Halfway Between The Gutter & The Stars

Halfway Between The Gutter & The Stars

Tyler Durden

Thu, 09/24/2020 – 13:20

Submitted by The Swarm Blog

Early July, I posted an article entitled It is All About Waves – Tech Stocks and The Log-Periodicity Power Law Singularity Model, explaining that for years physicists have worked on intriguing models designed to detect speculative financial bubbles and predict their end date. An ambitious project.

Since then, I have read many sarcastic comments on blogs or social media about the LPPLS model, and even econophysics as a scientific discipline.

How Nature Works

Somehow, the name “econophysics” can be misleading, as it is an interdisciplinary axis of research that was put forward by physicists like Per Bak or Didier Sornette. The study of complex systems has implications in almost every branch of science (e.g. seismology, cosmology, climatology, biology, anthropology, sociology, economics), and what is striking is the fact that so many systems exhibit very similar patterns also known as self-organized criticality. If humans are part of nature, then it seems legit to assume that their complex interactions obey to natural laws.

Thinking outside the box has always been essential, including for scientists or traders. While most economists postulate how the economy is supposed to work, and then built beautiful but meaningless theoretical frameworks on top of that, physicists like Bak argue that the right intellectual approach is to understand how nature works first, before trying to build any predictive model.

The LPPLS model is all about that. When a financial market is overwhelmingly dominated by a narrative, with all participants sharing the same opinion, then it tends toward a form of swarm intelligence, a singularity. But such a state is highly unstable and the system because vulnerable as there is no support since all investors have capitulated.

Researchers like Sornette have shown that such moments are characterized by typical patterns like an acceleration of fluctuations, as the fight between bulls and bears is getting fiercer.

What the Roller Coaster Is Telling Us

While one could argue that US stock market has been overvalued since 2015, the premise of the mania started in 2018. But, the stress provoked by the Fed balance sheet normalization and the fears of a trade war with China led to a severe correction during Fall 2018.

Since 2009, investors knew that the central banks could intervene if necessary. And this is what happened at the end of 2018. The Fed ended the normalization process, they started the “non-QE” REPO injections a few months later, and Donald Trump promised “a huge trade deal” with China. While many investors had turned bearish in December 2018, those actions led to a big short squeeze during the following months.

The aggressive rebound of 2019 was a massive positive feedback loops for participants as they got the confirmation that the Fed would do “whatever it takes” to support capital markets.

What happened during the first half of 2020 can be seen as a “bis repetita” event, but on a larger scale. Speculative behavior had started a few months before the end 2019, and things got worse in January and February with media talking about “the unstoppable tech bull run”.

The Covid-19 sell-off was a bigger test for the “Fed put” narrative (aka “stocks only go up”). However, despite a short but intense period of stress, many participants did not sell that much as they knew that central bankers might act quickly. And they were right, the trillion dollars stimulus and the infinite QE programs led to an even bigger bounce. In other words, another positive feedback loop.

As retail investors massively entered in the market after March, it seems legit to think that we had finally reached the final stage of a speculative mania that many people had expected for years. During August, the last bears capitulated, and everyone turned bullish on equities as it looked like “stocks would not go down again”.

Said differently, the dominant narrative has won the intersubjective war. However, this was not good news for bulls.

From a statistical perspective, long-term fluctuations have accelerated, as evidenced by the peak-to-trough log variation of the Nasdaq (see chart above). Somehow, it tells us that the market was exhibiting the patterns described by Sornette and other econophysicists.

Simulations and Results

Even though tech valuations were already rising to the Moon at the beginning of 2020, it is interesting to note that the LPPLS model did not suggest the bubble had accelerated at a critical rate in February, and thus did not expected a near-term crash. The February-March sell-off was actually caused by an external factor: the pandemic and lockdowns in major countries all over the world.

When I ran the LPPLS model in July, it suggested that the Nasdaq was driven by euphoria since March, expecting a crash “by the end of the summer” (i.e. mid-September). I decided to run it again at the end of August as I felt that the bull run had accelerated, and the conclusion was that the market could crash “any time”.

Therefore, the recent sell-off on tech that started on September 3 should not come as a surprise. This sudden move was not cause by any external event or any news, but by pure endogenous causes (i.e. large participants starting to sell). And this is what the LPPLS model told us.

What’s Next?

At this stage, the key question for everyone is, will the market crash more severely soon?

People might have noted that there is a strong support force on the market. This could be explained by the fact that the retail army seems to have regarded this correction as screaming-buy opportunity, opening new record positions on out-of-the-money short-term call options, and exacerbating the impact of the so-called gamma squeeze.

While some professional investors have turned more cautious, with CTAs exhibiting net short positions, the Fed has just decided to step in so as to try to stop the selling forces a few weeks before the election. If you are not convinced, then how do you explain the 17 media interventions of Fed speakers this week?

Even if the Fed put has always been the major pillar of the dominant narrative, other catalysts like “vaccine optimism”, “V-shaped recovery optimism”, or “trade deal optimism”, have significantly weakened. Thus, all that remain in this happy bull’s world is the intersubjective trust in the Federal Reserve ability to magically inflate equities.

One Flew Over the Cuckoo’s Nest

To conclude, I would like to remind that the prediction of the LPPLS was right, as the bull run ended at the beginning of September.

Has the trend been broken? I think it has, as the market is struggling to come back to all-time highs. More interestingly, the Nasdaq has made new lows almost every week since the end of August, suggesting that finally the powerful bullish trend was not invincible (Do you agree Dave Portnoy?).

Of course, the action of the Fed will be decisive for the evolution of the market until the end of the year (or at least until November 3).

But the thing is, it is a bubble. And like all bubbles in human history, it will pop. And there will be no happy ending.

No need to be a rock-star physicist to understand that.


Another Record-Sized Auction As Treasury Sells $50BN in Tailing 7-Year Paper

Another Record-Sized Auction As Treasury Sells $50BN in Tailing 7-Year Paper

Tyler Durden

Thu, 09/24/2020 – 13:14

After two solid, stopping through auctions, moments ago the US Treasury completed the week’s coupon issuance with the auction of another record-sized treasury sale in the form of $50 billion in 7 year notes, up from $47 billion last month.

Unlike the week’s previous two auctions, the high yield of 0.462% was not the lowest on record: while it was below last month’s 0.591%, it was above the all time low hit in July when the auction printed 0.446%. And amid today’s listless Treasury activity, the auction tailed the When Issued 0.462% by 0.1bps.

The Bid to Cover was barely changed from last month, although at 2.42 it was the lowest since January, and well below the 2.55 six auction average.

The internals were also a bit on the weak side, with Indirects taking down 62.9%, below the 64.5% recent average. And with Directs taking down 16.7%, virtually unchanged from last month and higher than recent average, Dealers were left with 20.5%, the highest since June.

Altogether, another solid if not spectacular auction, with the most notable feature being that the bigger the auction size, the lower Treasury yields drop in a bond market that has now been fully taken over by the Fed.


President Trump’s Niece Sues Family Claiming She Was “Defrauded” Of Inheritance

President Trump’s Niece Sues Family Claiming She Was “Defrauded” Of Inheritance

Tyler Durden

Thu, 09/24/2020 – 12:55

With her uncle Robert now deceased, President Trump’s niece, Mary Trump, has committed to her scorched-earth campaign to embarrass her uncle, the president, in a way that – she probably hoped – might stir up legal action and possibly impact the election.

Various investigations into President Trump’s financial dealings continue, but apparently Mary Trump – who reported in her book that her uncle once complimenter “her figure” by exclaiming ‘Wow, Mary. You’re stacked’ after seeing her in a bathing suit – didn’t provoke the response she was hoping for.

Apparently unwilling to give up just yet, she and her legal team have decided to file a lawsuit against her uncle accusing him and his siblings of conspiring to keep her from receiving her share of her inheritance. Mary is the daughter of Trump’s deceased brother Freddy, the family’s purported black sheep, who died of alcoholism-related complications in his early 40s.

CNN, which got the scoop on the lawsuit filing, reports that in the filing, Mary Trump’s lawyers argue that she was defrauded by her relatives not out of spite but simply because that’s what they do.

In the lawsuit, filed in New York state court against the President, his sister Maryanne Trump Barry and the estate of their late brother Robert Trump, Mary Trump asserts that for the Trumps, “fraud was not just the family business—it was a way of life.”

The lawsuit accuses her two uncles and her aunt, a retired federal judge, of conspiring amongst themselves and with several other parties, including a trustee appointed to act on Mary’s behalf, to give her “a stack of fraudulent valuations” and force her to sign a settlement agreement that “fleeced her of tens of millions of dollars or more.”

“Rather than protect Mary’s interests, they designed and carried out a complex scheme to siphon funds away from her interests, conceal their grift, and deceive her about the true value of what she had inherited,” the lawsuit says.

The lawsuit appears to be based partly on aspects of the Trump’s family inheritence that were first reported by the NYT two years ago.

Other accusations were initially detailed in Mary Trump’s book: “Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man.” Unsurprisingly, it has been a best-seller.

CNN relitigates the allegations in detail in its report (you can find that here if you’re curious), but the gist is that her uncles Donald and Robert worked together with her aunt Maryanne Trump Barry to become the sole executors of their father’s estate. They then used all sorts of tricks and schemes, according to the lawsuit, to siphon money away from her late father Fred Trump Jr.’s estate, disguising some of the dealings as legitimate business.

Trump’s legal team has yet to comment on the news. We suspect a solid settlement and an NDA will soon be signed, and Mary Trump will go back to being the relatively anonymous niece of the president. Because if nothing else, this lawsuit shows why Trump started working with the media in the first place.


Should We Declare The Gold Bull Run Dead?

Should We Declare The Gold Bull Run Dead?

Tyler Durden

Thu, 09/24/2020 – 12:35

Authored by Michael Maharrey via,

Gold had another precipitous drop on Wednesday (Sept. 23), falling through the support level at $1,900 to a 2-month low. That has led some to ask – is the gold bull dead?

The concern is understandable but I think it’s too early to declare last rites.

In order to believe the gold bull run is over, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong.

That seems rather unbelievable.

The big drop in gold and silver has primarily been driven by dollar strength. The dollar index hit a two-month high on Wednesday. Investors have moved into the dollar due to concerns about a resurgence in coronavirus in Europe and the possibility of further economic lockdowns. The sudden risk-off sentiment hasn’t only clobbered gold and silver. US stocks have taken big hits as well. In some ways, it looks a little bit like March when everything was selling off.

But the big driver of all of this is the Fed. In many ways, the selloff we’ve seen both in stocks and precious metals is a big temper tantrum because the Fed didn’t promise more stimulus during the September FOMC meeting. Sure, the central bank maintained its commitment to extraordinary monetary policy. But the markets don’t think that’s enough. As Peter Schiff put it in a podcast earlier this week, there’s this idea out there that the Federal Reserve is not loose enough. The Fed’s monetary policy is not dovish enough. What we have is not enough. The addict wants even more of the monetary drug

Chicago Federal Reserve President Charles Evans stoked this notion of a “hawkish” Fed when he said that the central bank could raise rates before inflation averages 2% for some period of time. “We’ve sort of said we’re looking to get inflation up to 2%, and then after that, we could be raising rates and still have an accommodative setting of monetary policy,” Evans said on Tuesday.

That raises the first key question: do you really believe the Fed is going to raise rates?

If you ask me, that’s a hard no.

How could it given the levels of debt in the economy? Rising interest rates would pop the debt bubble and crush the economy. Remember, the Fed couldn’t even normalize monetary policy in 2018 – a decade after the Great Recession. It gave it the old college try. And then the stock market tanked and the Fed cut interest rates, relaunched QE (although it refused to call it that), and engaged in repo operations to rescue the market and shore up a rickety financial system. There is a lot more debt now than there was in 2018. The stock market bubble is bigger. The real estate bubble is bigger. If the Fed couldn’t raise rates two years ago, how in the world will it do it now?

It won’t.

In fact, Evans has already walked his statement back, as Reuters reported.

‘I don’t fear 2.5% inflation,’ he said, noting that the lower the tolerance for an inflation overshoot, the longer it will take for the Fed to meet its goal of 2% inflation on average. Regardless, he said, the Fed won’t raise rates until inflation reaches 2%, sustainably, and the central bank is confident it will overshoot that goal – conditions that won’t be met before the end of 2023.”

And Fed Vice Chair Richard Clarida was also talking in his most dovish voice, saying, “Rates will be at the current level, which is basically zero, until actual observed PCE inflation has reached 2%. That’s ‘at least.’ We could actually keep rates at this level beyond that. But we are not even going to begin thinking about lifting off, we expect, until we actually get observed inflation … equal to 2%.”

If I were a betting man, I would say the odds of the Fed raising rates in the next five years are the same as the interest rate – zero.

But there is another important question to grapple with: will the Fed provide more stimulus?

I think the answer to that question is an emphatic yes.

In fact, Jerome Powell was on Capitol Hill pushing for just that this week. He said the economy appears to be improving but, “there is a long way to go.” And he said, “We need to stay with it … The recovery will go faster if there is support coming both from Congress and the Fed.”

The Fed chair is clearly still all-in on stimulus. He would prefer Congress to pass another fiscal stimulus bill. But when you boil it all down, fiscal stimulus is monetary stimulus. If Congress spends more, it will have to borrow and the Fed will have to monetize all that debt — in other words — more money printing.

