Category: zerohedge

Authored by Daisy Luther via The Organic Prepper blog,

When will we get back to normal?

If you yearn for the days before COVID-19 swept across the planet, I regret to inform you that those days are gone.

This isn’t a warm and fuzzy blog post telling you that everything is going to be all right. If you’re looking for reassurance that “we’ve got this,” I’m afraid I can’t provide it. This article wasn’t written to console or coddle you, so if that’s what you’re seeking, you’re going to want to stop reading right now.

If, however, you want a reality check on what I believe we’re really facing, I’m not going to hold back. You’ve been warned.

We’re not even halfway through.

You may have seen some optimistic reports recently that the “worst” is behind us. It would certainly be lovely if that’s the case, but in my opinion, this ordeal is just getting started. I wrote an article previously about how long we could expect our current state of lockdown to last using the timelines of China and Italy as points of comparison, and based on that, we are 17 days in as of the writing of this article on April 8.

The lockdown of Wuhan is expected to last 77 days. If our own timeline continues to echo that of China, then we’re not even halfway there. We have at least 2 months left and this doesn’t include any new clusters when the lockdowns are totally lifted or any second waves. We’ve barely begun living in our current state of purgatory and this will continue (and most likely worsen) for quite some time.

So if you’re seeing this as a little break after which you’ll pick up with your life exactly where you left off, you’re going to be extremely disappointed. You need to adapt now because if you don’t, the future is going to be very hard on you mentally.

Use this time to think about the changes you can make to meet the needs of your family. Learn new skills, practice old ones, and get your head in the game.

The supply chain may never be the same.

Nearly every store in America (the ones that are still open, anyway) has glaring bare spots on their inventory. Who would have expected paper products to be the “gold” of our apocalypse? There was an original run on supplies back in early March when the general public realized, “Hey, this is for real!” and razed store shelves bare. Even though preppers already had most of their supplies put back by the time this happened, we were no less vilified by the media as panicked shoppers got into physical altercations over toilet paper and macaroni.

Government officials told everyone to “calm down” and “just shop for the week.” They promised that if we did, everything would be back in stock in no time. Many of us knew even then that this wasn’t true. The ports in California were empty of shipping containers from China where many of our essential goods are produced. There’s no inventory with which to replenish the inventory.

It’s been more than a month since that first shopping frenzy and unfortunately, supplies are still limited in most parts of the country. A reasonably-sized package of toilet paper can’t be had for love or money, nor can one easily locate cleaning wipes, paper towels, 20-pound bags of rice, and bottles of bleach. Other supplies are available, but sparsely and often in limited quantities: meat, eggs, butter, dried goods like pasta and rice, and canned goods. Prices have approximately doubled on many items.

Don’t expect this to clear up any time soon. Abundant inventory may well be a thing of the past. Many of the products sold in American stores are made in China. Even much of our meat that is a “product of the USA” is processed in China. Obviously, China is going to replenish its own inventory before exporting goods to us. Here’s a list of goods that we import from China that we may not be receiving in the same quantities in the future.

As well, the days of just “running to the store” to replace things or pick up a single ingredient are gone. Now, in many parts of the country, you have to walk through a cordoned off maze to enter a Walmart or Costco store. Only a certain number of people can be there at a time. Shopping means you’re risking your own health if someone else is ill, or you are ill and don’t realize it, you’re risking the health of others. It’s no longer quick, easy, inexpensive, or pleasant in any way.

And the generous offerings of days gone by are disappearing. In some areas, the store may have things you want but because the government there doesn’t consider them “essential,” you won’t be allowed to buy them. Ordering online may soon be your only option for things like craft supplies, clothing, decorative items, and shoes. And even when you order online, it may take quite some time before the goods arrive. Amazon has said it is prioritizing necessities, leaving people with uncertain shipping times.

And it could get even worse. What happens if the US Postal Service stops running? A House committee has warned the USPS could actually be forced to cease operations by June. So, if you think it’s hard to get supplies now, just wait.

The rules will get more restrictive and violence will ensue.

Every state with some form of movement restriction (lockdown for lack of a better word) has its own set of rules which are handed down by the respective governors in the form of an executive order. Some states are more restrictive than others and a small handful of states have no restrictions whatsoever.

The other difference between states is the methods of enforcement. Some states have the rules on the books but do little to enforce them. Others are levying fines. One municipality in Louisiana found it amusing to announce the beginning of the curfew with the Purge siren, terrifying people who were already on edge.

Don’t expect this gentle approach to continue. While I don’t think we’ll go full-Wuhan and weld people into their apartments, our Constitutional rights are already being trampled in numerous ways.

Texas and Florida have checkpoints where they’re testing travelers for health problems, escorting them to quarantine, or turning them away. Rhode Island police went so far as to go door-to-door with the National Guard, searching for “New Yorkers” who had fled the virus in their home state.

Most states have closed non-essential businesses and schools for the foreseeable future. Local authorities are beginning to crack down on groups of people and innocent Americans risk being questioned when they leave their homes to walk the dog or go to the store. Last week, thousands of Americans considered essential workers were given “travel papers” to show the authorities if they’re stopped when they are going to work. Travel papers. In the United States of America.

