Trump Threatens Veto Of New COVID-19 Vaccine Rules; France Imposes New ‘Social Distancing’ Restrictions: Live Updates

Trump Threatens Veto Of New COVID-19 Vaccine Rules; France Imposes New ‘Social Distancing’ Restrictions: Live Updates

Tyler Durden

Thu, 09/24/2020 – 08:20


  • Trump vetos vaccine restrictions
  • China says mass vaccinations to take up to 2 years
  • France introduces more curbs
  • Israel lockdown intensifies
  • FDA delivers emergency authorization
  • Moscow reports 1,050 new cases
  • Indonesia suffers 2nd straight record

* * *

While the US marches toward the 7 million mark, France announced new restrictions on Wednesday calling for bars and restaurants to be shuttered in the ‘hot spot’ of Marseille, and Germany added 11 regions to its list of COVID hotspots, as the second wave of COVID-19 infection spreads across Europe.

China has been pressing ahead with its vaccination projects, with multiple efforts already well into ‘Phase 3’ testing. But if China’s COVID-19 infection rates are really so low as to be virtuallly nonexistent, as Chinese official data, and state-controlled media reports, have suggested, then why is the Communist Party of China attaching such a high priority to the country’s domestic mass-vaccination efforts?

A top government scientist told the local press that it’ll take China up to two years to finish vaccinations on a mass scale, said infectious disease expert Zhong Nanshan, who was speaking at an “industry event”, according to China’s Changjiang Daily.

One could argue that another outbreak is just around the corner, but after months of Beijing’s heavy handed “wartime footing” approach, people in Wuhan are partying like its 2019, and even a handful of domestic cases can trigger ‘localized’ lockdowns that can seal off cities from their surrounding province.

Circling back to the US, President Trump threatened to veto any attempt to tighten rules related to emergency clearance of a vaccine, a statement that will inevitably trigger another round of accusations about Trump meddling with government scientists and applying undue political pressure that could compromise the safety, and credibility, of the eventually-approved vaccine.

Still, Dr. Fauci and Dr. Redfield told Congress during yesterday’s hearing that they “wouldn’t hesitate” to get a vaccine if one was offered.

One day after JNJ became the fourth US vaccine project to enter ‘Phase 3’ testing, AstraZeneca said it is still waiting for a decision from the FDA on whether it can resume tests in the country after halting global trials due to concerns about a participant who became ill in the UK.

Though case numbers across Sweden remain well below their springtime peak, a recent surge in cases in and around Stockholm has prompted the country’s top health officials to consider imposing new localized restrictions to prevent a broader resurgence. Swedish PM Lofven said the country “would not hesitate” to take further action to limit the spread.

After separately announcing new measures earlier in the week, Spain, France, the UK and Germany are leading European nations in combating a second wave that continues to rise. With Europeans opposed to a lockdown return, all of these countries are relying on ‘localized’ restrictions – particularly on bars and restaurants, and large gatherings and weddings – as their front-line of defense, with leaders (notably Johnson) warning that the restrictions could remain in place for up to six months.

The biggest numbers out of the US yesterday came from Texas, which followed California to become the 4th state to see its death toll top 15,000.

Here’s a rundown of important numbers from yesterday, accurate as of 0630ET: 

31,914,770: confirmed cases worldwide

977,109: confirmed deaths worldwide

37,330: New US cases recorded yesterday

6,935,415: Total cases confirmed in the US

1,098: deaths in the US recorded yesterday

201,920: total U.S. deaths

97,459,742: tests conducted in the U.S.

Cases have fallen from a five-week high reached earlier in the week…

…while the US saw the highest number of deaths in a week yesterday.

Here’s other important news from overnight:

US FDA delivered emergency authorization for the first serology/antibody point-of-care COVID test (Newswires).

China’s Sinovac Biotech hopes to supply its experimental vaccine across Latin America as quickly as possible by outsourcing some manufacturing procedures to a partner in Brazil. Sinovac plans to provide semi-finished products to its partner Instituto Butantan, which will complete the rest of the process and supply finished items to other South American countries, Chairman Yin Weidong said at a news conference, part of China’s effort to ‘atone’ for unleashing SARS-CoV-2 on the world (Source: Nikkei).

Indonesia reports a daily record high for the second consecutive day with 4,634 new infections, and 128 deaths. The country has now a total of 262,022 coronavirus cases, with the death toll crossing the 10,000 mark for the first time to 10,105 (Source: Nikkei).

The Philippines reports 2,180 new infections and 36 additional deaths. Total confirmed cases rose to 296,755, still the highest in Southeast Asia, while deaths reached 5,127, nearly half of which were recorded in the past 30 days (Source: Nikkei).

SoftBank Group starts offering PCR coronavirus testing with saliva that will cost 2,000 yen ($19) per person, excluding delivery fees, for corporate customers. In Japan, PCR testing is typically priced from 20,000 to 40,000 yen. The Japanese tech investor aims to expand the testing market by making tests available to people without symptoms at a reasonable price through its unit. It also plans to offer the service to individuals this winter (Source: Nikkei).

China reports seven new coronavirus cases for Thursday, down from 10 reported a day earlier. All new cases were imported infections involving travelers from overseas. The number of new asymptomatic cases rose to 20 from 18 a day earlier (Source: Nikkei).

Moscow registered 1,050 new cases in the last day, the first time that the Russian capital diagnosed over a thousand infections since June. New daily cases in Moscow have grown by two-thirds since Sept. 1, when schools opened nationwide. The number of infections is rising throughout Russia, with 6,595 new cases in the last day. There have been 1,128,836 reported infections, the fourth highest in the world, after the U.S., India and Brazil (Source: Bloomberg).

The Israeli government tightened lockdown restrictions for the next two weeks to try and fight a coronavirus outbreak that’s spun out of control. Just last week, the government imposed its second lockdown since the pandemic began. With daily new infections surging dramatically, the government voted early Thursday to clamp down further during a season of major Jewish holidays by almost totally idling the private sector, allowing only essential employees to work (Source: Bloomberg).

Russia is preparing to supply 17 more countries with its Avifavir COVID-19 treatment (Newswires).

via ZeroHedge News Tyler Durden

Traders On Edge As Futures Fail To Rebound After Wednesday Rout

Traders On Edge As Futures Fail To Rebound After Wednesday Rout

Tyler Durden

Thu, 09/24/2020 – 08:07

US equity futures were subdued and European stocks rebounded from an early selloff as markets tried to stem the Wednesday rout sparked after a range of Fed speakers urged further fiscal stimulus, even as investors braced for another staggering weekly jobless claims figure, the latest evidence of a slowing economic recovery from a pandemic-led recession.

The FAAMGs which led a Wall Street rally since April, again edged lower in premarket trading. A 2% slide put Tesla Inc on course for its third straight day of declines following an underwhelming “Battery Day” presentation by Chief Executive Officer Elon Musk. At the same time, big banks including Goldman Sachs, Wells Fargo and JPMorgan gained between 0.8% and 1.6%. Nikola which is set for one of its biggest weekly declines ever, tumbled another 7.8% as Wedbush downgraded the stock to “underperform”.

The S&P 500 is hovering just above correction territory on waning hopes of more fiscal stimulus – which prompted Goldman overnight to slash its Q4 GDP forecast from 6% to 3% – signs of choppy economic growth and a sell-off in heavyweight technology-related names. The Nasdaq entered correction territory earlier this month, but the blue-chip Dow has outperformed its peers on demand for value-linked stocks such as industrials.

The MSCI World index was down 0.5% in morning trading, its fifth day in the red out of the last six and hovering near a two-month low. “Optimism on the recovery, optimism on the virus, and bets on stimulus were keeping markets well bid, and on all three of these issues, there has been a degree of disappointment this month,” said John Velis, an FX and macro strategist at BNY Mellon.

Despite markets betting on more U.S. fiscal stimulus, political stalemate in Washington continues to frustrate efforts to prop up the world’s biggest economy, beset by one of the worst COVID-19 death rates globally.

“A U.S. fiscal deal was baked into markets and now what you are seeing is that the probability of a deal going through has simply reversed,” said Justin Onuekwusi, a London-based portfolio manager at Legal and General Investment Management. “We have heard this week how important a fiscal deal is to the Federal Reserve but from a political standpoint, focus has moved more towards the election and Supreme Court deliberations rather than the economy,” he added.

In Europe, the Stoxx 600 Index initially slipped as much as 0.8% by, but has since erased most of the losses with improving German business optimism and a strong take-up of the latest European Central Bank liquidity operation providing some relief. After a summer lull in much of Europe, the infection rate has begun to rise sharply, with a number of countries including Britain introducing tougher rules to help limit the spread of the virus.

