Just as we noted about April's numbers, the misery in Class 8 heavy duty truck orders continues.
Still struggling with the remnants of an order backlog that started almost two years ago with record orders in August 2018, the industry was unable to find an equilibrium prior to the coronavirus pandemic. Orders were sluggish and we noted numerous trucking companies that closed up shop altogether in 2019.
After a 73% crash in April, Class 8 orders once again plunged 62.5% in May, to their lowest sales levels since 2011. Sales came in at just over 9,000, according to Transport Topics.
Don Ake, vice president of commercial vehicles at FTR, tried to look at the bright side: “It’s not a horrible number. It’s a fair number under bad conditions. It is going to be a long, slow climb back.”
“We went into 2020 with very high inventories,” Ake said. YTD sales for Class 8 trucks were 69,379, which is down 37.5% from 2019.
Dan Clark, head of BMO Transportation Finance, says a V-shaped recovery isn't likely: “Given that the industry is still wrestling with the hangover of a near-record two-year stretch of heavy-duty truck sales, which is now compounded by lower than previously expected economic activity for the next year or two, we aren’t expecting to see a V-shaped recovery in Class 8 sales.”
He believes that orders will remain "choppy" during the second half of 2020, especially heading into the election.
Steve Tam of ACT Research took a longer term view: “These trucking companies have to assume I’m here today, I will be here tomorrow and so will my business. A lot of what we are dealing with now is just noise. It’s another cycle in the industry, although a very different cycle, with a very different catalyst. But a cycle nonetheless. So in some ways they have to look past the short term to what the more strategic picture is. So they have to continue to invest in the business if they want it to continue, and, hopefully, grow as well. So they are taking the long view."
As for individual company performance, Transport Topics reported:
Volvo Trucks North America earned an 11.8% share with 1,084 sales, or 60.2% fewer compared with a year earlier.
Mack Trucks posted a 9.6% share on 879 sales, or 51.5% fewer compared with a year earlier.
Kenworth Truck Co. earned the second-highest share, 13.9%, with 1,277 sales, or 65% fewer compared with a year earlier.
Peterbilt Motors Co. notched a 12.2% share with 1,119 sales, or 71% fewer, the biggest decline, compared with the 2019 period.
Recall, April's numbers were the lowest since FTR began tracking orders in 1996.
Many companies canceled or delayed new orders as demand, measured by the ratio of loads to trucks, fell 66% in April.
TFI's Chief Executive Alain Bédard said in an April 22 call: “Everything has been canceled.”
A 10-member SWAT team for a Florida police department has resigned en masse after their chief knelt with racial justice protesters, saying they felt "restrained by the politicization of our tactics."
The letter of resignation from the SWAT team in Hallandale Beach, Fla., was delivered to city officials on Friday, according to the South Florida Sun Sentinel.
“The risk of carrying out our duties is no longer acceptable to us and our families," the officers wrote, adding that the unit felt it was “minimally equipped, under trained, and often times restrained by the politicization of our tactics.”
The officers said they took exception to the comments and actions of one city official at a recent protest, who took a knee with other demonstrators and raised a 2014 shooting incident by the SWAT team that left an unarmed black man dead. The city's police chief joined in kneeling.
A review found the shooting justified and the victim's family was awarded a little more than $400,000 in a settlement.
The city official, Vice Mayor Sabrina Javellana, “has shown that she takes pleasure in besmirching the hard work and dedication of the members of this professional agency, having the gall to compare us to the Minneapolis Police Department," the SWAT officers said, adding that they felt the chief's decision to join Javellana in kneeling at the recent protest was an endorsement of her criticisms of the SWAT team.
Javellana defended her actions, saying “we have our own George Floyds and Breonna Taylors in our own city that we must address before we can heal and reform”
While the officers resigned from the tactical unit, they have not resigned from the department. Officials said they would rely on neighboring police SWAT teams until the matter is resolved.
The city's police chief is set to meet with the officers' union on Monday to discuss the resignations, according to the mayor.
“I will be following up with our chief of police, following up with our unions and, most importantly, ensuring that our accredited department has the resources and the training that they need to protect and serve our public,” Mayor Joy Cooper told the newspaper.
Michelle Caruso Cabrera, former CNBC anchor, has been trying to engage with her political opponent, Alexandria Ocasio-Cortez, for months now. But for a small online debate that took place in February, it doesn't look like AOC has any further interest in debating her upcoming political opponent.
AOC has said she plans on skipping face-to-face debates that are scheduled for this upcoming Wednesday. The Parkchester Times-sponsored debate is the same one that Rep. Joseph Crowley skipped before he was dethroned by AOC in 2018, according to the NY Post.
Parkchester Times publisher Sheikh Musa Drammeh said: "Ocasio-Cortez is claiming her incumbency privilege. But if she does the same thing, history will repeat itself."
It doesn't look to be a scheduling conflict for AOC, either: the House of Representatives has no votes scheduled for Wednesday and the House Financial Services Committee only has a meeting that will be held virtually.
Recall, we noted when things got nasty during an online debate that the two participated in back in February of this year.
MCC accused AOC of staying in her "luxury" apartment in DC ("with a Whole Foods in the lobby") while her constituents in the Bronx-Queens district are left to deal with the coronavirus pandemic on their own.
AOC responded by saying that MCC once lived in a Trump-owned building in NYC and that her family still has roots in her district, according to the NY Post. “This is where my uncle is. There is where my brother is. This is where my family is,” AOC said.
MCC responded: “AOC says her family lives here. Her mother moved to Florida because the taxes are too high.”
AOC thought the fact about her mom was a low-blow.“You can come after me all you want. Leave my mom out of it. My mom is a widow,” she barked back to MCC on a video posted online. “My mother is a school secretary who makes an hourly wage that’s laid off. You don’t know her. You don’t know what she’s been through. Leave my mom out of it. It’s really wrong.”
MCC then took on AOC driving Amazon out of New York: “We have to have an attitudinal shift toward jobs. We can’t tell job creators, ‘Go away, we don’t want your 25,000 jobs [referring to the aborted Amazon project].’ I’m never going to do that,” Caruso-Cabrera said.
She also noted that AOC voted against the Covid relief legislation last moth. “It’s what you always do. You’re always working on your celebrity status. No bill is ever perfect. But we have to start somewhere and we had to work quickly,” MCC said.
As a site focused on economics, AIER would rather have stayed away from commentary on diseases and their mitigation. In normal times, we would have.
The archives of AIER dating back to 1933 show that we had no comments on the polio epidemic (1948-1951), the Asian Flu (1957-59), the Hong Kong flu (1968-69), the Avian bird flu (2006), or the Swine flu pandemic of 2009, which was a strain most like 1918 and therefore, one might suppose, would have caused panic but did not.
We had nothing to say because disease mitigation is a job for medical professionals, not economists and certainly not politicians.
The problem is that this time, the disease mitigators (some of them, the ones in power and with the ear of politicians) didn’t stay out of economics. Indeed, their plans for mitigation trampled all over commerce, life, and the freedoms that are necessary to make it function. For a few months in 2020, the presumptuous model-building disease mitigators became central planners, overriding the wisdom of not only medical professionals but also economists, philosophers, political scientists, historians, and everyone else including legislatures and voters.
Our first piece on the topic ran January 27. The focus was on the quarantine power and the argument was simple: because people are not ridiculous and know how to deal with disease in consultation with medical professionals, this state power should not be deployed. At the time, people said we were being alarmist even for saying this. Nothing like this could ever happen in the U.S. because we have a Constitution and courts and a tradition of trusting the people.
It turns out, of course, that we underestimated the threat of coercion. It wasn’t just about quarantining the sick. It was about putting the whole of the country (but for a few governors who heroically resisted) under lockdown. This brought about economic collapse (and increasingly social and cultural collapse too). We chronicled the disaster in real time on this site, which became an essential go-to source for factual information and rational analysis – in contrast to the mainstream media which was pushing for panic and lockdown.
On April 2, we published our first set of commentaries: Coronavirus and Economic Crisis, edited by Peter C. Earle. Amazon would not permit the Kindle edition to go live. They have admitted to us that they “incorrectly blocked” the book. There is no going back but it remains a reality: AIER’s influence was blocked when it was most needed. It’s the fourth time in our history we’ve been censored.
Those were censorious times. It is however available now.
Much of the commentary focused on the absurd failures of the models being used by a handful of statisticians and epidemiologists. They predicted as many as 2.3 million deaths in the United States (the New York Times went one better and predicted 8.25 million deaths) if government didn’t crack down and shutter nonessential business, and lock hospitals down to become COVID-only zones.
Economists know something about the incredible failure of forecasting models. They have been deployed often in the postwar period. They came under heavy fire from economists of the Austrian and classical schools. They don’t grapple with certain facts of reality: second and third tier responses to policies, unpredictabilities of human choice, and the uncertainties of the future. There are too many variables operating in a complex system like a socio-economic order for any mechanistic model to capture them all, especially when dealing with an unknown and unknowable future.
The same forecasting failures afflicted the models that panicked politicians into locking down. They are too aggregated. They don’t consider population diversity and how novel viruses affect different groups in different ways. They presume that planners can know things that they cannot know, such as disease severity in the midst of an epidemic. Slogans like “flatten the curve” massively oversimplify social processes and human choices, and presume to know far too much about cause and effect.
It turned out of course that the models were horribly wrong, not only about the large death numbers but also about hospital capacity, unseen costs, economic effects, and even the demographics of the affected population. Remarkably, none of the models even considered the impact of the virus on long-term care facilities, and hence contributed to gross neglect of the population that should have received the bulk of the focus.
The Wall Street Journal sums up the blizzard of data rather sharply:
About 80% of Americans who have died of Covid-19 are older than 65, and the median age is 80. A review by Stanford medical professor John Ioannidis last month found that individuals under age 65 accounted for 4.8% to 9.3% of all Covid-19 deaths in 10 European countries and 7.8% to 23.9% in 12 U.S. locations.
For most people under the age of 65, the study found, the risk of dying from Covid-19 isn’t much higher than from getting in a car accident driving to work. In California and Florida, the fatality risk for the under-65 crowd is about equal to driving 16 to 17 miles per day. While higher in hot spots like New York (668 miles) and New Jersey (572 miles), the death risk is still lower than the public perceives.
Future historians will be astonished to ruminate about what we did here. We shut down schools, sports, theaters, bars, restaurants, and churches – government ignored the rule of law and put individual rights on hold – but it is more than obvious now that this was all a huge distraction. The focus should have been on the aged with underlying conditions living in nursing homes.
