Big Tech, Monopoly, & The Pretense Of Capitalism

Big Tech, Monopoly, & The Pretense Of Capitalism

Tyler Durden

Sat, 08/22/2020 – 13:20

Authored by Charles Hugh Smith via OfTwoMinds blog,

All those who believe the ‘privatized totalitarianism’ of Big Tech ‘platform plantations’ are ‘capitalism’ have been brainwashed into servitude by Big Tech’s pretense of capitalism.

What do you call an economy of monopolies without competition or any regulatory restraints? An economy of monopolies that control both the buying and selling in the markets they control? Monopolies with the power to commit legalized fraud and the profits to buy political influence? Monopolies whose black box algorithms are all-powerful but completely opaque to public scrutiny?

Call it whatever you want, but it certainly isn’t Capitalism, which requires competition and market transparency to price capital, labor, risk, credit, goods, services, etc.

Black Box Monopoly is the death of Capitalism as it eliminates competition and market transparency.

The American economy is now dominated by Big Tech Black Box Monopolies, and thus what we have isn’t a “free market” system (a.k.a. capitalism), it’s the pretense of capitalism, a slick PR cover for the most rapacious form of exploitation.

The SillyCon Valley model is simple: achieve monopoly power by scaling the network effect and buying up hundreds of potential competitors with stock “printed” out of thin air. Once monopoly is achieved, buyers and sellers are both captive to the Big Tech monopoly: both buyers and sellers of apps, for example, must submit to the profiteering and control of the Big Tech monopoly.

Once the profits flowing from monopoly pile up, buy back the shares you “printed” to eliminate competition, boosting the wealth of insiders to the moon. Since share buybacks were once illegal, this is nothing but legalized fraud.

Despite the immense destruction these Big Tech monopolies wreak on society, the political power they purchase protects them from any limits. That their platforms now control the flow of data, including political content and adverts, is brushed aside with the usual paradoxical claims of “free markets.”

Ironic, isn’t it? Big Tech Black Box Monopolies claim they shouldn’t be exposed to any regulation because they’ve destroyed competition and transparency within the letter of the law. Monopoly platforms that control the flow of data, news and narratives are privatized totalitarianism, cloaked by the pretense of capitalism.

Like all totalitarian monopolies, Big Tech now claims “you can’t limit us because now you depend on us.” In other words, Big Tech is now too centralized and powerful to submit to any socio-political controls.

It’s a neat trick, isn’t it? Enrich the super-wealthy “investor class” with your buyback-juiced stock valuations, “buying” their loyalty and political pull with these outsized gains to keep your monopoly out of reach of any public scrutiny or limits on your profiteering and privatized totalitarianism.

That our society and economy are now in thrall to privatized totalitarian Big Tech monopolies is straight out of a Philip K. Dick story in which what’s perceived as real has been manipulated by those who own the means of manipulation.

We’re not just debt-serfs in central-bank feudalism, we’re all serfs on Big Tech’s platform plantations. If you don’t love your servitude with sufficient enthusiasm, Big Tech has a special place for you: the Village of the Deplatformed, a village of ghosts who have disappeared from the platform plantations and who no longer show up in search, social media, app stores, etc.

Just as the Soviets snipped those sent to the gulag out of photos, the privatized totalitarian Big Tech monopolies cut out your selfhood and your income: Deplatformed doesn’t just mean you disappear from view, it also means you’ve been demonetized— your ability to earn money from your own content has been eliminated.

In effect, your labor, content and selfhood have been expropriated by Big Tech’s totalitarian platforms. Big Tech monopolies don’t just “own” the plantation of the mind, they own the platform plantations that control what we see, buy and sell, and what the algorithms collect and sell to everyone who wants to influence what we see, buy and sell.

All those who believe the privatized totalitarianism of Big Tech platform plantations are “capitalism” have been brainwashed into servitude by Big Tech’s pretense of capitalism. Just because totalitarianism and fraud are now “legal” doesn’t mean they’re not evil.

Mark, Jesse and I discuss Big Tech’s financialization of everything in Salon #18: The Endgame of Financialization Resembles a Philip K. Dick Novel— a nightmarish world of deplatformed ghosts and digital galley slaves.

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My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)

(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

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Financials Can’t Catch A Break, And What It Means For The Market

Financials Can’t Catch A Break, And What It Means For The Market

Tyler Durden

Sat, 08/22/2020 – 12:30

Authored by Bryce Coward via Knowledge Leaders Capital blog,

The bank stocks are at it again as they make another new 52-week relative performance low compared to the broad market.  It’s a perennial issue. Over the last year the KBW Bank Index, an index of 24 of the largest US banks, has underperformed the S&P 500 by 30%. Over the last 10 years, the banks have returned just 51% as much as the broad market.

