February Heavy Duty Truck Orders Plunge, New 2020 Estimates Call For A 31% Drop

February Heavy Duty Truck Orders Plunge, New 2020 Estimates Call For A 31% Drop

It has been an interesting dance over the last 18 months for the Class 8 trucking industry and its analysts. While the numbers have consistently told us one thing, namely that the economy is slowing and that the trucking industry is bearing the brunt of the recession, analysts continue to make excuses for the poor numbers while holding out what seems like neverending hope for a turnaround.

But the data doesn’t lie: February Class 8 orders fell 16%. The month is traditionally a slower one for the heavy duty trucking industry, but this year included an extra day. The seasonally adjusted orders were the weakest monthly order rate since last August, according to ACT Research. 

ACT’s senior analyst Kenny Vieth said: “Weak freight market and rate conditions, as well as a still-large backlog, continue to bedevil new Class 8 orders.” 

Thanks for that groundbreaking analysis of the situation. Lest we forgetACT Research had said last month that it expected the backlog in Class 8 orders to “continue to wear away”. We guess that is no longer the case.

Forward projections for the rest of the year don’t look optimistic either. Analyst Ann Duignan from JP Morgan has said she expects production of ~236,000 Class 8 units in 2020, or down 31% y/y. She is also estimating ~240,000 units in 2021, or up 2%. We anticipate that these numbers could vary sharply depending on how severe the coronavirus outbreak in the U.S. winds up becoming. 

Leading indicators remain weak, according to JP Morgan:

According to our analysis, the ISM New Orders Index tends to be the best leading indicator of future freight trends and truck demand. Specifically, the YoY change in ISM New Orders has historically led the YoY change in the Cass Freight Index (our preferred broad-based indicator of freight trends) by 6-9 months.

ISM New Orders Index decreased 2.2pts MoM to 49.8 in February, down 9.3% YoY and back in contraction region (<50). The Cass Freight Index was down 9.4% YoY in January (the latest month available), a fourteenth consecutive YoY decline. We note though that the Cass Freight Index includes rail freight and may be less of an indicator of overall freight, so we also look at the ATA Total Loads SA Index, which increased 4.1% YoY to 112.0 in January (vs. up 6.0% YoY in December).

And while it’s seemingly stunning to “analysts”, this data should not surprise Zero Hedge readers.

Recall, in January, Class 8 orders had a temporary dead cat bounce. While analysts pontificated about brighter days for the heavy duty truck market during almost every single data report throughout 2019 and through January 2020, we remained skeptical.

For now, it looks as though we continue to be correct.


Tyler Durden

Tue, 03/10/2020 – 18:05

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Volokh Conspiracy Canceling All In-Person Events, Moving Online for Duration of Coronavirus Epidemic

We plan to take advantage of our nearly 18 years’ experience with distance learning to make this as seamless a transition as possible for you, our valued clients.

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Biden Likens Owning an AR-15 to Falsely Shouting Fire in a Crowded Theater

Former Vice President Joe Biden, the leading contender for the Democratic presidential nomination, today got into a heated argument with a Detroit autoworker who challenged his support for a new federal “assault weapon” ban. Even leaving aside Biden’s reference to an “AR-14” when he meant “AR-15,” the conversation revealed both the illogic of his proposal and the suspicions it understandably arouses among many gun owners.

Cellphone video of the encounter shows a bearded man in a hard hat accusing Biden of “actively trying to end our Second Amendment right and take away our guns.” Biden denied the charge. “You’re full of shit,” he said. “I support the Second Amendment. The Second Amendment, just like now, if you yelled fire, that’s not free speech…I have a shotgun. I have a 12-gauge, a 20-gauge. My sons hunt….I’m not taking your gun away at all.”

It is true that Biden’s proposal—like the 1994 federal “assault weapon” ban, which expired in 2004—does not include confiscation of guns Americans already own. Instead he would give owners of the targeted firearms a choice: They could sell their guns to the federal government, or they could register them under the National Firearms Act (NFA), following the same procedure, including a background check and a $200 tax, that applies to machine guns. Unlike former presidential candidate Beto O’Rourke, Biden is not threatening to “take your AR-15.”

