party to punish it for its moves on Hong Kong. Still, let’s ignore all that and allow markets to sing “Come fly with me”.

Indeed, Germany has agreed a major fiscal stimulus program. That Europe’s very own ‘Nikita Khrushchev’ (“Nobody touch anything! I like things exactly the way they are!”) Angela Merkel managed to shepherd through EUR130bn in tax cuts and spending, 30% higher than expected, through is a real achievement. There will even be new money for new things like a 5G roll-out…just as one German telco follows the lead of two in Canada and drops China’s Huawei. More money for European firms then. “Come fly with me, let's fly.”

Meanwhile, in the US we saw the ADP’s projection of US job losses at “only” 2.8m for May vs. 9m expected and 19.5m for April, meaning that things are moving from the we-can’t-even-begin-to-describe-it terrible to just the worse-of-the-Great-Depression-era bad. “Come fly with me, let's fly, let's fly away.”

We have also seen the criminal charges against the police officers in the George Floyd case in the US upgraded and widened to all four involved, which may go some way towards assuaging protestor anger. There also appears --from a great distance-- to be generally a more peaceful if defiant tone to the US protests, although things remain extremely tense. The market naturally has no idea how this whole situation can be resolved in a market-friendly way, but presumes it will be…”because markets”.

Lastly, we get to hear from the ECB today, who are likely to spray more liquidity into a marketplace that is so desperately short of it already.

Ironically, with so much going ‘right’ we still saw a fading of the recent rally in the Asian session. Still, some turbulence is to be expected, right? Just don’t ask what the Final Destination for this particular flight is. You really don’t want to know, trust me.

Come fly with me, come fly, let’s fly away;

If stocks just use some FOMO moves; A new high’s still in play;

Come fly with me, let's fly, let's fly away

Come fly with me, let's float down to the EU

In wurst-land there's a central bank; And it'll toot its flute for you

Come fly with me, let's take off in the blue

Once I get you up there; Where the stocks are rarefied;

We'll just glide; Starry-eyed

Once I get you up there; I'll be holding stocks so near

You may hear; Bloomberg cheer, 'cause this bull run’s forever

Market-wise, it's such a lovely day; Just say the words and we'll beat the birds

Down to Marina Bay; It is perfect for a flying honeymoon, they say

Come fly with me, let's fly, let's fly away

Once I get stocks way up there; Where the P-Es are rarefied; We'll just glide…;

Once I get you up there; Even if earnings are hard to find;

We'll just glide; Starry-eyed

Once liquidity’s up there; I'll be holding stocks so near

You may hear; Bloomberg cheer, 'cause we're all rich together

Market-wise, it's such a lovely day;

You just say the words and we'll beat the birds

Down to Marina Bay; and next SpaceX fly to the moon, they say

Come fly with me, let's fly let's fly; Pack up let's fly away!

Now please take off your headphones and fasten your seat belts. And prepare to brace.

Published:6/4/2020 8:21:12 AM
[Markets] Stocks’ Rally Pauses as Jobless Claims Continue Global stocks were mixed on Thursday after a sensational rally as economies reopen across the globe. The ECB announced it would spend an additional 600 billion euros in stimulus efforts. In the U.S., another 1.8 million people filed for unemployment. Published:6/4/2020 7:50:17 AM
[Markets] Need to Know: A 50-year technological revolution is about to begin. These are the stocks to own, says strategist Worried about the present day troubles? Our call of the day, from Brad Neuman, director of market strategy at equities manager Alger, says we’re at the start of a technological revolution.
Published:6/4/2020 7:50:17 AM
[Markets] Former MI6 Boss Says COVID-19 Escaped From Chinese Lab Former MI6 Boss Says COVID-19 Escaped From Chinese Lab Tyler Durden Thu, 06/04/2020 - 08:46

The former head of Britain's MI6 spy agency believes COVID-19 is a manmade virus that accidentally escaped from a Chinese laboratory, according to The Telegraph.

Entitled "A Reconstructed Historical Aetiology of the SARS-CoV-2 Spike", the new study, seen by The Telegraph, suggests the virus is "remarkably well-adapted virus for human co-existence" and is likely to be the result of a Wuhan lab experiment to produce "chimeric viruses of high potency".

The paper concludes: "Henceforth, those who would maintain that the Covid-19 pandemic arose from zoonotic transfer need to explain precisely why this more parsimonious account is wrong before asserting that their evidence is persuasive, most especially when, as we also show, there are puzzling errors in their use of evidence." -The Telegraph

Perhaps most notable is that the paper is being given a strong endorsement by former MI6 boss Sir Richard Dearlove - who helpedObamagate operative Stefan Halper set up a smear campaign against Michael Flynn, and who made a name for himself nearly two decades ago peddling a bogus report that Saddam Hussein had WMDs - which Tony Blair used to justify the UK's involvement the Iraq war. Clearly Dearlove is trying to ruin our street cred.

Dearlove and Flynn shake hands

Indeed, while it was inevitable that the Western establishment would eventually gravitate towards the Wuhan lab theory Zero Hedge presented in late January, Dearlove's endorsement couldn't come from a more suspicious operative.

Thus, as the establishment continues to adopt the very obvious conclusion supported by a mountain of evidence that the bat-like coronavirus probably escaped from a Chinese laboratory known for modifying bat coronaviruses to infect humans, we suspect Dearlove and the 'perpetual war' crowd are most interested in using the accusation as a political cudgel to wield against China.

Here's the narrative

While we've told you about the Wuhan Institute of Virology and its infamous coronavirus-expert Shi Zhengli (a.k.a. 'bat woman'), we really triggered the muppets in early February when we reported on an Indian research team that found HIV-like "spike proteins" which allow the SARS-CoV-2 coronavirus to more easily enter human cells, making it extremely infectious. While the report was retracted, further studies from Nankai University found an "HIV-like mutation" in the virus.

Dearlove, through the Telegraph, is talking up a scientific paper prepared for imminent release which focuses on the HIV-like "spike proteins" - while separate research from one of the co-authors considers them to be "unique fingerprints" that cannot have evolved naturally. Instead, they are "indicative of purposive manipulation."

Entitled "A Reconstructed Historical Aetiology of the SARS-CoV-2 Spike", the new study, seen by The Telegraph, suggests the virus is "remarkably well-adapted virus for human co-existence" and is likely to be the result of a Wuhan lab experiment to produce "chimeric viruses of high potency".

The paper concludes: "Henceforth, those who would maintain that the Covid-19 pandemic arose from zoonotic transfer need to explain precisely why this more parsimonious account is wrong before asserting that their evidence is persuasive, most especially when, as we also show, there are puzzling errors in their use of evidence." -The Telegraph

The peer-reviewed research was a collaboration between Professor Angust Delgleish of St. George's Hospital at the University of London and Norwegian virologist Birger Sorensen. They claim to have identified "inserted sections placed on the SARS-CoV-2 Spike surface" which explain how it binds itself to human cells - and warns that efforts to develop a vaccine are doomed to fail because the virus is misunderstood. Sorensen, CEO of Norwegian pharmaceutical company Immunor AS, is developing his own vaccine.

Nobody would accept the research until they went easy on China...

Interestingly, the paper was widely circulated after being distributed for peer review - including by intelligence officials, however no legitimate publications would carry it until they toned down their language blaming China for the outbreak.