The models nowhere included what ended up being our reality, even though that reality was upon us as early as February when people in nursing homes began to die in Washington State. We should have seen it long before the lockdowns began.
Now the modelers in the epidemiological profession need to learn what the economists figured out long ago. Human life is too complex to be accurately modeled, much less predicted. This certainly pertains to a novel virus.
Economics in the 18th and 19th century focused on logic and principles. Economists sought to discern laws that operate in the material world, how incentives affect human choice, where wealth comes from, how production works, the function of prices, and they sought to introduce to the human mind accurate and realistic theories of the relationship between the material world and the human experience. Over the centuries, economics became a beautiful science.
In the 20th century, that way of understanding economics came under scrutiny as a new generation of thinkers began to imagine a better way. John Maynard Keynes in the 1930s famously rejected classical theorems but the problems had begun much earlier and lasted much longer. Eventually, economics was saddled with a thing called modeling a technical approach that eschewed real-world data and experience for computer simulations.
The American Institute for Economic Research has been fighting against this way for its entire history. Along with our work has been some of the best economic minds of the 20th century: Ludwig von Mises, F.A. Hayek, Benjamin Anderson, Joseph Schumpeter, and so on.
It seems like epidemiology similarly took a turn for the worse around 2006, when agent-based modeling strategies displaced the accumulated wisdom of the ages as summed up by Donald Henderson in this beautiful piece we republished.
It is not implausible to think that we can all get smart again about modeling and viruses. Consider the words of South Dakota Governor Kristi Noem. She never locked down. She resisted.
So this brings me to the question of modeling. While modeling certainly has a place, models have two major shortcomings. No model can actually predict the future. Especially when it is based on data that is incomplete. And no model is capable of replacing human freedom as the best path to responding to life’s risks, including this virus.
That is why central planning of the economy has failed every time the government has tried it. In South Dakota, we saw modeling as a tool, and we used it to be prepared for a worst case scenario. I thank God that the worst case hasn’t happened. But we were ready, and we are still ready, if it does.
But there is no model that can take into consideration all of the factors that make real life work. A blind reliance on insufficient modeling has led some politicians to institute disastrous lockdowns, that have not only jeopardized their people’s health, and their welfare, but also created conditions for a financial catastrophe, that will cause untold burdens and costs on their people for generations.
A powerful June 5, 2020, editorial in the Journal of the American Medical Association makes the core point:
Both modelers and public health policy makers should recognize that COVID-19 is not a unitary epidemic; in the US and other countries, it likely consists of multiple, contemporaneous, and intertwined suboutbreaks prominently including those in LTC settings. Distinguishing the rates and pattern of disease occurring in the general population from those in LTC facilities is both feasible and critical to control of infection in these high-risk settings. Creating separate models that reflect how COVID-19 has affected these different populations could provide more accurate evidence to guide mitigation efforts in the community and in LTC facilities, and could be helpful to better understand and reduce the morbidity and mortality this infection has caused among the most frail and vulnerable individuals.
We doubt the ability to create better models, however. Viruses do not behave in real life as they do in World of Warcraft and Hollywood movies. People are not automatons. They are choosing minds capable of intelligent adaptation to new realities, even pandemics. Instead we absolutely must recapture the wisdom of the past if we are going to deal intelligently with viruses in the future.
We cannot centrally plan an economy. Computers are no help. We cannot centrally plan a response to a new virus. Computers are of no help. For the sake of health, prosperity, human rights, and liberty, leave disease mitigation to the professionals and get it out of the hands of modelers and the politicians they intimidate into implementing their plans.
It wasn't a great week for Tesla last week. They were downgraded by both Goldman Sachs and Morgan Stanley on the same day, the company's health official appeared to make up un-scientific excuses for the spread of Covid at the company's California factories and the company started cancelling solar roof appointments that have been in place for the better part of the last 3 years.
Now, the problems appear to be extending to the Model Y. The company is reportedly having trouble scaling up production of its Model Y, according to a new report at Jalopnik.
Model Y production was the headline that was touted throughout the pandemic, several times, helping to keep Tesla's stock price buoyant. With Tesla's Fremont factory back on line and producing the carSUVwhatever the hell it is, it appears "not everything has gone to plan".
CEO Elon Musk has apparently told employees that things aren't going well and that he'd be walking the line to help fix issues, according to Bloomberg:
Tesla Inc.’s Elon Musk told employees the electric-car maker is having issues boosting output of its new Model Y crossover and said he’ll be walking the assembly line on a weekly basis to troubleshoot production snafus.
“We are doing reasonably well with S, X and 3, but there are production and supply chain ramp challenges with Model Y, as is always the case for new products,” Musk wrote in an internal email sent Saturday and seen by Bloomberg News.
Of course, we're not sure how Musk walking the floor of his production line is necessarily going to help. His rare visits to the factory floor have been described as hands-off and nerve wracking for employees. Even Jalopnik notes:
It’s always unclear whether Elon taking to the factory floors actually helps it seems distracting, if nothing else, if you’re trying to focus on your work and the billionaire CEO of the company is wandering around observing things. But whether it’s a publicity stunt or not or maybe Elon’s just bored these factory tours always just seem to come and go, and production rolls on.
In addition to having scaling issues, other problems about the Model Y are starting to surface online. Perhaps due to the new body style of the Model Y, it once again appears that paint issues are abound:
We look forward to the Model Y hitting all of the stages of "hell" that Model 3 production had to endure: production hell, pricing hell, paint shop hell, gross margin hell and, eventually, simply running-out-of-demand hell.
I was contacted recently by Sputnik News for my thoughts on what’s happening in the U.S. currently.
Specifically, they wanted my opinions on how out of control spending feeds back into the debt, the confidence of the dollar and to what extent the political unrest is playing.
This is a complicated set of circumstances and it’s my goal with these opportunities to be as broad-minded as possible given where things stand.
Sputnik: The United States’ national debt has exceeded $26 trillion for the first time in American history, Treasury data revealed. What does this number tell us about the current state of the US economy? What will be the ramifications of this, if any?
Tom Luongo: The U.S. economy is in terrible shape thanks to unfolding global financial crisis as well as the catalyst of the COVID-19 response. Locking down the economy only intensified a crisis that was already unfolding, making it far worse than it should have been.
The U.S. will run a primary budget deficit of more than $4 trillion this year, above 25% of GDP, at levels not seen since WWII.
And in some ways that has to occur given the circumstances because the world is biblically short of dollars as the Fed’s weekly balance sheet statement tells us. The demand for dollars is still very high and as the quality of the debt repayable in dollars deteriorates around the world, that demand will only intensify from here.
So, this was always going to occur, the question was always to what extent and spread out over what time period. COVID-19 accelerated both the severity and the timeline of events.
Florida reports another alarming jump in new cases as Miami beach reopens
Texas reports another record jump in hospitalizations
NY reports just 23 deaths - a record low
Kudlow says numbers across US still trending lower
Authorities cover another 8 cases tied to Xinfadi market Sunday morning
China confirms 57 cases from June 13
Tokyo sees another spike
23 US states see cases climb
US reports 25k+ cases, largest daily increase in 2 weeks
Several states reporting record jumps
Iran sees deaths rebound
Brazil, Russia, India, Mexico see troubling climb continue
UK officials review lockdown conditions
* * *
Update (1420ET): South Carolina reported its highest number of new cases for a fourth consecutive day on Saturday, joining a spate of startling increases across the south, including in Alabama and Florida, which both reported record numbers of new cases for third straight day.
South Carolina counted 785 new cases on Saturday, the highest one-day jump since the virus landed in SC. Friday’s report had 729 new cases, Thursday’s saw 682 and Wednesday’s counted 531.
The state has recorded a total of 17,955 cases and 599 deaths. SC was one of the last states to issue a stay-at-home order and among the first to reopen on May 4.
South Carolina’s hospital bed occupancy has reached between 69.4% in the upstate area to 77% in the Pee Dee area, per state health department officials. In both Pee Dee and the Midlands, hospital occupancy is at records.
* * *
Update (1300ET): Florida reported another alarmingly high daily total of new COVID-19 cases on Sunday, the Orlando Tribune reported, citing data from state public health officials.
Florida reported 2,016 new coronavirus cases and six new deaths Sunday, continuing the surge of reported infections in the state over the past week and a half.
The statewide case load is now 75,568, and the death toll stands at 2,931.
Saturday’s update from the state health department marked the highest number of cases reported in a day with 2,581 cases. It was also the first time since the outbreak began that more than 2,000 cases were reported in one day.
Sunday makes the eleventh time in the past twelve days that the state saw more than 1,000 daily cases.
Though it wasn't as high as yesterday's total, the 2k+ number is still more than twice the daily average from a couple of weeks ago.
With its more than 75k cases, Florida still has the 8th-largest caseload in the country.
Of course, even these record high numbers didn't deter patrons from the newly reopened Miami Beach.
* * *
Update (1200ET): Texas, Florida, California and Arizona are perhaps the four most closely watched states now that New York, New Jersey and Connecticut have seen the number of new cases wanes. And of these, Texas - with its urban clusters like Houston that have brought the state to the "precipice" of disaster, as one local official put it.
And once again on Sunday, health officials in the state reported that hospitalizations have climbed to a new record. The Texas Department of State Health Services confirmed 2,242 people were hospitalized with the respiratory illness on Saturday afternoon, an increase from 2,166 people hospitalized on Friday.
Friday's virus hospitalization figure was Texas' highest to date when DSHS reported it, surpassing previous admission records reported consecutively on Monday, Tuesday and Wednesday. Hospitalization numbers reported last Sunday, June 7, only fell below Texas' initial peak of 1,888 admissions.
Hospitals around the state, but particularly in Houston, San Antonio and several more rural hot spots, have seen confirmed cases and patient admissions regularly climb. Statewide, hospitalizations have increased by close to 50% since then.
Texas health officials also reported a sizable jump in new cases on Saturday, with 2,331 confirmed diagnoses. That number approached the current record, 2,504 positive tests, from Wednesday. Texas' case positivity ratio, as DSHS notes on the state's COVID-19 dashboard, is about 7.2%.
The spike in new cases in more rural states hasn't totally offset the drop in NY and the surrounding area.
Texas has identified 12,458 new virus cases over the last week. That trend has continued in June. According to JHU, the state has confirmed 86,915 diagnoses since the start of the pandemic, along with 1,971 deaths and 56,535 recoveries.
During an appearance on CNN's "State of the Union", Larry Kudlow appeared on Sunday to reiterated the same litany of factors minimizing the data showing an increase in cases and hospitalizations.
