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Lyft Soars After Smashing Expectations, But An Ugly Future Awaits

Lyft Soars After Smashing Expectations, But An Ugly Future Awaits

Back at the start of February, just before the world shut down due to the Wu Flu, Uber delighted investors when it predicted that it would (somehow) reach profitability one year ahead of schedule, a move which its main competitor Lyft failed to copy, and the market punished its stock accordingly. Just three months later, Uber may have changed its mind, considering it just announced 3,700 layoffs – hardly the confidence boosting corporate activity from a company hoping to turn profitable- with the news spooking Lyft investors who pushed its stock as much as 5% lower ahead of earnings.

But was it warranted? One look at LYFT earnings suggests that perhaps this time around it is Uber – with its much more international operations – that is hurting far more, because in a surprise to most LYFT easily surpassed some investors’ worst expectations Wednesday when it not only beat expectations, but pushed closer to profitability and reported moderate growth of the ride-hailing business in a quarter marred by the effects of the coronavirus pandemic.

The San Francisco-based ridehailing company reported Q1 revenue of $956MM, a 23% increase from the $776MM a year ago, and smashing expectations of $829.6MM; the resulting adjusted loss of $97.4MM, down 20% Q/Q, was roughly half the expected loss of $179.6MM.

Adjusted EBITDA came in at negative ($85.2MM), down 35% Q/Q and far better than the ($201.2MM) EBITDA expected, a -9% Adj EBITDA margin compared to -28% a year ago, a 19% improvement Y/Y.

Also of note, LYFT’s contribution margin improved substantially by 7% to 57% from a year ago.

However, while LYFT clearly streamling its income statement by cutting operating expenses…

…  the coronavirus clearly hit Lyft’s growth machine, and the company, which as Bloomberg notes is accustomed to growth rates of more than 50% a quarter, said adjusted sales climbed 23% from last year.

Indeed, LYFT’s Q1 active riders of 21.2 million, an increase of +3.5% y/y, were well below the 22.7 million estimates, even as the revenue per active rider rose by 19% y/y to $45.06.

Looking at liquidity, the company reported $597.9MM in cash and cash equivalents, and a total $2.7BN including short-term investments.

A couple of caveats: as noted above, Lyft only operates in the U.S. and Canada, which were largely spared from the virus until March, which means that LYFT’s results were only affected for about a week or two at the end of March, when the governments issued guidance saying people should significantly curb travel. Transportation businesses, including Lyft’s, were jolted. Last month, Lyft pulled its 2020 forecast and said it would reduce its workforce by 17%, furlough another 5% and slice salaries for everyone left.

Brian Roberts, LYFT’s CFO said in a statement Wednesday that the company would cut spending for the year beyond its previous expectations by about $300 million. “In these uncertain times, we are building on that progress by taking decisive action to reduce costs and further improve our operating efficiency,” he said.

Lyft was dealt another major setback this week when California sued the company and its larger rival, Uber Technologies Inc., claiming they’re in violation of a law that went into effect this year that makes many contract workers eligible for employee benefits. Although the companies are seeking to overturn the law through a ballot measure in November, investors were unsettled by the suit. Lyft’s stock was down 2.1% at the close of trading Wednesday.

None of this mattered after hours, when a furious short squeeze coupled with the stronger than expected results delighted investors; alas, the earnings merely reflected the solid performance in January and February while the far uglier new normal has yet to be quantified.  For now the stock is up 10% in kneejerk reaction, but the early euphoria will soon reverse as investors realize that it will take years for things to get back to normal.


Tyler Durden

Wed, 05/06/2020 – 16:28

via ZeroHedge News https://ift.tt/3do9L5k Tyler Durden

While Pandemic Destroys Lives, The Surveillance State Celebrates

While Pandemic Destroys Lives, The Surveillance State Celebrates

Authored by Lee Camp via ConsortiumNews.com,

If we don’t fight back against the secretive surveillance state growing steadily around us, your wife/husband may find out you love a Cinnabon more than you love her/him. And that might be just the beginning of it.

While many of us remain quarantined – inexorably welded to our home/apartment/RV in an abandoned Walmart parking lot – the surveillance state is actually stretching its legs, brought out for a run by our friendly neighborhood oligarchs like a young golden retriever let off its leash on a nice day. Unfortunately, in this case what it’s retrieving is all of our information, movements, thoughts and desires.

Right now violations of American’s privacy rights do not hold many people’s attention. We’re too busy adapting to a new, confusing, and anxiety-filled form of existence. (Last week I myself finally saw my dentist, my therapist and my prostitute all via Zoom calls. Unfortunately, I had performance anxiety – but that was with the therapist [flaccid super-ego].)

