Category: zerohedge

President Jair Bolsonaro warned this week that COVID-19 is going nowhere and urged local leaders to abandon strict social distancing measures and lockdowns, arguing that Brazil’s people need to start learning how to live with the virus, according to Bloomberg. 

“This issue of Covid will continue for life,” Bolsonaro said during a weekly webcast on social media, adding that social distancing measures will “lead nowhere.”

Bolsonaro, 65, has already been infected with the virus and has held a pretty tough stance against social distancing. 

When it comes to vaccines, the Brazilian president, a longtime China skeptic, thanked Beijing earlier this week for approving Sinovac Biotech’s COVID-19 vaccine for export. Bolsonaro said he would not take any COVID-19 shot. 

Critics have said Bolsonaro’s laissez-faire approach to managing the crisis has resulted in a massive death toll, second to the US. Hospitals are overrun with virus patients, which has pressured the president’s popularity in recent months. 

A slow rollout has also pressured Bolsonaro’s popularity, with the country only receiving two million doses of Oxford/AstraZeneca vaccines. 

Meanwhile, Brazil’s massive fiscal stimulus to support the economy from cratering even further has reached its limits, hence why Bolsonaro is calling for some sense of normalcy. At the same time, people learn to live with the virus. 

At this point, who knows how long the virus will be sticking around, but in Bolsonaro’s defense, there’s mounting evidence that continues to how mandatory stay-at-home orders issued by the government don’t work. 

However, maybe Bolsonaro is right by telling his fellow compatriots to go out there and live their lives. After all, a total implosion of the. Brazilian economy wouldn’t exactly be great for the people’s health. 

Authored by Mike Shedlock via MishTalk,

New York’s Governor says bail him out or he’ll be forced to punish New Yorkers with tax hikes.

Biden Elected, Begging Starts

It did not take long for the begging to start. 

New York Governor Andrew Cuomo launched the effort with a Tax Hike Ultimatum. 

“If the federal government doesn’t fund state and local governments, it’s going to hurt all New Yorkers,” Mr. Cuomo warned Tuesday while proposing to raise the state’s top income tax rate in New York City to 14.7%. This would be the highest rate in the country, at least until New Jersey Gov. Phil Murphy makes a competing bid.

Mr. Cuomo’s ultimatum goes like this: Democrats in Washington must deliver $15 billion in budget relief pronto or he will raise the state’s top tax rate to 10.82% from 8.82% on income over $100 million and create four new tax brackets on income of more than $5 million. New York City has a top rate of 3.88%, though Mayor Bill de Blasio wants to raise it too.

The Governor says the higher rates would be temporary, but New Yorkers know better than to believe him after he broke his promise to let the millionaire’s tax that Albany imposed during the 2009 recession expire. Mr. Cuomo is also begging Democrats in Congress to lift the $10,000 state-and-local tax (SALT) deduction limit to mitigate his tax hike.

Add these tax increases to Medicare taxes, and some New Yorkers would pay a marginal tax rate as high as 64% under Mr. Cuomo’s plan. Florida Gov. Ron DeSantis may need to set up temporary asylum camps in Palm Beach for the waves of New York tax refugees.

Pitiful, Just Pitiful

Gratefully, I expect Cuomo’s pitiful plea to go straight to the ash pile of requests not delivered where it belongs.

Why?

There is not a single Republican senator who will vote to bail out New York, New, Jersey, Illinois or other corrupt states with union pension woes of their own making.

In Search of a Senator

Given the 50-50 Senate split, it only takes one Democrat to stand up to such fiscally mad proposals.

The most likely candidate is West Virginia Senator Joe Manchin. 

Politico notes Manchin emphatic he ‘will not vote’ to kill the filibuster

Also note that Manchin is in a Bipartisan group of senators pushes back on Biden Covid plan.

