Category: zerohedge

Asia is on track to report the most new COVID cases in April (adjusted for population) than any other continent as India’s “second wave” of COVID-19 is proving even more deadly than its first.

COVID-19 cases are surging around the world, but already, India’s “second wave” of COVID-19 is proving even more deadly than its first. After days of reporting record daily tallies, India reported more than 2,000 COVID deaths in a single day, the health ministry said Wednesday. Coronavirus infections also rose by a record, increasing by 295,041 over the last 24 hours, the data showed. Total deaths reached 182,553, which, to be sure, is merely a fraction of the US’s 568,483 deaths (per Johns Hopkins data). Though experts suspect that India’s numbers are skewed by pervasive undercounting of deaths (while the US and other western countries are suspected of over-counting).

India’s buckling health-care system is badly in need of government relief, and so the Indian government is planning to boost supplies of medical oxygen in coming days, according to the country’s Health Secretary Rajesh Bhushan. The government is also reportedly considering applications for oxygen imports from overseas suppliers. The decision follows the deaths of nearly 2 dozen patients in a hospital in Maharashtra, one of the most hard-hit areas of the country, which was caused by a leak in an oxygen tank, the Associated Press reported.

Meanwhile, hospitals in Delhi, the Indian capital, said on Tuesday that they had enough oxygen left for just another eight to 24 hours, while some private clinics had enough for only four or five.

CNN reported that India’s health-care system was “close to collapse”.

“The volume is humongous,” said Jalil Parkar, a senior pulmonary consultant at the Lilavati Hospital in Mumbai, which has had to convert its lobby into an additional Covid ward. “It’s just like a tsunami.”

Prime Minister Narendra Modi addressed the nation on Tuesday, acknowledging the country’s “very big battle” against Covid-19. He however appealed to states to “use a lockdown as their last option,” even as the capital New Delhi entered its first full day of a week-long lockdown, Jessie Yung and Vedika Sud report.

On Monday, Delhi Chief Minister Arvind Kejriwal warned that failing to halt movement in the city could lead to “tragedy.” When India went into lockdown last March, the mass exodus of migrant workers from the cities became one of the most enduring images of the country’s battle against the virus — and is believed to have helped to spread Covid-19 nationwide.

What epidemiologists are describing as India’s “second wave” is hitting the country like a “tsunami’ as hospitals, graveyards and morgues all run out of space for the sick and the dead.

“Things are out of control,” said Ramanan Laxminarayan, director of the Center for Disease Dynamics, Economics and Policy in New Delhi. “There’s no oxygen. A hospital bed is hard to find. It’s impossible to get a test. You have to wait over a week. And pretty much every system that could break down in the health care system has broken down,” he said.

Despite all of this, Indian PM Narendra Modi urged local officials to impose new lockdowns only as a last resort during a national televised address yesterday.

On Monday, Delhi Chief Minister Arvind Kejriwal warned that failing to halt movement in the city could lead to “tragedy.”

“Our healthcare system has reached its limit. It is now in a state of distress. It has not collapsed yet but it is in distress,” Kejriwal said. “Every healthcare system has its limits. No system can accommodate unlimited patients.”

But experts fear it’s too little, too late, as positive patients compete for limited resources and mass gatherings threaten to spread the virus even further. Some families are turning to social media where they’re pleading with the public for donations or supplies – anything that might help secure treatment for an afflicted friend or family member.

As demand for medications and vaccines surges, the Indian government has imposed an export ban. On Wednesday, health officials said it would be at least two months before exports of vaccines would be allowed to move forward, even as India’s Serum Institute moves to raise output to 100M doses of the AstraZeneca by July.

Investors will likely learn more details about losses tied to Credit Suisse’s historically terrible first quarter when the bank reports results on Thursday. The bank has already announced plans to cut bonuses and its dividend after disclosing a $4.7 billion loss tied to the Archegos blowup. The bank is also bracing for billions in losses tied to the collapse of Greensill Capital (though, to be sure, most of the losses from that incident will likely be passed along to Credit Suisse’s clients).

