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Many Majority-Black Cities Excluded From Fed’s Municipal Liquidity Facility

Many Majority-Black Cities Excluded From Fed’s Municipal Liquidity Facility

The Federal Reserve’s Municipal Liquidity Facility (MLF) will provide $500 billion in loans to states and cities during these challenging economic times. However, there’s a twist, and the program will exclude a majority of cities that have high concentrations of African Americans.

According to the Brookings Institution, MLF’s proposed eligibility criteria for cities and counties is “disturbing:” 

“As initially proposed, the Fed’s MLF facility will support lending to U.S. states and the District of Columbia, U.S. cities with a population exceeding one million residents and U.S. counties with a population exceeding two million residents. The population requirements mean that, unless the Fed revises the eligibility criteria, only ten cities and fifteen counties across the country have direct access to the MLF.

In particular, none of the thirty-five most African American cities in America meets the Fed’s criteria for direct assistance. They will be forced to go through their state government and may be limited by that state’s ability to access funds compounded by the state politics.

As a result of both urban/rural and racial politics, many of the largest metropolitan areas lack single jurisdictions that meet the Fed’s criteria for assistance. The entire metropolitan statistical areas of Atlanta, Baltimore, Boston, Pittsburgh, and Detroit all fail this test. Not a single city or county in Ohio, Florida, or New Jersey (America’s densest state) qualify.”

Here’s the U.S. Census Bureau’s 2016 breakdown of African American regional distribution across the U.S. – many of these folks are situated in the South and Northeast.

“We are not suggesting that the Fed had racist intentions when setting this limit. To the contrary, everything suggests the Fed was just acting quickly in unprecedented area – the Fed has long objected to aiding municipal and state governments for good reason. Quick actions can have unintended consequences, and the Fed has time to fix this one,” the Brookings authors wrote.

Bloomberg notes, “lending may be needed in some black communities that are more at risk from a deep economic slowdown.”

Many of these areas have already suffered widespread education, health, and wealth inequalities over the last several decades. The Fed is clearly showing limited interest in the working-class poor as it bails out Wall Street for the umpteenth time.

Currently, 25 cities and counties are eligible for MLF. The Fed could eliminate population limits and loosen up restrictions to prevent African American communities from being excluded.

We noted earlier this month, residents in a predominantly African American community in Baltimore City aren’t sticking around hoping for Fed money to blanket their collapsing local economy – many of these folks ‘stormed’ a bank – withdrawing as much money as they could.

The Fed has some explaining to do, or at least change the criteria rules of the program to include regions that have large concentrations of African Americans. If these communities aren’t supported, then President Trump’s lowest black unemployment rates would likely be reversed… 


Tyler Durden

Wed, 04/15/2020 – 14:20

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

From the Cholera Riots to the Coronavirus Revolts

As a pandemic swept through Europe in 1831, a riot broke out in Königsberg. “Groups of people who did not agree with the cholera regulations assembled [on July 28] for the funeral of a journeyman carpenter,” the Prussian State Gazette reported. After refusing a request to disperse, the dissenters “invaded the Police building and threw files and papers into the street. The military fired on the crowd and eight people were killed.” The newspaper attributed the revolt to “a general misunderstanding of the interpretation of the measures against the cholera.”

The historian Richard S. Ross offers a more detailed account in his 2015 book Contagion in Prussia, 1831. The rioters believed that the carpenter had died not from cholera but from a medication prescribed to treat him; they also chafed at the quarantines and other cholera rules that interfered with their ability to go about their lives. Many of them also believed a conspiracy theory in which the disease itself was a government plot to cull the lower classes. By the chief of police’s account, the rioters shouted that “the doctors are poisoning the poor, the police drag them to the lazaret and close up their houses, saying they have to go because they are poor.” By the end of the upheaval, there had been looting, armed clashes in the streets, and hundreds of arrests. Ross suspects there was more method to the crowds’ actions than you might conclude from contemporaneous accounts of an irrational mob. When they stormed the police building, he notes, they took the opportunity to destroy “police records and other papers concerned with cholera and quarantine measures.” (With a nod to that conspiracy theory, the rioters also chanted “We want the cholera germs.”)

This wasn’t unusual. Similar cholera riots broke out across Europe that year, and still more erupted periodically for decades afterward. As you’d expect, these took somewhat different forms in different places. In Russia, they prompted a brutally repressive response; in England, such ferocity was rare. Italy’s cholera uprisings intersected with the revolt against the Bourbon monarchy; in France, where a relatively liberal government had come to power in 1830, the upheaval got a boost instead from the political right. The left-leaning historian Samuel K. Cohn notes these variations, and others, in a 2017 article (squeamishly titled “Cholera revolts: a class struggle we may not like“) for the journal Social History. But overall, he reports, the riots had more similarities than differences: “the content and character of the conspirac[y theories], divisions by social class, and the targets of rioters’ wrath were uncannily similar.”

The more high-handed the ruling classes were, the more likely they were to be targeted by rumors and revolt. The riots persisted longest, Cohn writes, “where elites continued to belittle the supposed ‘superstitions’ of villagers, minorities, and the poor, violated their burial customs and religious beliefs, and imposed stringent anti-cholera regulations even after most of them had been proven to be ineffectual. Moreover, ruling elites in these places addressed popular resistance with military force and brutal repression. By contrast, distrust and rumours of purposeful poisoning abated where elite attitudes and impositions changed.” As Königsberg and other Prussian cities were rioting in 1831, the authorities in Berlin loosened the local cholera regulations; both the government and middle-class charities organized relief efforts. Berlin did not riot.

