Category: zerohedge

Disney delaying its parks reopening, disappointing slowdown in the improvement in jobless claims, more concerns over a second wave of COVID (directly impacting Texas and Apple), all offset by regulators easing regs on banks (and presumably hopes of no dividend cuts tonight from the bank stress tests)…

• 1000ET *BANKS GET EASIER VOLCKER RULE AND $40 BLN REPRIEVE ON SWAPS

• 1049ET *FLORIDA COVID-19 CASES RISE 4.6% VS. PREVIOUS 7-DAY AVG. 4%

• 1135ET *TEXAS GOVERNOR HALTS NEW PHASES OF REOPENING STATE’S ECONOMY

• 1140ET *ARIZONA VIRUS CASES JUMP 5.1%, ABOVE PRIOR 7-DAY AVERAGE 2.3%

• 1435ET *APPLE TO RE-CLOSE 14 MORE U.S. RETAIL STORES ON COVID-19 SPIKE

• 1510ET *CALIFORNIA HOSPITALIZATIONS NOW UP 32% OVER LAST 14 DAYS.

• 1532ET *FLORIDA‘S DESANTIS: NO PLAN TO GO TO NEXT PHASE OF OPENING NOW

• 1558ET *U.S. VIRUS CASES RISE 1.7%, BIGGEST GAIN SINCE MAY 30

After yesterday’s chaotic headlines, today was far calmer – despite similar headlines – making for one of the lowest range days of the year, until…

Source: Bloomberg

Until a huge buy program hit at 1530ET…(no news catalyst)

Source: Bloomberg

Sparking a dramatic short-squeeze…

Source: Bloomberg

Lifting everything ahead of tonight’s stress test. Four major buying moves in today’s actions but the late-day one is the most notable for its total lack of reason…TOTAL PANIC BID!!!!

Yes, small caps rallied 1.5% in the last hour of the day on nothing but bad news from a virus perspective and no news on anything else. 9th positive day in the last 10 for Nasdaq.

This seems to sum things up rather well…

The big banks all jumped nicely at the open on the Volcker Rule easings (ahead of tonight’s stress test results)…

Source: Bloomberg

Notably financials outperformed (driving Small Caps) despite a flattening in the yield curve…

Source: Bloomberg

And derivatives are implying a cut next and then a flat dividend yield from banks for the next 12 months

Source: Bloomberg

Bonds were barely alive today with the long-end very marginally lower in yield…

Source: Bloomberg

The Dollar ended marginally higher, but slipped late on back into the red on the week…

Source: Bloomberg

Bitcoin traded down to $9,000 intraday before bouncing back to almost unchanged…

Source: Bloomberg

Oil prices rebounded today but WTI was unable to get back to the $40 Maginot Line…

Silver managed gains on the day but failed to reach $18…

But gold ended the day marginally lower, but appears to be coiling for a move…

And finally, sometimes you just gotta know when to fold ’em… Warren Buffett is going through “the worst patch” of his investing career, Jim Bianco, president and founder of Bianco Research LLC, wrote Wednesday in a Twitter post.

As Bloomberg notes, Bianco cited a total-return ratio, including dividends, between Buffett’s Berkshire Hathaway Inc. and the S&P 500 Index.

Source: Bloomberg

The ratio closed Tuesday at its lowest level since November 2001 after dropping 23% from this year’s high, set March 16, according to data compiled by Bloomberg. The current reading was first reached in 1995, as cited by Bianco, who wrote that “Berkshire has turned into a mediocracy” for the past 25 years.

Authored by Eddie van der Walt, macro commentator at Bloomberg

A mix of slow growth, easy money and black swans can propel gold to record highs in the second half of 2020. Lingering fears about lockdowns and scarring to the real economy should keep haven demand strong, but the metal could also rally in a risk-on environment, as the 2008 play book showed.

Comfortably the best-performing major asset in the past year, gold soared by a quarter. That put it within levels that Markets Live foresaw at the end of 2019. With a global recession arriving sooner and cutting deeper than expected, $2,000/oz is the next target.

While central bank policies aimed at supporting employment are likely to keep equities from collapsing, the prescription is as good as a steroid for gold. Money printed by the trillion feeds the narrative of faster future inflation and keeps investors coming back to the metal, which tends to do well when real rates are low.

