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Bloomberg Team Blames Bernie Supporters In Spate Of Campaign Office Vandalizations

Bloomberg Team Blames Bernie Supporters In Spate Of Campaign Office Vandalizations

The Bloomberg campaign has lashed out at Bernie Sanders supporters, blaming them for a spate of campaign office vandalizations following a Thursday evening incident in which the billionaire’s Knoxville, Tennessee office was spray painted with “Fuck Bloomberg,” “oligarch,” “classist,” and “Authoritarian” on the door.

In response, Bloomberg campaign manager Kevin Sheekey said in a Friday statement that while they have no idea who did it, the vandalism “echoes language from the Sanders campaign and its supporters.”

“We call on Bernie Sanders to immediately condemn these attacks and for his campaign to end the Trump-like rhetoric that is clearly encouraging his behaviors to engage in behavior that has no place in our politics,” Shakey added.

According to WVLT, the Knoxville Police Department confirmed that the office was vandalized on Thursday night sometime between 6 p.m. and 7 a.m. on Friday, and they are actively investigating. There were no security cameras and there are no suspects.

More from Sheekey’s statement:

“The kind of divisive and hateful rhetoric and action we are seeing from Bernie Sanders’ supporters has no place in our politics,” said Holly McCall, Tennessee’s campaign representative. “Over the past week, we’ve seen similar attacks against Mike Bloomberg 2020 offices in multiple states. Mike Bloomberg believes Democrats need to unite to defeat Donald Trump in November, and as president, he will bring our country together.”

The Bloomberg campaign cited a quote from Sanders – “We are a democracy, not an oligarchy. You’re not going to buy this election,” as evidence the vandals are Bernie bros.

Tensions between the two camps have been high since Wednesday’s debate in Las Vegas, when Bloomberg, the former New York mayor, flat-out asserted that Sanders would lose the general election to President Donald Trump should he become the Democratic nominee.

At the same debate, Sanders, a U.S. Senator from Vermont and the current Democratic front-runner, was asked about the conduct of some of his more vitriolic supporters – so-called “Bernie Bros” – on social media. He said they made up a tiny fraction of his political base.

We have over 10.6 million people on Twitter, and 99.9% of them are decent human beings, are working people, are people who believe in justice, compassion, and love,” Sanders said. “And if there are a few people who make ugly remarks … I disown those people; they are not part of our movement.” –Bloomberg (which has no disclaimer at the bottom)

Sanders and his aides have repeatedly referred to Bloomberg as an oligarch.


Tyler Durden

Fri, 02/21/2020 – 15:00

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BofA Is “So Bearish, It’s Bullish”, But Here Are The Signs The Top Is Near

BofA Is “So Bearish, It’s Bullish”, But Here Are The Signs The Top Is Near

One week after BofA CIO Michael Hartnett pointed out the biggest asset bubble in the central bank era, where so-called tech “disruptors” (which we previously called e-commerce) have now surpassed the relative performance of most prior bubble assets including housing, tech, China and biotech…

… which really is a record bubble in both bonds and stocks, because there is just so much central bank liquidity in the world it ends up going in both risk-on and risk-off assets…

… Hartnett’s latest Flow Show confirms that the dual bubbles kept growing bigger for another week, with another $2.2bn inflow into equities (where tech sticks out like a sore thumb) this week and $18.1bn into bonds, bringing the YTD inflows to bonds to a stunning $130bn.

Some more details on the relentless fund flows into bubble assets:

  • Bond bubble: inflows into bonds annualizing at $966bn (vs. record $481bn in ’19), into IG bonds $605bn (vs. record $308bn in ’19).
  • Tech bubble: inflows into tech annualizing at $62bn (vs. record $18bn in ’17); note despite coronavirus ChiNext index (“NASDAQ of China”) up 22% YTD.

And just to help out the Fed which still sees no sign of the bubbles its policies have created despite “global interest rates at 5,000 lows”, Hartnett points out:

  • European IG corporate default risk at record low;
  • MAGA (Microsoft, Apple, Google, Amazon) all valued >$1tn;
  • Significant moves in Tesla, Virgin Galactic, Stamps.com, palladium;
  • Ppassive (e.g. Vanguard & Blackrock) thrusting into private equity & ESG; private equity (Apollo) issuing huge >$2bn CLO;
  • Auto lenders (e.g. Ally) buying subprime credit card businesses.

Not surprisingly, Hartnett calls the current bubble era “so 1999”, and refers to the latest FOMC Minutes in which even the Fed goes so far as to warn that “recognizing these limitations (i.e. macro prudential tools), many participants remarked that the Committee should not rule out the possibility of adjusting the stance of monetary policy to mitigate financial stability risks, particularly when those risks have important implications for the economic outlook and when macro prudential tools had been or were likely to be ineffective at mitigating those risks” which is the closest the Fed will go to an “irrational exuberance” warning, and the “combo of new highs in asset prices & rising volatility (e.g. VIX, MOVE)” is so 1999.

Yet it’s not just bubbles: alongside some of the most overvalued assets in history, there are also “so many bear markets”:

… worst 10-year rolling return from cash & commodities since 1930s, relentless secular relative bear markets in Japanese stocks (since 1989), European stocks (2001), value stocks (2006), banks (2006), China (2007), energy stocks (2008)…US energy sector currently trading at lowest price relative to S&P500 since 1941 (WW2 Pearl Harbor attack – Chart 2).

Commenting on this confluence of giant bubbles and terrifying bear markets, Hartnett says that the “scale of relative bear markets in cyclicals, resources, value stocks is matched by relentless bull market in bonds…since GFC government bond yields have each year on average negatively surprised consensus by 94bps (Chart 7) led by JGBs, which have only seen downgrades to forecasts over past 4-years (Chart 8).”

As a result of this Japanification plus the “inevitable policy shift from Quantitative Easing to Modern Monetary Theory to finance fiscal stimulus in coming years” means everyone now thinks yields stay lower for longer; as a result, Hartnett thinks that the old “floor” of 2% GDP growth, CPI, 10-year bond yields is the new “ceiling”.

Which brings us to his trading view assessment, which is summarized as follows: “All-in on “I’m so bearish, I’m bullish”

As a result of this unmovable conviction in a yield “ceiling” a believe is forming that lower yields = higher stocks, which means that there is now a consensus all-in on “bad news is good news” bandwagon; This means

  • bond bubble spill-over to send other asset class prices to irrational levels (happening now);
  • “disorderly” rise in yields (>2%) or “disorderly” fall in yields (<1.35%) to incite volatility & risk asset declines (which BofA thinks is actually a much higher probability event).

To be sure, there isn’t anything on the horizon that could push yields sharply higher. In fact, as Hartnett puts it, there are now two economies: i) the cyclical “PMI economy”, which drives EPS & relative asset performance (equities/bonds, cyclicals/defensive),  and ii) the secular “GDP economy”, which drives interest rates; “GDP economy” weak. It is the poor global capex numbers despite lower tax rates, lower interest rates, & record corporate profits that confirm the post-financial crisis “GDP economy” just not strong enough for higher rates or yield.

Which is not to say one can’t trade the “PMI economy”, which everything has a price but not always a catalyst. Here Hartnett reminds us that the latest Global Fund Manager Survey shows investors most bullish on Growth>Value since Jul 2008

In this light, the key catalyst to unlock a “cyclical value” trade is a giant China stimulus that causes higher yields (e.g. 2009 & 2016); But that is hardly imminent: just watch China’s M1 growth (0%) as lead indicator, currently at lowest level on since 1996 (Chart 9).

So does that mean that nothing will ever drop again? Not at all, and as Hartnett says the “Q2 catalyst for volatility will be disorder in the bond market.” And since some traders need specific catalysts, Hartnett makes it very easy, with the following flowchart on how to trade the bursting of the asset bubble: “we say risk assets trade higher (e.g. S&P500>3498) into Q2, until”:

  • peak Positioning…BofA Bull & Bear Indicator >8;
  • peak Policy…Fed will buy net $180bn T-bills next 3-months to end-April, to dial-down purchases thereafter;
  • peak Politics…currently 79% likelihood according to Oddschecker.com (was 42% Nov’19) that 2020 election results in president with pro-business, low tax & regulation platform (Chart 5); Democratic nominee likely visible by March 17th

In other words, the biggest bubble of all time may be just weeks away from the prick heard around the world…


Tyler Durden

Fri, 02/21/2020 – 14:52

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Ex-Sanders Criminal Justice Adviser Arrested After Plotting Violent Jailbreak

Ex-Sanders Criminal Justice Adviser Arrested After Plotting Violent Jailbreak

A former consultant to Bernie Sanders’ 2016 presidential campaign was arrested after he allegedly planted loaded weapons and ammunition inside a soon-to-be-opened Tennessee prison, according to authorities.

On Wednesday, Nashville police said that prison reform advocate Alex Friedmann – who helped shape Sanders’ criminal justice agenda – spent months plotting to help prisoners escape after the facility was opened. He was arrested on Tuesday on one count of felony vandalism – however the allegations go far beyond that according to Davidson County Sheriff Daron Hall.

“Throughout the last several weeks it was discovered that Mr. Friedmann, over many months, had developed and implemented an extremely deliberate – and in my opinion evil – plan,” said Hall, adding “Understand, this plan went far beyond vandalism. Ultimately it included planting various tools, weapons, security equipment throughout this facility. All designed to assist in a massive escape plan.”

The stashed weapons included loaded guns and ammunition, according to Hall, who added “What disturbed me most is not that this was about an escape … It was also about loss of life.”