The bipartisan group of 16 senators held a call with Brian Deese, director of the White House National Economic Council, Jeff Zients, Biden’s coronavirus coordinator, and Louisa Terrell, head of White House legislative affairs on Sunday afternoon — the first of what’s sure to be many conversations between centrists and the Biden administration.

The 75-minute call, set up by Sen. Joe Manchin (D-W.Va.), is one of the first big calls the Biden administration has held as it works to build cross-party support for the $1.9 trillion plan. Senators asked for more data on how the White House filled out its plan.

Susan Collins (R-Maine) pressed the Biden officials on why families making $300,000 would be eligible and urged a focus on lower-income workers.

Sen. Angus King (I-Maine) also questioned the price tag: “This isn’t monopoly money,” as he put it.

Manchin is a Democrat senator in the most trump-friendly state. His statements suggest that he will not stray too far fiscally. 

King caucuses with the Democrats and if either one of them says “no” to state bailouts, they won’t happen.

There might be others. In general, Biden will have a difficult time.  

Go Ahead Cuomo, Go Ahead

So, governor Cuomo go ahead. Raise those taxes. 

I am curious to see how big the New York exodus will be.  And I always need some new things to write about.

Google has been actively removing a flood of negative reviews for the Robinhood app from the Google Play Store, according to The Verge, which reports that “Robinhood users organized campaigns to give the app a one-star review on Google’s Play Store and Apple’s App Store,” and were able to ‘review-bomb’ it down to a one-star rating over the company’s decision to restrict purchases of GameStop, AMC and other stocks amid a crowdsourced campaign to trigger short squeezes.

Robinhood’s restrictions were widely seen as a handout to billionaire short-sellers that threw retail traders under the bus.

Robinhood came under intense scrutiny on Thursday, after the stock trading app announced it would block purchases of GameStop, AMC, and other stocks made popular by the r/WallStreetBets subreddit, and some users have already replaced their deleted one-star reviews with new ones to make their anger heard. –The Verge

The website 9TO5Google captured the carnage when the app had just under 275,000:

And here’s what it looks like now, per The Verge:

According to the report, the mass censorship is within Google’s ‘purview,’ as their policies “explicitly prohibit reviews intended to manipulate an app’s rating.”

How do they know this is an organized campaign and not 100,000 individually pissed off retail customers? Google claims to have a system which “combines human intelligence with machine learning to detect and enforce policy violations in ratings and reviews.”

Google says it specifically took action on reviews that it felt confident violated those policies, the company tells The Verge. Google says companies do not have the ability to delete reviews themselves.

On Apple’s App Store, Robinhood has a 4.7 rating, and we didn’t see any reviews newer than Wednesday. However, popular apps like TikTok, Uno, and Genshin Impact also didn’t have reviews from any later than Wednesday when we checked. –The Verge

Meanwhile, Robinhood is only allowing “limited buys” of various stocks, while at least one lawsuit has been filed against the company for “removing Gamestop from its trading platform” earlier this week.

Authored by Pat Buchanan via Buchanan.org,

As soon as the Senate received the lone article of impeachment accusing President Donald Trump of “incitement of insurrection” in the Jan. 6 mob assault on the Capitol, Rand Paul rose to object.

The Senate, he said, has no right to try a private citizen, which Trump now is. Thus, what we are about to do is flatly unconstitutional.

Forty-five of 50 Republican members agreed with Paul’s motion.

“This vote indicates it’s over. The trial is all over,” said Paul.

“If you voted that (the Senate trial is) … unconstitutional, how in the world would you ever vote to convict somebody for this?”

Consistency says you would not.

Susan Collins of Maine, one of five Republicans who voted against Paul’s motion, agreed that the vote portends the final vote on conviction.

“Do the math,” Collins said. “It’s extraordinarily unlikely the president will be convicted.”

Rand Paul may have just derailed the second impeachment of Donald Trump.