But state requirements for registration of “assault weapons” have been honored mostly in the breach, and Biden’s plan is likely to be even less successful now that talk of confiscation is in the air. When the government does not know who owns the guns it decides to ban, it can neither force people to register them nor seize them. It is perfectly rational for gun owners to worry that the first step will eventually lead to the second.

During the exchange in Detroit, Biden himself muddied the legal impact of his proposal. “Are you able to own a machine gun?” he asked. “No, machine guns are illegal,” the autoworker replied. “That’s right,” Biden confirmed. “How are AR-15s legal?”

It’s not actually true that “machine guns are illegal.” While new production for civilian use has been banned since 1986, machine guns owned before then can be legally possessed and transferred as long as the NFA’s requirements are followed. On one hand, Biden wants to treat “assault weapons” the same way machine guns are treated, which he says shows he does not favor confiscation. On the other hand, he erroneously says no civilian is legally “able to own a machine gun,” which contradicts his first point.

Biden argues that machine guns “are rarely used in crimes” because of the restrictions imposed by the NFA. But even without those restrictions, “assault weapons” also are used in a very small share of gun homicides. In 2018, according to the FBI’s numbers, rifles in general—only a subset of which would qualify as “assault weapons”—accounted for 4 percent of guns used in firearm homicides where the type of weapon was specified. Handguns, by contrast, accounted for 93 percent of the weapons used in those cases. A tally by Sen. Dianne Feinstein (D–Calif.), who sponsored the original “assault weapon” ban and has introduced a new, stricter version that is probably similar to what Biden favors, suggests that the firearms she considers intolerable were used in something like 0.5 percent of gun homicides from 2004 through 2011.

The argumentative autoworker raised that point with Biden, noting that handguns are much more commonly used in homicides than the firearms he wants to ban. “Why are you advocating for [a ban on] assault rifles?” he wondered. Biden did not answer.

There is a good reason for that. Biden has conceded that the 1994 “assault weapon” ban had no impact on the lethality of legal firearms, which remained “just as deadly.” He says he would fix that problem, but it is hard to see how, since “assault weapons” are an arbitrarily defined category of firearms distinguished by military-style features that make little or no difference in the hands of a murderer. No amount of tinkering with the list of forbidden characteristics can ban guns that are effective in mass shootings without also banning guns that are commonly used for self-defense and other legal purposes, which would clearly violate the Second Amendment.

Biden wants us to believe that owning an AR-15 is constitutionally analogous to “falsely shouting fire in a theatre and causing a panic,” which is “not free speech.” But he cannot explain why. The Supreme Court has said the Second Amendment guarantees the right to own firearms “in common use” for “lawful purposes,” a standard that so-called assault weapons easily satisfy, since they are among the most popular rifles sold in the United States.

Today Biden repeatedly asked his interlocutor whether anyone really needs a magazine that holds “100 rounds,” which is doubling misleading. First, the issue of ammunition capacity is distinct from the definition of “assault weapon,” since a gun could fall outside Feinstein’s criteria and still accept a 100-round magazine. Second, Biden’s proposal to ban “high-capacity magazines,” assuming it is similar to Feinstein’s, draws the line at 10 rounds, not 100. That rule would ban magazines commonly used for self-defense.

To show that he supports the Second Amendment, Biden noted that he owns shotguns and that “my sons hunt,” which is not exactly reassuring for anyone who values the right to armed self-defense. Biden also has said that if you must keep a firearm for home defense, a shotgun is the way to go—questionable advice that has been rejected by the millions of Americans who own handguns for that purpose, a choice the Supreme Court has recognized as constitutionally protected. Feinstein seems to share Biden’s affection for shotguns, hundreds of which are included in her bill’s gratuitous list of specifically exempted firearms.

Since even shotguns are more commonly used in homicides than “assault weapons” are, the constitutional or public safety distinction that Biden and Feinstein have in mind is rather mysterious. If Biden wants gun owners to believe him when he says he respects the Second Amendment, he will have to do a better job of explaining which rights he thinks it protects and why.