And I am almost certain that even absent action from Congress, the Fed will do what it can to keep the bubbles inflated. If stocks keep falling, the Fed will up QE.

Even if I’m wrong, the Fed has already committed to maintaining QE at least at the current level. Even that is bullish for gold. The Fed is printing money at a record pace. The money supply has increased at record levels for five straight months. It’s hard to project dollar strength longterm given we are still in the midst of QE infinity.

In a nutshell, to believe the gold bull run is over, you have to believe the Fed is done with stimulus. It seems pretty clear it’s not.

There are other reasons to remain bullish on gold. In fact, Citigroup analysts think gold could be back over $2,000 before the end of the year. They focused in on election uncertainty, saying it may “be under-appreciated by precious metals markets.”

Citi also cites plummeting global bond yields, more liquidity injected by the Fed and dollar weakness, global trade tensions, and the continuing COVID-19 pandemic as reasons to be bullish on gold.

But in my view, it all comes back to the Fed. If I really believed it was about to get out of the stimulus game, then I’d say, sure, gold is in trouble. But it’s not. And it’s not. I would argue that this isn’t a time to panic. In fact, it just might be a good time to buy the dip.


Prominent Hong Kong Activist Joshua Wong Arrested For Breaking ‘National Security’ Law

Prominent Hong Kong Activist Joshua Wong Arrested For Breaking ‘National Security’ Law

Tyler Durden

Thu, 09/24/2020 – 12:15

In the latest Hong Kong crackdown on a major dissident figure over actions dating back to the 2019 pro-democracy protests, Hong Kong student-protest leader Joshua Wong has been arrested again on Thursday in what he says is the third case against him related to his activism.

The Associated Press reports that Wong was arrested when he went to check in at Hong Kong’s Central Police Station in keeping with his bail requirements.

Wong and his team broke the news in a tweet sent after he left the police station on bail once again. As the tweet states, the charges under the new national security law pertain to an Oct. 5 “unauthorized assembly.” Wong is also accused of violating HK Chief Executive Carrie Lam’s anti-mask order.

Wong gained international notoriety for his work as a leader of the 2014 Umbrella Movement. However, he took a mostly low-key role in the leaderless pro-democracy demonstrations that carried on for the latter half of last year.

Wong rose to prominence as a student leader during the 2014 Umbrella Movement protests for universal suffrage, and is among a growing number of activists being charged for various relatively minor offenses since Beijing imposed a sweeping national security law on the territory that has severely restricted political speech.

He played a low-key role in mostly leaderless and sometimes violent anti-government protests last year that led to Beijing imposing the security law. However, with Beijing’s encouragement, Hong Kong authorities have been pursuing charges against major opposition figures for illegal assembly and other minor infractions in what some call a campaign to harass and intimidate.

Wong’s arrest follows the latest arrest of Hong Kong media mogul Jimmy Lai, whose company, Next Digital, runs one of HK’s largest newspapers, which has taken a firmly independent, pro-democracy line.

Both Wong and Lai have vowed to resist the measures taken under the new national security law, which gives authorities broad latitude to punish anyone for pro-democracy speech, which Beijing views as “terroristic” and “seccessionist” rhetoric, encouraged by foreign agitators.


Amid The Rout, Morgan Stanley Explains Why There’s No Panic Selling (Yet)

Amid The Rout, Morgan Stanley Explains Why There’s No Panic Selling (Yet)

Tyler Durden

Thu, 09/24/2020 – 11:55

By Morgan Stanley’s Rob Cronin, Ross Montgomery, Mathieu Renault

Post September expiry, clients appear well hedged into year-end and bar US election/covid headline agitation there is no clear SX5E technical that can drive spot in either direction near-term. The net futures short has rebuilt to levels last seen in June, ownership of downside is higher than normal and HF gross/net exposure is concentrated in market segments where drawdowns are low. HF P&L volatility is extremely low and returns are, in aggregate, mid-single digits now (vs. -8% at its worst). Breakouts on the upside, flow wise, have so far been met with stern resistance and the new SX5E composition makes sharp breakouts more difficult. There is some evidence (in cash & options) that the focus is shifting to single names.

Since the start of August, clients have re-hedged, increasing their net short in SX5E futures by -$13bn, taking the total net to -$19bn (vs. YTD trough of -$50bn). About $2bn more of the long book was left to expire in Sep roll vs. the short book, but the rest was flow. There isn’t a lot of longs to unwind – the client long book is $51bn (vs. 5Y average of $74bn) and except for the a drop to $42bn post the Mar20 expiry, this is the joint-lowest it has been since 2013. The short book is $71bn, in line with the 5Y average.

We estimate clients are net long SX5E puts in ~$6bn of delta between now and Dec. For options expiring within 3m, this amount is in its 65th %-ile vs. 2015. The appearance of a lot of short puts for strikes between 2800-3000 indicates a lot of these are likely spread trades.

Panicky HF flow is also limited as the “crowded” HF trades, where gross and net leverage is high, are working. Crowding is concentrated in high quality Cyclicals and Defensives but the common themes are secular growth winners with low EPS volatility – performance has been very strong in these areas (left chart below). In areas where HF nets are low or outright short, performance is bad. As a result of this dynamic HF P&L volatility is low and it has been persistently sub 4v on a 20d rolling basis since July – even hit 2.7v in early Sep, lowest recorded YTD. For comparison HF P&L vol was 5v in Jan/Feb, 21v at its peak in March. SX5E 20d realized vol is trading well above Jan/Feb levels (21v now vs. ~15v then).

Sharp SX5E breakouts to the upside are likely to be curbed further as a result of the largest SX5E rebalance last week (5 stock changes, 7% weight). The new stocks have massively outperformed such that the NEW composition, on a fixed weight basis, would be 20% higher than the ACTUAL SX5E over the last 5Y (right chart below). YTD it would be 5% higher than ACTUAL SX5E and 4% closer to its own YTD high. Be careful when looking at SX5E at 3150, the NEW basket of underlying stocks has performed better than SX5E levels suggest. 

The ratio of notional traded in all EU single name options vs. SX5E index options has hit an 8Y high. Both are low vs. history but SNO activity has bounced back quicker than index in Sep (single names traded $4bn on average per day over last month vs. $30bn for SX5E index). Big gaps in stock performance YTD and stickiness of SX5E is likely driving this.

We see more urgent trading in SX5E single names in cash too. Since the start of Sep, we have seen more volume traded net at the offer vs. bid in SX5E names than at any point since the March rally. 

One representation of HF crowding is MSTITANS (custom basket of 10 of EU’s highest quality, secular growth winners) where HF Gross and Net exposures are at record highs. YTD, the basket is now +16%, has outperformed Value by 50% and is at a YTD high. Despite that outperformance, 3m 90/110 option skew spread for MSTITANS vs. Value (MSQQEVLL) is close to 5Y lows. Despite the massive outperformance, the options market has little concern about potential downside for the MSTITANS group. 

One area of concern for EU equities is an emerging over-reliance on EU based accounts. Net buying of SXXP names by US based accounts had been strong in 2020 but they have flipped to being net sellers over the last 10w with EU based account bidding for that supply.

Source for charts: Morgan Stanley European Derivatives Desk, Eurex, MS PB Content Team


EV Maker Lordstown Claims 40,000 Pre-Orders For New Electric Truck 

EV Maker Lordstown Claims 40,000 Pre-Orders For New Electric Truck 

Tyler Durden

Thu, 09/24/2020 – 11:35

Days after Nikola founder Trevor Milton unexpectedly resigned as Executive Chairman, following an investigation by the SEC and DOJ into a highly critical short-seller report, another EV company, this time, Lordstown Motors Corp., claims it has secured tens of thousands of preorders for its electric vehicle ahead of a potential Nasdaq listing in October. 

First of all, who has ever heard of Lordstown? And second, EV companies like Tesla and Nikola have developed reputations for exaggerating – sometimes widely – numbers and expectations of preorders – so much so that analyst should approach any EV company with trepidation. 

Nevertheless, Lordstown released a statement Wednesday, quoted by local Ohio newspaper The Business Journal, announcing it has recived approximately 40,000 preorders for the Endurance pickup truck. It may not sound like much, but that’s about $2 billion in potential revenue, the company said in its announcement.

… And it only costs $100 to reserve an Endurance. 

And just like Tesla and Nikola, there has to be a wonderful story about massive pre-orders… These EV companies are in game to manufacture a dream, and by doing so, allows them to raise funds via secondary markets. 

So Lordstown’s announcement is timely because the EV company recently entered into a business agreement with shell company, DiamondPeak Holdings Corp., which is set to close in October. If all goes well, Lordstown will be listed on the Nasdaq under the ticker “RIDE” in the near term. 

As of Wednesday, DiamondPeak ended the session around $24.4 per share. The stock is up nearly 200% since the start of August, from $11 to $31 in 35 sessions. In the last two sessions, the stock has dipped into a bear market, down 23%. 

As for delivery date of the Endurance, CEO Steve Burns told The Verge, in late July, delivery will start in early 2021… 

Maybe the folks at Hindenburg Research should do some due diligence around Lordstown.


The Silent Exodus Nobody Sees: Leaving Work Forever

The Silent Exodus Nobody Sees: Leaving Work Forever

Tyler Durden

Thu, 09/24/2020 – 11:15

Authored by Charles Hugh Smith via OfTwoMinds blog,

The “take this job and shove it” exodus is silently gathering momentum.

The exodus out of cities is getting a lot of attention, but the exodus that will unravel our economic and social orders is getting zero attention: the exodus from work. Like the exodus from troubled urban cores, the exodus from work has long-term, complex causes that the pandemic has accelerated.

These are the core drivers of the exodus from work.

1. labor’s share of the economy has been in multi-decade decline. It’s easy to blame globalization and/or automation–and it’s true that the decline in labor’s share accelerated from 2000 on. But this trend began around 1970, long before China joined the World Trade Organization and the advent of “software eating the world.” (see chart below)

2. While it’s convenient for those reaping the big gains (see chart below) to blame globalization and/or automation, the real driver was financialization–the neoliberal move to deregulate finance so it could turn everything into an exploitable “market” that could be made to serve one master: shareholder value, the innocuous-sounding code-phrase for anything goes and winner takes most–if you’re rich.

Shareholder value was the super-wealthy’s self-serving justification for unlimited greed as corporations went from being enterprises serving communities, the national interest, employees, customers and shareholders to financialization machines whose sole purpose was enriching insiders via loading the company with debt to pay huge bonuses to top managers, stock buybacks funded by debt, the abandonment of trustworthy accounting principles and so on.

Financialization and the deification of shareholder value sluiced all the gains into the hands of the few at the top at the expense of the many. As the chart below indicates, the top 0.1% enjoyed income gains of around 350% since 1979 while the bottom 90% barely topped 20%–a number that would be sharply negative if real-world inflation were included.

Simply put, the bottom 90%–wage-earners–lost ground over the past four decades of financialization while the wealthy winners of financialization became super-wealthy. The rewards of labor/work have diminished to an extraordinary degree for the bottom 90%, and even the 91% – 99% bracket has found their labor has mostly served to enrich those above them.

These trends will drive both the top wage-earners and the bottom wage earners out of the workforce. The managerial class that keeps the whole machine glued together can either retire or use their human and financial capital to find other less stressful ways to make a living and downsize their expenses to match their reduced income.

Some will be voluntary, many will be involuntary, but the results will be the same: a mass exodus of hard-to-replace skilled workersThis is what I’m calling the take this job and shove it exodus.

Once the Federal Reserve starts sending “free money” directly to households, many at the bottom of the pay scale will realize they too can take this job and shove it.

In Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit “Digital Dollars” Directly To “Each American” (Zero Hedge

‘I cry before work’: US essential workers burned out amid pandemic Essential workers reported stress caused by increased workloads, understaffing, fears over Covid and struggles in enforcing social distancing. (The Guardian)

What few well-paid apologists seem to realize is that to equal the purchasing power of the minimum wage I earned in 1970 ($1.65/hour), the minimum wage would have to be close to $20/hour now. The absurdly under-reported rate of official inflation (the Consumer Price Index) claims that a minimum wage of $12/hour now equals the purchasing power of $1.65/hour in 1970, but since I’ve kept records of all expenses I can report that this is totally false.

As the chart below shows, wages’ share of the economy has been in a relentless 50-year slide. The entire machinery of inflation calculation has been driven by the desperate need to mask the true collapse of the purchasing power of wages.

Once the workforce awakens to this, the silent exodus out of the workforce will gather into a flood tide. Permanent unemployment payments, Universal Basic Income (UBI), free Fed money–regardless of the program or name, these will enable a mass exodus of those at the bottom of the workforce pay scale while burnout will also decimate the ranks of essential managerial / skilled workers.

It’s payback time, people. Hey, Financial Aristocracy, clean your own floors and slaughter your own meat. Hey, corrupt politicos and apparatchiks, wipe your own tables and watch your own brats. The take this job and shove it exodus is silently gathering momentum.

The Protected Class of pundits, technocrats, flunkies, toadies and enforcers believes the take this job and shove it exodus is “impossible”, just as everyone believed the Titanic was unsinkable. Just as the Titanic sinking went from “impossible” to inevitable, so will the take this job and shove it exodus move from “impossible” to inevitable.