Correspondence seen by The Telegraph shows that, in April, the initial paper was rejected by leading academic journals including Nature and the Journal of Virology, which deemed the research "unsuitable for publication". 

Much of the paper was watered down to remove explicit accusations against China, and the rewritten study was then judged to be of sufficient scientific merit to be accepted for publication in the Quarterly Review of Biophysics Discovery, a journal chaired by leading scientists from Stanford University and the University of Dundee.  -The Telegraph

"This [the first] article was submitted to a… journal, which refused it within a week of receiving it, and in the same period accepted for publication two or three Chinese articles that relate to the virus, within 48 hours," Dearlove told The Telegraph. "So I mean, as this debate about the virus develops, I think all this material is going to be in print and is going to embarrass a number of people, I think. Let's suggest that the Chinese maybe have too much say in their journals, in what appears and what doesn't."

Dearlove suggests that Wuhan scientists may have been conducting genetic experiments on bat coronaviruses when COVID-19 accidentally escaped.

"It's a risky business if you make a mistake," said the 75-year-old spook. "Look at the stories... of the attempts by the leadership to lockdown any debate about the origins of the pandemic and the way that people have been arrested or silenced. I mean, we shouldn't really have any doubt any longer about what we're dealing with."

Sir Richard said he did not believe the Chinese had released the virus deliberately, but accused Beijing of subsequently covering up the scale of its spread.

"Of course, the Chinese must have felt, well, if they've got to suffer a pandemic maybe we shouldn't try too hard to stop, as it were, our competitors suffering the same disadvantages we've got," he said.

"Look, the Chinese understand us extremely well. They have made a study of us over the last decade or longer, particularly through attending our universities. We understand the Chinese very poorly. It's an imbalanced relationship in that respect."

Last month, the US Secretary of State, Mike Pompeo, claimed there was "enormous evidence" that the coronavirus outbreak originated in a Chinese laboratory, but did not provide any proof. However, the US National Intelligence Director's office later said it had determined that Covid-19 "was not manmade or genetically modified". -The Telegraph

"We are aware that these findings could have political significance and raise troubling questions," the authors originally wrote before they were forced to remove language critical of Beijing, who also referred to it in a previous draft as the "Wuhan virus," claiming that they had proven "beyond reasonable doubt that the Covid-19 virus is engineered."


Published:6/4/2020 7:50:17 AM
[Markets] European Central Bank boosts size of PEPP program by 600 billion euros European Central Bank boosts size of PEPP program by 600 billion euros Published:6/4/2020 7:22:47 AM
[Markets] Stock futures turn mixed as ECB injects more stimulus, investors await jobless claims U.S. stock-index futures were trading slightly lower Thursday morning, but pared earlier losses after the European Central Bank announced plans to increase its emergency stimulus program. Published:6/4/2020 7:22:47 AM
[Markets] Slumping Futures Spike After ECB Nearly Doubles Emergency QE Program Slumping Futures Spike After ECB Nearly Doubles Emergency QE Program Tyler Durden Thu, 06/04/2020 - 08:17

When even Bloomberg has articles such as this one "A Stock Melt-Up Looks Like the Fed’s Latest Feat of Engineering", you know it was time for the Fed to ease off the overnight ramp gas pedal, and that it was time for the insane rally from the past 2 months to ease a bit. And it did... until the ECB decided to pick up the monetary firehose when at 745am the European Central Bank announced it would nearly double its emergency QE to €1.35 Trillion from €750BN and extend it to at least June 2021, sparking a new bout of buying.

And while U.S. stock index futures slipped on Thursday as a rally fueled by optimism over an economic rebound from a coronavirus-led downturn ran out of steam, the ECB bailed out all those retail momentum daytraders who were about to suffer their first down day in over a week, when it announced a massive expansion to its QE program, which not only send stocks surging, but also pushed the Euro to a nearly three-month high, because in today's banana world printing money is bullish for the currency (and why not, we already showed that easing is deflationary).

Wall Street’s indexes had rallied in the previous few sessions, with the Nasdaq inching closer to a record high on hopes of a rebound from the economic slump and a spate of data that has been less dire than feared. The tech-heavy index was just 1.4% away from overtaking its all-time closing high set in February even though U.S.-China tensions continued to simmer as Hong Kong’s Legislative Council passed a bill that would criminalize disrespect of China’s national anthem on the anniversary of the Tiananmen Square massacre, a move seen as the latest sign of Beijing’s tightening grip on the city.

While Europe's Stoxx 600 dipped in early trading after markets were disappointed by the €130BN German stimulus which largely left out domestic automakers in the cold, it pared all losses from earlier in the session after the ECB's announcement. Stocks in Asia were mixed, with an MSCI benchmark of global equities falling just short of recouping three-quarters of its tumble from a February record.

Earlier in the session, Asian stocks gained, led by consumer staples and health care, after rising in the last session. Most markets in the region were up, with Thailand's SET gaining 2.3% and Australia's S&P/ASX 200 rising 0.8%, while Jakarta Composite dropped 0.5%. Trading volume for MSCI Asia Pacific Index members was 12% above the monthly average for this time of the day. The Topix gained 0.3%, with DLE and ITmedia rising the most. The Shanghai Composite Index retreated 0.1%, with Yongyue Science & Technology and Zhejiang Shengyang Science & Technology posting the biggest slides

With the ECB having pleasantly surprised traders who were looking for a €500BN PEPP expansion, investors will now keep an eye on U.S. employment data that may signal the extent of the damage to jobs, and which will likely print at just under 2.1 million; indicatively on most previous Initial Claims days, the market has soared so there is no reason to expect any different today. As Bloomberg adds, "traders are searching for further tailwinds for risk assets without more evidence that reopening economies can trigger a rebound in corporate earnings", and they are finding all the "evidence" they need in central bank actions.

“We’ve had an over-extension, and a bit of altitude sickness is creeping in,” said Neil Wilson, chief market analyst in London for

And speaking of stimulus, late on Wednesday Chancellor Angela Merkel’s coalition agreed on a sweeping 130 billion-euro package designed to spur short-term consumer spending and get businesses investing again.

In rates, Treasuries are slightly richer across the curve, with yields within 1bp of Wednesday’s closing levels as narrow ranges dating back to start of April broadly hold. Bunds underperform after Germany’s EU130b stimulus package exceeds earlier estimates. Treasury 10-year yields around 0.760%, richer by ~1.5bp on the day; long-end continues to lag slightly with 5s30s and 10s30s mildly steeper. Bunds lag by ~1bp vs. Treasuries, gilts trade broadly in line. As Bloomberg notes, Asia-session demand emerged with 10-year yields in 0.70%-0.75% range, a theme of recent weeks

In FX, the dollar initially halted a five-day losing streak and rose against all its Group-of-10 peers except the franc, however it reversed all gains and then some after the ECB surprised with a larger than expected PEPP expansion, which sent the EURUSD as high as 1.1272, a three-month high. The pound sank after Germany’s ambassador to the EU said there had been no real progress toward a trade deal in its negotiations with the U.K. The Norwegian krone fell for the first time in eight days as oil prices declined and the yen fell to a 2-month low on the back of the stronger dollar.