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Leaked Covid-19 Documents: Hospitals Prep For 96 Million Infections & 480K Deaths

Leaked Covid-19 Documents: Hospitals Prep For 96 Million Infections & 480K Deaths

Authored by by Mac Slavo via SHTFplan.com,

Leaked medical conference documents have warned that hospitals across the United States are preparing for 96 million coronavirus infections.  Not only that, but the same document wants hospitals to make preparations for 480,000 deaths from this outbreak.

the American Hospital Association (AHA) conference in February reveal that US hospitals are preparing for:

  • 96 million coronavirus infections

  • 4.8 million hospitalizations from the infection

  • 480,000 deaths in the United States

According to Business Insider, these leaked documents are telling. Dr. James Lawler, a professor at the University of Nebraska Medical Center, presented the harrowing “best guess” estimates of the extent of the outbreak to hospitals and health professionals as part of the AHA webinar called What Healthcare Leaders Need to Know: Preparing for the COVID-19 on February 26.

These documents paint a bleaker picture for those who are over the age of 60. According to the leaked documents:

People aged 80 and over have a 14.8% chance of dying if they contract the infection, the slides revealed. The risk declines with youth, though those aged 70-79 and 60-69 are still placed at a significant risk, with 8% and 3.6% mortality rates respectively.”  –Business Insider

Additionally, it’s worth noting that Dr. Lawler’s estimate of 480,000 deaths would indicate a death rate of just half a percent (0.5%), which is significantly lower than death rates being reported by the WHO (3.4%) and the nation of Italy (5%). If the death rate in the United States reached just 2% while 96 million Americans are infected, that would result in 1.92 million deaths.

The United States has fewer than one million hospital beds, and they are typically around 75% occupied by existing patients, unrelated to the coronavirus. Natural News has calculated that U.S. hospital beds will be overrun by May 30th if nothing is done to stop the exponential spread of the coronavirus.

Mike Adams, aka, the Health Ranger at Natural News, has a new video out presenting the math and statistics found in these leaked documents.

If you want to die, heed the advice of Mike Pence and do nothing to prepare for the pandemic. The Surgeon General also hopes you stop buying protecting gear so that you get infected and die more quickly, thereby making more protective equipment available to the government which is stockpiling like mad at this very minute.”  –Mike Adams, Natural News

As Alt-Market’s Brandon Smith notes, it is also likely that hospitals are prepping for only 480,000 deaths because that is the maximum number of terminally ill patients their facilities can handle anyway. 

If Italy is any indication and this virus does not burn out soon, the death rate will probably be between 3%-5%.  The real number of infected versus dead will not be accurately calculated for another year at least…


Tyler Durden

Tue, 03/10/2020 – 17:45

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Watch Live: Task Force Unveils ‘Details’ Of Trump’s Coronavirus-Impact Bailout Plan

Watch Live: Task Force Unveils ‘Details’ Of Trump’s Coronavirus-Impact Bailout Plan

Update (1729ET): Barely more than a minute after our last update, Javers reported that they’re setting up the Vice Presidential seal at the podium in the press room, indicating that Trump will not be joining the task force this evening.

* * *

Update (1727ET): Eamon Javers just tweeted that nobody is sure whether President Trump is coming to the press conference tonight.

That was basically the impression we had. Trump did promise to release the details of the plan ‘tonight’. But if there aren’t any details to release…well.

GIven his showman instincts, a surprise appearance isn’t out of the question.

* * *

Last night, as the White House scrambled think of something, anything that they could say that might calm anxious markets (and increasingly anxious workers and business owners), President Trump dropped in on the task force’s press briefing (VP Pence, the task force’s nominal head, was supposed to lead) and told reporters that the administration was planning a stimulus package aimed at helping Americans cope with the economic fallout from the outbreak.

Trump has already signed an $8.3 billion stimulus package into law, but that money’s been earmarked to help the CDC and states fight the outbreak via testing and accomplish urgent priorities like rapidly expanding bed capacity to handle the soon to be overwhelming numbers of patients with life-threatening pneumonia who will be flooding emergency rooms – at least, that’s according to the most dire predictions of states and the CDC.