The violence of the 19th century cholera revolts makes a striking contrast with the upheaval inspired by the COVID-19 pandemic. The unrest in America hasn’t been entirely nonviolent—more than one prison riot has broken out—but in the un-incarcerated sectors of the U.S., the resistance we’ve seen so far has looked more like civil disobedience. In Idaho, Ammon Bundy organized an illicit Easter service. In North Carolina, more than 100 marchers paraded through downtown Raleigh; another group hopes to do the same this Friday in Carolina Beach. In Michigan, protesters convoyed to Lansing to protest the state’s unusually restrictive stay-at-home order. On a less political note, speakeasies have surfaced in New York, in San Francisco, and elsewhere.

The authorities have responded haphazardly to such defiance, sometimes trying to crack down and sometimes not. There is a tension at the heart of the government’s coronavirus response: The same public health concerns that inspired these new rules have given us good reasons to roll back a lot of the state’s traditional enforcement mechanisms.

Start with the biggest weapon in the authorities’ arsenal: incarceration. Prisons and jails have been hotspots for spreading the disease, both behind bars and in communities located nearby. Some jurisdictions have tried to ease the crowding by releasing prisoners who are elderly or were convicted of nonviolent crimes. If you’re doing that, it doesn’t make much sense to simultaneously fill the jails with nonviolent lockdown scofflaws—or even to arrest them, given that it’s hard to book someone while social-distancing. (That last issue is surely running through a lot of officers’ minds right now, as the coronavirus infects police departments. At one point in New York, nearly 20 percent of the police department’s uniformed workforce was out sick. In Detroit, the police chief just got through a bout with COVID-19—and both the captain of the homicide department and the commander of the county jail are dead.)

What other tools are in the enforcers’ box? One is to impose fines. That doesn’t pose direct public health problems, but it brushes up uneasily against another COVID-era reform impulse: the effort to suspend people’s debts while the economy has ground to a halt. Some governments have turned to roadblocks and checkpoints—blunt tools that can certainly be effective in reducing people’s movements, but which may have unintended consequences too. (“With checkpoints looming,” writes Phil Magness of the American Institute for Economic Research, “some people may start to weigh the risk of being stuck there for a long time, of being cut off from family and loved ones in other states, or of having to deal with increasingly draconian police enforcement in their own home towns.” This could prompt them to travel while they still can, exactly the opposite of what the checkpoints were supposed to accomplish.) If the cops have trouble cracking down on a business’s patrons, they still might crack down on the business itself; in Cincinnati, police simply boarded up a bar that refused to cooperate with a shutdown order. That may work when you’re handling a few holdouts with fixed addresses, but it’s unclear how well it would scale.

And then there are the departments that send drones to try to shame people into compliance. The intrusiveness of this tactic shouldn’t blind you to the fact that it’s ultimately a form of persuasion rather than coercion. (Whether it’s an effective form of persuasion is another matter.) That may be a deliberate choice. As the Financial Times reports, in a story covering the approaches different police forces have taken to the virus in Britain, many officials have decided that “a more consensual approach…is likely to prove more effective at containing the disease.”

The Duke historian Gabriel Rosenberg has suggested an interesting parallel between the current pandemic and the history of controlling the epidemics that afflict livestock. When the federal government created the Bureau of Animal Industry in 1884, the new agency was given extensive powers to enter private property and to seize infected or exposed animals. But the people running the bureau quickly realized that a purely punitive approach could backfire: Farmers “would do everything they could to conceal evidence of illness, to quietly treat sick animals themselves, to avoid public veterinary health officials and finally to stealthily transport their stock out of the quarantine zones and sell them in other markets. Rather than containing illness, such responses would spread disease further and could accelerate small outbreaks into devastating pandemics.” So the government adopted an additional tactic: It started compensating farmers for their losses. Rosenberg suggests that the authorities do something similar with human quarantines: If you’re telling people to stop plying their trades, pay them to stay home.

That makes more sense than the repressive approach: The government may be bad at many things, but no one doubts its ability to pay people not to work. Whether it will direct those payments appropriately is a different question. To judge from the contents of the CARES Act, and from the virtually unaccountable way the feds have been distributing that money, most of the relief funds will end up in the hands of whoever has the best lobbyists, not whoever has the greatest needs.

But Rosenberg’s core point is valid. “Quarantines are rarely effective if they do not encourage voluntary cooperation from potentially exposed populations,” he writes. “If quarantines establish an oppositional relationship between public health authorities and exposed populations, they often fail.” And sometimes they do more than fail. Just ask the burghers of Königsberg.

from Latest – Reason.com https://ift.tt/2XED7ri
via IFTTT

From the Cholera Riots to the Coronavirus Revolts

As a pandemic swept through Europe in 1831, a riot broke out in Königsberg. “Groups of people who did not agree with the cholera regulations assembled [on July 28] for the funeral of a journeyman carpenter,” the Prussian State Gazette reported. After refusing a request to disperse, the dissenters “invaded the Police building and threw files and papers into the street. The military fired on the crowd and eight people were killed.” The newspaper attributed the revolt to “a general misunderstanding of the interpretation of the measures against the cholera.”

