Category: zerohedge

Hugo Boss has joined several other western clothing companies – notably H&M and Nike, which were virtually erased from the Chinese Internet late last week after saying they wouldn’t use cotton sourced from Xinjiang – in criticizing China’s record on human rights in the far-flung western region, and the company’s stock is paying for it Monday morning.

Boss shares tumbled in Frankfurt as Chinese celebrities criticized the brand over its stance on human rights in the country, ensnaring the German brand in a growing boycott of western firms. That boycott appeared to accelerate Monday morning as Chinese landlords started closing some of H&M’s stores, threatening its foothold in what has become the company’s fourth-biggest market.

At one point, Boss shares were down more than 2%, H&M shares declined by a similar magnitude in Stockholm.

At least six stores in the lower-tier cities of Urumqi, Yinchuan, Changchun and Lianyungang have been shut down by the owners of the properties, according to mall operators in those areas who reportedly spoke to Bloomberg. In addition, local Chinese media have reported on more closures, with pictures showing H&M’s brand billboards being removed.

Li Yifeng, an actor and singer who has more than 60MM followers on his Weibo – a Chinese social media platform often compared with twitter – has ended all cooperation with Hugo Boss, according to a post on his agent’s Weibo account. Zhu Zhengting and Wang Linkai, both popular singers, will also stop working with the German firm, according to similar posts from their agents.

Western clothing companies have all found themselves in an uncomfortable position. On the one hand, the US and EU, which recently slapped new human rights sanctions on China, have criticized the CCP for imprisoning more than 1MM ethnic Uyghers in concentration camps. On the other, Beijing has made clear that firms hoping to sell clothes in China can either use cotton from Xinjiang, or risk a public “boycott”.

When confronted about the cotton issue at a press conference last week, Foreign Ministry spokeswoman Hua Chunying insisted nearly half the production in the region is “mechanized”, while also slamming America over its own history of slavery. “This was in the US when Black slaves were forced to pick cotton in the fields,” she said.

Hugo Boss initially appeared to try to appease the CCP by posting on its Weibo account last week that it would “continue to purchase and support Xinjiang cotton.” However, a spokeswoman for the company now claims that comment was unauthorized and has now been deleted.

In a separate statement currently posted to its website, Hugo Boss said the company does not tolerate forced labor and insists that its global suppliers follow suit. The company “has not procured any goods originating in the Xinjiang region from direct suppliers.”

Circling back to H&M, mall operators said the closures were ordered by landlords who wanted to punish H&M for showing “disrespect” to China. As Bloomberg put it, H&M appeared to suffer the brunt of the fallout after the statement was called out by the Communist Youth League and the People’s Liberation Army. In addition to the closures, As we have reported, H&M outlets have vanished on Apple Maps and Baidu Maps searches, making it hard for Chinese consumers to locate stores, and it’s been removed from Chinese e-commerce platforms. It’s unclear how long the closures will last, and analysts warned that it could significantly impact the company’s second-quarter sales.

Other brands, including Inditex’s Zara, are still weighing whether to use Xinjiang cotton, or not.

Authored by James Bovard via The American Institute for Economic Research,

“Build Back Better” is the motto for President Biden’s ambitious plans to remake much of the American economy and society. On Wednesday in Pittsburgh, Biden will reveal his plans for trillions of dollars of new spending for infrastructure and other projects. His devotees in the national media will whoop up his proposals as the greatest thing since the New Deal, or at least since Biden’s American Rescue Plan Act a couple weeks ago.

Once Biden fires the starting gun, a deluge of experts will descend upon cable news shows to tout the vast benefits of the proposed “investment.” There will be a barrage of econometric formulas that irrefutably prove, via 10 or 15 shaky or squirrely assumptions, that vastly increasing federal spending will multiply prosperity across the land.  

Rather than deferring to mathematical formulas, I prefer old time political economy – i.e., analyses premised on the perfidy of politicians and the imbecility of bureaucracies. As a Washington journalist, I have investigated scores of federal programs that sounded great until they crashed and burned (okay, I did give some of them a push). Historical track records of government agencies are a better lodestar than the latest idealistic buncombe regardless of how many MSNBC hosts swoon. 

“Washington knows best” is the tacit premise for most of Biden’s initiatives. The Biden administration can trust federal agencies to shamelessly fabricate statistics to vindicate any new program, or at least cover up the initial damage. 

Biden is planning on expanding federal job training programs, a beloved federal panacea dating back to the Kennedy administration. In 2014, President Obama admitted that such programs rely on a “‘train and pray’ approach. We train them and we pray that they can get a job.” To hide its dismal record, the Labor Department “defined down success” by counting trainees as hired simply by confirming they had a job interview, by certifying as permanently employed any trainee who spent one day on a new job, and by claiming victory for teaching teenagers how to make change for a dollar. No wonder programs are notorious for leaving trainees worse off than if they had never signed up. 

