Author: admin

Summary:

• NYC closes schools in ‘hot spots’

• Horace Mann school also closes amid outbreak

• US in the grip of “dangerous” COVID-19 comeback

• Cases continue to rise across US as Midwest drives new wave

• GSK + VIR say new antibody treatment enters Phase 3

• Ireland’s cabinet suggests raising alert level

• China in talks to have WHO ‘assess’ vaccines

• India reports fewest new cases since Aug. 25

* * *

Schools in ‘hot spots’ across NYC are closing Tuesday – a day earlier than NYC Mayor Bill de Blasio had hoped – as Gov Cuomo, de Blasio’s political arch-rival, makes changes to the mayor’s proposal, which was subject to state approval. De Blasio had wanted to shutter all “non-essential” business, in the first rollback of the city’s summertime reopening efforts, but Gov. Cuomo wisely staid his hand.

Of course, NY isn’t alone, as outbreaks are worsening across the Midwest and other parts of the country, while states like NY and NJ see incipient new outbreaks of their own.

In addition to the public schools in NYC’s hot spots, Horace Mann, a private school in the Bronx, has suspended in-person classes for its middle and upper grades for two weeks after the school was alerted to a mini outbreak among its teaching staff.

But, as Bloomberg points out, South Dakota and North Dakota are seeing some of the worst outbreaks relative to their populations.

While big states like California, Florida and Texas are seeing cases continue to decline, outside of the Sun Belt, the US outbreak is growing.

Scientists in the US have long warned of a looming “Twindemic” as the coronavirus mixes with the common cold and the seasonal flu. And in the Midwest, where falling temperatures are starting to send people indoors, many states are seeing the virus arrive in towns and small communities where it has been almost totally absent. In Nebraska, the seven-day average of cases hit a record Saturday, joining Midwestern and Western states including Wisconsin, Montana and the Dakotas in confronting a virus that had eluded them until recently.

“We’re in very bad shape, never having achieved any sense of containment, never gotten below 20,000 new confirmed cases per day,” said Eric Topol, director of Scripps Research Translational Institute. “Things can only get worse on this course.”

Meanwhile, as Trump’s return to the White House captivated the country on Monday, the NYT reported – as we mentioned last night – that the administration is once again pressuring the FDA to make changes to its proposed new vaccine guidelines to strip out a section that would essentially rule out the approval of a vaccine before election day.

Despite rising case numbers, Texas Gov Greg Abbott is reportedly preparing to announce another round of rollbacks for the state’s COVID-19-related restrictions.

Finally, on the pharmaceutical side, GlaxoSmithKline and VIR have announced that their antibody therapy, which is similar to convalescent plasma and other techniques seeking a ‘cure’ for COVID-19.

Here’s more COVID-19 news from last night and this morning:

Global cases reach 35,485,738. The worldwide death toll has hit 1,044,085 (Source: JHU)

US COVID cases +39,562 (prev. +35,504) and deaths +460 (prev. +690). New York COVID cases +933 (prev. +1,222) and deaths +8 (prev. +14). (Source: Newswires).

Biontech and Pfizer have initiated a rolling submission to the European Medicines Agency for COVID-19 vaccine candidate as the EU scrambles to approve the leading vaccine projects, which also includes AstraZeneca and Oxford (which has also struck a deal for rolling submission of trial data) (Source: AFP).

France COVID cases +5,084 (prev. +12,565) and deaths +69 (prev. +32). (Source: AFP).

Ireland’s Cabinet recommended to raise the country’s alert level to 3, from, at midnight Tuesday (Source: RTE).

Iranian President Hassan Rouhani reportedly may have contracted COVID-19 (Source: FARS).

China is in talks to have its locally produced COVID-19 vaccines assessed by the World Health Organization, as a step toward making them available for international use, a WHO official says. Hundreds of thousands of essential workers and other groups considered at high risk in China have been given locally developed vaccines even though clinical trials had not been completed, raising safety concerns (Source: Nikkei).

India’s latest daily new case count was just 61,267, fewer than the 74,442 a day earlier and the lowest single-day tally since Aug. 25. India has seen a total of 6.69 million. Deaths rose by 884 to 103,569 (Source: Nikkei).

By Michael Every of Rabobank

Back to the Roach Motel.