More Americans have now been killed by Covid-19 than were killed during the Vietnam War. (I mean Americans killed in Vietnam of course. “Others” killed have never much mattered to us.) As the virus death toll rises, various governments around the world have discussed using smart city technology to trace where infected people go and who they come in contact with. At first that sounds great. What kind of psychopath doesn’t want to end this pandemic? But it turns out there’s one problem with allowing the moneyed rulers to track every man, woman, and child. That problem — stop me if you guessed it — is that they’re tracking every man, woman, and child.

As was written in the crazy anarchist rag known as Forbes Magazine:

“…the use of masses of connected sensors makes it clear that the coronavirus pandemic is–intentionally or not – being used as a testbed for new surveillance technologies that may threaten privacy and civil liberties. So aside from being a global health crisis, the coronavirus has effectively become an experiment in how to monitor and control people at scale.”

Oh goody! I love being gerbilized for the ruling elite. (Maybe they’ll give us yummy treats – like carrots or cucumbers.) And it’s not just your phones they’re tracking in these “smart cities.”

Forbes again:

“Making use of a traffic light indicator system, their algorithm is able to anonymously identify and label people who maintain safe distances, while flagging violations.”

If they’re able to track “violators” who follow within a flying spit particle of someone else, then it stands to reason they could choose to track pretty much any other type of behavior. Such surveillance activity can effectively shut down all dissent or resistance, both large-scale and small. For example: would my hobby of mooning every Bank of America be an arrestable offense? Is a gentlemanly mooning illegal now? I thought this was a free country. What happened to “Give us your tired, your poor, your huddled asses?” Apparently, they didn’t mean it. Now our asses have to be covered and they can’t even be huddled — they have to be 6 feet apart.

Data Governance and SMART cities, @NTusikov lays down the concerns. (Giulia Forsythe, Flickr)

Point is, the reason police officers post up every two blocks in minority neighborhoods is ostensibly to “catch” people committing crimes. But as we know from the stats, most of these “crimes” are really nothing — loitering, noise complaints, open alcoholic beverages, possession of a half a joint. Essentially the surveillance creates or stirs up the “crimes” in order to lock up people of color, thereby protecting the class structure and insulating the rich.

As we’ve seen in dictatorships the world over (most of them friends-with-benefits of the American government) a police state can be used (abused?) to arrest anyone the rulers desire. Now imagine a state where those political elite know exactly how and where you walk at all times — what you do, where you do it, and why you did it.

Dystopian Hellholes

They’re calling this kind of surveillance “smart cities,” but a more accurate term would be “dystopian surveillance state hellholes.” However, that name doesn’t fit on the signage as easily as “smart city.” It’s similar to how landlords give the shittiest apartment buildings grandiose names like “The Cromwell” or “The Victorian.” When you see a name like that, you know it has “the Bed Bugs.” But they often throw in “Le Black Mold” free of charge. Hence, the fact they’re calling these “smart cities” scares the shit out of me.

Army researchers investigate how the internet could complement military assets in urban operations. (U.S. Army)

Even if this technology is only used to help with the Coronavirus outbreak right now, what makes you think the top execs at America Inc. won’t keep using it after the pandemic is over? As we know from the historical record — George W. Bush, Bill Clinton, Barack Obama, Donald Trump, etc. — if a government acquires a tool that swells its power, it never relinquishes that tool. No one in power ever says, “You know what? These nuclear weapons are kinda dangerous. We better get rid of them. And this unlimited surveillance of American citizens doesn’t feel right anymore. Do me a favor and click the OFF switch on that big machine with the sign that reads ‘Watch Everybody.’”

As Edward Snowden stated:

“Five years later the coronavirus is gone, this data is still available to them — they start looking for new things. They already know what you’re looking at on the internet, they already know where your phone is moving, now they know what your heart rate is. What happens when they start to intermix these and apply artificial intelligence to them?”

Think about that. If the government and big tech know someone’s web searches, purchases, standard travel behavior and their heart rate, A.I. systems can basically figure out everything about them. They can know who you are, what you want, when you “misbehave” in societal terms. The systems could define “misbehaving” as criticizing power structures, pushing back against authority, or not giving in to the standard cultural institutions like marriage, car ownership, sports team allegiance, owning a treadmill you have an emotionally abusive relationship with, falling for a timeshare in the Virgin Islands you don’t want and can’t afford, etc.

“I’m Edward Snowden – Stop Watching Us, Berlin,” 2013. (mw238 Flickr)

Monitoring Your Pulse  

The surveillance state can know that your heart races every time you see a fucking Cinnabon. They can know you have a gambling or alcohol or Adderall problem. They can know your pulse doesn’t race when you see your wife. In fact, on the list of things that grab your attention, wife isn’t even on thesame page as a Cinnabon. She’s below Cinnabons, sharks, and a good pass in the NFL. Wife is just below a partially warmed-up gas station burrito on the excitement index.

Back to Forbes for another groundbreaking revelation: “…those doing the monitoring… may not always have our best interests at heart.”