You’d think at some point these stocks could catch a break, but that would be to ignore the fundamental headwinds facing these institutions. If we use the yield curve as a proxy for bank profit margins, it’s no surprise that the banks have underperformed by such a large degree. Indeed, with a 10Y-2Y US Treasury spread at just 48bps, the margin generated by borrowing short and lending long has all but evaporated. The below chart plots the 10-2 yield curve spread in red against the relative performance of the KBW Bank Index vs the S&P 500.

And then there is the fact that for the last many number of years the real rate of interest has been falling like a stone. With 10-year real risk-free rates now at -1%, how exactly do lending institutions in aggregate generate substantially positive real returns? That is a rhetorical question, obviously, because the whole point of financial repression is to favor creditors over lenders in an effort to reduce the debt burden.

More importantly, though, is the impact of bank underperformance on the broader market. It’s often thought that when the banks underperform by a large degree it spells disaster for the equity market as a whole. That isn’t exactly true, although forward performance for the S&P 500 is pretty weak when banks hit new 1-year relative lows.

The headwinds facing the financials may, however, very much impede “value” related strategies from gaining much traction. Last week, we highlighted how “value” as an investment style is still challenged despite a blip of outperformance in August. Part of the reason is that the weighting of financials in most “value” related indexes is rather extreme (see table below). So, in order for “value” to work in earnest, we really need banks to outperform.

Along those lines is a theoretical question about whether there remains any risk premia embedded in “value” stocks or if their performance profile is mostly just a function of the macro environment. In other words, if “value” can only outperform when real interest rates rise and financials outperform, have the idiosyncratic features of “value” that made it a winning strategy in decades past evaporated? The last chart below shows the relative performance of “pure value” stocks vs the S&P 500 overlaid on the 10-year TIPS yield. In the bottom panel of the chart is the correlation between the two series. Until 2009, when financial repression started in earnest, there was basically no positive long-term correlation between real rates and “value” performance. Since 2009, that correlation has been highly positive, which suggests that real interest rates are a (the?) defining feature of modern-day “value” performance trends.

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Pentagon Report Deems “Covert Surveillance” Aircraft Flown Over George Floyd Protests Legal

Pentagon Report Deems “Covert Surveillance” Aircraft Flown Over George Floyd Protests Legal

Tyler Durden

Sat, 08/22/2020 – 12:05

The Pentagon is defending its use of military aircraft to conduct surveillance on the large crowds of demonstrators and in some cases riots which enveloped multiple cities connected with George Floyd’s death. A new investigation has exonerated the National Guard after allegations it illegally gathered intelligence on Americans.

It was previously revealed that the National Guard used reconnaissance planes to fly over at least four US cities in order to gather data on growing protests in late May and early June, crucially at a moment President Trump was urging greater action in ensuring law and order in the protest and vandalism-hit cities.

RC-26 spy plane with infrared and electro-optical cameras flew over protests Washington, DC, and Las Vegas on June 2 in the United States. Source: Al Jazeera via EFE/EPA

Defense Secretary Mark Esper said he never personally approved of the program to fly the reconnaissance aircraft over the protests, but National Guard officials say they didn’t need higher approval given it was just for observing crowd sizes and to probe if any emergencies such as large fires were unfolding, according to their account.

The Associated Press reported of the new Pentagon findings out Friday – the result of an Air Force inspector general investigation ordered by Esper:

The investigation by the Air Force inspector general found that the planes were used to gather information about crowd size, crowd flows and fires but they did not monitor individuals. The probe was ordered by Defense Secretary Mark Esper in response to questions within the department and Congress about whether the military illegally conducted surveillance of American citizens during the unrest after the death of George Floyd.

It’s certainly an interesting distinction that’s somewhat disturbing in terms of precedent, regardless of the fact that in many instances the protests produced dangerous and deadly riots and caused widespread destruction (which, it should be noted, is a matter for local and state authorities, and even the FBI – but not military intelligence). 

Via AP/VOA: This image from video released by the Department of Defense show a scene on a street as captured by a RC-26 flying over Minneapolis, on June 4, 2020.

Essentially the argument appears to be that protests can be monitored using national intelligence means and assets so long as it is groups or crowds being observed, and not individuals.

The AP continues:

The investigation reviewed seven flights by the aircraft in Minnesota, Arizona, California and Washington, D.C. If found that while the sensors on the aircraft could show buildings and vehicles, they “were not capable of identifying any distinguishing features of people” and they did not have the capability of collecting information from cellphones or radios.