President Trump indeed returned to the White House yesterday, where people seem to be going down with Covid like flies. Luckily he is probably already immune, as he noted. Trump arrived by helicopter in a Leni Riefenstahl video clip and urged Americans –for the second time, the first by Tweet– not to be afraid of Covid, and not to let it dominate their lives. He had, he said, fought the virus as a leader. He had to do what he done, knowing the risks, involved.

Critics will point out that the man who just fought the virus is not yet out of the woods medically, and was caught puffing after climbing the stairs: true, but have they ever seen what Trump looks like after climbing any set of stairs at any time? The same critics point out Trump just benefitted from experimental, world class healthcare at public expense even as he has nominated a justice to the Supreme Court who may vote to repeal existing conditions protections offered by Obamacare.

However, one has to also consider that 2020 is likely a base election, and Leni Riefenstahl and Trump know how to fire up a base. It is very easy to call for continued lockdowns when one has a safe job paying full salary to work comfortably from home – which includes most Trump critics (and, full disclosure, this writer too). It’s far less attractive an option for a small business owner facing ruin, or for the self-employed, facing ruin, and even for the ‘always one rule for them and another for us’ blue collar voters who have had to keep working through Covid regardless, for example, delivering food to those working from home. Those are all Trump voters.

In short, objective analysis in partisan times would suggest there is going to be a flood of justified criticism of Trump’s actions (again), but likely also a lot of base support. Unless Trump has a health lapse, as his critics warn – but that is where we have been since Friday anyway.

Stocks certainly perked up on the Trump news, and 10-year Treasury yields rose too in a Lazarus effect….although earlier in the day we were told this was because Biden was far ahead in the polls. Or perhaps this was due to hopes for more US stimulus, which Trump has tweeted he very much wants done, and which appears to be edging closer?

On which, we must enter another Roach Motel. Yesterday, the Financial Times published an article from Stephen Roach –formerly of Morgan Stanley, and now a senior lecturer at Yale– in which he calls for the imminent collapse of the US dollar (which will decline by a third by the end of 2021, apparently) and its loss of global reserve currency status. Such pieces from Roach, always with the same theme, seem to appear once or twice a year now, and always get coverage in the financial press, regardless of the fact that they are nonsense. Two colleagues contacted me last night about the piece, which shows how much consternation it caused: one to double check that Roach’s arguments were indeed as silly as they looked and he wasn’t going mad.

Anyway, Roach is roaching that the USD will collapse because the US is running a vast fiscal deficit, and that will cause a vast current account deficit, and then foreigners won’t want to fund it, and then the USD will plunge, and then something else will emerge to replace it globally. This is what they teach at Yale today, apparently.

Naturally, this overlooks that the vast fiscal deficit –which looming stimulus would indeed make vaster– represents a transfer from the public sector to the private sector, so the huge deficit on one hand is matched by a huge surplus on the other. Think of those cheques for USD1,200 going to households, and all the households who just bank it while working from home. In other words, if the US runs a 20% fiscal deficit, for example, it won’t run a 20% current account deficit too: private savings will spike at the same time, and it will only run perhaps a 4% deficit overall.

So, yes, the USD can go down. But it’s already gone down a long way vs. EUR and JPY of late. Does anyone think the ECB and BOJ —who have the same fiscal deficit problems as the US!!!— are going to sit there and do nothing if EUR should try to go up to 1.40 and JPY to 80, bringing both crushing deflation? Likewise, Roach ignores that the USD is up a lot against many EM FX despite what has happened so far fiscally and politically. Is he really saying everyone will now want to hold EM and not US assets? This is also what they apparently teach at Yale.

That is a parallel to the equally tragicomic ‘But nobody will buy US Treasuries!’ argument, which plays out ad nauseum even as yields trend ever lower: on which, this latest UST yield spike is another false dawn unless Trump or Biden push for serious *structural* change in the economy – and that will take a lot more than a Build Back Better sign falling off of a lectern, Theresa May style, or a Leni Riefenstahl video of a helicopter and a balcony.

Roach also can’t make an argument for how any other currency or asset can realistically replace the USD, which is literally armed to the teeth to stop that happening, and where liabilities in the Eurodollar market exceed available USD by 9 to 1. It will just happen, he says. Such ideas are of course much appreciated in China: here is Roach being praised for his bold commentary in the official China Daily, for example.