If you can’t satisfy the requirements laid out by your state or local government, you could face fines and even misdemeanor charges for breaking stay-at-home orders. (source)

Expect as the rules and enforcement efforts become more stringent for people to balk. As the money being dished out by the government dwindles to a trickle and as promises made by the government get broken, people will become more and more desperate.

Imagine. Your ability to make a living was suddenly taken away through no fault of your own. You’re all but under house arrest. Your government is threatening you with fines, incarceration, and even possible violence. Your family is hungry and you have nothing to feed them. What would you do in that situation?

There’s virtually no way this continues without violence ensuing, either out of rebellion or hunger or possibly both. Fewer and fewer police officers are available to respond as more of them get diagnosed with COVID-19. In New York City, nearly ten thousand first responders are ill. When you put all this together, it’s a recipe for violent crime.

The economy will be devastated.

We’re already watching our economy get destroyed right in front of our eyes. Never in history – including the Great Depression – have so many Americans been unemployed. And the fact that they all became unemployed at once is even worse. By the end of March, 7.1 million people had filed for unemployment due to COVID-19.

Many of the people who lost their jobs are the ones who are least able to afford it – hourly workers. Those who work at or around minimum wage are less likely to have a savings account to see them through the rough spot.

Then there’s the fact that the government appears to have lied. Others who became unemployed were initially told they qualified, but now the application process is proving impossible. Gig workers, such as drivers for Uber, Lyft, and Doordash, are being asked to supply pay stubs, something they just don’t have. It just isn’t how it works.

Those who have applied are waiting weeks to hear back from state unemployment programs. Their applications will likely be rejected, leaving them without any income for an indefinite amount of time. The advice for these workers?

A spokesperson for the New York State Department of Labor says the guidance requires workers who are not usually eligible for unemployment benefits to apply to state programs, get rejected, and then apply again for the federally funded pandemic assistance. (source)

So for all the big talk about making unemployment easy to get and simple to apply for, it isn’t working out that way at all for many people.

And of course, the economic issues are bigger than that. Small businesses are in big trouble. Those who are not able to find a way to operate during these difficult times still have overhead and bills. They have rent and utilities for their place of business. Many have inventory payments that were due net-30.  Restaurants that can’t make the conversion to takeout and delivery, fitness studios, gyms, clothing stores, and many more independent businesses may never reopen after the government-imposed hiatus.

One by one, families across America are looking at disappearing income, higher prices, and with shelter-in-place orders nearly everywhere, no real way to seek new employment. Unemployment, if and when it comes, is only a short term solution. If ever there as a chance to usher in Universal Basic Income and see people welcome it with open arms, this crisis would be it. Of course, UBI brings with it many problems, not the least of which is a lord-and-serf relationship and a slippery slope toward the social credit system, also brought to us by China just like the COVID-19 outbreak.

Right now we’re looking at short-term effects, but we will feel the effects of this situation for a very long time. In fact, it’s likely to change the economy forever.

As the economy continues to plummet because people are only purchasing the bare necessities, we’ll see other issues arise. How will you pay your rent or mortgage if your job qualifications are in a field that is now considered a luxury? How will you keep your utilities on when you’re not making any money? How will you feed your family, keep a roof over your head, pay for medical care, and maintain a vehicle?

If you’ve never been through personal financial hardship before, you could be in for a terrible reality check when the cost of your most basic essentials is out of reach. But many of us have been there. We can tell you that it often makes you feel powerless – it’s difficult and humiliating, but you can get through it.

If you’re a business owner, how will you keep operating if you have no working capital? How can you hire people if you don’t know whether you’ll be able to keep them on board for more than a couple of pay periods? How can you buy more inventory and can you even acquire that inventory anymore?  Will you be able to get the parts you need to repair items if you run a repair service business?

As you can see, there are more questions than answers. (source)

We’re just at the beginning of this bumpy ride, and there’s really no place that it leads except to an economic depression even worse than the one that took place in the 1920s.

We’ll never “get back to normal.”

For all the people wondering when we’re going to get back to normal, I’m very sorry to say, the answer to that is “never.”

There are jobs lost that are never coming back. Businesses that were successful may never reopen, and if they do, unless they can pivot to cater to necessities, they won’t last long in an economy with widespread unemployment.

And medically speaking, we are a long way from “normal” too.

Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, told a coronavirus press briefing on Monday that the world may never return to the “normal” that was known before the outbreak.

…”When we get back to normal, we will go back to the point where we can function as a society,” he said.  He continued, “If you want to get back to pre-coronavirus, that might not ever happen in the sense that the threat is there.” (source)

What’s more, the virus will be back for another wave.

Fauci said Sunday that people must be prepared for a resurgence next year, which is why officials fighting the pandemic are pushing for a vaccine and clinical trials for therapeutic interventions so “we will have interventions that we did not have” when this started. (source)

We could be looking at on and off periods of social distancing for eighteen months to two years before this is over. Here’s what the models suggest:

Under this model, the researchers conclude, social distancing and school closures would need to be in force some two-thirds of the time—roughly two months on and one month off—until a vaccine is available, which will take at least 18 months (if it works at all). They note that the results are “qualitatively similar for the US.”

Eighteen months!? Surely there must be other solutions. Why not just build more ICUs and treat more people at once, for example?