Having completed a rounded-bottom formation after a triple top in the first half of the last decade, gold rallied more than 40% since this Macro View column in late 2018 predicted gains would follow a short-squeeze.

The years after 2008 offer a precedent for the current climate. Back then, policy makers were also aggressively applying unconventional monetary policy to boost growth. That meant gold became positively correlated with risk assets, with bad news triggering further rounds of quantitative easing which propelled both gold and stocks.

Such momentum could become self-perpetuating for gold, a Veblen good with high autocorrelation. As prices go up, more is written about it, and more money flows in. Regressing price moves against those a year earlier shows an R of 0.4 since 1990, higher than the same measure for the S&P 500 or commodities like oil and copper.

Consumers of gold products have been largely absent in the first half, due to post-Lunar New Year lockdowns and higher prices. High premiums for physical metal and dislocations between New York and London prices were seen after refineries shut down along with most other industries. Pent-up demand may emerge as Diwali approaches in India.

Besides, investor flows in ETFs and futures are more important price drivers. After a brief overshoot early in 2019, gold’s speculative overhang retreated from almost 50% to below 30%, measured by Comex managed-money net-long positioning as a share of open interest, leaving room to rebuild. The appetite in exchange-traded funds remains insatiable.

The primary risk to this view would be a V-shaped economic rebound strong enough to result in aggressive reductions in central bank stimulus. The latter may come if runaway inflation emerges, but seems unlikely to transpire in a meaningful way before year-end. For now, policy makers are likely to remain dovish, and thus indirectly supportive of gold.

The dollar is bullion’s biggest driver on a tick-by-tick basis. Regression analysis shows about a quarter of weekly price moves since 2001 could be accounted for by the trade-weighted dollar, which might suggest a stronger U.S. currency is a risk.

Yet, during periods of acute stress, gold’s relationship to the greenback flips and both become haven assets. The inverse correlation between the two broke down during, or immediately after, every recession since 1981.

Central banks are also likely to remain a backstop as buyers of physical metal during periods of weakness. While Russia and China are no longer reliable buyers, the official sector bought nearly 6 million ounces of metal through April according to IMF data. That’s the biggest increase in total holdings at that point of the year since 2013. If prices keep rising, demand in this corner may dry up.

Supply is not a threat, given gold’s nearly perfectly inelastic supply curve. Shares of junior miners, a high-beta play on gold, rallied 38%in the past year. But any new capex won’t bear fruit for years to come and recycling only matters at the margin.

These factors should help gold break long-term resistance at $1,800. CTAs could give it momentum to test 2011’s record highs and make a price range of $1,900 to $2,000 realistic by year-end.

Now that the Fed’s release of POMO is more of a periodic affair than every Friday, moments ago the NY Fed published its latest POMO schedule for both Treasurys and MBS, covering the period June 26 – July 13.

In line with the recent Fed disclosure that the central bank will purchase about $80 billion in Treasurys monthly, the latest schedule shows an average daily purchase of about $4.5 billion, or $40.2 billion spread over 9 days; for MBS the average daily is nearly identical, at $4.6 billion daily, or $45.6BN spread over 10 days.

Here is the latest summary of Treasury POMOS. Of note: the biggest POMOs will take place on July 6 and June 26, when the Fed will monetize $12.825BN and $8.825BN worth of US debt.

The Agency MBS can be found at the following link.

The visual summary of all TSY/MBS POMO since the start of QE Unlimited on March 13 is shown below.

Yesterday we showed that according to Goldman calculations, the prevalence of coronavirus symptoms is rising, with the share of patients seeking care with symptoms of Covid-like illness at 3.5%, up 0.4% from 2 weeks ago. Daily confirmed have risen steadily over the past several days to 86 per million, ending a 2-month decline, and clearly spooking the market. A big part of this is due to increased testing: indeed, the volume of daily coronavirus tests has risen 23% over the last two weeks, while the positive test rate has risen by 1.3pp to 6.2%. On the flipside, fatalities have declined over the last two weeks (-12% to 1.9 per million), although fatalities lag new cases by multiple weeks.