Earlier in the session, the MSCI Asia Pacific Index dropped 1.7% overnight, while Japan’s Topix index closed 1.1% lower with Takakita and Niitaka falling the most. The Shanghai Composite Index retreated 1.7%, with Wuxi Commercial and Guangdong Guanhao High-Tech posting the biggest slides. MSCI’s Emerging Markets Index was down 1.8%.

In rates, the 10-year Treasury yield was at 0.664%, down 0.5bps. Futures volume stood around 80% of 20-day average level ahead of risk events including 7-year auction and another bevy of Fed speakers including Powell at 10am. Yields remain within a basis point of Wednesday’s closing levels, 10-year around 0.67% with bunds outperforming by 1.5bp on haven flows. The week’s Treasury auction cycle concludes with the sale of $50b in 7-year notes at 1pm ET; Wednesday’s 5-year offering drew a record low yield about a basis point lower than the WI yield at the bidding deadline. High-grade euro zone government bond yields fell across the board on an expectation that stimulus measures would be maintained, with the German 10-year down 2.2 basis points.

In FX, flows into the dollar helped it rise for a fifth straight day following yesterday’s warnings by Federal Reserve officials that more fiscal stimulus is needed to sustain the economic recovery. The Bloomberg Dollar Spot Index advanced a fifth consecutive day, the longest streak since March, and the greenback touched a two-month high versus the euro at 1.1635, as it remained bid in amid a risk-averse sentiment.

The Norway’s krone fell a sixth consecutive day against the euro, the longest streak since February, to reach more than a four-month low after the central bank said rate hikes remains years away; Governor Oystein Olsen also said current situation doesn’t warrant any further intervention in the Norwegian krone similar to what Norges Bank did earlier when the currency weakened. Australian and New Zealand dollars extended losses as a strengthening greenback combined with soft local rates and speculative client flows weigh on the currencies. The Swiss franc advanced against the euro even as the Swiss National Bank said it’s on alert and ready to “intervene more strongly”after an intense battle earlier this year in response to the franc’s advance to a five-year high against the euro. The pound was steady versus the dollar before U.K. Chancellor Rishi Sunak announces plans to protect jobs from coronavirus upheaval.

Elsewhere among regional rate-setters, the Swiss National Bank maintained its easy monetary policy, but turned less gloomy on the impact of the pandemic. In Britain, meanwhile, the finance minister launched a new jobs support scheme. In emerging markets, Turkey surprised markets with a hike in its policy rate by 200 basis points to 10.25%, sending the lira and bonds higher. Mexico is also set to decide on monetary policy later on Thursday.

In commodities, gold continued to drop tracking the rise in negative real rates.

With central bankers in focus globally, Federal Chair Jerome Powell will be watched later in the day when he delivers his third testimony for the week before the Senate Banking Committee, while other Fed officials are scheduled to speak at other events during the day. Investors are also waiting for weekly data due later on Thursday, which is expected to show U.S. jobless claims fell slightly but remained elevated, indicating the world’s largest economy is far from recovering. A similar picture was visible in Europe, where the European Central Bank’s latest Economic Bulletin said unemployment would continue to rise in the euro zone, with little growth in demand seen for consumer goods.

Expected data include jobless claims and new home sales. Accenture, CarMax and Costco are reporting earnings.

Market Snapshot

  • S&P 500 futures down 0.2% to 3,225.75
  • STOXX Europe 600 down 0.2% to 358.46
  • MXAP down 1.6% to 168.03
  • MXAPJ down 1.9% to 546.00
  • Nikkei down 1.1% to 23,087.82
  • Topix down 1.1% to 1,626.44
  • Hang Seng Index down 1.8% to 23,311.07
  • Shanghai Composite down 1.7% to 3,223.18
  • Sensex down 2.2% to 36,832.76
  • Australia S&P/ASX 200 down 0.8% to 5,875.94
  • Kospi down 2.6% to 2,272.70
  • Brent futures down 0.8% to $41.44/bbl
  • Gold spot down 0.4% to $1,855.30
  • U.S. Dollar Index little changed at 94.43
  • German 10Y yield fell 1.6 bps to -0.521%
  • Euro down 0.03% to $1.1657
  • Brent Futures down 0.8% to $41.44/bbl
  • Italian 10Y yield fell 1.5 bps to 0.647%
  • Spanish 10Y yield unchanged at 0.224%

Top Overnight News from Bloomberg

  • The day after Bank of England Governor Andrew Bailey poured cold water on the chance of negative rates, betting against them via the options market exploded
  • The Swiss National Bank is on alert and ready to “intervene more strongly”after an intense battle earlier this year in response to the franc’s advance to a five- year high against the euro
  • Euro-zone banks took 174.5 billion euros ($203 billion) in another dose of ultra-cheap funding from the European Central Bank. The bids for the targeted loans, known as TLTROs, came from 388 banks, and the takeup was at the high end of economists’ expectations
  • France introduced new measures to fight the rapid resurgence of the coronavirus pandemic in major cities, adding to risks weighing on an already slowing economic recovery
  • U.K. Chancellor of the Exchequer Rishi Sunak will set out a new crisis plan to protect jobs and rescue businesses as the coronavirus outbreak forces the U.K. to return to emergency measures
  • German companies are turning increasingly optimistic that government support and a reluctance to return to wide-scale lockdowns will carry the economy through the coronavirus pandemic. The Ifo institute’s business climate index rose to 93.4 in September from 92.5 in August. That was slightly lower than the median forecast of economists in a Bloomberg survey. A gauge of expectations also improved

Asian equity markets were lower on spill-over selling from peers on Wall St where the major indices were dragged by broad weakness across all sectors and hefty losses in the big tech names, while President Trump’s comments also spurred concerns of a contested election. This was after he stated that he thinks the 2020 election will end up at the Supreme Court which is why it is important to have nine justices and later refused to commit when questioned about a peaceful transition of power if he loses the election. ASX 200 (-0.8%) was dragged lower by underperformance in tech and miners, as well as losses in financials after Westpac agreed to pay a record AUD 1.3bln fine over anti-money laundering breaches, while Nikkei 225 (-1.1%) was also subdued as exporters suffered from the recent inflows into the currency and ill-effects of the JPY-risk dynamic. Hang Seng (-1.8%) and Shanghai Comp. (-1.7%) conformed to the broad downbeat tone after a tepid liquidity effort which resulted to a net daily injection of CNY 10bln and it refrained from 7-day reverse repos owing to the National Day Golden Week holiday which begins next Thursday. Furthermore, there was still no significant improvement in US-China related headlines as US Secretary of State Pompeo reiterated calls for US  Governors to increase scrutiny on state pension funds’ investments into Chinese companies, while TikTok filed for a preliminary injunction against President Trump’s ban. Finally, 10yr JGBs were rangebound and failed to benefit from the risk averse tone after similar lacklustre trade in T-notes and with demand also hampered by weaker results at the 40yr JGB auction.

Top Asian News

  • Israel Controversially Tightens Lockdown as Virus Cases Soar
  • South Korea Says North Korea Killed its Citizen, Burned Body
  • Early Pandemic Bets Paid Off Big for a Few Asia Hedge Funds

European equities are now mixed after opening lower across the board (Euro Stoxx 50 -0.2%) in a continuation of the losses seen on Wall Street yesterday and in APAC hours. That being said, European equity futures came off lows following the cash open and are now mixed on the day whilst futures across the pond have been contained within tight ranges ahead of a slew of Fed speakers scattered throughout the day; currently mixed as well. Back to Europe, broad-based losses are seen across major bourses, but Netherland’s AEX (-0.5%) modestly underperforms as the tech sector lags (in-fitting with Wall Street and APAC performance), with heavy-weight ASML (-2.2%) weighing on the index and broader sector. The energy sector also resides as one of the straddlers amid price action in the complex. Overall sectors are mostly lower and somewhat of a defensive bias. The sectoral breakdown paints a similar picture, but performance is similarly off lows, with Travel & Leisure towards the bottom of the pile, whilst real estate, particularly in the UK, are supported ahead of Chancellor Sunak’s unveiling of further supportive measures. In terms of individual movers, AA (+4.6%) is firmer after confirming that a consortium of Towerbrook Capital and Warburg Pincus has expressed strong interest in pursuing a possible cash offer for the Co. Elsewhere, Veolia (-1.3%) CEO said the group is to hold discussions with Engie (-1.0%) and did not rule out increasing its bid for Engie’s holding of Suez (-3.9%).