Well, in the researchers’ model, that didn’t solve the problem. Without social distancing of the whole population, they found, even the best mitigation strategy—which means isolation or quarantine of the sick, the old, and those who have been exposed, plus school closures—would still lead to a surge of critically ill people eight times bigger than the US or UK system can cope with…

…How about imposing restrictions for just one batch of five months or so? No good—once measures are lifted, the pandemic breaks out all over again, only this time it’s in winter, the worst time for overstretched health-care systems.

And what if we decided to be brutal: set the threshold number of ICU admissions for triggering social distancing much higher, accepting that many more patients would die? Turns out it makes little difference. Even in the least restrictive of the Imperial College scenarios, we’re shut in more than half the time.

This isn’t a temporary disruption. It’s the start of a completely different way of life. (source)

For the foreseeable future, it appears that this is our life.

What will the future look like?

At this point, it’s pretty difficult to imagine what a future filled with waves of a pandemic virus, a devastated economy, and great loss will look like.

But some of the things we can expect are intermittent periods of social distancing, periods of interaction. Businesses like restaurants, movie theaters, bars, malls, travel experiences, and sports venues will never be the same and if they survive, will only be able to operate intermittently.

Homeschooling will be a long-term thing – children will not be able to be in a regular school setting during outbreaks.

We’re going to be looking at an entirely different world, one full of six-foot distances, immunity passports, and dystopian tracking methods using our phones.

One particularly unsettling possibility is a picture is painted by Technology Review.

We don’t know exactly what this new future looks like, of course. But one can imagine a world in which, to get on a flight, perhaps you’ll have to be signed up to a service that tracks your movements via your phone. The airline wouldn’t be able to see where you’d gone, but it would get an alert if you’d been close to known infected people or disease hot spots. There’d be similar requirements at the entrance to large venues, government buildings, or public transport hubs. There would be temperature scanners everywhere, and your workplace might demand you wear a monitor that tracks your temperature or other vital signs. Where nightclubs ask for proof of age, in future they might ask for proof of immunity—an identity card or some kind of digital verification via your phone, showing you’ve already recovered from or been vaccinated against the latest virus strains.

We’ll adapt to and accept such measures, much as we’ve adapted to increasingly stringent airport security screenings in the wake of terrorist attacks. The intrusive surveillance will be considered a small price to pay for the basic freedom to be with other people.

As usual, however, the true cost will be borne by the poorest and weakest. People with less access to health care, or who live in more disease-prone areas, will now also be more frequently shut out of places and opportunities open to everyone else. Gig workers—from drivers to plumbers to freelance yoga instructors—will see their jobs become even more precarious. (source)

Never let a good crisis go to waste, right?

This is necessarily how it’s going to happen – it’s only one possible scenario of the many unpalatable futures that are currently emerging. None of them are scenarios that embrace freedom or the joy of anonymity.

The life we knew is not coming back. But it’s better to know this and begin to think about how to mitigate these changes. Think about how you can earn a living, how you can teach your children about freedom in an unfree world, and how you can resist being a figure on a screen, constantly monitored for a spike in temperature.

And who knows? Maybe Americans will return to their independent ways and say, “No more.”  But the changes that took place after 9/11 suggest otherwise. Unless a fearful populace can be convinced that freedom is more important than safety, this will lead to more restrictions and some kind of Pandemic Patriot Act 2.0.

We don’t know what’s coming, but it will be different.

Facing uncertainty is always difficult. But by focusing on the things you can do, it can be managed.

I can’t tell you exactly what the future holds. But I can tell you that the lives we lived prior to COVID-19 are not going to re-emerge like nothing ever happened. And every day the lockdowns continue lessens the possibility of that even more.

You need to accept that now so you can best figure out how to navigate the post-COVID world that awaits. This doesn’t mean you’ll never be able to be happy again. It doesn’t mean you’ll lose everything. It means that things are going to be different and if you don’t accept that, your acclimation period will be dangerously long. As Selco always says, the sooner you understand the new rules, the better off you’ll be.

Things will be different.

We will adjust. We will adapt. We will survive.

With America’s small and medium businesses suffering from cardiac arrest now that the economy is in a indefinite coma, it is hardly a surprise that the largest US bank, JPMorgan Chase has been inundated with more than 375,000 requests for $40bn of loans under the $350bn small business rescue scheme, a higher number of applications than any other bank, its consumer head Gordon Smith told President Donald Trump on Tuesday.

It is in this context that the FT reports that Chase has temporarily stopped accepting applications for small business loans outside the government’s Paycheck Protection Program. A Chase spokeswoman told the FT that the bank was now devoting all of its small business underwriting resources to processing these applications and had “temporarily suspended” taking other applications from small businesses. The bank was continuing to process non-PPP applications already in train, she said, and would revisit the issue of new applications next week.

This means that any small business that have borrowing needs beyond the PPP’s limits, or if they want to borrow for purposes beyond wage bills, they would need to seek other facilities or other lenders.

Ok fine, JPM is so busy trying to bail out mom and pop shops, it doesn’t have time to deal with anyone else. Why is that a story? Here’s why.

First of all, even before the Treasury announced it would hand out PPP loans to eligible business, the issuance of commercial and industrial loans exploded, and in the past month, soared by nearly $400 billion, the fastest increase on record.

