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Marvel introduces superheros “Snowflake” and “Safespace”

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity… and on occasion, poetic justice.

Alcohol to go: Why wasn’t this always a thing?

You realize how absurdly micromanaged the economy is when the government starts lifting pointless restrictions.

For example, New York and Washington DC will now allow people to order takeout and to-go alcoholic beverages from bars and restaurants.

But these governments still can’t totally let go of control. The new rules in DC require restaurants and bars to obtain special permission from the government to sell drinks to-go.

And even then, in both DC and New York, customers can only order drinks if they also buy food.

See New York’s rules here, and Washington DC’s here.

Marvel introduces superheros “Snowflake” and “Safespace”

We had to check to make sure this one wasn’t fake news. It’s real.

Marvel, the group behind Captain America, Ironman, etc., has now introduced two new superheroes: Snowflake, and their brother Safespace.

(Snowflake is non-binary and uses pronouns they/them/their.)

Snowflake creates icy throwing stars, while Safespace has more defensive powers. Both use “violence to combat bullying,” according to the author.

They must also be antifa members if they respond to words and dissenting opinions with violence.

Click here for the full story.

DOJ wants the power to detain Americans indefinitely during crises

We see two forces at work during a crisis.

On the one hand, the government is eliminating unnecessary laws and burdensome regulations.

This is to make the response easier, and to placate people who are dealing with restrictions on their freedom to run a business or carry on with normal life.

On the other hand, you have the government grab at more “temporary” powers… that never seem to expire.

Using the Covid-19 epidemic as a convenient excuse, the Department of Justice has asked Congress for the power to “pause” court proceedings “whenever the district court is fully or partially closed by virtue of any natural disaster, civil disobedience, or other emergency situation.”

It might sound reasonable enough. Until you realize that anyone can be arrested and detained indefinitely without trial or without even a preliminary hearing in front of a judge.

The draft language of the draft bill applies this suspension to “any statutes or rules of procedure otherwise affecting pre-arrest, post-arrest, pre-trial, trial, and post-trial procedures.”

Pre-arrest? Does that mean cops don’t even need a warrant from a judge anymore for arrests and homes raids?

As long as the emergency persists, all rights of the accused go out the window.

And the way things are looking right now, an “emergency situation” could last a long long time.

Sort of like the special war powers the government took almost twenty years ago… for a war that is still ongoing.

Click here for the full story.

Brazil’s president insists his people “never catch anything”

It seems these days that people everywhere think that their president or prime minister is the biggest buffoon in the world.

And to be fair there is no shortage of political leaders who routinely say the dumbest things imaginable.

But Brazil’s President Jair Bolsonaro may really win the award. In a press conference just yesterday, he told reporters that he was unconcerned about the Corona Virus and that Brazilians “never catch anything.”

When challenged, he doubled down on that assertion, stating that there’s some antibodies within Brazilians that should be studied, because his people simply do not get sick.

77 Brazilians are already dead as of Thursday, with nearly 3,000 confirmed cases.

Click here for the full story.

Source

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Pandemic-Related Unemployment and Shutdowns Are a Recipe for Social Unrest

Could the stalled economy we’ve inflicted on ourselves in our frantic efforts to battle the COVID-19 pandemic lead to civil disorder? History suggests that’s a real danger.

Around the world, high unemployment and stagnant economic activity tend to lead to social unrest, including demonstrations, strikes, and other forms of potentially violent disruptions. That’s a huge concern as forecasters expect the U.S. unemployment rate in the months to come to surpass that seen during the depths of the Great Depression.

“We’re putting this initial number at 30 percent; that’s a 30 percent unemployment rate” in the second quarter of this year as a result of the planned economic shutdowns, Federal Reserve Bank of St. Louis President James Bullard told Bloomberg News on March 22. Gross Domestic Product, he adds, is expected to drop by 50 percent.

Unlike most bouts of economic malaise, this is a self-inflicted wound meant to counter a serious public health crisis. But, whatever the reasons, it means businesses shuttered and people without jobs and incomes. That’s risky.