I realize this pandemic frightens us all and turns our lives inside out. I realize it has taken “normal,” beaten it thoroughly, changed its clothes, given it a fake mustache, and then dropped it out of a helicopter from 30,000 feet. By the end of this pandemic, “normal” will only be identifiable by dental records. But even so, we cannot give away all our rights, all our privacy under the guise of “security.”

Any salesman will tell you, one of the best tools to sell someone something they don’t need is fear. Want someone to buy the expensive car? Tell them it’s safer and ask them to picture their children in a car accident. Want someone to buy the home security? Paint a mental image of a big bad burglar stealing their entire Phil Collins vinyl collection. After 9/11 companies even sold parachutes to office workers to keep under their desk in case they needed to jump out the window. Didn’t even matter if their office was on the second floor. Can’t be too safe.

Fear makes us idiots. Fear makes us listen to the lizard brain instead of the smart guy in your head. Don’t let the oligarchs use fear to trick you into giving up what little right to privacy and freedom you have left.


Tyler Durden

Wed, 05/06/2020 – 16:25

via ZeroHedge News https://ift.tt/3cbJIy2 Tyler Durden

New Facebook Oversight Board Will Handle Tricky Moderation, but Will It Value Free Speech?

Facebook CEO Mark Zuckerberg has described content moderation as the most perplexing problem he faces, and so today’s announcement that the company had appointed an independent oversight board to review controversial decisions comes as no surprise.

The board will be chaired by Catalina Botero-Marino, a former free expression reporter for the Organization of the American States; Jamal Greene, a Columbia University law professor; Michael W. McConnell, a Stanford University law professor; and Helle Thorning-Schmidt, the former prime minister of Denmark. They spelled out their vision for the board in a New York Times op-ed:

We will not be able to offer a ruling on every one of the many thousands of cases that we expect to be shared with us each year. We will focus on identifying cases that have a real-world impact, are important for public discourse and raise questions about current Facebook policies. Cases that examine the line between satire and hate speech, the spread of graphic content after tragic events, and whether manipulated content posted by public figures should be treated differently from other content are just some of those that may come before the board.

Over the coming months, we will lay out how we prioritize and select cases for review. Once a case has been chosen, it will be considered by a panel with a rotating set of members. All panel decisions will be reviewed by the entire board before they are finalized, and if a majority of members disagree with a decision, they can ask a new panel to hear the case again.

The composition of the rest of the board was also announced. It includes a number of free speech and international human rights experts. John Samples, a vice president of the libertarian Cato Institute, is one of them.

“Facebook is giving users a way to appeal its content moderation decisions,” Samples said in a statement. “The board is charged with making sure such decisions agree with Facebook’s values and community standards. Facebook has said ‘voice’ is its paramount value, so I envision that the board will advance the cause of free speech in the digital era.”

Facebook has come under heavy criticism from nearly every point on the political spectrum. Many on the left are angry at Facebook essentially for not doing more aggressive content moderation. Sen. Elizabeth Warren (D–Mass.), for instance, has complained about “misleading” political advertisements on the platform. Celebrities, and many in the media, want Facebook to broadly prevent the spread of disinformation, and are evidently worried that the board is oriented toward protecting controversial speech.

On the other hand, various rightwing commentators think Facebook is too aggressive with its content regulation. Recently, small steps taken by the platform to disallow events that deliberately spread harmful information about COVID-19 provoked widespread cries of censorship.

No one seems to hate Facebook more than Sen. Josh Hawley (R–Mo.), who gave the following reaction to news of the oversight committee:

This is a blatant misrepresentation of the committee’s aims, and one that in no way, shape, or form makes any sort of compelling argument for the government to break up Facebook. Indeed, the committee might cause Facebook to be less censorious, in a way that meets the approval of conservatives: After all, it includes a number of individuals whose unique backgrounds as advocates for civil and human rights might make them more inclined to permit controversial content than Facebook’s own employees would be. It’s hard to avoid the impression that Hawley objects to Facebook’s size and influence, and would rail against the company no matter what it did.

The most sensible take on the oversight committee belongs to Jesse Blumenthal, a tech policy expert at Stand Together, who writes that he is “cautiously optimistic” about the potential for the oversight committee to defend free expression. Nevertheless:

There are two interrelated issues: what rules do you set and how do you enforce them. The former is a deliberative choice, the latter is an impossible task that can be refined at the margins. Still, it is clear where Facebook stands on those questions. What is less clear is whether the new oversight board will embrace or resist this shift in values.

Indeed, only five of the initial board appointments come from the United States. The other 15 come from abroad. That is some cause for concern because even the strongest free expression advocates abroad tend to place a lower emphasis on free expression than their American counterparts.

In many discussions about the board both Facebook staff and external activists have pressed the company on geographic representation. This priority is reflected in the bylaws and regularly taken as a given. But by emphasizing geographic diversity the board risks shifting away from a uniquely American approach to free expression.