There is a good reason for this surge, and it has to do not only with a surge in demand but also supply – after all such loans are some of the highest margin products US commercial banks offer, in fact one can argue that it is not prop trading or frontrunning the Fed, but issuing loans that is the primary business of – you know – commercial banks!

Furthermore, loans are not only extremely profitable over their lifetime, they are also secured by assets, effectively eliminating downside risk for the bank lender. Said otherwise, of all bank products, these are the ones US commercial banks want to flow no matter what. One final point: bank lending is the most scalable, as it involves a minimum amount of upfront work which creates an extremely lucrative revenue stream since traditionally only a tiny percentage of loans default, at which point the bank’s loan workout teams kick in.

Unless… that’s no longer the case.

Which brings us to what is the much more likely reason why the largest US commercial bank has decided to suddenly no longer participate in the one product that is the bread and butter of large US commercial banks.

As a reminder, there is one way that PPP loans are unique – they are guaranteed by the Treasury, which means that JPMorgan carries absolutely no risk when it issues the loan. Worst case, the loan defaults and the bank issues a refund request to Uncle Sam who makes JPM whole. Simple enough.

But all those other loans that flooded the system, see they don’t have a government guarantee. And even though they would normally pay generous interest over the lifetime of the loan, that is not the case if JPMorgan’s default assumptions have soared alongside the surge in new issuance.

Said otherwise, the only reason why JPMorgan would “temporarily suspend” all non-government backstopped loans such as PPP, is if the bank expects a default tsunami to hit. And it would expect that if JPM’s risk managers have recalibrated their default assumption models and now see a wave of corporate bankruptcies hitting. After all, why issue loans that will default in months if not weeks, when JPM can stick to the 100% risk free issuance of government-guaranteed small-business loans, especially if it makes JPM look patriotic by doing its duty to bail out America.

If indeed it is the case that JPMorgan is quietly stepping away from the non-government backstopped lender market, expect one after another bank to do the same, and other big and not so big US banks such as BofA, Citi, and Wells Fargo to follow just as quietly in JPM’s footsteps and halt loans to all small business across America due to fears of a default tsunami.

And if that indeed happens, and if America is about to be flooded with thousands if not millions of corporate bankruptcies, what happens then? Will the Fed expand its functions to become “bankruptcy court of last resort” for all of America and offer unconditional DIP loans to millions of small and medium businesses, while equitizing their existing lenders?

And since this is unlikely, inquiring minds want to know just how bad will the US depression get over the next few months if JPMorgan has just battened the hatches and has put up a “closed indefinitely” sign on its window.

Authored by Darren Smith via JonathanTurley.org,

I have to wonder if our state government’s lockdown of the population, curtailment of civil liberties, destruction of job opportunities, and denial of basic medical, education, and cultural needs would have been necessary and legally justified had each of us been equipped with our own supply of masks.

At the beginning of the self-declared State of Emergency, Washington Governor Jay Inslee declared, among many other restrictions, that access to basic medical services, such as routine doctor visits, dental procedures, diagnostic services were to be prohibited, ostensibly on the fact that masks should be diverted from these services and conserved to supply hospitals and critical care centers that were lacking in preparedness and woefully out of stock. He further reiterated that because the public will spread corona virus, we were ordered to self-quarantine, resulting in tens of thousands of job losses, an upset in daily life and the general loss of liberty.

Before the next virus crises hits, I propose we adopt a new symbol of American Freedom and Liberty–The N95 Mask–and shield ourselves from the next outbreak of panic legislation and overreach by executive and administrative power

Washingtonians, can debate whether or not the actions of our state government was reasonable or necessary, but the fact is that what is happening here provides a strong lesson in what life is like when freedom is taken away, and of the great importance of preventing a similar environment. It was not the corona virus that led to this, the upheaval was the result of mandates forced upon us by politicians and agency bureaucrats. Surely COVID-19 was the impetus, but government proclamations were the instrument. And that instrument can be wielded in the future regardless if there is an actual threat or enemy if we do not learn how to restrain government overreach.

We are told that we cannot hunt for food, attend funerals for those who are not of our immediate family, attend church, peacefully assemble, purchase clothing, work in some of our chosen occupations, visit public parks and forests, visit our dentist or doctor for needed but not emergency health care, travel outside our areas of residence, and in other states be outside our homes past 9:00 p.m. If we do so we are subject to arbitrary restrictions under threat of arrest. Presumably this was partially due to shortages of masks and the transmission potential of viruses. Health care workers are permitted to attend to COVID-19 patients, is there any reason we cannot live a lifestyle of our own choosing if we all instead simply adorned ourselves with N95 masks when in the public arena or at work?

I find it difficult to believe that the Courts here would not frown upon the governor and state agencies claiming a legitimate state interest in curtailing liberty as we have seen recently had each of us had the universal ability to wear masks and go about our lives as we did previously. Had hospitals not failed to adequately stock their warehouses with PPE supplies such as masks and other sundries and not relied on the economics of “Just in Time” supply chain strategies the state could not fully justify the mandate for dental offices and basic health care providers to cut services on the rubric of masks being in short supply. How could the state also justify restricting the public’s right to assemble in public, keep their shops open, or engage in their chosen profession when we each have masks that would make transmission of disease negligible? The Courts do not view the power of government to restrain freedom during an emergency as absolute.