Now, he needs to convince markets that the administration is going to come through with the fiscal stimulus that every analyst, economist and armchair trader with a twitter account believes is necessary to save the US economy – if not the whole global economy – from sliding into a brutal recession.

With markets finishing in the green on Tuesday, the sense of urgency has slackened somewhat. Still, reporters are claiming that there is no plan, and that Trump essentially pulled the payroll tax cut idea out of his ass, failing to run it by his staff and senior administration officials, as well as the Congressional Republican leadership.

But since President Trump promised earlier to unveil the ‘details’ of his plan tonight, it appears he will be joining the task force to lay out the broad strokes of a ‘plan’ that’s reportedly nowhere near finished.

Will Trump start a war with fellow Republicans at a time of urgent national crisis, with his electoral future on the line? Hopefully, for his sake, his advisors have made clear just how important it is to convey to the public that this is a serious problem that Trump and his administration are meeting with serious solutions.

During a tweet sent a few hours ago, Trump praised the task force, and notably omitted any reference to the media conspiracy he alleges is being orchestrated to blame him for the outbreak.

The press conference is set to begin at 5:30, but like most Trump Administration press briefings, we suspect it will be late. Will Trump and the White House task force manage to restore confidence in the market and stop today’s rally from being just a dead cat bounce?

You’ll have to watch to find out:


Tyler Durden

Tue, 03/10/2020 – 17:27

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Biden Likens Owning an AR-15 to Falsely Shouting Fire in a Crowded Theater

Former Vice President Joe Biden, the leading contender for the Democratic presidential nomination, today got into a heated argument with a Detroit autoworker who challenged his support for a new federal “assault weapon” ban. Even leaving aside Biden’s reference to an “AR-14” when he meant “AR-15,” the conversation revealed both the illogic of his proposal and the suspicions it understandably arouses among many gun owners.

Cellphone video of the encounter shows a bearded man in a hard hat accusing Biden of “actively trying to end our Second Amendment right and take away our guns.” Biden denied the charge. “You’re full of shit,” he said. “I support the Second Amendment. The Second Amendment, just like now, if you yelled fire, that’s not free speech…I have a shotgun. I have a 12-gauge, a 20-gauge. My sons hunt….I’m not taking your gun away at all.”

It is true that Biden’s proposal—like the 1994 federal “assault weapon” ban, which expired in 2004—does not include confiscation of guns Americans already own. Instead he would give owners of the targeted firearms a choice: They could sell their guns to the federal government, or they could register them under the National Firearms Act (NFA), following the same procedure, including a background check and a $200 tax, that applies to machine guns. Unlike former presidential candidate Beto O’Rourke, Biden is not threatening to “take your AR-15.”

But state requirements for registration of “assault weapons” have been honored mostly in the breach, and Biden’s plan is likely to be even less successful now that talk of confiscation is in the air. When the government does not know who owns the guns it decides to ban, it can neither force people to register them nor seize them. It is perfectly rational for gun owners to worry that the first step will eventually lead to the second.

During the exchange in Detroit, Biden himself muddied the legal impact of his proposal. “Are you able to own a machine gun?” he asked. “No, machine guns are illegal,” the autoworker replied. “That’s right,” Biden confirmed. “How are AR-15s legal?”

It’s not actually true that “machine guns are illegal.” While new production for civilian use has been banned since 1986, machine guns owned before then can be legally possessed and transferred as long as the NFA’s requirements are followed. On one hand, Biden wants to treat “assault weapons” the same way machine guns are treated, which he says shows he does not favor confiscation. On the other hand, he erroneously says no civilian is legally “able to own a machine gun,” which contradicts his first point.

Biden argues that machine guns “are rarely used in crimes” because of the restrictions imposed by the NFA. But even without those restrictions, “assault weapons” also are used in a very small share of gun homicides. In 2018, according to the FBI’s numbers, rifles in general—only a subset of which would qualify as “assault weapons”—accounted for 4 percent of guns used in firearm homicides where the type of weapon was specified. Handguns, by contrast, accounted for 93 percent of the weapons used in those cases. A tally by Sen. Dianne Feinstein (D–Calif.), who sponsored the original “assault weapon” ban and has introduced a new, stricter version that is probably similar to what Biden favors, suggests that the firearms she considers intolerable were used in something like 0.5 percent of gun homicides from 2004 through 2011.

