Category: zerohedge

A bank’s prime brokerage unit is supposed to be a safe, reliable and predictable generator of revenue, resulting from modest-margin transactions with a bank’s hedge fund client base. It’s safe because the bank’s risk managers scour the bank’s exposure to various hedge funds, and immediately flag any clients that become too big and a potential source of loss (it’s also “safe” because the bank’s prime brokerage management tends to make far less than the frontline Sales and Trading staff).

That is, at least, the theory. The practice, as the recent Archegos fiasco demonstrated, is anything but.

Case in point, the now infamous Credit Suisse disaster in its dealing with Archegos, which as of this moment have resulted in more than $5.4 billion in losses for the Swiss bank, and which as the FT reported today, resulted in a paltry CHF16 million (US$17.5 million) in revenue last year. In simplistic terms, this means that somehow the funding chain and the leverage Credit Suisse afforded to Archegos resulted in over 300x leverage in the wrong direction!

As the FT notes this morning, the paltry fees Credit Suisse received from Archegos “raises further questions about the risks the lender was prepared to shoulder in pursuit of relationships with ultra-wealthy clients” and adds that “the low level of fees and high risk exposure have caused concern among the board and senior executives, who are investigating the arrangement, according to two people with knowledge of the process.” It has also caused a flood of layoffs and terminations as the bank belatedly looked at its books – the infamous scene from Margin Call comes to mind here…

… and realized just how massive its exposure had been all along, and how nobody had any idea how big the loss would end up being until it was finally booked following the now infamous late-March liquidation frenzy.

As the FT reports, the bank’s management was “particularly alarmed” after it was told that Hwang was not a private banking client of the group, suggesting there was little incentive to pursue his prime brokerage business, which is bizarre considering how much leverage via TRS and CFDs the bank had afforded the relatively obscure family office.

As Risk.net first reported, Credit Suisse demanded a margin of only 10% for the equity swaps it traded with Archegos and allowed the family office 10-times leverage on some transactions. That was about double the leverage offered by fellow prime broker Goldman Sachs, which took minimal losses when unwinding its positions.

And with the horse having long ago fled the barn, on Friday, António Horta-Osório was confirmed as the chair of Credit Suisse and promised an urgent review of the bank’s risk management, strategy and culture. Which is great, the question is i) why this wasn’t done years ago, and ii) what kind of risk controls – if any – does Credit Suisse actually have on a client by client basis.

“Current and potential risks of Credit Suisse need to be a matter of immediate and close scrutiny,” said the former Lloyds Banking Group chief executive. “I firmly believe that any banker should be at heart a risk manager.”

To be sure, “action was taken” (even if confidence has yet to be restored) and Credit Suisse’s board already removed several senior executives, including chief risk and compliance officer, Lara Warner, and investment bank head, Brian Chin. Andreas Gottschling, who led the board’s risk committee, was forced to step down last week in expectation of a shareholder backlash. The two heads of the prime division have also stepped down.

CEO Thomas Gottstein also announced it will cut a third of its exposure in its prime services business, leading to even less revenue at a time when the bank just raised $1.9BN from shareholder to close the Archegos inflicted funding gap.

And while Credit Suisse does not disclose the amount of money it makes from its prime services division, JPMorgan analyst Kian Abouhossein estimated the unit made $900MM of revenues last year, just over a third of the total from its equities business. It means that the Archegos fiasco not only led to a total wipeout on a 300x levered position, but it will lead to a revenue plunge of more than half a billion dollars going forward as the bank finally purges other risky PB exposure.

Abouhossein said the prime brokerage generated bigger profit margins than other parts of the investment bank. “We see shrinkage as a material setback for the overall long-term viability of Credit Suisse’s investment bank,” he added.

Of course, the big question, as we discussed more than a month ago, is how widespread will the Prime Brokerage deleveraging be and will it hammer other Archegos-wannabes, forcing them to liquidate positions ahead of time. While Credit Suisse is the biggest European provider of prime services, it lags bigly behind global leaders Goldman, Morgan Stanley and JPMorgan. According to the FT,  the largest investment banks pulled in $15.2Bn in prime broking revenue last year, slightly less than the $16.5Bn they made in 2019, as hedge funds reduced their borrowing during the pandemic, according to Coalition Greenwich.