“Results from the empirical analysis indicate that economic growth and the unemployment rate are the two most important determinants of social unrest,” notes the International Labour Organisation (ILO), a United Nations agency that maintains a Social Unrest Index in an attempt to predict civil disorder based, in part, on economic trends. “For example, a one standard deviation increase in unemployment raises social unrest by 0.39 standard deviations, while a one standard deviation increase in GDP growth reduces social unrest by 0.19 standard deviations.”

Why would economic shutdowns lead to social unrest? Because, contrary to the airy dismissals of some members of the political class and many ivory-tower types, commerce isn’t a grubby embarrassment to be tolerated and avoided—it’s the life’s blood of a society. Jobs and businesses keep people alive. They represent the activities that meet demand for food, clothing, shelter—and that develop and distribute the medicine and medical supplies we need to battle COVID-19.

President Donald Trump may be overly optimistic when he hopes to have the country, including areas hard-hit by the virus, “opened up and just raring to go by Easter,” but he’s not wrong to include the economy in his calculations.

By contrast, New York Gov. Andrew Cuomo’s insistence that “if it’s public health versus the economy, the only choice is public health,” sounds fine and noble. But it reflects an unrealistic and semi-aristocratic disdain for the activities that make fighting the pandemic possible at all—and that keep social unrest at bay.

While the ILO has tried to quantify the causes of social unrest, its researchers certainly aren’t the first to make the connection between angry, unemployed people and trouble in the streets.

At the height of the Great Depression, when U.S. unemployment hit a peak of 24.9 percent, Franklin Delano Roosevelt’s administration saw make-work programs such as the Civilian Conservation Corps (CCC) as a means of getting the jobless—especially young men—safely into “quasi-military camps often far from home in the nation’s publicly owned forests and parks,” Joseph M. Speakman wrote for the Fall 2006 issue of Prologue Magazine, a publication of the U.S. National Archives and Records Administration.

“Bringing an army of the unemployed into ‘healthful surroundings,’ Roosevelt argued, would help to eliminate the threats to social stability that enforced idleness had created,” Speakman added.

The program mostly worked—at least, it confined revolts to the camps themselves, where they were suppressed by Army officers. Those same officers commanded the men when they were drafted and dispatched to even more remote destinations with the coming of World War II.

In fact, the connection between unemployment, stagnant economies, and social unrest is so clear that an important indicator for a large underground economy is relative peace prevailing alongside a chronically high unemployment rate.

If 21 percent of the workforce “were jobless, Spain would not be as peaceful as, barring a few demonstrations, it has so far been, say economists and business leaders,” the Financial Times noted in 2011. Sure enough, researchers found that off-the-books businesses and jobs thrived in Spain—accounting for the equivalent of a quarter of GDP at one point—keeping people employed and defusing tensions.

Bullard of the Fed doesn’t propose shipping the jobless off to the wilderness—at least, not yet—and he doesn’t seem inclined to rely on the black market to keep people fed, warm, and healthy. Instead, to defuse the impact of the social-distancing shutdowns of normal economic activity, he calls for lost income to be replaced by unemployment insurance and other payments that would make displaced workers and business owners whole.

He better be right that government checks—drawing on money from the thin air and not generated by an economy that has largely halted, I’ll note—can offset the pain of lost jobs and businesses, because the first wave of the unemployment he predicts is already here.

“In the week ending March 21, the advance figure for seasonally adjusted initial claims was 3,283,000, an increase of 3,001,000 from the previous week’s revised level,” the United States Department of Labor announced on Thursday, March 26. “This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series.”

Those disturbed by such economic collapse include public health professionals who take COVID-19 very seriously.

“I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life—schools and businesses closed, gatherings banned—will be long lasting and calamitous, possibly graver than the direct toll of the virus itself,” wrote David L. Katz, former director of Yale University’s Yale-Griffin Prevention Research Center, in The New York Times last week. “The stock market will bounce back in time, but many businesses never will. The unemployment, impoverishment and despair likely to result will be public health scourges of the first order.”