Sheriff Hall said the arrest came after an investigation stemming from a previous case involving Friedmann, who was arrested in January on charges including attempted burglary for allegedly posing as a construction worker to enter a different detention center multiple times, stealing keys, and diagraming the layout of the center, which was still being built and not in use at the time.

A press release from the sheriff’s office said that corrections officials noticed on Dec. 30 that two keys were missing. They viewed surveillance video and saw someone dressed as a construction worker who matched Friedmann’s description taking a key ring, then coming back and replacing it with two keys missing. –Fox News

Friedmann was one of several consultants to Sanders’ 2016 presidential campaign advising him on criminal justice issue. According to Fox News, his input resulted in Sanders introducing a bill aimed at eliminating private prisons. In 2015, Friedmann told The Atlantic that the bill didn’t go far enough.

It appears to be more for political purposes than to actually address the many problems in our criminal justice system,” he said.

Friedmann, who was associate director of the Human Rights Defense Center and managing editor of its Prison Legal News publication, was released following that arrest after he posted $2,500 bond, and the case is still pending. HRDC director Paul Wright declined to comment on the allegations but told Fox News that Friedmann resigned from the organization following his January arrest. -Fox News

Friedmann’s attorney, Ben Raybin, told Fox News that it was “important to clarify that the new vandalism charge stems from alleged conduct arising last year, and not any recent actions occurring after his previous arrest,” adding that his client returned the keys to the sheriff’s office and had been cooperative.

“Mr. Friedmann surrendered himself immediately after being advised of the new charge,” he said.

Friedmann is currently in custody with a $2.5 million bond. His next court appearance is Feb. 26, while the previous case has an April 6 appearance.


Tyler Durden

Fri, 02/21/2020 – 14:30

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‘The Russians Are Coming…Again’ – Exposing The Resistance’s Poverty Of Imagination

‘The Russians Are Coming…Again’ – Exposing The Resistance’s Poverty Of Imagination

Authored by James Howard Kunstler via Kunstler.com,

We’re reminded this morning by The New York Times, America’s official psychotic fantasy generator, that the Russians are coming (again!) as an ad hoc arm of the committee to re-elect Mr. Trump.

You have to ask yourself: Does Mr. Trump actually need their help? His opponents have been self-meddling so diligently that their party now looks like a Frankenstein creature assembled from the spare parts of Herbert Marcuse, Tupac Shakur, Leopold von Sacher-Masoch, and Jame Gumb. Imagine that monster running a government.

If Vlad Putin happened to express an aversion to the idea at an international cocktail party, can you really blame him? Plenty of Americans surely feel the same way. Anyway, the Times’ story never gets around to saying much about the alleged new Russian campaign besides this:

They have made more creative use of Facebook and other social media. Rather than impersonating Americans as they did in 2016, Russian operatives are working to get Americans to repeat disinformation, the officials said. That strategy gets around social media companies’ rules that prohibit ‘inauthentic speech.’”

Wow, that’s pretty scary! Except when you consider that Americans have done a crackerjack job of mind-fucking themselves with disinformation the past several years, coincidentally via this very The New York Times, a figment machine so demented that it has come to resemble the proverbial crazy aunt locked in the attic. The true wonder is the Times’ poverty of imagination, reviving a tattered cockamamie story that bombed abjectly the first time around. I suppose, in a culture addicted to stupid sequels, they expect Robert Mueller will be called back on-duty to sort this one out like he did so nicely before.

Actually, you could make a credible argument that the vaunted US “Intel Community” is a bigger threat to American life than anything the Russians might do on Facebook. Hence, the good news that Mr. Trump has just appointed Ambassador to Germany, Richard Grenell, to the pivotal job as Director of National Intelligence, a position created in 2004 to supposedly coordinate the farflung activities of seventeen armies of spooks and snoops, lately notorious for feeding disinformation to The New York Times and its “Resistance” media allies. Note: right off the bat, The Washington Post characterized Mr. Grenell as a “partisan propagandist,” seeking to disable him from the get-go. One could reasonably assume that the officers of the seventeen intel agencies will do everything possible to work around Mr. Grenell, but he does have the power to ask questions, and to ask additionally the reason why is isn’t getting straight answers, and then to do something about it.

Of course, that’s exactly what the Resistance is afraid of.

It was Mr. Grenell’s Predecessor, Joseph McGuire, who fecklessly allowed the “whistleblower,” and that phantom’s enabler, ICIG Michael Atkinson, to play the nation on UkraineGate, a hideously embarrassing episode of engineered political subterfuge that instigated the grave process of impeachment, so that the whole world could see exactly how dishonest we are amongst ourselves — more proof that we don’t need Russia’s help sowing disorder and ignominy in our country. Mr. Grenell might commence by asking some questions about that caper. There’s so much do dig into at the CIA, FBI, and the NSC after three years of deceitful shenanigans that he’ll need a Bucyrus RH400 hydraulic excavator to get the job done.

The Attorney General sure can use some help. No doubt you saw the circus around the Roger Stone case develop into another Lawfare operation to oust Mr. Barr when a thousand-odd former federal attorneys — including some who signed off falsely on FISA warrants — mobbed up a petition for his resignation. I suspect it only pissed him off and made him more determined to bring cases against some of them. Stone, of course, is a political clown with a weak sense of boundaries who made some legally foolish moves, considering the parlous times. But you can still argue he was treated rather unfairly, since his jury forewoman outed herself as a Resistance activist as soon as the trial concluded and no one, including Judge Amy Berman Jackson, has addressed how that happened.

The General Flynn matter is something else, and goes far deeper into the seditious misuse of US intelligence. Flynn has become the American Dreyfus, an honorable army officer dragged through the muck unjustly by the Intel Community working “six ways from Sunday,” in the immortal words of Senator Chuck Schumer, to prevent its dirty laundry from being aired. His ordeal has gone on for three years and is coming close to climax. The legal devices used to screw General Flynn are known to the public now, including the initial deceitful interrogation by FBI agents Strzok and Pientka, the withholding of exculpatory evidence by his prosecutors (and plenty of other misconduct), and the unethical behavior of his former lawyers from the Swamp firm of Covington and Burling. He’s going to eventually get off this ignoble rap sooner or later, one way or another. Silencing him was probably the key objective in the long train of seditions that I sum up as CoupGate.

It would be best if the federal court itself could clean up the Flynn mess by Judge Emmet Sullivan declaring it a malicious prosecution and throwing out the case, because that would begin to repair the institutional damage. But Mr. Trump might have to pardon him in the end. If he does, I hope he goes on national television and provides a detailed explanation of the aforesaid DOJ misconduct for the public, and I hope he does it off the teleprompter so it will come off clearly and coherently.


Tyler Durden

Fri, 02/21/2020 – 14:15

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“Jeffrey And I Had Everyone On Videotape” Ghislaine Maxwell Reportedly Told Socialite

“Jeffrey And I Had Everyone On Videotape” Ghislaine Maxwell Reportedly Told Socialite

Jeffrey Epstein’s alleged ‘madam’ told a former acquaintance that she and the now-dead pedophile had “everything on videotape,” according to The Telegraph.

The acquaintance, socialite and distant relative to the royals Christina Oxenberg, said that Maxwell also told her that Epstein bought a private helicopter because commercial pilots were “eyes and ears” he did not need.

She revealed she had spoken to the FBI about what she had been told.

Ms Oxenberg, 57, first met Maxwell in the early 1990s and said she would never forget a conversation the pair once had in Maxwell’s home.

“We were alone,” she said. “She said many things. All creepy. Unorthodox. Strange. I could not believe whatever she was saying was real. Stuff like: ‘Jeffrey and I have everyone on videotape.’”…

Maxwell has been accused by several alleged Epstein victims of both facilitating and participating in sexual crimes. She has vehemently denied the claims and has not been charged with any crimes in connection to Epstein’s activities. 

If true, we wonder who exactly was taped?

And of course:


Tyler Durden

Fri, 02/21/2020 – 13:56

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Turkey Requests US Jets Patrol Near Idlib To Halt Russian Air Power

Turkey Requests US Jets Patrol Near Idlib To Halt Russian Air Power

It’s not just Patriot anti-air defense missile systems that Turkey is requesting from Washington, apparently, in order to halt Russian air power over Idlib. 

A bombshell report in Middle East Eye has cited Turkish defense officials who say Turkey’s government has asked the US to begin aerial patrols over southern Turkey along the border with Syria’s Idlib province

This latest report comes on the heels of the Patriot missile request being confirmed, a major unexpected flip vis-à-vis the prior pivot to Moscow which saw the controversial transferal of the Russian S-400 systems. 

F-22 Raptor file image via Reuters.

Ankara is also trying to get NATO more involved militarily after Erdogan has vowed to prevent pro-Assad forces from retaking Ildib, also amid a humanitarian crisis which could see a surge of some one million refugees toward the Turkish border. 

The new Middle East Eye report details

Turkey has asked the US to conduct aerial patrols in its airspace bordering the Syrian province of Idlib to show support for Ankara’s ongoing military operations against forces loyal to Damascus, a Turkish official told Middle East Eye.

The request was made during US Special Envoy James Jeffrey’s recent visit to Ankara, where he voiced strong support to “our NATO ally Turkey” as the Idlib crisis heats up. 