In recent weeks, Credit Suisse has fired more than half a dozen senior executives, including Lara Warner, the bank’s head of risk and compliance. Meanwhile, CEO Thomas Gottstein has avoided the chopping block. And as the finger-pointing intensifies, Bloomberg on Wednesday published an anonymously sourced story laying the blame for the Archegos blowup at the feet of Parshu Shah, who had been head of risk at the bank’s prime-services business, a position he assumed after serving as the salesman in charge of – what else? – nurturing the bank’s relationship with Archegos.

For years, Shah – who was let go along with served as a front-office salesman raking in commissions and helping to “nurture” relationships for CS’s prime brokerage division, including with Archegos and other hedge funds. As Bloomberg pointed out, it’s rare that “revenue-producing” front-office employees are moved to a compliance/risk management role, since risk management is an unglamorous “back office” role.

While it’s not typical for revenue-generating finance employees to switch to risk-oversight roles, some banks make such shifts.

That’s because Shah wasn’t so much moved to a different role as he was given the additional responsibility of managing risk within the prime brokerage unit. Though the report says Shah’s sales role ended when he left the swaps desk, clearly, his new “hyrbid” role involved too much conflict for him to be effective.

When Shah left the swaps desk, his sales role ended and he took over the new oversight position within the prime-brokerage group. That job included overseeing the risk of several clients, including Archegos. An existing member of Shah’s team was assigned to Hwang’s firm for monitoring its activity on a daily basis, according to a Credit Suisse executive who asked not to be identified discussing internal matters.

The prime-brokerage risk group was one among several lines of defense set up to shield a firm of Credit Suisse’s size from confronting hefty losses in dealings with any one client. But the enormity of the bank’s exposure coupled with the rapid implosion of Hwang’s firm ripped through the safety net Credit Suisse had set up, leaving management befuddled, the lender’s workforce frustrated and investors furious.

Conveniently for the bank’s current CEO, Thomas Gottstein, Bloomberg laid the blame for these risk management changes at the feet of Gottstein’s predecessor, CEO Tidjane Thiam, who “revamped” the bank’s risk controls following a wave of departures from the bank’s compliance department. The attitude was hands-off, with Warner being mostly trusted to oversee compliance and risk across the bank. Around the same time, then-CEO Thiam shipped compliance from New York back to Zurich, a clear message to employees that risk management wasn’t a priority.

At Credit Suisse Group AG, executives had given the point salesman to Archegos Capital Management on its swaps desk the new responsibility of instead overseeing risk-taking in the broader prime-brokerage unit, according to people with knowledge of the matter. This year, Archegos’s swap bets spectacularly collapsed, saddling the bank with a $4.7 billion writedown, and setting it up as the biggest loser to emerge from the debacle at Bill Hwang’s family office.

Parshu Shah — the salesman who became head of prime-services risk — hasn’t been accused of any impropriety in previous trades with Archegos. But the bank has faced questions in the wake of the debacle over whether managers prioritized boosting revenue over managing against downside. Shah is among a roster of Credit Suisse executives who’ve been forced to step down following the blowup, according to an internal memo early this month.

The usually behind-the-scenes functions of risk controls have been thrust into the limelight after Credit Suisse was left holding the bag on two financial catastrophes in just a month — Hwang’s firm and the collapse of Greensill Capital. The Swiss lender’s losses have left investors puzzling over whether it has sufficient checks in place.

Looking ahead, expect the bank to share plans for revamping its risk management controls, an investment that won’t exactly help revive its lagging valuation, presently the lowest of all the bulge bracket banks.

With the SEC having long ago become the butt of all financial jokes, its reputation tarnished and memorably steamrolled by none other than the Elon Musk who not long ago mused once whether SEC stands for “Suck Elon’s Cock“, the US capital markets regulator finally appears to be waking from its peaceful slumber frozen in carbonite and in the aftermath of the GameStop short squeeze and Archegos fiasco – which ended up costing various prime brokers billions in losses – it is reportedly considering “tougher disclosure requirements” for investment firms.

Confirming what we discussed last month, according to Bloomberg, Securities and Exchange Commission officials are “exploring how to increase transparency for the types of derivative bets that sank Archegos,” while also facing pressure from Capitol Hill “to shed more light on who’s shorting public companies after the GameStop frenzy.”