WH economic adviser Larry Kudlow: "We have had an increase in [COVID] cases in some states." pic.twitter.com/7OSpc9Erj3
Italy's numbers were modest once again as the country, once the worst-hit in Europe, has returned to some semblance of normality, even in hard-hit Milan and the surrounding area.
JUST IN: Italy reports 338 new cases of coronavirus and 44 new deaths.
Update (0900ET): The SCMP has a more detailed breakdown of the latest batch of cases reported in China Sunday, the largest one-day total in 2 months.
Beijing reported 36 new local coronavirus cases on Sunday, all of them linked to the city’s biggest wholesale food market.
The patients included 27 people who worked at the Xinfadi food market, which has been closed down, and nine who had been exposed to it, the municipal government said.
Another person had also tested positive for the coronavirus but showed no symptoms, it said. Under Chinese rules, asymptomatic cases are not added to the tally.
Beijing has confirmed 43 local cases since Thursday, before which it had not had any for 55 days.
The outbreak has also spread beyond the capital to neighbouring regions, with the Liaoning provincial government announcing two new cases on Sunday, both of whom had been in close contact with Beijing residents confirmed as having the virus this week.
For the country as whole, there were 57 new confirmed coronavirus cases in the 24 hours to midnight Saturday, the National Health Commission reported, the biggest one-day total in two months. Some 38 of the new cases were locally transmitted, including the 36 in Beijing, with the other 19 were travellers arriving from abroad.
A spokesman for the Beijing Health Bureau urged all residents who visited the Xinfadi market to get tested immediately (that's an order, not a request).
With the market in Beijing accounting for the vast majority of new cases, it's clear that the officials are reckoning with the reality that the asymptomatic spread across China's biggest cities is likely much larger than authorities will admit.
What's more, officials have reported another 8 positive cases from Sunday morning (June 14), all of which were tied to Xinfadi (according to authorities).
Reuters: CHINESE CAPITAL SAYS 8 NEW CONFIRMED COVID-19 CASES ON JUNE 14
The steady drumbeat of discouraging COVID-19-linked headlines continued yesterday as Florida, along with several other southern states, reported record-breaking spikes in new infections. That marked the state's third daily record in a row, as Gov Ron DeSantis has blamed farm workers and sought to play down the rising numbers as an inevitable consequence of reopening, as beachgoers returned to Miami Beach for the first time.
According to the New York Times, there are 23 states where the daily number of new cases continues to climb.
Here's what the Times heatmap of the US looked like Sunday morning:
With a large swath of southwestern Beijing back under lockdown, Chinese health officials said they confirmed another 57 new cases yesterday as they aimed to test more than 10k people connected by contact tracers to a local seafood wholesaler/market that has been shut down for a deep cleaning, as officials said it was the epicenter of the latest outbreak. Furthermore, officials have moved a widely anticipated economic briefing online. The NBS presser will take place at 10amET.
#BREAKING:Mainland #China reported 57 new cases of #coronavirus and 9 asymptomatic cases for Saturday, said the National Health Commission.Nineteen of them were imported cases.#Beijing reported 36 locally transmitted cases. The other 2 local cases were in Liaoning.
Meanwhile in Japan, officials in Tokyo confirmed the capital city's largest daily total (47) of new COVID-19 cases since May 5.
In the Middle East, Iran suffered its biggest daily death toll from the coronavirus since April 13, around the time Iran started relaxing its lockdown. So far, a total of 187,427 people have been infected with the disease and 8,837 have died in Iran, according to Health Ministry spokeswoman Sima Sadat Lari.
He added that Iran reported 107 deaths over the last 24 hours, a 9-week high.
In the UK, Chancellor of the Exchequer Rishi Sunak backed calls to ease the UK's 2-meter social distancing benchmark as HMG carries out its "comprehensive review" of the restrictive lockdown measures imposed by PM Boris Johnson during the early days of the pandemic. Since then, the methodology of the projections that inspired the government's approach have come under question.
As the number of new cases continues to soar in Brazil, Mexico, India and Russia, the Russians reported 8,835 new confirmed coronavirus infections, a 1.7% increase over the past day. An additional 119 people died in same period, bringing the overall death toll to 6,948, leaving it in third place.
Meanwhile, the global tally of coronavirus cases has surpassed 7.8 million cases, while the US is nearing 2.1 million cases (2,074,526).
US virus cases rose by more than 25k cases reported yesterday (remember, these numbers are reported with a 24-hour lag), the fastest pace in two weeks, while Brazil’s infections increased 2.6% as deaths climbed 2.1%, with Brazil seeing the number of cases draw closer to the 850,000 mark. Deaths in the country are nearing 50k.
Finally, Beijing is pushing a conspiracy theory about US 'conspiracy theories' about the latest outbreak in Beijing.
A Beijing market detected coronavirus on chopping board of imported salmon, triggering a wave of conspiracy theory regarding virus origin. But Chinese experts gave multiple explanations. The US government, trying hard to spin conspiracy theory against China, is really shameless.
In the world of finance there are certain catch phrases that have withstood the test of time: one is Pimco's "New Normal" meant to define the post-financial crisis world (which the firm's CIO Marc Seidner, incidentally, is no longer that excited about saying on Friday he is "getting pretty sick of the phrase"). Another is Albert Edwards' "Ice Age", which however is now coming to an end with the SocGen strategist expecting a "Great Melt" to be unleashed soon (but not before a massive deflationary bust hits first).
A third such phrase is the "state of exception" defined by DB derivatives strategist Alex Kocic, which is meant to describe the world in which markets no longer function as they should due to interventions by central banks which are meant to stabilize these markets and revert them to a normal baseline, hence the "temporary" nature of these states although as we have often critiqued Kocic's view over the past few years, it has always been our belief that the market simply will never be able to remove its ever-bigger training wheels, with central banks forced to intervene any time there is even modest turmoil, effectively making this state fully permanent.
Back in December 2017, when looking at the feedback loop of volatility and leverage, Kocic himself hinted that an outcome such as this was likely...
... saying that there will come a point when "the spiraling trajectory cannot continue indefinitely; it has to stop at some point beyond which there will be no more bubbles. In many ways, it looks like the post-2008 represents the last lapse. A new game has to be reinvented for the old future to materialize, or a different paradigm altogether has to take over."
Well, as Kocic now concedes, the events over the past three months were just that event, and the "permanent state of exception", which those clutching at the straws of efficient markets had hoped would only be the latest temporary deviation, is truly permanent and is "here to stay."
In his latest credit note, Kocic gives a quick recap on the political framing of the term he defined half a decade ago, defining it as follows:
In times of crisis, which shake up the accepted order of things, the enhanced power to transcend existing rules and laws in the name of “public good” are given to a superior entity, “the sovereign”, until the crisis is over.
To ensure popular support to what was effectively encroaching statism and USSR-style central planning of markets, Kocic then writes that "in the case of the last two financial crises, policy response in both cases has been articulated as the state of exception: Traditional rules and norms of the market were suspended for the purpose of self-preservation with central banks acting as “the sovereign”. The markets continue to function while the rules withdraw."
As a result, "central banks rise above the normative constraints of the free markets and decide about their validity. They are the subject taking the ultimate decisions, other rules become only antechambers of their power. These decisions free central banks from all normative ties and they become the ultimate rule that governs the markets."
Stated simply, central banks have taken on the role of the communist politburo, which micromanages the economy similar to what the USSR did for 5 decades, however to avoid allegations that capitalism is now dead and minimize references to the gruesome collapse of the USSR when central planning resulted in too much capital misallocation and too many bloated and inefficient enterprises, culminating with the collapse of the Soviet Union, the Fed's role had to be framed as merely a temporary one.
With that in mind, Kocic explains that this "position of enormous power.... works on the environment of the markets so that the markets voluntarily decides in favor of central banks’ decisions and actions. This in turn creates a low-frequency positive feedback loop between central banks and markets which, although supportive while it lasts, can cause contentious reactions when withdrawn. We have been there before, the memory is still fresh." Incidentally, nowhere is the creeping Sovietization of the US economy more evident than in the surge of zombie companies, which according to Deutsche Bank's Torsten Slok are now a fifth of all US corporations (which brings up a critical question of where is the tipping point before the sheer propensity of zombies crashes the entire economy which can not be supported by a handful of tech stocks any more, but that is a discussion for another post).
This brings us to the present, where in the aftermath of the Fed's grotesque takeover of capital markets following the March crash, Kocic writes that "here we go again, the state of exception is back, although this time it is really different."
Why? Because as a result of what appears to be the full "Austrianization" of Kocic, the strategist agrees with what we have been saying for the past decade, namely that "with every new crisis problems have become deeper and more difficult to manage" which was to be expected in a world in which constant bailouts from central banks prevent a normal corrective process to occur as the imbalances and excesses continue to pile up resulting in ever greater shocks to the system, requiring ever greater bailouts, and even greater debt, i.e., borrowing from the future until, as Eric Peters, recently said "We Have Reached The Point Where The Entirety Of Future Prosperity Has Been Pulled To The Present."
Conceding that central planning has won, Kocic admits that the untenable problems which have not been fixed but merely swept underneath the rug, "pile up on top of the unresolved problems from previous crises forming an accumulated residual which, with time, erodes market’s ability to recover. As a consequence, new crises become increasingly more difficult to manage requiring an ever more extended accommodation and heavier handed policy intervention. This in turn diminishes market’s ability and/or desire to re-emancipate itself and to function on its own, producing the reinforcing loop between market’s “apathy” and Fed’s addiction liability."
However, where Kocic does provide some fresh perspective is his quantification of these dire conclusion, and specifically the admission that as of this moment, the entire market has come to grips with the understanding that the Fed can never again step back.
To do that, Kocic present a chart showing the dispersion of vol ratios across the term structure, where he spots something that suggests that "this time it's different":
The figure shows the history of the 2Y / 10Y vol ratios across the term structure, from 3M2Y / 3M10Y to 5Y2Y / 5Y10Y. In normal markets, when the Fed is active at the front end of the curve, the entire term structure of these ratios resides (on the average) above 100%. As the shocks are administered through the front end and attenuated as they propagate to the back end, the front end leads in both directions – the curve responds to the Fed shocks through bull steepening or bear flattening. During QE, the front end is parked near zero, while the back end moves in response to Fed purchases and expresses the referendum on their success. Back end is more volatile than the front end as the curve bear steepens or bull flattens. The ratios, at least the gamma sector, declines below 100%.