It’s possible that by delegating the most difficult moderation decisions to a third party, Facebook will effectively end up permitting the proliferation of new norms that are actually less friendly to speech than what Zuckerberg himself has envisioned. (Facebook has pledged to abide by the board’s decisions, though the bylaws give the company plenty of wiggle room.) I don’t think this is the most likely possibility, but it could happen.

Given all the opprobrium the platform has earned for its moderation decisions—which are indeed occasionally flawed, but often not nearly as contemptible as critics claim—Zuckerberg can hardly be faulted for wanting to share this responsibility with another entity. As long as that entity isn’t Congress, we should all be grateful.

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New Facebook Oversight Board Will Handle Tricky Moderation, but Will It Value Free Speech?

Facebook CEO Mark Zuckerberg has described content moderation as the most perplexing problem he faces, and so today’s announcement that the company had appointed an independent oversight board to review controversial decisions comes as no surprise.

The board will be chaired by Catalina Botero-Marino, a former free expression reporter for the Organization of the American States; Jamal Greene, a Columbia University law professor; Michael W. McConnell, a Stanford University law professor; and Helle Thorning-Schmidt, the former prime minister of Denmark. They spelled out their vision for the board in a New York Times op-ed:

We will not be able to offer a ruling on every one of the many thousands of cases that we expect to be shared with us each year. We will focus on identifying cases that have a real-world impact, are important for public discourse and raise questions about current Facebook policies. Cases that examine the line between satire and hate speech, the spread of graphic content after tragic events, and whether manipulated content posted by public figures should be treated differently from other content are just some of those that may come before the board.

Over the coming months, we will lay out how we prioritize and select cases for review. Once a case has been chosen, it will be considered by a panel with a rotating set of members. All panel decisions will be reviewed by the entire board before they are finalized, and if a majority of members disagree with a decision, they can ask a new panel to hear the case again.

The composition of the rest of the board was also announced. It includes a number of free speech and international human rights experts. John Samples, a vice president of the libertarian Cato Institute, is one of them.

“Facebook is giving users a way to appeal its content moderation decisions,” Samples said in a statement. “The board is charged with making sure such decisions agree with Facebook’s values and community standards. Facebook has said ‘voice’ is its paramount value, so I envision that the board will advance the cause of free speech in the digital era.”

Facebook has come under heavy criticism from nearly every point on the political spectrum. Many on the left are angry at Facebook essentially for not doing more aggressive content moderation. Sen. Elizabeth Warren (D–Mass.), for instance, has complained about “misleading” political advertisements on the platform. Celebrities, and many in the media, want Facebook to broadly prevent the spread of disinformation, and are evidently worried that the board is oriented toward protecting controversial speech.

On the other hand, various rightwing commentators think Facebook is too aggressive with its content regulation. Recently, small steps taken by the platform to disallow events that deliberately spread harmful information about COVID-19 provoked widespread cries of censorship.

No one seems to hate Facebook more than Sen. Josh Hawley (R–Mo.), who gave the following reaction to news of the oversight committee:

This is a blatant misrepresentation of the committee’s aims, and one that in no way, shape, or form makes any sort of compelling argument for the government to break up Facebook. Indeed, the committee might cause Facebook to be less censorious, in a way that meets the approval of conservatives: After all, it includes a number of individuals whose unique backgrounds as advocates for civil and human rights might make them more inclined to permit controversial content than Facebook’s own employees would be. It’s hard to avoid the impression that Hawley objects to Facebook’s size and influence, and would rail against the company no matter what it did.

The most sensible take on the oversight committee belongs to Jesse Blumenthal, a tech policy expert at Stand Together, who writes that he is “cautiously optimistic” about the potential for the oversight committee to defend free expression. Nevertheless:

There are two interrelated issues: what rules do you set and how do you enforce them. The former is a deliberative choice, the latter is an impossible task that can be refined at the margins. Still, it is clear where Facebook stands on those questions. What is less clear is whether the new oversight board will embrace or resist this shift in values.

Indeed, only five of the initial board appointments come from the United States. The other 15 come from abroad. That is some cause for concern because even the strongest free expression advocates abroad tend to place a lower emphasis on free expression than their American counterparts.

In many discussions about the board both Facebook staff and external activists have pressed the company on geographic representation. This priority is reflected in the bylaws and regularly taken as a given. But by emphasizing geographic diversity the board risks shifting away from a uniquely American approach to free expression.

It’s possible that by delegating the most difficult moderation decisions to a third party, Facebook will effectively end up permitting the proliferation of new norms that are actually less friendly to speech than what Zuckerberg himself has envisioned. (Facebook has pledged to abide by the board’s decisions, though the bylaws give the company plenty of wiggle room.) I don’t think this is the most likely possibility, but it could happen.

Given all the opprobrium the platform has earned for its moderation decisions—which are indeed occasionally flawed, but often not nearly as contemptible as critics claim—Zuckerberg can hardly be faulted for wanting to share this responsibility with another entity. As long as that entity isn’t Congress, we should all be grateful.