 

Authored by Paul Joseph Watson via Summit News,

The Minneapolis Target store that was infamously ransacked by looters last year now proudly displays a mural celebrating those same rioters.

Yes, really.

As we highlighted last year, the store was reopened with the goal of catering more to black shoppers and being less “racist.”

After a newly formed “racial justice committee” sought to tackle Target’s reputation of appealing primarily to white suburban shoppers, efforts were made to make the store more welcoming for black people while also stocking more products made by black-owned brands.

Part of this facelift included a new mural at the front of the store meant to represent the new ethos of the brand.

Now we know what that looks like – the mural features the words ‘Together We Build’ as well as a depiction of two BLM protesters holding an “I can’t breathe” sign.

Inspiring corporate-sponsored art now adorning the Target in Minneapolis that was looted last year pic.twitter.com/jlXZ79tVaM

— Michael Tracey (@mtracey) April 27, 2021

The mural also depicts protesters with their fists raised triumphantly in the air while buildings around them are on fire.

“The figures in the piece symbolize protesters, who could be any of us,” according to one of the artists who worked on the display.

“The piece was created by Minneapolis-based nonprofit Juxtaposition Arts, which goes by JXTA,” reports Alpha News. “The multi-million dollar organization seeks to empower black youth to create activist art. This apparently includes teaching kids how to write graffiti during a three week summer camp, printing Black Lives Matter T-shirts and more.”

“JXTA also flies a flag that mimics the color scheme of the ones often carried by the New Black Panthers and other paramilitary black nationalist groups like the Not Fucking Around Coalition.”

Apparently, the mural was only supposed to be a “temporary” addition, but it is still there today.

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While most eyes were on the surge in Ethereum this morning, the real animal spirits are in Dogecoin, which is up 50% today, topping 60c for the first time ever…

Doge has now surged above Ripple to become the 4th largest cryptocurrency…

Source

And that utter chaos has sparked trouble at Robinhood, as its crypto trading app “experiencing issues”…

We’re currently experiencing issues with crypto trading. We’re working to resolve this as soon as possible. For the latest updates, check https://t.co/ZS733G6N1J

— Robinhood Help (@AskRobinhood) May 4, 2021

Somewhere, Mark Cuban and Elon Musk are laughing… but not so much Charlie Munger.

Authored by Nicole Hao via The Epoch Times (emphasis ours)

The Chinese regime has said its controversial virology institute had no relationship with the military, but the institute worked with military leaders on a government-sponsored project for almost a decade.

The Wuhan Institute of Virology (WIV) participated in a project, sponsored by the National Natural Science Foundation of China (NSFC)—a regime-funded scientific research institution—from 2012 to 2018. The project was comprised of a team of five military and civil experts, who conducted research at WIV labs, military labs, and other civil labs leading to “the discovery of animal pathogens [biological agents that causes disease] in wild animals.”

The WIV is located in central China’s Wuhan City, the COVID-19 pandemic ground zero. As an advanced virology institution, the WIV has the only P4 lab—the highest biosafety level lab—in China and the biggest repository of bat coronaviruses in Asia. The CCP (Chinese Communist Party) virus, commonly known as novel coronavirus, is “96 percent identical at the whole-genome level to a bat coronavirus,” Chinese researchers wrote in a research article (pdf) published in February 2020.

In recent months, the Chinese Foreign Affairs Ministry and Shi Zhengli, the WIV virologist nicknamed “Bat Woman” for her research on coronaviruses of bat origin, denied there is a connection between the WIV and military, and said that no WIV researchers were infected with COVID-19.

However, according to an investigation conducted by the U.S. State Department, “several researchers inside the WIV became sick in autumn 2019, before the first identified case of the outbreak, with symptoms consistent with both COVID-19 and common seasonal illnesses.”

“The WIV has engaged in classified research, including laboratory animal experiments, on behalf of the Chinese military since at least 2017,” states a State Department fact sheet.

However, Shi denied that the WIV engaged in research with the Chinese military. “I don’t know of any military work at the WIV. That information is incorrect,” Shi said at a public webinar on March 23. Shi didn’t mention that the WIV was used by a Chinese military medical team in early 2020 for developing COVID-19 vaccines.

Shi told Science magazine in July 2020 that no pathogen leaks or personnel infections had occurred. The magazine reported that according to Shi, “there is ‘zero infection’ among staff or students with SARS-CoV-2 [2019 novel coronavirus] or SARS-related viruses.”