The historian Richard S. Ross offers a more detailed account in his 2015 book Contagion in Prussia, 1831. The rioters believed that the carpenter had died not from cholera but from a medication prescribed to treat him; they also chafed at the quarantines and other cholera rules that interfered with their ability to go about their lives. Many of them also believed a conspiracy theory in which the disease itself was a government plot to cull the lower classes. By the chief of police’s account, the rioters shouted that “the doctors are poisoning the poor, the police drag them to the lazaret and close up their houses, saying they have to go because they are poor.” By the end of the upheaval, there had been looting, armed clashes in the streets, and hundreds of arrests. Ross suspects there was more method to the crowds’ actions than you might conclude from contemporaneous accounts of an irrational mob. When they stormed the police building, he notes, they took the opportunity to destroy “police records and other papers concerned with cholera and quarantine measures.” (With a nod to that conspiracy theory, the rioters also chanted “We want the cholera germs.”)

This wasn’t unusual. Similar cholera riots broke out across Europe that year, and still more erupted periodically for decades afterward. As you’d expect, these took somewhat different forms in different places. In Russia, they prompted a brutally repressive response; in England, such ferocity was rare. Italy’s cholera uprisings intersected with the revolt against the Bourbon monarchy; in France, where a relatively liberal government had come to power in 1830, the upheaval got a boost instead from the political right. The left-leaning historian Samuel K. Cohn notes these variations, and others, in a 2017 article (squeamishly titled “Cholera revolts: a class struggle we may not like“) for the journal Social History. But overall, he reports, the riots had more similarities than differences: “the content and character of the conspirac[y theories], divisions by social class, and the targets of rioters’ wrath were uncannily similar.”

The more high-handed the ruling classes were, the more likely they were to be targeted by rumors and revolt. The riots persisted longest, Cohn writes, “where elites continued to belittle the supposed ‘superstitions’ of villagers, minorities, and the poor, violated their burial customs and religious beliefs, and imposed stringent anti-cholera regulations even after most of them had been proven to be ineffectual. Moreover, ruling elites in these places addressed popular resistance with military force and brutal repression. By contrast, distrust and rumours of purposeful poisoning abated where elite attitudes and impositions changed.” As Königsberg and other Prussian cities were rioting in 1831, the authorities in Berlin loosened the local cholera regulations; both the government and middle-class charities organized relief efforts. Berlin did not riot.

The violence of the 19th century cholera revolts makes a striking contrast with the upheaval inspired by the COVID-19 pandemic. The unrest in America hasn’t been entirely nonviolent—more than one prison riot has broken out—but in the un-incarcerated sectors of the U.S., the resistance we’ve seen so far has looked more like civil disobedience. In Idaho, Ammon Bundy organized an illicit Easter service. In North Carolina, more than 100 marchers paraded through downtown Raleigh; another group hopes to do the same this Friday in Carolina Beach. In Michigan, protesters convoyed to Lansing to protest the state’s unusually restrictive stay-at-home order. On a less political note, speakeasies have surfaced in New York, in San Francisco, and elsewhere.

The authorities have responded haphazardly to such defiance, sometimes trying to crack down and sometimes not. There is a tension at the heart of the government’s coronavirus response: The same public health concerns that inspired these new rules have given us good reasons to roll back a lot of the state’s traditional enforcement mechanisms.

Start with the biggest weapon in the authorities’ arsenal: incarceration. Prisons and jails have been hotspots for spreading the disease, both behind bars and in communities located nearby. Some jurisdictions have tried to ease the crowding by releasing prisoners who are elderly or were convicted of nonviolent crimes. If you’re doing that, it doesn’t make much sense to simultaneously fill the jails with nonviolent lockdown scofflaws—or even to arrest them, given that it’s hard to book someone while social-distancing. (That last issue is surely running through a lot of officers’ minds right now, as the coronavirus infects police departments. At one point in New York, nearly 20 percent of the police department’s uniformed workforce was out sick. In Detroit, the police chief just got through a bout with COVID-19—and both the captain of the homicide department and the commander of the county jail are dead.)

What other tools are in the enforcers’ box? One is to impose fines. That doesn’t pose direct public health problems, but it brushes up uneasily against another COVID-era reform impulse: the effort to suspend people’s debts while the economy has ground to a halt. Some governments have turned to roadblocks and checkpoints—blunt tools that can certainly be effective in reducing people’s movements, but which may have unintended consequences too. (“With checkpoints looming,” writes Phil Magness of the American Institute for Economic Research, “some people may start to weigh the risk of being stuck there for a long time, of being cut off from family and loved ones in other states, or of having to deal with increasingly draconian police enforcement in their own home towns.” This could prompt them to travel while they still can, exactly the opposite of what the checkpoints were supposed to accomplish.) If the cops have trouble cracking down on a business’s patrons, they still might crack down on the business itself; in Cincinnati, police simply boarded up a bar that refused to cooperate with a shutdown order. That may work when you’re handling a few holdouts with fixed addresses, but it’s unclear how well it would scale.

And then there are the departments that send drones to try to shame people into compliance. The intrusiveness of this tactic shouldn’t blind you to the fact that it’s ultimately a form of persuasion rather than coercion. (Whether it’s an effective form of persuasion is another matter.) That may be a deliberate choice. As the Financial Times reports, in a story covering the approaches different police forces have taken to the virus in Britain, many officials have decided that “a more consensual approach…is likely to prove more effective at containing the disease.”