Biden is stretching the definition of infrastructure to include new spending for early childhood education, seeking to offer free pre-kindergarten for all three- and four-year-old American children. Will Biden’s speechwriters concoct a label as punchy as President George W. Bush’s “No Child Left Behind (NCLB)?” But stretching government control over more years of childhood will turn out no better than Bush’s biggest domestic fraud. NCLB empowered the U.S. Education Department to punish local schools for not fulfilling arbitrary, often imaginary guidelines for “adequate yearly progress.” Almost half the states responded by “dumbing down” academic standards, lowering passing scores on tests to avoid harsh federal sanctions. Unfortunately, NCLB’s disasters have not deterred politicians from hustling further federal takeovers of schooling. 

As part of its climate change agenda, Biden issued an executive order on January 27 proclaiming “the goal of conserving at least 30 percent of our lands by 2030.” Farmers and other landowners fear the feds may squeeze out private ownership of vast swaths of the nation’s heartland. Is there any reason to expect Biden’s Climate “Brain Trust” to be wiser than Franklin Roosevelt’s original Brain Trust which launched command-and-control farm policies that still vex America?

The sugar program, for instance, relies on import quotas and other interventions to drive U.S. sugar prices to double or triple the world price, costing consumers $3 billion a year. Since 1997, Washington’s sugar policy has zapped more than 120,000 U.S. jobs in food manufacturing. More than 10 jobs have been lost in manufacturing for every remaining sugar grower in the U.S. 

Peanuts take the prize for perpetual policy perversity. When the U.S. peanut program was launched in the 1930s, the federal government gave favored farmers licenses to grow peanuts and outlawed anyone else from entering the business. To maximize its controls, the USDA used aerial photography to determine if farmers planted a few more square feet than they were allotted. In 2002, Congress spent $4 billion to buy out the peanut license owners and end the program. Problem solved, right? Nope – congressmen still needed campaign contributions. In 2014, Congress created a new program that guaranteed payments far above market prices. The cost of peanut subsidies quickly approached a billion dollars a year, nearly equaling the farm value of all the peanuts grown in the U.S. Farmers dumped surplus peanuts on USDA, which dumped them on Haiti, sowing chaos in local markets. But that wasn’t a problem because Haitian peanut farmers can’t vote in U.S. elections (at least not yet).  

Among other pending marvels, Biden is planning to reform the Postal Service, an agency that has almost perfected statistical chicanery. In the 1980s, it boasted of 95% next-day delivery of first-class mail but the official tests measured only when letters moved from one post office to another, not when they were actually delivered. When the target for overnight first-class delivery was slashed to less than 50 miles in 1989, Postmaster General Anthony Frank promised that the new standards would “improve our ability to deliver local mail on time.” Sen. David Pryor (D-AR) groused, “This is like trying to fool the public by cutting the top off the flagpole when the flag is stuck halfway up.” In 2015, the Postal Service effectively eliminated overnight mail delivery even for local mail in much of the nation. With revised standards, “mail was considered on time if it took four to five days to arrive instead of three,” the Washington Post noted. The Postal Service has gotten away with cutbacks because it has a monopoly: it is a federal crime to provide better mail service than the government.

Biden administration policymakers can take solace knowing that federal agencies will shroud their abuses with statistical smokescreens. Transportation Security Administration agents, for instance, are sometimes derided as hopeless knuckleheads (cynics suggest that “TSA” actually stands for “Too Stupid for Arby’s”). Though TSA screeners dismally failed to detect most of the smuggled weapons and fake bombs in undercover tests, TSA in its early years issued triumphal press releases touting the number of knickknacks confiscated at airport checkpoints. TSA chief James Loy bragged that TSA screeners “have identified, intercepted, and therefore kept off aircraft more than 4.8 million dangerous items.” All the fingernail clippers, cigar cutters, frying pans, horseshoes, and small pointy objects TSA seized proved that the feds were protecting airline passengers better than ever. TSA doubled down by spending billions of dollars on Whole Body Scanners to take nude photos of travelers, after which TSA screeners’ failure rate on undercover tests rose to 95%. But presidents and members of Congress have been exempted from most of TSA’s indignities, so this particular federal gropefest continues. 

Transportation Secretary Anthony Foxx declared in 2015, “Defective agencies, like defective people, need the capacity for self-reflection and to make room for self-improvement.” But bureaucracies don’t learn from mistakes because they don’t pay for their failures. Government intervention is a cornucopia for politicians and bureaucrats regardless of what happens to purported beneficiaries.