Turkish President Recep Tayyip Erdogan also reportedly pressed Trump in a phone call to send military support. “He [Trump] promised that he would sanction the regime officials, or anyone involved in attacks against the civilians. And that he would issue strong-worded statements,” a top Turkish official was quoted in the report as saying. “But he didn’t commit himself to anything involving the military, yet.”

“Another Turkish official said that Ankara was also waiting for a response from Nato to provide more support for its air defense needs,” the report added.

But other than vocal condemnation and sanctions on Syrian officials for the ongoing offensive in Idlib, the White House is expected to sit on the sidelines, given Turkey is still giving every indication that it will activate its newly acquired S-400s

“We will get them operational in the spring. No doubt about this,” Turkish Defense Minister Hulusi Akar said during a Wednesday interview with CNNTurk.


Tyler Durden

Fri, 02/21/2020 – 13:48

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Are They Going To Impeach Trump Again?

Are They Going To Impeach Trump Again?

Authored by Jim Rickards via The Daily Reckoning,

The Democratic candidates held another debate last night. Michael Bloomberg took a lot of heat from the others, and he did not handle it well. He showed real weakness for the first time.

Joe Biden, meanwhile, put in a strong performance last night. We’ll have to see if he can generate any momentum from it. After Iowa and New Hampshire, his campaign is in serious trouble.

Speaking of Iowa, they still haven’t resolved that mess…

The Iowa caucus was officially over on Feb. 3. But it’s not over yet and may never be over.

The conduct of the caucus was one of the biggest fiascos in modern political history and the repercussions are still being felt. You probably know the story by now.

A caucus is not a primary election. It’s a physical gathering of voters at about 1,600 precinct locations such as school gyms and similar venues around the state.

That’s a limiting factor right away because many voters don’t have the flexibility to show up at an appointed time and place. Voters organize in groups backing a certain candidate.

An initial count of support for each candidate is taken. Candidates’ groups who have less than 15% of the total are then told they can either go home or switch sides (with less than 15% support you get zero delegates).

Voters then reorganize — for example, a Biden supporter can switch to Liz Warren — and a second count is taken.

That second count is then used in a mathematical formula to assign delegates for the Democratic convention.

The number of delegates for each candidate is not proportional to votes in the second count because some precincts are overweighted. Got it?

Don’t worry; neither does anyone else. That system is nuts. But it gets worse…

A new mobile phone app was created to send in results. The app had never been used in actual voting and it crashed.

Precinct organizers were told to phone in results. The phone lines were jammed and organizers couldn’t get through. That didn’t matter because party officials in the central locations were told to leave their mobile phones outside.

Others could not get online. Some did not know how to use spreadsheets. TV network anchor desks were on the air with nothing to report.

Candidates were robbed of bragging rights, both on caucus night and in the days leading up to the New Hampshire primary on Feb. 11. Iowa results dribbled out over days in a way that seemed intentionally designed to hurt Bernie Sanders.

Finally, the chair of the Iowa Democratic Party resigned in disgrace.

As of now, it is reported that Bernie Sanders won the most votes in the first and second alignments, but Pete Buttigieg got the most delegates because of the quirky math formula.

But even that reported result is not final because a “re-canvass” recount is underway.

The biggest loser was not among the candidates. The biggest loser was the Democratic Party itself.

Commentators were quick to ask how Democrats can run the economy if they can’t even count votes in Iowa. Good question.

But could they be so dumb as to actually try to impeach Trump again?

If the Democrat effort to impeach Trump was grounded in political hatred rather than constitutional law, why would the Democrats not do it again?

The answer is that the impeachment efforts are not stopping.

House Democrats are already planning hearings on Trump’s reassignment of Lt. Col. Alexander Vindman and his firing of Ambassador Gordon Sondland, both of whom provided anti-Trump (but incompetent, irrelevant and immaterial) testimony during Adam Schiff’s unconstitutional impeachment show trial.

Trump also reassigned Vindman’s twin brother, Yevgeny, for subversive activities in the National Security Council.

Other avenues of anti-Trump inquiry include an expected appeals court ruling that may require testimony from former Trump White House counsel Don McGahn, further inquiry into Russian collusion allegations (the hoax that won’t die), possible violations of the Emoluments Clause (despite court rulings dismissing partisan lawsuits against Trump) and pursuit of testimony from John Bolton that was not part of the Senate trial.

In short, there is no shortage of fake allegations on which to base a new impeachment.

We can’t be certain there will be another impeachment this year, but it cannot be ruled out. Impeachment hearings could begin again this spring ahead of a new impeachment vote this summer and a trial in August just in time for the Republican convention.

Another possibility is Trump wins a second term (likely, in my view) and the Democrats keep control of the House, in which case another impeachment in 2021 is a high probability.

This is bad for the country and is actually bad for Democrats, as shown in the polls. Yet the Democrats seem to be the last to know.


Tyler Durden

Fri, 02/21/2020 – 13:25

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Chinese Coronavirus Patient Reinfected 10 Days After Leaving Hospital

Chinese Coronavirus Patient Reinfected 10 Days After Leaving Hospital

As we first reported on Monday, shortly after the US decided to break the quarantine surrounding the Diamond Princess cruise ship which had emerged as the single-biggest locus of coronavirus cases outside of China, hundreds of weary, homesick Americans were on their way home. And as more than a dozen buses sat on the tarmac at Tokyo’s Haneda Airport with 328 Americans wearing surgical masks and gloves inside, awaiting anxiously to fly home after weeks in quarantine aboard the Diamond Princess, U.S. officials wrestled with troubling news: new test results showed that 14 passengers were infected with the virus. The problem: the U.S. State Department had promised that no one with the infection would be allowed to board the planes.

A decision had to be made. Let them all fly? Or leave them behind in Japanese hospitals? At this point, according to the Washington Post, a fierce debate broke out in Washington, where it was still Sunday afternoon: The State Department and a top Trump administration health official wanted to forge ahead. The infected passengers had no symptoms and could be segregated on the plane in a plastic-lined enclosure (something we mocked on Monday when we said we can only hope that “plastic divider” was enough to keep the virus confined to its own class aboard the aircraft.”). At this point, officials at the Centers for Disease Control and Prevention disagreed, contending they could still spread the virus. The CDC believed the 14 should not be flown back with uninfected passengers.

“It was like the worst nightmare,” said a senior U.S. official involved in the decision, speaking on the condition of anonymity to describe private conversations. “Quite frankly, the alternative could have been pulling grandma out in the pouring rain, and that would have been bad, too.”

In the end, the State Department won the argument. But unhappy CDC officials demanded to be left out of the news release that explained that infected people were being flown back to the United States — a move that would nearly double the number of known coronavirus cases in this country.

In retrospect, the CDC will soon be proven correct in its dire warning that repatriating a full plane of both infected and healthy individuals could be a catastrophic error, because it now appears that not only can the virus remain latent for as long as 42 days, 4 weeks longer than traditionally assumed, resulting in numerous false negative cases as infected carrier slip across borders undetected, but far more ominously, it now appears that the diseases can re-infect recently “cured” patients, because as Taiwan News reports, a Chinese patient who just recovered from the Wuhan coronavirus (COVID-19) has been infected for the second time in the province of Sichuan, according to local health officials.

On Wednesday (Feb. 19), the People’s Daily reported that a man in Sichuan’s capital Chengdu had tested positive for the virus during a regular check-up just ten days after being discharged from the hospital. The report said he had previously been cleared of the virus by medical staff.

The Sichuan Health Commission confirmed the news on Friday (Feb. 21) and issued a community warning announcement in the patient’s neighborhood. The announcement said that the man and his family had been transported to a nearby health facility on Thursday morning (Feb. 20) and that health officials had sanitized the entire community, reported Liberty Times.

According to ETtoday, the patient and his family had been under home quarantine and had not left the house since Feb. 10. The authorities are still investigating the cause of the reinfection.

The news has stirred up heated reactions from Chinese netizens. Some suspect that the hospital discharged the man before he was fully recovered, and many have expressed concern about the worsening epidemic.

Several doctors from Wuhan, the epicenter of COVID-19, said last week that it is possible for recovered patients to contract the virus a second time. They warned that a recurring infection could be even more damaging to a patient’s body and that the tests are susceptible to false negatives.

Needless to say, with the US now repatriating over a dozen coronavirus-infected individuals, it will be absolutely critical to keep a close eye on any deemed healthy or cured, because it now appears that not only can the virus stay latent for nearly a month longer than previously expected, but cured patients can also get reinfected.

And all of this is probably why, in a far more gloomier sounding press conference, today the CDC warned that:

  • CDC SAYS CORONAVIRUS IS A TREMENDOUS PUBLIC HEALTH THREAT, FUTURE HUMAN TO HUMAN TRANSMISSION IN THE U.S IS VERY POSSIBLE AND EVEN LIKELY

In short, it’s only a matter of time before the pandemic, which is already “contained” in nearly 30 cases in the US as of this moment, becomes uncontained, and the exponential chart of cases away from China, includes the US in it.

h/t @jodigraphics15


Tyler Durden

Fri, 02/21/2020 – 13:05

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Did The Fed Just Reveal Its Plans For A Digital Dollar Replacement?

Did The Fed Just Reveal Its Plans For A Digital Dollar Replacement?

Via Birch Gold Group,

Thanks to the Federal Reserve, the idea that you can go into a store and anonymously purchase something with cash might soon be obsolete.

Why? Because they’re developing something called Fedcoin, which would be based on blockchain technology.