The Duke historian Gabriel Rosenberg has suggested an interesting parallel between the current pandemic and the history of controlling the epidemics that afflict livestock. When the federal government created the Bureau of Animal Industry in 1884, the new agency was given extensive powers to enter private property and to seize infected or exposed animals. But the people running the bureau quickly realized that a purely punitive approach could backfire: Farmers “would do everything they could to conceal evidence of illness, to quietly treat sick animals themselves, to avoid public veterinary health officials and finally to stealthily transport their stock out of the quarantine zones and sell them in other markets. Rather than containing illness, such responses would spread disease further and could accelerate small outbreaks into devastating pandemics.” So the government adopted an additional tactic: It started compensating farmers for their losses. Rosenberg suggests that the authorities do something similar with human quarantines: If you’re telling people to stop plying their trades, pay them to stay home.

That makes more sense than the repressive approach: The government may be bad at many things, but no one doubts its ability to pay people not to work. Whether it will direct those payments appropriately is a different question. To judge from the contents of the CARES Act, and from the virtually unaccountable way the feds have been distributing that money, most of the relief funds will end up in the hands of whoever has the best lobbyists, not whoever has the greatest needs.

But Rosenberg’s core point is valid. “Quarantines are rarely effective if they do not encourage voluntary cooperation from potentially exposed populations,” he writes. “If quarantines establish an oppositional relationship between public health authorities and exposed populations, they often fail.” And sometimes they do more than fail. Just ask the burghers of Königsberg.

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via IFTTT

5 Reasons Why The “V-Shaped Recovery” Is A Fantasy

5 Reasons Why The “V-Shaped Recovery” Is A Fantasy

Authored by Simon Black via SovereignMan.com,

The big story over the last few days has been ‘reopening the economy’.

And that’s certainly a nice idea. Countless people have been living in despair over the last month, and the prospect of everything going back to normal soon feels really great.

I certainly hope for the best.

But a couple of weeks ago I quoted James Stockdale– one of the toughest men who ever lived – talking abut how he cultivated the mental strength to survive 7 torturous years as a Prisoner of War in North Vietnam.

And I thought it would be relevant to re-post his advice here.

When asked, “Who didn’t make it [out of the POW camp],” Stockdale replied,

Oh that’s easy. The optimists. They were the ones who said, ‘we’re going to be out by Christmas.’ And then Christmas would come, and Christmas would go.

And then they’d say, ‘We’re going to be out by Easter.’ And then Easter would come, and Easter would go. And then Thanksgiving. And then it would be Christmas again.

And they died of a broken heart.

“This is a very important lesson,” Stockdale continued. “You must never confuse faith that you will prevail in the end—which you can never afford to lose– with the discipline to confront the most brutal facts of your current reality, whatever they might be.

There’s clearly been a lot of positive data lately showing that the growth rate of the virus seems to be slowing, and that the mortality rate is lower than originally estimated.

This is all good news.

But we’re seeing a lot of ‘Stockdale optimists’ right now who only look at the good news and refuse to confront brutal facts.

Many of the world’s most prominent financial markets have been bitten by Stockdale Optimism; stocks, for example, are way up because investors believe everything is about to return to normal and the economy will experience a ‘V-shaped recovery’.

(This means that the economy will bounce back as quickly and aggressively as it stalled.)

But anyone with the discipline and emotional courage to confront the most brutal facts of our current reality realizes that ‘normal’ is still far away.

Here are a few things to consider:

1) Hardcore PTSD

We’re now living in a world where hugging is considered an act of biological terrorism.

It would be silly to think that everyone will come out of hiding and go back to normal… packing bars, airplanes, shopping malls, elevators, offices, etc. like we used to do.

There’s going to be some serious, worldwide Post-Traumatic Stress Disorder. Millions of people will permanently change their behavior, reduce consumption, stay home, and avoid contact with others.

And this is clearly going to have a lingering economic impact.

2) RIP Small Business

Countless small businesses ‘temporarily’ closed last month. Many of them will never reopen.

Others have had to make deep cuts and lay off a number of employees in order to survive.

But even when economic conditions finally start to normalize, many small business owners will realize, “Gee I didn’t actually need some of those workers.”

They’ll do the math and determine that the business can be more profitable and efficient without all the employees. And some of those temporary job cuts will become permanent.

3) Big business downsizing

Ditto for big businesses. A typical medium-sized or large company can lay off at least 10% of its workforce with minimal impact to operations. Nearly everyone has fat to trim.

And so a lot of big companies who have laid off their workers will not hire everyone back.

Moreover, big companies now have an opportunity to shrink their overhead further by reducing their office footprints.

Executives now realize that many employees can work from home. And frankly, many employees prefer it.

This will likely reduce demand for office space, causing a steady increase in commercial property vacancy rates.

Even Disney’s Chairman Bob Iger recently said his company will reopen “with less office space.”

4) Retail was dying before this started. . .

Let’s be honest– retail stores were already dying before this pandemic; the entire industry is being swallowed up by Amazon.

A number of major retail chains (Sears, Macy’s, Pier 1 Imports, etc.) filed for bankruptcy well before the pandemic started. Plenty of others were on the ropes.

And now with so many places on lockdown, many of them simply will not survive.

Between the continued rise of e-commerce, the lockdown consequences, and the lingering PTSD that could keep millions of people from visiting stores, physical retail is in pretty serious trouble.