Unemployment, impoverishment, and despair are frightening outcomes in themselves. They’re also a recipe for social unrest that will afflict even those of us who weather both the pandemic and the accompanying economic storm.

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A Different Tune: Xi Offers Trump Help After China ‘Shutting Down The Borders’ To Foreigners

A Different Tune: Xi Offers Trump Help After China ‘Shutting Down The Borders’ To Foreigners

Well this is surprising given the past week’s war of words between Washington and Beijing centered on the White House’s lambasting the Chinese Foreign Ministry’s ‘propaganda and disinformation’ over the coronavirus pandemic, which it should be noted Trump and Pompeo still insist on calling “the Chinese virus”, per Reuters:

Chinese President Xi Jinping told U.S. President Donald Trump during a phone call on Friday that he would have China’s support in fighting the coronavirus, as the United States faces the prospect of becoming the next global epicentre of the pandemic.

It seems everyone’s now singing a different tune from a mere few days ago.

Image: AFP via Getty/Bloomberg

On the one hand Reuters confirms China’s ‘controversial’ and even supposedly “racist” policy of drastically cutting flights to the mainland while also barring foreigners’ entry — and on the other with the United States now soaring past China in confirmed cases, surpassing 86,000 by Friday morning, Trump appears ready to momentarily play nice with Xi, perhaps now more willing to gain something from China’s experience in fighting the virus.

“China has been through much & has developed a strong understanding of the virus,” Trump said. “We are working closely together. Much respect!”

As we detailed yesterday Beijing now claims it has its domestic outbreak under control and that the new cases are ONLY from foreigners, and in a stunning piece of total and utter hypocrisy, they have decided to… Suspend entry of all foreigners’ entry to China.

The foreign ministry can now present local containment and declining numbers while touting its own version of a ‘foreign virus’ narrative: Shanghai now has 125 patients who arrived from overseas, including 46 from Britain and 27 from the United States, Reuters reports based on Chinese numbers.

Via EPA-EFE

Apparently ‘draconian measures’ to lock down borders and keep foreigners out is no longer a unique form of “OrangeManBad White House racism”. Here’s the break down of China’s new measures:

In effect from Sunday, China has ordered its airlines to fly only one route to any country, on just one flight each week. Foreign airlines must comply with similar curbs on flights to China, although many had already halted services.

About 90% of current international flights into China will be suspended, cutting arrivals to 5,000 passengers a day, from 25,000, the civil aviation regulator said late on Thursday.

From Saturday, China will temporarily suspend entry for foreigners with valid visas and residence permits, in an interim measure, the foreign ministry added.

It was only two months ago, as deaths from China’s virus were rapidly escalating and spreading across the nation, that Beijing expressed outrage at the measures enacted by the global community to limit the spread of the deadly virus, saying they went way beyond standards accepted worldwide.

Chinese Foreign Minister Wang Yi had said in biting criticisms issued the first week of February that Beijing “does not agree with the approach adopted by individual countries to create tension or even panic” by closing borders, trade, and flights to and from China. He pointed out at the time that the WHO “did not approve of travel or trade restrictions on China.”

Remember too the very public charge of hypocrisy! aimed at the US during that crucial time when the outbreak was clearly fast spreading far outside mainland China:

“Just as the WHO recommended against travel restrictions, the U.S. rushed to go in the opposite way. Certainly not a gesture of goodwill,” another Chinese official angrily denounced at the time. 

And now we are still awaiting the grand denunciations from leftist pundits of China’s supposed xenophobic move to ban outsiders from entry. We won’t hold our breath.


Tyler Durden

Fri, 03/27/2020 – 11:05

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Fed’s Cure Risks Being Worse Than The Disease: James Bianco

Fed’s Cure Risks Being Worse Than The Disease: James Bianco

Authored by Jim Bianco, op-ed via Bloomberg.com,

An alphabet soup of new asset-buying programs will essentially nationalize large swaths of the financial markets, and the consequences could be profound…

The economic debate of the day centers on whether the cure of an economic shutdown is worse than the disease of the virus.  Similarly, we need to ask if the cure of the Federal Reserve getting so deeply into corporate bonds, asset-backed securities, commercial paper, and exchange-traded funds is worse than the disease seizing financial markets. It may be.