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Nomura Sees Asset Managers De-Grossing; “YOLO-ing Robinhood-ers” Left Holding The Bag

Nomura Sees Asset Managers De-Grossing; “YOLO-ing Robinhood-ers” Left Holding The Bag

Tyler Durden

Thu, 09/24/2020 – 10:55

Having  ‘nailed it’ on the post-Quad-Witch tumble in stocks, noting that dealer delta and gamma positions suggested a lack of support after expiration…

“if selling persists and the $270 “trigger” in QQQs is taken out, that’s when “things could get sloppy to the downside into next week”

It is worth listening to Nomura’s Cross-Asset Strategy MD Charlie McElligott when he warns that he is seeing large market players de-risking while retail continues to desperately play their leveraged BTFD game.

Bag-holders beware…

As McElligott notes, the legacy impact of:

1) the Nasdaq / Mega-Cap Tech dynamics from August (mind you, some of those large flows were Sep all the way out through Feb), and

2) evidence of more Robinhood retail YOLO’ing even just last week chasing short-dated and highly-convex upside on the bounce

…has continued to perpetuate the dealer “short gamma” dynamics in QQQ options…

And as retail continues to try and buy any dip – on leverage – McElligott points out that “large lot” trade imbalances in futures – a proxy for Asset Managers – were tilted for sale all day long and accelerated into the close.

All of which suggests – given the carnage in mega-tech markets this week – that retail is the bagholder once again as the big boys reduce risk (amid surging election/fiscal-stimulus) uncertainty.


Flailing Central Banks & Failing Economies, Rabo Exposes The Sinners & The Sinned

Flailing Central Banks & Failing Economies, Rabo Exposes The Sinners & The Sinned

Tyler Durden

Thu, 09/24/2020 – 10:35

Authored by Michael Every via Rabobank,


Many readers will be familiar with the word chutzpah but some may not. Those who think it is pronounced with a “ch” like ‘chair’ rather than a “ch” like ‘loch’ are perhaps not as well-versed as they think. It is a word perhaps best defined by anecdote rather than a dictionary.

The apocryphal classic offered by Leo Rosten is “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.” In more contemporary terms, it has been compared to “calling up tech support to report a bug on pirated software.”

There are countless others. Indeed, we are drowning in chutzpans.

Not just the obvious figure of Donald Trump: many other world leaders are out there boldly saying one thing and doing the complete opposite and knowing nobody in the media can bother joining the dots to notice. (Because markets.)

Rather, we see Elon Musk, who has achieved everything he has –including stratospheric wealth regardless of his Twitter habits– due to the opportunities offered him by the US, including tax-payer support and US government contracts, is now suing the US government –and even USTR Lighthizer directly– in a US Court to get tariffs on China over-turned. (Which takes us to an oft-repeated broader point: ‘Workers of the world, unite!’ became ‘Workers of the world, untie!’ decades ago: capitalists –even ones needing public bailouts– happily work across all international borders, and always will. Because markets.)

In the UK, Chancellor Sunak –working under the guidance of a PM who told everyone to go to work and to the pub, to eat junk food, and to lose weight,…and then to junk going to the pub and to work from home– is cancelling his budget and thinking how to support the millions of jobs everyone always knew were going to be shed as soon as furlough schemes end next month. He is apparently going to adopt the German model of supporting firms who allow workers back part time. Bloomberg also reports the UK may carry out studies that would deliberately expose healthy people to the virus in a bid to speed up development of a vaccine. Many would say that they already were. Perhaps it’s not chutzpah that springs to mind there though: more schlemiel.

Canada’s Justin Trudeau, who is the living, breathing definition of chutzpah –except that he has not a modicum of the required twinkle in his eye that says “I can’t quite believe I am getting away with this, can you?”– is also pushing forward a massively expansionary Covid economic scheme.

In Europe, where cultural affinity with chutzpah varies from the ‘we do it and call it something else and had it before you, obviously’ of France, to the ‘but the self-serving rules we wrote say this’ of others, government spending is also going to soar further as lockdowns return tranche by tranche. The ECB will today meanwhile be carrying out another round of TLTRO’s, where it lends to banks at rates as low as -1% to try to encourage them to lend to households about to be locked down again and firms about to see the economy close again. EUR1.3 trillion was the take-up last time three months ago, but it is likely to be less this time round. This is what central banking now looks like today.

The US is probably also on the verge of another huge fiscal stimulus package; and not making many mainstream headlines yet, the Fed’s Mester was yesterday muttering about the potential for Fed ‘digital dollars’ and depositing them directly into household accounts in the face of a downturn – so crypto helicopter money. That is what central banking also now looks like.

It’s not that these steps aren’t perhaps unavoidable, or even possibly beneficial, if done right – which they never are, of course. It’s that our central banks still have the chutzpah to pretend that this bloated, creaky, groaning, blatantly self-serving edifice is called ‘capitalism’, rather than say ‘crony capitalism’ or ‘central planning without a plan’ (but, boy, do some get rich while all this lack of planning is happening!). And that we have to comment on it as if it is capitalism.

On which note –and, not wishing to be a chutzpan myself, drawing from the depths of the internet rather than any inner-tsaddik— the word chutzpah is of Hebrew, not Yiddish, origin and actually has deep religious roots. In fact, it is contended that there is an extreme version of it in the Old Testament. Specifically, Moses found it unacceptable that God should visit the sins of the father onto the children of the third and fourth generation (Numbers 14:18) and actually dares (as Schulweis puts it) to argue with God, in the name of God, and to engage God with fierce moral logic:

“Sovereign of the Universe, consider the righteousness of Abraham and the idol worship of his father Terach. Does it make moral sense to punish the child for the transgressions of the father? Sovereign of the Universe, consider the righteous deeds of King Hezekiah, who sprang from the loins of his evil father King Achaz. Does Hezekiah deserve Achaz’s punishment? Consider the nobility of King Josiah, whose father Amnon was wicked. Should Josiah inherit the punishment of Amnon?”

Incredibly, God’s divine response to Moses is to accede to and that the sins of the father shall not be visited onto their sons.

If we can talk truth to power to THAT extent and get positive results, why can’t someone show some the chutzpah to hold up a mirror to our flailing central banks and failing political-economy, and ask where the sins are and who they are being visited unto? Rather than, say, that X went up 0.01% and Y went down 0.02%?


SPAC Stocks Slammed After SEC Chair Clayton Vows To “Look Closer” At Transactions

SPAC Stocks Slammed After SEC Chair Clayton Vows To “Look Closer” At Transactions

Tyler Durden

Thu, 09/24/2020 – 10:15

SPAC stocks like Forum Merger II, Tortoise Acquisition, and DiamondPeak Holdings all tumbled after SEC Chair Jay Clayton said the agency would be looking closer at the transactions going forward, in an interview on CNBC. 

Given the ongoing implosion of one of the market’s most well known recent SPAC transactions in Nikola (which is down about 15% again this morning and has traded with a 16 handle literally days after touching $50), Clayton likely thought it wise to make a round of PR stops on Thursday morning to assure investors that, even though fraud could be widespread in SPACs, the SEC is on the case. 

The SEC Chair assured investors that the SEC was focusing on certain parts of the SPAC process while Andrew Ross Sorkin noted that over 100 companies have used the IPO-end-around go to public this year so far. 

“To the extent that the SPAC structure is an alternative to an IPO, it’s actually really healthy,” Clayton said, defending the process at first.

“Competition to the IPO process is probably a good thing, but for good competition and good decision making you need good information and one of areas in SPAC space I’m particularly focused on is incentives and compensation to the SPAC sponsors,” Clayton said.

Clayton continued, telling Andrew Ross Sorkin: “For good competition and good decision making you need good information. One of the areas I’m particularly focused on is the incentives and compensation to the SPAC sponsors. How much of the equity do they have now, how much of the equity did they have at the time of transaction?”

“What are their incentives? We want to make sure investors understand those things. And then at the time of the transaction, when they vote, that they’re getting the same rigorous disclosure that you get in connection with bringing an IPO to market,” he said.

Then, comically, he thanks CNBC: “I appreciate you guys bringing to light that SPACs are different than IPOs.”

With Clayton offering no specifics about concrete steps the agency is ready to make right now to reel in the SPAC frenzy, it is likely that the feeding frenzy of questionable transactions will continue throughout the rest of 2020 – or at least until another SPAC publicly implodes, leaving the SEC not so much worried about the individual investor – but rather how the embarrassment affects their image as an agency.

Then, maybe they’ll do something about it. 


US New Home Sales Surge In August To Highest Since 2006

US New Home Sales Surge In August To Highest Since 2006

Tyler Durden

Thu, 09/24/2020 – 10:08

Despite a huge upside surprise in existing home sales (to highest SAAR since 2006), analysts expected a small drop MoM in new home sales in August (which makes some sense after the colossal rebound in the last 3 months to well above the pre-COVID levels and the largest YoY jump since 1992!).

But, in keeping with the recent trend, new home sales beat expectations with a 4.8% MoM rise (-1.2% MoM exp) but we do  note that YoY growth in sales slowed very modestly from 28 year highs…

Source: Bloomberg

…to 1.011mm SAAR (well above the 890k SAAR expected)…This is the first time new home sales SAAR is above 1mm since Sept 2006…

Source: Bloomberg

Mixed picture across regions with the Midwest sales down 21.7% MoM (and West -1.7% MoM), while sales in the South surged 13.4% MoM and the Northeast saw sales rises 5.0% MoM.

Notably, while existing home prices surged to a new record high, median new home price fell 4.3% y/y to $312,800; average selling price at $369,000.

Also worth pointing out is that unlike the surge in high-end existing home sales, 12% of new homes sold in August cost more than $500,000, down from 14% prior month.


Facebook Launches Long-Promised ‘Oversight Board’ Before US Election

Facebook Launches Long-Promised ‘Oversight Board’ Before US Election

Tyler Durden

Thu, 09/24/2020 – 09:51

Facebook is planning to move ahead with the launch of its “Supreme Court-style” oversight committee – which Sen. Josh Hawley has lambasted as Facebook’s ‘special censorship committee’ – according to a report published Thursday morning in the FT.

Just days after the UK business broadsheet reported that Facebook was planning for dozens of election-night contingency scenarios, including – presumably – shutting down any official or unofficial accounts that suggest President Trump won’t accept the results of the election, an issue that has sent liberals into a tizzy after Trump again joked about refusing to leave the White House.

The oversight board, which was first mentioned by Zuckerberg in November 2018, will start accepting cases from mid-to-late October. Of course, the rules of the committee allow 90 days for review, meaning decisions on issues taken up before and during the vote might not be resolved until early next year. Though the board will process cases submitted by users and from within Facebook, it will have an “expedited” option that the company can deploy to demand a quicker turnaround on a given decision.

Back in May, Facebook announced the members, including major figures from across the political spectrum, including Alan Rusbridger, the former editor of the Guardian newspaper, to John Samples, vice-president of the libertarian think-tank, the Cato Institute.

While the review board will be in place, Facebook cautioned that it won’t be the primary mechanism via which the social media platform ‘self-polices’ for censoring “harmful” speech, like ‘premature’ claims of victory from Trump.

The board’s focus will be entirely “forward looking,” according to a report from Politico published in May.


S&P Enters Correction, Down 10% From Highs, Goes Red YTD

S&P Enters Correction, Down 10% From Highs, Goes Red YTD

Tyler Durden

Thu, 09/24/2020 – 09:35

But, but, but… fiscal stimulus… Powell Put… v-shaped recovery… vaccine…

Nasdaq is leading the tumble but the S&P 500 has just hit a 10% drop from its highs – entering correction…

And going red year-to-date…

Time for a call?



Goldman Gives Up On New Stimulus In 2020, Cuts Q4 GDP Growth Forecast From 6% to 3%

Goldman Gives Up On New Stimulus In 2020, Cuts Q4 GDP Growth Forecast From 6% to 3%

Tyler Durden

Thu, 09/24/2020 – 09:15

“A U.S. fiscal deal was baked into markets and now what you are seeing is that the probability of a deal going through has simply reversed,” said Legal and General Investment Management PM Justin Onuekwusi, and he couldn’t be more correct when it comes to big bank analysts who during the August meltup were rushing to upgrade their GDP forecasts (if only to validate the market meltup which we now know was not due to fundamentals but a gamma squeeze orchestrated by SoftBank and facilitated by Robinhood traders).

Even as we were warning all the way back in late July that the fiscal cliff – and the lack of new stimulus clarity – threatens to derail the tepid economic rebound, sellside analysts were tripping over each other to upgrade their Q3 and Q4 GDP forecasts. Well, now that Congressional attention is more focused on the Supreme Court, it seems that a new fiscal deal is 2021 business which now seems unlikely to take place before the election, and really before a new president is appointed – a process which according to president Trump will involve the Supreme Court and may drag well into next year.

Indeed, as Justin adds, “we have heard this week how important a fiscal deal is to the Federal Reserve but from a political standpoint, focus has moved more towards the election and Supreme Court deliberations rather than the economy,” and sure enough, overnight the first GDP downgrade came from Goldman Sachs, which aggressively reversed on its previous “base case” of a $1.5 – $2 trillion stimulus being passed “shortly”, and as a result the bank just slashed its Q4 GDP growth forecast in half from 6% to 3%. Here’s why:

We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution.  This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021.