Retail makes up roughly 10% of the work force in the US alone (according to estimates from the Aspen Institute), so it’s not hard to imagine a few million job losses just from this one sector… not to mention the impact to the real estate market of so many shops and malls going under.

5) Additional outbreaks

While the social distancing and lockdown measures have reduced the rate of contagion, it’s important to remember that some places (like Hong Kong and Singapore) already experienced a second wave of outbreaks after they loosened their restrictions.

Yet the ‘V-shaped recovery’ fantasy completely ignores this very real possibility… and the huge economic consequences it would have.

In fact, any of the five points I mentioned above could have a nasty impact– to the unemployment rate, financial markets, GDP, real estate prices, corporate earnings, government deficits, etc.

But they’re all being ignored.

The prevailing narrative right now is that we’re out of the woods and the economy is about to come roaring back.

And that would certainly be nice.

Staying positive is great. Like Stockdale said, we know that we will prevail in the end.

But it’s important to be realistic– to confront the most brutal facts of our reality. And our reality is that the consequences of this pandemic could last much longer than many people are choosing to believe.

*  *  *

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.


Tyler Durden

Wed, 04/15/2020 – 14:05

via ZeroHedge News https://ift.tt/2XBEQ0v Tyler Durden

Small Business Bailout Fund To Run Out Of Money Today

Small Business Bailout Fund To Run Out Of Money Today

With millions in small business owners still waiting for their bank to get back to them on the status of their business continuity loan/grant application, it appears that some applicants have been more equal than others, and according to the Journal, the small-business loan program also known as the Paycheck Protection Program – which now finds itself at the center of a clash between congressional Democrats and Republicans – is expected to run out of money later Wednesday.

Negotiations between Congress and the White House, which reportedly resumed Wednesday over replenishing the small-business loan program designed to support businesses hit by the coronavirus pandemic, will take on a new urgency after the program is expected to exhaust its initial allocation of $350 billion as early as the close of business today. As of Wednesday morning, the Small Business Administration said it had approved about 1.3 million applications, totaling more than $289 billion in loans.

While both Democrats and Republicans want to add $250 billion to the small-business aid program, the two parties have been sparring for days over whether to add restrictions to the funds. As reported previously, Democrats want to expand access to the loans as well as include more money for hospitals, food assistance and state and local governments. Republicans, on the other hand, said they want to keep the bill focused on increasing small-business aid and defer other funding debates until the next, broader legislation is crafted.

And so the political buck-passing continues: top Senate Democrate Chuck Schumer told reporters he had spoken with Treasury Secretary Steven Mnuchin Wednesday morning and that both House and Senate Democratic staff were expected to meet with officials from Mr. Mnuchin’s office later in the day.

“We see no reason why we can’t come to an agreement,” Mr. Schumer said. “We Democrats believe we need more money for small businesses, but we need it to go to the people who are under banked and underserved.”

As the WSJ added, the discussions were the first signs of progress this week, but it remains uncertain whether congressional leaders and President Trump will be able to reach an agreement by week’s end. Both chambers are scheduled to hold brief sessions later this week.

Meanwhile, the megacorportions are already benefitting from the surge in stock prices, which allows them to sell stock with at levels which rapidly are approaching all time highs. Assuming, of course, companies would sell stock (we know they would much rather buy it back), instead of simply waiting for their grants – which bar them from firing workers for a few more months – to hit.

And so once again the wealthy and politically connected win, as for everyone else…


Tyler Durden

Wed, 04/15/2020 – 13:56

via ZeroHedge News https://ift.tt/2RHK2fw Tyler Durden

Will The S&P Retest The Lows? It Depends On Whether This “Battle Line” Is Breached

Will The S&P Retest The Lows? It Depends On Whether This “Battle Line” Is Breached

Until today’s catastrophic economic data – which saw industrial production, housing, retail sales, and New York manufacturing all plunging at or near record levels and which sent stocks sliding – some Wall Street strategists had become confident that the worst of the crisis is behind us and the market lows are in, if for now other reason than last week’s 10% torrid rally in the S&P, almost as if those retail traders who were caught in the most vicious short squeeze in history “knew” something instead of merely scrambling to close out losing positions.

Whatever the reason, however, last week’s rally of 12.10% on the SPX was the strongest since October 1974 using data back to 1950. And while price always makes the narrative, it is worth noting that weekly rallies of 10% or more from 1974 and 2009 came on the moves off of the lows, while the 2008 rallies were part of a larger bottoming process that saw undercuts of the lows. Yet one reason why in this case the recent torrid rallies may not be the full story is because as Bank of America’s chief technician, Stephen Suttmeier writes, “the two weekly rallies of 10% or more over the last three weeks resemble the two 10% up weeks from October and November 2008, which were part of a bottoming process with the ultimate low not seen until March 2009.”

Some more bad news for the optimistic bottom callers: since 1928, the SPX has had 18 week-over-week rallies of at least 10%. Last week was the 8th strongest week for the SPX. These 10% rallies can occur as part of a bottoming process, but as BofA notes,  do not mark the ultimate low most of the time. While the forward returns after a 10% up week are strong going out to nine and 12 months, 13 out of the prior 16 observations (many of which were during the Great Depression) experienced drawdowns. Furthermore, ten out of the 16 signals prior to 2020 saw double digit drawdowns after the signal and only three did not experience a drawdown. Average and median declines into the weekly closing lows after 10% up weeks were -20.35% and -18.94%, respectively.