In just these past few weeks, the Fed has cut rates by 150 basis points to near zero and run through its entire 2008 crisis handbook. That wasn’t enough to calm markets, though — so the central bank also announced $1 trillion a day in repurchase agreements and unlimited quantitative easing, which includes a hard-to-understand $625 billion of bond buying a week going forward. At this rate, the Fed will own two-thirds of the Treasury market in a year.

But it’s the alphabet soup of new programs that deserve special consideration, as they could have profound long-term consequences for the functioning of the Fed and the allocation of capital in financial markets. Specifically, these are:

  • CPFF (Commercial Paper Funding Facility) – buying commercial paper from the issuer.

  • PMCCF (Primary Market Corporate Credit Facility) – buying corporate bonds from the issuer.

  • TALF (Term Asset-Backed Securities Loan Facility) – funding backstop for asset-backed securities.

  • SMCCF (Secondary Market Corporate Credit Facility) – buying corporate bonds and bond ETFs in the secondary market.

  • MSBLP (Main Street Business Lending Program) – Details are to come, but it will lend to eligible small and medium-size businesses, complementing efforts by the Small Business Association.

To put it bluntly, the Fed isn’t allowed to do any of this. The central bank is only allowed to purchase or lend against securities that have government guarantee. This includes Treasury securities, agency mortgage-backed securities and the debt issued by Fannie Mae and Freddie Mac. An argument can be made that can also include municipal securities, but nothing in the laundry list above.

So how can they do this? The Fed will finance a special purpose vehicle (SPV) for each acronym to conduct these operations. The Treasury, using the Exchange Stabilization Fund, will make an equity investment in each SPV and be in a “first loss” position. What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is acting as banker and providing financing. The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury.

In other words, the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades.

This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.

In 2008 when something similar was done, it was on a smaller scale. Since few understood it, the Bush and Obama administrations ceded total control of those acronym programs to then-Fed Chairman Ben Bernanke. He unwound them at the first available opportunity. But now, 12 years later, we have a much better understanding of how they work. And we have a president who has made it very clear how displeased he is that central bankers haven’t used their considerable power to force the Dow Jones Industrial Average at least 10,000 points higher, something he has complained about many times before the pandemic hit.

When the Fed was rightly alarmed by the current dysfunction in the fixed-income markets, they felt they needed to act. This was the correct thought. But, to get the authority to stabilize these “private” markets, central bankers needed the Treasury to agree to nationalize (own) them so they could provide the funds to do it.

In effect, the Fed is giving the Treasury access to its printing press. This means that, in the extreme, the administration would be free to use its control, not the Fed’s control, of these SPVs to instruct the Fed to print more money so it could buy securities and hand out loans in an effort to ramp financial markets higher going into the election. Why stop there? Should Trump win re-election, he could try to use these SPVs to get those 10,000 Dow Jones points he feels the Fed has denied everyone.

If these acronym programs were abused as I describe, they might indeed force markets higher than valuation warrants. But it would come with a heavy price. Investors would be deprived of the necessary market signals that freely traded capital markets offer to aid in the efficient allocation of capital. Malinvestment would be rampant. It also could force private sector players to leave as the government’s heavy hand makes operating in “controlled” markets uneconomic. This has already occurred in the U.S. federal funds market and the government bond market in Japan.

Fed Chair Jerome Powell needs to tread carefully indeed to ensure his cure isn’t worse than the disease.


Tyler Durden

Fri, 03/27/2020 – 10:45

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Cruise Stocks Sink After COVID-19 Bailouts Unlikely

Cruise Stocks Sink After COVID-19 Bailouts Unlikely

Shares in cruise line stocks fell sharply Friday morning after a change to the coronavirus stimulus package blocking companies that aren’t incorporated in the US will prevent them from receiving aid, according to a Dow Jones report.