Chief Justice John Roberts, the constitutional officer designated to preside over Senate impeachment trials, has said he will not preside over this latest trial of the ex-president. With Roberts seeing no constitutional duty, and declining the honor, his replacement as the presiding officer will be Patrick Leahy of Vermont, the longest-serving Democrat and the president pro tempore of the Senate.

But Leahy is viscerally hostile to Trump and one of a Democratic bloc that voted twice last January to convict Trump of high crimes and misdemeanors. How will it look to the world if this partisan is installed as both judge and juror at the trial of his political enemy?

Welcome to Zimbabwe.

Does the liberal establishment, now back in power and controlling the House, Senate and presidency, not see how this is all going to look in the history books, generations hence?

Blinded by hatred of Trump, enraged by the mob that stormed the Capitol, Nancy Pelosi’s House, in a rush to judgment, without hearing a single Trump witness and without letting his lawyer offer a defense, impeached, i.e., indicted, Donald Trump for “incitement of insurrection.”

But how could Trump have incited the riot and the attack on the Capitol when the mob swept up the stairs before Trump finished speaking a mile away?

And he would end his rally remarks by urging the crowd to march to the Hill “peacefully and patriotically.”

We have subsequently learned that plans and plots were being hatched days before the assault on the Capitol began.

Was the Trump White House, or Trump, privy to those plots?

In August 1974, it was a near certainty that the House would vote to impeach Richard Nixon. But after the president resigned, the House did not impeach, and Ford pardoned Nixon so the country could move on.

The rage of the establishment at being deprived of its revenge against Nixon who had turned the Silent Majority against it, not unlike today, knew no bounds. And, though history has vindicated Ford, his pardon of Nixon precipitated a plunge in his poll numbers.

Half a century on, however, history says Ford did the right thing.

Why then are the Democrats continuing with this exercise in vengeance?

They want Trump convicted so that he will be prohibited from ever again holding public office. The establishment fears that Trump could make a comeback, win the Republican primaries in 2024, become the nominee, and return in triumph as president.

They are determined to abort that possibility. Many openly admit it.

What does that say about the liberal establishment’s love of democracy when they would disqualify, in advance, the largest vote-getter their opposition party ever had, out of fear he might come back to win the presidency as he did in 2016?

“Trust the people!” was a campaign slogan made famous by George Wallace. Our national establishment prattles endlessly on about its devotion to democracy, but it does not trust the people.

But the establishment is going to pay a price for trying to squeeze the last ounces of juice out of this rotting fruit. President Joe Biden’s call to unity are being drowned out by Democratic howls for a trial, conviction and banishment.

This effort to convict and disqualify Trump from running again tells us more about the people behind it than it does about Trump.

For the odds are slim at best that Trump would or could, at 78, win the nomination and the presidency a second time, as Grover Cleveland did in 1892.

Yet, a fearful establishment does not want to take the chance.

For all the babbling about “democracy” we have heard in recent days, the establishment wants to eliminate the possibility that the people could rise up, and, horror of horrors, elect Trump once more.

You can smell the fear.

A powerful winter storm starting on Saturday through early next week could impact more than 100 million people across the Midwest to the Northeast. 

CBS News reports from Chicago to Cleveland to Baltimore to New York, tens of millions of people could be impacted by severe winter weather starting on Saturday and lasting through Tuesday. 

The system has already dumped upwards of 15 inches of rain in some parts of California and in higher elevations, up to 100 inches of snow this week. We noted earlier that an atmospheric river emanating from over the Pacific Ocean would create severe weather for parts of California that would eventually lead to a snowstorm for Midwest and Northeast states. 

On Friday afternoon, the system is in the Southwest and moves eastward. 

Ahead of the storm’s arrival, much of the Mid-Atlantic and Northeast are experiencing frigid temperatures. 

Heavy snow is likely to fall across the Midwest and Ohio Valley Saturday night and Sunday. Chicago, Indianapolis, and Colombus could see anywhere from 6-12 inches by Sunday night.