Kocic then adds that "as this state of suspension of traditional rules of yield curve dynamics is expected to be temporary -- this is the essential part of the state of exception -- the options market expresses the view of the horizon over which the market would normalize. The long dated ratios generally remain stable despite collapse of the short dated ones. This is the dispersion that we observe both post 2008 and now."
Why is the chart different this time? Because while the dispersion is expected, "the long-dated end has developed new structure in 2020."
Until this year 5Y vol ratio, 5Y2Y / 5Y10Y, has never declined meaningfully below 100% (this is highlighted by the red horizontal dashed line). In the past, pre-2008, monetary policy was always one of the main sources of volatility -- front end almost always delivered more vol than the back end. Monetary policy shocks were swift and the market metabolized them quickly. Long-dated front/back vol ratios were always trading above 100% as short tenors vol carried a premium due to uncertainty related to a possibility that future monetary policy would need a heavier hand and that possible reversal of policy could cause additional volatility in the market.
And in a victory for all those who have long claimed that the Fed, having increasingly taken over the market in the past 11 years will never again be able to step away, but will instead be forced to increasingly extend its control over all asset classes, the market now agrees. Here is Kocic:
... the loss of the bottom of the 5Y ratios, their decisive and swift decline well below 100% (Figure) is indicative of something new – market’s skepticism that rates will normalize any time soon, if at all, that the traditional dynamics of rates cuts and hikes as the essence of monetary policy will not return in the foreseeable future.
Another way to visualize the market's determination of the "duration" of the state of exception, i.e., the period when central banks are in absolute control, are the two charts below meant to facilitate a comparison of the current term structure of the ratios with a snapshot in mid-2011 when gamma reached the same levels as we are observing today. The thing to note is that, as Kocic says, "while in 2011, the ratios rose rapidly and reached 100% over subsequent three years, current term structure is rising slowly, never reaching the previous levels. This extends even beyond 5Y expiries."
In short, looking at the market, the DB streategist sees "a capitulation on the idea of return to normalcy over all horizons – the ratio increases along the term structures, but never rises above 100%"
With that in mind, the resulting punchline should be quite familiar to our readers: after all we have been pounding the table on this from the beginning - there is no longer even the possibility of rebooting the system under the current paradigm, let alone having a functioning market:
The way the markets are pricing the evolution of the current crisis in combination with the policy response no longer looks like a state of exception, but as a new rule which is here to stay for an extended period of time.
Needless to say, this has been our core thesis from day one, and is also the reason why we remain steadfastly in the corner of hard assets as a world in which the only backstop of economic, monetary, political and social stability is accelerating dilution of fiat, means that currency collapse is only a matter of time.
Despite massive government and central bank stimuli, the global economy is seeing a concerning rise in defaults and delinquencies. The main central banks’ balance sheets (the Federal Reserve, Bank of Japan, European Central Bank, Bank of England and People’s Bank Of China) have soared to a combined $20 trillion, while the fiscal easing announcements in the major economies exceed 7% of the world’s GDP, according to Fitch Ratings. This is the biggest combined stimulus plan in history. However, businesses are closing at a record pace and unemployment has reached extremely elevated levels in many countries.
There is an important risk in what I call the “bailout of everything”, or the conscious decision from governments and central banks to provide any needed support to all sectors and companies with access to debt. Most of these stimulus packages and liquidity measures are aimed at supporting current government spending and providing liquidity to companies with assets, access to debt and in traditional sectors. It is not a surprise, then, that at the same time as we see the largest fiscal and monetary support plan since World War II, we are already witnessing two dangerous collateral effects. The rise of zombie companies and the collapse of small businesses and start-ups.
According to the Institute of International Finance (IIF), the figure of global corporate bond defaults has risen to $50 billion in the second quarter of 2020 despite historic-low interest rates and high liquidity. Additionally, according to Deutsche Bank and the Bank of International Settlements, the number of zombie companies in the eurozone and the US, large companies that cannot cover their interest expense costs with operating profits, has rocketed to new all-time highs. According to professors Petroulakis (ECB) and Andrews (OECD) “Europe’s productivity problem is partly due to the rise of zombie firms that crowd out growth opportunities for others” (What zombie firms tell us about Europe’s productivity problem” World Economic Forum, April 2019). This problem is only increasing in the current crisis.
The rise in bond defaults is a consequence of previous high leverage in a weakening operating income environment. This should not be a concern if creative destruction works to improve the economy, as inefficient companies are taken over by efficient ones and new investors re-structure challenged businesses to make them competitive. The big problem is that massive liquidity and low rates are perpetuating overcapacity and keeping an extraordinary amount of zombie firms alive.
Maintaining and increasing zombie firms destroys any positive effect from re-structuring and innovation. Additionally, to maintain cash flows and stay alive, companies are cutting investment in innovation, technology, and research. Meanwhile, small businesses that do not have access to debt or own hard assets are dissolving every day. In most developed economies, where 80% of employment comes from small businesses, the “bailout of everything” is becoming a massive transfer of wealth from the new economy to the old economy, preventing a stronger and more productive recovery.
In the eurozone, the main beneficiaries of the European Central Bank corporate bond purchases are large industrial conglomerates that were already facing weak margins, poor growth, and bloated balance sheets in 2019. In the United States, the financing channel of the real economy is more diverse, and the impact of zombification is smaller, but not negligible or irrelevant.
Some of these problems may have been inevitable in a crisis, but the majority of them could have been mitigated significantly by implementing supply-side policies instead of large government-directed stimuli and recovery plans based on adding more debt to already challenged sectors.
The “Bailout of Everything” (as long as it is large) creates significant risks. Low productivity and indebted sectors survive, creating a perverse incentive that benefits malinvestment and poor capital allocation. Additionally, as these sectors already had overcapacity and structural problems, their bailout does not lead to higher job creation or stronger investment. Furthermore, high productivity sectors will likely suffer the tax burden that rises after these governments’ rescue plans, diminishing the employment potential and the likelihood of rising real wages as productivity growth stalls. Finally, when governments bail out large and overcapacity-ridden conglomerates, investment in innovation, efficiency and re-structuring of loss-making divisions are severely diminished. Why? Because the first reason why governments agree to take stakes or bailout large sectors is precisely to prevent them from re-structuring. Alternatively, tax cuts and supply-driven liquidity measures to small businesses and technology would have worked significantly better at a lower cost for taxpayers.
There is no doubt that some liquidity and support mechanisms are positive, but what we are seeing today may have long-term negative implications. A weaker than expected recovery, with low productivity growth and a challenging return of the lost employment as well as poor investment growth are likely collateral damages of the misguided and panic-driven “Bailout of Everything”. Unfortunately, it will also generate more debt and higher taxes that will further complicate things for taxpayers and innovative sectors.
It feels like ages ago, but will no doubt become front and center the next time Washington inches toward war with Iran as happened last January in the wake of the Qassem Soleimani assassination.
The contents of a high level United Nations investigative report was leaked days ago, which details that last year's (Sept. 14) major attack on Saudi Aramco facilities in the country's east included missiles of “Iranian origin”.
Tehran officials promptly slammed the report as only too "convenient" given it curiously comes at a sensitive and crucial moment “when the United States is working to draft a dangerous resolution to extend an arms embargo against Iran,” according to an official Iranian statement.
And yet UN Secretary-General Antonio Guterres' statements the Security Council still made some interesting qualifications which brings Washington's "Iran ordered the attack" narrative into question:
Some have design characteristics similar to those also produced by a commercial entity in Iran, or bear Farsi markings, Guterres said, and some were delivered to the country between February 2016 and April 2018.
He said that “these items may have been transferred in a manner inconsistent” with a 2015 Security Council resolution that enshrines Tehran’s deal with world powers to prevent it from developing nuclear weapons.
Iran slammed the UN findings as ultimately put together “under political pressure from the U.S. and Saudi regimes,” according to Iran's rebuttal by the foreign ministry.
Last week Iran began urging Russia and China to reject US efforts at persuading the Security Council to extend a UN arms embargo set to expire in October.
The end of the embargo had been negotiated as part of the 2015 nuclear deal (JCOPA), which the Trump administration has since pulled out of.
Recall that when the September 2019 attacks likely out of Yemen temporarily halted Saudi oil output in a major jolt to global markets, the US had laid immediate blame on Tehran. After Yemen's Shia Houthi rebels took responsibility, Western pundits focused on the fact they are "Iran-backed" - and concluded such a massive operation came under the direction of the IRGC.
"Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy. Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply," Secretary of State Mike Pompeo said at the time. "There is no evidence the attacks came from Yemen."
Seattle's so-called Capitol Hill Autonomous Zone (CHAZ) has begun reparations, as white members of the fledgling sovereignty were asked on Friday night to give at least one black person $10 before leaving the area.
"I want you to find, by the time you leave this autonomous zone, I want you to give ten dollars to one African American person from this autonomous zone. And if you find that's difficult - if you find it's hard for you to give ten dollars to people of color, to black people expecially [sic], you have to think really critically about - in the future, are you going to actually give up power and land and capital when you have it?
If you have a hard time giving up ten dollars, you have to think about: are you really down with this struggle? Are you really down with the movement? Because if that is a challenge for you, I'm not sure if you're in the right place.
So find an African American person. White people, I see you. I see every one of you, and I remember your faces. You find that African American person and you give them ten dollars. Cash up, venmo, ten dollars in your pocket. That's my challenge to you. Do it."
I wonder how many just sent a text: “Hey mom & dad, can I borrow $10?”
Meanwhile, CHAZ's efforts at gardening appear to be ill-fated. Perhaps they will cross their fortified borders into the United States to resupply at the local Whole Foods.
HAHAHAHAHA this is the antifa "garden."
This almost makes me want to believe in god because truly seeing something this absolutely insane, this totally degraded and dumb, has to be a miracle. pic.twitter.com/Hp7WNqCsFV
The confrontation continued in the CHAZ/CHOP as the “Christ Zone” guy accused someone of stealing his phone. A person came up and said, “Mental health, we got this.” To which another person said, “No, you don’t ‘got this!’”
"There’s a clear correlation between the annual growth rate in M2 money supply and the price of the yellow metal. "
Clear Correlation?
The Tweet claims something different than my lead chart depicts. So let's investigate the above idea in other time frames.
Gold vs Rate of Change in M2 Money Supply
If we look at longer time frames, the rate of increase in M2 theory falls flat on its face.
One can force a correlation starting in 2010 but that is purposeful cherry-picking a timeframe. and even then, the time period in the box is counter-trend.
Cherry-Picking Timeframes
If you have to cherry-pick timeframes, especially when there are totally random results outside that timeframe, the relationship is imaginary.