The legal argument also appears centered on the technological capabilities outfitted on the aircraft, with the conclusion that if domestic communications can’t be picked up, it’s permitted.

Specifically the aircraft involved was the RC-26 spy plane, but there were also widespread reports that federal and local agencies used drones, including the US Drug Enforcement Agency, which was authorized to “conduct covert surveillance” of the protests, according to the Trump administration. 

Regardless of the issue being protested, this creates a disturbing precedent. Recall for example, the large-scale protests against Obama’s preparations to bomb Syria in August and September of 2013. Should there be any future mass anti-war demonstrations which gain steam in the US, for example, will the Pentagon conduct intelligence gathering missions on these too?

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Turkish-Backed Forces Cut Water Supply To 1 Million People In Syria Amid Pandemic

Turkish-Backed Forces Cut Water Supply To 1 Million People In Syria Amid Pandemic

Tyler Durden

Sat, 08/22/2020 – 11:40

AlMasdarNews.com,

Syria’s permanent representative to the United Nations, Dr. Bashar al-Jaafari, called on the international organization to intervene to end the suffering of the residents of the Syrian city of Hasakah as a result of Turkish authorities’ decision to obstruct the water supply to over 1 million people.

In a phone call with the Secretary-General of the United Nations, Antonio Guterres, Dr. Al-Jaafari briefed him on the tragic situation in the city of Hasakah and its environs, as a result of the Turkish regime’s move to shut off the water supply from the Alouk station.

A child in Aleppo drinking from a street pond in 2014 when Turkish-backed militants cut off water there.

The permanent representative of Syria stressed that this Turkish aggressive behavior constitutes a “war crime and a crime against humanity,” adding that the situation resulting from this crime is intolerable, especially in light of the hot climate and the risk of the spread of the coronavirus. Al-Jaafari called on the Secretary-General to intervene immediately and “use his good offices to stop this crime.”

The armed factions loyal to Turkey had stopped pumping water from the Alouk station (the only drinking water source for the city of Hasakah and its suburbs) near the city of Ras al-Ain under its control, since August 13, while several areas in Hasakah were suffering days before that from a water crisis as a result poor pumping.

The Syrian government rushed several tanks of drinking water for the people of Al-Hasakah on Friday, where some neighborhoods have been without water for up to 20 days.

According to the Syrian Arab News Agency (SANA), the Syrian government had installed several tanks to alleviate the suffering of the people of northeast Syria “as a result of the Turkish occupation forces and their terrorist mercenaries continuing to commit the crime of cutting water to more than a million civilians in Al-Hasakah for the ninth consecutive day.”

The situation has become incredibly difficult for the people of Al-Hasakah, as the ongoing COVID-19 pandemic, coupled with the scorching heat, has created a humanitarian emergency in this region of Syria.

The Turkish-backed militants have now cutoff the water supply to the people of Al-Hasakah on two occasions in the last two months; this has prompted the Syrian military to send reinforcements to the region in preparation for a potential operation if this continues to happen.

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Global COVID-19 Deaths Pass 800,000 As US Outbreak Slows: Live Updates

Global COVID-19 Deaths Pass 800,000 As US Outbreak Slows: Live Updates

Tyler Durden

Sat, 08/22/2020 – 11:17

Summary:

  • Johns Hopkins reports more than 800k deaths
  • Argentina joins growing list of countries testing one of China’s vaccines
  • Philippines sees 4k+ new cases for 5th day
  • India, Russia see outbreaks move closer to milestones

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The global coronavirus outbreak reached another grim milestone on Saturday morning: The Johns Hopkins tally of COVID-19 related deaths (which excludes “probable” or “suspected” deaths) has surpassed 800,000.

While the US outbreak is showing more signs of slowing following what appears to have been a ‘peak’ last month, the US still has the most deaths of any country with more than 175,000.

It has counted more than 32,000 of those in New York, nearly 16,000 in New Jersey and almost 12,000 in California.

Globally, Brazil is No. 2 behind the US with more than 113,000 deaths tied to COVID-19 as of Saturday, though Brazil’s outbreak has lately burned more brightly than the outbreak in the US.

Mexico (with 60,000), India (55,000) and the UK (41,500) have also reported a lot of deaths.

Moving on, most of the big news early Saturday is coming out of the emerging world.

Despite its record-setting lockdown, Argentina’s outbreak has continued to worsen and over the last couple of weeks has gotten to the point where hospitals are being overrun as Argentines rally in the streets to demand the end of the Peronista government’s lockdown. Argentina, like the Philippines, Brazil, India and dozens of other desperate nations anxious to bring about an end to the crisis, has turned to China, which has promises to share hundreds of millions of courses with the developing world as it works to cement its status as a super power that feels “responsible” for the virus it “unwittingly” unleashed.