On Sunday, the system will move towards the Mid-Atlantic area, spreading snow across Virginia, Washington, D.C., Maryland, Delaware, and southern Pennsylvania.

“The snow may be heavy at times in places like Washington, D.C.,” CBS said. 

While CBS is only offering weather models of what may happen – their meteorologists ask a few questions about the potential track of the system:

“Now comes the tricky part. Does the storm slide eastward out to sea, keeping cold air locked into the Washington area and the heavy snow bullseye between D.C. and Atlantic City? Or does the storm move northeastward, burying New York City, Providence and perhaps Boston in over a foot of snow? ” 

Forecasts for Monday shows New York City could get walloped with snow.  

The mid-Atlantic and Northeast states’ total snowfall forecasts through early next show significant accumulation could be ahead. 

While everyone might take a snowday or two early next week, that will give even more people the opportunity to trade GameStop and other most shorted stocks. Here’s a list of the next most shorted stocks. 

All of Spygate came down to a $100 fine for a federal lawyer

— Jack Posobiec 🇺🇸 (@JackPosobiec) January 29, 2021

The entire game is rigged.

DOJ is trying to throw a troll in prison for 10 years because of a meme from 2016.

Meanwhile, a corrupt FBI attorney gets probation for defrauding a federal court in order to spy on his enemies.

The rule of law is dead. https://t.co/FOP0lHY4lE

— Sean Davis (@seanmdav) January 29, 2021

*  *  *

Authored by Ivan Pentchoukov via The Epoch Times (emphasis ours)

A federal judge on Jan. 29 sentenced former FBI attorney Kevin Clinesmith to 12 months of probation for forging an email that resulted in one of several major errors in the applications to spy on former Trump campaign adviser Carter Page.

U.S. District Court Judge James Boasberg described Clinesmith’s forgery as an “inappropriate shortcut.” The judge concurred with the defense’s argument that the FBI attorney did not intend to lie when he added the words “not a source” to an email from a CIA liaison which described Page as having provided information to the agency.

Boasberg, who serves as one of the judges in the secret Foreign Intelligence Surveillance Court that approved the applications to surveil Page, said that Clinesmith’s forgery damages the reputation of the court. The judge said he had no reason to disagree with the findings of the report by the Department of Justice Office of Inspector General, which found that Clinesmith’s actions were not motivated by his bias against President Donald Trump.

The judge also ordered Clinesmith to serve 400 hours of community service.

The government argued for a prison sentence for Clinesmith and disputed the claim that the defendant did not intend to lie when altering the email. The prosecutor argued that the forgery was “akin to identity theft” since Clinesmith effectively impersonated the CIA liaison by changing the message. Anthony Scarpelli, one of the prosecutors, told the judge that the “resulting harm is immeasurable.”

In an address to the court, Clinsemith described the email forgery as a “critical error in judgment” and an “unnecessary shortcut.”

“I harmed the very institutions I cherish and admire,” Clinesmith said.

The defense attorney painted Clinesmith’s misdeed as an “aberration” in an otherwise honorable life.

The judge noted that he received roughly 50 letters attesting to Clinsemith’s character. Boasberg also noted that he can’t ignore the harm that Clinesmith has already suffered, including the loss of his government job and the potential of losing his attorney license. The judge noted that Clinesmith was thrust from being an obscure attorney to the center of a national hurricane over the improper surveillance of Trump campaign associates.

In an address at the sentencing hearing, Page described the harm he suffered as a result of the surveillance and the related government leaks. He said a close friend cut all ties with him while the media painted him as a Russian asset. Page sought mercy and did not ask for Clinesmith to receive prison time.

In arguing for a prison sentence, Scarpelli cited the cases of former Trump campaign adviser George Papadopoulos and attorney Alex van der Zwaan, both of whom were sentenced to prison for the same charge as part of the investigation by special counsel Robert Mueller. Scarpelli argued that Clinesmith’s offense is more egregious than that of Papadopoulos.

Something bad is taking place at Robinhood.