The argumentative autoworker raised that point with Biden, noting that handguns are much more commonly used in homicides than the firearms he wants to ban. “Why are you advocating for [a ban on] assault rifles?” he wondered. Biden did not answer.

There is a good reason for that. Biden has conceded that the 1994 “assault weapon” ban had no impact on the lethality of legal firearms, which remained “just as deadly.” He says he would fix that problem, but it is hard to see how, since “assault weapons” are an arbitrarily defined category of firearms distinguished by military-style features that make little or no difference in the hands of a murderer. No amount of tinkering with the list of forbidden characteristics can ban guns that are effective in mass shootings without also banning guns that are commonly used for self-defense and other legal purposes, which would clearly violate the Second Amendment.

Biden wants us to believe that owning an AR-15 is constitutionally analogous to “falsely shouting fire in a theatre and causing a panic,” which is “not free speech.” But he cannot explain why. The Supreme Court has said the Second Amendment guarantees the right to own firearms “in common use” for “lawful purposes,” a standard that so-called assault weapons easily satisfy, since they are among the most popular rifles sold in the United States.

Today Biden repeatedly asked his interlocutor whether anyone really needs a magazine that holds “100 rounds,” which is doubling misleading. First, the issue of ammunition capacity is distinct from the definition of “assault weapon,” since a gun could fall outside Feinstein’s criteria and still accept a 100-round magazine. Second, Biden’s proposal to ban “high-capacity magazines,” assuming it is similar to Feinstein’s, draws the line at 10 rounds, not 100. That rule would ban magazines commonly used for self-defense.

To show that he supports the Second Amendment, Biden noted that he owns shotguns and that “my sons hunt,” which is not exactly reassuring for anyone who values the right to armed self-defense. Biden also has said that if you must keep a firearm for home defense, a shotgun is the way to go—questionable advice that has been rejected by the millions of Americans who own handguns for that purpose, a choice the Supreme Court has recognized as constitutionally protected. Feinstein seems to share Biden’s affection for shotguns, hundreds of which are included in her bill’s gratuitous list of specifically exempted firearms.

Since even shotguns are more commonly used in homicides than “assault weapons” are, the constitutional or public safety distinction that Biden and Feinstein have in mind is rather mysterious. If Biden wants gun owners to believe him when he says he respects the Second Amendment, he will have to do a better job of explaining which rights he thinks it protects and why.

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Yes, There Are Libertarians in Pandemics

It’s almost never a good idea to use a public health crisis to score points against your political opponents—and if you’re going to do it, you really ought to try to describe the situation accurately.

Actually, that second part applies even when there’s no public health crisis.

It has, however, become fashionable for certain elements of the Very Online Left to use the ongoing coronavirus outbreak as evidence that libertarians either don’t actually exist or that we quickly abandon our principles in the face of a pandemic. This recent outbreak of libertarian bashing—which makes only slightly more sense than the claims made by some on the right that libertarians are secretly running everything in Washington, D.C. and plotting to get your kids addicted to porn—seems to have started with a pithy tweet from Atlantic writer Derek Thompson on March 3. But it’s become a ubiquitous online “take” since Sunday afternoon, when Bloomberg opinion writer Noah Smith logged on.

The take may have achieved its final form—at least let’s hope so—with The Atlantic‘s publication on Tuesday of an 800-word piece from staff writer Peter Nicholas carrying the headline (sigh) “There Are No Libertarians in a Pandemic.”

Lazy? Yes. Inaccurate? Yes.

Nicholas’ article opens with a scene from CPAC—that’s the Conservative Political Action Conference, by the way—and proceeds to detail all the ways in which the Trump administration has botched the federal response to the new coronavirus, called COVID-19. You know, the same Trump administration that is just full to the brim with libertarians. The same administration that is raising barriers to free trade, making it more difficult for people to move to America, giving bail-outs to politically favored industries, considering more bailouts to more politically favored industries, trying to regulate free speech online, suing newspapers in an attempt to curb the First Amendment, and launching missiles into foreign countries without congressional authorization. That administration? That’s the libertarian one?