Today, in an update to its tracker, the bank writes that as a result of diminishing available hospital capacity, some states will be forced to reconsider their reopening plans. According to Goldman, a decline in hospital capacity below 20% could pressure states to consider slowing or reversing reopening. In this context, according to the latest CDC data, Alabama and Maryland currently have 23% of ICU beds available (with Covid patients accounting for 7% and 13% of occupancy respectively), and Arizona has 25% available (with Covid patients accounting for 11%).

The bank also notes that the COVID-19 patient share of total occupancy has risen steadily to 14% in Arizona, accounting for most of the increase in total occupancy this month. In Texas and Florida, new cases have risen sharply, but the COVID-19 share of hospital occupancy has only edged up. Hospitalizations lag other indicators such as symptoms and new confirmed cases.

Just several weeks into reopening in these states, Goldman predicts that “it would take relatively small increases in COVID-19 patient occupancy to take total occupancy to very high levels.” The bank also notes that while in New York and New Jersey at the peak outbreak in April, COVID-19 patients occupied nearly 45% of hospital capacity, total occupancy reached only about 75% as bans on elective procedures and state lockdown measures resulted in more patients hospitalized for COVID-19 than for other reasons. Today, in Arizona, Florida, and Texas non-COVID-19 occupancy is much higher, leaving less spare capacity the bank cautions.

Available hospital capacity is not just tied to the spread of the coronavirus in a state, though. States with less capacity per capita should see higher occupancy rates in an outbreak. As a result, some of the states not meeting federal guidance to proceed with reopening (at least 30% available capacity) have below-average capacity per capita.

Regional data could also pressure states or cities to modify their phased reopening policies. For example, available hospital capacity in Houston, Texas is 8pp lower than the already-low state average.

Finally, as a result of the rising virus spread in some states, Goldman’s Blake Taylor calculates that the estimated effective reproductive number (Rt), which measures the change in growth in new confirmed cases adjusted for testing volume, has risen back above 1.0 on a population-weighted basis, indicating an acceleration in case growth nationwide.

Why is all of this important? This is what we said yesterday:

Whether one believes the official virus data or is willing to dismiss it as a “plandemic”, is irrelevant for two reasons: i) markets still respond to every incremental headline, fully aware that it will shape fiscal and monetary policy especially with various Fed speakers warning yesterday that a second wave would lead to even more Fed intervention, and ii) the global coronavirus pandemic stopped being about epidemiology long ago and has since become a political weapon to be used at will by those with a certain agenda. It’s also why various states will be eager to use whatever data is published to pursue their political intentions, which according to many involve a new round of shutdowns some time in the late summer and in any case, ahead of the elections to encourage another economic meltdown and further crippling Trump’s re-election changes despite the administration’s solemn vows that a “second wave” shut down is not coming.

And while there is some time before the elections and anything can still happen, the ongoing jump in new cases is just what the Fed will need to trigger even more aggressive monetary stimulus in the coming months, which will have a profound impact on risk assets, and may explain why most banks are rather eager for the worst case outcome, if only from a pandemic standpoint.

Via Mass Private I blog,

Travel publications around the world have referred to the Hawaiian islands as “paradise on earth.” But a much darker and more disturbing trend that was once relegated to the continental United States has taken Hawaii by storm.

Much has been written about Nextdoor’s “Karen” problems of reporting on people of color, and now as AP News reports, “volunteer” Hawaiians are turning suspected quarantine rule breakers in to the police.

A former reporter named Angela Keen and her Facebook group of snitches spy on vacationers’ social media pages looking for incriminating pictures.

When members of her Facebook group spot tourists posting about their beach trips on social media, Keen zeroes in on photos for clues like license plate numbers she can run down and distinctive furnishings she can match up with vacation rental listings.

Her group of “volunteer” snitches has spread across the Hawaiian islands, leading to the arrests of 35 vacationers so far.

So far, volunteer sleuths with her group Hawaii Quarantine Kapu Breakers — kapu can mean rules in Hawaiian — has helped find about 13 people on Oahu and 22 people on the Big Island who were later arrested by police, Keen said. Members on other islands assisted with other cases that led to arrests, she said. (To see a depressing 90 minute video of what Angela Keen’s group has done click here.)

Keen claims her group of “sleuths” is told not to approach potential violators and not to profile people because they look like outsiders. Which is misleading on numerous levels.

For a place that bills itself as a vacationers paradise with hotels, restaurants, sightseeing tours and car, boat and helicopter rentals, it would be extremely easy for “volunteers” to identify vacationers.