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Nasdaq Continues Record Run Despite Biggest Job Loss Ever

Nasdaq Continues Record Run Despite Biggest Job Loss Ever

Nasdaq outperformed once again today…(as everything else lagged)…NOTE – like yesterday, everything got a bit jiggy in the last 20-30 mins…

…because nothing says buy stocks like over 20 million job losses!!

Source: Bloomberg

Sending the Nasdaq Composite within a few points of unchanged for 2020…

Source: Bloomberg

And Nasdaq is roaring as earnings collapse…

Source: Bloomberg

Makes you wonder if anyone is actually paying attention…

Bank stocks were battered again (despite higher yields, steeper curves)…

Source: Bloomberg

The Virus Fear trade worsened notably again…

Source: Bloomberg

HYG and LQD are giving back lots of the Fed-supported buying binge…

Source: Bloomberg

Continued dramatic corporate issuance (and a heavy Treasury calendar ahead) sent longer-dated yields higher.

Source: Bloomberg

The moves have been dramatic jerks higher this week which suggest rate-locks, not systemic selling

Source: Bloomberg

The yield curve steepened significantly today (2s30s +9bps)…

Source: Bloomberg

The dollar managed gains, pushing up towards its recent downtrend channel…

Source: Bloomberg

Cryptos were higher on the day…but it was clear there was a rotation into Bitcoin from altcoin…

Source: Bloomberg

With Bitcoin testing $9400 intraday as the halving looms…

Source: Bloomberg

Gold was thumped back below $1700…

WTI could not make its mind up but ended lower on the day – breaking its 5 day win streak…

Wholesale beef prices are screaming higher, but cattle prices plunge as supply chains break…

Source: Bloomberg

Copper and Gold are signaling stocks are way over their skis here…

Source: Bloomberg

And finally, FANG stocks have broken to a new record high… as if the world was not locked down, economies on their backs.

Source: Bloomberg

Don’t you just love buybacks!!??


Tyler Durden

Wed, 05/06/2020 – 16:01

via ZeroHedge News https://ift.tt/2yr9tMe Tyler Durden

“Land Of The Free?” – The Polarizing Politics Of A Pandemic Exposed

“Land Of The Free?” – The Polarizing Politics Of A Pandemic Exposed

America’s polarization continues to increase by the day. Political and economic divides among Democrats and Republicans predate the pandemic, but lockdowns are now catalyzing new divides and exacerbating old ones.

Before diving into the new survey, generally speaking, Midwest and Southeast states are dominated by Republican governors. Notice how most of the partial reopenings are happening in red states? 

Notice any similarities?

CNBC/Change Research Poll surveyed 3,544 voters in early May in key election battleground states, including Florida, Michigan, North Carolina, Pennsylvania, and Wisconsin, revealed 68% were “very” or “somewhat” concerned about the virus. This share of respondents fell from 76% from a similar poll that was taken mid-April. 

Here’s where the partisan split appears: “Only 39% of Republicans said they had at least somewhat serious concerns about the coronavirus disease, down from 55% last month. At the same time, 97% of Democrats said they had significant worries, nearly identical to the 98% share in mid-April.” 

The survey underscores the partisan view of how a majority of Republicans want to see the reopening of the economy while a majority of Democrats want it to be closed. Again, this is a new divide that has developed in the last month. The split is also seen on a county to the state level, where Republican governors, senators, and congressmen/women are reopening their economies. At the same time, Democratic lawmakers were more obliged to continue lockdowns. 

Respondents’ precautions and worries about reopening also reflected a partisan divide. About 12% of Democratic voters believe the pandemic is subsiding, versus 66% who say it is getting worse. As for Republicans, 69% said the virus crisis is abating, while 19% said things are still getting more serious. 

When it came to practicing good hygiene, respondents from both political parties overwhelmingly said they were washing their hands. But there was a huge split, 96% of Democrats and 67% of Republicans said they were engaging in social distancing. About 95% of Democrats and 61% of Republicans said they were avoiding crowds. When it came to sheltering at home, 87% of Democrats said they were currently doing that while 43% of Republicans answered yes. Notice a trend? Again, a massive divide between both political parties.

While Republicans are itching to reopen the economy and say pretty much everything is safe except for using airplanes, public transportation, and sporting events, Democrats countered by saying everything is unsafe.  

Drilling into the divide some more… 

About 71% of respondents said the economy is headed into a recession, including most Democrats (89%) and about half of Republicans. 

At least half of the battleground voters who participated in the poll said at least someone in their household experienced a job loss or been furloughed or experienced a reduction in pay because of the virus-related shutdowns.

Another divide is how relief money is distributed into the economy. About half of Republicans agree that elites and mega-corporations should get bailed out while only 37% of Democrats agree. About 37% of Democrats believe more funds should be directed at the middle class and small businesses while 21% of Republicans believe so. Equally splitting the money up between big corporations and households saw 24% of Republicans say yes and only 8% of Democrats say yes. 