Argentina has joined Peru, Morocco and the UAE in approving a ‘Phase 3’ clinical trial for the China National Biotec Group’s vaccine candidate. More nations are signing on to host trials as the race to produce a vaccine enters its later stages, and the dwindling outbreak in China has created a shortage of potential test subjects.

Meanwhile, the Philippines, still the biggest outbreak in Southeast Asia, reported 4,933 new cases, the fifth straight day reporting a number north of 4,000. It also reported 26 COVID-19 deaths. In a bulletin, the health ministry said total confirmed cases have increased to 187,249, while deaths reached 2,966.

Just as its outbreak was appearing to quiet down, India on Saturday reported a record daily jump of coronavirus infections, bringing the total near 3 million and piling pressure on authorities to curb huge gatherings as a major religious festival began. The 69,878 new infections, the fourth straight day above 60,000, take India’s total number of cases to 2.98 million, on the edge of 3 million and behind only the US and Brazil. India reported another 945 COVID-19 deaths bringing the total to 55,794.

Russia reported 4,921 new cases on Saturday, pushing its confirmed national tally up to 951,897 as it edges inexorably closer to becoming the fourth country to pass 1 million confirmed cases. Officials reported another 121 deaths, bringing the total to 16,310 (though many critics believe this figure is well below the accurate tally).

Finally, Joe Biden on Friday declared that he would “shut down the united states” if a set of doctors told him it would be a good idea.

via ZeroHedge News https://ift.tt/2Yqua4z Tyler Durden

Governments Are Faking It, And Copying Each Other

Governments Are Faking It, And Copying Each Other

Tyler Durden

Sat, 08/22/2020 – 11:00

Authored by Jeffrey Tucker via The American Institute for Economic Research,

A mystery for months is how it is that so many governments in so many different places on earth could have adopted the same or very similar preposterous policies, no matter the threat level of the virus, and without firm evidence that interventions had any hope of being effective. 

In the course of two weeks, traditional freedoms were zapped away in nearly all developed countries. In a seriously bizarre twist, even the silliest policies replicated themselves like a virus in country after country. 

For example, you can’t try on clothing in a store in Texas or in Melbourne, or in London or in Kalamazoo. What’s with that? We know that the COVID bug is least likely to live on fabrics unless I have symptoms of it, sneeze on my handkerchief and then I stuff it in your mouth. The whole thing is a ridiculous mysophobic overreach, like most of the rules under which we live. 

Then there was the inside/outside confusion. First everyone was forced indoors and people were arrested for being outdoors. Later, once restaurants started opening, people were not allowed indoors so eating establishments scrambled to make outdoor dining possible. Are we supposed to believe that the virus lived outside for a while but then later moved inside? 

Or these curfews. So many places have them despite a complete absence of evidence that COVID spread prefers the night to the day. I guess the real point is to put a stop to revelry that might bring people together in a fun way? It’s like all our governments decided on the same day that COVID spreads through smiles and fun, so we have to banish both. 

In Sydney and Los Angeles, and also in Detroit and Miami, you need to wear a mask when you walk in a restaurant but not when you sit. And this 6-foot rule is highly suspect too. It seems to imply that if you get too close to each other, COVID spontaneously appears. At least people seem to believe that. 

Australia, in its way, even created a slogan and a jingle to go with it. “Staying Apart Keeps Us Together,” says Orwell, I mean, Victoria. 

Socially distance! Don’t be a silent spreader! Even though the largest study yet has shown that “asymptomatic cases were least likely to infect their close contacts.” Which is to say, this is mostly nonsense. 

In most places too, you have to quarantine two weeks when you arrive from afar, even though it is rare that the virus incubation period is that long. The mean period is 6 days, perhaps, which is what one would expect from a coronavirus like the common cold. 

Oh, and in department stores, you can’t spray perfume to try it out, because surely that spreads COVID – not. Except that there is not one shred of evidence that there is any truth to this. This one seems completely made up, though it is widely imposed. 

The list goes on. The bans of gatherings over 50 outdoors and 25 indoors, the closures of gyms at a time when people need to be getting healthy, the shutting of theaters and bowling alleys but the keeping open of big-box stores – these policies are as ubiquitous as they are unsupported by any science. And we’ve known this for many months, ever since the media meltdown over Florida Spring Break ended up in zero fatal cases contracted at the revelry. 

The worst case is school closings. They were shut down at the same time all over the world, despite evidence available since at least January that the threat to children is nearly zero. Yes, they do get COVID almost entirely asymptomatically, which is to say they do not get “sick” in the old-fashioned sense of that term. What’s more, they are highly unlikely to spread it to adults precisely because they do not have symptoms. This is widely admitted

Still governments decided to wreck kids’ lives for an entire season. 