Imagine going to Hawaii for a vacation and being arrested because a group of “volunteers” sent your pictures, license plate information and whatever else they could find about you and your family to the police.

The group also tracked down visitors who had rented a Mustang through a company that loans out private owners’ vehicles. When arriving at the airport, they listed the car owner’s address as where they would spend quarantine, but the group found them at a short-term vacation rental in Waikiki.

I know some of you will say this great, if people ignore the 14-day quarantine why shouldn’t “volunteers” report them. But looking at the bigger picture reveals a much more disturbing issue.

For one thing police can use Keen’s group of volunteers and other groups across the country to do things they could not normally do without a warrant. (I’m looking at you Nextdoor.)

In the continental U.S. bars and restaurants are allowed to reopen only if they agree to snitch on customers.

The Department of Homeland Security and the city of New Orleans are creating a “new normal” by forcing bars and restaurants to collect customers personal information.

“We know everyone is eager to reopen. It’s not going back to normal; it’s what we’re calling ‘the new normal.’ It will be the data and not the date that drives not only the decision but the phased approach to reopen the City of New Orleans. Today, we are outlining what those guidelines will be for the City,” said Mayor Latoya Cantrell.

Law enforcement is using bars and restaurants to record detailed lists of customers’ private information. And now in Hawaii, police are encouraging a volunteer group to monitor vacation rentals, record vacationers comings and goings, record their rental vehicle license plates and look into their social media accounts.

Remember in Hawaii and elsewhere “volunteers” or private citizens are giving police all the information they have collected, providing a loophole for police so they cannot be sued. It also has an added benefit of not being discoverable, meaning police do not have to disclose how they got the information.

Combine all of this and it it becomes painfully obvious that police can use these groups to circumvent our Bill of Rights.

When a police spokeswoman attempts to justify “voluntarily” spying on vacationers everyone should take notice.

“As a small community here in Hawaii, it takes everybody to be able to keep everybody safe,” she said. “You know, some people say, ‘Oh, you’re snitching on people,’ but that’s not how you see it. It’s seen it as the fact that you want to keep the community safe,” Lt. Audra Sellers, a Maui police spokeswoman said.

Being an island community still does not justify snitching on neighbors as a way to keep the community safe. And it certainly is not a justification for doing an end-run around the Constitution.

Does a pandemic automatically make it OK for police to use volunteers to surveil people of color or monitor vacationers without a warrant?

I for one do not want to see a group of “Karens” turn Hawaii into a mirror-image of mainland America.

Aside from a new NHTSA investigation into its Model S touchscreens, a litany of Model Y quality issues and a report out yesterday that Tesla may have knowingly allowed Model S vehicles to roll off its production line with a flaw that could cause them to go up in flames, it’s been an otherwise tame week for Tesla.

Oh, wait. There is just one other thing: J.D. Power finally included Tesla in its Initial Quality Survey for 2020 and the brand scored an abysmal 250, placing it below literally dozens of other manufacturers, including names like Land Rover and Audi, in terms of reliability.

The survey has been put out annually for the last 34 years and works by asking buyers of new cars of the current model year what problems they have had within the first 90 days of owning a vehicle. The score is based on the number of problems experienced within those 90 days per 100 vehicles. 

One feather in the cap for Tesla is that they can’t technically be ranked last out of all brands because it won’t allow J.D. Power to survey its customers in 15 states where OEM permission is required, according to ARS Technica. 

But that didn’t stop J.D. Power from going on record about how accurate they thought their findings were. Doug Betts, president of the automotive division at J.D. Power, said:  “However, we were able to collect a large enough sample of surveys from owners in the other 35 states and, from that base, we calculated Tesla’s score.”

The survey asks 223 questions that are split into nine categories, including “infotainment, features, controls and displays, exterior, interior, powertrain, seats, driving experience, climate, and even driving assistance.”

Infotainment was the worst scoring category on the survey this year, as people experienced issues with their voice recognition, Bluetooth, GPS and Android/iOS pairing capabilities. Recall, just yesterday, the NHTSA launched a preliminary evaluation into Tesla’s touchscreens on its Model S vehicles. 