If you’re unfamiliar with blockchain technology, you’re not alone. Here’s how a piece on Motley Fool describes it:

The digital and decentralized ledger that records all transactions. Every time someone buys digital coins on a decentralized exchange, sells coins, transfers coins, or buys a good or service with virtual coins, a ledger records that transaction, often in an encrypted fashion, to protect it from cybercriminals. These transactions are also recorded and processed without a third-party provider, which is usually a bank.

Right now, Bitcoin is a popular form of cryptocurrency that operates using blockchain technology. Like the description above, Bitcoin is decentralized, its transactions are anonymous, and no central bank is involved.

But the irony is, the blockchain tech behind the Fed’s idea isn’t likely to be used the way Bitcoin uses it. Not even close.

Originally, the “Fedcoin” idea appeared to be a security enhancement to a century-old system used for clearing checks and cash transactions called Fedwire. According to NASDAQ in 2017:

This technology will bring Fedwire into the 21st Century. Tentatively called Fedcoin, this Federal Reserve cryptocurrency could replace the dollar as we know it.

The idea didn’t seem to move very much three years ago, but now the idea of a central bank-controlled “Fedcoin” seems like it could be moving closer to reality, according to a Reuters report from February 5.

According to the report, “Dozens of central banks globally are also doing such work,” including China.

Of course, there is risk, according to Federal Reserve Governor Lael Brainard. For example, there is the potential for a country-wide run on banks if panic ensued while the Fed “flipped a switch” and made Fedcoin the primary currency for the United States.

But blogger Robert Wenzel warns the risks of the Federal Reserve issuing its own cyber currency may run even deeper than that.

“This is not good.”

Lawmakers try to package and sell whatever ideas they come up with, no matter how intrusive or ineffective they might be.

According to Brainard, Fedcoin has the potential to provide “greater value at a lower cost” for monetary transactions. Sounds reasonable, if taken at face value.

But no matter how the Fed may try to “sell” the idea of utilizing Fedcoin in the future, Wenzel’s warning is pretty clear:

A Federal Reserve created digital coin could be one of the most dangerous steps ever taken by a government agency. It would put in the hands of the government the potential to create a digital currency with the ability to track all transactions in an economy—and prohibit transactions for any reason. In terms of future individual freedom, this would be a nightmare.

If you use cash at a grocery store, no one will know who you are or what you bought unless it was caught on video or you use a reward card. In the rare instance a store accepts Bitcoin, the same would be true.

But if you were to use a centrally-controlled digital currency like Fedcoin, who knows what the Fed will decide to track now or in the future? Or what meddling they could come up with to deny your transaction?

If the Federal Reserve wanted to outlaw cash, and your only choice was to use Fedcoin to make purchases, then your financial life would be tracked under their watchful eye.

“Not good” indeed.

Protect your retirement by maintaining your financial freedom

Who knows if the Federal Reserve will move closer to making cash a thing of the past? Perhaps Fedcoin will add to the number of ways the Fed can meddle with your retirement?

Until that gets sorted out, you can consider other options to protect your retirement with a tangible asset that can’t be converted into digital form.

Precious metals like gold and silver continue to hold value, and have for thousands of years. And because they are physical assets, you can’t be tracked as you could if Fedcoin moves from being a bad idea to reality.

*  *  *

After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.


Tyler Durden

Fri, 02/21/2020 – 12:45

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Democrat Lloyd Blankfein Would Probably Vote For Trump Over Bernie Sanders

Democrat Lloyd Blankfein Would Probably Vote For Trump Over Bernie Sanders

Former Goldman Sachs CEO Lloyd Blankfein said he would probably vote for Donald Trump over Bernie Sanders, according to the Financial Times.

“I think I might find it harder to vote for Bernie than for Trump,” said Blankfein, a Democrat.

“The Democrats would be working very hard to find someone who is as divisive as Trump,” he continued. “But with Bernie they would have succeeded.”

“At least Trump cares about the economy.”

That said, Blankfein noted “There’s a long time between now and then.

Blankfein’s comments should come as no surprise, as he and Sanders have been at odds for quite a while.

 Last July, Sanders tweeted out a list of Wall Street CEOs who have criticized him in the past, including Blankfein. Sanders quotes Franklin Roosevelt on how he should be judged “by the enemies I have made.” The two then went back and forth on Twitter, with Sanders criticizing Blankfein for the Goldman Sachs bailout. –Bloomberg

And weeks ago, Blankfein tweeted that Sanders would “ruin the economy.” 


Tyler Durden

Fri, 02/21/2020 – 12:25

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Peter Schiff: Gold Is Your Only Alternative

Peter Schiff: Gold Is Your Only Alternative

Via SchiffGold.com,

Which will outperform in 2020? Gold? Or Equities?

Peter Schiff joined a moderated debate on the subject at the Orlando Money Show. Peter teamed up with Rick Rule to argue for gold, against Louis Navellier and Jeffrey Saut, who contend the stock market is still the place to be. Mark Skousen moderated the debate.

Interestingly, even Navellier admitted that the stock market is getting “a little bubbly.” He said it looks like ’99 all over again – the year before the dot-com bubble popped. But he still thinks there’s money to be made.

Skousen set up the gold argument by bringing up the fact Mark Mobius says buy gold at any price because interest rates are so low and gold is relatively cheap.

Rule said the gold vs. stocks debate is a little bit silly. It’s not necessarily one or the other. The stock market is a market place to buy and sell stocks. Why would you be against the market? Why would you be against every individual company? On the other hand, Rule said he thinks gold is very under-owned. He pointed out that even a reversion to the mean in gold investment would quadruple demand for the yellow metal.

Peter pointed out that gold is beating the S&P 500 this century. The key is to look at what is going on in the broader economy.

We’ve got quantitative easing. We’ve got negative real interest rates. We’ve got massive deficits as far as the eye can see. This is not the same dynamic that we had. You can’t earn. Twenty years ago, 30 years ago, you could put your money in the bank and you could earn 5 or 6%. There was a reason not to own gold becuase there was an opportunity cost. You could actually get interest on your savings. Now, you can’t do that. In fact, 20, 30 years ago, central bankers claimed that they wanted price stability. Now they claim they want inflation. They want prices to go up by at least 2% a year. If they’re not going up 2% a year, they’re not happy. So, the central bankers are telling you if you hold currency, you are going to lose. So, gold is your only alternative.”

Rule took on Warren Buffett, concluding if you’re not Buffett, you need to own some gold.

At one point, Skousen showed off a gold peso he carries in his pocket. He asked Peter and Rick why they didn’t carry gold around if they’re such big gold bugs. Peter said he had too much to carry around.

Peter took issue with Naveillier when he said the Fed is worried about the lack of inflation.

That’s nonsense. And in fact, what they are the most happy about is that their inflation has not shown up in a bigger way in the CPI. The last thing the Fed wants to have to do is fight inflation because it can’t. The way the Fed is able to justify keeping interest rates as low as they are is by claiming there is no inflation, claiming that we’re below 2%. Well, what happens if we actually get to 4%? Or 5%? How is the Fed going to put that genie back in that bottle? How is the Fed going to take interest rates up to six or seven or eight percent when we have all this debt? They would force the US government into default.

To close out the discussion, the panel talked about the possible impact of presidential politics on the markets.


Tyler Durden

Fri, 02/21/2020 – 12:05

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Pentagon ‘Accidentally’ Tells The Truth About Idlib

Pentagon ‘Accidentally’ Tells The Truth About Idlib

The Pentagon has in a rare moment gone off the mainstream narrative script concerning Idlib. 

The UK’s Sky News interviewed US coalition spokesman Col. Myles Caggins as part of its coverage focusing on Syrian and Russian forces “indiscriminately” attacking civilians and “bombing hospitals” — however, the Army colonel gave a counter angle, instead focusing on the jihadist groups ruling Idlib as the fundamental cause to civilian suffering there.

The US-led coalition spokesman called Idlib “a magnet for terrorist groups” that are a “nuisance, a menace and a threat” to hundreds of thousands of civilians just “trying to make it through the winter.”

He essentially identified “all” of groups operating on the ground as “terrorists” and a “threat” to the local population in the rare frank commentary:

There are variety of groups there — all of them are a nuisance, a menace and a threat to… hundreds of thousands of civilians who are just trying to make it through the winter.

His truthful words are all the more interesting given they come at a moment that CNN and other mainstream networks have “rediscovered” Idlib and “evil Assad and Russia” who they say are attempting to “butcher” children and innocent civilians. 

The very network that interviewed the Operation Inherent Resolve spokesman elsewhere on the same day questioned “whether the international community is doing enough to restrain the Assad regime.”

The main anti-Assad group on the ground fighting the Syrian Army has long been al-Qaeda faction Hayat Tahrir al-Sham (formerly Nusra Front), which is a US Treasury designated terrorist organization

Typically US and UK media reports leave out this crucial fact and nuance altogether, acting as if the whole conflict is as simple as Assad and Putin wishing to kill as many civilians as possible. 

Such ultra-simplistic coverage has just been debunked by the Pentagon’s Caggins, who essentially admits that the Russians and Syrian Army are fighting terrorist groups occupying Idlib province.


Tyler Durden

Fri, 02/21/2020 – 11:44

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Why It’s So Hard To Escape America’s “Anti-Poverty” Programs

Why It’s So Hard To Escape America’s “Anti-Poverty” Programs

Authored by Justin Murray via The Mises Institute,

One of the most common debates that has occurred in the United States for the past six decades is the discussion of the poverty rate. As the narrative goes, the US has an unusually high poverty rate compared to equivalent nations in the OECD (Organisation for Economic Co-operation and Development). Although it’s true that the measure of poverty is flawed, especially when compared cross-nationally, this piece addresses the reasons why the poverty rate in the US in particular has not improved.