And the timing of it all seems strangely suspicious. All these countries and states implemented this compulsory clown show at the same time, whether cases were everywhere or nowhere. 

In the U.S., this was fascinating to watch. The shutdowns happened all over the country. In the Northeast, the virus had already spread widely toward herd immunity. The South shut down at the same time but the virus wasn’t even there. By the time the virus did arrive, most states in the South had already reopened. The virus doesn’t seem to care either way

Now, looking at this it is very easy to go to conspiracy as the explanation. There is probably some secret hand at work somewhere that is guiding all of this, the thinking goes. How can so many governments in the world have simultaneously lost their marbles and abolished the people’s liberties in such a cruel way, while trampling on all rights of property and association?

I tend to resist big conspiracy theories on this subject simply because I seriously doubt that governments are smart enough to implement them. From what I can see, these governors and statesmen seem to be making things up in a crazy panic and then sticking with them just to pretend that they know what they are doing. 

Pete Earle’s theory of pot commitment seems to explain why the stringency persists even in the lack of evidence that they do anything to suppress the virus. 

But how can we account for the imposition of so many similarly ridiculous rules at the same time across so many parts of the globe? 

I invite you to examine a very interesting study published by the National Academy of Sciences: Explaining the homogeneous diffusion of COVID-19 nonpharmaceutical interventions across heterogeneous countries

A clearer title might be: how so many governments behaved so stupidly at once. The theory they posit seems highly realistic to me: 

We analyze the adoption of nonpharmaceutical interventions in the Organisation for Economic Co-operation and Development (OECD) countries during the early phase of the coronavirus disease 2019 (COVID-19) pandemic. Given the complexity associated with pandemic decisions, governments are faced with the dilemma of how to act quickly when their core decision-making processes are based on deliberations balancing political considerations. Our findings show that, in times of severe crisis, governments follow the lead of others and base their decisions on what other countries do. Governments in countries with a stronger democratic structure are slower to react in the face of the pandemic but are more sensitive to the influence of other countries. We provide insights for research on international policy diffusion and research on the political consequences of the COVID-19 pandemic.

This seems to fit with what I’ve seen anecdotally. 

These guys in charge are mostly attorneys with specializations in bamboozling voters. And the “public health authorities” advising them can get credentials in the field without ever having studied much less practiced medicine. So what do they do? They copy other governments, as a way of covering up their ignorance. 

As the study says:

While our paper cannot judge what an “optimal” adoption timing would be for any country, it follows, from our findings of what appears to be international mimicry of intervention adoptions, that some countries may have adopted restrictive measures rather sooner than necessary. If that is the case, such countries may have incurred excessively high social and economic costs, and may experience problems sustaining restrictions for as long as is necessary due to lockdown fatigue. 

Which is to say: the closures, lockdowns, and imposed stringency measures were not science. It was monkey see, monkey do. The social psychology experiments on conformity help explain this better than anything else. They see some governments doing things and decide to do them too, as a way of making sure they are avoiding political risk, regardless of the cost. 

All of which only increases one’s respect for the governments around the world that did not lock down, did not close business, did not shut down schools, did not mandate masks, and did not push some crazy kabuki dance of social distancing in perpetuity. South Dakota, Sweden, Taiwan, and Belarus come to mind. It takes an unusual and rare level of incredulity to avoid this kind of herd mentality. 

Why did so many governments go so nuts at once, disregarding their own laws, traditions, and values by bludgeoning their own people with the excuse of science that has turned out to be almost completely bogus?

Some people claim conspiracy but a much simpler answer might be that, in their ignorance and stupor, they copied each other out of fear. 

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Embattled Lukashenko Says US “Planning & Directing” Unrest In Belarus

Embattled Lukashenko Says US “Planning & Directing” Unrest In Belarus

Tyler Durden

Sat, 08/22/2020 – 10:35

Days ago the European Union declared that it would not recognize Alexander Lukashenko’s reelection as Belarus’s legitimate president following mass protests which have gripped the nation for weeks on charges of a “rigged election” and led the 26-year ruler to threaten calling upon Russian military aid.

European council president Charles Michel said Wednesday“The European Union stands in solidarity with the people of Belarus,” further condemning the Aug. 9 presidential elections as “neither free nor fair and did not meet international standards”, he said. “We don’t recognize the results presented by the Belarus authorities.” The statement was issued following an emergency meeting of EU’s 27 leaders over the rapidly moving events in Belarus. Sanctions targeting the Lukashenko government were also introduced at a moment the embattled leader said he moved troops to the western border, warning supporters that “NATO troops are at our gates. Lithuania, Latvia, Poland and our native Ukraine are ordering us to hold new elections.”