Nicholas tries to get away with this nonsense by setting up a false dichotomy. Trump is campaigning against socialism, you see, and libertarians also dislike socialism—so therefore the Trump administration must be libertarian. Right? Therefore, when Trump starts talking like a socialist himself—by promising coronavirus bailouts and the repurposing of disaster recovery funds to cover people who come down with COVID-19—it is proof positive that the libertarian world has abandoned its commitment to smaller government. Voila!

Perhaps The Atlantic‘s editorial staff has self-quarantined from its duties—how else to explain how an otherwise thoughtful publication could allow a headline that confuses libertarianism with anything that the Trump administration is doing? For that matter, maybe Smith and Thompson believe that an army of strawmen are an effective defense against COVID-19. I hope it works out for them.

As a libertarian in a pandemic, let me first assure you that we do in fact still exist.

And, in fact, it is the free market—and, to a lesser extent, its defenders—who will help you survive the new coronavirus. All those groceries you’re stocking up on in advance of the expected collapse of civilization? They didn’t end up on grocery store shelves because government officials ordered it to happen or because someone was feeling particularly generous today. That gallon jug of hand sanitizer delivered to your front door less than 48 hours after you ordered it online? It didn’t show up because Trump tweeted it into existence or because the surgeon general is driving a delivery truck around the country.

Bottled water? Face masks? They’re available because someone is turning a profit by making and selling them. The first latex gloves were invented in the 1880s but the disposable variety that are so useful right now have “only been available since 1964, as innovated by the private company Ansell, founded by Eric Ansell in Melbourne, Australia. Thank you international trade,” notes Jeffrey Tucker, editorial director of the American Institute for Economic Research.

Sure, one consequence of the success of private enterprise in reshaping the world is an interconnected planet that allows for something like COVID-19 to spread more rapidly than would have been possible in the past. But modern technology has also allowed doctors, private enterprises, and (yes) governments to respond more quickly than ever before.

It also means that you’ll have access to nearly every piece of film, television, and music ever recorded by human beings if you have to self-quarantine for a week or two. It means that humans have the ability to live far healthier lives than they did in 1918, when a global flu pandemic killed 50 million people. The people who live through the current coronavirus outbreak because of stronger immune systems made possible by steady diets won’t show up on any list of statistics after the coronavirus has passed, but capitalism is at least partially to thank for their survival.

In short, if you had to pick any time in human history to live through a global pandemic, you’d be incredibly foolish not to pick the current time. And the reason you’d pick this moment in history probably has less to do with who is running the White House, the Centers for Disease Control and Prevention, or the World Health Organization, and more to do with the technological and medical advances made possible by free enterprise.

“What is the mighty contribution of government these days?” asks Tucker. “To order quarantines but not to tell you whether you can step outside, how you will get groceries, how long it will last, who you can invite in, and when it will all end. Don’t try to call the authorities. They have better and bigger things to worry about than your sorry plight that is causing you sleepless nights and endless worry. Thank goodness for digital technology that allows you to communicate with friends and family.”

Yeah, there are libertarians in a pandemic. We’re the ones willing to acknowledge how much more all of this would suck if the market didn’t exist.

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Jefferies Board Approved Massive Executive Bonuses Despite Firm’s $182 Million WeWork Write Down

Jefferies Board Approved Massive Executive Bonuses Despite Firm’s $182 Million WeWork Write Down

Bringing back memories of 2008, WeWork’s dramatic collapse leading up to its IPO didn’t deter bankers at Jefferies from taking bonuses – rather, it encouraged them.

After Jefferies wrote down the stake of its WeWork holdings by $182.3 million last year, its board authorized $10.7 million in cash payouts to its CEO and three of his top lieutenants, according to Bloomberg, who cited a regulatory filing.

Better yet, writing down WeWork’s IPO wound up cutting into an earnings ratio that would have been effectively denied senior management their payouts. But the board used the excuse that WeWork’s valuation collapse was “completely unanticipated and dramatic” and made with the bonuses anyway. Maybe someone should tell them that’s what can happen when you’re making investments for a living.