Authored by Steve Watson via Summit News,

Analysis carried out by the Pew Research Center has revealed that just one in six protesters turning out at BLM demonstrations in the US are actually black.

The research notes that the plurality of those present at the gatherings have been white people.

The full breakdown reveals that just 17 percent of protesters were black, while 46 percent were white.

A further 22 percent were Hispanic, with eight percent being Asian, the analysis highlights.

Perhaps even more telling is the demographic breakdown in terms of political affiliation.

Almost four out of every five “protesters” identified as Democrats or Democrat-leaning, with fewer than 17 percent identifying as Republicans.

The findings dovetail with comments made by BET Founder Robert Johnson yesterday, who noted that most black Americans “laugh” at white people attempting to bring down monuments and cancel everything they deem to be “racist”.

Johnson said that white people “have the mistaken assumption that black people are sitting around cheering for them saying ‘Oh, my God, look at these white people. They’re doing something so important to us. They’re taking down the statue of a Civil War general who fought for the South.”

“You know, black people, in my opinion, black people laugh at white people who do this the same way we laugh at white people who say we got to take off the TV shows.” Johnson said in an interview with Fox News.

“Look, the people who are basically tearing down statues, trying to make a statement are basically borderline anarchists, the way I look at it,” he continued, adding “They really have no agenda other than the idea we’re going to topple a statue.”

“It’s not going to give a kid whose parents can’t afford college money to go to college. It’s not going to close the labor gap between what white workers are paid and what black workers are paid. And it’s not going to take people off welfare or food stamps.” Johnson urged.

“It’s “tantamount to rearranging the deck chairs on a racial titanic. It absolutely means nothing.” Johnson asserted.

At a time when the Trump administration continually promotes a V-shaped economic recovery from the coronavirus pandemic, a new UCLA Anderson Forecast has revised its economic forecast down, with no recovery this year or next. 

UCLA Anderson Forecast senior economist David Shulman writes in its second quarterly forecast of 2020, that the virus pandemic has “morphed into a Depression-like crisis” with no V-shaped recovery until 2023. 

“To call this crisis a recession is a misnomer. We are forecasting a 42% annual rate of decline in real GDP for the current quarter, followed by a ‘Nike swoosh’ recovery that won’t return the level of output to the prior fourth quarter of 2019 peak until early 2023,” Shulman writes in a report titled “The Post-COVID Economy.”

“On a fourth-quarter-to-fourth-quarter basis, real GDP will decline by 8.6% in 2020 and then increase by 5.3% and 4.9% in 2021 and 2022, respectively,” he notes.

Shulman says the labor market might not recover until “well past 2022,” and the unemployment rate will stay stubbornly high, well over 10% through the fourth quarter of 2020. A labor recovery might not be seen for several years. 

“For too many workers, the recession will linger on well past the official end date,” he warns. 

He says the economy is in desperate need of more stimulus via the Federal Reserve and the federal government to support ailing corporate bond markets and a severely damaged consumer. 

“Simply put, despite the Paycheck Protection Program, too many small businesses will fail and millions of jobs in restaurants and personal service firms will disappear in the short run. We believe that even with the availability of a vaccine, it will take time for consumers to return to normal,” Shulman writes. 

The report says the economy has hit bottom, that doesn’t necessarily mean GDP and employment levels will immediately surge back to fourth-quarter 2019 levels, as heavily indebted companies and weak consumers will lead to sluggish economic activity. 

For more color on the recovery so far, Fathom Consulting offers a glimpse into a less than stellar rebound: 

US retail sales for restaurants have yet to bounce significantly. 

Industrial production remains at lows.  

An explosion in government debt to prop up the crashed economy.

Tens of millions of people out of work. 

High unemployment suggests a “biblical” wave of bankruptcies is about to flood the US economy.

Meanwhile, the stock market’s disconnect from reality is setting up for the next possible stock market correction. 

Corporate profits are sliding, stocks are rising. Alligator jaws… 

 

UCLA Anderson Forecast’s new downward revision of the recovery suggests the worst has yet to be seen – several more years of pain are likely ahead. 

Authored by Bruce Wilds via Advancing Time blog,

How people spend their money has more impact on the economy than most people realize. What consumers buy matters a great deal. When looking at the policies flowing out of Washington it is clear many politicians seem to have no idea that all consumer spending and purchases are not created equal. Certain purchases result in money bouncing around a community sparking future economic growth which enriches everyone. Other purchases simply give the money wings allowing it to exit not only the community but often the country.