In commodities,  West Texas oil declined from a three-month high as OPEC+ unity was threatened by a long-running feud and U.S. data cast doubt on the strength of the demand recovery. Gold was slightly higher at $1,707 per oz.

Expected data include jobless claims and trade balance. Broadcom and Gap are among companies reporting earnings

Market Snapshot

  • S&P 500 futures down 0.3% to 3,107.75
  • STOXX Europe 600 down 0.5% to 367.23
  • MXAP up 0.2% to 157.51
  • MXAPJ up 0.4% to 506.96
  • Nikkei up 0.4% to 22,695.74
  • Topix up 0.3% to 1,603.82
  • Hang Seng Index up 0.2% to 24,366.30
  • Shanghai Composite down 0.1% to 2,919.25
  • Sensex down 0.3% to 34,005.85
  • Australia S&P/ASX 200 up 0.9% to 5,991.82
  • Kospi up 0.2% to 2,151.18
  • German 10Y yield rose 0.6 bps to -0.348%
  • Euro down 0.3% to $1.1200
  • Italian 10Y yield rose 5.2 bps to 1.382%
  • Spanish 10Y yield rose 4.0 bps to 0.65%
  • Brent futures down 1.7% to $39.13/bbl
  • Gold spot up 0.3% to $1,704.33
  • U.S. Dollar Index up 0.3% to 97.60

Top Overnight News

  • German Chancellor Angela Merkel’s coalition agreed on a sweeping 130 billion-euro ($145 billion) stimulus package designed to spur short-term consumer spending and get businesses investing again
  • The U.K. is heading for a damaging showdown with China as it takes on Beijing over Hong Kong and Huawei Technologies Co.
  • Officials in Germany, France, Italy and Spain are closely monitoring contagion data to see if looser controls are backfiring. That appears not to be the case, even if there have been some outbreaks connected to slaughterhouses
  • Bond yields in Europe’s safest and riskiest markets are converging as the region’s central bank and governments ramp up policy stimulus to counter a recession caused by the coronavirus
  • French Budget minister Gerald Darmanin says the budget deficit will rise to 11.4% of economic output in 2020

Asian stocks were mostly higher as the region partially upheld the firm handover from Wall St where sentiment was underpinned by recovery hopes and encouraging data after ISM Non-Manufacturing PMI topped estimates and ADP employment numbers showed a much narrower than feared drop ahead of Friday’s NFP release. ASX 200 (+0.8%) was lifted by broad sector gains aside from commodity related stocks, in particular gold miners after the precious metal briefly slipped below the USD 1700/oz focal point, while Nikkei 225 (+0.4%) was underpinned by the favourable currency moves but with gains momentarily reversed amid fears of a second virus wave in Tokyo after a jump in cases recently prompted an alert and with officials said to consider flagging the city as an area where coronavirus is increasing. Hang Seng (+0.2%) and Shanghai Comp. (-0.1%) were mixed with mainland China the laggard following another substantial liquidity drain and as trade tensions remained in the spotlight with the US to designate additional Chinese media outlets as foreign missions and announced a ban on Chinese airline flights to the US in response to China refusing to allow US airlines to resume passenger service, although Beijing has since changed its tune regarding this. Furthermore, it was also reported that Chinese state-controlled companies cancelled some shipments from US farm exporters including livestock feed, corn, pork, cotton and have postponed some meat imports. Finally, 10yr JGBs declined at the open after the sell-off seen in USTs and which saw the benchmark 20yr JGB yield at its highest level in more than a year, while prices were also pressured after all metrics of the 30yr JGB auction pointed to a weaker result.

Top Asian News

  • Tokyo Virus Cases on Uptrend as Double-Digit Rise Continues
  • Li’s Support for Street Vendors Spurs China Stock Market Frenzy
  • Tsinghua Holdings Yuan Bond Due 2022 Drops Most in Six Months
  • Singapore Sees Higher Community Virus Cases After Partial Reopen

European equities trade with modest losses [Euro Stoxx 50 -0.7%] – with some touting potential profit-taking ahead of key risk events including the ECB’s latest policy decision later today (full preview available on the Research Suite). At the same time, tomorrow’s NFP could also prove to be another dire reading. Macro-news flow has remained light early-doors, although reports suggested US Department of Transport ordered to ban Chinese passenger airlines from flights to the US from June 16th in response to China refusing to allow US airlines to resume passenger service, whilst China's Agricultural Ministry confirmed they are continuing to purchase US soybeans, which followed reports Chinese state-controlled companies reportedly cancelled some shipments from US farm exporters. Back to Europe, sectors are mostly negative with cyclicals largely lagging defensives – suggesting more of a risk-averse mood. The sectorial breakdown adds little colour to the current state of play, although its seemingly a mirror image of yesterday’s performance – possibly implying consolidation. In terms of movers and shakers, German auto names are pressured (Daimler -4%, BMW -1.9%, Volkswagen -1.8%) after the German relief package failed to include incentives to purchase petrol and diesel vehicles. Meanwhile, LVMH (-1.5%) drifted lower after the open after the group confirmed source reports that it is backing away from the Tiffany (-0.7% pre-mkt) deal for now. On the flip side, AstraZeneca (+1.8%) holds onto gains as the Trump admin selected the Co’s COVID-19 vaccine as a candidate finalist.

Top European News

  • ECB Told to Be Bold With More Cash for Recovery: Decision Guide
  • Rolls-Royce Plans 3,000 U.K. Job Cuts as Aviation Contracts
  • Mass Mink Cull Ordered on Dutch Farms to Stem Coronavirus Spread
  • Remy Cointreau Jumps on Upped 1Q Guidance, FY20 Earnings Beat

In FX, a quirk of fate perhaps or simply coincidental, but a broad and firmer Dollar recovery from recent lows amidst some signs of sated risk appetite has culminated in Eur/Usd, Usd/Jpy, Cable, Usd/Chf, Aud/Usd, Nzd/Usd and Usd/Cad all close to big figures, at 1.1200, 109.00, 1.2500, 0.9600, 0.6900, 0.6400 and 1.3500 respectively. Meanwhile, the DXY has pared more losses from a minor new base at 97.180 on Wednesday to trade nearer the top of a 97.638-314 range awaiting final pre-NFP employment signals via Challenger layoffs and initial claims, though latter not the survey week for Friday’s BLS report. Back to the other major currencies, Germany’s bigger than expected Eur130 bn fiscal package gave the Euro enough momentum to breach Fib resistance at 1.1237, but not the amount required sustain 1.1250+ levels, and decent option expiry interest may now keep the headline pair in check ahead of the ECB policy meeting, if not the NY cut given 1 bn rolling off between 1.1245-50 and 1.4 bn just above 1.1200 and yesterday’s 1.1190 low from 1.1205 to 1.1215. However, the ECB event and Lagarde presser will be pivotal with focus on more PEPP stimulus or a pause until September, with the market split over the 2 main potential outcomes – for a full preview see the Newsquawk Research Suite. Elsewhere, the Yen is still eyeing broad risk sentiment, Greenback moves and US Treasury yields/spreads for direction, but also Japanese budget supplements to counter COVID-19 with the latest injection said to be equivalent to 2% in terms of real GDP. Technically, 109.38 (April 6 lower high) has not seriously been tested, but pull-backs could be limited following the rally through key chart levels on the way up and beyond 109.00. Turning to the Pound, stops were tripped at 1.2525 after a fade ahead of 1.2600 and the midweek 1.2615 peak pulled Sterling back below the 100 DMA (1.2564) against the backdrop of rising no deal Brexit prospects assuming no breakthrough in trade talks or an extension to the transition period, while the Franc is firmer despite deflationary Swiss CPI data, as Eur/Chf retreats towards 1.0750 from over 1.0800 yesterday. Down under, the Kiwi is holding up better than its Antipodean neighbour as Aud/Nzd hovers around 1.0750 and the Aussie digests somewhat mixed macro news in the form of weak retail sales vs a wider than forecast trade surplus. Last, but not least, the Loonie is still reflecting on a relatively encouraging if not quite upbeat assessment and outlook from the BoC in the run up to Canadian trade data and a speech from Gravelle later.