Of course, with just the big 3 central banks injecting a record $2.8 trillion since March (and much more coming) it is safe to say that this time will be different.

And while the simplest “investing” decision at this point is to simply follow what the Fed does, as Blackrock has decided to do for the foreseeable future, for those who instead believe that the future can be predicted by looking at charts, BofA’s Suttmeier writes that while the SPX tests 50% retracement, a major clash will emerge as the S&P hits big resistance around 2800-3027.

As Suttmeier explains, after a second 90% up day on the rally from late March pushed the S&P 500 above its 200-week moving average (MA) near 2652, the next target is resistance at 2792-2880 (50% of the 2020 decline and 100-week MA). While the SPX achieved this level last week, the 2800-3027 area, which was where the S&P 500 built its bullish triangle ahead of the 4Q breakout and rally into mid 1Q 2020, it is the” big battle line resistance that may offer a powerful source of supply as those who bought the SPX in late 2019 seek to get out of the market closer to even.”

And while stocks will have big trouble breaking out above the major resistance zone, the question remains whether the SPX will or will not retest the lows. The answer, according to Suttmeier, is that if investors sell into the 2800 to 3027 resistance  zone, “the potential for a retracement of the 20%+ rally from 3/23 increases.”

The best case would be that the SPX holds its 200-week MA near 2650 (4% from the 4/13 close), but a retest or undercut down to the December 2018 and March 2020 lows near 2346-2191 (15-20% from the 4/13 close) and even to the 2016 Presidential Election and UK Brexit vote lows in the 2083-1991 (24-28% from 4/13 close) is not ruled out. Tactical supports: 2571-2522 (4/6 upside gap), 2450 (chart support) and 2344-2300 (upside price gap from the 90% up day on 3/24)d

Of course, we live in a world where fthe Fed has just made sure that undamentals no longer matter; so if anyone out there actually believes that some squiggles on a chart can launch the next war with the US central planners, more power to them.


Tyler Durden

Wed, 04/15/2020 – 13:50

via ZeroHedge News https://ift.tt/34Erz8S Tyler Durden

How China Corrupted the World Health Organization’s Response to COVID-19

The World Health Organization (WHO) put out questionable guidance on how to deal with the coronavirus, it was slow to communicate the magnitude of the threat, and it whitewashed the Chinese government’s early handling of the crisis.

President Donald Trump, who put a hold on WHO funding yesterday, isn’t absolved of his own failures in confronting COVID-19. But there’s no doubt that the WHO’s response destroyed much of its credibility, damaged the field of public health, and failed to contain the pandemic.

The WHO’s actions in response to COVID-19, in part, stemmed from its overly deferential stance towards China, which is its second-biggest financial contributor among 194 member states.

“A phenomenal collective action by the people of China to this response” is how Bruce Aylward, head of the joint WHO-China mission, described China’s handling of the outbreak on February 25, 2020, a day after WHO Director-General Tedros Adhanom Ghebreyesus praised China’s “rapid response,” which he claimed “changed the course of this epidemic.”

The WHO also praised China for releasing the virus’s genome while neglecting to mention that it took them at least 17 days to do so. It didn’t report human-to-human transmission until late January—even though Chinese doctors suspected it at least a month earlier. Although the extreme lockdown of Wuhan likely saved thousands of lives, WHO scientists weren’t allowed into Wuhan until 3 weeks after the outbreak first came to light, leaving open many questions about measures the government took in the interim. Meanwhile, the WHO praised the country for its supposed openness.

“China took action at the epicenter, and that helped prevent the spread to other provinces and the rest of the world,” Ghebreyesus said on February 15. 

“As China has shown, this does not need to be a pandemic if we take action,” WHO Executive Director Michael Ryan said on February 28. 

As the virus continued spreading across Europe and reached America, the WHO recommended “no interference with international travel.”

One country that ignored this advice was Taiwan, which also warned the WHO that it suspected that the virus was spreading through human-to-human transmission, yet was ignored. Taiwan, which has one of the lowest rates of known COVID-19 infections per capita, was prevented from joining the WHO as a member country in 2015 by China, which refuses to acknowledge Taiwan’s independence.

In late March, World Health Organization epidemiologist Bruce Aylward declined to answer a Hong Kong reporter’s question about Taiwan—or even acknowledge its existence.

As Taiwan was distributing face masks to its citizens, the WHO was advising the rest of the world that they were unnecessary—and initially, the Centers for Disease Control and U.S. Surgeon General followed its lead.

But health experts pointed to mounting evidence that masks can help slow the spread of respiratory disease, especially among asymptomatic carriers, a population that the WHO maintains is virtually nonexistent despite mounting evidence to the contrary.

In mid-February, the WHO trumpeted good news from  China, claiming confirmed and suspected cases of COVID-19 had declined, ignoring evidence that it may have been a statistical anomaly. U.S. intelligence, meanwhile, believes that China has entirely misrepresented both case numbers and death tolls, according to Bloomberg News.

Finally on March 11, after Italy was already in full national lockdown with more than 10,000 cases, the WHO finally acknowledged the true magnitude of the crisis, declaring a global pandemic.

As the death toll climbs above 100,000, the global economy remains in crisis, and billions of lives are disrupted, it’s important to remember that if the World Health Organization had done its job, the nightmare we’re living through might not have happened at all.