All of this led to Lukashenko most direct accusation yet that the swell of domestic anger and unrest against him is ultimately a foreign plot akin to prior “color revolutions” in Eastern Europe and the Baltics.

Presidents Lukashenko and Putin, file image, AFP via Getty.

According to his comments in state-run Belarusian BelTA news agency on Friday:

“The US is planning and directing it, and the Europeans are playing along,” he said, adding that “a special center” has been established near Warsaw. “You know, when there is unrest nearby and tanks and planes begin to move, this is no coincidence,” the president pointed out.

He cast the unrest as ultimately an attempt to sever Belarus as the key “only remaining link” in “Baltic-Black Sea corridor” which includes Ukraine.

Both domestic and international pressure has mounted for him to step aside in favor of political rival and main presidential opponent Svetlana Tikhanovskaya, who came in second with results showing 10.12% of the vote, but forced to flea to Lithuania where she’s attempted to rally the people. There has also been growing demands to hold a new vote under international monitors.

But the embattled president vowed earlier in the week“We held the election. Until you kill me, there will be no other election.”

Meanwhile, color revolution accusations and suspicions notwithstanding, there’s consensus that the Kremlin doesn’t appear wedded enough to Lukashenko to strongly intervene an any visible scale, but would likely draw the line if his fate was to be dictated from the outside or external interference in a crisis increasingly drawing in more overt signaling from the US and Europe.

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Roberts: March Was A Correction, Bear Market Still Lurks

Roberts: March Was A Correction, Bear Market Still Lurks

Tyler Durden

Sat, 08/22/2020 – 10:10

Authored by Lance Roberts via RealInvestmentAdvice.com,

As we have been discussing, this past week, the S&P 500 index set an all-time high. Importantly, the breakout to all-time highs confirms the 35% decline in March was only a correction and not a bear market. The implications are important as the change of definition suggests a bear market still lurks for the full-market cycle to complete.

“The S&P 500 set a new record high this week for the first time since Feb. 19, surging an eye-popping 51% from its March 23 closing low of 2,237 to a closing high of 3,389 on Tuesday. This represents the shortest bear market and third fastest bear-market recovery ever.” – Sam Ro

To understand why March was not a “bear market,” we have to break the analysis into several key components:

  1. What defines a bull and bear market?

  2. What exactly is a “full-market cycle?” 

  3. How deep will a “bear market” contract?

Bear Market Definition Is Arbitrary

Let me start with an insightful note from Sentiment Trader:

“The S&P 500 finally did what it’s been trying to do for days now, and crept to a new high.

This ended its shortest bear market in history. Using the completely arbitrary definition of a 20% decline from a multi-year high, it has taken the index only 110 days to cycle to a fresh high. That’s several months faster than the other fastest recoveries in 1967 and 1982.”

Such was a point I discussed on May 20th in “Just A Big Correction:”

“Price is nothing more than a reflection of the ‘psychology’ of market participants. A potential mistake in evaluating ‘bull’ or ‘bear’ markets is using a ‘20% advance or decline’ to distinguish between them.”

As Sentiment Trader notes, the 20% rule is arbitrary. The question is, after a decade-long bull market, which stretched prices to extremes above long-term trends, is the measure still valid?

What Defines A Bear Market

To answer that question, let’s clarify the premise.

  • A bull market is when the price of the market is trending higher over a long-term period.
  • A bear market is when the previous advance breaks, and prices begin to trend lower.

The chart below provides a visual of the distinction. When you look at price “trends,” the difference becomes both apparent and useful.

The distinction is essential.

  • “Corrections” generally occur over short time frames, do not break the prevailing trend in prices, and are quickly resolved by markets reversing to new highs.

  • “Bear Markets” tend to be long-term affairs where prices grind sideways or lower over several months as valuations are reverted.

Using monthly closing data, the “correction” in March was unusually swift but did not break the long-term bullish trend. Such suggests the bull market that began in 2009 is still intact as long as the monthly trend line holds.

I discussed this concept in the video below.

What Is A Full-Market Cycle

One of the most important concepts to grasp is that of the “full market cycle.”

It is not surprising after an 11-year, liquidity fueled bull market, investors have begun to make the assumption the current trend will last indefinitely. However, throughout history, bull market cycles only make up on one-half of the “full market” cycle. During every “bull market” cycle, the market builds up excesses, which must ultimately revert through a market correction. In other words, as Sir Issac Newton discovered:

“What goes up, must come down.” 