One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be traded at a time, effectively shutting down in all but name (it couldn’t risk another day of furious public outcry and massive client departures).

However, just before the close, things got downright surreal when in a blog post the broker – which should probably change its name from Robinhood to Suit – made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!

In other words, as of this moment, no client is allowed to one more than 1 share in names like GME, AMC, AG, BBBY, BYND, WKHS and many others. Even boring, low vol names like GM and SBUX are limited to just one share.

This is what the blog post said:

“The table below shows the maximum number of shares and options contracts to which you can increase your positions. Please note that these are aggregate limits for each security and not per-order limits, and include shares and options contracts that you already hold. These limits may be subject to change throughout the day.”

Panicked clients who are wondering if this means that their current holdings which exceed 1 laughable share will be forcefully liquidated can breathe for now: the company said that “outside of our standard margin-related sellouts or options assignment procedures, your positions will not be sold for the sole reason that you are currently over the limit. However, you will not be able to open more positions of each of these securities unless you sell enough of your holdings such that you are below the respective limit.”

In other words, virtually nobody can buy any new securities.

The company also disclosed that no fractional shares can be bought going forward as “fractional shares are currently position closing only for all of the securities listed in the table above. This means you can sell and close your fractional positions, but you can’t open new fractional positions. However, you can still open new whole share positions according to the limits listed above.”

Why is this happening? The most likely reason is that between DTC, clearinghouses and other regulatory entities, Robinhood was found to be in another capital deficiency position – even with the billions raised overnight – and it is being forced to delever.

This likely means that Robinhood is as of this moment, scrambling to obtain even more capital, although we somehow doubt it will be just as easy to “take from the rich” as it was late last night especially since the client exodus is surely accelerating.

It also means that we may have to have another “Lehman Weekend” situation on our hands, only this time it will be a “Robinhood Weekend”, and an urgent acquisition from a strategic buyer may be required to prevent the worst case outcome. We only hope that the billions in funds held in custody for clients is segregated should the company collapse (pinging Jon Corzine here).

In any case, expect a lot of Robinhood related news over the weekend.

 

Any Britons who have vacation (or business) plans in China in the immediate future might have a new problem on their hands. 

Beijing announced Friday that it would no longer recognize British National Overseas (BNO) passports as travel documents in China from Jan. 31. The statement from the Chinese came as Britain prepares to offer a new visa program to millions of Hong Kongers, according to AP News. 

“From Jan. 31, China will no longer recognize the so-called BNO passport as a travel document and ID document, and reserves the right to take further actions,” Chinese foreign ministry spokesman Zhao Lijian told reporters.

Lijian reiterated China’s opposition to Britain’s interference in Beijing’s political affairs. He said the UK must come to terms that Hong Kong belongs to China. 

“The policy of residence and naturalization in the UK has been repeatedly expanded. Britain’s attempt to turn a large number of Hong Kong people into second-class British citizens has completely changed the BNO nature of the original Sino-British understanding,” he said.

Lijian stressed that Britain’s move violates their agreement with China making the current BNO invalid. 

Last year, Beijing’s passage of the national security law prompted the UK government to offer refuge for eligible Hong Kongers via BNO passports. But now the new BNO program is opening up to 5.4 million Hong Kongers. 

Under the BNO policy, Hong Kongers can live and work in the UK for five years with an eventual citizenship path. 

“I am immensely proud that we have brought in this new route for Hong Kong BNOs to live, work and make their home in our country,” British Prime Minister Boris Johnson said in a statement.

“In doing so we have honored our profound ties of history and friendship with the people of Hong Kong, and we have stood up for freedom and autonomy — values both the UK and Hong Kong hold dear.”

The UK government estimates around 300,000 Hong Kongers could migrate to the UK over the next five years, which would be beneficial for the British economy. 