In late March, overseas Chinese media reported that three WIV staff members started to have symptoms similar to COVID-19 as early as November 2019. Soon thereafter, Chinese state-run media China News reported that the news was based on rumors.

China News reported that a Chinese specialist told the WHO investigation team—which visited China in February to investigate the origin of the CCP virus—that cases dating back to 2019 were patients at WIV-related hospitals, rather than members of WIV staff.

Military-Civil Cooperation

The NSFC put research results about the animal pathogens on its website on Feb. 1, 2018. It also stated that the project “discovered over 1,640 types of new viruses by using the metagenomics technology,” and the research was performed by a civil and military team.

Cao Wuchun, 58, a member of the project’s military team, is a colonel and top epidemiologist in the Chinese military. He has been a researcher at the Academy of Military Medical Sciences since September 2017, but has worked there for the last 21 years. He served as the academy’s director from 2007 to 2017, according to his official resume. Cao served on the team as second in command to Major General Chen Wei, China’s top biowarfare expert.

On Jan. 26, 2020, Cao accompanied Chen to Wuhan and they took over command of the WIV. Chinese state-run media reported, at that time, that the main purpose of the military take-over was to develop a vaccine against the CCP virus.

Cao also co-led the NSFC project with Shi (the WIV virologist), and the Chen-Cao team had taken over the WIV when the COVID-19 pandemic broke out in Wuhan.

The other three team leaders of the NSFC project were Liang Guodong, Zhang Yongzhen, and Xu Jianguo, researchers from the Chinese Center for Disease Control and Prevention (CDC). Among them, Xu was the project leader or the manager of the other four team members.

Xu, 69, is the director of the CDC’s state key laboratory for communicable disease prevention and control, a scholar at the Chinese Academy of Engineering, and director of the Research Institute of Public Health at Nankai University. Xu’s resume states that he received $987,820 in funding from the NSFC for the project.

As one of China’s top virus specialists, Xu went to Wuhan to serve as a team leader in early 2020. On Jan. 14, 2020, Xu told China’s Science magazine, “All 763 close contacts aren’t infected. The pandemic isn’t severe, and it might stop next week if there’s no more new infection.”

In fact, Wuhan people started to crowd inside hospitals for their pneumonia symptoms from early January 2020, but the regime refused to recognize that the virus can transmit among humans until Jan. 20, 2020. The late announcements fooled people into traveling and allowed the virus to spread all around the world from Wuhan.

Bat Woman

Shi, 56, directs the Center for Emerging Infectious Diseases at WIV. In 2000, she received her Ph. D. degree in virology from the University of Montpellier II in France, after studying there for four years.

Shi started to investigate coronaviruses when China suffered from the severe acute respiratory syndrome (SARS) outbreak in 2002 and 2003.

Beijing authorities said the SARS virus was transmitted from civets (a meat-eating animal) to humans in southern China’s Guangdong Province in November 2002, and spread to other Chinese cities and neighboring Hong Kong because the regime didn’t allow people to discuss this infectious disease in the first two months. SARS eventually killed at least 774 people, and infected 8,096 people from 31 countries.

Chinese state-run CCTV reported on Dec. 29, 2017, that Shi and her team didn’t believe that civets were the natural hosts of SARS, and were only the intermediate host. They started to investigate bats from different Chinese regions in 2004.

In 2011, Shi’s team detected a SARS-like virus from bats living in a cave in southwestern China’s Yunnan Province. They then named this virus “WIV1” and conducted further studies. CCTV didn’t report the details of the virus, but said Shi’s team continued to get samples from the same cave for five years.

Since 2015, Shi’s team has been publishing their test results in international magazines, including Virologica Sinica, Nature, and Lancet.

Weeks after the Chinese regime publicly announced the COVID-19 outbreak, Shi and her team published an article in Nature, linking COVID-19 to bats.

Shi’s team discovered the bat coronavirus in the bats that they had collected from an abandoned copper mine in Tongguan township, Mojiang county in Yunnan Province. The WIV researchers had visited the mine for several days even after six workers had gotten infected while working there.