A key focus of the review will be whether there needs to be changes to forms 13F and 13D which reveal big stock holdings of hedge funds, mutual funds and family offices… except when they don’t.

Normally, investment firms that own shares worth at least $100 million must file a 13F detailing their long holdings (but not their shorts) every quarter, while funds issue a 13D once their stake in a single corporation exceeds a 5% “activist” threshold, an alert to other investors that they may be pursuing a hostile takeover or the breakup of the company. However, when funds use derivatives such as TRS or Certificates For Differences, they can legally mask their activities and hide their investment strategy from the entire market.

Enter Archegos, which never filed a 13F or a 13D because it used swaps – lots of swaps – rather than common stock to stealthily amass huge positions, including an estimated $10 billion wager on ViacomCBS. 

Like derivatives, short-sales are also largely excluded from disclosure forms in the US (but not in Europe), an issue that became a flashpoint this year when lawmakers questioned how hedge funds made bearish bets that were seemingly bigger than GameStop’s market value without anyone knowing who was behind the trades.

According to Bloomberg, the SEC is evaluating “whether filings should include derivatives and short positions, and if firms should submit 13Fs more frequently than every three months.” An overhaul might help regulators and Wall Street spot risks that are building up in the financial system. The billions of dollars in losses that Archegos triggered for Credit Suisse Group AG and other firms show the consequences of having such blind spots.

Hilariously, it was less than a year ago, in July 2020, that the Securities and Exchange Commission tried to reduce fund filing requirements, when it announced it had proposed an amendment to Form 13F and Rule 13f-1 to increase the reporting threshold for institutional investment managers to $3.5BN. Had the Proposal been adopted, it would have significantly relieved the administrative burden of 13F disclosures on all those investment managers who managed less than $3.5BN which is roughly 98% of all.

Luckily, the proposal did not pass, and so now the SEC is trying to do the opposite: get funds to file even more information about their holdings.

However, it won’t be easy: according to Bloomberg, one “thorny issue” the SEC is examining is how much legal flexibility it has to revamp rules as “current disclosure requirements are based on equity stakes that give investors the right to vote shares in corporate elections, not complex financial instruments like derivatives or options.”

Democrats on the House Financial Services Committee are also evaluating whether regulations should be tightened, including by making family offices like Archegos file confidential forms to the SEC that are meant to help identify threats to market stability, a congressional aide said. Even when family offices file 13Fs, they often avoid reporting their investments publicly because the SEC permits them to submit parts of the documents covertly.

To be sure, it is likely that nothing will actually happen since the review is in its early stages and Gary Gensler, who took over as SEC chairman last week, will decide how to proceed. He may well decide to do nothing if his Wall Street buddies decide that’s in their best interest.  And with former Goldmanite Gensler being new to the job, “there hasn’t yet been a push to pass legislation because lawmakers would like to give Gensler time to get up to speed in his new job.”

In other words, don’t expect anything to change for a long time.

Authored by John Stossel via PJMedia.com,

This Thursday, Earth Day, politicians and activists will shout more about “the climate crisis.”

I don’t think it’s a crisis. COVID-19, malaria, exploding debt, millions of poor children dying from diarrhea – those are genuine crises.

But global warming may become a real problem, so it’s particularly absurd that Earth Day’s activists rarely mention the form of energy that could most quickly reduce greenhouse gases: nuclear power.

When France converted to nuclear, it created the world’s fastest reduction in carbon emissions.

But in America, nuclear growth came to a near halt 40 years ago, after an accident at the Three Mile Island plant in Pennsylvania.

The partial meltdown killed no one. It would probably have been forgotten had Hollywood not released a nuclear scare movie, “The China Syndrome,” days before.

“People saw that and freaked out,” complains Joshua Goldstein, author of “A Bright Future: How Some Countries Have Solved Climate Change (with nuclear power).”

One of the people still freaking out is solar activist Harvey Wasserman. “I live in terror of the next accident,” he says in my latest video.

His anti-nuclear argument has basically won in most of the world. Nuclear plants are being shut down.

Why? I ask Wasserman. No one was hurt at Three Mile Island.