In the past, Jefferies’ board had said there should be a “strong link between executive compensation and performance.” It appears as though that is only true in cases where executives are entitled to their bonuses.

Without the collapse of WeWork, executives would have met the ratio parameters necessary to get their bonuses. Occasionally, directors have discretion over adjusting bonus awards for unforeseen circumstances, which can sometimes draw criticism from proxy firms and investors. 

The bonuses were issued to CEO Richard Handler, President Brian Friedman, Chief Financial Officer Teresa Gendron and General Counsel Michael Sharp. For the year, Handler was paid $43 million in stock, $1 million in a cash salary and a $4.5 million bonus. The bonuses are generally linked to a metric that compares the firm’s net income to book value and the bank posted a 5.89% return for 2019, which was short of the company’s 6% bonus threshold.

Without WeWork, the ratio would have been 7.74%. So, like every company does now with non-GAAP earnings “ex-items”, Jefferies simply played pretend and acted as though WeWork, the largest IPO blowup story possible of the last decade, never happened. 

The Board defended the payouts citing hiring a new class of investment bankers that’s 49% female and avoiding regulatory scrutiny for the year. A spokesman for Jefferies declined to comment to Bloomberg. We wonder why.


Tyler Durden

Tue, 03/10/2020 – 17:15

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“Brace For Impact” – The Real Economy Is Degrading Very Quickly

“Brace For Impact” – The Real Economy Is Degrading Very Quickly

Via The World Complex blog,

What a week we just had in the precious metals market.

From a huge drop last Friday – which in the past would have presaged further declines the following week – to a significant rebound in the gold price, coupled this time with a major drop in the US dollar – which I will argue may be the signal for a switch to inflationary conditions.

First the chart

We see the nice deflationary trend of the past 18 months looks to have been decisively broken by last week’s action.

Although it will be a few weeks before we can be absolutely sure, last week suggests that we are about to embark on another bout of inflation, no doubt as carefully calibrated by the Masters of the Universe as they can fill a shot-glass of whiskey from a pool of liquidity the size of a football field. Either, like a small child pouring very carefully, they have poured only too much, or they have sloshed out enough whiskey to fill a large swimming pool, and we are about to see what happens when it all lands in a shot glass.

Now, why the need for some liquidity?

Another chart:

This graph plots the gold-copper ratio against its rate of change. I typically interpret this ratio as an indicator of the real world preference between bricks and mortar and financials. When the ratio is low, it’s a sign that people would rather make refrigerators than chase derivatives.

Rate of change is the vertical axis. Near the top of the chart means that the plot is shifting towards the right at high speed. Currently, the system is moving toward the right (ratio is increasing) at the fastest rate in the last couple of years.

To me, this means the real economy is degrading very quickly.

Thus the Fed may feel pressured to pump out some liquidity.

If we are moving into an inflationary cycle, then one consequence, according to this recent post, is a decrease in the gold-silver ratio. Given that moves tend to get larger as liquidity sloshes around the system, the gold-silver ratio could hit a significant low, implying a new all-time high for the silver price (in fiat terms).

Normally I would wait a few weeks to have greater certainty, but if there is a swimming pool full of whiskey heading for a shot glass I want to get as close to ground zero as possible with a bucket.


Tyler Durden

Tue, 03/10/2020 – 17:00

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Yes, There Are Libertarians in Pandemics

It’s almost never a good idea to use a public health crisis to score points against your political opponents—and if you’re going to do it, you really ought to try to describe the situation accurately.

Actually, that second part applies even when there’s no public health crisis.

It has, however, become fashionable for certain elements of the Very Online Left to use the ongoing coronavirus outbreak as evidence that libertarians either don’t actually exist or that we quickly abandon our principles in the face of a pandemic. This recent outbreak of libertarian bashing—which makes only slightly more sense than the claims made by some on the right that libertarians are secretly running everything in Washington, D.C. and plotting to get your kids addicted to porn—seems to have started with a pithy tweet from Atlantic writer Derek Thompson on March 3. But it’s become a ubiquitous online “take” since Sunday afternoon, when Bloomberg opinion writer Noah Smith logged on.