Both political parties remain divided on direct payments to households. 

The survey provides more evidence that Americans are becoming more polarized than ever. The polarization of the reopening of the economy is split between Republicans who say let’s reopen America and Democrats who say not yet because it could spark a second coronavirus wave. 

Richard Bernstein Advisors tweeted a chart via Cornerstone Macro that details how 25 of the “green” states that have reopened, about 10 have increasing cases and 3 appear to have “budding increases. It’s pretty clear a 2nd wave is becoming the #1 risk that no one is talking about.” 

It does not matter which political party, lockdowns have decimated the middle class, with more than 30 million unemployed in six weeks. Trump supporters have been the most vocal about the economic crash with protests at state capitol buildings, demanding state officials to reopen local economies. Militia members have been seen at several of these government buildings, wielding assault-style weapons and bulletproof vests, a move that is a show of force. Society is disintegrating as a massive tug of war between one political party and the other unfolds in 2020. 

And maybe the goal of lockdowns was to transform America, literally overnight, into a welfare state, where tens of millions of people rely on the government for UBI checks, food, and are paid to stay unemployed. Elites, such as Bill Gates, have mysteriously risen to the top, projecting plans of a surveillance state and vaccines that will rescue us all. 

The stay-at-home orders were initially to flatten the pandemic curve. Now it appears to be a form of control over the masses. People are rising up, irritated by big government, and how it has crushed their lives and destroyed any economic prosperity, they had left. 

The irony here is that flip-flop Democrats (Nancy Pelosi and the elite Democratic politicians in New York) were all proclaiming earlier this year that President Trump was fearmongering about the virus while they told people to go outside and enjoy life. Now, as the president attempts to reopen the crashed economy, Democrats are the ones preventing it from reopening.

As a reminder, it is not only until a vaccine or highly effective treatment to eliminate new cases that states like Illinois will fully reopen its economy, which suggests some form of lockdowns could persist through the second half of the year as America becomes more polarized than ever. 

So, with a pandemic, crashed economy, deep polarization, record unemployment, and food shortages — it appears America is headed for social turmoil. 


Tyler Durden

Wed, 05/06/2020 – 15:50

via ZeroHedge News https://ift.tt/2xCNmSm Tyler Durden

Stop Blue Angel Flyovers Saluting COVID-19 Responders!

The country is in lockdown in response to the novel coronavirus, the federal government has voted to spend nearly $3 trillion to stabilize the economy, and over 72,000 Americans have died in the past two months.

So why not toss a truly meaningless gesture that adds rank militarism into the equation? A week ago, I watched the Navy’s Blue Angels and the Air Force’s Thunderbirds, demonstration flight squads, fly over New York City, the epicenter of the pandemic, in a “tribute” to first responders, doctors, nurses, and other people involved in treating the sick and dying. Now the Angels have made it to Texas, where the governor, Greg Abbott, is acting as an advance man for this display of aviation excellence.

Such displays are both a waste of time and money and an insult to the hard work and suffering going on. The website Gothamist tallied up various estimates of what it costs to have the Blue Angels do a flyover and came up with a pretty fat figure: as much as $450,000 per mission. Task & Purpose, a website that covers military and defense issues, reports that the Pentagon is sending the squadrons to at least 22 cities at a cost of at least $1.3 million, or “enough to purchase dozens of ventilators at, say, $20,000 a pop.” Jared Keller comments:

“Ensuring that VA medical facility staff, as well as clinical and administrative employees, have the appropriate PPE to protect their health and the health of the veterans they serve is essential to countering the pandemic,” a group of senators wrote in a letter to VA Secretary Robert Wilkie this week. Busting out the Blue Angels and Thunderbirds, while entertaining, is not.

The Pentagon dutifully contends that because the members of the squads need to train anyway, these flyovers “incur no additional cost to taxpayers.” Well, maybe it’s time to reconsider such ornamental luxuries, then. Judging by recent, profligate legislation coming out of Congress, the federal government has signaled it is willing to make current and future taxpayers bear any burden and meet any hardship when it comes to spending public dollars. The least it can do is ask the people being honored how they want money to be wasted.

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Stop Blue Angel Flyovers Saluting COVID-19 Responders!

The country is in lockdown in response to the novel coronavirus, the federal government has voted to spend nearly $3 trillion to stabilize the economy, and over 72,000 Americans have died in the past two months.

So why not toss a truly meaningless gesture that adds rank militarism into the equation? A week ago, I watched the Navy’s Blue Angels and the Air Force’s Thunderbirds, demonstration flight squads, fly over New York City, the epicenter of the pandemic, in a “tribute” to first responders, doctors, nurses, and other people involved in treating the sick and dying. Now the Angels have made it to Texas, where the governor, Greg Abbott, is acting as an advance man for this display of aviation excellence.