Top European News

  • Norges Bank Surprises Market as Rate Hike Remains Years Away
  • JPMorgan Joins Rivals in Pausing London Office Return Plans
  • German Business Optimism Improves With Economy on Recovery Path
  • Virus Forces Sunak to Spend More on Saving U.K. Jobs, Firms

In FX, the SNB and Norges Bank both maintained benchmark rates, as widely expected, but the reaction in respective currencies has been quite contrasting given relative stability in the Franc around 0.9250 vs the Dollar and 1.0775 against the Euro compared to Eur/Nok rallying further through 11.0000 towards 11.1750 at one stage. It seems that the former has acknowledged no change in the Swiss Central Bank’s valuation of the Chf and perhaps more regular updates on intervention, while the Krona is taking heed of the rate path projecting steady policy for the next couple of years against some expectation that a hike may come before the 4th quarter of 2022.

  • USD – Demand for the Dollar has accelerated again, and this time mainly on safe-haven grounds after a sharp retreat in US stocks and knock-on declines in global amidst the ongoing recurrence of COVID-19. The DXY has duly extended gains to 94.558 and pull-backs are getting shallower and more fleeting with the latest bout of consolidation stopping well ahead of 94.000, at 94.235. However, some G10 rivals continue to display a degree of resilience and resistance for the index resides relatively close by around 94.632 (March 9 high).
  • AUD/NZD – No respite for the beleaguered Aussie or Kiwi, as Aud/Usd straddles 0.7050 having let go of the 0.7100 handle and Nzd/Usd struggles to retain 0.6500+ status following NZ trade data for August showing a deficit vs surplus due to a marked slowdown in exports rather than moderately higher imports.
  • GBP/JPY/EUR/CAD – Sterling continues to defy the odds and gravity, with Cable resisting pressure below 1.2700 and Eur/Gbp probing 0.9150 after the cross formed a near double top around 0.9220 on Tuesday and yesterday ahead of Chancellor Sunak’s mini budget and more commentary from BoE Governor Bailey. Meanwhile, support at 105.50 seems to have arrested the Yen’s reversal from circa 104.00 and Usd/Jpy may be kept in check by decent option expiry interest spanning 104.45-55 (1.1 bn) to 105.70-75 (1.4 bn) with even more rolling off at the 105.00 strike (1.7 bn). Similarly, after a rather non-descript German Ifo survey in terms of key metrics vs consensus and an even more forgettable monthly ECB report, the Euro could be contained by expiries between 1.1600-10 and 1.1700-10 (1.7 bn and 1.2 bn respectively), though veering towards the downside after a hefty TLTRO3 take up. Elsewhere, the Loonie has recoiled to sub-1.3400 in wake of Canadian PM Trudeau’s stark warning that an Autumn bout of the coronavirus could be significantly worse than the original one in Spring, as a 2nd wave is already spreading across the country’s 4 biggest provinces.
  • SEK/EM – Rhetoric from Riksbank’s Skingsley underlining limited space to cut the Swedish repo rate and discounting Crown developments have not prevented the Sek depreciating to almost 10.6000 before bouncing vs the Eur, but the Try and Mxn will be hoping for more support from the CBRT and Banxico. On that note, the NBH has helped the Huf via a 15 bp hike in the 1 week deposit rate having left the benchmark on hold on Tuesday.

In commodities, WTI and Brent front month futures are essentially flat firmly off overnight lows and relatively contained in early European hours amid a lack of fresh fundamental catalysts ahead of a raft of Central Bank speakers. Complex-specific newsflow has also been light, although the Iraqi oil ministry denied earlier reports, citing the Iraqi oil minister, that OPEC+ agreed for Iraq to increase oil exports. Iraq added that it is fully committed to the supply deal. WTI resides just below USD 40.00bbl (vs. current range of 39.12-40.00) while its Brent counterpart trades towards the top end of today’s range around USD 41.75/bbl (vs. current range 41.27-84). Elsewhere, spot gold mirrors USD action and briefly dipped below USD 1850/oz, while spot silver remains on a downward trajectory and underperforms in the precious metal space as it probes USD 22/oz to the downside. In terms of base metals, LME copper prices are softer amid the firmer USD and broad losses across equities. Conversely, Shanghai steel futures rose almost 3% amid future demand speculation as prices flipped into backwardation.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 840,000, prior 860,000; Continuing Claims, est. 12.3m, prior 12.6m
  • 9:45am: Bloomberg Consumer Comfort, prior 47.7
  • 10am: New Home Sales, est. 890,000, prior 901,000; New Home Sales MoM, est. -1.22%, prior 13.9%
  • 11am: Kansas City Fed Manf. Activity, est. 14, prior 14

Fed speakers:

  • 8:50am: Fed’s Kaplan speaks at Texas Christian University
  • 10am: Powell, Mnuchin Testify Before Senate Banking Committee
  • 12pm: Fed’s Bullard Discusses Economy and Monetary Policy
  • 1pm: Fed’s Evans Discusses the U.S. Economy and Monetary Policy
  • 1pm: Fed’s Barkin Speaks to the Money Marketeers of NYU
  • 2pm: Fed’s Barkin Takes Part in Virtual Discussion on Economy
  • 2pm: Fed’s Williams Discusses Virus Impact on Communities of…
  • 2pm: Fed-s Bostic Speaks to Bankers on Racism

DB’s Jim Reid concludes the overnight wrap

Yesterday marked 6 months since lockdown started here in the U.K. and with the tightening restrictions announced over the last 36 hours I suspect we’ll have at least another 6 months of similarly restrictive conditions. How time flies. On that you may be amused to know my wife and I had a relatively big row on Tuesday night which I can now mention as we kissed and made up last night. In it she said one of the most hurtful things I have ever had directed at me. She said, or rather shouted ……. “Why can’t you just go back to the office full time…”. It was a hammer blow. I just said “fine I will…” which given the new restrictions might end up being illegal had I followed through. You won’t be surprised to learn the argument was about kids and childcare.

So Covid-19 looks like remaining at the epicentre of our lives for months or even quarters to come. Indeed Europe saw further increases in cases yesterday, as yet more signs emerged of further restrictions heading into winter. US markets fell sharply after Europe went home as the continual negative blows finally took their toll.

The S&P 500 lost -2.37% with over 94% of stocks in the index lower yesterday and 23 of 24 industries down on the day. Consumer durables and apparel were the one exception (+2.69%) on the back of Nike (+8.76%), who was the top performer in the overall S&P after the company posted much stronger results than expected. Tech (-3.21%) and Energy (-4.55%) stocks lost further ground too, with the NASDAQ falling -3.02%. Tesla saw one of the larger declines in the index with a -10.34% dip as reports came through of a network outage on top of the “Battery Day” disappointments we discussed yesterday. The VIX volatility index rose 1.7pts to 28.6 in its second largest daily jump since 3 Sept, when the current market weakness began.

Risk-off sentiment has continued this morning with the Nikkei (-0.77%), Hang Seng (-1.78%), Shanghai Comp (-1.46%), Kospi (-1.79%), Asx (-0.94%) and India’s Nifty (-1.26%) all down. European futures on the Stoxx 50 (-1.04%), FTSE 100 (-0.89%) and Dax (-1.01%) are also pointing to a weak open in the region. Meanwhile, futures on the S&P 500 and Nasdaq are trading broadly flat. In Fx, the US dollar index is up a further +0.09% this morning and on course for the strongest weekly performance since April. Elsewhere, crude oil prices are down c. -1%.

On the virus it’s beginning to feel a bit like March-lite. In France, it was announced by Health Minister Veran last night that the country would be divided into “zones” by alert level and they would empower local authorities to tighten restrictions before a state of emergency would be declared within them. Marseille, the second largest city in the country and the Carribbean Island of Guadeloupe are the only “maximum” level zones today. The minster also announced that bars and restaurants in the Paris region as well as other major cities will close at 10pm, similar to the rules recently laid out in the UK. Attendance at large public events will be cut down to 1,000 from 5,000, while small gatherings over 10 people are banned in those “maximum” level areas.

Meanwhile in Germany, the foreign minister Heiko Maas went into quarantine as a result of one of his security detail having the virus, even though an initial test on Maas came up negative. Germany also issued travel warnings to more parts of France. Elsewhere, China will ease restrictions on entry of some foreign nationals as the country said foreigners holding residence permits for work, personal matters and reunions will be allowed to enter China starting September 28.

In terms of case numbers, the UK reported a further 6,178 yesterday, which was the highest number since May 1, and sent the 7-day average above 4,500. That comes ahead of an announcement today from Chancellor Sunak in the House of Commons, who tweeted yesterday that he’d be speaking about “our plans to continue protecting jobs through the winter.” With the furlough scheme scheduled to conclude at the end of October, there have been reports that Sunak is looking at a German-style wage subsidy program, similar to the Kuzarbeit program, which would see the government top up the wages of part-time workers.