Rather than punishing society and coercing us under penalty of arrest through proclamations of emergency, we should instead demand that we be accomodated to protect our liberty by allowing us or giving each household a supply of protective masks and gloves.

We might actually save more lives than we are by treating the symptoms of disease at the expense of jobs and freedom.

Perhaps we should go from politicians promising a chicken in every pot, to a box of N95 masks in every medicine cabinet. It would actually be much cheaper in the end than wrecking our economy and our livelihoods.

Over the past month, the American economy has collapsed into a depression, with the most significant unemployment spike in history. Millions of people have just lost their jobs, and as we’ve been documenting, food bank networks across the country are becoming overwhelmed. 

We recently said that some food banks had seen an eightfold increase in the number of people asking for food. The National Guard has been deployed to food banks in Cleveland, Pittsburgh, and Phoenix, to make sure supply chains do not breakdown, which if food shortages did materialize, it could lead to a “social bomb,” triggering civil unrest. 

“I’ve been in this business over 30 years, and nothing compares to what we’re seeing now. Not even when the steel mills closed down did we see increased demand like this,” said Sheila Christopher, director of Hunger-Free Pennsylvania, which represents 18 food banks across 67 counties.

Today’s food bank lines resemble ‘breadlines’ from the 1930s. However, this time around, Americans are not standing around city blocks waiting for soup, they’re sitting in mile-long traffic jams outside donation centers waiting for a care package. 

The run on food banks was first documented on March 30. Drone footage captured a traffic jam of hungry Americans waiting to pick up food aid at a facility in Duquesne, Pennsylvania. 

Hundreds of cars wait to receive food from the Greater Community Food Bank in Duquesne. Collection begins at noon. @PghFoodBank @PittsburghPG pic.twitter.com/94YFaO7dqX

— Andrew Rush (@andrewrush) March 30, 2020

As a reminder, to visualize how America went from “the greatest economy ever” to “Greater Depression,” in just one month, take a look at the chart below: 

The run on food banks will only increase as the depression worsens in April. 

On Monday, a drone captured dramatic footage outside a South Florida food bank that measured “miles-long” row of cars, reported Daily Mail. 

The footage is from outside the Feeding South Florida food bank, located in Broward County. 

The food bank reports a 600% jump in the number of people in recent weeks as South Florida’s services economy collapsed, resulting in hundreds of thousands of job losses. 

Stephen Shelley, president and CEO of Farm Share, which distributes food to food banks, churches, schools, and other nonprofits, said the amount of people asking for food at food banks is unprecedented. 

“The volume is at a level we’ve never seen before,” Shelley said, adding that his company is running at full capacity at the moment to handle the demand surge. He said the amount of food that he is moving to keep pace with demand is “overwhelming the system.” 

A perfect storm is brewing deep in America, one where overwhelmed food bank networks could see supply chain disruptions that could trigger food shortages in various low-income regions, that would undoubtedly leave many people hangry – and possibly incite social unrest. 

Just in case Nomura’s quant Masanari Takada wasn’t clear enough yesterday when he said that the current rally, which pushed the S&P back into a bull market from its March 24 lows was nothing more than a giant “bear squeeze” rally, driven by panicked exits from shorts that investors accumulated during the downturn, he doubled down today when in a note published overnight, he said that “the present rally should best be viewed as an unenthusiastic, inorganic bear market rally” and that “the stock market rebound across major world markets is being led by exits from bearish trades, including a squeeze on short positions held by systematic traders.“

Echoing Morgan Stanley which found that virtually nobody is participating in the current bear market rally, the Nomura quant writes that global equity market remain jittery as “most investors (apart from some with short  investment horizons) are still in standby mode“, and in fact, “some may be inclined to sell whatever rallies come along.”

Meanwhile, as Takada shows in the charts below, the pick-up in investor sentiment looks like no more than the sort of spontaneous rebound in sentiment that one would normally expect under the circumstances.

As a reminder, looking at investor flows, Morgan Stanley was surprised that in the recent surge higher, there had been virtually no participation on the buy side, and even more perplexing, almost no short covering either, especially in the latest leg higher:

• ZERO HF re-grossing (fundamental or systematic)
• ZERO covering of the $33bn net short in Futures (and volumes falling)
• ZERO new build in call ownership (and volumes falling).

Yet while there is nothing explicitly new in the above which we had presented previously, where Takada did provide a new perspective was his estimate of how long this bear market rally will last. To do that, he analyzed the transition in the bullish flows “baton” between CTA and fundamental investors, warning that “should the baton get dropped, we would expect
CTAs’ net buying of NASDAQ 100 futures to wind down by 22 April.”

We think that periodically checking CTAs’ net position in NASDAQ 100 futures may give investors a sense of how long the bear market rally might last… It appears that CTAs were quick to swing long on NASDAQ 100 futures. To anyone looking to gauge the strength of technical investors’ inclination to buy, CTAs’ net position in NASDAQ 100 futures can be read as a leading indicator of what may happen in other equity futures markets.