If we look at the graph below, we see that official poverty rates fell 44 percent between 1960 and 1969 then spent the next fifty years fluctuating between an 11 and 15 percent poverty rate. It’s this lack of improvement over a five-decade period that is interesting, especially considering that poverty rates had consistently been dropping for over a century.

Incentive Problems

One of the key problems is that during the 1960s the Great Society programs were implemented, particularly the War on PovertyOver this period, spending on anti-poverty programs exploded five times in inflation adjusted dollars, going from 3 percent of public spending to 20 percent between 1973 and today.

Yet the poverty rate stubbornly ignored all this lucrative expenditure. A key problem is that none of these programs built in an incentive system to graduate people off the assistance. Push systems, systems where a person is ejected from assistance if they prove unwilling to improve themselves, are nonexistent, while pull systems, like job training programs, are ineffective at best. Without these systems, people neither have the tools nor the drive to exit these programs.

These programs, in effect, have generated a culture of dependency. Out of sixty-nine welfare programs that the government operates, just two, EITC (earned income tax credit) and the child refund credit, require any kind of employment and even then are tax discounts. Further, the expansion of various handout programs has successfully eradicated the stigma of public assistance, removing the social pressure to improve and exit. When nearly half the population receives public assistance, not including individuals receiving a paycheck for public sector work, people view it as normal and acceptable.

Public Sector Interference

For those who do legitimately want to break the cycle of dependency, the public sector isn’t making things any easier. One of the major problems with the welfare structure is that it requires funding in the form of taxes, debt, and inflation. The tax structure necessary to fund redistribution schemes naturally creates a Tax Dead Zone. What this dead zone does is create an income range where, after all taxes and benefits are accounted for, earning an extra dollar in gross income results in either no change or a reduction in net income.

Essentially, the extra dollar in earnings is taxed at 100 percent or more, penalizing the current recipient for attempting to exit public assistance. This dead space is nearly $20,000 in range, meaning that if the person estimates they’re unable to consistently earn above roughly $60,000 a year, it’s better to not try and to stick around $18,000 a year since the net benefit structure at $18,000 results in more resources to live on than at $45,000. It is mathematically impossible to design a welfare and tax structure that doesn’t, at some point, penalize a welfare recipient for earning more money.

Another insidious trap is the regulatory structure. People who are current welfare recipients tend to have few or no job skills. This is particularly true for younger individuals who haven’t had a first job yet. What the regulatory state does is drive up the cost of employment. When employment costs are raised, be it through a minimum wage or workplace rules, a higher skill level is demanded from the worker to generate sufficient revenues to justify the cost. If the applicant isn’t sufficiently skilled, they won’t get hired.

Unemployment can create a cycle of further unemployment in this environment. Since skills degrade over time, a person who elects to take twenty-six weeks of paid unemployment instead of a temporary lower-skilled role will be at a major disadvantage. Long-term unemployment becomes a trap, since the individual will no longer possess sufficient skills to cover the cost in wage mandates, taxes, and regulatory impositions of hiring them. If public unemployment benefits didn’t exist and the state didn’t artificially inflate the cost of employment, this individual wouldn’t have been lured into taking a six-month vacation and wouldn’t have struggled to justify the costs of their employment.

The impacts are particularly bad in terms of generational poverty. The minimum wage has a strong negative impact on youth employment rates. Teens who are unemployed enjoy significantly lower lifetime earnings and are more likely to be unemployed as adults compared to their peers who held a part-time job. This, in turn, leads to greater utilization of public sector benefits.

Incentives for Government

Based on its poor track record, one wonders if government even wants to solve the poverty problem. Seattle, for instance, spends roughly $100,000 per homeless resident of the city on homeless relief programs. The major beneficiaries of this public largess are charity organizations that claim to assist the poor but use that money to pay themselves salaries in excess of $200,000 for a single executive. Major agencies, including the Department of Health and Human Services, employ tens of thousands of people.

What would happen should poverty and homelessness be eradicated? No more $200,000 salary. No more job for tens of thousands of people. No more $8 million temporary tents.

Poverty and homeless assistance has turned into a big business. We now have a Homeless Industrial Complex, and poverty assistance has become big business. The public sector appears to be fully invested in ensuring that poverty and homelessness persist. Without the homeless, what do we need with a Low-Income Housing Institute? Without the poor, how could the Department of Agriculture justify $100 billion a year in the farm bill? There is little evidence that the state cares to solve the issue, only caring to make homelessness and poverty a viable lifestyle choice.

The Future

The state has, by accident or by design, created a permanent underclass. Radical elimination of regulatory impositions and the elimination of the minimum wage are merely the first steps toward solving the problem of poverty. The underlying issue is that the transition into a nation that can truly eradicate poverty will be painful. People trapped in public dependency won’t develop skills overnight, and odds are that they may never develop the skills needed for well-paid employment. Breaking habits is difficult and the sad reality is that catching up is a myth. People behind now will always be behind; if there were a magical means to accelerate skill development, everyone would be using it and the same person would still be behind.

But we can lay the groundwork for future generations not to have to battle through these public sector barriers, and we can return to the poverty improvement rate seen before the Great Society disrupted the process.


Tyler Durden

Fri, 02/21/2020 – 11:25

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Trump Hints At 3rd Ag Bailout, Promises Farmers “Additional Aid” Until Trade Deals “Fully Kick In”

Trump Hints At 3rd Ag Bailout, Promises Farmers “Additional Aid” Until Trade Deals “Fully Kick In”

President Trump tweeted a message of support to America’s farmers, pledging to deliver another round of federal bailout money if China, Canada and Mexico fail to immediately satisfy their commitments under their respective trade agreements with the US.

The message arrived in all-caps:

Of course, as many (including us) have noted, American firms are the ones on the hook for the tariffs, and the revenue, while strong, would be nowhere near enough to offset another 11-figure bailout package.

Considering the tweet’s forgiving tone, it looks like this is another classic Trump trade triangulation (where Trump sets the China hawks and pro-trade doves against each other, then stakes out a more moderate path, often via twitter). As we noted earlier, a senior Treasury Department official reportedly told Reuters that the administration is unsympathetic to China’s coronavirus-related troubles, and that it expects Beijing to keep its promise to buy $200 billion in US goods (with a large slug of that slated for ag products) over the next two years.

In essence, this ‘senior official’ was telling Beijing: ‘fuck you, pay me’.

Now, it appears President Trump has decided to soften the message a bit, telling farmers that the federal government will be there to backstop them if China does eventually need a little more time to make good on its commitments, or if the economic blowback is so severe that Mexico and Canada are heavily impacted (which is possible, but then again if that happens Trump might have other problems).

So far, the Trump administration has promised farmers a total of $28 billion in two farm bailouts, with the rest of that money set to be paid by April. Now he’s saying he might do a third if the coronavirus fallout for the global economy is bad enough.

Here’s another thought: As we theorized in our last post, President Trump needs to keep the threat of a trade-deal collapse alive to maintain leverage over China and feed expectations that the Fed could deliver another rate hike if things go poorly, which is why a revival of the reflation trade is in reality the biggest threat to the market right now.

So the message was addressed to American farmers, but the subtext was intended for Beijing.

Interestingly enough, the market dropped after the tweet, a sign of just how sensitive investors are becoming to hints of virus-related economic blowback.


Tyler Durden

Fri, 02/21/2020 – 11:10

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Yield Curve Collapse Accelerates After Fed’s Brainard Hints At Japanification

Yield Curve Collapse Accelerates After Fed’s Brainard Hints At Japanification

A month ago, The Wall Street Journal hinted at what’s to come when they reported that, as part of their contingency planning for the next recession, Federal Reserve officials are looking at a stimulus scheme the U.S. last used during and after World War II.

From 1942 until 1951, the Fed capped yields on Treasury securities – first on short-term bills and later on longer-term bonds – to help finance war spending and the recovery.

In fact, most recently, the Bank of Japan employed something known as yield-curve control, holding rates on 10-year government bonds at zero by committing to buy those securities at whatever price is needed. Bond yields and prices move inversely.

At issue is how the central bank should manage a faltering economy when short-term interest rates are already low.

And today, as US Treasury yields collapse to fresh record lows (despite record high stock prices), Fed Governor Lael Brainard gave a speech entitled “Monetary Policy Strategies and Tools When Inflation and Interest Rates Are Low”, which suggested a ‘Japanification’ shift in US monetary policy.

Brainard’s speech specifically champions the so-called Yield Curve Control (YCC) as a new policy tool, in an effort to strengthen the credibility of the forward guidance by implementing interest-rate caps in tandem as a commitment mechanism in the event that the policy rate is pushed to the lower bound.

“Based on its assessment of how long it is likely to take to achieve full employment and target inflation, the committee would commit to capping rates out the yield curve for a period consistent with its expectation for the duration of the outcome-based forward guidance

“This approach would smoothly move to capping interest rates on the short-to-medium segment of the yield curve once the policy rate moves to the lower bound and avoid the risk of delays or uncertainty that could be associated with asset purchases regarding the scale and time frame”

“I prefer flexible inflation averaging that would aim to achieve inflation outcomes that average 2% over time”

As Viraj Patel noted,

“This is no longer a drill but a fast-becoming reality. Fed can/will employ some form of YCC in the next big easing package it does (sooner than we think). No doubt US bond yields positioning for this…”

And sure enough, yields and the curve are accelerating lower and flatter on the speech…

However, while Brainard admits there are possible financial stability concerns:

Financial stability is central to the achievement of our dual-mandate goals. The new normal of low interest rates and inflation also has implications for the interplay between financial stability and monetary policy.