Over in the US, there was some positive news on the vaccine front, as Johnson & Johnson announced yesterday that they were launching their Phase 3 trial, which will involve a single vaccine dose given to up to 60,000 participants. This is different to a number of the other candidates, which involve a second dose, and Dr Fauci said in a statement that this “may be especially useful in controlling the pandemic if shown to be protective after a single dose.” J&J said that they anticipate the first batches could be available for emergency use authorisation in early 2021, should they be proven to be safe and effective. Meanwhile various media reports suggest that the UK government is considering carrying out the first studies that would deliberately expose healthy people to the coronavirus in a bid to accelerate the development of a vaccine. The report further added that a growing number of volunteers have signed up to take part in such studies should researchers decide to proceed. This could help AstraZeneca in speeding up its Phase 3 trials as they continue to remain on halt in the US. Bloomberg suggested this wouldn’t start until January though if it got the green light.

Late last night, aPresident Trump news conference signalled that he may try to veto any tightening of FDA rules surrounding the emergency clearance of a coronavirus vaccine. This may increase concerns that the vaccine is being politicised. On the other side, overnight we also heard from Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, and Stephen Hahn, the commissioner of the FDA, who both said that drug companies still face hurdles to authorising a vaccine. Dr. Fauci said that he expected a vaccine to be authorized at the earliest by November, while Dr Hahn stressed that the FDA would soon issue a number of additional guidelines. Elsewhere, the president again criticised mail-in ballots and as we showed in yesterday’s CoTD (link here) the US public is also very distrustful of mail-in ballots.

From central bankers, it was the 2nd day out of 3 featuring a testimony from Fed Chair Powell, and he was again asked about how the Fed could further help Main Street. The Fed Chair noted that the central bank had “done basically all of the things that we can think of” and reiterated that the economy needed fiscal stimulus. We also heard from a bevy of other Fed governors who all sought to convey the importance of fiscal aid. The Fed’s Rogerson noted that the “toughest part” of the recovery is still ahead, and that he was less optimistic than peers due to a lack of fiscal help and a second Covid-19 wave. The Fed’s Evans noted that members were concerned that the fiscal stimulus which was embedded in the FOMC’s outlook would not come to fruition, saying that the estimated jobless numbers had factored in roughly $1 trillion of fiscal support. Fed Governor Quarles joined the refrain of the day in asking for more fiscal help. As we have noted, the Senate and House are clearly more focused on the election – and also now a supreme court seat – than getting an additional fiscal stimulus bill through in the short term. While the Fed member’s spoke throughout the New York afternoon, we saw a clear move out of risk assets and the dollar index rose to an 8-week high, finishing +0.43%, having risen every session this week.

On the other side of the Atlantic, the STOXX 600 continued to come back from Monday’s loses, gaining +0.55% before the US later slump. The index was up as much as +1.5% in early trading before a mix of deteriorating virus news flow from Europe and negative market sentiment from the US saw the index fall into the close. Over in the fixed income sphere, Italian sovereign debt continued to outperform following the country’s regional election results, and the yield on 30yr BTPs fell a further -1.9bps yesterday to an all-time low of 1.768%. Spreads also narrowed further, with those on both 10yr Italian and Spanish debt over bunds reaching their tightest levels since late February when investors began to realise the pandemic’s impact on Europe. In the US, 10yr rates were up modestly (+0.2bps) at 0.672%. However there was a decline in inflation expectations – especially given some of the Fed rhetoric – with breakevens down -1.9bps to 1.603%, their lowest closing level in 6 weeks. Between the decline in inflation expectations and the rally in the greenback discussed earlier gold had its worst day in over a month, falling -1.94% to close under $1900/oz for the first time since 23 July. With the precious metal falling, its more volatile peers silver (-6.64%) and platinum (-3.08%) saw deep losses as well.

In terms of yesterday’s data, the main highlight came from the flash PMI readings, where there were clear signs that the services sector in Europe was being affected by the second wave of Covid-19. The Euro Area services PMI fell to 47.6 (vs. 50.6 expected), so below the 50-mark that separates expansion from contraction, with both Germany (49.1) and France (48.5) underperforming expectations. The big question as we enter Q4 next week will be whether activity can avoid a decline in the face of a virus resurgence. Manufacturing was more positive however, and the Euro Area (53.7), French (50.9) and German (56.6) numbers were all in expansionary territory. PMI readings were comparatively better in the US, showing continued momentum in the recovery though they were slightly lower than in August. The composite reading was just 2 tenths lower at 54.4, as services were just under expectations at 54.6 after being 55.0 last month. The country’s manufacturing numbers were in line with expectations (53.5), and actually up 0.4 from last month.

To the day ahead now, and the data highlights include the German Ifo business climate indicator for September, French business confidence for September, while from the US we’ll get the weekly initial jobless claims, new home sales for August and the Kansas City Fed manufacturing index for September. From central banks, we’ll hear from Fed Chair Powell at the Senate Banking Committee, as well as the Fed’s Bullard, Evans, Barkin, Williams, Kaplan and Bostic. Otherwise, we’ll hear from Bank of England Governor Bailey, ECB chief economist Lane, and the ECB will release its latest Economic Bulletin. In addition, both the Turkish and Mexican central banks will be deciding on monetary policy.

via ZeroHedge News Tyler Durden

Lira Drops Like A Stone After Turkish Central Bank Unexpectedly Hikes By 200 bps

Lira Drops Like A Stone After Turkish Central Bank Unexpectedly Hikes By 200 bps

Tyler Durden

Thu, 09/24/2020 – 07:30

With the Turkish economy hammered as a result of a collapse in global tourism, the country’s FX reserves dwindling by the day preventing the infamous Turkish interventions to stabilize the currency, Moody’s warning that Turkey faces an imminent balance of payments crisis, and the entire world cutting rates and easing to stimulate economies, the last thing Wall Street expected this morning from the CBRT was a rate hike – even though the Turkish Lira had been hitting daily record lows every single day for the past two weeks.

And yet moments ago, the Central Bank of Turkey shocked investors when it announced a whopping 200bps hike in the one week repo rate, from 8.25% to 10.25%, the first hike from Turkey in two years following an aggressive easing cycle which was unleashed when the rate hit a record 24% in late 2018.

Until now, political pressure from President Recep Tayyip Erdogan, who has demanded lower rates, forced the CBRT to tighten by stealth. Instead of hiking the main policy rate, the central bank had shut access to the one-week repo window, forcing banks to borrow at more expensive liquidity facilities. In the end, the central bank was forced to hike rates as the lira hit a record low against the dollar and inflation is still in double digits, while the average cost of CBRT funding has risen by almost 300 basis points since mid-July.

Wall Street economists had noted that the combination of an elevated risk premium, the challenging inflation outlook and subdued inflows suggested that the CBT was likely to implement further tightening, but consensus was that this would happen via liquidity measures.

Whether the hike was also driven by Turkey’s obsession with hammering TRY shorts remains unknown but the official explanation from the CBRT is that it decided to increase the policy rate by 200bps to restore the disinflation process and “support price stability” adding that “the Committee assessed that the tightening steps taken since August should be reinforced in order to contain inflation expectations and risks to the inflation outlook. Accordingly, the Committee decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.”

The full statement is below:

While global economic activity has shown signs of partial recovery in the third quarter following the normalization steps taken by several countries, uncertainties on global economic recovery remain high. Advanced and emerging economies continue to maintain expansionary monetary and fiscal stances. The pandemic disease is closely monitored for its evolving global impact on capital flows, financial conditions, international trade and commodity prices.

Economic activity is recovering markedly in the third quarter owing to gradual steps towards normalization and the strong credit impulse. Recent monetary and fiscal measures that aim to contain negative effects of the pandemic on the Turkish economy contributed to financial stability and economic recovery by supporting the potential output of the economy. The normalization trend recently observed in commercial loans has started in consumer loans as well. The recent upturn in imports, which has resulted from deferred demand as well as pandemic-related liquidity and credit policies, is expected to moderate with the phasing out of these policy measures. Although tourism revenues declined due to the pandemic, easing of travel restrictions has started to contribute to a partial improvement. The recovery in exports of goods, relatively low levels of commodity prices and the level of the real exchange rate will support the current account balance in the upcoming periods.

Pandemic-related supply-side inflationary factors were expected to gradually phase out during the normalization process and demand-driven disinflationary effects were expected to become more prevalent. Yet, as a result of fast economic recovery with strong credit momentum, and financial market developments, inflation followed a higher-than-envisaged path. The Committee assessed that the tightening steps taken since August should be reinforced in order to contain inflation expectations and risks to the inflation outlook. Accordingly, the Committee decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.

The Committee assesses that maintaining a sustained disinflation process is a key factor for achieving lower sovereign risk, lower long-term interest rates, and stronger economic recovery. Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance. In this respect, monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process. The Central Bank will continue to use all available instruments in pursuit of the price stability and financial stability objectives.

In kneejerk response, the Turkish Lira jumped as much as 1.9% to 7.5572 per dollar before fading some of the gains to 7.6165.