Produced by Zach Weissmueller. Graphics by Lex Villena.

Music: Cold String by Tiny Music, 6 by Lex Villena

Photo Credits: Kyodo/Newscom, Creative Touch Imaging Ltd/ZUMA Press/Newscom, Creative Touch Imaging Ltd/ZUMA Press/Newscom, SplashNews/Newscom, Imagine China/Newscom, CHINE NOUVELLE/SIPA/Newscom, Creative Touch Imaging Ltd, Liang Xu Xinhua News Agency/Newscom, Cheng Min Xinhua News Agency/Newscom, MONUSCO/Alain Coulibaly, Nicolas Economou/ZUMA Press/Newscom, Taipei, Taiwan skyline Author 台湾でSamuel in Taiwan (CC 2.0), Agazzi Sergiom, Nina Larson Ethiopia”s Tedros elected new WHO chief, Metzel Mikhail/ZUMA Press/Newscom, Thorkild Tylleskar World Health Organization Executive Board Room, OWID Covid 19 Cases Worldwide

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How China Corrupted the World Health Organization’s Response to COVID-19

The World Health Organization (WHO) put out questionable guidance on how to deal with the coronavirus, it was slow to communicate the magnitude of the threat, and it whitewashed the Chinese government’s early handling of the crisis.

President Donald Trump, who put a hold on WHO funding yesterday, isn’t absolved of his own failures in confronting COVID-19. But there’s no doubt that the WHO’s response destroyed much of its credibility, damaged the field of public health, and failed to contain the pandemic.

The WHO’s actions in response to COVID-19, in part, stemmed from its overly deferential stance towards China, which is its second-biggest financial contributor among 194 member states.

“A phenomenal collective action by the people of China to this response” is how Bruce Aylward, head of the joint WHO-China mission, described China’s handling of the outbreak on February 25, 2020, a day after WHO Director-General Tedros Adhanom Ghebreyesus praised China’s “rapid response,” which he claimed “changed the course of this epidemic.”

The WHO also praised China for releasing the virus’s genome while neglecting to mention that it took them at least 17 days to do so. It didn’t report human-to-human transmission until late January—even though Chinese doctors suspected it at least a month earlier. Although the extreme lockdown of Wuhan likely saved thousands of lives, WHO scientists weren’t allowed into Wuhan until 3 weeks after the outbreak first came to light, leaving open many questions about measures the government took in the interim. Meanwhile, the WHO praised the country for its supposed openness.

“China took action at the epicenter, and that helped prevent the spread to other provinces and the rest of the world,” Ghebreyesus said on February 15. 

“As China has shown, this does not need to be a pandemic if we take action,” WHO Executive Director Michael Ryan said on February 28. 

As the virus continued spreading across Europe and reached America, the WHO recommended “no interference with international travel.”

One country that ignored this advice was Taiwan, which also warned the WHO that it suspected that the virus was spreading through human-to-human transmission, yet was ignored. Taiwan, which has one of the lowest rates of known COVID-19 infections per capita, was prevented from joining the WHO as a member country in 2015 by China, which refuses to acknowledge Taiwan’s independence.

In late March, World Health Organization epidemiologist Bruce Aylward declined to answer a Hong Kong reporter’s question about Taiwan—or even acknowledge its existence.

As Taiwan was distributing face masks to its citizens, the WHO was advising the rest of the world that they were unnecessary—and initially, the Centers for Disease Control and U.S. Surgeon General followed its lead.

But health experts pointed to mounting evidence that masks can help slow the spread of respiratory disease, especially among asymptomatic carriers, a population that the WHO maintains is virtually nonexistent despite mounting evidence to the contrary.

In mid-February, the WHO trumpeted good news from  China, claiming confirmed and suspected cases of COVID-19 had declined, ignoring evidence that it may have been a statistical anomaly. U.S. intelligence, meanwhile, believes that China has entirely misrepresented both case numbers and death tolls, according to Bloomberg News.

Finally on March 11, after Italy was already in full national lockdown with more than 10,000 cases, the WHO finally acknowledged the true magnitude of the crisis, declaring a global pandemic.

As the death toll climbs above 100,000, the global economy remains in crisis, and billions of lives are disrupted, it’s important to remember that if the World Health Organization had done its job, the nightmare we’re living through might not have happened at all.

Produced by Zach Weissmueller. Graphics by Lex Villena.

Music: Cold String by Tiny Music, 6 by Lex Villena

Photo Credits: Kyodo/Newscom, Creative Touch Imaging Ltd/ZUMA Press/Newscom, Creative Touch Imaging Ltd/ZUMA Press/Newscom, SplashNews/Newscom, Imagine China/Newscom, CHINE NOUVELLE/SIPA/Newscom, Creative Touch Imaging Ltd, Liang Xu Xinhua News Agency/Newscom, Cheng Min Xinhua News Agency/Newscom, MONUSCO/Alain Coulibaly, Nicolas Economou/ZUMA Press/Newscom, Taipei, Taiwan skyline Author 台湾でSamuel in Taiwan (CC 2.0), Agazzi Sergiom, Nina Larson Ethiopia”s Tedros elected new WHO chief, Metzel Mikhail/ZUMA Press/Newscom, Thorkild Tylleskar World Health Organization Executive Board Room, OWID Covid 19 Cases Worldwide

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Far Worse To Come: COVID-19 Collapse Of State & Local Governments

Far Worse To Come: COVID-19 Collapse Of State & Local Governments

Authored by Grady Means, op-ed via The Hill,

Another sudden and unexpected factor will transform this year’s elections.