Similarly, one can find times when gold is correlated to the dollar, the Yen, and most likely the popularity of peanuts at Cub games in some time frame.
Gold vs Faith in Central Banks
The best correlation I can find to the price of gold is faith in central banks. Gold collapsed from $850 to $250 under Greenspan's "Great Moderation". Greenspan was viewed as the "Maestro" until the dot-com bubble collapsed.
Gold went on a tear during the housing bubble, but put in a top when ECB president Mario Draghi gave his famous speech: "We will do whatever it takes to save the Euro, and believe me it will be enough."
Draghi Q&A
Q: What did Draghi do?
A: Absolutely nothing!
Draghi did nothing. His speech was enough. Bond yields on Greek, Portuguese, and Italian bonds started collapsing right after that speech. It was not until years later the ECB resorted to negative interest rates and QE.
Gold started rising again when the ECB went nuts with QE and the Fed started talking about "normalization"that anyone in their right mind knew was not coming.
Massive QE and Inflation
Yes, the Fed has turned on QE to an extent few thought possible.
But that did not ignite inflation in any meaningful way, at least as measured by the CPI.
The Core CPI Declines 3 Months for the First Time Ever
My headline will have the inflationistas howling from the rooftops because they will not even bother reading what I said inside.
Poor Measure of Inflation
These indexes supposedly measure inflation.
They do nothing of the kind. The indexes do not include home prices, only rent.
The purported medical inflation is a joke. Anyone who buys their own medical insurance will tell you their costs are up more than the reported 5.9%.
Anyone in college has not been pleased with the rising cost of tuition and rent in college towns.
And anyone with an ounce of common sense knows the current stock market bubble is a measure of inflation.
Lie of the Day, Month, and Year
The Fed and economists pretend that "inflation" is only up 0.1% year-over-year.
The Fed and economists in general do not know how to measure "inflation".
And the Fed's efforts to produce it has created destructive bubbles sure to pop causing the deflation they hope to prevent.
BIS Deflation Study
The BIS did a historical study and found routine price deflation was not any problem at all.
"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.
It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.
Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive build up of unproductive debt and asset bubbles that eventually collapse.
The Problem is Not Deflation, It's Attempts to Prevent It
Presented with little comment (as to be frank, it speaks for itself)...
One twitter user (@BillBrewsterSCG) exposes the very real downside of the speculative mania occurring in American stock and option markets currently (emphasis ours):
This is still really raw and I have more questions than answers.
But, it’s very important and intersects with what I speak about here. Hopefully my family’s tragedy can help another family avoid tragedy.
My cousin in law was interested in investing.
He opened a Robinhood account. And, he seemed to be enjoying the markets. As many of us do, or have done, he got interested in options. He believed he had “no margin” selected on his account.
So, he began buying and selling options.
Fast forward to sometime this past week and his account showed him owing $700k+. How does a 20 year old with no income get access to that kind of leverage/exposure?!
The emotional stress from the exposure caused him to take his own life. I don’t feel right sharing this, but I also don’t feel right keeping it from the world.
Why? Because recently I’ve been joking about how much I love DDTG. I’ve laughed at the Robinhood memes.
But here’s the truth. AND PLEASE PAY ATTENTION TO THIS IF YOU’RE YOUNG.
The markets are bananas right now. It’s not the time for amateurs. Really really pay attention to position sizing. Stay away from exotic instruments like options and futures.
These are the times Buffett talks about being more careful because others aren’t.
Almost everything you see on this platform is coming from someone with a bias, myself included. Don’t pay attention to how many followers someone has, where they work, etc.
Judge investments on their own merits, as you understand them.
And, if you find yourself in a world of shit please talk to your family. Listen to @QTRResearch and @sanglucci pod about blowing up. Shit, hit me up. You are not alone. Finance isn’t worth losing your life over.
I do have one ask- if you know of Robinhood willingly extending way too much credit/margin please let me know. They are squarely on my radar and I have time for a research project.
Alex, R.I.P. You will forever be missed.
PS. And a bit of a cover my ass here. I haven’t seen the actual account. I only know what his final note said. He cited the figure, I am relaying what he said.
So, while it all well and good to mock the likes of Dave Portnoy who has become the poster-child for the current round of speculative mania (whether for real or otherwise), the fact of the matter is that the dollars being levered into worthless stocks are real to many people and when this liquidity-fueled shitshow ends, there will be hell to pay... and this time everyone knows The Fed is responsible for enabling it.
To those paying attention, the evidence about Covid-19 and the lockdown response is clear. We’ve been sold a pup.
The UK Government itself has confirmed several times that the virus is not serious to the majority of people who catch it. The lockdown was a panic-driven overreaction.
The facts and figures of what is known about Covid-19 are not really much disputed. More, it’s a question of how those facts translate into ways to deal with the threat. My contention is that anyone looking at the facts, figures, and basic science cannot possibly agree that the response to the crisis is appropriate to the risk and proportionate in terms of wider implications.
For example, in the UK the infection rate has receded, there’s been no evidence of a link between infection rates and social distancing, lockdown, and the wearing of masks It’s all been guesswork.
Yet the UK government has just declared it mandatory for the public to wear masks on public transport from 15 June 2020. That makes no sense whatsoever. Even the World Health Organisation (WHO), from which the government cherry-pick their guidance to reinforce ‘trust the experts’ narratives, for months advised that it was not necessary to wear masks. The WHO curiously U-turned on this in recent days.
So far, most of the public aren’t picking up on these anomalies, or at least when they do, it doesn’t particularly register with them, perhaps because of the continued media avalanche of misinformation, distraction, and scaremongering.
If people are told by the media that social distancing works, they seem to accept it, even if a brief reflection would make them realise there’s no evidence that lockdown translates into lower infection rates, particularly when there are so many other factors and unknowns in play.
So, it’s not really about going over the facts and figures or science anymore. It’s about merely getting the obvious conclusions, so far largely kept from the public, out there.
Therefore, how do we achieve this and get out of this lockdown mess to begin repairing the terrible damage caused to date?
Just the other day, Professor Ferguson, whose forecasts were central to the lockdown decision, basically admitted that lockdown made no difference when it came to containing Covid-19.
Great, so we can go back to normal?
Unfortunately, this huge admission only made it to the middle pages of a few newspaper publications. The rest of the media missed the story and continued with their usual brain-dead output.
But, perhaps we can get the government to admit they acted upon wrong advice and the lockdown was a mistake?
Well, hold on there. No one likes to admit they’re wrong, particularly when the errors are huge and so stupid beyond belief. That’s never going to happen voluntarily, at least without some encouragement or a sweetener.
Perhaps, however, there’s a chance. The proposal below is simple and quick. It gets us out of lockdown without too much recrimination. And the idea may have further appeal to the government because it will give them a sense of ultimate power (we know they love that). Hopefully it will mean that we can all move forward – back to the old normal.
SYNN (SAY YES, NOT NO)
First, for background, I used to work for a company which was customer-facing and focused on customer service with a unique passion and pragmatism. The motto was something like “the customer is right, even when they are wrong”. As a complaints manager, there were sometimes difficult cases to resolve.
The company, however, began a new initiative. It was called SYNN (Say Yes, Not No), where we were encouraged to be even more flexible to resolve difficulties and complaints.
The complaint managers were issued with SYNN cards to carry around to remind them. These cards gave us the authority and final say to resolve any difficulty or complaint in the way that we decided. Not even the managing director could overrule us (unless we were offering his chauffeur-driven car as compensation to a customer).
Before this initiative, I felt we were generally good at resolving complaints, but these cards were great because there often was an issue that we knew would take time to resolve. So, if we couldn’t initially resolve the matter, we could say, what the hell, and give the customer what they wanted.
I thought this was a great initiative even if it meant in some cases that we were encouraging the wrong behaviour or sometimes went against a principle.
SYNN was our licence to be powerful and pragmatic, and it was great for avoiding drawn-out confrontations and moving on quickly.
THE PROPOSAL
The idea is to arrange for members of the UK government to be issued smart-looking SYNN cards.
Then Boris Johnson and government ministers armed with these cards should do a live TV press conference where the following questions would be put to them:
Were the initial projections of infection and mortality for Covid-19 hopelessly wrong?
Therefore, was the blanket lockdown unnecessary given any limited adverse impact the virus would have had without it?
Is it true that the “trust the science” narrative throughout was not based on science but on faulty models and guesswork?
Do you agree that rather than act on fear and panic, it would have been wise to implement specific but limited measures, based broadly on the Sweden model?
Do you agree, as some scientists have said (and quite frankly is common sense), that any such measures should have been directed towards “close and prolonged contact” and “at risk groups” rather than for shoppers, walking in parks, and blanket social distancing and this was an assessment which should have been carried out at the outset?
Do you agree that the whole thing has been a complete fiasco from start to finish and you and the media have instilled unnecessary fear and panic to the public and utterly dumbed down any sensible discussion and have not focused on the real question – i.e is lockdown necessary and proportionate?
Finally, can we now lift lockdown, as well as apply and keep under review some limited and targeted precautions (vulnerable groups, close contact risks) in agreement with a panel of real experts?
The Rubin Report's Pavel Zarubin interviewed Russian President Vladimir Putin on Sunday, where he said social unrest across the US reveals the deep internal crisis in the country, reported TASS News.
"What has happened [in the US] is the manifestation of some deep domestic crises," Putin said, noting that this crisis was festering well before President Trump took office. "When he won, and his victory was absolutely obvious and democratic, the defeated party invented all sorts of bogus stories just to call into question his legitimacy," he added.
Putin pointed out the biggest problem of the US political system is the parties and their special interest of people behind the scenes.
"It seems to me that the problem is that group party interests, in this case, are placed above the interests of the entire society and the interests of people," Putin said.
While commenting on domestic issues, Putin said his government has been combating the virus with minimal losses. He said that was not the case in the US, adding the failures of the US' "management system" led to poor response and widespread destruction. He said the best strategy has been Moscow's top-down approach as all parts of government operated as a single team.
Putin further expanded on the US social unrest by linking it to the pandemic: "It shows there are problems. Things connected to the fight with the coronavirus have shone a spotlight on general problems."
He criticized the lack of strong leadership of virus response efforts, saying that "the president says we need to do such-and-such, but the governor somewhere tells him where to go."
In Russia, "I doubt anyone in the government or the regions would say 'we're not going to do what the government says, what the president says, we think it's wrong,'" Putin said.
Putin believes American democracy will work to end the twin crisis: public health and social unrest, which have engulfed the country lately.
"I expect that the fundamental basis of US democracy will still allow and help this country to end this crisis period where it certainly finds itself," he said.