We estimate that the withdrawal of fiscal support will reduce disposable incomen in Q4 to roughly the pre-pandemic level. This will weigh on consumer spending, but probably by less than initially feared. Seven weeks after unemployment benefits lapsed, timely spending measures have trended higher, reflecting an offset from ongoing adaptation and reopening in the service sector.  This process can likely continue to at least some extent in coming months, and we therefore expect softer but still modestly positive consumption growth in Q4.

Some more details on the expected hit from this lack of stimulus:

The withdrawal of fiscal support will reduce disposable income in Q4.  We estimate that after peaking in Q2, disposable income fell in Q3 and will fall further in Q4 to roughly the pre-pandemic level, as shown in Exhibit 2.  While rapid job growth has partially restored private income in Q3 and should provide a further boost in Q4, the sharp decline in fiscal support is likely to outweigh the gain in private income.

And as noted above, and as we said almost two months ago, Goldman now expects that the hit to disposable income “will weigh on consumer spending in Q4, though probably somewhat less than we initially feared” as shown in the next chart.

As a result, Goldman’s chief economist Jan Hatzius is lowering his consumer spending expectations for the remaining months of this year, “but not dramatically” penciling in a deceleration in consumption growth to 0-½% in September and October and -½% in November and December, “by which point the boost from the last round of extra unemployment benefits is likely to have faded.”

This downgrade to Goldman’s consumption forecast results in a downgrade to the bank’s GDP growth forecast to 3% on a quarterly annualized basis, from 6%previously:

“We are lowering our Q4 GDP growth forecast from 6% to 3% on a quarterly annualized basis.  This leaves more room for catch-up later, and we have therefore raised our 2021Q2-Q4 growth forecasts as a partial offset.  Our new forecasts imply full-year growth of -3.5% in 2020 and +5.8% in 2021 (or -2.5% in2020 and +5.5% in 2021 on a Q4/Q4 basis).”

While Hatzius concedes that this will delay the recovery somewhat he notes that this “leaves more room for catch-up next year, especially once a vaccine becomes available”

We have therefore bumped our 2021 Q2 forecast by 1pp to 7% and our 2021Q3 and Q4 forecasts by ½pp each to 4.5% and 3.5%.  We are offsetting the hit to Q4 with higher growth in Q2-Q4 because we are more confident that widespread distribution of a vaccine to the full population will be achieved by Q2 than by Q1 of next year in light of the recent press reports that the FDA is likely to announce tougher standards for vaccine authorization

Incidentally, Goldman’s core assumption that a vaccine is widely available in early 2021 and was the reason why the bank hiked its GDP forecast a few weeks ago, is where it will also be proven wrong, as a credible vaccine – one which sees a take up by a majority of the population – is unlikely to happen in 2021.


Bill Blain’s Financial Weather Forecast: “I Feel A Storm Approaching”

Bill Blain’s Financial Weather Forecast: “I Feel A Storm Approaching”

Tyler Durden

Thu, 09/24/2020 – 08:45

Authored by Bill Blain via,

A Falling Glass

“The storm comes. Use it to learn how to sail skillfully.”

There is a distinct chill in the air when it comes to markets this morning. Whatever Mnuchin and Powell say, the absence of further stimulus in the run up to a possibly tumultuous American election that may stretch uncertainty till Inauguration day in Jan 2021 is dominating the action in the US. (What kinds confusion might occur as they argue who runs the country..?) The “risks are weighted to the downside” says the Fed. The rising dollar is like a falling barometer telling us a Gale is coming. 

The glass is falling… 

Here in Europe, the dominant force is the Coronavirus, recession and jobs. It’s not just a UK crisis. Growth has fled. Recession in a sinking European economy will deepen. Even Sweden is admitting rising infections require a response – which will be measured, minimal and left to individuals to enforce. Something must be seriously wrong in France – they are copying Boris with 10 pm bar closings. France admitting England is right? That is serious m*rde. It’s not just stocks. Bond markets are beginning to sag with credit under increasing pressure. It’s a sign confidence is waning.

What more can governments and central banks do? We’ve thrown the kitchen sink at the virus, but the numbers are rising. Central Banks have cut rates to historically lowest levels ever and economic activity is falling… QE Infinity promises liquidity is not an issue – but holders want to sell…

Arr… Capt’n.. I can feel a storms a’coming… 

It’s been feeling autumnal all month – this morning I was woken by lashing rain, followed by  a clear blue sky at 7.00 am. As I finish the Porridge, its blowing half-pelicans out there! Even blowing the young olives off the trees on the balcony in front of me. It’s an equinoxal gale – with more rain and wind to come. I know that because I watched the weather forecast. 

Markets in these uncertain times feel much the same, hope followed by despair… Up and down… However, Financial forecasting of markets is not a science – it remains a dark art. Markets are all about behaviours – which are notoriously difficult to predict.

There are the market chartists – who pour over carefully constructed charts, lines and curves seeking logic in numbers while scrabbling for hints on what markets might do. They rely on the properties of magical number series like Fibonacci or Elliot Wave rules to determine the up and downs of prices. (I suspect many of them hedge their prognostications by also examining the livers of slaughtered sheep to divine the day’s financial auguries.) And, yes, it worries me that computer algorithms are running markets based on what the chart’s experience tells them.. 

In the past weather lore was considered essential knowledge for farmers, traders, and sailors. Knowing what the sky, hills, trees, the behaviours of cattle and sheep, and clouds were telling about the weather was critical. Experienced countrymen and sailors with a “weather eye” could read the signs. They could tell it was going to rain by the leaves on trees turning inside out, a shift in the wind, a sudden chill or heat in the air, or the cattle lying down. If the sheep were hiding in the deep combes and folds of the valley, then a wind was coming. If the waves were developing white-horses, then a blow was imminent. Grey mares high in the sky – thin whispy cirrus clouds like a horse’s tail – meant a front was approaching and likely to being rain – time to get the harvest in, or to reef the sails. The price of goods would change with the weather. 

Weather forecasting changed from lore to science thanks to the efforts of Admiral Robert Fitzroy. He was a religious man, who clashed with Charles Darwin when he skippered HMS Beagle on the voyage that changed the world and led to Darwin’s “The Origin of Species.” Fitzroy was an equally clever chap, and a superb oceanographer. He realised the weather had patterns that might be predictable. He founded what is today the Meteorological Office to collate and compute data and observations from ships and shore stations – and distributed the first forecasts across the land. Queen Victoria would consult him as to when it was safe for her to sail across the Solent. Today the Weather Area West of Biscay is named Fitzroy in his honour. 

Financial and market forecasting is still an art. The great traders and investors get that – and develop a feel for all the inputs. If I have any sense of it – it’s what’s crept into my bones through 35 years man and boy in markets. I’m that grizzled old fisherman who can look at a piece of seaweed to opine on where to fish today – he might not have a clue about it, but he’ll say it with confidence. It’s up to the younger fisherman to listen or ignore me. 

Arr… pass me a glass of rum… 

I like to think I’ve developed a keen weather-eye for markets. I tell myself I can sniff trouble coming. I watch, and particularly listen, for the sounds of approaching opportunity. (For every financial storm is ultimately a market opportunity..) I’m not watching the leaves on trees, or clouds, but the behaviour of the flock. The way cattle behave oft resembles the actions of the crowd and its peculiar madness. And I know October is oft a bad month. 

Discerning what is coming in financial markets is hit and miss. There is so much noise that it becomes difficult to discern the behaviours that drive markets. I used to watch the early morning financial TV shows – but the experts they bring in seldom get to say anything before the next advert proclaiming “We have your market interests at heart” blares through. Lies, lies and more lies. And why do they all have American hosts who nasally gabble at 10,000 words per minute? I can’t keep up.

No. To understand the financial weather, you need to listen. I can feel a storm approaching. 

First: There is a crack in the Tech Narrative that’s been driving markets. It spells a correction and a reassessment. It might be the current travails of the US not-making-any-trucks truck maker Nikola might be the trigger, that will precipitate a reversal. If it fooled GM into paying billions for a truck company yet to make a truck, then who else is pulling the proverbial wool over our eyes? 

The parallels with the crash 20-years ago are obvious. It will sort out the wheat from the chaff… which is why I’ll be putting names like Apple and Amazon into the long-term hold portfolio, and waiting for the next bounce to sell my Teslas. 

Second: I detect increasing desperation from Government here in Europe to stem the economic consequences of Coronavirus. Listen to the behaviours; its muddled, priorities are becoming confused, policies are increasingly contradictory and self-defeating. Sunak will put new employee protections in place, but knows the new anti-virus measures will trigger inevitable hospitality failures and unemployment, with serious multiplier effects across the economy. Morale is tumbling as fast as the economic prospects. Across Europe is feels the recession is deepening. It becomes a self-fulfilling force. 

Third: Crashing oil and commodity prices add to the underlying woe. 

Fourth: Geopolitics.. lest we forget, the west has picked an economic fight with China. Don’t forget about it. They are still there…waiting.. watching… biding their time.. waiting for that moment…. 

However, let’s not despair… 

35 years in markets and weathering many’s a gale means I’ve learnt many things, Capt’n… Gales pass! 

The trick is surviving and staying afloat: to avoid being caught on the lee shores of default, to be drawn onto the rocks by the siren-songs of the mer-unicorns, or to be left high and dry on the sandbars of bursting bubbles… Aye, the Gale will pass and the ships that survive get the highest market prices while picking up the floatsam and jetsom left by the storm. 

Opportunity beckons… 


870,000 Americans Filed For First-Time Unemployment Benefits Last Week

870,000 Americans Filed For First-Time Unemployment Benefits Last Week

Tyler Durden

Thu, 09/24/2020 – 08:34

870,000 Americans filed for first-time unemployment claims last week, slightly worse than the prior week’s and expectations.

Source: Bloomberg

As a reminder, last week’s jobless claims are four times the pre-COVID-Lockdown average!

New York was the worst state along with Georgia as California begins to ‘normalize’ (see below). Illinois and Michigan saw the best improvements last week…

Continuing Jobless Claims also disappointed – printing 12.58mm (worse than the 12.275mm expectations)

Source: Bloomberg

Bear in mind that this past week was also payroll-survey week.

Of course, as we detailed previously, the numbers are heavily skewed by the fraud and backlogs in California. As The Epoch Times’ Sarah Le reports, California officials said it may take until Jan. 27, 2021, for the state’s Employment Development Department (EDD) to work its way through a massive backlog of unemployment cases accumulated during the COVID-19 pandemic.

The EDD implemented a “two week reset” starting Sept. 19 to address the issue, among others, and said the agency would stop accepting new unemployment claims during that time.

The reset takes place after months of delays in processing applications and allegations of rampant fraud. The move provoked outrage among some state politicians.

The state has about 600,000 unemployment applications more than 21 days old that have not yet been processed, according to the EDD. Another 1 million Californians have received payments from the state, but have since modified their claims and are awaiting a review to continue receiving benefits.

“We will be clearing backlog every single day between now and January,” said Sharon Hilliard, director of the EDD, at a Sept. 21 press conference.

So take the still-near-one-million levels with a modest spec of salt… for now.


Trump Threatens Veto Of New COVID-19 Vaccine Rules; France Imposes New ‘Social Distancing’ Restrictions: Live Updates

Trump Threatens Veto Of New COVID-19 Vaccine Rules; France Imposes New ‘Social Distancing’ Restrictions: Live Updates

Tyler Durden

Thu, 09/24/2020 – 08:20


  • Trump vetos vaccine restrictions
  • China says mass vaccinations to take up to 2 years
  • France introduces more curbs
  • Israel lockdown intensifies
  • FDA delivers emergency authorization
  • Moscow reports 1,050 new cases
  • Indonesia suffers 2nd straight record

* * *

While the US marches toward the 7 million mark, France announced new restrictions on Wednesday calling for bars and restaurants to be shuttered in the ‘hot spot’ of Marseille, and Germany added 11 regions to its list of COVID hotspots, as the second wave of COVID-19 infection spreads across Europe.

China has been pressing ahead with its vaccination projects, with multiple efforts already well into ‘Phase 3’ testing. But if China’s COVID-19 infection rates are really so low as to be virtuallly nonexistent, as Chinese official data, and state-controlled media reports, have suggested, then why is the Communist Party of China attaching such a high priority to the country’s domestic mass-vaccination efforts?

A top government scientist told the local press that it’ll take China up to two years to finish vaccinations on a mass scale, said infectious disease expert Zhong Nanshan, who was speaking at an “industry event”, according to China’s Changjiang Daily.

One could argue that another outbreak is just around the corner, but after months of Beijing’s heavy handed “wartime footing” approach, people in Wuhan are partying like its 2019, and even a handful of domestic cases can trigger ‘localized’ lockdowns that can seal off cities from their surrounding province.

Circling back to the US, President Trump threatened to veto any attempt to tighten rules related to emergency clearance of a vaccine, a statement that will inevitably trigger another round of accusations about Trump meddling with government scientists and applying undue political pressure that could compromise the safety, and credibility, of the eventually-approved vaccine.

Still, Dr. Fauci and Dr. Redfield told Congress during yesterday’s hearing that they “wouldn’t hesitate” to get a vaccine if one was offered.

One day after JNJ became the fourth US vaccine project to enter ‘Phase 3’ testing, AstraZeneca said it is still waiting for a decision from the FDA on whether it can resume tests in the country after halting global trials due to concerns about a participant who became ill in the UK.