  • SCANDI/EM - The Swedish Krona is underperforming on the back of a steep decline in new orders, as Eur/Sek rebounds further from sub-10.4000, but Eur/Nok has recoiled from an oil-induced spike even though latest reports suggests no OPEC+ meeting this week and crude prices remain off their recovery peaks. On the EM front, widespread depreciation or retracement in line with the less bullish risk tone and Dollar reprieve, as the Rand and Rouble reverse back below 17.0000 and 69.0000 handles respectively.

In commodities, WTI and Brent futures remain subdued in European trade as traders are no closer to clarity on an OPEC+ meeting date – with conflicting sources noting a meeting in late June, whilst others highlight the possibility of a meeting today. Either way reports yesterday posited that Saudi and Russia have agreed to extend current curbs for an extra month – albeit the two nations want compliance among other states, with Iraq and Nigeria letting down the group after complying only 42% and 33% respectively. Reports early-morning also touted a potential delay to the July Official Selling Price (OSP) release until at least Sunday – possibly alluding to a meeting before then based on history and assuming no further delay, with sources also noting the possibility of a meeting this week if non-complying countries pledge to improve compliance. However, reports via journalist Reza Zandi notes the OPEC+ meeting is unlikely to be held today amid complicated negotiations for compliance, "As of now, the next meeting is scheduled for 9-10 June, as scheduled previously". Meanwhile, Russian Energy Minister Novak emerged on the wires, again with little clarity in regard to a meeting date, but stated that Russia is in talks with the US on the oil market – but does not expect US regulators to import production curbs. WTI July futures trade sub-USD 37/bbl and Brent August remains sub-USD 40/bbl, both off worst levels of USD 36.40/bbl and USD 39.03/bbl respectively. Elsewhere, spot gold was relatively flat on either side of 1700/oz amid light news flow and heading into the ECB monetary policy decision, but picked up in recent trade to trade closer to 1710/oz. Copper prices have retreated after failing to sustain prices above USD 2.5/lb as the red metal tracks sentiment and the brewing US-Sino tensions in the background.

US Event Calendar

  • 8:30am: Trade Balance, est. $49.2b deficit, prior $44.4b deficit
  • 8:30am: Nonfarm Productivity, est. -2.7%, prior -2.5%; Unit Labor Costs, est. 5.0%, prior 4.8%
  • 8:30am: Initial Jobless Claims, est. 1.84m, prior 2.12m; Continuing Claims, est. 20m, prior 21.1m
  • 9:45am: Bloomberg Consumer Comfort, prior 35.5

DB's Jim Reid concludes the overnight wrap

After one day of rain during a 10 week lockdown where my wife has single handedly planted well over a 100 new plants, shrubs and hedges, yesterday we spent every hour (between bouts of incredibly hard work) checking the latest percentage probability of rain in our area as my wife has got fed up of constant watering and there was finally a promise of rain. The probability was between 40-80% for every hour between 7am and 7pm. In the end we got probably about 5 drops. Nice to find something that makes a strategist feel good about his forecasts. Meanwhile the rain dance in the Reid household continues. Although it does pause when a game of golf is around the corner.

Perhaps all-time equity market highs are around the corner too as the relentless rally continues. Talking of forecasts it was interesting to look back on the EMR from 20th April (in what feels a lifetime ago) where we wrote the following “…. when central banks have so far pumped in an annualised $23.4 trillion into the financial system you can see how it’s hard to get a feel for where markets can go. Clearly they won’t keep up that pace of liquidity injections unless economies fall even further but could you really have a situation in 1-2 months’ time where economies are still struggling to fully open and yet equity markets are back at record highs? I don’t think so but you couldn’t rule it out given the ginormous liquidity injections. Crazy times and we haven’t even mentioned the government injections.”

I’ve thought a lot about the themes of this paragraph for the last 6-7 weeks and the only part of this that I now regret are the words “I don’t think so”. The rally has indeed been faster than surely anyone could have imagined but it was starting to be clear in late March and April that we were dealing with levels of stimulus that were going to be almost exponential relative to anything seen before in history. As you know we are still having a big debate here at DB as to whether this crisis is going to be deflationary or inflationary. I still think inflationary, but the case for both are laid out in Konzept here. Interestingly Oli Harvey, who is on the inflationary side, put out an interesting piece earlier this week (link here ) that looked at UK April money supply data for the UK and which showed another significant rise in aggregate money balances, even as households delevered. This is massively different from 2009. After a record rise in March, the April increase was the second largest on record. Oli ascribes the rise in household deposits to expansionary fiscal policy, as well as corporate borrowing to fund labour compensation. Should money creation continue at this pace, given the dramatic fall in real GDP, the effects should be inflationary in the medium to long-run. This may ultimately depend on whether fiscal policy continues to be expansionary though and that could be the key to resolving this debate. My view is that it’s going to be very difficult to push the fiscal genie back in the bottle in the months, quarters and years ahead.

Back to yesterday and risk assets advanced to new post-pandemic highs yesterday as the levels of risk appetite in markets appeared almost insatiable. The S&P 500 breached the 3100 barrier yesterday with a +1.36% advance, as bank stocks (+5.21%) led the way amidst a sharp rise in bond yields. That’s the 4th consecutive advance for the S&P, which is the first time that’s happened since early February. It’s is only now -7.78% from the all-time highs in February. Tech stocks lagged again yesterday, with the NASDAQ up by “just” +0.78%. But even that still left the index only -1.37% down from its all-time high back in February. Meanwhile volatility continued to decline, with the VIX index down a further -1.18pts to 25.7pts, its lowest level since late February. Bloomberg’s index of US financial conditions eased to its most accommodative level since late February too.

As with the day before, Europe was where the even bigger moves were, with the STOXX 600 up +2.54%. That comes ahead of today’s ECB meeting, where investors are hoping that the central bank will add further monetary stimulus, which alongside the switch back into value over growth has perhaps been helping to support the rally over recent days. In terms of what to expect, our European economists write in their preview (link here) that they expect that the €750bn Pandemic Emergency Purchase Programme announced in March will be doubled in size to €1.5tn and extended to mid-2021. The MNI story earlier in the week that suggested that some of the committee are not ready to rubber stamp the expansion hasn’t dampened expectations, but the ECB do have a habit of saving their largest responses to when the market is screaming out for it not when there is a big rally ongoing.