Nomura expects CTAs to continue “tentatively chasing the market up for the moment, with a push from the decline in stock market volatility.” Futures prices have increased more quickly than the pace of growth in CTAs’ net long position would suggest, but even when adjusting for this, CTAs should remain inclined to buy unless the NASDAQ 100 drops down into the 7,000-7,500 range.

However, as Takada shows next, the record of periods in which CTAs have accumulated long positions in NASDAQ 100 futures since 2009 shows that on average, net buying by trend-following investors has tended to mark an initial peak about 14 trading days after the net buying started. This time around, we estimate that CTAs started going long on 2 April (or around then), so if precedent is any guide, Nomura expects the systematic buying to fizzle out by April 22 at the latest.

But while CTAs may have already gone long, fundamentals-oriented growth funds and macro funds are far more cautious, and as we showed earlier today, still have a negative net exposure. This is important, because the upward momentum behind a technical rally tends not to stabilize until heavyweight fundamentals-oriented investors like these start chasing the market up.

For the coming week or two, then, the critical thing to look out for is whether the CTAs that are currently driving the rally manage to smoothly pass the baton to fundamentals-oriented investors without anyone dropping it. And, as Nomura concludes, “should the baton get dropped, we would expect CTAs’ net buying of NASDAQ 100 futures to wind down by 22 April.”

Authored by John Stossel, op-ed via Townhall.com,

Two weeks ago, President Donald Trump signed the largest stimulus bill in U.S. history: more than $2 trillion.

For once, both Republicans and Democrats agreed. The Senate voted 96-0. The House didn’t even bother with a formal vote.

At the White House, a reporter asked the president, pointing out that the bill includes $25 million for the Kennedy Center, “Shouldn’t that money be going to masks?”

“The Kennedy Center has suffered greatly because nobody can go there,” Trump responded.

“They do need some funding. And look — that was a Democrat request. That was not my request. But you got to give them something.”

“Something” they got. The bill includes $25 million for Congressional salaries, $50 million for an Institute of Museum and Library Services and lots of other wasteful things.

Only a few politicians were wary.

Rep. Thomas Massie complained that he wasn’t even allowed to speak against the bill.

Rep. Alex Mooney asked:

“How do you pay for it? Borrow it from China, borrow it from Russia? Are we going to print the money?”

Those are good questions.

Our national debt is already $24 trillion. Now it will jump, percentage-wise, to where Greece’s debt was shortly before unemployment there hit 27%.

Greece was bailed out by the European Union.

But the United States can’t be bailed out by others.

How will we pay off our debt? That’s the topic of my new video.

There are really three options:

1. Raise taxes.

2. Print money.

3. Default.

Let’s consider each:

1. Raising taxes on rich people is popular. Even Michael Bloomberg wants “higher taxes on billionaires” like him.

But raising taxes on the rich often kills the wealth and jobs some rich people create. And it won’t solve our debt problem. Even if we took all the billionaires’ wealth — reducing their net worth to zero — it would cover only an eighth of our debt.

2. Some on the left now say, “Don’t worry about debt, just print money!”

This belief, called Modern Monetary Theory, destroys lives.

Zimbabwe’s dictator tried it. Eager to spend more money on wars, higher salaries for government officials and luxury for himself, he had his government print more money. But that meant more money pursued the same goods. That caused explosive inflation. Soon, a $2 bag of onions cost $30 million Zimbabwean dollars.

The more money the government printed, the more inflation there was. They eventually even issued 100 trillion dollar bills. Today those 100 trillion bills are worth about 40 cents.

Inflation wrecked lives in 1920s Germany, Argentina and Russia, and in modern-day Venezuela, too.

3. America could simply refuse to pay our debt. But that would betray everyone who invested in America, and bankrupt Americans who bought Treasury Bonds.

Defaulting on your debt wrecks economies, too. When Argentina defaulted, unemployment rose to 21%.

Once you’re deep in debt, no option is good.

How did we get to this point?

Presidents have talked about the dangers of debt for decades. But they didn’t deal with it; they just talked about it.

“We have piled deficit upon deficit, mortgaging our future and our children’s future,” warned Ronald Reagan. “We must act today to preserve tomorrow.”

Bill Clinton said, “We’ve got to deal with this big long term debt problem.”

Barack Obama called driving up the national debt “irresponsible” and then proceeded to do exactly that.

Donald Trump complained that Obama “doubled” the nation’s debt. But now, under Trump’s presidency and the new CARES Act, our debt will grow even faster.

This will not end well.

So far, the deficit spending hasn’t done enormous harm. But it will. You can stretch a rubber band only so far, until it breaks.

Our debt will wreck our children’s lives.

Yet, today politicians mostly talk about spending more.

*  *  *

John Stossel is author of “Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media.” For other Creators Syndicate writers and cartoonists, visit www.creators.com.

Amid asset sales, boardroom battles, and seemingly endless litigation, WeWork has decided to jump on the “well, why should we have to pay according to a signed contract when no one else is” bandwagon and is reportedly skipping rent payments on numerous properties.

Amid an effort to aggressively cut costs as the economic downturn crushes any revenues, The Wall Street Journal reports, according to people briefed on the matter, that WeWork has yet to mail in its April rent check at numerous properties while it tries to renegotiate leases. (Quick aside – WeWork mails in its rent-checks?)