A post shared by Павел Зарубин (@zarubinreporter) on
To sum up, this was Putin's first major interview since the pandemic began. He outlines how the poor handling of the pandemic and protests are connected, signaling a "deep-seated internal crises" in the country. When comparing the response efforts of the US and Russia, he said the structure of the US government is why significant losses have been seen, as opposed to minimal losses in Russia.
Credit Bubble Bulletin’s Doug Noland saves the rest of us a lot of time by digging through the Fed’s quarterly financial reports and presenting the results in an understandable form.
These reports are always terrifying, but Q1 2020 is in a class of its own.
Here, mostly in Noland’s words, are some of the highlights of what may go down as the single most outrageous three months in financial history (at least until the current quarter’s numbers are published):
Total Non-Financial Debt (NFD) surged a nominal $1.597 TN during the first quarter ($6.379 TN seasonally-adjusted and annualized) to $54.325 TN. This was the strongest quarter of NFD growth on record, surpassing full-year NFD expansions for the years 2009, 2010, 2011 and 2013. Non financial debt is now up $20.857 TN, or 59%, since the end of 2008. As a percentage of GDP it is a record 260%, compared to previous cycle peaks of 226% (Q4 ‘07) and 183% (Q4 ’99).
Financial Sector borrowings jumped $963 billion during Q1, surpassing the previous record $656 billion from Q3 ’07.
Total Credit (Non-Financial, Financial and Foreign) surged a nominal $2.391 TN for the quarter to $77.861 TN, surpassing previous record growth from Q1 ‘04 ($1.512 TN).
At 102% of GDP, US government debt is the highest since World War II,
Combined outstanding Treasury and Agency (i.e., Fannie Mae and Freddie Mac mortgage paper) Securities surged $840 billion during Q1 to a record $29.289 TN, or 137% of GDP. Noland calls this “a replay of the ‘alchemy of Wall Street finance’ dynamic from the mortgage finance Bubble period. Endless “AAA” debt securities these days transform increasingly risky end-of-cycle Credit into perceived money-like, safe and liquid instruments (experiencing insatiable demand).”
Noland concludes:
This is a fiasco – and rather tangible, at that. It started years – even decades – ago. The craziness turned extreme last year, with the Fed aggressively stimulating in the face of highly speculative markets. It was never going to end well. And when the Bubble began imploding in March, the Fed and global central bankers responded immediately with Trillions of liquidity support. This fueled a rally, short squeeze and reversal of hedges that developed into one dazzling speculative melee.
From my analytical perspective, events over the past few months confirm Bubble Analysis – the Global Bubble Thesis. This week likely marked the beginning of a painful second leg of the bear market or, at the minimum, the return of wild volatility. There appears to have been both capitulation on the short side and “blow-off” speculative excess on the part of the bulls. It was almost like 1999 all over again– frenetic retail online trading, penny stock euphoria, derivatives run amuck, fun and games and throw caution to the wind speculative froth.
The Fed owns the frail Bubble – this disastrous mania. How ironic is it that the more cautious (i.e. realistic) the Fed’s view of economic prospects, the greater liquidity-induced market euphoria propagates delusions of V’s, perpetual bull markets and permanent prosperity? And of all the nonsense emanating from this historic financial mania, history will trash this foolhardy notion that there is no limit to the quantity of central bank Credit and government debt that can be issued. Reviewing the Fed’s Q1 Z.1 report, I was thinking this is how things look as a system self-destructs. Q2 will be worse.
A popular trucking app called "CDLLife" polled its users Thursday and found an overwhelming number of drivers will not "pickup/deliver to cities with defunded/disbanded police departments."
On Saturday afternoon, 1,212 users of the trucking app responded to the poll, with 79% saying they will not deliver loads to lawless cities.
Truck drivers also voiced their opinions on the comment section of the poll. After reviewing their concerns, we found several notable responses:
"As American Truck Drivers I feel we have the power to Stop all this that's going on! Park you Truck until the RIOTS STOP HAPPENING!," app user Albert T Pearl wrote.
"Unless my company starts allowing me co carry my gun in truck I won't do it," Robert Adkins wrote.
"Fuck those liberal assholes," David Simpson wrote.
"No cops= more Violence and targeted robbing," Scott Cuellar wrote.
"No I will not deliver to an area with a disbanded police department. My life matters and i do this for my family," wrote Casnpaper.
"I just turned down a load from Miami to st paul paying 3800 my life matter more than any other," wrote Carlos Barreras.
"Nope no load is worth my life," wrote Eddie Bean.
The poll comes after weeks of social unrest across the country. It has since sparked a political movement among radical leftists who seek to defund and disband police departments. We noted last week the Minneapolis City Council voted to replace the police department with "community-led" model:
According to the latest vote, the council will begin a year-long process to gather input from various community stakeholders about what a future 'public safety department' might look like."
Already a dangerous profession, truckers, who value their lives more than the cargo they haul, have been heard on CDLLife app calling for a nationwide moratorium of delivering goods until the riots stop. To understand why truckers are rejecting deliveries to certain cities -- the shocking videos below detail the "Mad Max" situation across major US metros:
I 35W protesters in Minneapolis open the back of a moving UPS truck and start looting the packages. 10:20pm. @karepic.twitter.com/VtSYY8G78p
Silver Report Uncut™ 🇺🇸 (@silver_report) June 4, 2020
Truck drivers have been on the frontline of the global pandemic. These folks move 68% of all freight tonnage in the US. So if riots and defunding police cause drivers to reject loads, and even form a protest of their own -- then say hello to domestic supply chain disruptions -- or better yet, no V-shaped economic rebound this year.
And then it happened. A vicious sell off seemingly out of the blue putting a sudden end to the steepest rally ever with many indices and individual stocks getting hammered seeing sizable declines just as Nasdaq was making new all time highs and $SPX was going green for the year setting up markets for an epic battle of control in the days and weeks to come.
Markets were clearly extended on many fronts and a correction was due. But nothing is normal about these liquidity soaked markets. The rally was historic with a 47.5% nearly vertical ascent following the March lows and the disconnect of valuations behind the size of the real economy has taken on historic levels. Markets reached nearly 152% market cap to GDP before the snapback as valuations suddenly dropped to 141.8% by Thursday’s market close. And it happened fast as little support was built in a market that so heavily reliant on open overnight gap ups on the way up.
On Monday I made the case for Crash 2 highlighting narrowing patterns in the $VIX and $SPX that suggested another volatility event was shaping up and just 3 days later the $VIX wasted no time spiking to the 44 level filling its open gap in that area:
In short: A breakout in volatility and a violent breakdown in the rally trend. And suddenly some of the open gaps I highlighted on Monday started seeing some filling:
In process markets produced what in technical terms is called an island reversal with price left hanging isolated, even on the almighty tech sector:
Setting up for a key battle zone for control and I gave a quick snapshot readout on the levels last night:
In episode 6 of Straight Talk Guy Adami, Dan Nathan and I discuss this week’s market action, its implications, we discuss $AAPL, the banks, the Fed, the disconnect between the political cheerleading and the economic and social reality on the ground, keeping it real:
The Fed now having set the expectations that rates will remain at least at zero (while still publicly denying negative rates are coming) has inadvertently revealed a major gap in narrative: That of a V shaped recovery presumed by markets and a Fed signaling with zero rates through 2022 that there is no V shaped recovery in the offing, rather a protracted high unemployment environment that is entirely inconsistent with market valuations north of 150% market cap to GDP.
Somewhere in between these narratives is a truth and that’s a truth markets have to negotiate.
As this rally has been driven by record artificial liquidity and has been again entirely dependent on multiple expansion alone it should also be noted that this rally stopped during the same week that the Fed’s incremental expansion of its balance sheet shriveled to nearly zero with its slowest expansion since the March 23rd lows:
Fed expands balance sheet by only $3.7B in the past week and markets completely fall apart. pic.twitter.com/43v5CIXm9S
My phrase, no bull market without central bank intervention, again appears to ring true.
This week’s aggressive flush lower has created short term oversold conditions and next week is OPEX week which traditionally has a bullish slant, but be aware, unless markets can repair the island reversal gaps and resume the rally toward the open 3300 gap on $SPX, these reversals stand and they, along with a bearish engulfing weekly candle and trend breaks on the charts has bearish connotations suggesting that rallies may end up getting sold and lower prices are to come.
I am reminded of what I wrote on March 23rd, the day of the lows: “The 1929 redux tells us a big rally will come and this rally will be awe inspiring, it’ll produce technical reconnects in a market that is now widely disconnected to the downside and it will bring back optimism. But then the historical script suggests lower highs to come as the world is then confronted with the consequences of the costs of extinguishing this fire. The bill comes due as the world will be settled with even more debt, but now a much higher unemployment rate, poorer consumers, and companies focused on margin efficiencies.”
The consequences are already staring us in the face:
US debt has just hit $26 trillion, up from $23.5 trillion in March, and up $1 trillion in just the past month alone.
A yearly deficit of $1 trillion was crisis mode in 2009.
Now we did it in a month.
We're on a path to $30 trillion in a hurry or close to 150% debt to GDP.
Lay off announcements are continuing, corporate debt is higher than ever approaching 50% of GDP:
..while earnings have done nothing for years and are now declining:
With the share of zombie companies, now increasingly held afloat by the Fed, is ever increasing:
Want to take this all to be the recipe for a new structural bull market be my guest. From my perch this historic market cap to GDP extension fueled by nothing but artificial liquidity and now accompanied by speculative retail FOMO behavior still bears the historical footprint of an epic bear market rally. And if that is so the forces of intervention and cheerleading with find themselves greatly challenged by the forces of reality in the months to come.
And this is what our Straight Talk series is all about: Keeping taps on reality in a world keen on wanting to avoid it.
* * *
For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.
ETFs have taken over the market and become so widespread that a trend really hasn't "made it" now unless it has its own ETF. This rush to come up with new ways to generate fees from lazy and unsophisticated investors incapable of building their own portfolios has led to ETFs becoming the ultimate contrarian indicator at times.
For example, the Direxion Fallen Knives ETF, which trades under the ticket NIFE, was launched last Thursday. The ETF follows the Indxx US Fallen Knives Index, a benchmark designed to identify stocks that have fallen precipitously, according to Yahoo.
As if the traders on Robinhood needed an easier way to buy total garbage that has been decimated by the market...
“Fallen knives may offer the opportunity for outperformance within an equity allocation. A systematic approach brings a concentrated basket of the prospective securities within the US stock market,” according to Direxion. “Screening for eligible names that have recently experienced substantial negative returns helps identify differentiated exposure.”