However our economists also expect large downward revisions to the staff forecast which may give them cover to act further, with President Lagarde having already indicated that their forecast is between the “middle” and the “severe” scenarios the ECB had previously discussed, implying GDP growth this year between -8% and -12%. The other interesting aspect to watch out for today will be how Lagarde responds to questions on the German constitutional court ruling, which challenged the ECB’s previous public sector purchase programme in a court ruling last month.

Speaking of further stimulus, last night Chancellor Merkel’s ruling coalition struck a deal on another German fiscal stimulus package after multiple days of negotiations. The euro jumped to a 12 week high on the announcement before settling at up +0.56% for the day, the 7th straight session higher for the currency. German equities may have been anticipating the approval of further funds with the DAX rallying +3.88% yesterday, one of the best performing equity indices in Europe. The plan calls for roughly €130bn in measures including a time-limited value-added tax cut worth €20bn, investments in digitization and electric vehicles, and a €300 per child one-off payment to families. Hard-hit businesses in sectors like tourism and hospitality will receive €25bn from the new plan, while the government will also help support localities that have struggled given the lack of business tax dollars.

A quick check on markets overnight shows that bourses in Asia might finally be pausing for breath. Indeed despite there being no new newsflow to highlight, the Nikkei (-0.13%), Hang Seng (-0.11%) and Shanghai Comp (-0.21%) have all erased earlier gains to trade slightly lower while the Kospi (+0.23%) and ASX (+0.62%) have also retreated from earlier highs. Futures on the S&P 500 are also down -0.24% this morning while WTI oil is down -2.15% to $36.49. In FX, the US dollar index is up +0.18%. Spot gold prices are also up +0.24%.

In other news, the US Senate cleared changes to the Paycheck Protection Program that will allow small businesses more flexibility in using the rescue loan funds. The bill would extend an eight-week period - when proceeds must be spent for loans to be forgiven - to 24 weeks or until the end of the year, whichever comes first. Businesses would also have as long as five years, instead of two, to repay any money owed on a loan, and they could use a greater percentage of proceeds on rent and other approved non-payroll expenses.

Given the market mood yesterday it was a bad time to be in safe havens. The US dollar fell by -0.41%, down for a 5th straight session to its weakest level in nearly 3 months, while the Japanese yen was the worst-performing G10 currency for a 2nd day running. Gold also tumbled, down -1.62% in its biggest move lower in over 6 weeks, and 10yr Treasury yields were up +6.1bps to 0.746%. It was the largest one day rise in rates since 18 May, and the highest closing level since 14 April. Sovereign debt more broadly sold off, with 10yr bund yields also up +6.1bps to -0.35%, their highest level in nearly 2 months. Interestingly, inflation expectations have also been the beneficiary of the recent rally, with five-year forward five-year inflation swaps in the Euro Area now at 1.02%, their highest level in over 7 weeks. The (all time) low was at 0.72% on March 23rd. The US equivalent is at 1.82% and up from the all-time low of 1.22% on March 12th.

Oil was not an exception to the risk-on sentiment yesterday, even after falling early in the day on headlines that the OPEC+ meeting was in doubt thanks to a dispute over non adherence to oil quotas, with Russia and Saudi Arabia unhappy at others who haven’t stuck to their commitments. This has become increasingly important as the recent rally in oil prices has encouraged US shale producers to restart some production. Brent crude had been trading above $40/bbl prior to the report, but fell back afterwards as investors reacted to the prospect that production cuts might be eased next month in response. While the commodity was down just over -2% following the news, it ground higher throughout the day to finish the session up +0.56% at $39.79.

Turning to the data now, and the story from yesterday’s services and composite PMIs echoed that from Monday’s manufacturing PMIs in showing a recovery from April’s numbers, but remaining well inside contractionary territory (except in China). For the Euro Area, the final composite PMI was revised up to 31.9 (vs. flash 30.5), and was well above April’s 13.6 print, while the readings for France (32.1) and Germany (32.3) were also revised up from the flash reading. This is a positive sign given that the revisions reflect 6 extra days of the survey period relative to the flash PMIs, suggesting that the economic situation is improving as the various countries are gradually reopening. Nevertheless, the 31.9 reading for the Euro Area as a whole is still well below even the lowest point after the GFC, which just shows how far there is still to travel before we return to something like normality again.

The other main release was the ADP employment report for May, which showed a much better-than-expected -2.760m decline (vs. -9m expected), while the extent of the job losses the prior month was also revised lower. That’s a positive signal ahead of tomorrow’s jobs report, which is expected to show a further deterioration in the state of the US labour market. As a reminder, our US economists are predicting a -6.1m decline in nonfarm payrolls, with the unemployment rate rising to 19.1%. It’ll also be worth looking at today’s initial weekly jobless claims, where our economists are expecting a further 1.8m claims. Finally, the ISM’s non-manufacturing index for May also beat yesterday with a 45.4 reading (vs. 44.4 expected), though the employment component came in at just 31.8.

To the day ahead now, and the highlight is expected to be the aforementioned ECB meeting and President Lagarde’s subsequent press conference. Otherwise, we’ll also get data on Euro Area retail sales for April, as well as May’s construction PMIs from Germany and the UK. Over in the US, there’s also the weekly initial jobless claims release, along with April’s trade balance.

Published:6/4/2020 7:22:47 AM
[Markets] Job-cut announcements fell 40% in May, but still were the second highest ever Job-cut announcements fell 40% in May, but still were the second highest ever Published:6/4/2020 6:50:03 AM
[Markets] Hong Kong Makes "Disrespecting Chinese National Anthem" A Crime On Anniversary Of 'Tiananmen Square' Hong Kong Makes "Disrespecting Chinese National Anthem" A Crime On Anniversary Of 'Tiananmen Square' Tyler Durden Thu, 06/04/2020 - 07:37

As if the imposition of a new "National Security" law by the Politburo Standing Committee wasn't enough of a kick to the face for Hong Kong's pro-democracy movement, the city's own executive council, which over the years has been packed with pro-Beijing lawmakers via anti-democratic tactics, has just made it illegal to "disrespect" the Chinese national anthem.

Criticizing the anthem, or not showing appropriate respect, is now punishable by a penalty of up to three years in prison, and a maximum fine of HKD$50,000 ($6,400). The law was approved by a 41-1 vote in the legislature, according to WSJ.

What's worse: the new law, perhaps the biggest move by the legislature to suppress political freedoms in the city to date, was passed on the anniversary of "the June 4 incident" - better known in the US as the Tiananmen Square massacre, which WSJ noted is a "poignant day" for Hong Kong.

Many suspect that the law was passed as part of an effort mandated by Beijing to crack down on an annual vigil to honor the victims, which the authorities are refusing to allow this year for the first time since the incident occurred.

The vote was held on a poignant day in Hong Kong, where for the first time in 30 years, authorities refused permission for a mass vigil to mourn the deaths of the pro-democracy students gunned down by Chinese soldiers in Tiananmen Square 31 years ago. Police objected to the vigil, citing social-distancing rules amid the continuing coronavirus pandemic, and threatened to arrest those who violated the ban.

Vigil organizers and opposition groups have accused officials of using those regulations for political means to stifle dissent in the city, which was gripped by months of social unrest last year. China is in the process of passing national-security laws in the city to prevent a recurrence of the sometimes violent protests that drove the city into recession, a move opposition groups fear will permanently end the annual June 4 vigil and curb other demonstrations.