Such displays are both a waste of time and money and an insult to the hard work and suffering going on. The website Gothamist tallied up various estimates of what it costs to have the Blue Angels do a flyover and came up with a pretty fat figure: as much as $450,000 per mission. Task & Purpose, a website that covers military and defense issues, reports that the Pentagon is sending the squadrons to at least 22 cities at a cost of at least $1.3 million, or “enough to purchase dozens of ventilators at, say, $20,000 a pop.” Jared Keller comments:

“Ensuring that VA medical facility staff, as well as clinical and administrative employees, have the appropriate PPE to protect their health and the health of the veterans they serve is essential to countering the pandemic,” a group of senators wrote in a letter to VA Secretary Robert Wilkie this week. Busting out the Blue Angels and Thunderbirds, while entertaining, is not.

The Pentagon dutifully contends that because the members of the squads need to train anyway, these flyovers “incur no additional cost to taxpayers.” Well, maybe it’s time to reconsider such ornamental luxuries, then. Judging by recent, profligate legislation coming out of Congress, the federal government has signaled it is willing to make current and future taxpayers bear any burden and meet any hardship when it comes to spending public dollars. The least it can do is ask the people being honored how they want money to be wasted.

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“Extraordinarily Uncertain” Indeed

“Extraordinarily Uncertain” Indeed

Authored by Michael Lebowitz and Jack Scott via RealInvestmentAdvice.com,

On April 29, 2020, Jerome Powell said: “both the depth and duration of the economic downturn are extraordinarily uncertain.”

We are often critical of Federal Reserve policy and contradictory economic jargon coming from Fed presidents and governors.  However, to our amazement, Fed Chairman Jerome Powell surprised us with a moment of clarity.

No truer words were ever spoken.

His statement is so obvious, it is profound. Yet, if you only follow the financial media or much of social media, you might think his statement hyperbolic. The future, according to so many “experts”, is certain.

In case you haven’t heard, the economy will gradually re-open, and, in time, everyone will go back to work and resume the same lives and consumption patterns they were leading in 2019.

This reassuring picture of economic resurgence and a return to normal is simply a matter of harnessing the virus.  We, also hope, the confidence exuding from the experts, being paraded around the clock on CNBC and Bloomberg, turns out to be correct.

Think Outside of the Box

Wealth is not built, accumulated, or retained on hope. Building wealth comes from analytical rigor and a strong knowledge of data, facts, and history. Building wealth comes from avoiding debilitating losses, and it is built by thinking for yourself.

There are no stories in the history of pandemics causing global economic shutdowns at times with extreme debt levels and eye-watering asset valuations. There is no relevant historical guidance for what may happen next.

However, we can evaluate various events throughout history, study their intricacies, and use them to arrive at a range of potential outcomes under current circumstances. What we learn by doing so, and what Chairman Powell reminds us, is that the future is far from certain.

Dare we say, extraordinarily uncertain?

Nth Order Effects

Economic devastation will not heal itself in months or quarters and disappear, even if the virus does. The implications of bankruptcy and joblessness and a host of other financial, psychological, and societal issues dictate the path going forward.

Monetary and fiscal stimulus will ease some of the pain today, but at a cost. The pandemic has scarred people in ways that Wall Street and the media do not understand.

It is hard enough to forecast the first-order effects of the virus and its economic impact. Now consider the impossibility of understanding the myriad of second and third-order effects.

Anticipating these effects is like solving a Rubik’s Cube. If you twist a row to the left, what does that do to the other five sides? But that analogy is too simple. Make the cube an octagon and add ten more rows and columns.  Now add a series of rules, so each square is a chess piece and is limited in how it can be twisted.

To see a few shifts of the cube and think we can foretell the future is misleading at best and more akin to delusion.

Unforeseen Effects

As we wrote this article, President Trump announced that the China Trade Deal is now secondary to what China did with the virus. Treasury Secretary Mnuchin followed that by warning, there would be “very significant consequences” if China does not make good on the trade agreement. The saber-rattling re-opens the following considerations:

  • Trade War

  • Tariffs

  • De-globalization

We are witnessing a classic second-order effect, and but one example, that no one was planning for a few weeks ago.

The previous trade war happened when the U.S. and global economy were healthy. Despite the economy, trade barbs between Chairman Xi and President Trump took the S&P down 20%.

So now, the U.S. is engaged in a war on two fronts. One with another global power and one with a microscopic enemy. The list of possible second-order effects from these two issues is extremely complicated and unpredictable. Further, second-order effects often create third and fourth-order effects, and so on.  

Buy and Ignore

Stock prices and valuations are a function of the economy but are quite often trumped by confidence or lack thereof.

Despite depression-like GDP and unemployment data, which will undoubtedly be an anvil on corporate earnings, the S&P 500 has recently staged an eye-popping rally. April, in fact, witnessed the largest monthly percentage gain in over 30 years.