On July 15, 2020, virologist Jonathan Latham and molecular biologist Allison Wilson from Ithaca, N.Y., co-published an article in Independent Science News after translating a 66-page master’s thesis by Li Xu, a Chinese medical doctor who treated the miners and sent their tissue samples to the WIV for testing.

Li’s thesis was submitted in May 2013. He wrote that six miners removed the bat feces from a mine in April 2012. After working there for 14 days, all workers felt sick with severe symptoms, such as high fever, dry cough, and sore limbs.

Kunming Medical University, School of Clinical Medicine, where Li studied, received and treated the miners. Finally, three of the miners died. Their samples were sent to WIV for further investigation.

After February’s dismal drop, blamed on weather, US factory orders were expected to rebound solidly in March (despite a mixed picture from Manufacturing surveys), but analysts were disappointed when the print hit at +1.1% (below the +1.3% expected) after February’s 0.8% drop was revised higher to a 0.5% drop.

Source: Bloomberg

Obviously, the 16.1% YoY surge is due to the ugliness of the comps from last March when the world stopped.

March’s rebound has pushed total factory orders above Sept 2018’s cycle peak

Source: Bloomberg

Is this as good as it gets? Judging by the stagflationary drop in production and surge in prices, it may well be…

Source: Bloomberg

Until the next round of government handouts.

Just like late February when we had the first inflation scare-cum-Treasury tantrum, Tech is breaking down, and look no further than Amazon for the evidence.

In just the three days since reporting blowout Q1 earnings which sent its stock to a new all time high, AMZN stock is down over 9% and is on the verge of a correction. Other FAAMGs, most notably Apple which had a just as impressive quarter, are not faring any better.

However, unlike late February when tech was monkeyhammered mostly as a result of sharply surging yields, this time there is the double whammy of deeply negative gamma.

As SpotGamma wrote overnight, “both SPY & QQQ remain in negative gamma territory which implies higher relative volatility.”

Nomura’s resident x-asset expert, Chalie McElligott, picks on this and in a note this morning writes that while “there is nothing exceedingly bulky or “whale-like” by itself”, there has “been a pick-up with broad Vol / Gamma selling from clients in recent weeks.” The details:

• This has show via standard overwriter flows in singles and index, but also to the systematic strangle-selling mentioned in the press last week (which looks like the odd-lottish flows in ratios that trade ~3-4x’s a week, while there too is a separate daily overwriter program in one month straddles for example)…all of which has contributed to what has been a very “long gamma” dynamic for Dealers—and thus the “stuck” S&P for about three weeks, pinging around the gravity of the big strikes at 4150-4200
• The %ile rank of the overall $Gamma magnitude across US Equities index has come-off after recent expirations (SPX / SPY consolidated now a middling 56.6%ile $Gamma / IWM 35.9%ile; EEM 37.4%ile); however, Nasdaq / QQQ’s continue to be the epicenter for how broad index movement could get weird, with -$435.8mm $Gamma which is extremely negative at just 3.8%ile

Needless to say, negative QQQ gamma + tech selloff = explosive combination, and as McElligott summarizes, “with this “extreme” negative $Gamma in QQQ, we see Dealers increasingly moving into “short Gamma vs spot” territory as well (Gamma “neutral line” at 339.36 vs spot 333.55); similarly, we currently see Dealers “short Gamma vs spot” too in both IWM (226.19 “neutral line” vs 224.79 spot) and EEM (54.29 “neutral line” vs spot 53.59)”

Tech’s inability to breakout higher has crippled sentiment, and as the Nomura quant concludes, following what had been a strong recovery in April for the Tech sector and “Secular Growth” (aided by the stabilization in USTs and relative “bull-flattening” off the extremes of the March Rates selloff / “bear-steepening”) “our Nomura Sector Sentiment analysis shows that WoW, we have seen Tech sector sentiment collapse (again)–with an 85.1%ile score a week ago, but today printing down at 53.9%”

And as the tech revulsion spreads, dragging Nasdaq lower…

… it is starting to hit broader indexesm such as the S&P and Russell…

… which just dipped below its 50dma.

The rise of altcoins continues as Ethereum has accelerated above $3500 for the first time ever this morning (less than 48 hours after first crossing above $3000)…

Source: Bloomberg

“The market is realizing how fundamentally undervalued Ether is given all the development activity on the network,” said Vijay Ayyar, head of Asia Pacific at crypto exchange Luno Pte.