It is too early to tell whether this surge can be sustained: in addition to economic considerations, traders are also focusing on the latest geopolitical developments: the EU leader summit scheduled for today was delayed to October 1-2 where Turkey’s tensions with Greece and Cyprus over Mediterranean Sea drilling will be discussed.

via ZeroHedge News Tyler Durden

WIrecard’s Business ‘Almost Entirely Fraudulent’, Auditors Uncover $1BN Loss, Report Finds

WIrecard’s Business ‘Almost Entirely Fraudulent’, Auditors Uncover $1BN Loss, Report Finds

Tyler Durden

Thu, 09/24/2020 – 07:15

Carmine Di Sibio, the international chairman of EY, said in a letter to clients published earlier thsi month that  while he “regrets” the firm’s staggering lapse in supervising Wirecard (something the firm has continued to blame entirely on Wirecard’s deceptions, along with the invisible hand of Russian intelligence), the incident was a lesson learned, though he insisted that EY was ultimately “successful” in detecting the fraud.

While that’s technically true, it’s also true that dozens of red flags surfaced over the years that seemed to openly hint at the ongoing massive fraud operating just below the surface. And as auditors, regulators and prosecutors sift through the wreckage, they’re uncovering more stunning details prompting them to ask themselves: How did Wirecard’s shell game continue for so long without anybody speaking up?

The Financial Times, a paper that put its reputation on the line to back its reporting on Wirecard, and was ultimately vindicated after facing startling pushback from Wall Street analysts, Wirecard and German regulators, obtained a copy of an early report from Wirecard’s administrator. As bankruptcy courts pick through the wreckage, the report reveals that the fraud at Wirecard ran much deeper than the Southeast Asia business that was previously reported as the locus of the fraud.

In reality, Wirecard had only a few profitable business lines. And the stupefying staff and operational bloat that the company carried is almost shocking. Just imagine: Thousands of employees, shuffling paper, performing “busywork” with no real purpose like a nightmarish, real-life take on “Office Space”.

The €1.9 billion in fraudulent profits Wirecard reported between the beginning of 2015 and Q1 2020 was actually a €740 million ($860) loss. Even if the fraud hadn’t been uncovered when it did – even if the FT had never printed a word – the company would have eventually dissolved, as the burn rate far outstripped any reasonable expectation of income or capital raised.

Furthermore, bankruptcy court has determined that the real value of Wirecard’s assets is just €428 million, an amount dwarfed by the €3.2 billion in debt Wirecard carried when it collapsed.

Wirecard’s fabricated Asian business was not its only deception. The rest of the once-lauded German payment provider’s business was chaotic, beset by byzantine reporting lines, hobbled by lamentable IT and racking up losses, according to a report by Wirecard’s administrator and accounts of former employees. The picture that emerges of the Wirecard businesses that did exist is a stark contrast to the one painted by former chief executive Markus Braun, who hailed the group as a highly profitable pioneer in the payments industry. It reveals the scale on which the company, Germany’s biggest corporate fraud in decades, also misled investors about its real businesses. “Only a few units of the group were actually involved in conducting operative business that was customer-facing and generated revenue,” the administrator Michael Jaffé wrote in his report, a copy of which was seen by the Financial Times.

So, what did Wirecard spend all this money on? Well, certainly not IT. The report cited by the FT shows that Wirecard’s businesses ran on a hodgepodge of IT systems that were virtually unworkable. Any IT auditor would have noted significant issues, they said.

Its computer systems were inherited from companies acquired over the years and never fully integrated. Wirecard Bank, for instance, is still running on software originally developed for Germany’s small co-operative banks and which will be switched off by its IT service provider by the end of this year, according to people familiar with the matter.  “If IT auditors had been professional and serious, huge risks, weaknesses and non-compliance issues would have emerged a long time ago,” according to a former Wirecard IT employee, who was scathing about the “unbelievable brittleness of [Wirecard’s] IT infrastructure”.

Even up until its final months before diving into bankruptcy, Wirecard continued to expand its head count. All told, the company had more than 6,000 employees around the world. But only a fraction of them were needed to run the business.

Even as Wirecard faced increasing scrutiny of its accounting, the group’s headcount continued to rise, climbing by a quarter from early last year to 6,300 at the time of its implosion. Over the same period, its real revenues grew at less than half that rate, according to the administrator. The report points to bloated costs and a colossal amount of corporate waste. “Employees never faced the necessity to reduce the services they were using to those that were really needed as cash was abundantly available in the past,” it noted, adding that the company was suffering from “excessive overhead and personnel capacities”. “Only a fraction” of the employees were actually required to run Wirecard’s non-fraudulent business, the report found.

With this rate of burn, the company would have needed to raise money by the end of the year, or face insolvency.

By the time it unravelled in late June, the total was €10m a week and the company’s own internal planning predicted that figure would rise to more than €15m — some €200m for the third quarter as a whole, according to the administrator’s report. At that rate, Wirecard would have needed to raise fresh cash by the end of this year to pay its bills.

Wirecard’s “totally opaque” structure and “small business mentality” meant that its 55 subsidiaries were all effectively siloed off from one another. The main office in Munich had no idea what was going on elsewhere. in retrospect, it’s a setup seemingly designed to enable an ongoing fraud.

If extravagant spending is one of Mr Jaffé’s findings, another is what the report describes as Wirecard’s “totally opaque” and inefficient structure, consisting of at least 55 subsidiaries scattered over four continents. Staff at its headquarters on the outskirts of Munich did not know what the group’s different units were doing, the administrator concluded, with neither their tasks and responsibilities — or the payments and loans between the divisions — properly recorded. There was “a small business mentality” at many of its units, former employees told the FT, describing businesses that Wirecard had hoovered up around the world and largely left to their own devices.

At times, this led to “bizarre outcomes”, like employees in the antipodes performing work for distant offices in Europe.

The internal chaos led to bizarre outcomes. A team of IT specialists, working in Athens, but part of a subsidiary with headquarters in New Zealand, provided services to Wirecard’s German HQ that were not needed, the administrator found. In another example, when the administrator asked managers at a different Asian-based subsidiary about how they contributed to the group, the reply was “we don’t really know”, according to a person briefed on the matter.

The FT concluded its report with a comment from a German finance professor who argued that the fraud should have been caught earlier, and the fact that any “Big 4” firm would miss such conspicuous red flags is too difficult to believe. Perhaps a blind eye was turned. Or maybe auditors really were blinded by ex-CEO Markus Baram’s marketing prowess, that they simply didn’t question it when the company launched into technical explanations of its – totally fictitious – business.

via ZeroHedge News Tyler Durden

Media Declares “Violence Is Inevitable” As 2 Cops Shot In Louisville; Reporters Arrested In Aggressive Police Crackdown

Media Declares “Violence Is Inevitable” As 2 Cops Shot In Louisville; Reporters Arrested In Aggressive Police Crackdown

Tyler Durden

Thu, 09/24/2020 – 06:45

As we reported last night, protesters hit the streets in Louisville, NYC, LA, Denver, Oakland, Washington DC and other cities across the US after a Kentucky grand jury decided that no officers would be charged in the killing of Breonna Taylor, a tragic accident that was the result of officers serving a “no-knock” warrant.

In Louisville, the city where Taylor was shot and killed, 2 police were shot as gunfire broke out downtown after hundreds “peacefully” marched earlier in the evening. But as has become distressingly familiar, the real hard-core agitators came out after dark. A suspect in the shooting of the two officers was taken into custody shortly after, but he wasn’t the only “protester” who was packing heat at the “non-violent demonstration.”

Amazingly, left-leaning media outlets had the gall to frame the shooting of two police as an “inevitable”, while framing the events of last night in distorted terms that served to support their narrative of a corrupt justice system absolving three murderers, instead of reporting the facts: that a jury of their peers – not some unassailable magistrate – decided on the indictments for the three officers.

The Daily Beast reported that none of the officers were charged for Breonna Taylor’s killing. While that’s technically true – officer Brett Hankison was charged with three counts of wanton endangerment for firing into a nearby occupied apartment, not for the shots that killed Taylor, which were fired by a colleague – the result is misleading, and intentionally so, we suspect.

But we digress. Circling back to the events of Wednesday night, the Louisville Metropolitan Police Department – better known as the LMPD – aggressively enforced curfew violations after the shooting. Several reporters – including two journalists for the Daily Caller – were arrested during the sweep, and despite protests from their editors, were charged with breaking curfew and attending an “unlawful” assembly. It’s believed that dozens of protesters and reporters were taken into custody during the sweep of Jefferson Square, which has served as the base for BLM protesters who have been out demonstrating every night for the past 118 days.

As far as violence goes, this video has gone viral after being shared by several mainstream media outlets.