CNN points out anti-government protests across Hong Kong, in conjunction with Beijing’s passage of the national security law, has resulted in an increased issuance of BNO passports among Hong Kongers

BNO Passports Printed, Monthly

Time will tell if the new BNO program will result in a mass exodus of Hong Kongers to the UK as China’s communist government clamps down on the city. 

The USDollar managed to end higher for the month of January while stocks, bonds, and gold all ended lower…

Source: Bloomberg

Cryptos, however, had a big month, led by Ethereum (and helped the last few days by a migration of WSB’rs and Elon Musk)…

Source: Bloomberg

Of course, the really big news was the ‘Reddit Rebellion’ that routed shorts late in the month, pushing “Most Shorted” stocks to their biggest monthly squeeze in history…

Source: Bloomberg

With the Top 10 most-heavily shorted stocks in the Russell 3000 utterly exploding…

Source: Bloomberg

This is madness… Those are month-to-date %age performance numbers! lol

Source: Bloomberg

Small Cap stocks surged in January (where many of the ‘most-shorted’ stocks are found) as Dow and S&P were flat and Nasdaq managed only modest gains…

Energy outperformed in January, Staples were worst but everything was hit in the last few days…

This week was the worst for stocks since October…

The Russell 2000 outperformed the S&P 500 for the 5th straight month…

Source: Bloomberg

This week’s weakness sent The Dow back below its 50DMA…

And The S&P 500 found support at its 50DMA…

And as shorts suffered, hedgies were forced to liquidate many of their most liquid longs…

Source: Bloomberg

…pushing FANG stocks back to unchanged on the month…

Source: Bloomberg

WSB to Hedgies…

Artemis’ Christopher Cole points out that VIX traded at all-time highs to realized January 27th (Vol-of-vol also near an all-time high amid the transmutation of solvency risk for select L/S HF and margin calls on brokers such as Robinhood)

Bonds were notably sold in the last two days – even as stocks puked – suggesting a sell everything liquidation…

Source: Bloomberg

On the month, the short-end was unch as the long-end steepened notably…

Source: Bloomberg

1.10% remains a key level for 10Y yields…

Source: Bloomberg

Real Yields tumbled in the back half of January…

Source: Bloomberg

The dollar was up on the month – its first monthly gain since September

Source: Bloomberg

Bitcoin tested back above $38k today after Elon Musk’s tweet…

Source: Bloomberg

 

Notably, precious metals got a boost in the last week as the WSB crowd shifted their attention to miners…

 

Silver surged…

 

And so did Gold, but each surge in gold was met by a mysterious selling pressure…

And crude futures were totally insane…

Finally, this made us laugh out loud – The Fear & Greed Indicator has plunged to 36, full of fear!

And the S&P 500 is just 3.5% from all-time record high prices (and valuations).

The probes and lawsuits are coming.

Texas Attorney General Ken Paxton sent out a Civil Investigative Demand to 13 entities, including Robinhood and Citadel, regarding the “suspension of stock trading and investing” requiring higher margin reserves for trading certain companies and suspending chat platform activity.

Other names which were also issued CIDs include Discord, Robinhood Markets, Robinhood Securities, Interactive Brokers, TD Ameritrade, TD Bank, E-Trade, WeBull Financial, Public Holdings, M1 Holdings, Citadel Financial, and Apex Clearing.

“Wall Street corporations cannot limit public access to the free market, nor should they censor discussion surrounding it, particularly for their own benefit. This apparent coordination between hedge funds, trading platforms, and web servers to shut down threats to their market dominance is shockingly unprecedented and wrong. It stinks of corruption,” said Attorney General Paxton.

“I’m hopeful that these companies will step up and cooperate with these CIDs in order to clear any confusion over why stock purchases were forcibly closed and why even conversation around these stocks was silenced.”

In addition to public statements and internal documents, the CIDs request copies of all terms of service, policies related to content control and moderation, and communications between platforms and moderators of chat servers, including decisions to limit, control, or prevent access to the Discord r/WallStreetBets server.

Read copies of the CID here