On Thursday, authorities put up extra barriers around parts of the park where the vigil, which often draws tens of thousands of people, is held each year. Parts of the park where vigil participants typically gather have been closed for weeks as the city fought to contain the spread of the coronavirus, which is now largely under control in Hong Kong.

Notably, the penalties for disrespecting the anthem are similar to penalties for desecrating China's flag.

The anthem law bans acts including insulting the anthem - "March of the Volunteers" - in public, or playing and singing it in a distorted or disrespectful way. The penalties are similar to those in an existing law that criminalizes the desecration of China’s flag.

With the vigil canceled, other activities had been organized across the city. Some still said they would go to the park, while others planned events at churches and universities.

With the vigil now cancelled, some Hong Kongers are organizing other peaceful events. But don't be surprised if there's more unrest on the streets this weekend.

Published:6/4/2020 6:50:03 AM
[Markets] Metals Stocks: Gold prices bounce higher as traders watch for ECB decision, jobless claims Gold prices rose on Thursday as investors awaited policy actions by the European Central Bank, which could influence gold trade.
Published:6/4/2020 6:50:03 AM
[Markets] Hard-hit cruse operator Royal Caribbean offering $2 billion in bonds Hard-hit cruse operator Royal Caribbean offering $2 billion in bonds Published:6/4/2020 6:20:31 AM
[Markets] Genius Brands stock rockets more than 2,400% in a month, ahead of ‘important news’ in coming days Shares of Genius Brands International Inc. blasted off Wednesday on record volume, again, to extend the mind-boggling rally over the past month, ahead of the imminent release of “important news” and the launch of its network brand “Kartoon Channel” later this month.
Published:6/4/2020 6:20:31 AM
[Markets] 2 NYPD Cops Shot, 1 Stabbed In Brooklyn As 'Police Brutality' Riots Go Global 2 NYPD Cops Shot, 1 Stabbed In Brooklyn As 'Police Brutality' Riots Go Global Tyler Durden Thu, 06/04/2020 - 06:44

A movement inspired by another in a long line of heinous police killings in the US, and instead of walking away with a slap on the wrist, all of the officers involved with the ill-fated arrest have now all been arrested themselves, and charged with murder, or abetting murder. But still the protests won't stop, and instead, thousands of angry Europeans have opted to join their American 'comrades', and in so doing vent their frustrations following months of restrictive lockdowns.

A bunch of anarchists in Greece hurled molotov cocktails at the US embassy in Athens.

Riots and protests over police killings started because the cops who killed Eric Garner and Michael Brown walked away with only administrative punishments, and both got to keep their badges. This time around, the movement has a different goal: abolish "white supremacy" around the world.

Remember when an army of media pundits criticized the Occupy Wall Street movement for its 'vague' agenda? Well, it appears the those who continue to return to the streets night after night have only one real agenda: venting their rage on the cops, feds and national guardsmen, by pelting them with bricks and even shooting them. By the New York Times' count, Wednesday was the ninth night of demonstrations, and while most of the major American newspapers heralded the night as 'largely peaceful', they mostly neglected to mention that, amid all the enthusiasm over the new charges brought by Keith Ellison, somebody walked up to a cop in Brooklyn last night without provocation and stabbed him in the neck. Two cops were also shot during a struggle with the suspect, the New York Post reported. It's unclear whether the officer stabbed in the neck survived. The two who were shot reportedly had non-life-threatening injuries.

The NYP said the motive for the assault remains unclear, and an investigation is ongoing.

Elsewhere in Brooklyn, cops rejected calls from protesters at the Barclays center to "take a knee", as hundreds chanted from behind a fence. As the NYT reported, "they were not having it."

The phenomenon of deputizing all available federal officers to protect the area around the White House continued Wednesday night, as reporters claimed to encounter BoP corrections officers, DEA agents and others (we wonder if the fish and wildlife agents were out there too).

Outside Brooklyn, where the alliance between blacks and the white middle class gentrifiers who pushed them out of their homes has proven notably toxic, violence last night was minimal, as protests remained largely peaceful. Several horses were apparently allowed to join the rally in the Mission District last night.

A large group of peaceful protesters sat near the intersection of 86th Street and East End Avenue, the closest they are legally allowed to assemble near Gracie Mansion, the mayor’s official residence. For a time, the NYT said, the only sound to be heard was the birds and helicopters flying overhead.

Cops in midtown Manhattan enforced the city's curfew, and loaded those captured during a "mass arrest" onto police vans for transportation.

This cyclist went down particularly hard.

Marchers in Washington DC, roused by the earlier curfew but subdued by the rainfall, were greeted by a wider perimeter around the White House, as well as more officers, though demonstrations remained largely peaceful. Somebody passed out sandwiches. Another person gave out cookies.

The situation was very different in Portland, Ore., widely known across the US as the city with the most antifas per 100,000 residents, as all the white hipsters who populate the city's coffee shops, accompanied, presumably, by groups of "outside agitators", once again turned violent after dark, after a daytime rally that drew more than 10,000 people.

"We have to collectively come together to stop those who are holding our city with violence...Every night, we are using all our resources and it is still not enough," said Portland Police Chief Jami Resch.

Among the many controversies to erupt this week, the NYT is facing backlash for publishing an op-ed by Sen. Tom Cotton calling for the US to "send in the army" to restore order to the streets. One of the NYT's most visible reporters claimed the op-ed "puts black reporters in danger".

We'd love to hear an explanation of that logic.

Published:6/4/2020 5:49:01 AM
[Markets] Getting back to normal just got a lot harder for the U.S. economy Protests could curtail spending, slowing the fragile recovery.
Published:6/4/2020 5:49:01 AM
[Markets] Dow Jones Futures Signal Pause In Coronavirus Stock Market Rally; Two Recent Breakouts Dive On Guidance Futures signal a pullback with the Nasdaq nearing highs in the hot coronavirus stock market rally. Two software stocks dived below buy points Published:6/4/2020 5:49:01 AM
[Markets] Tropical Storm Cristobal Set To Strike US This Weekend  Tropical Storm Cristobal Set To Strike US This Weekend  Tyler Durden Thu, 06/04/2020 - 06:00

Tropical Storm Cristobal Summary: 

  • Tropical Storm Cristobal has formed in the southwestern Gulf of Mexico 
  • Cristobal to make landfall in or near Louisiana by Sunday, with specific impacts unknown at the moment
  • The 2020 Atlantic hurricane season is expected to by a very active one 

* * * 

Tropical Storm Cristobal could impact the U.S. as early as this weekend. The storm made landfall on the coast of Mexico Wednesday morning and is expected to then track toward the U.S. Gulf Coast, bringing tropical moisture with it.

The center of Cristobal arrived onshore west of Ciudad del Carmen, Mexico, on early Wednesday morning, with winds around 60 mph. 

In the next few days, the storm is expected to intensify, as it will charge up the southern Gulf and then track north late week. In the early part of the weekend, Cristobal will be near the northern U.S. Gulf Coast. Later on Sunday, the storm could make landfall around the upper Texas coast to the Alabama Gulf Coast. 