Many states, cities and counties are about to, suddenly, run out of money. Wages won’t be paid. Services won’t be delivered. Institutions will shut down abruptly. Many state colleges may fold. And yet most state and local political and administrative leaders just sit and watch. Voters will not be pleased.

Millions of American workers filed for unemployment insurance during the past two weeks. That is a record and represents a collapse of our local economies. Across the country, in every state, county and city, businesses have been shut down, and many will not return after the coronavirus crisis is over. Tens of millions have lost jobs, homes, savings and retirement incomes that will never return. Owners of rental property will go under when their loan payments come due and renters can’t pay. Across the country, state and local economies are being badly damaged — many of them permanently.

The result is that state and local tax revenues will plummet. States and localities will burn through any reserves they’ve maintained like wildfire. Since most of our politicians and government managers have been raised during a decade of expanding economies, their first instinct will be to wait and then panic and then raise taxes to cover shortfalls — perhaps a special “coronavirus surtax.” Taxpayers across the country have tolerated various forms of high state and local taxes; the politicians would naturally ask, “Why should now be any different?” 

But it is different. The resulting increased tax burden would be a disaster. Businesses that were barely hanging on would go under. Workers and homeowners who were barely surviving would go under. State and local tax bases would collapse even faster. There would be social unrest, possibly requiring martial law. People would migrate from high-tax states toward new jobs, accelerating a downward spiral. These large migrations would make the 2020 census results nonsense.

The only answer for the states, counties and cities that want to survive is to slash budgets now — probably 30 to 50 percent — eliminate all nonessential spending and reduce taxes today. Business leaders know that, in these types of situations, the only way to save a company is to cut costs immediately. There is no other answer, and those who act first and most aggressively are the most successful in saving the company and the greatest number of its employees. In short, “fiscal distancing” — that is, separating politicians from taxpayers’ money by cutting budgets and taxes now — is literally the only useful thing that state and local governments can do to prevent further economic and social catastrophe.

There is actually no other significant role that states and local governments can play in saving their economies, tax bases and quality of life. Only the federal government can provide truly useful, significant financial help to businesses and individuals during this historic disaster because only the federal government can print money in a crisis. Cutting taxes is the only state and local option to help their economies. Spending extra money now is throwing rocks into their own lifeboats.

I’ve talked to and written to many state and local officials over the past couple of weeks. Their recorded messages say they are all “working nonstop on coronavirus task forces.” Not to be rude, but most of that is a complete waste of time and public resources. With few exceptions, little or nothing useful will come of that. Only private businesses, individuals and the federal government are able to address this problem. For the most part, state and local governments will be in the way, except for critical, essential services such as police forces, fire departments and health care. Nearly everything else must go, now.

Of course, I’m not optimistic that many officials or politicians at the state or local levels will take massive budget cuts or slashing taxes seriously — yet. They were raised in a different world of explosive economic growth. Most would prefer to promote vanity and virtue-signaling projects from their towering sandcastles they’ve built with taxpayer money over the past couple of decades, even as their castles crumble around them. They could never grasp that cutting taxes is the only tool they have to preserve their states, counties and cities. The concept is far beyond their political vocabulary — none of them could grasp the public finance, let alone the Darwinian game theory, aspects of the enormous challenge in front of them. 

States are now furiously competing for ventilators. Tomorrow they will be fighting for taxpayers. Their primary (only) goal today should be to support and save their local economies — businesses, homeowners and other taxpayers — so that they have a foundation left on which to build later. If they kill off their tax base or drive businesses and taxpayers out of their states or localities, they will have poured salt on their fields and they will starve in the future. Their political careers will be over.

And so, as the coronavirus preys on the weakest human bodies, it also preys on the weakest state and local politicians. We can only hope that the fiscal mortality rate among those will be lower than the models suggest. In the end, though, the ruthless force of American politics probably will claim a new crop of unexpecting victims.


Tyler Durden

Wed, 04/15/2020 – 13:35

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

WHO Responds After Trump Pulls Funding

WHO Responds After Trump Pulls Funding

The World Health Organization has responded to President Trump’s decision to suspend funding, and hopes that the decision will be reversed.

“We regret the decision of the President of the United States to order a halt in funding to the World Health Organization,” said WHO Director-General Tedros Adhanom Ghebreyesus during a Wednesday press briefing.

“The United States of America has been a longstanding and generous friend to WHO and we hope it will continue to be so,” he added, according to The Hill.

Ghebreyesus added that the organization is currently “assessing” the impact on the funding cut, and will “try to fill gaps with partners.”

The WHO has come under fire for mishandling the coronavirus pandemic – praising China’s handling of the virus while the CCP silenced whistleblowers and lied about the disease.

Not only did the WHO repeat Chinese propaganda that there was no human-to-human transmission of COVID-19, an assessment that their own coronavirus expert disagreed with – they also opposed global border restrictions, suggesting they would spread ‘xenophobia and fear’ while blocking doctors from urging countries to impose them. Moreover, they recommended against the use of face masks to slow the spread of COVID-19.


Tyler Durden

Wed, 04/15/2020 – 13:20

via ZeroHedge News https://ift.tt/2XyH7d0 Tyler Durden