Indeed, recall that on 8 October the arms embargo on Iran ends. Russia has suggested it will then sell Tehran its S-400 defence system. The US has said anyone doing so will feel the full effect of the USD ‘weapon’. Likewise, 12 October is the 90-day mark following the passage of the Hong Kong Autonomy Act, by which date China hawk Mike Pompeo must compile a list of each foreign person who is “materially contributing to, has materially contributed to, or attempts to materially contribute to the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law”. That then starts a short countdown to financial institutions being listed; which starts the countdown to the imposition of US sanctions. The USD weapon again.

Against this backdrop, people will be avoiding USD and looking at EUR or CNY or others? Only in the way people are always deliberately looking for Roach Motels, rather than ending up in one. For one example, the Aussie trade balance today was just AUD2,643m vs. an expectation of AUD5,050m: exports were down 4% m/m and imports up 2%. The RBA left rates on hold while making clear getting unemployment down is an “important national priority”, and that it is ready to ease again: it is waiting to see the budget, out later today (and a fiscal deficit expected to be around 12% of GDP) before acting, however. Yet expect rates at 0.1% and more QE as soon as November: which according to Mr Roach means AUD is going up to 0.90 by end-2021.

During yesterday’s market ramp, Eminis hit a brick wall at exactly 3,400 which according to SpotGamma yesterday is exactly where the “gamma wall” in the S&P was to be found.

However, now that the trading range has reset higher and the S&P is set to open around 3,400 what are the key “gamma” levels for the market?  For the answer we go to the latest note out of our friends at SpotGamma who note this morning that not surprisingly, the largest interest area shifts from 3350 up to 3400.

As the derivative experts explain, if the market can sustain the rally up into 3500, “gamma notional levels increase which should add some stability to S&P prices” however, the tricky part for bulls here is that the modeled “Call Wall” did not roll up much overnight. That said, they see 3410 as the largest positive gamma strike “which indicates resistance and/or a tendency for markets to mean revert should this level be broken.”

For todays action, they list 3400 as the key pivot and a large price magnet, while 3350 remains support and a break of that area suggests a sharp expansion in volatility. To the upside, the primary resistance is at 3410, but note a large Combo bar at 3428.

Finally, on the single stock side, SG writes that while they have seen a small uptick in call positions they “aren’t detecting anything abnormal” which probably means that SoftBank is taking a break from last week’s gamma squeeze.

Authored by Alan Macleod via MintPressNews.com,

A UK court ruled that the administration of Boris Johnson’s position that Juan Guaidó is the legitimate ruler of Venezuela is far from equivocal, paving the way for over $1 billion of the country’s gold to be released.  

A United Kingdom court has handed the Venezuelan government of Nicolas Maduro a major win today, overturning a previous ruling from a lower court that legitimized the British government’s decision to freeze Venezuelan government gold reserves held in the Bank of England. The English Court of Appeal ruled that the Conservative administration of Boris Johnson’s position that Juan Guaidó is the country’s legitimate ruler was far from equivocal, potentially paving the way for some $1.95 billion of the Central Bank of Venezuela’s gold to be accessed.

Following President Trump’s lead, in July, the U.K. government took the extraordinary step of derecognizing President Maduro in favor of the self-declared Guaidó, despite the fact that for nearly six months, he had not even been a member of his Popular Will party, let alone its leader. The move was labeled “highway robbery” by supporters of the Venezuelan government.

A nearly unheard of politician before his ascension to the role of head of the Venezuelan National Assembly (a post given out on a yearly rotational basis among all parties in the institution) in January 2019, Guaidó shocked the country by using his appointment to unilaterally declare himself president of the country. He then led a series of coup attempts throughout 2019 and 2020, the last of which involved paying Trump-linked American mercenaries to shoot their way into the presidential palace. However, the plan ended in complete disaster, with the Americans subsequently sentenced to 20 years of prison time.

Guaidó based his claim to power on Article 233 of the Venezuelan Constitution, which allows a president to be removed if he “abandons his position” or becomes “permanently unavailable to serve” for whatever reason. Maduro, however, had clearly not left his post. Regardless, if he had, Article 233 states that the vice-president would take charge until a new election by universal suffrage was held. Guaidó’s party was not even registered to stand in elections, having boycotted them the year previously under U.S. orders. The Trump administration had attempted to organize a total boycott from opposition parties, thereby undermining the process’ legitimacy, even threatening to sanction opposition presidential candidate Henri Falcón. Despite the partial boycott, turnout was relatively high. A larger percentage of the total electorate still cast their ballot for Maduro than Americans did for Trump in 2016 or Obama in 2012. The U.S. government is currently trying the same tactic in the upcoming December elections to the National Assembly, the State Department releasing a memo in September declaring that all opposition parties taking place were considered “puppet parties” participating in an “electoral charade,” and would therefore be sanctioned.