Many economists point to the consumer as being the lynch-pin to our economy.  Given that retail sales make up roughly 40% of personal consumption expenditures which in turn comprise roughly 70% of our GDP, their impact on the economy is important. These numbers, however, only tell a small part of the story. Sadly, because of economic laziness or ignorance, this is where the link between how and where money is spent gets lost in the noise. Ironically while President Trump decries our trade deficit he seems unable to put one and one together and understand it is shortsighted consumers driving the deficit.

A detailed breakdown of how people receiving a stimulus check would provide a great deal of information about the finances of individual Americans. It would also be very interesting to randomly delve deep into the finances of a few hundred Americans and learn the truth about where we stand. By deep, I mean looking at where they get their income, debt, total obligations, savings, retirement plans, net worth, the whole caboodle. This kind of deep economic discovery has never been done to my knowledge but instead, we tend to garner our information from superficial polls.

An article by Lance Roberts that appeared on Real Investment Advice took a shot at explaining the bounce we just saw in retail sales at a time many consumers are tapped out. Robert wrote you should “never count the consumer out,” as they always find a way to go further into debt because psychologically, consumers are “trained” to “shop till they drop.” He claims that as long as individuals have a paycheck; they will spend it. Give them a tax refund; they will spend it. Issue them a credit card; they will max it out. Give them a government stimulus check; they will spend it as well. Don’t believe me, then why is consumer debt at record levels?

The fact is, consumers should take a long look at how their purchases will impact the economy over time. Robert makes the point that most consumers will spend if they have or can borrow the money. Taking this to the next level, few people realize what is registered as growth does not necessarily transfer into economic strength. This point is something that has been covered time and time again on this blog in articles such as, Healthcare Spending Wrongly Feeds Our GDP, and Economic Growth Does Not Equal Economic Strength.

The following examples highlight this matter. Just for fun imagine the money allowing for these purchases is flowing from the recent 2.3 trillion dollar CARES Act.

• Consumer one decides to put a new roof put on his home. This includes tear off and re-shingling. This labor-intense job pays a lot of local workers from those delivering and hauling away the old roof to those selling the shingles, those installing them, and even some folks at the local landfill. As a bonus, the shingles are made here in America. Putting even more ceiling on the cake is that it improves not only his property but raises values in his neighborhood enriching those living nearby.

• Consumer two uses their money as a down payment on a new Hyundai. The Hyundai Motor Company is a South Korean multinational automotive manufacturer headquartered in Seoul. Hyundai builds the vast majority of its vehicles at its plant in Ulsan, South Korea. It also operates plants all over the world with one in Mexico and a plant in Alabama. When I tried to research how likely the car was to be made here I hit a wall. One thing for certain is that it is packed full of South Korean parts and with each sale a bunch of dollars heads overseas.

• In the final example consumer three slaps, small businesses, brick and mortar retailers, and the 30 million-plus Americans recently unemployed in the face. His online purchase from Amazon of products made in China and shipped from a facility located in another state. Just like in the case of consumer two a bunch of the money heads overseas but real disaster for the community is absolutely none of the money stays there. This sets the area up for a new wave of store closings, prolonged unemployment, and declining real estate prices.

And It’s Gone!

Many of our economic problems stem from the many consumers out there making poor decisions. This includes things such as paying too much for a car they cannot afford or maintain. These automobiles generally do not last long and often get put on a hook. The least responsible consumers tend not to fulfill obligations due but to take on new debt and squander every penny they can lay their hands on. Online shopping and companies such as Amazon are like heroin to an addict when it comes to promoting spending that destroys real economic strength.

Those people that have choose to skip paying the essentials such as home mortgages and rent will most likely come to regret it as they are hit with penalties and their actions come back to haunt them. The elephant in the room when it comes to growing the economy is how “the broken window theory” is spun and interpreted. The gist of this theory is that if a hooligan breaks the window of a bakery, the subsequent repair expenditures by the baker will have no net benefits for the economy. Interestingly, it is not uncommon to see destruction touted as a good thing because it promotes spending. The idea destruction is good based on this reasoning discounts several facts.