To the extent that the combination of a low neutral rate, a flat Phillips curve, and low underlying inflation may lead financial imbalances to become more tightly linked to the business cycle, it is important to use tools other than monetary policy to temper the financial cycle.

She seems to suggest that other mechanisms would be used to tamp down excess, such as a counter0cyclical capital buffer.

But, as WSJ notes, there are serious risks (especially if they ever normalized).

If investors grew less willing to buy securities because they thought the Fed might abandon its peg, for example because inflation accelerated unexpectedly, then the Fed would have to increase its purchases to maintain the peg.

This happened in 1947 when the Fed raised its cap on short-term yields while maintaining one for long-term rates. Yields on long-term bonds suddenly looked less attractive to investors, who also may have doubted the credibility of that cap. As a result, the Fed had to purchase more bonds to defend the cap. By the end of 1948, its bondholdings rose to $11 billion from less than $1 billion, accounting for half of its portfolio.

But all of those worries are pointless to a Federal Reserve whose real mandate remains Dow 30k or bust!


Tyler Durden

Fri, 02/21/2020 – 11:08

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UCLA Backtracks On Facial Recognitions Plans

UCLA Backtracks On Facial Recognitions Plans

Authored by Celine Ryan via Campus Reform,

Students nationwide raised concerns about universities using biometric surveillance, or facial recognition, on students.

Campus Reform reported last month that at least three California campuses had implemented the software. At the time, the University of San Francisco, the University of Southern California, and Stanford University were confirmed to have systems in place.

Now, after concerns both nationwide and directly from its own campus, the University of California-Los Angeles has publicly stated that it will not move forward with plans to use such technology and has promised to ban the use of any such technology on campus.

“UCLA will not pursue the use of this technology. We have determined that the potential benefits are limited and vastly outweighed by the concerns of our campus community,” said UCLA administrative vice-chancellor Michael Beck, according to CNET.

“This type of invasive technology poses a profound threat to our basic liberties, civil rights, and academic freedom. Schools that are already using this technology are conducting unethical experiments on their students. Students and staff have a right to know if their administrations are planning to implement biometric surveillance on campus,” said Deputy Director of Fight for the Future Evan Greer. 

Fight for the future is a nonprofit group that advocates for digital rights and is part of the nationwide Ban Facial Recognition campaign against the use of this technology by universities.

UCLA’s decision comes as other colleges around the country have implemented technologies used to track students’ physical location for the purpose of recording class attendance. The University of Missouri, Syracuse University, Auburn, Central Florida, Indiana have all begun using a smartphone app called SpotterEDU, which the company says is currently being used at 40 schools across the country. 

New York Campus Correspondent Justine Murray asked students at Syracuse University what they think about their locations being tracked.

WATCH:


Tyler Durden

Fri, 02/21/2020 – 10:50

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White House Warns Beijing: ‘We Still Expect You To Honor Your Trade Deal Commitments’

White House Warns Beijing: ‘We Still Expect You To Honor Your Trade Deal Commitments’

A Chinese official recently suggested that Beijing might need some ‘wiggle room’ to fulfill its commitments under the ‘Phase 1’ trade deal. Now, the Treasury Department is hinting that this might not be an option, and that the US expects the Chinese to honor their commitments.

Citing comments from an anonymous ‘senior Treasury official’ (possibly Mnuchin himself), Reuters reports that the US government expects China to honor its commitments, to which it agreed late last year, around the same time that the virus first emerged in Wuhan.

The report arrives just days after the IMF confirmed that the epidemic had already disrupted economic growth in China, and that it could derail already-fragile global growth if it continues to worsen and spread. However, the official narrative in Beijing is that the government is winning the war, and that the brief pullback in Q1 growth will be offset by a recovery later in the year.

If you’re wondering why the administration would allow such a potentially damaging story to surface on a day when stocks are already in the red, well…we wouldn’t blame you…but more on that later.

Yesterday, the market got the first hint at the outbreak’s impact on China’s high-tech manufacturing sector (think Foxxconn, iPhones) with an unprecedented drop in China’s emerging industries PMI.

But so far the fallout has been beyond brutal.

To be sure, the US didn’t rule out all flexibility. While the official said the US still expects China to meet its commitments with the $200 billion figure in total imports, he pointed out that these increases are supposed to be doled out over a “period of time.”

As the Washington Post reminds us, China’s agricultural commitments alone in the Phase 1 deal were pretty specific: Beijing agreed to buy an additional $32 billion over the first two years, $12.5 billion over the $24 billion baseline in 2020, and $19.5 billion over that same baseline in 2021. The ‘baseline’ is $24 billion, the level of Chinese ag purchases in 2017, before Trump decided to instigate his big trade war. The commitments were part of a deal that’s supposed to guarantee an additional $200 billion in ag purchases over the baseline in the years ahead, with Beijing ordering state-controlled firms to carry them out in good ol’ fashioned centrally planned purchases that brings to mind the control economies of the Communist era.

And those ag purchases are only part of the broader $200 billion commitment over two years: Technically, China is expected to purchase an additional $77 billion US goods in 2020 and $123 billion by 2021, compared with a baseline of U.S. imports from 2017

However, almost as soon as the deal was signed, economists and analysts complained loudly that the deal was little more than a PR stunt, and that there was no way Beijing would be able to guarantee such hefty purchases (others argued that Beijing could make it happen). On Thursday, the chief economist at the US Department of Agriculture seemed to suggest that these critics might have been on to something when he released a projection claiming that China would only import roughly $14 billion in ag products during the business year that ends Sept. 30. That’s only a $4 billion increase from a year ago. Purchases were supposed to be between $40 and $50 billion this year and next year.

Perdue made the comments during the USDA’s Agricultural Outlook Forum this week, and during a news conference later on, he added that enforcing the deal “remained a concern” and that the coronavirus outbreak made projections difficult. So far, China has lifted some restrictions, including a live poultry ban (mostly for breeding), affecting the US. But that ban wasn’t related to the trade war; ironically, it was a precaution put in place during an avian flu outbreak.

While some of the discrepancy is related to a mismatch with the calendar year, the chief economist said there are other reasons why the numbers aren’t matching up. Perdue also said that the department wouldn’t just assume that China will meet its commitments and stick those numbers into the projections.

Still, Beijing has offered some hints that it’s following through: This week, the Global Times, a government mouthpiece, reported that China was likely to buy 10 million tons of US liquefied natural gas despite a major glut.

It’s possible we’ll learn more following the G-20 meeting in Riyadh on Saturday and Sunday, where Mnuchin will discuss the economic fallout of the global pandemic with other senior finance ministers of the world’s largest economies. Though representatives from China will be notably absent. Instead, the Treasury official told Reuters that ‘lower level’ officials would represent the finance minister and head of the PBOC. The meeting was supposed to focus on the OECD’s efforts to draft new international tax rules that have become a point of contention between the US and Europe, since they would impact American tech giants like Facebook, Google, Amazon etc.

One would think, with the election coming up in November and Beijing desperate to guarantee higher economic growth, that it’s now more important than ever that the deal holds. But while that may be true, by keeping the threat of collapse and disaster close at hand, Trump and his administration can convince markets that the Fed is ready to step in with another rate cut if things get out of control, virtually guaranteeing (at least, in their estimation) that markets will remain buoyant until November.

However, if markets catch the slightest whiff of reflation between now and then (unlikely given the strength of the dollar and drop in oil prices), they might panic, believing that the Fed has been robbed of its great excuse to keep rates low, and suspecting (possibly correctly) that Chairman Powell won’t stick his neck out for Trump’s sake.


Tyler Durden

Fri, 02/21/2020 – 10:36

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The Collapse Of This Historic Correlation Suggests A Major Crisis Is Imminent

The Collapse Of This Historic Correlation Suggests A Major Crisis Is Imminent

A lot of digital ink has been spilled in recent days over the perplexing reversal of the Yen, which for years was seen by the market as a “flight to safety” trade (as unexpected crisis events would prompt capital repatriation into Japan or so the traditional explanation went), only to suffer a major selloff in the past week as it suddenly started trading not as a funding currency for risk-on FX pairs, but as a risk asset itself.

To us, the reversal is far less perplexing than some smart people make it out to be: with Japan now effectively in a recession following the catastrophic Q4 GDP print which crashed 6.3% annualized, validated by today’s just as terrible PMI report…

… and with Japan now set to suffer a major hit due to the coronavirus epidemic spreading like wildfire across the region, it is only a matter of time before the BOJ follows the ECB and Fed in reversing what has been years of QE tapering, and either cuts rates further into negative territory or expands its QQE (with yield control), and starts buying equities (although with the central bank already owning more than 80% of all ETFs, one wonders just what risk assets are left for the central bank to buy). Needless to say, both of these would have an adverse impact on the yen, and potentially lead to destabilization in the Japanese bond market which for years has defied doom-sayers, but it will only take one crack in the BOJ’s confidence for Japan’s entire house of cards to fall apart. That said, we are not there quite yet.

Furthermore, after the bizarre move in the prior two days, overnight the JPY appears to regain some normalcy, when it traded as it should (i.e., it was once again a risk-off proxy), with the USDJPY sliding during the two major “risk-off” events overnight.