The idea of buying companies that had fallen in value fell apart on the day the ETF launched, Thursday, when the Dow finished the day down almost 2,000 points.
Another ETF that launched recently was the ETFMG Travel Tech ETF, which trades under the symbol AWAY. It invests in online travel companies and was launched on February 12, just days before the entire sector took a massive plunge due to the coronavirus pandemic.
Almost every stock in the travel and leisure category is trading lower than it was on the day the ETF was first launched.
Direxion also recently launched the Direxion Dynamic Hedge ETF recently, which trades under the symbol DYHG.
This product uses futures contracts to manage risk and increases short exposure during volatile environments, while increasing long exposure during times of less volatility. In other words, it's a backward looking indicator doing the exact opposite of getting ahead of the trade.
We are eager to hear the success stories that traders will pay 0.57% a year to share while transacting this ETF. And while we joke, we sadly know that many RIAs and "investment advisors" have likely already piled into these instruments, furthering a growing illiquidity problem in ETFs that has been widespread across markets for sometime now.
But hey, with the Fed now providing a multi-trillion dollar backstop to the market, does it even matter anymore?
Creating purpose and fulfillment within a failing system...
What the heck is going on?
I hear this a lot these days. Developments are happening too quickly to process for many folks, creating a persisting cloud of confusion.
Even focusing down on any particular single event often gets nowhere because so much of what’s going on simply makes so sense
Take for example, the W.H.O. which as recently as two weeks ago recommended that only sick people should wear masks. What? We’ve known for months that people can spread Covid-19 when they are asymptomatic. How can a ‘sick person’ wear a mask if they are sick but even they don’t know that? It just makes no sense. What is even going on?
Or take Jerome Powell, Chair of the Federal Reserve, who defiantly declared that the Federal Reserve “absolutely does not” contribute to the wealth inequality gap:
The Fed is busy buying distressed financial assets for far more than they are worth from the largest and wealthiest of stock and bondholders. That absolutely contributes to inequality.
So does juicing the stock market, or ““market”” as I like to term it (because it’s so distorted it needs two sets of quote marks).
So does appointing Blackrock – the world’s largest private asset manager – to select which private assets should be bought with the freshly-invented currency emanating from the Fed’s electronic printing presses. Should we really be shocked to learn that Blackrock chose their own distressed assets, like the junk bond fund JNK, for the Fed to buy first?
It’s a bald-faced lie for Jay Powell to claim anything other than the Fed is the #1 contributor to inequality. And that’s by a country mile.
So does Powell even think he can state such an obvious untruth and be taken seriously? And why does no one in the media seriously challenge him on this?
What the heck is going on?
The US government is supposed to be an open-book affair. The public has both an interest and a right to know what’s going on with its money.
Yet somehow, US Treasury Secretary Steven Mnuchin believes that $500 billion in recent bailout funds shoveled out the door to US corporations both can be and needs to be kept secret:
How is this even possible? How can anybody, let alone a sitting US Treasury Secretary think that it’s okay to keep $500 billion in fund disbursements a secret to the public? What the heck is going on?
At least this hasn’t entirely escaped everyone’s notice:
But ask the average person on the street? 99 out of 100 won’t have a clue this is going on.
Look, in the US alone, 44 million people have applied for jobless claims over the past 12 weeks. Over that same time period, thanks to the efforts of Jay Powell and the Federal Reserve, the Nasdaq 100 powered to brand new all-time highs:
The economy as measured by GDP is thought to have plunged anywhere from 15% to 50% during the quarter…and stocks were not just stable, but positively euphoric over those same 12 weeks, as if gleefully celebrating the largest loss of jobs in US history.
What the heck is going on?
What Comes Next
These and dozens of other weird, backwards, and truly unnatural acts are piling up; each difficult to understand on its own. But taken together, they reveal a current era of great uncertainty and upheaval.
There’s really no other explanation other than something has broken and it scares The Powers That Be to the point that they are wildly flailing about with increasing desperate policies, lies, and extreme actions that would have been unthinkable just a few months ago.
So, here we are.
The important question to ask yourself at this time is: What am I going to do about it?
For my part, I think that this current shock to the world economic system is too great to simply paper over. The loss of economic activity as measured by the demand destruction for oil, which remains down some -20% to -25%, suggests very large future disruptions the economy and, more generally, our way of life. Supply chains will run short of critical supplies and suddenly-blocked money conduits in the financial system imply a cascade of defaults are yet to come.
Nobody is smart enough to figure out in detail what any of that means. It’s just too huge and too complex.
So, what to do about it? You become more resilient. If you’re unsure if your paycheck is secure, you save money, begin thinking about ways to trim expenses, and fire up alternative income streams. Just in case.
If you can’t be certain that the stores will always be stocked with food, you build up a deep pantry and start a garden. Just in case.
If you doubt the ability of the Federal Reserve and Congress to ‘get it right’ you buy gold, invest in your home, and develop a buy list to execute if or when ‘they’ dial up the deficits, debt levels and money printing to even more ludicrous levels. Just in case.
If you’ve been relatively isolated but want a community to enrich your life in good times and support you in bad ones, you dedicate more of your waking hours to doing things with and for your neighbors to strengthen those social bridges. Just in case.
Here’s the thing: nobody knows what’s going to happen next. Our economy, our machinery of state, and our global supply chains are all interconnected complex systems. Such systems have two features:
they are inherently completely unpredictable, and
they have emergent behaviors
An emergent behavior is something that arises out of the conditions of the system. Because humans are complex systems, we can use them as an example.
Put one set of humans in a desert with scant resources on and you’ll get one set of languages, culture, art, technology, and beliefs.
Pick up those same humans, drop them onto a lush and moist prairie and eventually you’ll get an entirely different set of languages, culture, art, technology, and belief systems. The complexity of the ecology and the human species will yield different results under different circumstances.
Even though you know everything there is to know about humans, you cannot possibly predict what will emerge. You can only observe these things as they emerge.
Similarly, our economy and its key derivatives such as technology and systems of production and distribution have emerged from the combined actions of billions of people using immense amounts of fossil fuel energy.
What can we expect from our new reality now that tens of millions of formerly-productive people aren’t working? Nobody knows because it’s unpredictable. At the same time oil consumption, our primary energy input, is down by a shocking -20%. What does that mean in terms of changes in behaviors and goods produced? Nobody knows. We can only observe what emergent activity happens (or ceases to happen) next.
Here’s another thing to know about complex systems – perhaps the most important feature: they owe their complexity to the flows of energy through them. More energy and they can become more complex. Less energy and they become less complex, they simplify.
In economic terms, a reduction in energy throughput might manifest as a far simpler arrangement of fewer people working at fewer types of jobs. Or it might mean fewer sorts of goods being produced and reduced services to choose among. Again, we can’t know the future details; but the broad strokes can be defined and ‘simpler’ is one of those broad strokes that comes along with a -20% drop in oil consumption.
Which is why because I cannot predict the outcome, I prepare.
As I’ve mentioned numerous times before, driven by a growing internal anxiety of the increasingly insensible developments around us, I purchased a 182-acre property earlier this year. One I’ve been hard at work restoring into a productive and highly-sustainable family homestead.
It’s time to reveal what I’ve been up to.
In Part 2: Building The Foundations Of A Resilient Life, I give you a tour of the specific projects and installations my fiancee Evie and I have been busy with this hectic spring. An important goal of mine as we work to fully activate this property’s potential is to produce a body of “how to” content to help guide you and anyone else interested in making their home more resilient.
It’s the only way I know how to make sense out of today’s increasingly insensible world.
It appears Presidents Trump and Erdogan finally have something to agree on. Erdogan's office slammed Twitter on Friday, calling the US-based social media platform a "propaganda machine" after the company announced it suspended over 7,000 "fake" accounts known for churning out pro-Erdogan and AKP friendly tweets.
The accounts were suspected of being a bot network utilized by Erdogan's AK party insiders to advance its political agenda inside the country, along with others displaying "inauthentic" activity.
The Turkish presidency's office lashed out, saying Twitter has declared war on freedom of expression in the country while unfairly targeting the country's ruling party.
Detected in early 2020, this network of accounts was employing coordinated inauthentic activity, which was primarily targeted at domestic audiences within Turkey. Based on our analysis of the network’s technical indicators and account behaviors, the collection of fake and compromised accounts was being used to amplify political narratives favorable to the AK Parti, and demonstrated strong support for President Erdogan. We’re disclosing 7,340 accounts to the archive today.
Twitter had targeted alleged fake activity out of China and Russia as well.
An Erdoan spokesman, communications director Fahrettin Altun, responded with: “(This) has demonstrated yet again that Twitter is no mere social media company, but a propaganda machine with certain political and ideological inclinations,” according to Reuters.
The statement further claimed Twitter's crackdown on the accounts were due to enemies “peddling their ideological views” and influencing the US company's decision-making and censorship.
The Erdogan spokesman went so far as to issue a veiled threat suggesting Ankara could in turn move to block Twitter within the country. This after Twitter had in the past been temporarily blocked amid political turmoil related to Syria as well as the Kurds.
“We would like to remind the company (Twitter) of the eventual fate of a number of organizations which attempted to take similar steps in the past,” Altun added as part of the Turkish presidency's statement.
Interestingly in its statement Twitter charged that the youth organizations within AKP had actually managed to hack and take over accounts previously critical of Erdogan.
"As a result, the network we’re disclosing today includes several compromised accounts associated with organizations critical of President Erdogan and the Turkish Government," the Twitter statement said.
CNN has been attacked once again while covering Black Lives Matters protests and riots, but this time instead of the network's usual awkward attempt to paint the mayhem evidently all around them as "peaceful", there was a rare candid moment they were admitted to be "aggressive".
It happened late Saturday following the deadly Friday night shooting of a 27-year-old black man, Rayshard Brooks, at a Wendy's restaurant in Atlanta. As we reported, Brooks, who had fallen asleep at the wheel at the Wendy's drive-thru, was shot by an officer after he grabbed one of their Tasers and pointed it at them as he was running away. He died later that evening at Grady Memorial Hospital.
Moments after rioters descended on the Wendy's location Saturday night, a CNN crew of four showed up (and one security guard accompanying) and they were harassed and came under attack. “We were trying to get video of what was happening, and there were protesters who were very angry that we were recording this and tried to block our cameras,” CNN national correspondent Natasha Chen detailed on air.
“At that point they got aggressive and our CNN camera was broken,” she described, after which she said her crew had to swiftly exit the area, fearing for their safety. It apparently involved a physical alteration before the news crew fled.