One has to do with where the money is coming from but whether it is from an insurance company or the baker it still means the money is diverted from being used on another purchase. Repairing a broken window is maintenance spending which doesn’t improve growth because it doesn’t improve productivity; it would have occurred anyway. The only thing a broken window does is it makes the maintenance spending occur earlier, lowering the use life of the window. While maintenance spending may keep the economy going it doesn’t provide a boost. Instead, it is better to invest the money in something which creates wealth by increasing productivity.

Many people and even economists have real misconceptions as to how the economy works. Where money flows and who it enriches is a key component of economics, the failure to consider this is a blind spot many people have. After years of being told everything revolves around spending, this diminishes the important role savings plays in the scheme of a balanced economy. Fans of Keynesian economics that encourage government spending to stabilize the economy during a downturn tend to discount the importance that where and how money is spent matters a great deal.

In what is sure to elevate race tension to ’12’ (since they are already at ’11’), President Trump has responded to comments from the BLM movement’s leader earlier in the week:

Black Lives Matter leader states, “If U.S. doesn’t give us what we want, then we will burn down this system and replace it”. This is Treason, Sedition, Insurrection!

— Donald J. Trump (@realDonaldTrump) June 25, 2020

Trump’s comment follow comments by Hawk Newsome – who chairs Black Lives Matter of Greater New York  argued that because violence and rioting appeared to be getting the point across more effectively, those efforts were justifiable.

A tense exchange with Fox’s Martha MacCallum  lays out the details (and likely triggered Trump):

MacCallum began by quoting Newsome as saying that he wanted to “shove legislation down people’s throats,” and then asked him, “What exactly is it that you hope to achieve through violence?”

Newsome responded by claiming that the United States had been “built upon violence,” citing the American Revolution and arguing that American diplomacy largely consisted of blowing up other countries and replacing their leaders with leaders we liked better.

MacCallum responded: “The only reason I posed that first question to you the way that I did, I watched you talking on a bunch of different interviews today and you said, ‘Burn it down.’ You said it, ‘Burn it down, it’s time.’ So that makes me think that you want to burn it down.”

“If this country doesn’t give us what we want then we will burn down the system and replace it,” Newsome replied. “And I could be speaking figuratively, I could be speaking literally. It’s a matter of interpretation.”

This came on the heels of comments from another BLM co-founder earlier in the week. As we detailed earlier in the week, while massive protests continue to rage across the country (and beyond) in the name of George Floyd, Black Lives Matter co-founder Patrisse Cullors admitted during a Friday night interview with CNN that “our goal is to get Trump out.”

Cullors, who described BLM organizers in 2015 as “trained Marxists,” compared Trump to Hitler after refusing to meet with him, and referred to Immigration and Customs Enforcement (ICE) as the Gestapo, told CNN‘s Jake Tapper (via Breitbart‘s Josh Caplan):

JAKE TAPPER: I’ve heard a lot of criticism of former Vice President Joe Biden from civil rights activists. The election, obviously, will be a choice. How do you think Biden matches up compared to President Trump when it comes to these issues that are important to you?

PATRISSE CULLORS: Trump not only needs to not be in office in November but he should resign now. Trump needs to be out of office. He is not fit for office. And so what we are going to push for is a move to get Trump out. While we’re also going to continue to push and pressure vice president Joe Biden around his policies and relationship to policing and criminalization. That’s going to be important. But our goal is to get Trump out.

President “Trump not only needs to not be in office in November but he should resign now,” says co-founder of the Black Lives Matter Global Network Patrisse Cullors. “Trump needs to be out of office. He is not fit for office.” pic.twitter.com/T6mLZ11cEv

— The Lead CNN (@TheLeadCNN) June 19, 2020

In 2015, Cullors said that BLM would take “any opportunity we have to shut down a Republican convention.”

Was Tucker Carlson right when he said (and was punished with an advertiser walkout from the ‘cancel’ crew at Sleeping Giants) that Black Lives Matter is now a political party?

“Black [Lives] Matter is more popular by double digits than both the Democratic and Republican parties.

It is almost as popular as the U.S. military. It is much more popular than the pope.”@TuckerCarlson warns that the Black Lives Matter movement wields significant influence. pic.twitter.com/1AhsGqHBzo

— Washington Examiner (@dcexaminer) June 16, 2020