The S&P 500 is still down about 15% year to date, so some concern remains priced into asset prices.

However, consider that despite the selloff, valuations remain near record levels and, in some cases, are even higher today. In other words, for all the uncertainty, the market has not corrected at all.

Investors must be extremely confident that today’s problems will be fleeting and will not have significant lasting effects.

Summary

Extraordinary is defined as “very unusual or remarkable.”

Chairman Powell and the Fed, who tend to sugar-coat issues and take a cup-half-full approach, are warning us. What we are witnessing and experiencing is rare and, in many respects, without comparison.

No one knows how the future plays out geopolitically or economically, but we are experiencing a paradigm shift. Things have changed, and are changing, quickly. The “experts” are only experts at concocting compelling narratives. The ones who talk the most were cheerleaders during the dot-com bubble and never saw the onset of the great financial crisis. They are parrots repeating smart-sounding but empty phrases.

Many economists and investment strategists continue to use the lens of the past ten years in evaluating economies, markets, and investment ideas. They do not yet grasp that the next ten years may not be recognizable from the last ten years.

Do not assume that anyone, ourselves included, has the answers. Investment management is a dynamic process that should hinge first on sound risk management. As the Rubik Cube turns and the chess pieces move, we learn more, allowing us to adjust and change our minds.

Today’s complexities will reward those who manage risk well.


Tyler Durden

Wed, 05/06/2020 – 15:35

via ZeroHedge News https://ift.tt/2yA0Qib Tyler Durden

Coronavirus Has Devastated Uber and Lyft’s Business. Now California Is Suing Them.

Things are going from bad to worse for ridesharing companies during the coronavirus pandemic. Business is way down, while legal troubles continue to mount.

On Tuesday, California Attorney General Xavier Becerra along with the city attorneys of Los Angeles, San Francisco, and San Diego, filed a lawsuit against Uber and Lyft. Their complaint accuses the companies of misclassifying their drivers as independent contractors, not employees, in violation of the state’s famous gig economy law, Assembly Bill 5 (A.B. 5).

The lawsuit is the latest flashpoint in rideshare companies’ long battle with state and local governments over what rules should govern their relationship with their drivers.

“Californians who drive for Uber and Lyft lack basic worker protections—from paid sick leave to the right to overtime pay,” Becerra said in a statement. “Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences.”

Tuesday’s lawsuit accuses the two companies of a litany of local and state labor code violations stemming from their alleged misclassification of drivers as independent contractors, including not paying minimum wage, not paying overtime, not offering sick leave and meal breaks, and not paying into the state’s unemployment and disability insurance funds.

“We will contest this action in court, while at the same time pushing to raise the standard of independent work for drivers in California,” an Uber spokesperson told The New York Times, promising to fight the lawsuit.

“We are looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable healthcare and other benefits is more important than ever,” Lyft said in a more conciliatory statement to Reason.

California’s A.B. 5, which codified an earlier state supreme court decision, went into effect in January 2020. It lays out three conditions that a worker must meet to be considered an independent contractor. This three-part test, known as the ABC test, requires a worker to be free from “control or direction” in offering their services, be doing work outside the normal scope of business of the entity hiring them, and be customarily engaged in the kind of work they are being hired to do.

Workers who fail even one leg of this test are considered employees, a status that entitles them to certain benefits and protections while also imposing a long list of regulations on their relationship with their employer.

Rideshare companies have employed a range of arguments to avoid having to classify their drivers as employees, which they say would be both incredibly costly and destroy the flexible work arrangements that make these app-based services appealing to many drivers.

Bloomberg reports that reclassifying drivers as employees would raise rideshare companies’ costs by as much as 20 percent.

The companies insist that their status as tech firms who only connect drivers and riders, but who don’t tell drivers when or where they have to work, means those offering rides on their platform don’t qualify as employees under the ABC test.

In addition, Uber and Lyft have sued to stop A.B. 5 from going into effect. The two companies have also been pouring money into a state ballot initiative that would explicitly exempt their drivers from the law.

In their lawsuit, Becerra et al. argue that Lyft and Uber are fundamentally transportation—not tech—companies, meaning drivers are performing work that is core to their business, and are therefore their employees and entitled to all the benefits that status entails.

The passage and implementation of A.B. 5 have been rife with controversy as everyone from porn stars to truckers have pointed out ways that their reclassification as employees has cost them valued flexibility and income.

Trying to forcibly reclassify rideshare drivers as employees now will likely be even more disruptive given the dire circumstances rideshare companies find themselves in due to COVID-19.

One analytics firm estimates spending on rideshare services has fallen 83 percent during the pandemic, reports the Times. Lyft just announced that it is laying off 17 percent of its workforce. Uber is reportedly considering doing the same.

If Becerra’s lawsuit is successful, he might end up winning employment protections for drivers, while putting their newly classified employers out of business.

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