“WeWork believes in the long-term prospects of our locations and our relationships with landlords across the world,” a WeWork spokesperson said in a statement.

“Rather than implementing a companywide policy on rent payments, we are individually reaching out to our more than 600 global landlord partners to work in good faith towards finding asset-specific solutions that benefit all parties involved.”

WeWork isn’t treating all landlords the same. While some reportedly say they have been paid, others say they are still waiting for their checks.

One glance at the company’s bond price tells you all you need to know about the cash situation at this once almost $50 billion market cap mockery of an office space company.

Bloomberg’s Gillian Tan reports that WeWork executives have been pitching solutions including revenue-sharing agreements. Such deals would give landlords the chance to collect a portion of future revenue generated by each property. Early indications are that landlords are reluctant, people with knowledge of the matter said last week.

Mark it zero, Masa-san!

Via Mass Private I,

Historically speaking, it is hard for Americans to see how their liberties have been taken away. With the COVID-19 pandemic spreading across the country, hopefully that will no longer be the case.

In Crowley, Louisiana police are using “Purge” sirens to warn people to stay indoors during the COVID-19 pandemic.

In an effort to alert residents to the parish-wide curfew in Acadia Parish, Crowley Police rode around town broadcasting an alarm signal at 9:00 last night, but it’s not what anyone expected. In a video provided to KATC, the audible alarm from Crowley Police is actually the alarm sound from the successful film franchise The Purge.

Crowley Police will ticket people for going outside without documentation.

“After several days of this, the police department says they will begin giving out citations to violators. If you are headed to work or leaving work, you must have documentation from your employer.”

In Louisville, Kentucky a judge has ordered that people who ignore stay-at-home orders to wear GPS ankle bracelets.

“A judge has ordered one resident to stay at home after refusing to self-quarantine. CNN affiliate WDRB reports that the person, identified as D.L. in the court order, is living with someone who has tested positive for the illness and another person who is a presumptive case, according to an affidavit from Dr. Sarah Moyer, director of the health department.”

In Vermont, the Attorney General’s Office ordered police to stop setting up checkpoints and roadblocks to detain motorists who do not comply with stay-at-home orders. In Maine, a Franklin County Sheriff said they will not arrest motorists who do not comply with stay-at-home orders, “this is not Nazi Germany or Soviet Russia where you are asked for your papers.”

In Massachusetts and Alabama the government is giving law enforcement the names of anyone suspected of having COVID-19.

In Rhode Island, the state police are stopping people with New York state license plates and the National Guard is going door-to-door looking for New York state residents. In New York City the mayor has authorized the NYPD to fine people $500.00 for not observing social distancing.

In New Jersey, the Bergen County DA’s Office ordered police to stop requiring suspected COVID-19 patients to post signs on their homes. Police in Pennsylvania fined a woman $200.00 for taking a drive, and in Baltimore, Maryland the National Guard is being used to enforce COVID-19 curfews.

In Florida, Delaware, and Texas police are authorized to stop and question out-of state motorists. In Chicago, the mayor has threatened to arrest people for violating stay-at-home orders. Police in Rio Grande Valley are setting up roadblocks and 24/7 patrols to fine people for ignoring stay-at-home orders, while police in Detroit use video surveillance planes to fine people $1,000 and up to six months in jail for not observing social distancing. (To find out about Baltimore police surveillance airplanes, click here.)

In Brighton, Colorado a father was arrested for playing T-ball in a park with his 6-year-old daughter and wife because he did not observe social-distancing.

She’s like, ‘Daddy, I don’t want you to get arrested.’ At this point I’m thinking, ‘There’s no way they’re going to arrest me, this is insane.’ I’m telling her, ‘Don’t worry, Daddy’s not going to get arrested. I’ve done nothing wrong. Don’t worry about it,’ and then they arrest me.

As AP News warned, governors are using COVID-19 to further their political ambitions and help them win re-election.

“Now governors have been finding a way to introduce themselves, both politically and personally. Society won’t be the same for a long time after this, and that includes our politics,” Republican strategist John Weaver said. “I think you’ll see a rise of governors at the top of everyone’s mind when we get to that point in four years, there’s no doubt about it.”

If ever there was a reason to question political motives during COVID-19, I give you Sleepy Hollow.  The same village made famous for people being afraid of a headless horseman are now petrified of leaf blowers.

The Village of Sleepy Hollow is temporarily banning the use of leaf blowers to make sure residents are safe during the coronavirus pandemic. Village officials say since the virus is a respiratory condition, having things blown into the air could create a hazmat situation.

Talking about absurd COVID-19 responses,  the U.S. Department of Justice wants to give U.S. law enforcement the power to detain people indefinitely during an emergency.

The Justice Department has quietly asked Congress for the ability to ask chief judges to detain people indefinitely without trial during emergencies — part of a push for new powers that comes as the novel coronavirus spreads throughout the United States.

The Executive Director of the National Association of Criminal Defense Lawyers (NACDL) is “terrified” that police could hold people indefinitely for ignoring stay-at-home orders.

“So that means you could be arrested and never brought before a judge until they decide that the emergency or the civil disobedience is over. I find it absolutely terrifying. Especially in a time of emergency, we should be very careful about granting new powers to the government,” Norman L. Reimer, executive director of the NACDL said.