"The likely U.S. landfall for Cristobal is now within the 5-day forecast, slated for Sunday in Louisiana based on the latest forecasts. Specific impacts will be discussed closer to the weekend, but flooding rainfall would seem to be a minimum. There is upside potential toward a hurricane based on environmental conditions, but there are also limiting factors that should prevent a damaging major hurricane.

h/t Reuters commodity desk  

"Sea surface temperatures (SSTs) are only marginally supportive of hurricane intensity in the landfalling area around Louisiana, which is the number one factor in how strong a hurricane can get. Furthermore, as Cristobal approaches the U.S. shoreline, increasingly dry air will wrap into the circulation of the storm which will have a weakening effect," Reuters commodity desk said. 

Several spaghetti models show Cristobal could be headed to an area in the Gulf of Mexico with dozens of offshore drilling rigs. 

"As oil and gas companies began shutting offshore production before the first tropical storm of the season in the U.S. Gulf of Mexico, experts said restarting wells and refineries will take longer and prove more costly this year because of COVID-19. Well shut-ins typically last a few days or weeks at most, but oil companies have adopted stringent virus precautions for refinery and offshore staff, including frequent health checks, travel restrictions, onsite protective gear, and longer work stints with pre-departure quarantines," Reuters commodity desk said. 

h/t Reuters commodity desk  


This is the third tropical storm of the year, first of the season, and the 2020 hurricane season is likely to be a busy one. 

Published:6/4/2020 5:21:55 AM
[Markets] A Cheesecake-shaped recovery: Morning Brief Top news and what to watch in the markets on Thursday, June 4, 2020. Published:6/4/2020 5:21:55 AM
[Markets] Project Syndicate: Another drain on the U.S. economy: The long, painful road toward deglobalization As tariffs and trade frictions increase, corporate profits and gross domestic product suffer.
Published:6/4/2020 5:21:55 AM
[Markets] US Embassy In Athens Comes Under Firebomb Attack Amid Greek BLM Protests US Embassy In Athens Comes Under Firebomb Attack Amid Greek BLM Protests Tyler Durden Thu, 06/04/2020 - 05:30

More signs that the US George Floyd protests, riots and general contagion of spiraling mayhem are spreading far outside America's borders:

Demonstrators hurled firebombs in a march towards the U.S. Embassy compound in Athens on Wednesday in a protest over the death of George Floyd in Minneapolis.

Reuters journalists saw demonstrators throwing several flaming objects which erupted into flames on the street towards the heavily-guarded embassy in central Athens and police responding with rounds of teargas.

Chaos erupted outside the US Embassy in Athens Wednesday. Image source: Reuters

Though like other large European cities, Athens has been prone to youth rioting at the drop of a hat of the past years, it was clear the unrest was in direct spillover of events in US streets. 

Demonstrators which surrounded the fortified embassy, further secured with large Greek police buses, held signs with “Black lives matter” and “I can’t breathe” slogans, Reuters reports.

Dramatic footage showed Greek demonstrators charging through police lines in a clearly coordinated effort and then hurling the petrol bombs.

Greek police said the crowd swelled to over 3,000 demonstrators at one point. Police were seen running through flames after multiple firebombs exploded on the ground, but didn't appear to reach the main embassy building directly.

The attackers managed to get relatively close to the main embassy building:

Multiple molotov cocktails were thrown, caught on widely circulating social media videos; however, there were no instances of serious perimeter breaches or reported injuries among the police or Marine embassy guard. 

* * * 

More footage of Wednesday's chaos on the embassy steps in Athens below:

Published:6/4/2020 4:49:53 AM
[Markets] Turkey: Where Criticizing Islam Can Land You In Prison Turkey: Where Criticizing Islam Can Land You In Prison Tyler Durden Thu, 06/04/2020 - 05:00

Authored by Uzay Bulut via The Gatestone Institute,

Critics of Turkey's government and Islam continue being targeting by the country's authorities.

On May 17, Turkish photographer Firat Erez, a former supporter of Turkey's ruling Justice and Development (AKP) Party, was arrested in the city of Antalya after saying "Islam is immoral" on his Twitter account.

"This is not hate. It is a decision," he wrote.

"Islam is immoral. His Prophet, Allah, his disciples could not protect it. Islam has not overcome the moral barrier. It cannot. You cannot find the truth by bending over five times a day. Plain, clear and painful."

Erez was detained by Antalya police for "insulting religious values" and "provoking hatred or hostility in one section of the public against another section".

Twitter has since suspended Erez's account, and those who visit his Twitter feed today only see the following notification: "Twitter suspends accounts which violate the Twitter Rules".

Many people who commented on Erez's Twitter post called on authorities to arrest and punish him. One openly called on the "special operations unit" to torture Erez and "not to leave a single rib in his body that is unbroken, a tooth that is not pulled out, and a nail that is unextracted."

The journalist Hakan Aygün, former chief editor of the left-wing opposition-linked Halk TV, was also recently arrested for allegedly "humiliating religious values." Aygün was accused of "provoking hatred or hostility" by "insulting the Koran", the pro-government newspaper Sabah reported on April 3.

On March 31, Aygün had posted a tweet that criticized Turkey's "national donation campaign" to fight the coronavirus outbreak, announced by Turkish President Recep Tayyip Erdogan, with wordplay over a verse in the Koran. Many social media users have criticized the government for asking citizens to donate to the campaign when many citizens themselves are financially struggling after the government has mismanaged or irresponsibly wasted much of its budget.

Aygün criticized the donation campaign by referring to the Koran, which uses the term "iman" (religious belief) several times particularly in the expression "O you who believe! [who have faith]". Aygün replaced the word "iman" with "IBAN" [International Bank Account Number] and wrote:

"Iban surah, verse 1:

"O you who have IBAN! We gave you IBAN numbers from separate banks so that you will engage in IBAN. Undoubtedly, in the afterlife, those do IBAN will be separated from those who don't!"

Turkey's official Directorate of Religious Affairs (Diyanet), launched a criminal complaint against Aygün.

"The humiliation and attrition of Muslims before society," Diyanet said, "is never acceptable in any legal system."

Mustafa Dogan Inal, one of Erdogan's lawyers, also launched a criminal complaint against Aygün. It said, in part:

"The words of the suspect containing insults and accusations based on false claims that are impossible to be tolerated have reached more than one person, and have led to the insulting, degradation and demoralization of a particular section of the society."

Inal also said in the criminal complaint that Aygün's Twitter post "insulted the Koran, the holy book of Muslims, in a country where almost the entire population is Muslim and lives as Muslims.

"Degrading the book and its verses, which is one of the top priorities of the Muslims, by changing the places of letters and words through some word games is an unacceptable, ugly and presumptuous attack. Our book, Koran, clearly makes known the end [fate] of such people."

Indeed, laws criminalizing blasphemy or any criticism of the Islamic religion is deeply rooted in Islamic scriptures. According to the Koran and the recorded sayings (hadith) and biographies (sira) of Islam's founder, "To leave Islam, to insult Muhammad or Allah, to deny the existence of Allah, to be sarcastic about Allah's name, to deny any verse of the Koran" or to commit other acts of blasphemy are all punishable by death.

Such teachings have become embedded in the culture of many Muslim communities. Blasphemy is punishable by death in six countriesIranPakistanAfghanistanBruneiMauritania and Saudi Arabia.