Wasserman replies that after the accident, he went to nearby homes and people showed him “their tumors, their hair loss, their lesions.”

“It’s bunk,” I tell him. “It’s been studied. People lose hair and get cancer and they attribute it to Three Mile Island, but it’s not true.”

“Having been there,” Wasserman responds, “It’s my clear assertion that people were killed.”

Actual scientists don’t agree. In fact, they find less cancer near Three Mile Island than in other parts of Pennsylvania.

But what about Fukushima? That was more serious. Today, clueless media quote Greenpeace claiming, Fukushima’s radiation could “change our DNA!”

Also bunk. “There was heightened radiation, but it was all at this low level below what we consider to be safe,” explains Goldstein.

The low level of radiation released at Fukushima was hardly a threat. What killed people was the panicked response.

“Everyone freaked out and ordered a massive sudden evacuation. That caused suicide, depression…  Fear of radioactivity really did kill people.”

One nuclear accident, Chernobyl, did kill, and its radiation may still kill thousands more.

But Chernobyl was built by socialists cutting corners to please dictators. No Chernobyl-like plant will ever be built again. And even with Chernobyl’s deaths, nuclear power’s safety record is better than that of coal, oil, and natural gas.

“But what about the nuclear waste!” shout the activists.

“It’s a small problem,” says Goldstein. “All the nuclear waste from all America’s reactors for 60 years would fit into a Walmart.”

While the anti-nuclear movement has stopped nuclear construction in most of the West, “other places are building them like crazy,” says Goldstein. “China puts a nuclear reactor on the grid every two to three months.”

America may soon finish… one. It took Georgia Power Company six years just to get permission to build a plant. Regulation is so heavy that, 15 years later, it still isn’t operating.

Wasserman is proud he played a role in that. “If you want to accuse us of having raised the cost of building new nuclear plants by demanding more regulation, I plead guilty.”

He claims countries can power themselves with rooftop solar panels and wind.  Technology improvements did lower their prices, but what happens when the wind doesn’t blow? Or the sun doesn’t shine?

Store energy in batteries! replies Wasserman. “We are having a major technological and industrial revolution in battery capacity.”

Goldstein scoffs in response, “The idea that a miracle battery is going to come along and save us is completely untested.”

By contrast, nuclear energy has been tested. It could reduce greenhouse gasses, and provide reliable energy, if only we didn’t fear it so much.

“The whole regulatory system is crazy,” Goldstein concludes. “We’re regulating this energy source as though it were the most dangerous thing out there, and it’s actually the safest thing!”

The US Strategic Command on Tuesday casually tweeted about US adversaries conducting a nuclear strike as their ‘least bad option.’

“The spectrum of conflict today is neither linear nor predictable,” tweeted US STRATCOM, adding “We must account for the possibility of conflict leading to conditions which could very rapidly drive an adversary to consider nuclear use as their least bad option.“

#USSTRATCOM Posture Statement Preview: The spectrum of conflict today is neither linear nor predictable. We must account for the possibility of conflict leading to conditions which could very rapidly drive an adversary to consider nuclear use as their least bad option. pic.twitter.com/4Oe7xkl05L

— US Strategic Command (@US_Stratcom) April 20, 2021

The ominous tweet from America’s top strategic defense and global strike command comes on the same day as STRATCOM commander Adm. Charles Richard warned the Senate Armed Services Committee that China’s nuclear capabilities are increasing rapidly, and they may be – for the first time – primed for use.

“I can’t get through a week right now, without finding out something we didn’t know about China,” Richard told Senators alongside Army Gen. James Dickinson – head of US Space Command who also said that China was among his top military concerns as they advance in space-based military technology, according to Stars & Stripes.

STRATCOM’s tweet sparked panicked response from people wondering why the Biden administration would suddenly tweet about nuclear war as part of the agency’s annual Posture Statement – designed to inform Congress about the current status of affairs within the agency and around the world, according to Newsweek.

“I feel like this isn’t something to spring on us in a tweet,” one woman replied.

“What’s a worse option than nuclear?” another person asked.