Despite the three largest cruise companies being headquartered in Miami, Florida – they are all registered in other countries to avoid paying US taxes; Carnival is registered in Panama, Royal Caribbean in Liberia, and Norwegian Cruise Lines in Bermuda.

Despite the fact that all three of their corporate headquarters are in Miami, annual filings show that these companies are part of an industry that paid an average tax rate of under 1%, which is well below the required 21% corporate tax rate in the United States. –OCCRP.org

Shares were down more than 10% each in early Friday trade.

The Miami Herald notes that the industry is responsible for “nearly $9 billion in annual economic impact to Florida.”

Two congressional sources confirmed to the Miami Herald that the bill currently does not allow cruise lines to access the money. The bill is expected to pass the House of Representatives on Friday or Saturday without significant changes from the version that passed the U.S. Senate 96-0 on Wednesday night, and President Donald Trump is expected to sign it into law. –Miami Herald

President Trump, meanwhile, said on Thursday that he wants cruise lines to be based in the United States and pay US taxes.

“I do like the concept of, perhaps, coming in and registering here. Coming into the United States,” he said during yesterday’s coronavirus briefing. “It’s very tough to make a loan to a company when they’re based in a different country.”

Conservative US Senators, meanwhile, are lobbying against relief for cruise lines – Including Florida Republican Sen. Rick Scott and Missouri Sen. Josh Hawley, who say they should not get bailouts if they aren’t based in the US.

“I was very clear about my opposition to bailouts for big corporations,” said Scott in a statement. “While I still fear this bill could be used to provide relief to companies that can afford to take care of their workers without government assistance, I’m glad to see it requires a return on investment for the taxpayers.”

Florida Democratic Congresswoman Rep. Debbie Wasserman Schultz, meanwhile, expressed hope that the industry could receive funds in a future bailout, while Rep. Ted Deutch (D-FL) said on Thursday that “it’s important” to provide economic relief because the industry employs so many people from Miami-Dade counties.

Meanwhile, Bain & Co. sees Q1 global luxury sales down 25% – 30% despite signs of recovery in China.

“Sales could fall up to 35% this year, but companies can still emerge stronger, more innovative and more purposeful.”


Tyler Durden

Fri, 03/27/2020 – 10:30

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Massie, and That Pesky Constitution, Hold Up COVID-19 Bailout Bill

Massie’s big move? The House of Representatives is poised to vote on the $2 trillion COVID-19 relief bill that the Senate passed yesterday. But there’s a snag: Rep. Thomas Massie. The Kentucky Republican reportedly wants colleagues back in D.C. for a regular, recorded vote this morning instead of the voice vote that was expected to take place today.

“Members are advised that it is possible this measure will not pass by voice vote,” House Majority Leader Steny Hoyer’s office wrote in a Thursday advisory memo to members.

Massie tweeted out a link last night to Article I, Section 5, Clause 1 of the U.S. Constitution, which dictates the rules of engagement in the House of Representatives.

A quorum requires 216 members of the House be present for the vote.

“The senate did some voodoo just like with Obamacare,” Massie added. “Took a House Bill (HR 748) dealing with taxes, stripped every word, and put their bill in it. The House is just as responsible for killing the origination clause as the Senate. It’s the House’s job to reject the process.” 

Some members of Congress have been lashing out at Massie on Twitter. 

Rep. Pete King (R–N.Y.) called Massie’s move to make House members respect the Constitution “disgraceful” and “irresponsible.”

“If you intend to delay passage of the #coronavirus relief bill tomorrow morning, please advise your 428 colleagues RIGHT NOW so we can book flights and expend ~$200,000 in taxpayer money to counter your principled but terribly misguided stunt,” tweeted Rep. Dean Phillips (D–Minn.). 

Rep. Ruben Gallego (D–Ariz.) declared that he was “jumping on the red eye tonight” back to D.C., adding a (presumably sarcastic) “thanks Massie.”