As Megan Fox from PJ Media said,

Someone has to stand up to the unconstitutional directives that are being handed down daily by government officials and it will fall on the sheriffs to uphold what they know to be their legal and lawful duties, none of which involve trampling the rights of citizens.

We must remain vigilant and demand that the measures taken to stop COVID-19 are only temporary or we risk living in a country that suspends our Constitutional rights whenever they deem it necessary.

Unlike the Phase 3 of the fiscal stimulus, which represented $2.2 trillion in bailout aid for America’s small and medium business, and which passed through Congress without a glitch if with some delays, the next – Phase 4 – stimulus sought by Republicans may face far greater hurdles.

According to Reuters, House Speaker Nancy Pelosi said on Wednesday that $250 billion in coronavirus relief for small businesses desired by Republicans would not pass the House of Representatives on its own under current procedures, which require a unanimous vote of those present while most of Congress is out of town.

The reason why the aid would not get unanimous Democratic support is because Pelosi and Senate Democratic Leader Chuck Schumer are demanding that more aid for hospitals, local governments and food assistance be added to the small business aid proposal that the Trump administration and Republicans want passed this week.

Pelosi was speaking in an interview with National Public Radio. Asked if there are limits on spending for coronavirus relief, she said “No, we have to spend what we need.”

Which leaves republicans with two options: delay the passage of the next stimulus indefinitely, even though according to many the current $350 billion allocated to the PPP small business rescue program will be insufficient, or concede to Democrats and add far more pork to the bill.

Considering that according to Goldman, the US deficit will soar to 18% of GDP in 2020…

… and public US debt will hit 99% by the end of FY2020 and to 108% of GDP by 2023 from the current level of 79%…

… one can ask “what difference does it make?” After all, going forward the Fed will likely have to monetize all debt in perpetuity or risk losing control of long-term rates. In fact, one can probably also ask: why should anyone pay taxes ever again?

The Wall Street Journal published a new monthly survey that outlines the severe economic impact of shutting down cities across America to mitigate the spread of the COVID-19 pandemic. 

The survey of 57 economists from April 3-7 includes 14.4 million job losses and a surge in unemployment through spring, with the possibility of a recovery in the second half of the year.

Economists told The WSJ that the U.S. labor market is in free fall, could see an unemployment rate as high as 13% in June, and roughly 10% by December. As of March, the jobless rate was elevated at 4.4%.

The outcome of the virus pandemic spreading across the country with 399,929 confirmed cases and 12,911 deaths, has turned into an economic and social crisis.

A depression will unfold in the second quarter, and the survey expects GDP to contract by at least 25% on an annual rate.

“This is the worst external shock in anyone’s living memory; it is as if a meteor hit the Earth and now we have to put it back on its axis,” said Grant Thornton economist Diane Swonk.

Most of the economists, or at least 85% that were surveyed, believe an economic recovery will be seen in the second half of the year. Their estimates are between annualized growth rates of 6.2% and 6.6% in the third and fourth quarters, respectively.

Here’s what they believe growth will be on the full year:

“For the full year, measured from the fourth quarter of 2019 to the fourth quarter of 2020, economists expect gross domestic product to shrink 4.9%. That compares with expectations of 1.2% growth just last month. Full-year growth was 2.3% in 2019. Economists now forecast full-year growth of 5.1% in 2021,” said The WSJ.

Many of the economists that were surveyed were split among the shape of the recovery in the second half. 

“Can’t retire 20% of the economy and expect rapid rebound,” said economists Matthew Fienup and Dan Hamilton of California Lutheran University, who was part of the 45.1% of respondents expecting a U-shaped recovery.

The economists also said the Federal Reserve would hold interest rates on the zero lower bound through 2021. The average forecast in rate policy was a 25bps increase by the end of 2021.

The monthly survey showed 100% of economists thought the virus would be a “significant drag” on full-year economic growth in 2020,” up from 75% a month earlier.

“The economy will remain shellshocked at least this year,” said Loyola Marymount University economist Sung Won Sohn. “No time to raise rates.”

When it comes to corporate profits, economists expected earnings across companies in the S&P 500 to plunge 36% in the second quarter versus the same period last year. On an annualized basis, economists believed earnings would decline by at least 19%.

The WSJ notes, “One thing economists don’t see coming are further sharp selloffs in financial markets.”

Economists are making a bold statement in calling a possible bottom in markets as the economy plunges into depression.

Odd that almost every economist surveyed expects a recovery in the second half. What if that is not the case? 

Maybe these economists need to read the latest WTO and OECD reports listed below. It would undoubtedly change their minds about recovery this year… 

• “These Numbers Are Ugly” – WTO Forecasts Collapse In World Trade, Recovery For 2021
• Global Economies Suffer “Largest Drop On Record”: OECD

And a kindly reminder from Sven Henrich via NorthmanTrader.com, “January WSJ survey: 100% expect no recession in 2020.” 

January WSJ survey: 100% expect no recession in 2020. https://t.co/SJLGLGvcCN

— Sven Henrich (@NorthmanTrader) April 8, 2020

It appears these so-called experts are blinder than bats…