Nor is there a detectable learning curve among the likely hallelujah chorus for Biden’s proposals. Philip Tetlock, a University of California research psychologist, noted “a perversely inverse relationship between indicators of good judgment and the qualities the media prizes in pundits.” Washington policy experts are akin to baseball commentators who never consider players’ batting averages and then are perennially shocked at all of the strikeouts. Rather than soiling their pristine minds with Inspector General and Government Accountability Office reports documenting the failure of similar prior programs, media cheerleaders will showcase the latest White House talking points. 

But Biden can still count on economists riding to the rescue with multipliers, right? Alas, if such multipliers were reliable, America would have reached financial Valhalla many boondoggles ago. Econometric formulas omit the “X factor” for government incompetence. Nobel laureate economist George Stigler noted in 1963 that, for the preceding century, “No economist deemed it necessary to document his belief that the State could effectively discharge the new duties he proposed to give it.” Things haven’t improved much since Stigler’s time. Swedish economist Niclas Berggren observed in 2011 that 95% of paternalist proposals “do not contain any analysis of the cognitive ability of [government] policymakers.” 

The more power a politician captures, the more flattery he hears, and the more deluded he usually becomes. In the same way that Biden feels entitled to deny media access to the most damning scenes of children in overcrowded refugee centers at the southern border, so he will demand that the media ignore the debacles spawned by his new programs. But at some point, there will be too many fiascos to suppress by a president shouting demands for “unity.” 

Nowadays, the federal government is controlling almost everything except itself. Instead of economic salvation, Biden offers standard D.C. issue “no-fault pseudo-benevolence.” How many more trillion dollars will America waste for another Beltway “triumph of hope over experience?”

Not long after her legal team’s latest appeal of a judge’s order that Jeffrey Epstein’s alleged madam, Ghislaine Maxwell, be held without bail over being a flight risk, federal prosecutors have finally unveiled long-awaited new charges against Maxwell, including sex trafficking a minor.

According to the superseding indictment, from between 1994 to “at least in or about” 2004, Maxwell “assisted, facilitated and contributed to Jeffrey Epstein’s abuse of minor girls by among other things helping Epstein to recruit, groom, and ultimately abuse victims…” The indictment confirms that some of the victims were as young as 14. The indictment also alleges that both Maxwell and Epstein knew some of the accusers were minors.

(h/t @Techno_Fog)

Beyond this, Maxwell allegedly “repeatedly lied when questioned about her conduct”, including during testimony from 2016.

(h/t @Techno_Fog)

The new indictment confirms the existence of a fourth victim – “Victim-4” in court documents – who was allegedly abused between 2001 and 2004, and also adds a new charge, a “sex trafficking conspiracy” and alleges that Victim-4 was a victim of this conspiracy.

(h/t @Techno_Fog)

The indictment also alleges that other unnamed “conspirators” sent the minor lingerie and gifts. Epstein and Maxwell encouraged the minor to “recruit other young females to provide sexualized massages to Epstein.” These efforts were ultimately successful, and they found more victims.

(h/t @Techno_Fog)

Importantly, these charges apply to conduct that occurred at Epstein’s Palm Beach mansion. Ghislaine and her legal team have argued that she is still protected by Epstein’s sweetheart deal with prosecutors from more than a decade ago, and that she is therefore immune to these charges, as Techno Fog points out.

More detailed analysis via attorney and journalist Techno Fog here…

Read the entire superseding indictment below:

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Gun control was already a Biden Administration priority before the recent shootings in Georgia, Colorado, and Virginia. In fact, the House of Representatives passed two gun-control bills weeks before the shootings.

One of the House-passed bills expands background checks to include private sales, including those made at gun shows.

Under this bill, someone who is not a licensed federal firearms dealer cannot sell a firearm without first relinquishing it to a federally-licensed dealer. The dealer must then conduct a background check on the prospective purchaser.

The second bill allows the federal government to indefinitely delay a background check, thus indefinitely delaying a gun purchase. Other legislation introduced in Congress would create a national firearms registry, which would only facilitate gun confiscation.

This same legislation would forbid anyone under 21 from owning a gun.

The ban does not apply to the military, so it will not stop the majority of gun violence committed by 18-21 year-olds.

The bill requires Americans to obtain a federal license before getting a firearm, but individuals cannot receive a license unless they undergo a psychological evaluation. The psychological evaluation mandate could lead to individuals losing their Second Amendment rights because they once suffered from depression. It could also cause people to lose their Second Amendment rights because someone told the police they may become violent.

Police officers in 20 states and the District of Columbia already have the authority to take away an individual’s Second Amendment rights based on allegations and without giving the individual due process. These “Red Flag” laws are supported by politicians of both parties, including some who claim to be pro-gun rights.