The DC reporters arrested included Jorge Ventura and Shelby Talcott.

When editors reached out, the department refused to budge.

Circling back to the wounded officers, Interim LMPD chief Robert Schroeder confirmed the two officers had been shot and sustained life-threatened injuries, and that a suspect was in custody. One of the officers was shot in the abdomen, while the the other was shot in the thigh.

“I am very concerned about the safety of our officers,” Schroeder said. “Obviously we’ve had two officers shot tonight, and that is very serious. … I think the safety of our officers and the community we serve is of the utmost importance,” Schroeder said, according to the Courier-Journal.

As of 11pm local time on Thursday, police had arrested 46 people, which includes those arrested in the sweep of Jefferson Square, which reportedly happened around 8pm.

Independent video journalist Brendan Gutenschwager narrowly avoided arrest last night. Afterward, he chronicled the eerily silent streets, and surveyed the damage.

Thousands gathered across NYC and LA, and hundreds more in Portland, Chicago, Atlanta and other cities around the country as others marched “in solidarity”.

Expect the unrest to continue Thursday, as it has for nearly 120 days.

via ZeroHedge News Tyler Durden

Watch Live: “School Bus” Sized Asteroid Expected To Buzz Earth Thursday

Watch Live: “School Bus” Sized Asteroid Expected To Buzz Earth Thursday

Tyler Durden

Thu, 09/24/2020 – 06:40

NASA reports a small near-Earth asteroid (or NEA), the size of a “small school bus,” will buzz Earth Thursday (Sept. 24) at a distance closer than the moon and most geostationary weather satellites. 

The asteroid, named 2020 SW, was discovered last Thursday (Sept. 18) by NASA-funded Catalina Sky Survey in Arizona. The size of the asteroid is an estimated 15 feet by 30 feet wide, making it roughly the size of a “small school bus,” said NASA.

The space agency points out 2020 SW is “not on an impact trajectory with Earth, if it were, the space rock would almost certainly break up high in the atmosphere, becoming a bright meteor known as a fireball.” 

Paul Chodas, director of the Center for Near-Earth Object Studies (CNEOS) at NASA’s Jet Propulsion Laboratory in Southern California, said: “There are a large number of tiny asteroids like this one, and several of them approach our planet as close as this several times every year.

“In fact, asteroids of this size impact our atmosphere at an average rate of about once every year or two,” said Chodas. 

CNEOS expects the asteroid to zoom past Earth at a distance of about 13,000 miles over the Southeastern Pacific Ocean around 0712 ET on Thursday. 

The passing of 2020 SW will be live-streamed via the Virtual Telescope Project in Rome.

As the asteroid passes, it will continue its trajectory towards the sun and will not pass Earth again until 2041. 

via ZeroHedge News Tyler Durden

In Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit “Digital Dollars” Directly To “Each American”

In Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit “Digital Dollars” Directly To “Each American”

Tyler Durden

Thu, 09/24/2020 – 04:19

Over the past decade, the one common theme despite the political upheaval and growing social and geopolitical instability, was that the market would keep marching higher and the Fed would continue injecting liquidity into the system. The second common theme is that despite sparking unprecedented asset price inflation, prices as measured across the broader economy – using the flawed CPI metric and certainly stagnant worker wages – would remain subdued (as a reminder, the Fed is desperate to ignite broad inflation as that is the only way the countless trillions of excess debt can be eliminated and has so far failed to do so).

The Fed’s failure to reach its inflation target – which prompted the US central bank to radically overhaul its monetary dogma last month and unveil Flexible Average Inflation Targeting (or FAIT) whereby the Fed will allow inflation to run hot without hiking rates – has sparked broad criticism from the economic establishment, even though as we showed in June, deflation is now a direct function of the Fed’s unconventional monetary policies as the lower yields slide, the lower the propensity to spend. In other words, the harder the Fed fights to stimulate inflation, the more deflation and more saving it spurs as a result (incidentally this is not the first time this “discovery” was made, in December we wrote “One Bank Makes A Stunning Discovery – The Fed’s Rate Cuts Are Now Deflationary“).

In short, ever since the Fed launched QE and NIRP, it has been making the situation it has been trying to “fix” even worse while blowing the biggest asset price bubble in history.

And having recently accepted that its preferred stimulus pathway has failed to boost the broader economy, the blame has fallen on how monetary policy is intermediated, specifically the way the Fed creates excess reserves which end up at commercial banks instead of “tricking down” all the way to the consumer level.

To be sure, in the aftermath of the covid pandemic shutdowns the Fed has tried to short-circuit this process, and in conjunction with the Treasury it has launched “helicopter money” which has resulted in a direct transfer of funds to US corporations via PPP loans, as well as to end consumers via the emergency $600 weekly unemployment benefits which however are set to expire unless renewed by Congress as explained last week, as Democrats and Republicans feud over which fiscal stimulus will be implemented next.

And yet, the lament is that even as the economy was desperately in need of a massive liquidity tsunami, the funds created by the Fed and Treasury (now that the US operates under a quasi-MMT regime) did not make their way to those who need them the most: end consumers.

Which is why we read with great interest a Bloomberg interview with two former Fed officials: Simon Potter, who led the Federal Reserve Bank of New York’s markets group i.e., he was the head of the Fed’s Plunge Protection Team for years, and Julia Coronado, who spent eight years as an economist for the Fed’s Board of Governors, who are among the innovators brainstorming solutions to what has emerged as the most crucial and difficult problem facing the Fed: get money swiftly to people who need it most in a crisis.

The response was striking: the two propose creating a monetary tool that they call recession insurance bonds, which draw on some of the advances in digital payments, which will be wired instantly to Americans.

As Coronado explained the details, Congress would grant the Federal Reserve an additional tool for providing support—say, a percent of GDP [in a lump sum that would be divided equally and distributed] to households in a recession. Recession insurance bonds would be zero-coupon securities, a contingent asset of households that would basically lie in wait. The trigger could be reaching the zero lower bound on interest rates or, as economist Claudia Sahm has proposed, a 0.5 percentage point increase in the unemployment rate. The Fed would then activate the securities and deposit the funds digitally in households’ apps.

As Potter added, “it took Congress too long to get money to people, and it’s too clunky. We need a separate infrastructure. The Fed could buy the bonds quickly without going to the private market. On March 15 they could have said interest rates are now at zero, we’re activating X amount of the bonds, and we’ll be tracking the unemployment rate—if it increases above this level, we’ll buy more. The bonds will be on the asset side of the Fed’s balance sheet; the digital dollars in people’s accounts will be on the liability side.”

Essentially, the Fed is proposing creating a hybrid digital legal tender unlike reserves which are stuck within the financial system, and which it can deposit directly into US consumer accounts. In short, as we summarized “The Fed Is Planning To Send Money Directly To Americans In The Next Crisis, something we reminded readers of on Monday:

So this morning, as if to confirm our speculation of what comes next, Cleveland Fed president Loretta Mester delivered a speech to the Chicago Payment Symposium titled “Payments and the Pandemic“, in which after going through the big picture boilerplate, Mester goes straight to the matter at hand.

In the section titled “Central Bank Digital Currencies”, the Cleveland Fed president writes that “the experience with pandemic emergency payments has brought forward an idea that was already gaining increased attention at central banks around the world, that is, central bank digital currency (CBDC).”

And in the shocking punchline, then goes on to reveal that “legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments.

But wait it gets better, because in launching digital cash, the Fed would then be able to scrap “anonymous” physical currency entirely, and track every single banknote from its “creation” all though the various transactions that take place during its lifetime. And, eventually, the Fed could remotely “destroy” said digital currency when it so decides. Oh, and in the process the Fed would effectively disintermediate commercial banks, as it would both provide loans to US consumers and directly deposit funds into their accounts, effectively making the entire traditional banking system obsolete. Here are the details:

Other proposals would create a new payments instrument, digital cash, which would be just like the physical currency issued by central banks today, but in a digital form and, potentially, without the anonymity of physical currency. Depending on how these currencies are designed, central banks could support them without the need for commercial bank involvement via direct issuance into the end-users’ digital wallets combined with central-bank-facilitated transfer and redemption services. The demand for and use of such instruments need further consideration in order to evaluate whether such a central bank digital currency would allow for quicker and more ubiquitous payments in times of emergency and more generally. In addition, a range of potential risks and policy issues surrounding central bank digital currency need to be better understood, and the costs and benefits evaluated.