In what reality is nuclear the least bad option? You mean there is something worse than that? pic.twitter.com/Y4T6GFkkC7

— Snow Hawk (@HaakinSnow) April 20, 2021

pic.twitter.com/u8HKCU4mxY

— CALL UP JARRED KELENIC WORKING GROUP. (@marxmuncy) April 20, 2021

That’s a pretty ominous statement… pic.twitter.com/YYZjwVi8M4

— Christopher Jones (@Jones3d) April 20, 2021

If you need to know the facts surrounding the death of knife-wielding 16-year-old Ma’Khia Bryant in Ohio, it’s all detailed here.

Of course, knowing the facts is racist and assuming the only reason that the police officer “murdered” this “peaceful” teen was “systemic racism” is how we are being trained to think… and that appears to have triggered wannabe social-justice-warrior (and basketball player) LeBron James who tweeted an image of the suspected police officer (CNN reported him as Nicholas Reardon) in the incident to his millions of Twitter followers… with the threat “you’re next”.

James clearly got told, presumably by his lawyers (or Jack Dorsey or quite frankly, any sane rational human being) to take that down and just 20 minutes later, the basketball star deleted this disgusting tweet.

Dear Twitter, how does this not violate your “community standards” in multiple ways?

Jared Dillian, founder of The Daily Dirtnap, joins Real Vision’s Jack Farley to break down how market sentiment is evolving, the pause of the re-opening trade, and the renewed vigor in speculative activity. Dillian puts the remarkable rise of Dogecoin alongside other high-flyers such as Tesla, SPACs, and GameStop, exploring how rising rates could unwind leverage and cause some of these trades to implode. Dillian then discusses why he decided to exit the airlines, an industry on which he was previously very constructive. Dillian evaluates other re-opening sectors such as commercial real estate and theme parks before explaining why he is doubling down on his inflation trades and gearing his holdings to an even higher level of inflation exposure such as gold, land, and food.

Earlier today we showed that hedge fund leverage – both gross and net – has hit record highs according to Goldman’s Prime Brokerage.

It’s not just hedge funds. As Deutsche Bank’s Jim Reid writes in his “Chart of the day” note from this morning, with European equity markets seeing their worst day of the year yesterday and the US market suffering saw noticeable declines across the board “it’s worth being aware that US discretionary equity positioning is now at a record high according to our Equity strategists.”

In other words, besides hedge funds going all in – and with record leverage to boot – both institutional, retail and HNW investors have also never been more bullish!

As Reid observes next, given the historical correlation to the ISM this is not a big surprise since this itself is at 37-year highs. And as DB’s quants logically suggest, “further positioning increases are likely only if growth accelerates further. In the short term, growth signals are still likely to be strong and will support the market but they do expect growth (ISMs) to peak over the next 3 months.“

This is in line with Deutsche’s recent warning, which we discussed one week ago, according to which the German bank expects a sharp correction over the next 2-3 months.

“So perhaps”, Reid muses, investors should expect another spurt higher in discretionary positioning, “but for this to be relatively short-lived and to be pared back following a peak in the ISMs.”

We have been following the relationship between the CCP and Elon Musk for the better part of the last couple years, incessantly asking the question of when the honeymoon was going to end. It looks like, for whatever reason, we are drawing closer to that moment. 

We have been documenting a spat that is developing between China and Musk after a protestor at the Shanghai Auto Show “went viral” after standing on top of a Tesla vehicle and decrying the car’s brakes. 

Neither the CCP, nor state media, seems amused by Tesla’s response. This morning, we wrote about how commentary by a CCTV broadcaster has called for an investigation into Tesla’s brake failures following the incident. 

The CCTV commentary “said the regulator could invite third-party testing agencies that both the customer and Tesla can trust to test the vehicles,” according to a Reuters report on Tuesday. At the same time, it has been reported that one of China’s largest insurers has temporarily stopped providing services for new Tesla owners after the incident.

And now, China’s Xinhua News Agency has said that Tesla’s apology for its poor service “lacks basic sincerity,” according to a Wednesday report by Bloomberg. Tesla “didn’t give a ‘substantive’ response to the customer’s complaints and public concerns, and the apology letter was no more than crisis management,” the news agency reportedly said. 