Though case numbers across Sweden remain well below their springtime peak, a recent surge in cases in and around Stockholm has prompted the country’s top health officials to consider imposing new localized restrictions to prevent a broader resurgence. Swedish PM Lofven said the country “would not hesitate” to take further action to limit the spread.

After separately announcing new measures earlier in the week, Spain, France, the UK and Germany are leading European nations in combating a second wave that continues to rise. With Europeans opposed to a lockdown return, all of these countries are relying on ‘localized’ restrictions – particularly on bars and restaurants, and large gatherings and weddings – as their front-line of defense, with leaders (notably Johnson) warning that the restrictions could remain in place for up to six months.

The biggest numbers out of the US yesterday came from Texas, which followed California to become the 4th state to see its death toll top 15,000.

Here’s a rundown of important numbers from yesterday, accurate as of 0630ET: 

31,914,770: confirmed cases worldwide

977,109: confirmed deaths worldwide

37,330: New US cases recorded yesterday

6,935,415: Total cases confirmed in the US

1,098: deaths in the US recorded yesterday

201,920: total U.S. deaths

97,459,742: tests conducted in the U.S.

Cases have fallen from a five-week high reached earlier in the week…

…while the US saw the highest number of deaths in a week yesterday.

Here’s other important news from overnight:

US FDA delivered emergency authorization for the first serology/antibody point-of-care COVID test (Newswires).

China’s Sinovac Biotech hopes to supply its experimental vaccine across Latin America as quickly as possible by outsourcing some manufacturing procedures to a partner in Brazil. Sinovac plans to provide semi-finished products to its partner Instituto Butantan, which will complete the rest of the process and supply finished items to other South American countries, Chairman Yin Weidong said at a news conference, part of China’s effort to ‘atone’ for unleashing SARS-CoV-2 on the world (Source: Nikkei).

Indonesia reports a daily record high for the second consecutive day with 4,634 new infections, and 128 deaths. The country has now a total of 262,022 coronavirus cases, with the death toll crossing the 10,000 mark for the first time to 10,105 (Source: Nikkei).

The Philippines reports 2,180 new infections and 36 additional deaths. Total confirmed cases rose to 296,755, still the highest in Southeast Asia, while deaths reached 5,127, nearly half of which were recorded in the past 30 days (Source: Nikkei).

SoftBank Group starts offering PCR coronavirus testing with saliva that will cost 2,000 yen ($19) per person, excluding delivery fees, for corporate customers. In Japan, PCR testing is typically priced from 20,000 to 40,000 yen. The Japanese tech investor aims to expand the testing market by making tests available to people without symptoms at a reasonable price through its unit. It also plans to offer the service to individuals this winter (Source: Nikkei).

China reports seven new coronavirus cases for Thursday, down from 10 reported a day earlier. All new cases were imported infections involving travelers from overseas. The number of new asymptomatic cases rose to 20 from 18 a day earlier (Source: Nikkei).

Moscow registered 1,050 new cases in the last day, the first time that the Russian capital diagnosed over a thousand infections since June. New daily cases in Moscow have grown by two-thirds since Sept. 1, when schools opened nationwide. The number of infections is rising throughout Russia, with 6,595 new cases in the last day. There have been 1,128,836 reported infections, the fourth highest in the world, after the U.S., India and Brazil (Source: Bloomberg).

The Israeli government tightened lockdown restrictions for the next two weeks to try and fight a coronavirus outbreak that’s spun out of control. Just last week, the government imposed its second lockdown since the pandemic began. With daily new infections surging dramatically, the government voted early Thursday to clamp down further during a season of major Jewish holidays by almost totally idling the private sector, allowing only essential employees to work (Source: Bloomberg).

Russia is preparing to supply 17 more countries with its Avifavir COVID-19 treatment (Newswires).


Traders On Edge As Futures Fail To Rebound After Wednesday Rout

Traders On Edge As Futures Fail To Rebound After Wednesday Rout

Tyler Durden

Thu, 09/24/2020 – 08:07

US equity futures were subdued and European stocks rebounded from an early selloff as markets tried to stem the Wednesday rout sparked after a range of Fed speakers urged further fiscal stimulus, even as investors braced for another staggering weekly jobless claims figure, the latest evidence of a slowing economic recovery from a pandemic-led recession.

The FAAMGs which led a Wall Street rally since April, again edged lower in premarket trading. A 2% slide put Tesla Inc on course for its third straight day of declines following an underwhelming “Battery Day” presentation by Chief Executive Officer Elon Musk. At the same time, big banks including Goldman Sachs, Wells Fargo and JPMorgan gained between 0.8% and 1.6%. Nikola which is set for one of its biggest weekly declines ever, tumbled another 7.8% as Wedbush downgraded the stock to “underperform”.

The S&P 500 is hovering just above correction territory on waning hopes of more fiscal stimulus – which prompted Goldman overnight to slash its Q4 GDP forecast from 6% to 3% – signs of choppy economic growth and a sell-off in heavyweight technology-related names. The Nasdaq entered correction territory earlier this month, but the blue-chip Dow has outperformed its peers on demand for value-linked stocks such as industrials.

The MSCI World index was down 0.5% in morning trading, its fifth day in the red out of the last six and hovering near a two-month low. “Optimism on the recovery, optimism on the virus, and bets on stimulus were keeping markets well bid, and on all three of these issues, there has been a degree of disappointment this month,” said John Velis, an FX and macro strategist at BNY Mellon.

Despite markets betting on more U.S. fiscal stimulus, political stalemate in Washington continues to frustrate efforts to prop up the world’s biggest economy, beset by one of the worst COVID-19 death rates globally.

“A U.S. fiscal deal was baked into markets and now what you are seeing is that the probability of a deal going through has simply reversed,” said Justin Onuekwusi, a London-based portfolio manager at Legal and General Investment Management. “We have heard this week how important a fiscal deal is to the Federal Reserve but from a political standpoint, focus has moved more towards the election and Supreme Court deliberations rather than the economy,” he added.

In Europe, the Stoxx 600 Index initially slipped as much as 0.8% by, but has since erased most of the losses with improving German business optimism and a strong take-up of the latest European Central Bank liquidity operation providing some relief. After a summer lull in much of Europe, the infection rate has begun to rise sharply, with a number of countries including Britain introducing tougher rules to help limit the spread of the virus.

Earlier in the session, the MSCI Asia Pacific Index dropped 1.7% overnight, while Japan’s Topix index closed 1.1% lower with Takakita and Niitaka falling the most. The Shanghai Composite Index retreated 1.7%, with Wuxi Commercial and Guangdong Guanhao High-Tech posting the biggest slides. MSCI’s Emerging Markets Index was down 1.8%.

In rates, the 10-year Treasury yield was at 0.664%, down 0.5bps. Futures volume stood around 80% of 20-day average level ahead of risk events including 7-year auction and another bevy of Fed speakers including Powell at 10am. Yields remain within a basis point of Wednesday’s closing levels, 10-year around 0.67% with bunds outperforming by 1.5bp on haven flows. The week’s Treasury auction cycle concludes with the sale of $50b in 7-year notes at 1pm ET; Wednesday’s 5-year offering drew a record low yield about a basis point lower than the WI yield at the bidding deadline. High-grade euro zone government bond yields fell across the board on an expectation that stimulus measures would be maintained, with the German 10-year down 2.2 basis points.

In FX, flows into the dollar helped it rise for a fifth straight day following yesterday’s warnings by Federal Reserve officials that more fiscal stimulus is needed to sustain the economic recovery. The Bloomberg Dollar Spot Index advanced a fifth consecutive day, the longest streak since March, and the greenback touched a two-month high versus the euro at 1.1635, as it remained bid in amid a risk-averse sentiment.

The Norway’s krone fell a sixth consecutive day against the euro, the longest streak since February, to reach more than a four-month low after the central bank said rate hikes remains years away; Governor Oystein Olsen also said current situation doesn’t warrant any further intervention in the Norwegian krone similar to what Norges Bank did earlier when the currency weakened. Australian and New Zealand dollars extended losses as a strengthening greenback combined with soft local rates and speculative client flows weigh on the currencies. The Swiss franc advanced against the euro even as the Swiss National Bank said it’s on alert and ready to “intervene more strongly”after an intense battle earlier this year in response to the franc’s advance to a five-year high against the euro. The pound was steady versus the dollar before U.K. Chancellor Rishi Sunak announces plans to protect jobs from coronavirus upheaval.

Elsewhere among regional rate-setters, the Swiss National Bank maintained its easy monetary policy, but turned less gloomy on the impact of the pandemic. In Britain, meanwhile, the finance minister launched a new jobs support scheme. In emerging markets, Turkey surprised markets with a hike in its policy rate by 200 basis points to 10.25%, sending the lira and bonds higher. Mexico is also set to decide on monetary policy later on Thursday.

In commodities, gold continued to drop tracking the rise in negative real rates.

With central bankers in focus globally, Federal Chair Jerome Powell will be watched later in the day when he delivers his third testimony for the week before the Senate Banking Committee, while other Fed officials are scheduled to speak at other events during the day. Investors are also waiting for weekly data due later on Thursday, which is expected to show U.S. jobless claims fell slightly but remained elevated, indicating the world’s largest economy is far from recovering. A similar picture was visible in Europe, where the European Central Bank’s latest Economic Bulletin said unemployment would continue to rise in the euro zone, with little growth in demand seen for consumer goods.

Expected data include jobless claims and new home sales. Accenture, CarMax and Costco are reporting earnings.

Market Snapshot

  • S&P 500 futures down 0.2% to 3,225.75
  • STOXX Europe 600 down 0.2% to 358.46
  • MXAP down 1.6% to 168.03
  • MXAPJ down 1.9% to 546.00
  • Nikkei down 1.1% to 23,087.82
  • Topix down 1.1% to 1,626.44
  • Hang Seng Index down 1.8% to 23,311.07
  • Shanghai Composite down 1.7% to 3,223.18
  • Sensex down 2.2% to 36,832.76
  • Australia S&P/ASX 200 down 0.8% to 5,875.94
  • Kospi down 2.6% to 2,272.70
  • Brent futures down 0.8% to $41.44/bbl
  • Gold spot down 0.4% to $1,855.30
  • U.S. Dollar Index little changed at 94.43
  • German 10Y yield fell 1.6 bps to -0.521%
  • Euro down 0.03% to $1.1657
  • Brent Futures down 0.8% to $41.44/bbl
  • Italian 10Y yield fell 1.5 bps to 0.647%
  • Spanish 10Y yield unchanged at 0.224%

Top Overnight News from Bloomberg

  • The day after Bank of England Governor Andrew Bailey poured cold water on the chance of negative rates, betting against them via the options market exploded
  • The Swiss National Bank is on alert and ready to “intervene more strongly”after an intense battle earlier this year in response to the franc’s advance to a five- year high against the euro
  • Euro-zone banks took 174.5 billion euros ($203 billion) in another dose of ultra-cheap funding from the European Central Bank. The bids for the targeted loans, known as TLTROs, came from 388 banks, and the takeup was at the high end of economists’ expectations
  • France introduced new measures to fight the rapid resurgence of the coronavirus pandemic in major cities, adding to risks weighing on an already slowing economic recovery
  • U.K. Chancellor of the Exchequer Rishi Sunak will set out a new crisis plan to protect jobs and rescue businesses as the coronavirus outbreak forces the U.K. to return to emergency measures
  • German companies are turning increasingly optimistic that government support and a reluctance to return to wide-scale lockdowns will carry the economy through the coronavirus pandemic. The Ifo institute’s business climate index rose to 93.4 in September from 92.5 in August. That was slightly lower than the median forecast of economists in a Bloomberg survey. A gauge of expectations also improved

Asian equity markets were lower on spill-over selling from peers on Wall St where the major indices were dragged by broad weakness across all sectors and hefty losses in the big tech names, while President Trump’s comments also spurred concerns of a contested election. This was after he stated that he thinks the 2020 election will end up at the Supreme Court which is why it is important to have nine justices and later refused to commit when questioned about a peaceful transition of power if he loses the election. ASX 200 (-0.8%) was dragged lower by underperformance in tech and miners, as well as losses in financials after Westpac agreed to pay a record AUD 1.3bln fine over anti-money laundering breaches, while Nikkei 225 (-1.1%) was also subdued as exporters suffered from the recent inflows into the currency and ill-effects of the JPY-risk dynamic. Hang Seng (-1.8%) and Shanghai Comp. (-1.7%) conformed to the broad downbeat tone after a tepid liquidity effort which resulted to a net daily injection of CNY 10bln and it refrained from 7-day reverse repos owing to the National Day Golden Week holiday which begins next Thursday. Furthermore, there was still no significant improvement in US-China related headlines as US Secretary of State Pompeo reiterated calls for US  Governors to increase scrutiny on state pension funds’ investments into Chinese companies, while TikTok filed for a preliminary injunction against President Trump’s ban. Finally, 10yr JGBs were rangebound and failed to benefit from the risk averse tone after similar lacklustre trade in T-notes and with demand also hampered by weaker results at the 40yr JGB auction.