The United Kingdom and the United States have been leaders in a years-long economic and political campaign to oust Maduro from power, hitting the country with sanctions and attacking it politically. When Maduro attempted to use the impounded gold to buy humanitarian aid from the United Nations to deal with the coronavirus pandemic, the Johnson administration blocked it. Meanwhile, American sanctions, declared illegal by the U.N., have been responsible for over 100,000 Venezuelans’ death. The U.S. government is also continually provoking Venezuela militarily. Last week, it sent a warship — the U.S.S. William P. Lawrence — into the Caribbean, just 16 nautical miles from Venezuela’s coast. Defense Minister Vladimir Padrino described the action as “erratic and childish,” implying Trump was attempting to foment an “October Surprise” conflict to boost his reelection chances.

The U.S. has also funded and supported Guaidó throughout his coup attempts, grooming him since he was a student leader. Recently, they have been channeling money confiscated from the Venezuelan government to Guaidó so that he can personally pay every healthcare worker a huge stipend.

While the Maduro administration is very unpopular, the opposition has had little success shaking their image as elitists interested only in returning Venezuela to its former status as a U.S. client state. Guaidó is presented in Western media as a breath of fresh air and a break with that tradition. However, as the privately-educated son of an international airline pilot, and somebody who attended George Washington University (an impossible task for those who do not come from the elite), he has had little success persuading his countryfolk to get behind his vision for the country. A recent poll found that 3 percent of Venezuelans recognize him as president. Despite this, he has received virtually unanimous support in Washington and London. However, there is no doubt that today’s court ruling is a loss for him and a win for Maduro.

It appears COVID-Lockdowns have crushed the US trade war plan…

The US trade balance collapsed to its biggest deficit since 2006 in August at $67.1bn…

Source: Bloomberg

This was worse than the $66.2bn expectation as total imports increased 3.2% to $239 billion, while exports rose 2.2% from the prior month to $171.9 billion.

The further increase in imports suggests companies responded to stronger domestic demand amid lean inventories.

The nation’s surplus in services shrank to the lowest since 2012 as the goods deficit hit a record high…

Source: Bloomberg

Interestingly the China trade balance improved very marginally in August

Source: Bloomberg

Is it any wonder why the USDollar is under pressure?

Authored by James Howard Kunstler via Kunstler.com,

Hallelujahs echoed across the Blue Media late last week when the news broke that Donald Trump tested positive for coronavirus.

For four years the president had foiled every ambuscade set along his path by a morally-inflamed, predatory Resistance, and each time he beep-beeped his way around the trap. But, now, with a little help from a pitiless universe, they had him! A gazillion tiny, viral assassins were stealing through his bloodstream like so many microscopic jihadis, primping him for an agonizing death: his alveoli withering, red corpuscles robbed of their vital O2, pink foam issuing from his nostrils, toes and fingers turning blue-green — and most deliciously of all, he’d remain conscious of his imminent defeat, of the life (which he’d never deserved in the first place) draining by degrees from his wicked, orange, bloated, supine carcass…

Except… wait a minute… what the hell…? How could it be! Late Sunday he somehow arose from his bed-of-death, ordered pizza (with meat!) for a thousand imps and demons camped outside Walter Reed Hospital, and walked under his own power (!) into a limousine to take a ride around the block and wave at his unholy minions! The cheek of this man!

CNN had a whack attack. Brian Stelter was beside himself, hinting that sinister forces had punked the network, and all the other righteous Resistance cadres, and that Mr. Trump could be endangering every federal employee down to the enlisted men posted overseas by venturing from his sickroom. The New York Times went farther afield (of course), declaring that “the murky and shifting narrative of his illness was rewritten again with grim new details.” Nicely put by an outfit that has come to specialize in shifting narratives!

And indeed, the new Resistance narrative demands to know just exactly when did the president start to feel ill? Did he, perhaps on-purpose, haul his ailing, hulking, scheming Golem ass into the Cleveland debate venue with the hope of infecting his rival, delicate Ol’ White Joe Biden? Did he recklessly put at risk the White House staff, dignitaries and luminaries coming and going, their family members, associates, underlings, servants, children? Did he threaten the global order, world peace, the fate of humanity?