Subsequent overhead shots of the chaotic overnight scene showed a dangerous, lawless situation unfolding.
#BREAKING: CNN crew attacked by protesters outside Wendy’s in #Atlanta where a Black man was shot by police. CNN it’s time to send your crews out to record w/ phones becuz a big TV camera attracts those who want to do you harm. #AtlantaPolice#BLMpic.twitter.com/nZMM8J6hBs
It appeared that protests and riots that gripped dozens of American cities in the two weeks after George Floyd's death after being choked out by a Minneapolis police officer, which also included mass looting, had actually lost significant steam.
But Rayshard Brooks' death and what's sure to be a coming week of raging controversy over how it happened and who's at fault controversy which has already resulted in Atlanta Police Chief Erika Shields announcing she'll be be stepping down following the incident is likely to spark a new major round of nationwide unrest.
When the architect of Sweden's controversial strategy for combating the coronavirus, a strategy that involved voluntary social distancing measures and no lockdowns, admitted that he would have done things differently knowing what he knows now, proponents of lockdowns and other heavy handed measures pounced, accusing Sweden of admitting that it was responsible for the thousands of additional deaths when compared with its neighbors.
The country's top epidemiologist, Anders Tegnell, later clarified that his comment wasn't intended as an admission: while he might have favored certain other measures he said he had 'no regrets' about Sweden's approach.
At last count, the country had nearly 4.9k confirmed deaths (4,854 to be precise). But a public poll released Saturday found that Sweden's ruling party has retained its broad popularity despite the higher mortality rate, as its decision to skip lockdowns remained largely popular. The survey was taken in late May, according to the Svenska Dagbladet newspaper, which published the data in partnership with Sifo.
The party had the support of 30% of voters, compared with a reading of 31.7% in May, according to the poll by Sifo in newspaper Svenska Dagbladet. That difference is within the poll’s margin of error. The Moderates, the leading opposition party, also gained in popularity during the pandemic and had the support of 19.5% of voters in the poll.
Prime Minister Stefan Lofven has been the target of criticism from political opponents because of his government’s controversially soft lockdown policy. His party has seen large political gains during the crisis, despite the resulting high mortality rate.
"The recent criticism against the government doesn’t seem to have affected the Social Democrat Party to any larger extent," Toivo Sjoren, head of opinion at Sifo, told the newspaper. The Swedish government is still benefiting from the Covid effect, he said.
It's only the latest indication that Sweden’s governing Social Democrats remain in a strong position, popularity-wise, despite criticism over Tegnell's handling of the virus.
Meanwhile, other scientists have stepped up to praise Sweden's approach, while the WHO announced, then later walked back, that several recent studies had affirmed that cases of 'asymptomatic transmission' - when a patient with no symptoms spreads the virus to another - appear to be very rare. Of course, if this is true, it would have potentially radical policy implications. However, the WHO has spent much of the last week walking back a statement on the research from one of its top scientists while warning that the outbreak is getting worse, not better, despite progress in western Europe and the Greater New York Metropolitan Area.
As a reminder, what happened in late January was confusing. Shortly after we asked if "This [Is] The Man Behind The Global Coronavirus Pandemic", referring to Wuhan Institute Of Virology scientist Peng Zhou (who three months later was being investigated by western spy agencies for his role in creating Covid) and some low-grade "reporter" from Buzzfeed decided to report us to Twitter for "doxxing" Zhou using publicly available information, Twitter told us that the account had been suspended for "violating Twitter rules against abuse and harassment", which was false as we neither incited abuse nor harrassment, but merely asked questions. But the confusing part is that at the same time, Twitter fabricated an entirely different explanation for its decision when speaking to outside media, telling them the suspension was due to "platform manipulation" - whatever that means.
An odd mix of conflicting explanations but in any case, neither was true as we said at the time, and as we further told Bloomberg, the suspension was "unjustified, and likely motivated by reasons other than the stated ones" adding that "we are confident that we did not violate any of the stated Twitter terms: we neither incited harassment, nor did we ‘dox’ the public official, whose contact information is as of this moment listed on the Wuhan institute’s website."
Fast forward to late Friday night, when unexpectedly we received a brief email from Twitter Support informing us that "we made an error in our enforcement action" as a result of which "we have unsuspended your account."
Speaking to Bloomberg, a Twitter spokesperson said that "we made an error in our enforcement action in this case. Based on additional context from the account holder in appeal, we have reinstated the account. We have a dedicated appeals process for all account holders."
Funny how mistakes happen when you ban first and ask questions later (and only when prompted to do so).
In any case, no bad blood right - honest mistake? Well, not really: before all this happened, none other than Twitter's CEO was following us.
That's OK though, we never expected an apology. We are just glad that we will be able to share facts and perspectives with our now 700K Twitter followers, a number which has spiked by more than 30K in just the past few hours since the suspension was overturned.
The Russian role will be to balance the hegemonic powers, as a guarantor of a new union of non-aligned nations
Professor Sergey Karaganov is informally known in influential foreign policy circles as the “Russian Kissinger” – with the extra bonus of not having to carry a “war criminal” tag from Vietnam and Cambodia to Chile and beyond.
Karaganov is the dean of the Faculty of World Economy and International Affairs at the National Research University Higher School of Economics. He’s also the honorary chairman of Russia’s Presidium of the Council on Foreign and Defense Policy.
In December 2018, I had the pleasure of being received at Karaganov’s office in Moscow for a one-on-one conversation essentially about Greater Eurasia – the Russian path for Eurasia integration.
Now Karaganov has expanded his main insights for an Atlanticist made in Italy vehicle usually more distinguished for its maps than its predictable “analyses” straight from a NATO press release.
Even noting, correctly, that the EU is a “profoundly inefficient institution” on a slow path towards dissolution – and that’s a massive understatement – Karaganov observes that Russia-EU relations are on their way to a relative normalization.
This is something that has been actively discussed in Brussels corridors for months now. Not exactly the agenda envisaged by the US Deep State – or the Trump administration, for that matter. The degree of exasperation with Team Trump’s antics is unprecedented.
Still, as Karaganov recognizes: “Western democracies don’t know how to exist without an enemy.” Enter NATO’s routine secretary-general Stoltenberg’s platitudes on the Russian “threat.”
Russian President Vladimir Putin and Chinese President Xi Jinping get friendly at a ceremony to present Xi with a degree from the St Petersburg State University on June 6, 2019. Photo: AFP / Dmitri Lovetsky
Even as Russia’s trade with Asia is now equivalent to trade with the EU, a new “threat” emerged in Europe: China.
An Inter-Parliamentary Alliance on China was just invented last week as a new demonization platform, congregating representatives from Japan, Canada, Australia, Germany, the UK, Norway and Sweden as well as members of the European Parliament.
China “as led by the Chinese Communist Party,” is to be faced as a “threat” to “Western values” – the same old triad of democracy, human rights and neoliberalism. The paranoia embodied in the dual Russia-China “threat” is nothing but a graphic illustration of the prime Grand Chessboard clash: NATO vs Eurasia integration.
‘Russia’s Kissinger’: Head of the Council on Foreign and Defense Policy Sergey Karaganov. Photo: AFP/Evgeny Biyatov/Sputnik
A great Asian power
Karaganov breaks down the crucial Russia-China strategic partnership to an easily absorbed formula: As much as Beijing finds strong support on Russia’s strategic power as a counterpunch to the US, Moscow can count on China’s economic might.
He recalls the crucial fact that when Western pressure on Russia was at its peak after Maidan and the Crimea referendum, “Beijing offered Moscow virtually unlimited credit, but Russia decided to brave the situation on its own.”
One of the subsequent benefits is that Russia-China abandoned their competition in Central Asia – something I saw for myself in my travels late last year.
That does not mean competition has been erased. Conversations with other Russian analysts reveal that fear of excessive Chinese power is still on, especially when it comes to China’s relations with weaker and non-sovereign states. But the bottom line, for such a sterling realpolitik practitioner as Karaganov, is that the “pivot to the East” and the strategic entente with China favored Russia in the Grand Chessboard.
Karaganov totally understands the Russian DNA as a great Asian power – taking into consideration everything from authoritarian politics to the natural resource wealth of Siberia.
Russia, he says, is “close to China in terms of common history despite the enormous cultural distance separating them. Up to the 15th century, both were under Genghis Khan’s empire, the largest in history. If China assimilated the Mongols, Russia ended up expelling them, but in two and a half centuries of submission it incorporated many Asian traits.”
Karaganov considers Kissinger and Brzezinski “lucid strategists,” and laments that even if they suggested otherwise “the American political class” inaugurated a “new Cold War” against China. He breaks down Washington’s objective as playing a “Last Battle” profiting from the forward bases the US still dominates in what Wallerstein would define as our collapsing world-system.
New Non-Aligned Movement
Karaganov is very sharp on Russia’s independent streak – always fiercely countering “whoever pointed at a global or regional hegemony: from the descendants of Genghis Khan to Charles XII of Sweden, from Napoleon to Hitler. In the military and political spheres, Russia is self-sufficient. Not in the economic, technological and cyber spheres, where it needs markets and external partners, which it will search and find.”
The result is that the Russia-EU rapprochement dream remains very much alive, but under “Eurasian optics.”
That’s where the concept of Greater Eurasia comes in, as I discussed with Karaganov in our meeting: “a multilateral, integrated partnership, officially supported by Beijing, based on an egalitarian system of economic, political and cultural links between diverse states,” with China playing the role of primus inter pares. And that includes a “significative part of the Western extremity of the Eurasian continent, that is, Europe.”
That’s what the evolution in the Grand Chessboard seems to point at. Karaganov – correctly – identifies western and northern Europe as attracted to the “American pole,” while southern and eastern Europe are “inclined towards the Eurasian project.”
The Russian role, under this framework, will be to “balance the two possible hegemonic powers,” as a “guarantor of a new union of non-aligned nations.” That hints at a very interesting new configuration of the Non-Aligned Movement.
Yugoslav President Marshal Josip Broz, better known as Tito (R, 1892-1980) shares joke with Egyptian President Gamal Abdel Nasser (L) and Indian Prime Minister Jawaharlal Nehru (C) in July 1956 at Brioni Island during a Non-Aligned Movement summit. (Photo: AFP)
So meet Russia as one of the supporters of a new multilateral, multi-vector partnership, finally moving from a status of “periphery of Europe or Asia” to “one of the fundamental centers of northern Eurasia.” A work in – steady – progress.
Sun, 14 Jun 2020 11:00:00 +0000
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