Xinhua also pointed out that Tesla has a “natural advantage” of being able to look into the causes of its car accidents and that it should use it to win customers’ trust with modesty. This is as opposed to what it did with such data this week, when Elon Musk (likely prematurely) Tweeted out that data from a fatal wreck in Houston said that Autopilot was not engaged at the time of the accident. “Tesla should reflect on, and tackle its problems at the roots,” Bloomberg reported that Xinhua said.

Meanwhile, a separate report from Bloomberg notes that China’s State Administration for Market Regulation asked its local departments to ensure “legitimate rights” of consumers after the outburst at the Shanghai Auto Show. 

CNBC’s Eunice Yoon also reported during the day Wednesday that China’s state media warned Tesla for the second day in a row against “arrogance”. 

#China state-backed consumer association repeats message in state media and Communist Party social media account about @Tesla treatment of Chinese customers: don’t be cocky. CCA says “technological advantages should not be an obstacle to solving problems”. https://t.co/Pifgf2Z0PD pic.twitter.com/zHSDsjHr0U

— Eunice Yoon (@onlyyoontv) April 21, 2021

Recall, a protestor at the Auto Shanghai expo this week climbed on top of a Tesla Model 3 sedan and screamed in protest while wearing a t-shirt that said “The Brakes Don’t Work” and “Invisible Killer”. Video of the incident has caught fire in China and ” hit a nerve in China, sending complaints about the company ricocheting across the Chinese internet,” according to the Wall Street Journal. 

The woman was eventually dragged away by security guards, but not after catching the attention of hundreds in the building – and millions more on the web. The hashtag of the incident was viewed by 150 million people on Weibo, WSJ reported. 

In not so many words, it is starting to sound like the proverbial honeymoon between Tesla and China could be on its last legs.

And say China were to apply pressure on Musk and Tesla, who both desperately need the country to keep up appearances (and Musk’s empire)? How far would Musk go to appease the communist state and keep everything greased and running smoothly? We may find out. 

After Biden broke the prior Trump administration’s long negotiated May 1st deadline pullout deal with the Taliban, it vowed a “nightmare” for US troops should they stay past that date. Are we witnessing the beginnings of a massive upsurge in violence to come? A major peace conference meant to bring the national government and Taliban into a power-sharing arrangement to help facilitate a swift US exit has been canceled before it got off the ground…

“Just hours before the announcement of the postponement, a suicide bomber attacked a convoy of Afghan security personnel, wounding seven people in the capital of Kabul. The interior ministry said civilians and security personnel were among the wounded.

The attack was the first in weeks in the capital, even as targeted killings have escalated and Afghanistan’s security personnel have come under relentless attacks by Taliban insurgents. Recent months have also seen an increase in government bombing raids on suspected Taliban positions and increased raids by Afghan special forces.”

And the Associated Press adds further that “Residents fear the attack could be a harbinger of what’s to come as foreign troops prepare to begin their final withdrawal from Afghanistan. No one took immediate responsibility for the attack.” The report emphasized that US hopes for an “orderly exit” are already in peril. 

A week ago Biden announced a full US troop exit from America’s longest war in history, scheduled to be accomplished prior to the 20th anniversary of the September 11 terror attacks, which is this year.

But that’s long past the prior agreed-upon May 1st exit date. It appears that the Taliban has already declared the national government in Kabul ‘fair game’ for attacks, perhaps in an early ‘message’ and signal to Washington. 

Prior Taliban statements from days ago said that Washington can’t be trusted, and further it would “fight till the end” of the US occupation.

A number of pundits have noted that Biden’s handling of Afghanistan is a recipe for ensuring that America will yet again find a reason to stay.

Biden has botched Afghanistan. Any attacks against Americans after May 1 will be on him. If he foot drags on leaving after 9/11 he will also look bad & if we must return after that date he will look bad. We could have quietly packed up and left in accordance with the Doha deal.

— Max Abrahms (@MaxAbrahms) April 14, 2021

It’s the same pattern that’s repeated itself over and over again: Washington announces an intent to withdraw, then there’s an uptick in attacks ahead of the telegraphed exit date, and the US must then “answer” those attacks which in the end means extending military operations into the indefinite future.