The take may have achieved its final form—at least let’s hope so—with The Atlantic‘s publication on Tuesday of an 800-word piece from staff writer Peter Nicholas carrying the headline (sigh) “There Are No Libertarians in a Pandemic.”

Lazy? Yes. Inaccurate? Yes.

Nicholas’ article opens with a scene from CPAC—that’s the Conservative Political Action Conference, by the way—and proceeds to detail all the ways in which the Trump administration has botched the federal response to the new coronavirus, called COVID-19. You know, the same Trump administration that is just full to the brim with libertarians. The same administration that is raising barriers to free trade, making it more difficult for people to move to America, giving bail-outs to politically favored industries, considering more bailouts to more politically favored industries, trying to regulate free speech online, suing newspapers in an attempt to curb the First Amendment, and launching missiles into foreign countries without congressional authorization. That administration? That’s the libertarian one?

Nicholas tries to get away with this nonsense by setting up a false dichotomy. Trump is campaigning against socialism, you see, and libertarians also dislike socialism—so therefore the Trump administration must be libertarian. Right? Therefore, when Trump starts talking like a socialist himself—by promising coronavirus bailouts and the repurposing of disaster recovery funds to cover people who come down with COVID-19—it is proof positive that the libertarian world has abandoned its commitment to smaller government. Voila!

Perhaps The Atlantic‘s editorial staff has self-quarantined from its duties—how else to explain how an otherwise thoughtful publication could allow a headline that confuses libertarianism with anything that the Trump administration is doing? For that matter, maybe Smith and Thompson believe that an army of strawmen are an effective defense against COVID-19. I hope it works out for them.

As a libertarian in a pandemic, let me first assure you that we do in fact still exist.

And, in fact, it is the free market—and, to a lesser extent, its defenders—who will help you survive the new coronavirus. All those groceries you’re stocking up on in advance of the expected collapse of civilization? They didn’t end up on grocery store shelves because government officials ordered it to happen or because someone was feeling particularly generous today. That gallon jug of hand sanitizer delivered to your front door less than 48 hours after you ordered it online? It didn’t show up because Trump tweeted it into existence or because the surgeon general is driving a delivery truck around the country.

Bottled water? Face masks? They’re available because someone is turning a profit by making and selling them. The first latex gloves were invented in the 1880s but the disposable variety that are so useful right now have “only been available since 1964, as innovated by the private company Ansell, founded by Eric Ansell in Melbourne, Australia. Thank you international trade,” notes Jeffrey Tucker, editorial director of the American Institute for Economic Research.

Sure, one consequence of the success of private enterprise in reshaping the world is an interconnected planet that allows for something like COVID-19 to spread more rapidly than would have been possible in the past. But modern technology has also allowed doctors, private enterprises, and (yes) governments to respond more quickly than ever before.

It also means that you’ll have access to nearly every piece of film, television, and music ever recorded by human beings if you have to self-quarantine for a week or two. It means that humans have the ability to live far healthier lives than they did in 1918, when a global flu pandemic killed 50 million people. The people who live through the current coronavirus outbreak because of stronger immune systems made possible by steady diets won’t show up on any list of statistics after the coronavirus has passed, but capitalism is at least partially to thank for their survival.

In short, if you had to pick any time in human history to live through a global pandemic, you’d be incredibly foolish not to pick the current time. And the reason you’d pick this moment in history probably has less to do with who is running the White House, the Centers for Disease Control and Prevention, or the World Health Organization, and more to do with the technological and medical advances made possible by free enterprise.

“What is the mighty contribution of government these days?” asks Tucker. “To order quarantines but not to tell you whether you can step outside, how you will get groceries, how long it will last, who you can invite in, and when it will all end. Don’t try to call the authorities. They have better and bigger things to worry about than your sorry plight that is causing you sleepless nights and endless worry. Thank goodness for digital technology that allows you to communicate with friends and family.”

Yeah, there are libertarians in a pandemic. We’re the ones willing to acknowledge how much more all of this would suck if the market didn’t exist.

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