Despite some theatrical reactions, “passage isn’t in jeopardy,” NBC News notes. The vote could “be delayed for as long as it takes for 216 members to arrive in Washington.” 

“Pelosi called him selfish,” writes the left-populist pundit Matt Stoller, research director for the American Economic Liberties Project. “Reality is more complex. She just doesn’t want to lose power and do remote voting.” 

“Pelosi has kept the entire House in their districts, and is hoping to get the bill through without any formal debate or any hearings at all,” Stoller suggested. 

Trump’s cynical calculation? As the U.S. surpasses Italy and China to have the most confirmed cases of COVID-19, the Trump administration is still dragging its fee on ventilators and promising America will be open for business again by Easter (April 12).  Meanwhile, more and more state leaders are telling residents to stay home and ordering “non-essential” businesses closed.

Politically speaking, the president might be making a brilliant move: Allow other people to make the difficult decisions, then point to the inevitable-either-way economic devastation as something that could have been prevented if only we had gone to work sooner. 

Or maybe that’s just the best-case scenario. President Donald Trump could try to interfere with states’ ability to impose social distancing rules. No, he’s not going to send the military to reopen bars and movie theaters. But financial aid to state governments gives Washington all sorts of carrots and sticks. 

For now, though, that doesn’t seem to be on the horizon. In a letter to state leaders yesterday, Trump announced that “new guidelines for State and local policymakers to use in making decisions about maintaining, increasing, or relaxing social distancing and other mitigation measures” would be coming soon. Using “data-driven criteria, we will suggest guidelines categorizing counties as high-risk, medium-risk, or low-risk,” he said. 

That might not be a bad idea. As J.D. Tuccille wrote this week in Reason, we need to recognize that different areas of this country have very different risk profiles. 

COVID-19 and criminal justice. Another Trump-admin move that is heartening to see: embracing home detainment for nonviolent offenders in federal prisons. 

“I am confident in our ability to keep inmates in our prisons as safe as possible from the pandemic currently sweeping across the globe,” Attorney General Bill Barr wrote in a Thursday memo to the federal Bureau of Prisons. “At the same time, there are some at-risk inmates who are non-violent and pose a minimal likelihood of recidivism and who might be safer serving their sentences in home confinement rather than in BOP facilities.” 

New coronavirus cases expand around U.S. As Washington obsesses over which of the two ruling parties deserves more blame for the crisis, cases of the new coronavirus in the U.S. are starting to grow rapidly outside such hotbeds as New York and Washington state. 

For state-by-state breakdowns of cases, recoveries, and deaths, check out this tracker from Johns Hopkins University. 

FREE MARKETS

Beneficence on display. Airbnbs and hotels are offering free housing to COVID-19 first respondents—yet another example of private enterprises stepping up to fill public health voids in this time of crisis. “We shouldn’t lose sight of the exceptional vitality that the private sector is demonstrating during this mess,” as Veronique de Rugy writes.

At USA Today, Alexandra Hudson rounds up more examples of private enterprise stepping in to help ease COVID-19 related hardships. “Adam Smith distinguished between justice and beneficence,” she writes: 

Justice is the bare minimum we owe to others, an obligation to do no harm. Today, this means staying home during the quarantine and not potentially infecting others. But justice is about mere survival. To flourish, we need beneficence—the obligation we have to do good for others. It is a tumultuous time, but we should recognize and celebrate our vibrant ecosystem of civic dynamism that is dedicated to promoting the common good.

FREE MINDS

Coronavirus news from around the world: 

QUICK HITS

  • “We need every doctor and researcher we can get right now,” writes Shikha Dalmia. “It’s time to cut H-B1 Visa red tape.”
  • The Environmental Protection Agency is relaxing some rules in the face of COVID-19.
  • New York City outbreak update: 

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Watch: No Lines & No Protective Gear At Local Pennsylvania Hospital Drive-Thru Testing Center

Watch: No Lines & No Protective Gear At Local Pennsylvania Hospital Drive-Thru Testing Center

Via InvestmentWatchBlog.com,

I drove over to check the scene out today, it was raining but I got some footy that should give an idea of what is going on in a smallish city like mine in SE Pa of about 150,000. This is the newest and largest hospital in our area.