For example, former President Trump supported Red Flag laws. President Trump and Congressional Democrats were on the verge of reaching a “bipartisan” deal to expand Red Flag laws in the fall of 2019. Fortunately, the Democrat attempt to impeach the President ended all efforts at “bipartisan” deals to take away our rights.

A psychological evaluation could also be used to deny an individual Second Amendment rights because they may engage in “domestic terrorism.” Among those likely to be considered as potential “domestic terrorists” are opponents of US foreign policy, mass surveillance, the income tax, the Federal Reserve, and – ironically – gun control.

There is also legislation to reinstate the assault-weapons ban. Like the original ban, which was in effect from 1994-2004, the new legislation bans an arbitrary list of firearms and will do little to reduce gun violence.

Criminals and psychotics are not going to be deterred by background checks and licensing requirements from obtaining a firearm. There will be a black market to service those who cannot obtain firearms by legal means.

By discouraging law-abiding Americans from owning firearms, these laws leave millions of Americans defenseless against gun violence. There is a reason why most mass shootings occur in gun-free zones.

If Congress is serious about protecting Americans from violence, it would repeal all federal gun control laws. A good place to start would be with the Brady background check law and the misnamed “Safe and Gun-Free Schools” law, which leaves children defenseless against mass shooters. Congress ending the unconstitutional and anti-liberty war on drugs would also greatly reduce gun violence. Gun control, like all attempts by government to control our lives, makes us less safe, and less free.

Peter Boockvar, CIO of Bleakley Advisory Group and editor of The Boock Report, joins Real Vision managing editor Ed Harrison to discuss how the next few months will be critical in determining how sticky rising inflation expectations will be. As the vaccination rollout progresses, albeit slowly in many countries, Boockvar explains that markets are continuing to look ahead to the reopening of the economy with fears of inflation constantly present. He sees that the pressures coming from increasing commodity, labor, and services costs could prove to have a lasting effect on inflation expectations in the months to come, and he says this could bolster the 10-year Treasury yield rising north of 2%. They also talk about how this may impact the U.S. dollar. In the second half of the Daily Briefing, Harrison welcomes Trevor Hall, host of the Mining Stock Daily Podcast, to discuss rising input and commodity costs and its overall effect on precious metals, industrials, and miners.

At a moment North Korea is blasting as ‘hypocrisy’ the UN Security Council condemnation of its latest short-range ballistic missile test from last week, which interestingly President Biden had merely shrugged off, there’s an emerging consensus based on satellite imagery that Pyongyang is likely preparing deployment of a new submarine capable of firing nuclear ballistic missiles. 

The submarine is undergoing launch preparations at North Korea’s Sinpo shipyard, according to The Telegraph, which writes further, “New satellite images of the shipyard, on the east coast of the peninsula, show that a floating dry dock has been positioned alongside the launch quay for the vast construction hall where the submarine is being completed.”

In the summer of 2019 North Korean state media featured pictures of Kim Jong-un inspecting the sub as it was being constructed. 

Additionally the report said:

Analysis of the images by experts from The Stimson Center think tank and posted on the 38 North web site suggest the new vessel “may be nearing completion or is ready to be rolled out and launched in the near future”.

Earlier this year in January, state media touted the unveiling of a new type of submarine-launched ballistic missile which it called “the world’s most powerful weapon” at a military parade overseen by Kim Jong-un.

Few details on the missile’s capabilities have been given, and while subject of occasional reporting, the new submarine too has been a closely guarded secret. South Korean and US intelligence are said to be “thoroughly monitoring” the progress at the North’s Sinpo shipyard.

North Korea may be ready to roll out new ballistic missile submarine: 38 North https://t.co/SRr9XmL69N pic.twitter.com/vOMKnHuTN9

— The Korea Times (@koreatimescokr) March 28, 2021

The analysis site 38 North notes the following in relation to the new satellite imagery:

• Kim Jong Un visited the construction hall at Sinpho on July 23, 2019 to inspect a ROMEO-class submarine being modified to accommodate missile launch tubes.
• The parts yard adjacent to the construction halls, where large parts had been observed during the construction process, has been empty since last summer. This suggests major structural work has been completed.

What is known so far is that the North has lately orchestrated tests to simulate the launch of a ballistic missile from a submarine.

Recent commercial satellite imagery of #DPRK‘s Sinpho South Shipyard indicates that the floating drydock has been repositioned along the construction hall’s quay. Analysis by Jack Liu and Peter Makowsky. @planetlabs https://t.co/YqScL3ctrr

— 38 North (@38NorthNK) March 26, 2021

Analysts estimate that “The 2,720-tonne vessel that it is constructing is believed to be designed to carry three ballistic missiles and would theoretically be capable of sailing into the Pacific to threaten US military facilities in Hawaii or even the mainland of the continental US.”