“While one may think Ether has risen a lot, when you compare it to Bitcoin, there is a long way to go.”

Ayyar sees Ether hitting $5,000 to $10,000 by early next year. Evercore ISI technical strategist Rich Ross has revised up his target to $4,100 from $3,900. Many traders are eyeing a run toward $10,000 before the end of 2021, Edward Moya, a senior market analyst at Oanda Corp., wrote in a note.

“Ether will have much volatility, similar to Bitcoin, but can increase in value as more institutional investors become aware of it,” Pat LaVecchia, chief executive officer of crypto broker Oasis Pro Markets LLC, wrote in an email. Ether at $25,000 is possible over the next few years, he said.

The recent surge has pushed Ethereum’s market capitalization above $400 billion. That’s larger than Walmart and just shy of JPMorgan…

Source

Bitcoin is down this morning, testing $56,000, sending the ratio of ETH to BTC to 0.06x as the latest DeFi boom accelerates…

Source: Bloomberg

As The Wall Street Journal reports, the rally in ether is tied to the recent burst of activity on the network. About seven million new Ethereum addresses—or accounts able to hold ether balances—were created in the first four months of 2021, bringing the total to more than 55 million, according to analytics firm IntoTheBlock.

And the dollar value of transactions on the platform totaled $1.5 trillion in the first quarter, according to research firm Messari, more than the previous seven quarters combined.

The growth in markets like NFTs and defi has been “mind-boggling,” said Jean-Marie Mognetti, the chief executive of asset manager CoinShares.

“Ethereum as a network is what makes this all possible.”

The total amount of crypto held in defi protocols on Ethereum – a number referred to as “total value locked” – has skyrocketed to $68 billion, according to website DeFi Pulse, from about $900 million a year ago.

When new investors come to crypto the first asset they generally hear about and buy is Bitcoin before learning about other assets and allocating across the space. As FundStrat recently noted, the same learning curve is playing out with institutional investors right now where the crypto narrative is shifting from Bitcoin to Ethereum and other segments like DeFi and Web 3 apps.

Authored by Daniel Lacalle,

The Federal Reserve and European Central Bank repeat that the recent inflationary spike is “transitory”. The problem is that investors do not buy it.

Inflation is always a monetary phenomenon, and this time is not different. What central banks call transitory effects, and the impact of supply chains are not the real drivers of inflationary pressures. No one can deny certain supply shock impacts, but the correlation and extent of the increase in prices of agricultural and industrial commodities to five-year highs as well as the abrupt rise of non-replicable goods and services to decade-highs have monetary policy to blame.  Injecting trillions of liquidity makes more funds chase fewer goods and the rise in the real inflation perceived by citizens is much larger than the official CPI.

Take food prices. The United Nations Food Price Index is up 30% in the past five years and up 10% year-to-date (April 2021). The rise in food prices already caused protests all over the world in 2018 and it continues to reach new highs. The correlation in the price increase of most agricultural goods also shows that it is a monetary effect.

The same can be said about the Bloomberg Commodity Index which is also at five-year highs and up 15% year-to-date.

Yes, there have been some supply disruptions in a few commodities, but it is not widespread let alone the norm. If anything can be said is that the rise in agricultural and industrial commodities is happening despite the persistent overcapacity that many of these had already before the pandemic. We should also remember that one of the unintended consequences of massive monetary expansion is perpetuation of overcapacity. Excess capacity is refinanced and maintained even in crisis times. Therefore, we can argue that the rising cost of goods is not coming predominantly from supply shortages but in an environment of extended overcapacity, making it even more evident a monetary phenomenon.

We can discuss about the numerous ways in which governments disguise rising cost of goods and services in the official CPI (consumer price index), using debatable averages, excluding taxes, and underestimating the weight of some goods in a basket. In fact, the idea of CPI itself as created by the great economist Irving fisher was to disguise the abrupt rise in some goods by averaging the price change with others. Consumers were angry to see bread rise, say, 20%? What better idea than to include it in a basket of goods? However, that is not necessary. The reality is that the correlation in price moves and the aggressiveness of such changes show that most developed nation central banks simply will not change the course of monetary policy.

We know that central banks do not change course even if inflation is high and persistent because we have seen it in numerous countries, and almost every Southern European nation before the euro.