So perhaps the freak move earlier this week was just that: a one off?

But what if it wasn’t, and what if we have indeed entered a new risk/correlation phase for the Japanese yen?

If that is indeed the case, we may be on the verge of a major market crisis as Bloomberg FX strategist, Vassilis Karamanis writes this morning, noting that “the yen’s haven status is taking a hit and it could be the prelude to heightened market turmoil.”

As Karamanis writes, echoing what we said above, “historically, the currency performs well in times of risk-off sentiment as global investors seek refuge and those from Japan repatriate funds.” But as discussed over the past 48 hours, that rule broke down amid the latest wave of market turbulence fueled by the coronavirus outbreak – given that the health scare could have an immediate impact on Japan’s economy, “fueling the risk of a recession”, something we first pointed out on Sunday.

But while all that is obvious, the biggest implication is what this means for markets which tend to trade on well-established correlations, with potentially dire consequences any time a historic correlation breaks.

That’s exactly what appears to be happening now, because whereas the yen is usually inversely correlated to the Australian dollar as the latter is a risk-sensitive currency, as of now, the 200-day correlation between the two currencies is near zero according to Karamanis.

This is notable, because as the Greek FX strategist explains, referring to the chart below, “whenever this correlation breaks down, it is down to tail risks materializing such as the global financial crisis and the euro-area debt turmoil.

It also tends to spark an immediate central bank “crisis” response: “The last time the correlation turned positive, the Bank of Japan surprised markets by adopting negative interest rates.

Will this time be different, or will the breakdown of this historic correlation be the harbinger to another global crisis (arguably the result of the coronavirus pandemic) and another major emergency response by central banks? One look at the relentless explosion in the price of gold suggesting “someone knows something” about the imminent hammering of the CTRL+P combination, and the answer is a resounding yes…


Tyler Durden

Fri, 02/21/2020 – 10:22

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Existing Home Sales Slide In January, Prices Jump As Inventories Slump

Existing Home Sales Slide In January, Prices Jump As Inventories Slump

Following December’s surprisingly large surge, existing home sales were expected to slow in January and it did but less than expected due to an upward revision to December.

Dec existing home sales was revised from +3.6% to +3.9% MoM which cause the January move to modestly beat expectations but still fell (-1.3% MoM vs -1.8% MoM expected) to a 5.46 million annual rate…

Source: Bloomberg

The median existing-home price for all housing types in January was $266,300, up 6.8% from January 2019 ($249,400), as prices increased in every region. December’s price increase marks 95 straight months of year-over-year gains.

“Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Lawrence Yun, NAR’s chief economistsaid.

Total housing inventory at the end of January totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago (1.59 million).

The housing inventory level for January is the lowest level since 1999. Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the 3.0-month figure recorded in December and down from the 3.8-month figure recorded in January 2019.

Yun finds the outlook for 2020 home sales promising despite the drop in January.

“Existing-home sales are off to a strong start at 5.46 million.” Yun said.

“The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”

Single-family home sales sat at a seasonally-adjusted annual rate of 4.85 million in January, down from 4.91 million in December, but up 9.7% from a year ago. The median existing single-family home price was $268,600 in January 2020, up 6.9% from January 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in January, down 1.6% from December but 8.9% higher than a year ago. The median existing condo price was $248,100 in January, an increase of 5.7% from a year ago.

Regional breakdown

Sequentially, January sales only increased in the Midwest, while year-over-year sales are up in each of the four regions. Median home prices in all regions increased from one year ago, with the Northeast region showing the strongest price gain.

  • January 2020 existing-home sales in the Northeast saw no movement, recording an annual rate of 730,000, which is up 7.4% from a year ago. The median price in the Northeast was $312,100, up 11.5% from January 2019.

  • Existing-home sales increased 2.4% in the Midwest to an annual rate of 1.29 million, which is up 8.4% from a year ago. The median price in the Midwest was $200,000, a 5.4% increase from last January.

  • Existing-home sales in the South grew 0.4% to an annual rate of 2.38 million in January, up 11.7% from a year ago. The median price in the South was $229,900, a 6.3% increase from this time last year.

  • Existing-home sales in the West fell 9.4% to an annual rate of 1.06 million in January, an 8.2% increase from a year ago. The median price in the West was $393,800, up 5.2% from January 2019.

And of course, with interest rates crashing to record lows, one would imagine mortgage rate collapses will spark renewed interest in at worst refis, and at best more buying.


Tyler Durden

Fri, 02/21/2020 – 10:09

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“The Intelligence Doesn’t Say That”: National Security Official Pushes Back On 2020 Russian Meddling Report

“The Intelligence Doesn’t Say That”: National Security Official Pushes Back On 2020 Russian Meddling Report

On Thursday, the New York Times published an account of a briefing between an aide to outgoing National Intelligence director Joseph Maguire and the House Intelligence Committee claiming that Russia was meddling in the 2020 election, and was “trying to get Trump re-elected.”

Not so, according to a national security official – who told CNN‘s Jake Tapper that the aide, Shelby Pierson, may have mischaracterized the intelligence community’s findings during the heated meeting.

“A national security official I know and trust pushes back on the way the briefing/ODNI story is being told, and others with firsthand knowledge agree with his assessment,” tweeted Tapper on Friday, adding that a more reasonable interpretation is that Russia viwes Trump as a dealmaker they can work with – “not that they prefer him over Sanders or Buttigieg or anyone else.”

Tapper hedges at the end – noting that none of this disputes that Russians (and others) are attempting to interfere in the 2020 election. 


Tyler Durden

Fri, 02/21/2020 – 10:02

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Treasury Yields Plunge To Record Lows As US PMI Collapses Into Contraction

Treasury Yields Plunge To Record Lows As US PMI Collapses Into Contraction

Markit’s US Manufacturing bucked the surprising surge in ISM Manufacturing in January and preliminary February data was expected to confirm this slowing trend (with Services steadily expanding).

  • U.S. Feb. Services Flash PMI 49.4; Est. 53.4

  • U.S. Feb. Flash Manufacturing PMI 50.8; Est 51.5

  • U.S. Feb. Flash Composite PMI 49.6 vs 53.3

And as the chart shows, while ‘soft’ survey data had been rising, ‘hard’ data – actual economic flows – has been weakening for 4 months, and February appears to have been catch-down time!

Source: Bloomberg

New orders received by private sector firms fell for the first time since data collection began in October 2009. The fractional decline in new business stemmed from weak client demand across the service sector and the slowest rise in manufacturing new order volumes for nine months. Private sector companies continued to struggle to attract foreign client demand as new export orders fell for the second month running.

Finally, we note that the composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since October 2013, when the U.S. government shut down.

“The deterioration in was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions,” IHS Markit economist Chris Williamson said in a statement.

With the exception of the government-shutdown of 2013, US business activity contracted for the first time since the global financial crisis in February. Weakness was primarily seen in the service sector, where the first drop in activity for four years was reported, but manufacturing production also ground almost to a halt due to a near-stalling of orders.

“Total new orders fell for the first time in over a decade. The deterioration in was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions. However, companies also reported increased caution in respect to spending due to worries about a wider economic slowdown and uncertainty

The last time PMI crashed here, GDP went negative in Q1 2014 (-1.1%)…

 

And it could have been dramatically worse because, there’s one big glaring global error in all PMIs going forward. As @ClausVistesen exposes under the surface of Germany’s surprisingly solid PMI data.

The composite PMI in Germany fell trivially to 51.1 in February. from 51.2 in January, above the consensus, 50.7.

The coronavirus effect is nowhere to be seen in these data…

There is a catch, though. Markit notes that half of the increase in the manufacturing PMI was attributed slower delivery times.

Normally, such evidence of supply-side tightening is bullish—signalling accelerated activity — but respondents specifically noted that this was related to disruptions in China due to the coronavirus. Specifically:

“The ‘flash’ seasonally adjusted Suppliers’ Delivery Times Index was at 47.0 in February. down from 55.1 in January. A reading below 50 signals deterioration in supplier delivery times. In the calculation of the headline Manufacturing PM!. the supplier delivery times index is inverted.”

In other words, the PMIs appear to be designed so as to import a supply-chain disruption from the coronavirus as a bullish signal. Needless to say: it isn’t! With that in mind, it’s difficult to interpret the evidence of further easing in the rate of contraction and new orders as a good sign. The main risk is that production lines simply grind to a halt, even as new orders keep coming due to disruptions of the supply side.

…It’s ridiculous. Not exactly economists’ finest hours here, building up to the PMIs as if they were the litmus test for all this, and now we can just put them in the bin because of the supply-tightening/headline up effect.

Basically, we need to watch supply-side factors/input price inflation now. The problem is that we have even worse real-time data here than on the demand side.

And just like that – we now know all PMIs for the next few months are utterly useless (and in fact misleading – not necessarily by intent) due to this is inversion of supply chain crises into a bullish signal.

All of which has sent the 30-year US Treasury yield to an all-time record low of 1.89%…

…with stocks less than 1% off record highs!?


Tyler Durden

Fri, 02/21/2020 – 09:53

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US & Taliban Truce To Start Saturday Ahead Of Final Peace Deal

US & Taliban Truce To Start Saturday Ahead Of Final Peace Deal

At the end of a week which has witnessed for the first time the bizarre and disturbing spectacle of The New York Times publishing an op-ed by Taliban deputy leader Sirajuddin Haqqani a terrorist on the FBI’s most wanted list — a week-long “reductioa n in violence” between the US, the Taliban and Afghan forces is set to begin Friday at midnight.