The Federal Reserve has been researching issues raised by central bank digital currency for some time. The Board of Governors has a technology lab that has been building and testing a range of distributed ledger platforms to understand their potential benefits and tradeoffs. Staff members from several Reserve Banks, including Cleveland Fed software developers, are contributing to this effort. The Federal Reserve Bank of Boston is also engaged in a multiyear effort, working with the Massachusetts Institute of Technology, to experiment with technologies that could be used for a central bank digital currency. The Federal Reserve Bank of New York has established an innovation center, in partnership with the Bank for International Settlements, to identify and develop in-depth insights into critical trends and financial technology of relevance to central banks. Experimentation like this is an important ingredient in assessing the benefits and costs of a central bank digital currency, but does not signal any decision by the Federal Reserve to adopt such a currency. Issues raised by central bank digital currency related to financial stability, market structure, security, privacy, and monetary policy all need to be better understood.

To summarize, the wheels are already turning on a plan that sees the Fed depositing “digital dollars” to “each American”, a stunning development that essentially sees the Fed bypass Congress, endowing the Central Bank with targeted “fiscal stimulus” capabilities, and which could lead to a dramatic reflationary spike as it is the lower income quartile segments of US society that are the marginal price setters for economic goods and services. And having already implemented Average Inflation Targeting, the resulting burst of inflation would be viewed by the Fed as insufficient on its own (as it would have to persist for a long time over the “average” period whatever it may end up being), to tighten monetary policy. In fact, even as inflation rages – which some alternative inflationary measures to CPI suggest it already is – the Fed will have a semantic loophole in explaining just why it needs to keep inflation scorching hot even as the standard of living in America collapses to the benefit of a handful of asset holders.

Why? The CBO showed the answer yesterday:

Absent a massive burst of inflation in the coming years which inflates away the hundreds of trillions in federal debt, the unprecedented debt tsunami that is coming would mean the end to the American way of life as we know it. And to do that, the Fed is now finalizing the last steps of a process that revolutionizes the entire fiat monetary system, launching digital dollars which effectively remove commercial banks as financial intermediaries, as they will allow the Fed itself to make direct deposits into Americans’ “digital wallets”, in the process also making Congress and the entire Legislative branch redundant, as a handful of technocrats quietly take over the United States.

via ZeroHedge News Tyler Durden

“Let Me Explain What Happens Next…” – A Reader Sums It All Up Very Ominously

“Let Me Explain What Happens Next…” – A Reader Sums It All Up Very Ominously

Tyler Durden

Thu, 09/24/2020 – 05:00

Authored by ‘Austrian Peter’ via The Burning Platform,

A reader recently wrote me a long letter on how he feels about all this ‘Plandemic’ stuff.  I thought it would be good to share it as there is so much in it which rings bells of truth for me…

[emphasis ours]

I’ve just woken up after reading ZeroHedge late into the night. I awoke with the conviction that Covid is being used to roll out a police state:

They know it’s not deadly, it’s no longer spreading and Lockdown is killing off the few small businesses which remain viable. Yet Boris now insists upon banning the assembly of more than 6 people. He has recalled some petty bureaucrats to act as street enforcers and requested people become snitches who report on their neighbours for any breaches of these guidelines. This automatically means we must now all fear our neighbours, or strangers who take our car number. How better to destroy the mutual trust upon which society is built?

Just think if one were to refuse to bend the knee.  In Australia and Spain the police have been caught using excessive force against those not wearing masks. Intimidating isn’t it? I’m thinking I may have to start using one. Yet the science is clear – masks offer no protection.

So we know these new restrictions are not being driven by the authority’s concern for our health. And what is the difference between where we are now and making it normal for the police to come to your door and arrest you for a breach of their protocols? What is the difference between where we are now and an oppressive police state?

There is only one difference between now and full-on state oppression:  A change in the Zeitgeist.

They need an event that will change the mood of the people – an event or a series of events that make us afraid of ‘them’. A psychological shock that will give the police the conviction that things are so bad ‘a little force is necessary’ to ensure things don’t get out of control. And then, magically, the current ‘temporary restrictions’ become state oppression. What could that game changer be?

Imagine this November: The US has 100 cities descending into what looks like the start of civil war as patriots turn out to stop Antifa burning down Middle America. Kamala Harris is calling for the army to ‘evict’ Trump because he refuses to leave the White House on the grounds that he won the popular vote while the mail-in ballots were fraudulent.

For the Brits, Brexit has caused problems at the ports – among other things some foodstuffs are not getting through. Germany’s economy has cratered after the EU stopped them exporting cars to the UK (Trumps already tariffed them), and the EU’s bank has insisted Germany let the 500 non-viable, medium sized biz (currently kept alive with emergency funding) go bankrupt.

Deutsche Bank collapses and this initiates a global banking crisis. Europe has no way of saving its banks as all the European economies are so damaged and 20% of workers have already been laid off.  It’s a Greek style banking crisis on steroids. People are pulling out cash in the expectation of daily cash limits. Physical gold will have already disappeared from the market place. So any biz with money in the bank is frantically buying bitcoin in an attempt to avoid their working capital being ‘bailed in’.

The banks will have already pulled the plug on their most vulnerable customers – the airlines – so virtually no planes are flying. Dover is jammed up with lorries lining the approach roads. So no one can leave Blighty.  And if you did, the emergency measures intended to pre-empt Covid’s Second Wave require you to be kept in quarantine at your destination. Locked down in a hotel, under military guard (as in NZ), for 4 weeks at your own expense and with frequent testing to ensure you are not a carrier. With full bio-metric data being collected and filed on an EU wide register. In practice this means that travel becomes so fraught that escape from your homeland is just about impossible.

You get the gist?  November could be the end of world as we know it’ (TEOTWAWKI).  But my point is this: Why are we looking at such a catastrophe if their goal is not a police state? No one destroys the globe’s economy and creates the conditions for a 10 year Greater Depression by accident. This has to be a planned, intentional destruction of much of global civilization.

The evidence is overwhelming. This civilization has been purposefully destroyed. Right now we’re in an unreal time (like the beautiful summer just before WW1’s carnage).  It’s like Wiley E Coyote who has gone over the cliff, is still running but not yet started to fall. But when we fall, how will people react as they realize that they will never work again, never pay off the mortgage, never collect their pensions?  If we have state oppression and economic chaos by Christmas then what will be the next stage of their takeover?

The world’s economy is already doomed. The already broken supply chains ensure it can only get worse.  Once the derivative market goes, and banks can no longer fund the credit lines crucial for importers and exporters, then trade will collapse and thus food supplies cease.

It would seem to be inevitable that America is going to see more conflict as the Dems & Soros show no signs of wishing to abort their colour revolution. Maybe in 2021, maybe a year or two later, but there will come a time when a credit shortage leads to deflation. So the banks will print more and then rain down helicopter money which will lead to inflation. And then the currencies will start collapsing. Many people understand that this is inevitable. But what happens when people come to accept that money isn’t go to be worth the paper it’s printed on?  And thus keeping a job may not be worth the danger of leaving your house or of leaving safety.

I summarise one of last night’s articles:

“the beasts of burden don’t rebel, they just no longer show up. Not showing up can take a number of forms: early retirement, sick leave, a demand to work halftime, a workers’ compensation stress leave, and of course, resignation and quitting as in: “take this job and shove it”.  They slip noiselessly into the cracks and crevasses and once they’re gone, there’s nobody left to replace them.”

“As the Vital Few 4% realize the system no longer works for them and opt out, this will have an out-sized effect on the 64%, most likely urban dwellers, highly dependent on increasingly brittle, fragile services that depend on the Vital Few for their functionality. Think of London’s tube train drivers phoning in sick – ideology won’t matter.

Those dropping out may be Conservative or Progressive or they may have lost interest entirely in politics and all the other circuses that serve to distract the populace from the crises dissolving the glue that held the system together. “So I won’t get rich, that dream died a long time ago.”  What I’m interested in now is getting my life back and getting the heck out of Dodge as things fall apart.”

The rich will escape to their holiday cottages. The poor will riot – but what then?  As the social facade cracks, and the economic system breaks, there is neither a society nor an economy to fall back on. By Christmas it will be obvious that normality has gone for ever.

So what will ‘they’ do with millions of unemployed, frightened people?  If  ‘they’ leave the internet on then the people will start to organize – first politically – but when that doesn’t work, riots and then finally revolution. Turn it off and they will riot without being organized. Turn off phones and all hell will break out. Don’t turn them off and the kids will organize against the state – trash cars or burn down the local police station.  Have you noticed how some police stations look like forts?

My point is that it’s very hard not to see ‘events’ hitting the fan this November. And once they do it’s very hard to see life ever going back to stability, let alone ‘normality’. Rather, there will be an overwhelming need to control {oppress} the population before they take over the state. But what do you do with millions of unemployed in a failed economy who are doomed to losing their currency, long term poverty and probably food shortages. There is only one thing ‘they’ can do. Kill them.