The chart below shows the full market cycles over time. Since the current “full market” cycle is not yet complete, we can only guess at the ending valuation level. 

Over the last two bear market cycles, ending valuations were higher than the previous “bear market cycle” lows. Given changes to market environments over time, we can reasonably assume the next valuation low will be closer to the long-term CAPE average of 16.7x earnings. However, given markets are currently pushing 30x trailing earnings, completion of the mean reversion process will not be mild.

With the current trailing valuations at one of the greatest deviations from the long-term average, historically, “reversions to the mean” are tenacious.

How Big Of A Decline To Trigger A Bear Market

So, if a 35% correction in March wasn’t big enough to be considered a “bear market,” how deep of a decline will be needed?

There are really two issues with that question.

  1. How deep of a correction is needed to violate the bullish trendline from the 2009 lows, and

  2. Where will the bottom of such a bear market likely be to reset valuations?

If we put corrections into a bit of perspective, it becomes easier to visualize that damage that could, and most likely will, eventually occur.

10% Correction

A correction of 10% is entirely reasonable for a market in any given year. However, investors have become so complacent in the market, a 10% correction will “feel” much worse. However, such a decline would NOT trigger a violation of the bullish trend and would only set the market back to October 2019. 

20% Correction

A 20% correction from the recent highs is a bit more serious. While not as serious as the drop in March 2020, it will be emotionally distressing nonetheless. Try and remember how you felt during the March decline. This is where investors begin to make emotionally driven investment mistakes.

Currently, a 20% decline would NOT trigger a “bear market.” However, it would reset your portfolio back to where it was in December 2017, wiping out all the gains of the past two-years. While not the end of the world, your retirement is now set back by almost 4-years as you will have to make up the 30% gain from 2019 plus two-more years of lost growth.

30% Correction

Given the current deviation of the market from the 2009 bullish trendline, it will require nearly a 30% correction to break the previous trend. A decline of this magnitude takes you back to the beginning of 2017. While losing just 3-years of growth may not seem that bad, assuming you need 6% a year to reach your retirement goal, you will need almost 9-years to recover. (Remember, it takes 42.9% to rescue the 30% loss, plus you have to make up the 6% annual gains you needed, but didn’t accrue, during each year of recovering the previous damage.)

However, a 30% correction has not yet reset valuations back to levels which typically denote the end of a “bear market cycle.” Assuming a 30% decline from current levels would value the market at roughly 26x earnings. That is still a good bit from the 15x level we discussed.

40% Correction

Okay, this is starting to get ugly. A 40% decline takes the market back to 2014 levels and has now wiped out 6-years of your gains. While a 40% decline requires a 66.7% recovery to breakeven (10 years at 6%,) the lost accrual years are going to make it very difficult to meet retirement goals.

At this juncture, valuations have declined to 21x. The expected bear market “mean reversion” is now in full swing.

50% Correction

I know, I know…this can’t happen. (It just happened twice the century already.)

A drop of this magnitude will reset the market back to the market highs of 2000 and 2007. For individuals who were close to retirement in 2000, their portfolio, on an inflation-adjusted basis, will have been completely reset.

At this point, retiring is no longer an option for most. However, the good news, if you want to call it that, is the market is now trading at 18x earnings and beginning to align with expected bear market cycle lows.

60% Correction

Given the amount of debt, leverage, and overvaluation in the markets currently, a 60% correction is not entirely out of the question. Corrections of such a magnitude would reset portfolios back to 1999 levels. The devastation is more than investors can currently imagine, and retirement goals would disappear entirely.

However, market valuations have now retraced back to 15x earnings. Such a level is consistent with the beginning of a long-term secular bull market cycle where forward returns rise significantly for investors.

Lost And Found

There is a sizable contingent of investors, and advisors, today who have never been through a real bear market(No, March was not it) After a decade long bull-market cycle, fueled by Central Bank liquidity, it is understandable why mainstream analysis believed the markets could only go higher. What was always a concern to us was the rather cavalier attitude they took about the risk.

“Sure, a correction will eventually come, but that is just part of the deal.”

What gets lost during bull cycles, and is always found in the most brutal of fashions, is the devastation caused to financial wealth during a “mean reversion” process.

Such is the story told by the S&P 500 inflation-adjusted total return index. The chart shows all of the measurement lines for all the previous bull and bear markets. It also denotes the number of years required to get back to even.

What you should notice is that in many cases, bear markets wiped out substantially all of the previous bull market advances.

Many signs are suggesting the current Wycoff cycle has entered into its fourth, and final stage. 

Bear market cycles rarely end in a month. While there is a lot of “hope” the Fed’s flood of liquidity can arrest the market decline, there is still a tremendous amount of economic damage to contend with over the months to come.