They were doing tests and had one section of a lot cordoned off for the operation with several tents including one at the entrance.

A few points of interest:

  • The people doing the initial acceptance into the testing queue were not wearing PPEs while dealing with drivers that may be infected… some are armed with tasers.

  • Personnel performing tests are not changing PPEs between tests.

  • PPEs did not appear to include goggles or splash-shields of any kind.

  • Parking is about 80-85% capacity.

  • It looks like they are filling small propane tanks at the entrance for some reason.

  • There is a sign at that same propane station to check in there before entering hospital.

*  *  *

Sorry if I sound a bit sleepy and run down, I guess I am lol… was also wearing a mask so it probably sounds stuffier than it should but oh well.

h/t BFD


Tyler Durden

Fri, 03/27/2020 – 10:15

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UMich Consumer Sentiment Crashes Most Since Oct 2008

UMich Consumer Sentiment Crashes Most Since Oct 2008

While UMich’s preliminary March sentiment survey showed weakness, the final March print – taken after the lockdowns and market carnage began – was expected to plummet further.. and it did:

The final sentiment index for the month slumped 11.9 points to a three-year low of 89.1, data Friday showed. The median forecast in a Bloomberg survey of economists called for a decline to 90 after a preliminary March reading of 95.9.

Ratings for current conditions also decreased by the most since 2008, and a measure of the economic outlook dropped to the lowest level in more than three years.

Source: Bloomberg

And the headline print plunged by the most since October 2008…

Source: Bloomberg

“The outlook for the national economy for the year ahead changed dramatically in March, with the majority now expecting bad times financially in the entire country,’’ Richard Curtin, director of the Michigan sentiment survey, said in a statement.

“Perhaps the most important takeaway is that the largest proportion of consumers in nearly 10 years anticipated that the national unemployment rate will increase in the year ahead.’’

The wealthiest third of people interviewed dominated the collapse in sentiment – plunging to their least confident since 2014

Source: Bloomberg

Buying conditions plunged for homes and household appliances…

Source: Bloomberg

Finally, we note that once again the 12mo average household appliance buying conditions have front-run the turn in unemployment (which is about to explode higher)…

Source: Bloomberg

The final survey for the month included responses through March 24, a stretch that includes significant upheaval and uncertainty in day-to-day living and the labor market, as well as in financial markets. A report yesterday showed initial claims for unemployment benefits soared to a record 3.28 million last week.

“Stabilizing confidence at its month’s end level will be difficult given surging unemployment and falling household incomes,’’ Curtin said.

“Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism.’’


Tyler Durden

Fri, 03/27/2020 – 10:07

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Trump Slams “Grandstanding” Rep. Massie As Kentucky Republican Threatens To Delay Vote

Trump Slams “Grandstanding” Rep. Massie As Kentucky Republican Threatens To Delay Vote

Update (1002ET): Speaker Pelosi jut told reporters that the House will hold the vote on Friday…come hell or high water…as the vote will likely be extended to three hours, and then the house will vote in about 2 hours time.

*  *  *

The market has barely been open for half an hour, and Friday has already been a wild day, even by the standards of a particularly wild time. Boris Johnson has the coronavirus, as do roughly half a million other people around the world.  More than 20,000 have died from it. And now, President Trump has started a twitter feud with a Republican Congressman from Kentucky who is threatening to hold up the stimulus bill – the third installment of the federal government’s response to the crisis – because…well…it’s not exactly clear why.

Though it’s notable that Fox News just published this piece that’s essentially 2,000+ words of anonymously sourced aides saying things like “he better not!” and “oh yeah he’s gonna do it!” and “he received a very stern call from the leader…”.

Apparently, none of this has dissuaded Massie, and both leaders are calling up members to get on planes and come back to Washington so there can be a quorom vote. The best Massie can do is delay the vote a day.