Top Asian News

  • Israel Controversially Tightens Lockdown as Virus Cases Soar
  • South Korea Says North Korea Killed its Citizen, Burned Body
  • Early Pandemic Bets Paid Off Big for a Few Asia Hedge Funds

European equities are now mixed after opening lower across the board (Euro Stoxx 50 -0.2%) in a continuation of the losses seen on Wall Street yesterday and in APAC hours. That being said, European equity futures came off lows following the cash open and are now mixed on the day whilst futures across the pond have been contained within tight ranges ahead of a slew of Fed speakers scattered throughout the day; currently mixed as well. Back to Europe, broad-based losses are seen across major bourses, but Netherland’s AEX (-0.5%) modestly underperforms as the tech sector lags (in-fitting with Wall Street and APAC performance), with heavy-weight ASML (-2.2%) weighing on the index and broader sector. The energy sector also resides as one of the straddlers amid price action in the complex. Overall sectors are mostly lower and somewhat of a defensive bias. The sectoral breakdown paints a similar picture, but performance is similarly off lows, with Travel & Leisure towards the bottom of the pile, whilst real estate, particularly in the UK, are supported ahead of Chancellor Sunak’s unveiling of further supportive measures. In terms of individual movers, AA (+4.6%) is firmer after confirming that a consortium of Towerbrook Capital and Warburg Pincus has expressed strong interest in pursuing a possible cash offer for the Co. Elsewhere, Veolia (-1.3%) CEO said the group is to hold discussions with Engie (-1.0%) and did not rule out increasing its bid for Engie’s holding of Suez (-3.9%).

Top European News

  • Norges Bank Surprises Market as Rate Hike Remains Years Away
  • JPMorgan Joins Rivals in Pausing London Office Return Plans
  • German Business Optimism Improves With Economy on Recovery Path
  • Virus Forces Sunak to Spend More on Saving U.K. Jobs, Firms

In FX, the SNB and Norges Bank both maintained benchmark rates, as widely expected, but the reaction in respective currencies has been quite contrasting given relative stability in the Franc around 0.9250 vs the Dollar and 1.0775 against the Euro compared to Eur/Nok rallying further through 11.0000 towards 11.1750 at one stage. It seems that the former has acknowledged no change in the Swiss Central Bank’s valuation of the Chf and perhaps more regular updates on intervention, while the Krona is taking heed of the rate path projecting steady policy for the next couple of years against some expectation that a hike may come before the 4th quarter of 2022.

  • USD – Demand for the Dollar has accelerated again, and this time mainly on safe-haven grounds after a sharp retreat in US stocks and knock-on declines in global amidst the ongoing recurrence of COVID-19. The DXY has duly extended gains to 94.558 and pull-backs are getting shallower and more fleeting with the latest bout of consolidation stopping well ahead of 94.000, at 94.235. However, some G10 rivals continue to display a degree of resilience and resistance for the index resides relatively close by around 94.632 (March 9 high).
  • AUD/NZD – No respite for the beleaguered Aussie or Kiwi, as Aud/Usd straddles 0.7050 having let go of the 0.7100 handle and Nzd/Usd struggles to retain 0.6500+ status following NZ trade data for August showing a deficit vs surplus due to a marked slowdown in exports rather than moderately higher imports.
  • GBP/JPY/EUR/CAD – Sterling continues to defy the odds and gravity, with Cable resisting pressure below 1.2700 and Eur/Gbp probing 0.9150 after the cross formed a near double top around 0.9220 on Tuesday and yesterday ahead of Chancellor Sunak’s mini budget and more commentary from BoE Governor Bailey. Meanwhile, support at 105.50 seems to have arrested the Yen’s reversal from circa 104.00 and Usd/Jpy may be kept in check by decent option expiry interest spanning 104.45-55 (1.1 bn) to 105.70-75 (1.4 bn) with even more rolling off at the 105.00 strike (1.7 bn). Similarly, after a rather non-descript German Ifo survey in terms of key metrics vs consensus and an even more forgettable monthly ECB report, the Euro could be contained by expiries between 1.1600-10 and 1.1700-10 (1.7 bn and 1.2 bn respectively), though veering towards the downside after a hefty TLTRO3 take up. Elsewhere, the Loonie has recoiled to sub-1.3400 in wake of Canadian PM Trudeau’s stark warning that an Autumn bout of the coronavirus could be significantly worse than the original one in Spring, as a 2nd wave is already spreading across the country’s 4 biggest provinces.
  • SEK/EM – Rhetoric from Riksbank’s Skingsley underlining limited space to cut the Swedish repo rate and discounting Crown developments have not prevented the Sek depreciating to almost 10.6000 before bouncing vs the Eur, but the Try and Mxn will be hoping for more support from the CBRT and Banxico. On that note, the NBH has helped the Huf via a 15 bp hike in the 1 week deposit rate having left the benchmark on hold on Tuesday.

In commodities, WTI and Brent front month futures are essentially flat firmly off overnight lows and relatively contained in early European hours amid a lack of fresh fundamental catalysts ahead of a raft of Central Bank speakers. Complex-specific newsflow has also been light, although the Iraqi oil ministry denied earlier reports, citing the Iraqi oil minister, that OPEC+ agreed for Iraq to increase oil exports. Iraq added that it is fully committed to the supply deal. WTI resides just below USD 40.00bbl (vs. current range of 39.12-40.00) while its Brent counterpart trades towards the top end of today’s range around USD 41.75/bbl (vs. current range 41.27-84). Elsewhere, spot gold mirrors USD action and briefly dipped below USD 1850/oz, while spot silver remains on a downward trajectory and underperforms in the precious metal space as it probes USD 22/oz to the downside. In terms of base metals, LME copper prices are softer amid the firmer USD and broad losses across equities. Conversely, Shanghai steel futures rose almost 3% amid future demand speculation as prices flipped into backwardation.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 840,000, prior 860,000; Continuing Claims, est. 12.3m, prior 12.6m
  • 9:45am: Bloomberg Consumer Comfort, prior 47.7
  • 10am: New Home Sales, est. 890,000, prior 901,000; New Home Sales MoM, est. -1.22%, prior 13.9%
  • 11am: Kansas City Fed Manf. Activity, est. 14, prior 14

Fed speakers:

  • 8:50am: Fed’s Kaplan speaks at Texas Christian University
  • 10am: Powell, Mnuchin Testify Before Senate Banking Committee
  • 12pm: Fed’s Bullard Discusses Economy and Monetary Policy
  • 1pm: Fed’s Evans Discusses the U.S. Economy and Monetary Policy
  • 1pm: Fed’s Barkin Speaks to the Money Marketeers of NYU
  • 2pm: Fed’s Barkin Takes Part in Virtual Discussion on Economy
  • 2pm: Fed’s Williams Discusses Virus Impact on Communities of…
  • 2pm: Fed-s Bostic Speaks to Bankers on Racism

DB’s Jim Reid concludes the overnight wrap

Yesterday marked 6 months since lockdown started here in the U.K. and with the tightening restrictions announced over the last 36 hours I suspect we’ll have at least another 6 months of similarly restrictive conditions. How time flies. On that you may be amused to know my wife and I had a relatively big row on Tuesday night which I can now mention as we kissed and made up last night. In it she said one of the most hurtful things I have ever had directed at me. She said, or rather shouted ……. “Why can’t you just go back to the office full time…”. It was a hammer blow. I just said “fine I will…” which given the new restrictions might end up being illegal had I followed through. You won’t be surprised to learn the argument was about kids and childcare.

So Covid-19 looks like remaining at the epicentre of our lives for months or even quarters to come. Indeed Europe saw further increases in cases yesterday, as yet more signs emerged of further restrictions heading into winter. US markets fell sharply after Europe went home as the continual negative blows finally took their toll.

The S&P 500 lost -2.37% with over 94% of stocks in the index lower yesterday and 23 of 24 industries down on the day. Consumer durables and apparel were the one exception (+2.69%) on the back of Nike (+8.76%), who was the top performer in the overall S&P after the company posted much stronger results than expected. Tech (-3.21%) and Energy (-4.55%) stocks lost further ground too, with the NASDAQ falling -3.02%. Tesla saw one of the larger declines in the index with a -10.34% dip as reports came through of a network outage on top of the “Battery Day” disappointments we discussed yesterday. The VIX volatility index rose 1.7pts to 28.6 in its second largest daily jump since 3 Sept, when the current market weakness began.

Risk-off sentiment has continued this morning with the Nikkei (-0.77%), Hang Seng (-1.78%), Shanghai Comp (-1.46%), Kospi (-1.79%), Asx (-0.94%) and India’s Nifty (-1.26%) all down. European futures on the Stoxx 50 (-1.04%), FTSE 100 (-0.89%) and Dax (-1.01%) are also pointing to a weak open in the region. Meanwhile, futures on the S&P 500 and Nasdaq are trading broadly flat. In Fx, the US dollar index is up a further +0.09% this morning and on course for the strongest weekly performance since April. Elsewhere, crude oil prices are down c. -1%.

On the virus it’s beginning to feel a bit like March-lite. In France, it was announced by Health Minister Veran last night that the country would be divided into “zones” by alert level and they would empower local authorities to tighten restrictions before a state of emergency would be declared within them. Marseille, the second largest city in the country and the Carribbean Island of Guadeloupe are the only “maximum” level zones today. The minster also announced that bars and restaurants in the Paris region as well as other major cities will close at 10pm, similar to the rules recently laid out in the UK. Attendance at large public events will be cut down to 1,000 from 5,000, while small gatherings over 10 people are banned in those “maximum” level areas.

Meanwhile in Germany, the foreign minister Heiko Maas went into quarantine as a result of one of his security detail having the virus, even though an initial test on Maas came up negative. Germany also issued travel warnings to more parts of France. Elsewhere, China will ease restrictions on entry of some foreign nationals as the country said foreigners holding residence permits for work, personal matters and reunions will be allowed to enter China starting September 28.

In terms of case numbers, the UK reported a further 6,178 yesterday, which was the highest number since May 1, and sent the 7-day average above 4,500. That comes ahead of an announcement today from Chancellor Sunak in the House of Commons, who tweeted yesterday that he’d be speaking about “our plans to continue protecting jobs through the winter.” With the furlough scheme scheduled to conclude at the end of October, there have been reports that Sunak is looking at a German-style wage subsidy program, similar to the Kuzarbeit program, which would see the government top up the wages of part-time workers.

Over in the US, there was some positive news on the vaccine front, as Johnson & Johnson announced yesterday that they were launching their Phase 3 trial, which will involve a single vaccine dose given to up to 60,000 participants. This is different to a number of the other candidates, which involve a second dose, and Dr Fauci said in a statement that this “may be especially useful in controlling the pandemic if shown to be protective after a single dose.” J&J said that they anticipate the first batches could be available for emergency use authorisation in early 2021, should they be proven to be safe and effective. Meanwhile various media reports suggest that the UK government is considering carrying out the first studies that would deliberately expose healthy people to the coronavirus in a bid to accelerate the development of a vaccine. The report further added that a growing number of volunteers have signed up to take part in such studies should researchers decide to proceed. This could help AstraZeneca in speeding up its Phase 3 trials as they continue to remain on halt in the US. Bloomberg suggested this wouldn’t start until January though if it got the green light.

Late last night, aPresident Trump news conference signalled that he may try to veto any tightening of FDA rules surrounding the emergency clearance of a coronavirus vaccine. This may increase concerns that the vaccine is being politicised. On the other side, overnight we also heard from Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, and Stephen Hahn, the commissioner of the FDA, who both said that drug companies still face hurdles to authorising a vaccine. Dr. Fauci said that he expected a vaccine to be authorized at the earliest by November, while Dr Hahn stressed that the FDA would soon issue a number of additional guidelines. Elsewhere, the president again criticised mail-in ballots and as we showed in yesterday’s CoTD (link here) the US public is also very distrustful of mail-in ballots.

From central bankers, it was the 2nd day out of 3 featuring a testimony from Fed Chair Powell, and he was again asked about how the Fed could further help Main Street. The Fed Chair noted that the central bank had “done basically all of the things that we can think of” and reiterated that the economy needed fiscal stimulus. We also heard from a bevy of other Fed governors who all sought to convey the importance of fiscal aid. The Fed’s Rogerson noted that the “toughest part” of the recovery is still ahead, and that he was less optimistic than peers due to a lack of fiscal help and a second Covid-19 wave. The Fed’s Evans noted that members were concerned that the fiscal stimulus which was embedded in the FOMC’s outlook would not come to fruition, saying that the estimated jobless numbers had factored in roughly $1 trillion of fiscal support. Fed Governor Quarles joined the refrain of the day in asking for more fiscal help. As we have noted, the Senate and House are clearly more focused on the election – and also now a supreme court seat – than getting an additional fiscal stimulus bill through in the short term. While the Fed member’s spoke throughout the New York afternoon, we saw a clear move out of risk assets and the dollar index rose to an 8-week high, finishing +0.43%, having risen every session this week.

On the other side of the Atlantic, the STOXX 600 continued to come back from Monday’s loses, gaining +0.55% before the US later slump. The index was up as much as +1.5% in early trading before a mix of deteriorating virus news flow from Europe and negative market sentiment from the US saw the index fall into the close. Over in the fixed income sphere, Italian sovereign debt continued to outperform following the country’s regional election results, and the yield on 30yr BTPs fell a further -1.9bps yesterday to an all-time low of 1.768%. Spreads also narrowed further, with those on both 10yr Italian and Spanish debt over bunds reaching their tightest levels since late February when investors began to realise the pandemic’s impact on Europe. In the US, 10yr rates were up modestly (+0.2bps) at 0.672%. However there was a decline in inflation expectations – especially given some of the Fed rhetoric – with breakevens down -1.9bps to 1.603%, their lowest closing level in 6 weeks. Between the decline in inflation expectations and the rally in the greenback discussed earlier gold had its worst day in over a month, falling -1.94% to close under $1900/oz for the first time since 23 July. With the precious metal falling, its more volatile peers silver (-6.64%) and platinum (-3.08%) saw deep losses as well.