In the end, it does not matter IF you are “bullish” or “bearish.” What matters, in terms of achieving long-term investment success, is not necessarily being “right” during the first half of the cycle, but by not being “wrong” during the second half.

None of this will happen, you say?

Maybe? I certainly hope not.

But are you willing to bet your retirement on it?

via ZeroHedge News https://ift.tt/2YmXUzq Tyler Durden

‘As Easy As Going To Starbucks’ – Dr. Birx Says In-Person Voting Safe In November

‘As Easy As Going To Starbucks’ – Dr. Birx Says In-Person Voting Safe In November

Tyler Durden

Sat, 08/22/2020 – 09:45

“If you go into Starbucks in the middle of Texas and Alabama and Mississippi that have very high case rates, then I can’t say that it would be different waiting in line in the polls,” Dr. Deborah Birx, a key member of President Trump’s coronavirus task force, told CBN News’ David Brody. 

During the interview, Birx said she’s traveled across Sun Belt states to visit as many Starbucks coffee shops as she could find, which was an attempt to see if average Americans were wearing masks and socially distancing. Her experiences at the coffee shops, in states with high COVID-19 cases and deaths, led her to believe the country is more than ready to go to polls in November. 

“Well, I can tell you it has been safe for me to go to Starbucks and pick up my order,” Birx told Brody, advising masks and social distancing measures would need to be enforced at polling stations. 

Birx, who has served under both Republican and Democratic administrations for decades, discussed several topics, including vaccines and a timetable, to return the country to normal

She expects the results of COVID-19 vaccine testing this fall, adding that “vaccines are being manufactured and that’s going well.”

There have been discussions about which Americans, likely the most vulnerable, receive the vaccine first, she said. 

“Certainly, we would want to vaccinate those that we know are at the highest risk; individuals in nursing homes, those with multiple co-morbidities, having both hypertension, diabetes and a weight issue,” she explained. “Those are individuals independent of age that we would like to see vaccinated.”

Birx said she remains focused on preparing the country for the flu season, in the coming months, advising Americans to get their flu shot this fall.

When Brody questioned the increasing concerns around vaccination will be required for future  air travel and attending sporting events, she laughed and said: 

“Well, that’s an interesting suggestion… I’m going to take that back. Thank you for making it…I hadn’t heard that. No one has asked me that question. I think that’s really a very important question.” 

The interview comes as President Trump accuses Democrats of ‘trying to steal the election’ through the facilitation of mass mail-in balloting.

“They are talking about sending 51 million ballots out to anybody who, you know, nobody knows who is going to get them,” the president told Fox News’ Sean Hannity last week. “It’s a horrible thing. It’s a fraudulent election. Everybody knows it, you don’t even have to know politics to know it.”

While Democrats push for mail-in balloting and the Trump administration assures the country that in-person voting is safe, the pre-election chaos in Washington between both political parties certainly suggests, whoever wins in November, the other political party will certainly challenge the results. 

via ZeroHedge News https://ift.tt/32dkrzL Tyler Durden

Social Distancing Sign Says: “Look Away When Passing Other People”

Social Distancing Sign Says: “Look Away When Passing Other People”

Tyler Durden

Sat, 08/22/2020 – 09:20

Authored by Paul Joseph Watson via Summit news,

A coronavirus alert sign in the United Kingdom reminding people to maintain social distancing also tells them, “Look away when passing other people.”

The sign was seen in the northern market town of Stockton-on-Tees.

It says;

“CORONAVIRUS BE ALERT – NARROW WALKWAY AHEAD. Please ensure you keep your distance, pass others quickly, look away when passing other people.”

The person who originally tweeted the image remarked, “A prime example of psychological warfare and mind control.”

Author and commentator Peter Hitchens, a vehement critic of coronavirus lockdown laws, also weighed in.

“This official tax-funded placard from Stockton-on-Tees encourages human beings to treat each other as toxic hazards,” tweeted Hitchens.

“Leaving aside the disturbing philosophical and moral implications, surely such behaviour is incompatible with anything resembling a society,” he added.

As we previously highlighted, the UK is home to some of the most draconian social distancing rules in the developed world, with one company telling staff that only 40% of them will be able to return to work in January due to a rule that dictates cars must be “socially distanced” in the parking lot.

As we document in the video below, the public’s perception of the threat of coronavirus is infinitely greater than its actual lethality.

A survey revealed in the UK for example that people on average think COVID-19 has killed 7 per cent of the population – around 5 million people.

The actual number is 41,403.

*  *  *

In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Also, I urgently need your financial support here.

via ZeroHedge News https://ift.tt/3aNTDtR Tyler Durden