Turkey does not have a separate law on blasphemy, but critics of Islam can be exposed to physical violence and death. Turan Dursun, an ex-Muslim imam and author who spoke about his atheism and publicly criticized Islam, and professor Bahriye Üçok, who said the use of headscarf was not obligatory in Islam, were both murdered in Turkey in 1990.

Certain laws in the criminal code are specifically cited to punish people for offenses related to "disrespecting" or "insulting" Islam. Article 216 of the Turkish criminal code, for instance, outlaws "insulting religious belief":

"Any person who openly disrespects the religious belief of group is punished with imprisonment from six months to one year if such act causes potential risk for public peace."

Bans on, or pressure against, any criticism of religion appear to be commonplace across the Muslim world. According to a report by the United States Library of Congress:

"Most jurisdictions in the Middle East and North Africa have laws prohibiting insulting Islam or religion generally. Many of them have recently applied such laws, including in Algeria, Bahrain, Egypt, Iran, Jordan, Kuwait, Morocco, Qatar, Saudi Arabia, Sudan, Tunisia, the United Arab Emirates, and the West Bank.

"In South Asia, the Islamic states of Afghanistan and Pakistan have blasphemy laws that are actively enforced.

"Islamic countries in East Asia and the Pacific, including Brunei, Indonesia, Malaysia, and Myanmar, have blasphemy-related laws that are actively enforced."

Apostasy is often charged along with blasphemy. According to a 2016 report by Pew Survey:

"Laws restricting apostasy and blasphemy are most common in the Middle East and North Africa, where 18 of the region's 20 countries (90%) criminalize blasphemy and 14 (70%) criminalize apostasy."

More alarming is that these pressures and bans come not only from governments. Many of the people in the countries mentioned above also appear enthusiastically to support strict or even deadly blasphemy and apostasy laws. According to a 2013 Pew survey, overwhelming percentages of Muslims in many regions -- Southeast Asia (84%), South Asia (78%), the Middle East and North Africa (78%), and Central Asia (62%) -- favor making sharia, or Islamic law, the official law of the land. And according to sharia, blasphemy and apostasy are punishable by death.

The "End Blasphemy Laws Campaign", run by the International Coalition Against Blasphemy Laws, has been trying to repeal blasphemy and related laws worldwide. According to its official website:

"While freedom of thought and belief, including religious belief, must be protected, it is equally important to guarantee an environment in which a critical discussion about religion can be held.

"Countries which prosecute 'blasphemy' and 'insult to religion' tend to suffer disproportionately many incidents of intercommunal and mob violence, vigilantism against individuals, and the general silencing and persecution of minorities.

"Criminalizing 'insult to religion in the penal code lends... legitimacy to the social persecution of individuals and groups who are said to 'offend' mainstream religious sensibilities, sometimes with their speech acts or writing, often just through their existence, or based on rumours spread with the intention of whipping up violence."

Hakan Aygün was released on May 6, pending trial. His next hearing will be held on July 14. Firat Erez, however, is still in jail. The way these two individuals have been targeted appears to be a warning by the government to other potential dissidents who might consider criticizing some aspects of Islam or a government policy.

Even if criticizing Islam might be offensive to some Muslims, all ideas, religions and ideologies should be open to criticism so long as one does not incite violence. "If liberty means anything at all," the author George Orwell wrote, "it means the right to tell people what they do not want to hear." Sadly, however, a philosophy that is for liberty seems a million years away from Erdogan's government.

In Turkey, where at least 103 journalists and media workers are in prison, Orwell could probably write another book about the government's tyranny against minorities and dissidents.

Published:6/4/2020 4:21:31 AM
[Markets] NerdWallet: Should you be ‘fair’ with the inheritance you leave to your kids? Parents who leave their children unequal inheritances risk fueling family feuds.
Published:6/4/2020 4:21:30 AM
[Markets] Unemployment, Delta, Slack, ZoomInfo - 5 Things You Must Know Thursday Wall Street awaits U.S. unemployment data; Slack and Broadcom report earnings; Delta extends social distancing measures; ZoomInfo's IPO is priced. Published:6/4/2020 4:21:30 AM
[Markets] Dow futures edge back as investors await jobless claims report, ECB decision U.S. stock-index futures tick lower early Thursday after a series of gains pushed the Nasdaq Composite to less than 2% of its all-time high, as a gradual restart to the U.S. and world economies from coronavirus-induced closures helps support bullish sentiment. Published:6/4/2020 3:23:31 AM
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[Markets] Europe Re-Opens Schools - Suffers No Second COVID Wave Europe Re-Opens Schools - Suffers No Second COVID Wave Tyler Durden Thu, 06/04/2020 - 04:15

Ahead of the fall academic year, American parents are asking one question: If schools reopen, will my child be safe from COVID-19

Well, there's some good news from Europe in the last several weeks. The Wall Street Journal has compiled a list of officials from countries who have overwhelmingly reported, that after a month or so of having education systems open, there are limited to no outbreaks of the virus.

Schools in Denmark, Austria, Norway, Finland, and Germany, have been operating for 1-2 months with no issue whatsoever about the virus. This is excellent news for American parents but also for stubborn US education officials who continue to shutter many school systems across the country for the upcoming academic year. 

Denmark was one of the first Western countries to reopen schools in mid-April and has a tracing system for if an outbreak is detected. 

"Our interpretation is that it may be that the children aren't that important for the spread of infection," said Tyra Grove Krause, a senior official with the State Serum Institute. Schools have imposed social distancing, air circulation, and new hygiene measures to reduce transmission risk. 

Norweigan Education Minister Guri Melby said if infections rise in the country, education facilities will remain open. Melby reopened schools on April 20 and has yet to report any significant outbreak. 

Austria reopened on May 18, so far, there has been no rise in infections at schools and kindergartens, a government spokesman said. 

Schools in Germany have been opened for at least a month, with no increase in cases. However, cases have surged at migrant shelters, slaughterhouses, restaurants, and churches, while schools have been widely spared. 

Finland opened schools on May 14, Mika Salminen, director of health security at the Finnish Institute of Health and Welfare, recently said, adding that no new cases have been reported at any schools and or day-care centers. 

Professor Herman Goossens, a medical microbiologist, and coordinator of the European Union, said the main reason for no outbreaks at schools is because children have fewer ACE2 receptors the virus uses to enter the body. 

Goossens said data from around the world showed children accounted for less than 1% of total infections.

Though German Health Minister Jens Spahn recently warned that "the state of science at the moment doesn't allow for any real conclusions about how much children contribute to the spread of the virus…. There are different assessments, and that makes it especially difficult to make political decisions."

It appears that children are less susceptible to contracting the virus. Maybe it's time to reopen America's schools... The longer schools are shut -- the more protesting and rioting from millennials will be seen


Published:6/4/2020 3:23:31 AM
[Markets] Europe's Natural Gas Glut May Force Supply Cuts Europe's Natural Gas Glut May Force Supply Cuts Tyler Durden Thu, 06/04/2020 - 03:30

Authored by Tsvetana Paraskova via,

Europe is so awash with natural gas amid weak demand and limited storage capacity that gas suppliers may have to cut flows to prevent natural gas prices from plunging further.