No doubt both Washington and regional allies, particularly Japan, would see a nuclear-capable sub deployment as a huge and alarming leap in the North’s launch capabilities, given the complete mobility and lack of detection. 

Submitted by Walter Block, Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics, Loyola University New Orleans,

In the view of most economists, a minimum wage law will raise the compensation of some unskilled workers, and unemploy others.

According to the Congressional Budget Office, a boost in the federal level to $15, in gradual steps until reached by 2025, will increase the economic well-being of some 900,000 people, while consigning 1.4 million to the unemployment rolls. We won’t debate these proportions, except to note that this all depends upon the elasticity of the demand curve for inexpert labor, and that this statistic rises the greater the length of run. That is, immediately upon passage of such an enactment, very few such employees will be fired, but as time goes on, more and more of them will be.

Instead, we will now focus, only, on those who lose their jobs due to an increase in minimum wage level. We also keep in mind those who cannot be employed even at $7.25, since their productivity is below that point, and any firm that hires them will lose money by so doing. That is to say, all sides of this debate acknowledge that wage minima create unemployment; they only diverge on the degree to which this occurs.

What, then, is unemployment? It is a soul-destroying situation to be in. You pound the pavement every day, looking for a job, unsuccessfully. You send out zillions of resumes, to no avail. You sometimes, rarely, are accorded a job interview, but nothing ever comes of it. (If you stop looking, and, say, go back to school, due to the magic of government statistics you are no longer counted as unemployed. This description applies solely to those actively seeking a career, and you are no longer so doing; instead, you are now out of the labor force.)

Unemployment is not just statistically correlated with drug taking, alcoholism, wife beating, child abuse, loss of self-worth, depression, mental illness, even suicide. No, it is causally related. All too many people who cannot find a job are utterly miserable in this myriad of ways.

All of this comes about as a result of a public policy. Those responsible for the ensuing unemployment are thus accountable for these debilities.

Suppose the genesis of these despicable results were not public, but rather private. I go to the inner city (that’s were a disproportionate number of minimum wage victims live) with a big gun. I also have an invisibility cloak, so that the cops can’t stop me. I march up to, oh, 5%, a nice round number for the unemployment effects of this law, of all the people I find there who have jobs. I credibly threaten to murder them unless they quit their positions and seek none others. My threats are believable. Unemployment therefore rises.

How would the law of the land deal with me? How should the law of the land regard me? I’m no lawyer, but I think it goes without saying that I am a criminal. They should lock me up and throw away the key. I am very despicable for picking on people at the bottom of the economic pyramid and forcing them to become unemployed with all that that entails.

But are the likes of Bernie, and AOC, and Chuckie and Nancy and Sleepy Joe any less guilty than I? I think not. Ok, ok, none of them pulled a gun on anyone, as did I. They used the force of law instead. They have much better velvet gloves than I do. But in their support of this contemptible minimum wage law, they are no less guilty than me of visiting the scourge of unemployment on those least able to withstand its inexorable pressures. If I do, then these people also richly merit incarceration.

The point is that all the advocates of this evil legislation, without exception, admit that it will cause at least a small amount of unemployment. And, yet, they persist in their wicked ways. Whether they know it or not, they have mens rea. At least they should have a guilty conscience, which none of them ever acknowledge.

While I’m on the subject of incarcerating public figures for doing incredible mischief, the same applies to those responsible for not allowing free markets in used human body parts.

Appendix:

A report by the Congressional Budget Office on a proposal to see $15 by 2025 estimates the increase would move 900,000 people out of poverty — and at the same time cut 1.4 million jobs.

Last Friday, when previewing the month and quarter-end rebalance, Nomura’s Charlie McElligott went on a brief tangent, showing the collapse in marketwide call volumes as the retail frenzy has decidedly cooled off in recent weeks…

… which McElligott attributed to three factors:

• The weight of not just the overall “stalling-out” in the broad Equities tape again — but particularly, many of these most popular speculative names meaningfully lower over the past few months and bleeding PNL, particularly in YOLO Retail trading accounts
• Retail selling ahead of tax bills coming-due, particularly with an anticipated hike in the capital gains tax from the Biden administration looking like an inevitability
• And perhaps the most salient point with a “totally-sane” macro rationale, being that as JPM found last week, the latest round of “stimmy checks” are being re-routed away from speculative assets (which were previously obsessed over during the “Work From Home” screen-time era), but now instead are transitioning back into the real world consumer economy, as we re-open and get back to work in the post-Vaccine paradigm shift

Whatever the reason, but the sudden drop off in retail participation – which as we discussed last week has also manifested itself in more QQQ put buying as even “unsophisticated” investors are now hedging their downside – has become a significant source of market tensions across other banks as well, with Deutsche Bank’s flow strategist Parag Thatte also noting that after call volumes had been rising sharply for over a year, especially since November, “they soared further mid-January, but then fell sharply right after the steep climb and subsequent sell-off in heavily shorted stocks in late January. Volumes then rose briefly but have been declining again since the middle of February.”