In terms of yesterday’s data, the main highlight came from the flash PMI readings, where there were clear signs that the services sector in Europe was being affected by the second wave of Covid-19. The Euro Area services PMI fell to 47.6 (vs. 50.6 expected), so below the 50-mark that separates expansion from contraction, with both Germany (49.1) and France (48.5) underperforming expectations. The big question as we enter Q4 next week will be whether activity can avoid a decline in the face of a virus resurgence. Manufacturing was more positive however, and the Euro Area (53.7), French (50.9) and German (56.6) numbers were all in expansionary territory. PMI readings were comparatively better in the US, showing continued momentum in the recovery though they were slightly lower than in August. The composite reading was just 2 tenths lower at 54.4, as services were just under expectations at 54.6 after being 55.0 last month. The country’s manufacturing numbers were in line with expectations (53.5), and actually up 0.4 from last month.

To the day ahead now, and the data highlights include the German Ifo business climate indicator for September, French business confidence for September, while from the US we’ll get the weekly initial jobless claims, new home sales for August and the Kansas City Fed manufacturing index for September. From central banks, we’ll hear from Fed Chair Powell at the Senate Banking Committee, as well as the Fed’s Bullard, Evans, Barkin, Williams, Kaplan and Bostic. Otherwise, we’ll hear from Bank of England Governor Bailey, ECB chief economist Lane, and the ECB will release its latest Economic Bulletin. In addition, both the Turkish and Mexican central banks will be deciding on monetary policy.


Lira Drops Like A Stone After Turkish Central Bank Unexpectedly Hikes By 200 bps

Lira Drops Like A Stone After Turkish Central Bank Unexpectedly Hikes By 200 bps

Tyler Durden

Thu, 09/24/2020 – 07:30

With the Turkish economy hammered as a result of a collapse in global tourism, the country’s FX reserves dwindling by the day preventing the infamous Turkish interventions to stabilize the currency, Moody’s warning that Turkey faces an imminent balance of payments crisis, and the entire world cutting rates and easing to stimulate economies, the last thing Wall Street expected this morning from the CBRT was a rate hike – even though the Turkish Lira had been hitting daily record lows every single day for the past two weeks.

And yet moments ago, the Central Bank of Turkey shocked investors when it announced a whopping 200bps hike in the one week repo rate, from 8.25% to 10.25%, the first hike from Turkey in two years following an aggressive easing cycle which was unleashed when the rate hit a record 24% in late 2018.

Until now, political pressure from President Recep Tayyip Erdogan, who has demanded lower rates, forced the CBRT to tighten by stealth. Instead of hiking the main policy rate, the central bank had shut access to the one-week repo window, forcing banks to borrow at more expensive liquidity facilities. In the end, the central bank was forced to hike rates as the lira hit a record low against the dollar and inflation is still in double digits, while the average cost of CBRT funding has risen by almost 300 basis points since mid-July.

Wall Street economists had noted that the combination of an elevated risk premium, the challenging inflation outlook and subdued inflows suggested that the CBT was likely to implement further tightening, but consensus was that this would happen via liquidity measures.

Whether the hike was also driven by Turkey’s obsession with hammering TRY shorts remains unknown but the official explanation from the CBRT is that it decided to increase the policy rate by 200bps to restore the disinflation process and “support price stability” adding that “the Committee assessed that the tightening steps taken since August should be reinforced in order to contain inflation expectations and risks to the inflation outlook. Accordingly, the Committee decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.”

The full statement is below:

While global economic activity has shown signs of partial recovery in the third quarter following the normalization steps taken by several countries, uncertainties on global economic recovery remain high. Advanced and emerging economies continue to maintain expansionary monetary and fiscal stances. The pandemic disease is closely monitored for its evolving global impact on capital flows, financial conditions, international trade and commodity prices.

Economic activity is recovering markedly in the third quarter owing to gradual steps towards normalization and the strong credit impulse. Recent monetary and fiscal measures that aim to contain negative effects of the pandemic on the Turkish economy contributed to financial stability and economic recovery by supporting the potential output of the economy. The normalization trend recently observed in commercial loans has started in consumer loans as well. The recent upturn in imports, which has resulted from deferred demand as well as pandemic-related liquidity and credit policies, is expected to moderate with the phasing out of these policy measures. Although tourism revenues declined due to the pandemic, easing of travel restrictions has started to contribute to a partial improvement. The recovery in exports of goods, relatively low levels of commodity prices and the level of the real exchange rate will support the current account balance in the upcoming periods.

Pandemic-related supply-side inflationary factors were expected to gradually phase out during the normalization process and demand-driven disinflationary effects were expected to become more prevalent. Yet, as a result of fast economic recovery with strong credit momentum, and financial market developments, inflation followed a higher-than-envisaged path. The Committee assessed that the tightening steps taken since August should be reinforced in order to contain inflation expectations and risks to the inflation outlook. Accordingly, the Committee decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.

The Committee assesses that maintaining a sustained disinflation process is a key factor for achieving lower sovereign risk, lower long-term interest rates, and stronger economic recovery. Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance. In this respect, monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process. The Central Bank will continue to use all available instruments in pursuit of the price stability and financial stability objectives.

In kneejerk response, the Turkish Lira jumped as much as 1.9% to 7.5572 per dollar before fading some of the gains to 7.6165.

It is too early to tell whether this surge can be sustained: in addition to economic considerations, traders are also focusing on the latest geopolitical developments: the EU leader summit scheduled for today was delayed to October 1-2 where Turkey’s tensions with Greece and Cyprus over Mediterranean Sea drilling will be discussed.


WIrecard’s Business ‘Almost Entirely Fraudulent’, Auditors Uncover $1BN Loss, Report Finds

WIrecard’s Business ‘Almost Entirely Fraudulent’, Auditors Uncover $1BN Loss, Report Finds

Tyler Durden

Thu, 09/24/2020 – 07:15

Carmine Di Sibio, the international chairman of EY, said in a letter to clients published earlier thsi month that  while he “regrets” the firm’s staggering lapse in supervising Wirecard (something the firm has continued to blame entirely on Wirecard’s deceptions, along with the invisible hand of Russian intelligence), the incident was a lesson learned, though he insisted that EY was ultimately “successful” in detecting the fraud.

While that’s technically true, it’s also true that dozens of red flags surfaced over the years that seemed to openly hint at the ongoing massive fraud operating just below the surface. And as auditors, regulators and prosecutors sift through the wreckage, they’re uncovering more stunning details prompting them to ask themselves: How did Wirecard’s shell game continue for so long without anybody speaking up?

The Financial Times, a paper that put its reputation on the line to back its reporting on Wirecard, and was ultimately vindicated after facing startling pushback from Wall Street analysts, Wirecard and German regulators, obtained a copy of an early report from Wirecard’s administrator. As bankruptcy courts pick through the wreckage, the report reveals that the fraud at Wirecard ran much deeper than the Southeast Asia business that was previously reported as the locus of the fraud.

In reality, Wirecard had only a few profitable business lines. And the stupefying staff and operational bloat that the company carried is almost shocking. Just imagine: Thousands of employees, shuffling paper, performing “busywork” with no real purpose like a nightmarish, real-life take on “Office Space”.

The €1.9 billion in fraudulent profits Wirecard reported between the beginning of 2015 and Q1 2020 was actually a €740 million ($860) loss. Even if the fraud hadn’t been uncovered when it did – even if the FT had never printed a word – the company would have eventually dissolved, as the burn rate far outstripped any reasonable expectation of income or capital raised.

Furthermore, bankruptcy court has determined that the real value of Wirecard’s assets is just €428 million, an amount dwarfed by the €3.2 billion in debt Wirecard carried when it collapsed.

Wirecard’s fabricated Asian business was not its only deception. The rest of the once-lauded German payment provider’s business was chaotic, beset by byzantine reporting lines, hobbled by lamentable IT and racking up losses, according to a report by Wirecard’s administrator and accounts of former employees. The picture that emerges of the Wirecard businesses that did exist is a stark contrast to the one painted by former chief executive Markus Braun, who hailed the group as a highly profitable pioneer in the payments industry. It reveals the scale on which the company, Germany’s biggest corporate fraud in decades, also misled investors about its real businesses. “Only a few units of the group were actually involved in conducting operative business that was customer-facing and generated revenue,” the administrator Michael Jaffé wrote in his report, a copy of which was seen by the Financial Times.

So, what did Wirecard spend all this money on? Well, certainly not IT. The report cited by the FT shows that Wirecard’s businesses ran on a hodgepodge of IT systems that were virtually unworkable. Any IT auditor would have noted significant issues, they said.

Its computer systems were inherited from companies acquired over the years and never fully integrated. Wirecard Bank, for instance, is still running on software originally developed for Germany’s small co-operative banks and which will be switched off by its IT service provider by the end of this year, according to people familiar with the matter.  “If IT auditors had been professional and serious, huge risks, weaknesses and non-compliance issues would have emerged a long time ago,” according to a former Wirecard IT employee, who was scathing about the “unbelievable brittleness of [Wirecard’s] IT infrastructure”.

Even up until its final months before diving into bankruptcy, Wirecard continued to expand its head count. All told, the company had more than 6,000 employees around the world. But only a fraction of them were needed to run the business.

Even as Wirecard faced increasing scrutiny of its accounting, the group’s headcount continued to rise, climbing by a quarter from early last year to 6,300 at the time of its implosion. Over the same period, its real revenues grew at less than half that rate, according to the administrator. The report points to bloated costs and a colossal amount of corporate waste. “Employees never faced the necessity to reduce the services they were using to those that were really needed as cash was abundantly available in the past,” it noted, adding that the company was suffering from “excessive overhead and personnel capacities”. “Only a fraction” of the employees were actually required to run Wirecard’s non-fraudulent business, the report found.

With this rate of burn, the company would have needed to raise money by the end of the year, or face insolvency.

By the time it unravelled in late June, the total was €10m a week and the company’s own internal planning predicted that figure would rise to more than €15m — some €200m for the third quarter as a whole, according to the administrator’s report. At that rate, Wirecard would have needed to raise fresh cash by the end of this year to pay its bills.

Wirecard’s “totally opaque” structure and “small business mentality” meant that its 55 subsidiaries were all effectively siloed off from one another. The main office in Munich had no idea what was going on elsewhere. in retrospect, it’s a setup seemingly designed to enable an ongoing fraud.

If extravagant spending is one of Mr Jaffé’s findings, another is what the report describes as Wirecard’s “totally opaque” and inefficient structure, consisting of at least 55 subsidiaries scattered over four continents. Staff at its headquarters on the outskirts of Munich did not know what the group’s different units were doing, the administrator concluded, with neither their tasks and responsibilities — or the payments and loans between the divisions — properly recorded. There was “a small business mentality” at many of its units, former employees told the FT, describing businesses that Wirecard had hoovered up around the world and largely left to their own devices.

At times, this led to “bizarre outcomes”, like employees in the antipodes performing work for distant offices in Europe.

The internal chaos led to bizarre outcomes. A team of IT specialists, working in Athens, but part of a subsidiary with headquarters in New Zealand, provided services to Wirecard’s German HQ that were not needed, the administrator found. In another example, when the administrator asked managers at a different Asian-based subsidiary about how they contributed to the group, the reply was “we don’t really know”, according to a person briefed on the matter.

The FT concluded its report with a comment from a German finance professor who argued that the fraud should have been caught earlier, and the fact that any “Big 4” firm would miss such conspicuous red flags is too difficult to believe. Perhaps a blind eye was turned. Or maybe auditors really were blinded by ex-CEO Markus Baram’s marketing prowess, that they simply didn’t question it when the company launched into technical explanations of its – totally fictitious – business.


Media Declares “Violence Is Inevitable” As 2 Cops Shot In Louisville; Reporters Arrested In Aggressive Police Crackdown

Media Declares “Violence Is Inevitable” As 2 Cops Shot In Louisville; Reporters Arrested In Aggressive Police Crackdown

Tyler Durden

Thu, 09/24/2020 – 06:45

As we reported last night, protesters hit the streets in Louisville, NYC, LA, Denver, Oakland, Washington DC and other cities across the US after a Kentucky grand jury decided that no officers would be charged in the killing of Breonna Taylor, a tragic accident that was the result of officers serving a “no-knock” warrant.

In Louisville, the city where Taylor was shot and killed, 2 police were shot as gunfire broke out downtown after hundreds “peacefully” marched earlier in the evening. But as has become distressingly familiar, the real hard-core agitators came out after dark. A suspect in the shooting of the two officers was taken into custody shortly after, but he wasn’t the only “protester” who was packing heat at the “non-violent demonstration.”

Amazingly, left-leaning media outlets had the gall to frame the shooting of two police as an “inevitable”, while framing the events of last night in distorted terms that served to support their narrative of a corrupt justice system absolving three murderers, instead of reporting the facts: that a jury of their peers – not some unassailable magistrate – decided on the indictments for the three officers.

The Daily Beast reported that none of the officers were charged for Breonna Taylor’s killing. While that’s technically true – officer Brett Hankison was charged with three counts of wanton endangerment for firing into a nearby occupied apartment, not for the shots that killed Taylor, which were fired by a colleague – the result is misleading, and intentionally so, we suspect.