Ideally, for the elite, Covid’s Second Wave will have a higher morbidity rate. Enough to steadily reduce the population but not so fast they can’t be buried in plague pits. It would have to be bad enough to justify a harsh Lockdown but it’s difficult to see that being feasible without giving the people electricity, internet & food and the money to pay for it. And even then it’s only a temporary fix as Lockdown can’t last for ever. Permanent Lockdown would soon destroy the currency which will mean no electricity or food.

Maybe Covid-19 v1.0 was supposed to kill off more people but it failed. Or maybe it worked as intended – they didn’t want to risk killing off too many in case the Lockdown failed and we revolted. But I don’t see they have much choice now. ‘The Fourth Turning’ will be turbulent until 2025 and things won’t really be resolved until 2030. How are they going to manage us for another 10 years? How will they control us? Feed us?

They can start a war but no one is going to turn up. Fight a war for the elite? Use a gun to kill people you don’t know?  That’s not going to happen. And they need to preserve the professional soldiers to ‘maintain the peace’ in the cities. So what options do they have but to release a more potent bio-weapon – nuclear war perhaps?

One of the scary things about working through ‘their’ options is that they don’t have many. Things have gone too far – they’ve destroyed the world’s economy. The system is stuffed. What are ‘they’ going to do with 2bn unemployed people. Even if there is enough food but the US has a developing dust bowl, Africa’s suffered huge locust devastation, and China’s preparing for food shortages. How do unemployed people pay for it?  Who can give them money without destroying the currency or if the currency is already destroyed?

A simple thing like the current fall in the number of sunspots is indicating an immediate future of colder weather and lower crop yields. Add into that, fuel shortages for agricultural machinery, lack of fertilizer – Nitrogen is made by burning lots of oil, lack of supply lines, and loss of credit lines. With people in Lockdown ‘they’ would be relying on a planned economy (not a free market) which is going to be inefficient. A planned economy is completely incapable of ensuring a stable food supply when there are shortages and the world is chaotic.

It’s not even feeding our cities that will be prime problem. It will be feeding the cities in Mexico and North Africa. They can’t cope with food price inflation. But they won’t starve – they’ll flood into the USA or cross the Mediterranean – lucky us!  And what will Erdogan in Turkey do to feed his people – nothing good!  If there are real food shortages then note that there are huge Muslim populations in France & Sweden, Turks and refugees in Germany, Pakistani ghettos in UK and plenty more where they all came from.

I’m feeling concerned. The problem is I can’t see Brexit solving our problems. Sure, it may not exacerbate them as much as I fear. November’s events may not trigger us into a state of oppression. But do you see my point?  Things have got so bad, they can only get worse. November is bound to see some changes and they may well trigger a change in the Zeitgeist, though how significant depends on ‘events, dear boy, events’.

But whatever happens I think it’s virtually guaranteed that both the economy and society will keep on deteriorating.

Do you think I’m right?

Will November be the tipping point?

Is there any way back?

Will there be anything to go ‘back’ to?

Or else, is it a case of:  “we’re doomed, I tell ya, doomed”.  And what happens when more people work out that the elites have created a situation where their only option is to rapidly reduce the population! Famine will lead to uncontrollable social conflict, perhaps with Muslims massacring whites in general or the local Jewish populations in particular. I think that much conflict could see ‘them‘ lose control.

Thus it’s hard to see any other viable method than a bio-weapon. Agenda 21 could be implemented on schedule. And if not, the solution will need to be applied within a few years, certainly before 2025.  Timing may depend on vaccine production as there will have to be at least enough vaccine for essential workers, the police, the military and the management class if the elite are to retain control.

via ZeroHedge News Tyler Durden

UK Grocers Stave Off Panic Buying Amid 2nd Lockdown Fears; Daily COVID Case Record Smashed

UK Grocers Stave Off Panic Buying Amid 2nd Lockdown Fears; Daily COVID Case Record Smashed

Tyler Durden

Thu, 09/24/2020 – 04:15

Britain is scrambling to avoid a second lockdown after its first one six months ago, with PM Boris Johnson just introducing expanded new social distancing rules across the UK, as the government’s top adviser Sir Patrick Vallance warns “the epidemic is doubling roughly every seven days.” 

Specifically the latest surge in COVID-19 cases at current rates could mean 50,000 cases a day by mid-October, Vallance warned at the start of the week. In introducing new measures to fight the spread Tuesday night, Johnson urged citizens to “summon discipline, resolve and a spirit of togetherness.” The new measures will last a whopping six months with warnings of “a difficult winter” also at a moment total infection numbers approach the half-million mark (as of Wednesday: 409,729 people tested positive since the start, including 41,862 deaths).

However all the dire pandemic predictions have naturally resulted in a surge of panic buying, similar to what happened across the West and in the United States as lockdowns hit last Spring.

AFP via Getty Images 

“Supermarket bosses have urged shoppers not to start panic buying, while Asda is bringing in 1,000 safety marshals, as the industry braces for a potential change in shopping habits ahead of new lockdown restrictions,” The Guardian reports late Wednesday.

Discount supermarket chains Tesco and Aldi urged customers this week not to start stockpiling goods, saying was “unnecessary” and seeking to calm fears of disruption in supply chains. 

Aldi in the UK, for example, posted a public statement saying:

“There is no need to buy more than you usually would. I would like to reassure you that our stores remain fully stocked and ask that you continue to shop considerately.”

“We have remained open for our customers throughout the pandemic and will continue to have daily deliveries, often multiple times a day, across all of our products.”

And CEO Dave Lewis of the popular store Tesco said in a televised interview that Britons should not panic: “The message would be one of reassurance. I think the UK saw how well the food industry managed last time, so there’s very good supplies of food,” he said, describing an improved plan for rapid restocking.

“We just don’t want to see a return to unnecessary panic buying because that creates a tension in the supply chain that’s not necessary,” he added.

Via NPR: If the U.K.’s rate of new coronavirus cases doubles four more times, Chief Scientific Advisor Sir Patrick Vallance said, “you would end up with something like 50,000 cases in the middle of October per day.”

Given the record number of new cases, the sense of fear and panic is not likely to abate in the short term:

New UK coronavirus cases hit 6,178 on Wednesday, according to the latest government data. The number is the highest daily level since 1 May, when the UK was in full lockdown.

Here were the numbers as of the prime minister’s Tuesday night address:

Local UK grocery stores have reported they’ve started hiring and stationing extra security personnel in preparation to monitor both numbers of shoppers at once, and mask and other guidelines. 

via ZeroHedge News Tyler Durden

Three Iranian Power Plants Will Soon Be Mining Bitcoin

Three Iranian Power Plants Will Soon Be Mining Bitcoin

Tyler Durden

Thu, 09/24/2020 – 03:30

Authored by Shaurya Malwa via,

In brief

  • Three power plants in Iran will soon offer their electricity outputs to interested Bitcoin miners.

  • The move comes after a July ruling enabled power plants to legally mine Bitcoin.

  • Iran has turned to Bitcoin mining as a potential source of income amidst broader economic worries.

Three major power plants in Iran will soon offer their energy outputs exclusively for Bitcoin mining, the country’s Thermal Power Plant Holding Company (TPPH) announced on Monday, as per a report on local news outlet Tehran Times.

Irani power plants receive benefits and subsidies from the government on their fuel supplies, which are in turn used to produce power. And while they were earlier barred from mining cryptocurrencies, a new ruling in July allowed power plants to engage in the business—albeit after gaining necessary government approval, licenses, and complying with the tariffs set for crypto mining.

The TPPH now wants a slice of that pie. It said it will soon offer a tender for the electricity output of three power plants for the purpose of Bitcoin mining.

 “The necessary equipment has been installed in three power plants of Ramin, Neka, and Shahid Montazeri, and the auction documents will be uploaded on the website in the near future,” said TPPH head Mohsen Tarztalab.

Tarztalab said that the sale of electricity to Bitcoin miners presented a new, stable way of generating profits in the electricity sector.

He added the three power plants will only use their expansion turbines for the purpose of Bitcoin mining, which uses natural gas to produce power and is a cheaper alternative to liquid fuels like gas oil.

Such turbines are not connected to the national grid—which distributes power across the country for commercial purposes—and will be wholly used by the power plans to mine Bitcoin instead, explained Tarztalab.

Bitcoin adoption for a reason

The July ruling is said to be a savior for the country’s electricity industry. Repeated price hikes and the obligation to supply electricity at stable prices to subscribers has created falling profits for Iranian power producers in the past, the report noted.

Iran’s adoption of Bitcoin comes at a time when the country grapples with a bleak economic outlook and international trade sanctions imposed by influential governments, such as the US, over its controversial nuclear power program.

However, Bitcoin mining is providing them a new way for them to generate income, it added. And mining is a big opportunity.

Iranian ministers said in 2019 that regulated, industrial-scale Bitcoin mining can pull in, annually, an estimated $8.5 billion.

via ZeroHedge News Tyler Durden