As DB further notes, the prior rise and the subsequent fall “have been both led by trades in the smallest contract sizes, indicative of retail traders.”

What is behind the dropoff in retail participation? Simple: the opportunity to engage in other, more social activites. As DB notes, over the last few months, call volumes have been inversely correlated with indicators of reopening, with volumes rising as stay-at-home activity rose and falling as reopening gathered pace.

Said otherwise, the economic reopening is bad news for continued gamma squeezes.

The pace of reopening has accelerated since mid-February as suggested by a variety of metrics.  Mobility indicators, restaurant bookings and air passenger traffic…

 

have all risen significantly and this has coincided with the decline in retail call volumes.

This jives with DB’s view that “as retail investors have other things to do, the attention focused on the equity market will start to fade.”

Still, putting it in perspective, DB notes that a basket of stocks with the most exposure to call volumes relative to their market cap the previous week, had been rallying sharply since November, as the twin catalysts of the US election resolution and positive vaccine news unfolded. The basket rose by a massive 160% in just over three months, outperforming the equal-weighted S&P 500 by 130%. Since mid-February however, the basket is down -24%, even as the average stock in the S&P 500 is up slightly. The downturn in the basket’s performance has coincided with the abovementioned decline in call volumes since mid-February

Another notable factor: whereas previously investors put a substantial portion of their stimmy checks in risk assets, this time that does not appear to be the case. According to DB, $276BN or more than two-thirds of the anticipated payments of $410bn have already been distributed as per US Treasury data. This means the incremental impact of stimulus payments should start to fade. This week also saw the first outflow from US equity funds (-$10bn) in 7 weeks, after averaging $23bn a week since early February

So as what went up is now coming down, vol premiums have also been declining as call volumes have fallen, which has begged the question whether systematic strategies raise equity exposure? While JPMorgan has repeatedly scrambled to create a narrative that systematic funds can’t wait to DB is also now getting on boar with this thesis writing that “a major driver of implied volatility remaining elevated despite the strong equity rally and declines in realized volatility, has been that the vol premium has been very high, and that in turn has been driven by very strong bullish option volumes.” As call volumes have declined, vol premiums and in turn implied vol have also begun to subside, following realized vol and daily ranges lower. “One significant implication of lower volatility is that it can then prompt systematic  trategies to raise allocations to equities.” Whether that happens, however, remains to be seen – consider that after banging the drum on commodities for weeks ahead of last week’s quant rebalance, the day came and went and oil…plunged.

Still, according to DB’s consolidated measure of equity positioning and flows which has been going sideways over the last week at very elevated levels (92nd percentile), the bank’s measure of discretionary investor positioning, which is more focused on institutional investors, is already near all-time highs (98th percentile). It is currently well-supported by the strong global growth outlook but has only limited room to rise further. Systematic strategy exposure on the other hand has remained very low (39th percentile) as vol has remained elevated. If falling vol sees systematic strategies raise allocations, we could see overall positioning grind higher towards the record levels seen in early 2018.

Which means that for all the doom and gloom about retail investors stepping away, their place in capital market hierarchy will be taken by systematic and vol-control funds, whose buying will be triggered by the next sharp dropoff in VIX and realized vol as some sense of stability returns to markets even if it means a sharp decline in WallStreetBets traffic.

Authored by Kiley Holliday and Jenin Younes via the American Institute for Economic Research,

One of the most infuriating aspects of a year replete with illogical, short-sighted public health mandates has been the utter failure of those within the public health profession to adequately address the role that poor diet and lack of exercise have played in exacerbating the coronavirus crisis.  In fact, many of the decrees ostensibly issued in the name of public health have had the effect only of aggravating the underlying problem.

A recent global study found that obesity is a “driving factor in COVID-19 deaths,” and that Covid-19 death rates are an astonishing ten times higher in countries where most adults are overweight.  Although advanced age is the strongest indicator of a severe outcome from a coronavirus infection, “being overweight comes a close second,” the report determined.  The CEO of the World Obesity Federation went so far as to blame the “failure to address the root causes of obesity over many decades . . . for hundreds of thousands of preventable deaths.”  While the study makes evident the degree to which poor underlying health is a driving force in coronavirus deaths, we have known almost since the beginning that being overweight or obese significantly increases the risk of a severe outcome.

Given this information, the Anthony Faucis and Eric Feigl-Dings of the world should focus on alerting people to the dangers of being overweight and obese, and expending significant efforts to encourage exercise and healthy diet.  Instead, they have spent the past twelve months urging people to “stay home, save lives” and to wear two masks, if not three or four, a measure not shown to have mitigated coronavirus deaths at all.