But we digress. Circling back to the events of Wednesday night, the Louisville Metropolitan Police Department – better known as the LMPD – aggressively enforced curfew violations after the shooting. Several reporters – including two journalists for the Daily Caller – were arrested during the sweep, and despite protests from their editors, were charged with breaking curfew and attending an “unlawful” assembly. It’s believed that dozens of protesters and reporters were taken into custody during the sweep of Jefferson Square, which has served as the base for BLM protesters who have been out demonstrating every night for the past 118 days.

The DC reporters arrested included Jorge Ventura and Shelby Talcott.

When editors reached out, the department refused to budge.

Circling back to the wounded officers, Interim LMPD chief Robert Schroeder confirmed the two officers had been shot and sustained life-threatened injuries, and that a suspect was in custody. One of the officers was shot in the abdomen, while the the other was shot in the thigh.

“I am very concerned about the safety of our officers,” Schroeder said. “Obviously we’ve had two officers shot tonight, and that is very serious. … I think the safety of our officers and the community we serve is of the utmost importance,” Schroeder said, according to the Courier-Journal.

As of 11pm local time on Thursday, police had arrested 46 people, which includes those arrested in the sweep of Jefferson Square, which reportedly happened around 8pm.

Independent video journalist Brendan Gutenschwager narrowly avoided arrest last night. Afterward, he chronicled the eerily silent streets, and surveyed the damage.

Thousands gathered across NYC and LA, and hundreds more in Portland, Chicago, Atlanta and other cities around the country as others marched “in solidarity”.

Expect the unrest to continue Thursday, as it has for nearly 120 days.


Watch Live: “School Bus” Sized Asteroid Expected To Buzz Earth Thursday

Watch Live: “School Bus” Sized Asteroid Expected To Buzz Earth Thursday

Tyler Durden

Thu, 09/24/2020 – 06:40

NASA reports a small near-Earth asteroid (or NEA), the size of a “small school bus,” will buzz Earth Thursday (Sept. 24) at a distance closer than the moon and most geostationary weather satellites. 

The asteroid, named 2020 SW, was discovered last Thursday (Sept. 18) by NASA-funded Catalina Sky Survey in Arizona. The size of the asteroid is an estimated 15 feet by 30 feet wide, making it roughly the size of a “small school bus,” said NASA.

The space agency points out 2020 SW is “not on an impact trajectory with Earth, if it were, the space rock would almost certainly break up high in the atmosphere, becoming a bright meteor known as a fireball.” 

Paul Chodas, director of the Center for Near-Earth Object Studies (CNEOS) at NASA’s Jet Propulsion Laboratory in Southern California, said: “There are a large number of tiny asteroids like this one, and several of them approach our planet as close as this several times every year.

“In fact, asteroids of this size impact our atmosphere at an average rate of about once every year or two,” said Chodas. 

CNEOS expects the asteroid to zoom past Earth at a distance of about 13,000 miles over the Southeastern Pacific Ocean around 0712 ET on Thursday. 

The passing of 2020 SW will be live-streamed via the Virtual Telescope Project in Rome.

As the asteroid passes, it will continue its trajectory towards the sun and will not pass Earth again until 2041. 


“Let Me Explain What Happens Next…” – A Reader Sums It All Up Very Ominously

“Let Me Explain What Happens Next…” – A Reader Sums It All Up Very Ominously

Tyler Durden

Thu, 09/24/2020 – 05:00

Authored by ‘Austrian Peter’ via The Burning Platform,

A reader recently wrote me a long letter on how he feels about all this ‘Plandemic’ stuff.  I thought it would be good to share it as there is so much in it which rings bells of truth for me…

[emphasis ours]

I’ve just woken up after reading ZeroHedge late into the night. I awoke with the conviction that Covid is being used to roll out a police state:

They know it’s not deadly, it’s no longer spreading and Lockdown is killing off the few small businesses which remain viable. Yet Boris now insists upon banning the assembly of more than 6 people. He has recalled some petty bureaucrats to act as street enforcers and requested people become snitches who report on their neighbours for any breaches of these guidelines. This automatically means we must now all fear our neighbours, or strangers who take our car number. How better to destroy the mutual trust upon which society is built?

Just think if one were to refuse to bend the knee.  In Australia and Spain the police have been caught using excessive force against those not wearing masks. Intimidating isn’t it? I’m thinking I may have to start using one. Yet the science is clear – masks offer no protection.

So we know these new restrictions are not being driven by the authority’s concern for our health. And what is the difference between where we are now and making it normal for the police to come to your door and arrest you for a breach of their protocols? What is the difference between where we are now and an oppressive police state?

There is only one difference between now and full-on state oppression:  A change in the Zeitgeist.

They need an event that will change the mood of the people – an event or a series of events that make us afraid of ‘them’. A psychological shock that will give the police the conviction that things are so bad ‘a little force is necessary’ to ensure things don’t get out of control. And then, magically, the current ‘temporary restrictions’ become state oppression. What could that game changer be?

Imagine this November: The US has 100 cities descending into what looks like the start of civil war as patriots turn out to stop Antifa burning down Middle America. Kamala Harris is calling for the army to ‘evict’ Trump because he refuses to leave the White House on the grounds that he won the popular vote while the mail-in ballots were fraudulent.

For the Brits, Brexit has caused problems at the ports – among other things some foodstuffs are not getting through. Germany’s economy has cratered after the EU stopped them exporting cars to the UK (Trumps already tariffed them), and the EU’s bank has insisted Germany let the 500 non-viable, medium sized biz (currently kept alive with emergency funding) go bankrupt.

Deutsche Bank collapses and this initiates a global banking crisis. Europe has no way of saving its banks as all the European economies are so damaged and 20% of workers have already been laid off.  It’s a Greek style banking crisis on steroids. People are pulling out cash in the expectation of daily cash limits. Physical gold will have already disappeared from the market place. So any biz with money in the bank is frantically buying bitcoin in an attempt to avoid their working capital being ‘bailed in’.

The banks will have already pulled the plug on their most vulnerable customers – the airlines – so virtually no planes are flying. Dover is jammed up with lorries lining the approach roads. So no one can leave Blighty.  And if you did, the emergency measures intended to pre-empt Covid’s Second Wave require you to be kept in quarantine at your destination. Locked down in a hotel, under military guard (as in NZ), for 4 weeks at your own expense and with frequent testing to ensure you are not a carrier. With full bio-metric data being collected and filed on an EU wide register. In practice this means that travel becomes so fraught that escape from your homeland is just about impossible.

You get the gist?  November could be the end of world as we know it’ (TEOTWAWKI).  But my point is this: Why are we looking at such a catastrophe if their goal is not a police state? No one destroys the globe’s economy and creates the conditions for a 10 year Greater Depression by accident. This has to be a planned, intentional destruction of much of global civilization.

The evidence is overwhelming. This civilization has been purposefully destroyed. Right now we’re in an unreal time (like the beautiful summer just before WW1’s carnage).  It’s like Wiley E Coyote who has gone over the cliff, is still running but not yet started to fall. But when we fall, how will people react as they realize that they will never work again, never pay off the mortgage, never collect their pensions?  If we have state oppression and economic chaos by Christmas then what will be the next stage of their takeover?

The world’s economy is already doomed. The already broken supply chains ensure it can only get worse.  Once the derivative market goes, and banks can no longer fund the credit lines crucial for importers and exporters, then trade will collapse and thus food supplies cease.

It would seem to be inevitable that America is going to see more conflict as the Dems & Soros show no signs of wishing to abort their colour revolution. Maybe in 2021, maybe a year or two later, but there will come a time when a credit shortage leads to deflation. So the banks will print more and then rain down helicopter money which will lead to inflation. And then the currencies will start collapsing. Many people understand that this is inevitable. But what happens when people come to accept that money isn’t go to be worth the paper it’s printed on?  And thus keeping a job may not be worth the danger of leaving your house or of leaving safety.

I summarise one of last night’s articles:

“the beasts of burden don’t rebel, they just no longer show up. Not showing up can take a number of forms: early retirement, sick leave, a demand to work halftime, a workers’ compensation stress leave, and of course, resignation and quitting as in: “take this job and shove it”.  They slip noiselessly into the cracks and crevasses and once they’re gone, there’s nobody left to replace them.”

“As the Vital Few 4% realize the system no longer works for them and opt out, this will have an out-sized effect on the 64%, most likely urban dwellers, highly dependent on increasingly brittle, fragile services that depend on the Vital Few for their functionality. Think of London’s tube train drivers phoning in sick – ideology won’t matter.

Those dropping out may be Conservative or Progressive or they may have lost interest entirely in politics and all the other circuses that serve to distract the populace from the crises dissolving the glue that held the system together. “So I won’t get rich, that dream died a long time ago.”  What I’m interested in now is getting my life back and getting the heck out of Dodge as things fall apart.”

The rich will escape to their holiday cottages. The poor will riot – but what then?  As the social facade cracks, and the economic system breaks, there is neither a society nor an economy to fall back on. By Christmas it will be obvious that normality has gone for ever.

So what will ‘they’ do with millions of unemployed, frightened people?  If  ‘they’ leave the internet on then the people will start to organize – first politically – but when that doesn’t work, riots and then finally revolution. Turn it off and they will riot without being organized. Turn off phones and all hell will break out. Don’t turn them off and the kids will organize against the state – trash cars or burn down the local police station.  Have you noticed how some police stations look like forts?

My point is that it’s very hard not to see ‘events’ hitting the fan this November. And once they do it’s very hard to see life ever going back to stability, let alone ‘normality’. Rather, there will be an overwhelming need to control {oppress} the population before they take over the state. But what do you do with millions of unemployed in a failed economy who are doomed to losing their currency, long term poverty and probably food shortages. There is only one thing ‘they’ can do. Kill them.

Ideally, for the elite, Covid’s Second Wave will have a higher morbidity rate. Enough to steadily reduce the population but not so fast they can’t be buried in plague pits. It would have to be bad enough to justify a harsh Lockdown but it’s difficult to see that being feasible without giving the people electricity, internet & food and the money to pay for it. And even then it’s only a temporary fix as Lockdown can’t last for ever. Permanent Lockdown would soon destroy the currency which will mean no electricity or food.

Maybe Covid-19 v1.0 was supposed to kill off more people but it failed. Or maybe it worked as intended – they didn’t want to risk killing off too many in case the Lockdown failed and we revolted. But I don’t see they have much choice now. ‘The Fourth Turning’ will be turbulent until 2025 and things won’t really be resolved until 2030. How are they going to manage us for another 10 years? How will they control us? Feed us?

They can start a war but no one is going to turn up. Fight a war for the elite? Use a gun to kill people you don’t know?  That’s not going to happen. And they need to preserve the professional soldiers to ‘maintain the peace’ in the cities. So what options do they have but to release a more potent bio-weapon – nuclear war perhaps?

One of the scary things about working through ‘their’ options is that they don’t have many. Things have gone too far – they’ve destroyed the world’s economy. The system is stuffed. What are ‘they’ going to do with 2bn unemployed people. Even if there is enough food but the US has a developing dust bowl, Africa’s suffered huge locust devastation, and China’s preparing for food shortages. How do unemployed people pay for it?  Who can give them money without destroying the currency or if the currency is already destroyed?

A simple thing like the current fall in the number of sunspots is indicating an immediate future of colder weather and lower crop yields. Add into that, fuel shortages for agricultural machinery, lack of fertilizer – Nitrogen is made by burning lots of oil, lack of supply lines, and loss of credit lines. With people in Lockdown ‘they’ would be relying on a planned economy (not a free market) which is going to be inefficient. A planned economy is completely incapable of ensuring a stable food supply when there are shortages and the world is chaotic.

It’s not even feeding our cities that will be prime problem. It will be feeding the cities in Mexico and North Africa. They can’t cope with food price inflation. But they won’t starve – they’ll flood into the USA or cross the Mediterranean – lucky us!  And what will Erdogan in Turkey do to feed his people – nothing good!  If there are real food shortages then note that there are huge Muslim populations in France & Sweden, Turks and refugees in Germany, Pakistani ghettos in UK and plenty more where they all came from.

I’m feeling concerned. The problem is I can’t see Brexit solving our problems. Sure, it may not exacerbate them as much as I fear. November’s events may not trigger us into a state of oppression. But do you see my point?  Things have got so bad, they can only get worse. November is bound to see some changes and they may well trigger a change in the Zeitgeist, though how significant depends on ‘events, dear boy, events’.

But whatever happens I think it’s virtually guaranteed that both the economy and society will keep on deteriorating.

Do you think I’m right?

Will November be the tipping point?

Is there any way back?

Will there be anything to go ‘back’ to?

Or else, is it a case of:  “we’re doomed, I tell ya, doomed”.  And what happens when more people work out that the elites have created a situation where their only option is to rapidly reduce the population! Famine will lead to uncontrollable social conflict, perhaps with Muslims massacring whites in general or the local Jewish populations in particular. I think that much conflict could see ‘them‘ lose control.

Thus it’s hard to see any other viable method than a bio-weapon. Agenda 21 could be implemented on schedule. And if not, the solution will need to be applied within a few years, certainly before 2025.  Timing may depend on vaccine production as there will have to be at least enough vaccine for essential workers, the police, the military and the management class if the elite are to retain control.