Governments always justify printing more money with the excuse that there is no inflation. When inflation rises, they say it is transitory. And when inflation soars, governments blame businesses and shop owners, presenting themselves as the solution with “price controls”.

Central banks are unable to normalize policy even with the evidence of a strong recovery because they are hostage to governments that simply refuse to reduce deficit spending while they cannot tolerate even a small rise in bond yields.

Investors know this and are looking for ways to protect their clients’ savings from inflation and an even more likely concern: stagflation. A rising number of funds are looking at a highly likely risk of stagnation after the chain of stimuli but with rising prices. Official CPI may not reflect the rise in healthcare, education, fresh food prices and rent, but citizens feel it.

There is a reason why in 2018 and 2019 we saw protests against the intolerable rise in cost of living all over Europe and emerging markets at the same time as central banks warned of the risk of deflation. The real cost of living is rising faster than what the official calculations suggest. It was a problem in 2018 and it is an even larger problem after 2020.

If there was thing that was peculiar about Bill Hwang’s blowup, it was the choice of some of his investments. Hwang had gone long several questionable names that had been targeted by short sellers in the past. 

Some of the names Hwang was in – like GSX, for example – also saw intense call buying over the span of months after being targeted by short sellers, likely helping drive up the equity’s price by several multiples of itself in what was an obviously unnatural fashion to all observers with more than one or two brain cells. It is unconfirmed whether or not Hwang played a part in these options purchases in these questionable names, but now it at least appears that some of Hwang’s stock selections have caught the eye of the media. 

For example, the South China Morning Post couldn’t help but notice that “Archegos was loaded up with investments in Chinese companies that have been accused of fraud”. The article asked whether Hwang’s blowup was the conclusion to the “unfinished story” that was laid out in The China Hustle, a documentary about exposing U.S. listed China based fraudulent companies.

The movie laid out how numerous Chinese companies systematically committed fraud across various U.S. exchanges, siphoning millions of dollars out of the country at the expense of U.S. investors and unwilling funds. 

SCMP couldn’t help but draw the parallel between the short sellers who acted as protagonists in the movie and Hwang. This is because those same protagonists had alleged fraud in numerous names in Hwang’s portfolio. In addition to GSX, there were also names like iQiyi and Vipshop, which had been targeted by short sellers Muddy Waters Research, J Capital Research and Citron Research as frauds. 

And many of these companies accused of fraud, notably GSX, were somehow able to buck the accusations – despite the gravitas of those making the allegations – and mysteriously rise higher. 

But then, Hwang blew up. The article laid out how Hwang’s positions in names cascaded lower, one after the other, after Viacom sold shares to take advantage of what analysts were widely considering to be an overvalued stock, after it had risen 600% over the course of less than a year. 

And so the SCMP notes that after watching the “delicately balanced bomb” of Hwang’s portfolio eventually detonate, eyes have turned to China Huarong Asset Management.

The asset manager “has portfolios of distressed assets monetised in its US$22 billion bonds, that are being leveraged by US investors”, SCMP writes. “Fitch helpfully downgraded its credit rating on the bonds from ‘A’ to ‘B’ – one notch above junk – after a panic sell-off.”

At the end of the day, Hwang’s blowup leaves us with more questions than answers. Namely:

1. Why did Hwang have a portfolio full of names accused of fraud?
2. Why did several of his names, like DISCA and VIAC, mysteriously rise higher at aggressive clips? Was Hwang in the options market in these names?
3. Could China Huarong Asset Management be the next bomb to go off?

For these answers and more, stay tuned…

By Michael Every of Rabobank

It’s not as if we are short of big picture themes right now: vaccines vs. vacillation; inflation, hyperinflation, disinflation, or deflation; tax and spend vs. no tax and spend vs. no tax and no spend; crypto vs. Tales From the Crypt-o; fast US-China decoupling,…or slow US-China decoupling; and even war or peace. No new developments on any of them today, however.

Instead, the focus is obviously on that most crucial of developments: that Bill and Melinda Gates are divorcing after 27 years. As Bloomberg puts it, “Their separation is likely to send shock waves through the worlds of philanthropy, public health, and business.”

And equal waves of excitement through divorce lawyers given there is allegedly no pre-nuptial agreement in place and a USD130bn pot of assets to divide. (Which is larger than the 2019 GDP of 153 of the world’s 213 economies and territories, with the cut-off point being Kuwait, and Ukraine potentially the next one in line – the second time I have had to use that phrase in very different contexts in recent weeks.)