So now, a keening wail of lamentation rings out across the land at Mr. Trump’s possible, dastardly recovery. How dare he! — to paraphrase Saint Greta Thunberg. 209,000 other Americans died, and not him! What vile and unholy devices got him out of a sure death sentence? No doubt Democratic Party astrologasters and consulting augurers will be searching for clues among the orbiting planets and the spilled organs of sacrificed chickens in the days to come. Perhaps Rep. Adam Schiff (D-CA) can snare a few of the president’s attending physicians into his House Intel Committee and rev up another impeachment for going against doctors’ orders. Wouldn’t that be a delectable counter to the looming confirmation process for Ruth Bader Ginsburg’s replacement next door in the Senate this month?

Over his dead body, Senate Minority Leader Chuck Schumer is hinting — a tantalizing prospect, with Covid-19 on the loose. It was Chuck who memorably told Rachel Maddow of MSNBC in 2017 that the Deep State “has six ways from [sic] Sunday at getting back at you.” By my count, they’re well over their allotted six by now. Not only did they all fail, but the seditionists behind them are liable to wind up behind bars before this is all over, perhaps even a few of Senator Schumer’s colleagues.

Anyway, Majority Leader McConnell isn’t buying Mr. Schumer’s sob story. “The Senate’s floor schedule will not interrupt the thorough, fair and historically supported confirmation process,” McConnell said on Saturday. The hearings are pegged to begin on October 12. Prediction: they will run three days, tops, and the nominee will sail through. No doubt Senator Schumer and company will be combing the legislative rules thickets with their Lawfare bush-beaters in search of some recondite, magic by-law that might prevent the deal from going down. Or else Chuck will threaten to shoot a puppy on the floor of the Senate if the Amy Coney Barrett hearing proceeds.

[President Trump’s discharge from, Walter Reed] was loaded to the brim with portentous metaphor, mainly, that Mr. Trump has overcome yet another adversity, specifically one that the Resistance has been using to scare the public into compliance with economy-wrecking rules. As the president re-enters something like normal life in the days ahead, perhaps the rest of America will rethink the abnormalities of 2020. Perhaps they will notice the Democratic Party’s investment in the Covid-19 lockdown narrative, and what it has done to their livelihoods, their families, and their futures. Maybe watching Mr. Trump get through this, they will see a way out of the woods.

Submitted by Irina Slav of OilPrice

Saudi Arabia appears to be more upbeat about the immediate future of oil prices than fundamentals warrant, according to Goldman Sachs analysts. These have calculated that the Saudi budget plan is based on a Brent average of $50 a barrel between 2020 and 2023, according to Bloomberg.

“Using our own estimates for the breakdown of government revenues, we calculate that the numbers presented in the budget statement are based on an average oil price of around $50 a barrel between 2020 and 2023,” one UK-based Goldman analyst told Bloomberg.

However, even at $50 a barrel, which is far from certain, Brent would be cheaper than Saudi Arabia needs it to be to shrink its deficit. Even the Saudis themselves have acknowledged the effect the pandemic has had on their finances. In a recent update, the governor of the Saudi Arabian Monetary Authority said the financial outlook for the year remained uncertain.

In July, the International Monetary Fund (IMF) said that the price plunge and the oil production cuts would hit oil exporters in the Middle East and North Africa hard, with the combined oil income for those countries expected to plummet by US$270 billion this year compared to 2019.

Saudi Arabia is the biggest oil economy in the Gulf and while it will not be the hardest hit, it is already being affected adversely by the combination of oil’s fundamentals and the pandemic. The Kingdom booked a deficit of $29 billion for the second quarter and effected some austerity measures although Riyadh insists this is not austerity. A tripling of VAT, a cancellation of so-called cost-of-living allowances, and the delay of some public spending decisions and the cancellation of others were among the measures.

Even so, the largest OPEC oil producer appears to believe oil prices will start improving soon, if Goldman’s calculations are right. The bank is among the oil bulls that expect prices to recover beginning next year as the supply and demand situation rebalances. However, fresh tightenings of movement restrictions in Europe last week hinted this may not come to pass. Brent closed below $40 a barrel at the end of the week and with Libya ramping up oil production with lightning speed, it may be a while before the benchmark recovers.