In a similar vein, governors around the country have ordered gyms closed, along with countless other businesses.  In New York, gyms have been open since this past summer, but patrons must wear a mask at all times, even while exercising.  Due to the extreme discomfort of exercising while masked, I (Jenin) quit my gym months ago for the first time in two decades and began relying solely on outdoor forms of exercise to stay in shape.  I doubt I am the only one to have done so for similar reasons.

Thus, equally counterproductive are outdoor mask mandates in states like Massachusetts, which have the pernicious effect of discouraging outdoor as well as indoor exercise.  All this, despite the fact that the World Health Organization (WHO) advised against wearing a mask while exercising, pointing to research demonstrating that wearing them even during mild to moderate physical activity can “lead to significant negative cardiovascular and pulmonary effects in both healthy people and those with underlying respiratory diseases.”   (Of course, these findings contradicted the religion of face-coverings that has overtaken our society, so were automatically discounted, not on the merits but because they did not fit within the dominant narrative).  

Likewise, especially at the beginning of the crisis, governors around the nation closed playgrounds, national parks, and hiking trails, another policy choice that simply deprived people of the opportunity to engage in healthy outdoor activities. Mercifully, many of these orders have been reversed following significant pushback from the public, although never with an admission on the part of government officials that such measures were detrimental to public health.

While exercise is vital for overall health, significant research suggests that those who are struggling with obesity require dietary changes in order to lose weight.  Predictably, the shutdown strategy, which entailed people working from home much more often or exclusively, led to a sharp increase in unhealthy eating habits. People began snacking on processed foods in much greater quantities, in large part to ease stress, giving Mondelez International — the manufacturer of Oreos — and other unhealthy, processed snacks cause to celebrate. 

The exhortations of the “stay home” crowd, as well as the implementation of measures such as gym and park closures have had the expected impact, which is that 42 percent of adults in the United States reported undesired weight gain during the past year, with an average of twenty-nine pounds.  Millennials as a group fared the absolute worst, with 48 percent reporting unwanted weight gain, at an average of forty-one pounds.  Suffice it to say, a significant portion of adults who in March of 2020 were not at substantial risk of a severe outcome from coronavirus now can be categorized as in an elevated risk group.

The cause of this national belt-loosening is not merely staying home and moving around less, but anxiety and depression caused by social isolation, both of which have been demonstrated to cause weight gain and obesity.  Society has now organized itself around the principle of depriving people of meaningful social contact with family, friends, and coworkers for the better part of a year.  One need not have a degree in psychology to recognize that such an approach is bound to aggravate the obesity crisis, as indeed it has. In fact, our newly confirmed Surgeon General, Dr. Vivek H. Murthy has written an entire book on health effects of loneliness, arguing that it is associated with increased risk of heart disease, dementia, obesity, and sleep disorders.

Yet despite these circumstances, publications such as the New York Times have been running grossly irresponsible pieces with headlines such as Should You Worry About Your Kid’s Pandemic Weight Gain?  (the answer of the author, Virginia Sole-Smith is, generally speaking, ‘no’). In typical fashion, Sole-Smith ascribes the rising incidence of childhood obesity to the pandemic itself, rather than the decision to shutter classrooms for many months. She contends that because childhood dieting can lead to adult eating disorders, parents should avoid treating their children’s weight gain as a “problem to be solved.” Parents should inquire about the mental health of their children, but also accept that the circumstances causing their depression and late-night stress eating simply cannot be changed, as though it is perfectly reasonable from a public health perspective to prioritize Covid prevention (a virus less harmful to children than the flu) above all things.  

A more recent Times article, by Sandra E. Garcia dodged the issue of underlying health, and instead argued that people whose body mass index (BMI) qualified them for early vaccination should take advantage of that status.  The article quoted Emma Specter of Vogue magazine saying “a metric of health that has long been called into question by fat activists and medical experts alike could stand to actively benefit fat people for the first time.”

Similarly, Garcia quoted a tweet that quipped “because my BMI permits me to get the vaccine tomorrow, and because the vaccination will enable me to protect myself and others, my thick thighs will in fact save lives.”  While BMI is an imperfect measure of an individual’s health and, of course, not all thin people are healthy, the past thirty years has shown us that rising rates of obesity and chronic diseases go hand in hand.  

Apparently, Garcia’s ideological commitment to the narrative of identity politics precludes any admission that being overweight, and particularly obese, is a significant predictor of a severe outcome from a coronavirus infection, and that many people can take steps to lose weight and thereby become healthier and even remove themselves from at-risk categories.  Getting vaccinated will not solve the larger problem, as it can only protect one from the coronavirus and does not cure the various comorbidities resulting from poor diet and a sedentary lifestyle.  