But really, why the “shock waves”?

Did Amazon stumble after the Bezos divorce? Hardly.

Does the Gates divorce somehow prevent the philanthropy that sees them oppose developing nations being allowed to produce generic versions of Covid-19 vaccines? Yes, that won’t solve the terrible problem in India right now given the issue is physical supply – but arguably if everyone could produce vaccines to begin with, then there would be far fewer crises in the first place. That message –right or wrong– backs countries not relying on global supply chains in the future. Or finding a ‘vaccine-daddy’ that they *really* trust. And of course, this is about more than vaccine: what will the next crisis be? What will we be lacking then? Semiconductors are an obvious example, and it will be years before we sort that mess out, apparently. But there are many other critical goods supplies which billionaire neoliberal CEOs have “assumed away” in their world-is-flat business models. Of course, some countries have been thinking much further ahead: the not-so (neo)liberal ones. The EU is slowly catching on, based on the news reported here yesterday; as is the UK based on this report.

Back to the “shock waves”. Does the Gates divorce mark the end of anti-competitive business practices that sometimes end up in court? To say this is unlikely is an understatement, looking at the front page of the Wall Street Journal today. It also seems to ignore that the business model of much of the tech ‘disruption’ we see around us is: “We bleed money now, but once we are the ONLY global firm doing X, we are the next Bill Gates.” Except unlike Microsoft, current market valuations for tech are propelling many firms close at least ‘entry-level’ billionaire status long before every business and household has actually had to buy the product. Didn’t Andy Warhol say one day we would all be famous for 15 minutes? Maybe now we all get to be Bill Gates.

And who gets the land in this divorce, not the house, given the Gates are the largest private farmland holders in the US, with 242,000 acres? That is a lot of space on which to “carry out research to help breed chickens that lay better-quality eggs and cows that produce more milk for farms in South Asia and Africa”.

So perhaps the Gates divorce “shock wave” is just because everyone in financial markets and media, philanthropy, public health, and business are out-and-out romantics(?) Yes, that must be it.

Anyway, enough celebrity gossip and time for some more of the bigger-picture narratives: except it’s hard to tell the two apart. In particular, the Philippines’ Foreign Affairs Secretary just went ‘Wolf Warrior’ to use his personal Twitter account for a four-letter word tirade against China, demanding it remove its ships from a disputed area. (To clarify, the dispute is that international law and the Philippines say the waters are theirs: China says it isn’t, and is acting like it.) President Duterte then had to state on TV that “China remains our benefactor. Just because we have a conflict with China doesn’t mean that we have to be rude or disrespectful,” as he negotiates delivery of up to 4m doses of Sinovac vaccine, and 2m of Russia’s Sputnik V – for a population of 111m. See what I mean about philanthropy and supply chains? But don’t worry: those better-quality eggs are coming real soon.

And down to Australia, where the RBA meet today in their latest studious attempt to pay no real attention to the world or economy around them. Will there be recognition of the “drums of war” flagged recently? Of course not. There will be vague and unreliable snapshots of what they think the Chinese economy is doing. Will there be recognition of the house-price rises that are pretty bonza even by Aussie standards, while the only other people who can do something about it, APRA, say it literally “isn’t their job”? Of course not. Expect something incredibly anodyne instead. One could say that the RBA only start to use more interesting language about housing when the market is going down: the higher it goes, the drier the lexicon becomes.

Given that this is the case, and that we can expect rates on hold, and QE on hold, and less-and-less-credible YCC on hold, and a copy and paste statement to boot, perhaps we should look at the latest headlines from an Aussie gossip mag instead? As New Idea Magazine (“Australia’s most loved weekly magazine, featuring the latest celebrity news, real life stories, exclusive interviews, recipes, health and more.”) excitingly reports: ‘Yes, it’s a wig’: MAFS’ Melissa shuts down critics on her new look; and if you think that is market-moving, try Princess Eugenie shares rare pics of baby August for Jack Brooksbank’s birthday. It’s all heady stuff, even if they aren’t covering the Gates divorce for some reason.

But what some of us wouldn’t give for some New Idea economics Down Under.

Or All Over. We live in hope