Assuming it holds, this will lead to the US signing a historic peace deal with the Taliban on February 29 in a “signing ceremony” with senior representatives from both sides. 

But the biggest hurdle after that, in a process which could ultimately see a complete withdrawal of American forces after eighteen years of war, will be the intra-Afghan talks involving various political parties in the country.

Image source: BBC/Getty

The Taliban considers the national government American forces imposed after the 2001 invasion to be a “US puppet” and has previously refused to engage with it. 

US Secretary of State Mike Pompeo said on Friday that the US had “come to an understanding with the Taliban” — words that sound incredibly strange after nearly two decades of the post 9/11 “war on terror”.

“We are preparing for the signing to take place on February 29,” Pompeo said of the signing which is to take place in Doha, Qatar. “Intra-Afghan negotiations will start soon thereafter, and will build on this fundamental step to deliver a comprehensive and permanent ceasefire and the future political road map for Afghanistan.”

But again this is the roadblock that could derail things before they really get off the ground:

The Afghan election commission earlier this week declared the president, Ashraf Ghani, the winner of the presidential elections held in September but his rivals quickly denounced his win.

The Taliban have refused to talk to Ghani’s government and also denounced the election results, saying they will talk to government representatives but only as ordinary Afghans.

The Taliban has said the deal will be off if it doesn’t lead to a total US troop exit

There’s also the question of the exchange of thousands of prisoners currently being held by both sides.

A key controversial aspect to the start of intra-Afghan talks will be that “5,000 Taliban prisoners from Afghan government prisons will be released, and 1,000 government forces prisoners will be released by the Taliban” however it’s unclear whether Kabul is actually on board with this


Tyler Durden

Fri, 02/21/2020 – 09:35

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Was The Debate Beat-Down Fatal For Mayor Mike?

Was The Debate Beat-Down Fatal For Mayor Mike?

Authored by Pat Buchanan via Buchanan.org,

Wednesday night in Las Vegas, Mayor Mike Bloomberg learned what it is like to be thrown up against a wall and frisked.

At the opening of the Democratic debate, his first, Mayor Mike was greeted by his nearest neighbor on stage, Sen. Elizabeth Warren, with this warm welcome:

“We’re running against … a billionaire who calls women ‘fat broads’ and ‘horse-faced lesbians.’ And, no, I’m not talking about Donald Trump. I’m talking about Mayor Bloomberg.”

Bloomberg was not only charged with misogyny and sexism but racism for his stop-and-frisk policy, which the NYPD pursued during his three terms as mayor. By Bloomberg’s own admission, stop and frisk singled out black men between 16 and 25.

Undiscussed were the positive results of the policy.

Gun homicides in New York fell to levels below those attained by his predecessor, Rudy Giuliani. And if those most often frisked were black and Hispanic men, the lives saved and the woundings prevented were also mostly those of people of color.

Yet, a question that remains after this debate was one that was puzzling even before the debate.

Why did he do it? Why did Bloomberg, who is not on the Nevada or South Carolina ballot, decide to join the debates before these contests?

Today, the mayor’s campaign is probably buying tens of millions of dollars in ads to undo the damage done to him under the remorseless fire on his character, campaign and record from his rivals Wednesday night.

These attacks were predictable and predicted. Why did he submit to this? Who counseled Bloomberg to climb into the ring?

By investing $350 million in ads in primary states since November and crafting scheduled appearances while avoiding adversarial talk shows and candidate debates, Bloomberg had propelled himself from nowhere into the top tier of candidates in every state on Super Tuesday.

Why did he abandon a winning strategy to walk out, unprepared, onto a stage full of enraged and exasperated rivals who think he is buying and stealing a nomination for which they have fought for a year?

Why did he volunteer to enter a forum where he had to know his rivals would become a flash mob before he answered his first question? This was campaign malpractice of historic dimensions.

It is going to take hundreds of millions of dollars in new ads to undo the damage done to Bloomberg’s reputation among the millions of voters who got their first impression of the mayor from the debate.

Where does the race stand before Saturday’s caucuses in Nevada?

Sen. Bernie Sanders, his energy restored after his heart attack a few months back, his lines honed by a year’s repetition, was at the top of his game Wednesday night, fending off attacks and fighting back with a passion and ferocity that Bloomberg never exhibited.

With his popular vote victories in Iowa and New Hampshire, five national polls showing him taking the lead from Joe Biden, and contributions pouring in from his huge army of small donors, Sanders is the favorite to win in Nevada and man to stop.

But after Super Tuesday, March 3, he may be unstoppable.

A new Washington Post poll Wednesday shows Sanders with a huge lead among young voters and in a statistical tie with Joe Biden among African Americans. And he is flush with cash.

March 4 could see Sanders with an almost insurmountable lead that could have him enter the Milwaukee convention with a majority of delegates or a plurality so huge as to make it politically impossible for his adversaries to gang up on him and take the nomination away.

For who would be the beneficiary of such a robbery on the convention floor? The same Bloomberg his rivals described Wednesday night as a misogynist, sexist and racist.

Bloomberg’s campaign is sounding the alarm that Sanders could soon amass an insurmountable delegate lead if the Democratic field stays split, and is urging the other candidates to drop out.

Mayor Pete Buttigieg, Sen. Amy Klobuchar and Vice President Biden are being told that if they do not get out of the race and clear the lane for the mayor, they will get a socialist as their nominee, and the party will deserve the fate November will bring — a second term for Trump.

Bloomberg’s strategist Kevin Sheekey was pointedly warned by staffers on Thursday:

“If Biden, Buttigieg, and Klobuchar remain in the race despite having no path to appreciably collecting delegates on Super Tuesday (and beyond), they will propel Sanders to a seemingly insurmountable delegate lead by siphoning votes away from (Bloomberg).”

As the other candidates cannot beat Sanders, Bloomberg’s campaign is saying, they should step aside and clear the field for Mayor Mike. This would call for a spirit of self-sacrifice and measure of esteem for the mayor not evident on that stage Wednesday night.


Tyler Durden

Fri, 02/21/2020 – 09:20

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US Exposed To Immediate Impact From “Supply-Chain Shock”, Deutsche Says

US Exposed To Immediate Impact From “Supply-Chain Shock”, Deutsche Says

In the last few weeks, we’ve provided many articles on the evidence of creaking global supply chains fast emerging in China and spreading outwards. Anyone in supply chain management, monitoring the flow of goods and services from China, has to be worried about which regions will be impacted the most (even if the stock market couldn’t care less).  

Deutsche Bank’s senior European economist Clemente Delucia and economist Michael Kirker published a note on Thursday titled “The impact of the coronavirus: A supply-chain analysis” identifying the effect of contagion on the rest of the world, mainly focusing on demand and spillover effects into other countries. 

The economists constructed a ‘dependency indicator,’ to figure out just how much a country depends on China for the supply of particular imported inputs. It was noted that the more a country depends on China, the more challenging it could be for businesses to find alternative sourcing during a period of supply chain disruptions. 

The biggest takeaway from the report is that, surprisingly, the European Union is less directly exposed to a China supply-chain shock than the US, Canada, Japan, and all the major Asian countries (i.e., India, South Korea, Indonesia, Malaysia, Vietnam).

It was determined that in the first wave of supply chain disruptions that “euro-area countries are somewhat less directly dependent on China for intermediate inputs than other major economies in the rest of the world.” 

“The euro-area countries have, in general, a dependence indicator below the benchmark. This suggests that euro-area countries have a below-average direct dependence on Chinese imports of intermediate inputs (Figure 2).” 

But since China is highly integrated into the global economy, and a supply chain shock would be felt across the world. The second round of disruptions would result in lower world trade growth that would eventually filter back into the European economy.

The US, Japan, Canada, and all the major Asian countries would feel an immediate supply chain shock from China.  

Here’s a chart that maps out lower dependency and higher dependency countries to disruption from China. 

To summarize, the European Union might escape disruptions from China supply chain shocks in the first round, but ultimately will be affected as global growth would sag. As for the US and Japan, Canada, and all the major Asian countries, well, the disruption will be almost immediate and severe with limited opportunities for companies to find alternative sourcing. 

“First of all, our analysis does not take into account non-linearity in the production process. In other words, it does not capture consequences from a stop in production for particular product. It might indicate that given the dependence is smaller, Europe could find it somewhat easier substitute a Chinese product with another. But there is no guarantee this will be the case.”

“Secondly, while our results indicates that the direct impact from supply issues in China could be smaller for the euro area than for other regions in the world, the euro area could be hard-hit by second-round effects. With their higher direct exposure to China, production in other major economies could slow down as a result of disruptions in the supply chain. This not only could cause a shortage in demand for euro-area exports, but it could also impact on the euro-area’s import of intermediate inputs from these other countries (second-round effects). In other words, China has become a relevant player in the world supply chain and production/demand problems in China are spread worldwide through direct and indirect channels.

News flow this week has indeed suggested the virus is spreading outwards, from East to West, and could get a lot worse ex-China into the weekend. 

We believe supply chain disruptions ex-China could become more prevalent in the weeks ahead.

The mistake of the World Health Organization (WHO), governments, and global trade organizations to minimize the economic impact (protect stock markets) of the virus was to allow flights, businesses, and trade to remain open with China. This allowed the virus to start spreading across China’s Belt and Road Initiative (BRI). 


Tyler Durden

Fri, 02/21/2020 – 09:00

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