Again, it’s not exactly clear why Massie wants to delay the bill, though some have expressed concerns that it contains too much “wasteful” spending, and we’ve even derided the excessive amounts of “pork” in the package. But at this point, something is clearly better than nothing, and that pork spending is still money that will eventually be spent on…something.

Still, any attempt to disrupt President Trump’s plan – especially after all that time he spent bashing Pelosi for stalling – is a big no-no, and President Trump came out swinging on Twitter, accusing Massie of “grandstanding.”

Massie hasn’t tweeted recently, but his last tweet criticized the Senate for stripping away House text and subbing in their own bill into the shell.

If Massie keeps this up, he might walk away with a nickname…

 

 

 

 

 

 

 

 

 


Tyler Durden

Fri, 03/27/2020 – 10:01

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“No Bid”: In Stunning Development, Dealers Run Out Of Securities To Use In Fed Repo Operations

“No Bid”: In Stunning Development, Dealers Run Out Of Securities To Use In Fed Repo Operations

Two weeks ago, just after the Fed first announced its massive overnight and term repo operation expansion which now amounts to some $1 trillion in daily repo capacity (and before Powell expanded this bazooka to included ZIRP and unlimited QE), we said that this is a big mistake as the Fed was targeting the wrong liquidity conduit.

Then, after the Fed launched QE across the entire curve and expanded it to include MBS, the Fed’s monetary police became outright bizarre: on one hand the Fed was offering to buy Treasurys and MBS held by Dealers (at a hefty, unknown premium to market), on the other it was offering Dealers to park those securities at the Fed either overnight or on a term basis in exchange for cash while incurring modest capital charges.

After all, why would anyone pick repo over QE in the current market was a total mystery.

Why indeed, and as we expected, after several repo operations that saw zero Treasury submissions in the Fed’s overnight and term repo operations at the start of this week…

… we finally got a failing repo operation, when this morning the Fed saw no bids (i.e., submissions) in either Treasurys, MBS and Agency securities in its $500BN 3-month repo operation!

Today’s other repo operation, the $500BN overnight repo saw just $1.5BN in TSYs submitted (the remaining $5.25BN were MBS) into the $500BN operation.

For those who haven’t been following the Fed’s repo operations, this was the first time since the bank restarted its repo operations that it received no bids on its term offerings. But it’s not just term: as the charts below show, ever since the Fed announced unlimited QE concurrently with massive repos, the amount of securities submitted into repos has collapsed and for Treasurys has been $0 on most of this week’s operations…

… with MBS catching up fast.

To be sure, having predicted this outcome, it is now obvious – if only in retrospect – to everyone:  according to Bloomberg, “the lack of interest may stem from the fact that the central bank is buying $75b of Treasury securities a day.”

Well, duh.

So what can the Fed do to unbreak the repo market? Why undo some of its massive QE!

According to Barclays’ Joseph Abate, the scale of the Fed’s asset purchases may be “inadvertently creating dislocations” in the repo market (inadvertently because it was perfectly obvious to everyone what would happen, except the Fed of course). “The increase in specials volumes, their spread widening to GC, and the pick-up in fails are all symptoms of a distribution problem”, adds Abate who suggests that the Fed might consider increasing counterparty lending caps in its securities program.

“Why on Earth you would tie something up for three months in repo with the Fed buying,” said Ian Burdette, managing director at Academy Securities, who followed up with a very apt observation: 

“I think people are getting wise to the fact that an absolute tsunami of global sovereign debt issuance is on its way. Best to sell it all to the fed now probably.”

That is indeed, spot on, however it also means that going forward the Fed’s repo operations will be a “fail” virtually every time as Dealers chose not to park their securities with the Fed but instead sell them to the Fed, a contradictory outcome which was obvious to most people as far back as two weeks ago.

All… except the Fed of course which is just making things up as it goes along and no longer ever realizes what it is doing.


Tyler Durden

Fri, 03/27/2020 – 09:52

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