Under the pretense of “body positivity,” the authors of these articles are normalizing a lifestyle that leads to significant health problems.  Instead of questioning the circumstances that create obesity – conditions that have only worsened during the pandemic – they propound against all reason and logic that obesity is not unhealthy, or that it is somehow unhealthier to recognize and deal with it.  This effectively steers people away from drawing the all-too obvious conclusion that the decision to close schools, gyms, and workplaces and force people to shelter in place for months at a time was never in the interest of public health.

Of course, not everyone can lose weight for a variety of reasons, spanning the spectrum from metabolic disorders to inadequate access to healthy food or time to exercise.  The inability of many to lead a healthy lifestyle can be directly tied to significant, systemic problems in our society and country today, and it is not within the scope of this article to address this matter.  Nor do we advocate “fat-shaming,” or any cruelty directed at individuals because they are overweight or obese.  Rather, we are suggesting that the government and public health authorities should not issue and support, respectively, mandates that curtail freedom to the point of fostering depression and disease in the general population.  That includes not only closures of parks and gyms, but measures such as mandatory mask-wearing during exercise and stay-at-home orders, which inevitably leads to social isolation.  

In stark contrast to the approach they have taken, public health authorities, and by extension politicians and the media, ought to encourage the public to maintain a healthy weight, and not just during the pandemic. In fact, it is their moral obligation to address the issue head-on, rather than putting identity politics or political correctness before public health, and to vigorously renounce measures that are creating an unhealthier nation.  

We suspect that one day, the quarantining of entire societies that was carried out in response to the coronavirus pandemic, leading to vast swaths of the population becoming unhealthier overall and ironically more susceptible to severe outcomes from the virus, will be seen as the 21st century version of bloodletting.  As the epidemiologist Martin Kulldorff has observed, public health is not just about one disease, but all health outcomes.  Apparently, in 2020, the authorities forgot this obvious truth.

Authored by Jonathan Turley,

As the trial of former police officer Derek Chauvin starts in Minneapolis, much of the trial will focus on the role of fentanyl in the body of George Floyd as the possible cause for his death. Notably, a new study in the last week reinforces prior research showing an alarming increase in the abuse of this powerful drug and deaths associated from it.  In some counties, there was an almost 75% increase in the first half of 2020 in fatal drug overdoses with fentanyl as the main culprit.

While Floyd denied using drugs, he later said he was “hooping,” or taking drugs. That was confirmed in the autopsy which found that Floyd died from “cardiopulmonary arrest while being restrained by law enforcement officer(s).”

The state’s criminal complaint against Chauvin said the autopsy “revealed no physical findings that support a diagnosis of traumatic asphyxia or strangulation.

Mr. Floyd had underlying health conditions including coronary artery disease and hypertensive heart disease.”

He also was COVID-19 positive.

Andrew Baker, Hennepin County’s chief medical examiner, strongly suggested that the primary cause was a huge amount of fentanyl in Floyd’s system:

“Fentanyl at 11 ng/ml — this is higher than (a) chronic pain patient. If he were found dead at home alone & no other apparent causes, this could be acceptable to call an OD (overdose). Deaths have been certified w/levels of 3.”

Baker also told investigators that the autopsy revealed no physical evidence suggesting Floyd died of asphyxiation. The toxicology report on Floyd’s blood also noted that “in fatalities from fentanyl, blood concentrations are variable and have been reported as low as 3 ng/ml.” Floyd had almost four times the level of fentanyl considered potentially lethal.

That level of fentanyl will be tied to Floyd complaining about being unable to breathe. Floyd stated that he could not breathe while sitting in the police cruiser and before he was ever restrained on the ground. That is consistent with the level of fentanyl in his system that can cause “slowed or stopped breathing.”

Notably, the report shows that Floyd had both fentanyl and methamphetamine in his system. That is the combination discussed in the recent study (and past studies) as a commonly lethal combination.

The new Quest study shows that lethal overdoses overwhelmingly involve combinations with fentanyl, particularly methamphetamine: “Most overdose deaths involving opioids such as fentanyl also involve concurrent use of benzodiazepines, cocaine, or methamphetamine.”

The expert testimony on such combinations will be the key to the trial of Chauvin. Much turns on the result. Indeed, there is a real danger of a cascading failure of all four cases if the jury hangs or acquits.

As I have previously noted, the role of fentanyl does not mean that Chauvin has an insurmountable defense. It makes this a stronger manslaughter than murder case. However, Floyd was clearly in distress and one of the other officers suggested moving him (which Chauvin countermanded). That could still constitute manslaughter if Chauvin knew or should have known that his knee restraint was endangering Floyd’s life.