Category: zerohedge

Via SchiffGold.com,

There seems to be some optimism in the markets that the end of the coronavirus shutdown is getting closer. There is also this resistant myth that the economy will just fire back up at the snap of a finger. Peter Schiff recently appeared on RT Boom Bust along with Christy Ai to talk about the markets and the pandemic.

He said people are still far too focused on the pin and not the bubble that it popped.

The US stock market has had some strong rally days recently with this growing optimism that we could be nearing the coronavirus peak. So, has the stock market found its bottom? Peter doesn’t think so.

Too many people are focused on the pin and are ignoring the bubble that the pin pricked. You know, before the COVID-19 shutdown, the economy was long overdue for a severe recession, and the US stock market was long overdue for a bear market. So, I think the COVID virus simply accelerated the onset of both…

So I would not get excited about this rally. I think we still have a long way to go on the downside. And the economy, I think, is going to be even worse.”

Christy agreed with Peter saying this is not the real bounce and we still have a long way drop. She pointed out that earnings still have a long way to fall and there is a massive unemployment tail from the pandemic.

Peter was asked about the response to the government stimulus package signed by President Trump.

As you would expect, a lot of people are trying to line up for whatever free money the government is handing out. But it’s not free. There’s going to be a heavy price to be paid in terms of the loss of purchasing power of the US dollar as prices respond to all the new money being created.”

Peter said the programs are also doing far more harm than good.

What they are doing is exacerbating the downturn and they are going to push the recovery off even further into the future because the government is basically encouraging businesses that should be downsizing and kind of adjusting their cost structure to the new reality — instead, the government is encouraging them to hold on to employees that they would be better off letting go and freeing up to do something else.

Instead, they are going to keep some employees entrenched in companies that are probably going to end up failing because they refuse to lay off people. And so instead, they are going to have to lay off even more people later.

And I think a lot of these loans are never going to be repaid because even the people that don’t fire their workers, a lot of these businesses are going to go out of business because they didn’t fire their workers and then everybody’s going to be out of a job. And the government is not going to get any money back because the loans have no security and there’s no personal guarantee.”

Christy reiterated that the tail of the coronavirus is very long and will be very long-lasting. It won’t be a V-shaped recovery as many seem to expect. We have both a severe supply shock that is morphing into a demand shock.

On the day of the show, both gold and stocks were in the midst of strong rallies. Peter was asked why gold was up when it seemed to be a “risk-on” day.

I think the risk is inflation. The only thing that’s propping up the stock market is the Fed and other central banks printing money, which is creating inflation. So, you don’t have earnings going for the stock market. All you have is all the cheap money that’s being created. And inflation is much better for gold than it is for the stock market. And so, that’s why both stocks and gold are going up.

But I think eventually, gold is going to be going up much more than the stock market and I think gold is going to be going up even as the stock market rolls over and goes down. So, I think in terms of gold, stock prices are going to continue to fall. In fact, they’re going to fall precipitously regardless of what happens to nominal stock prices because of the massive inflation being unleashed by the Fed and other central banks.”

Today’s minutes will provide detail on the Fed decisions announced on March 3 and March 15 after Fed Chair Jerome Powell convened emergency meetings as the scale of the pandemic and its risk to the U.S. economy became clear. The readout may also include their discussions of a slate of related actions that flowed from those two meetings. 

Amusingly, just five weeks before the surprise rate cut on March 3, Powell and his colleagues had wrapped up their first meeting of the year on Jan. 29 with an air of cautious optimism.

Since that emergency rate-cut (and the bazooka of all bazookas), The Dow is down around 9% and somewhat interestingly, the dollar, gold, and the long-bond are all up around 4%…

Source: Bloomberg

And at the same time, the volume of beta that The Fed will inevitably cut rates below zero has also surged…

Source: Bloomberg

As a reminder, today’s minutes may show just how dire a threat officials saw in those earliest moments and what spurred them to action.

The first move came on Feb. 28. With the S&P 500 Index tumbling 15% from its record high in just seven sessions and corporate credit spreads widening fast, Powell released an unscheduled statement at 2:30 p.m. pledging that Fed officials would “use our tools and act as appropriate to support the economy.”

The following Tuesday – March 3 – the Fed cut its benchmark lending rate by half a percentage point to a range of 1.00% to 1.25%.

“The fundamentals of the U.S. economy remain strong,” the U.S. central bank said.

“However, the coronavirus poses evolving risks to economic activity.”

One month later, the US economy was in a recession, or perhaps a depression.

That said, today’s minutes are unlikely to contain anything to spook markets, given that it has rolled-out measures to assuage market concerns, and will likely reiterate its pledge to support the financial system. Of most interest will be whether there was any discussion in the minutes of if, when and under what, the Fed would start buying stocks.

Despite all The Fed has done, financial conditions are extremely tight still…

Source: Bloomberg

So just how freaked out were they over those two hectic weeks…

The short answer is “very”!

Policy makers saw risks pointing to the downside and warranting a “forceful” response, according to a record of their emergency gathering Sunday, March 15.

“All participants viewed the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain,” minutes published Wednesday of the Federal Open Market Committee meeting showed.

At the unscheduled meeting, officials announced that they would cut their benchmark interest rate to nearly zero and relaunch massive bond-buying programs to pump cash into the financial system, as they sought to shelter the U.S. economy from the coronavirus pandemic.

Fed notes “extremely large degree of uncertainty” on outlook

In their consideration of monetary policy at this meeting, most participants judged that it would be appropriate to lower the target range for the federal funds rate by 100 basis points, to 0 to ¼ percent. In discussing the reasons for such a decision, these participants pointed to a likely decline in economic activity in the near term re-lated to the effects of the coronavirus outbreak and the extremely large degree of uncertainty regarding how long and severe such a decline in activity would be.

Fed advocated “forceful” monetary response

In light of the sharply increased downside risks to the economic outlook posed by the global coronavirus outbreak, these participants noted that risk-management considerations pointed toward a forceful monetary policy response, with the majority favoring a 100 basis point cut that would bring the target range to its effective lower bound (ELB). With regard to monetary policy beyond this meeting, these participants judged that it would be ap-propriate to maintain the target range for the federal funds rate at 0 to ¼ percent until policymakers were con-fident that the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals

Fed on the severe strain in bond markets:

Trading conditions across a range of markets were severely strained. In corporate bond markets, trading ac-tivity and liquidity were at very low levels, although not back to the low point reached in 2008. Market partici-pants expected that actions taken to slow the spread of the virus could have significant effects on the credit wor-thiness of certain borrowers, particularly those at the lower end of the credit spectrum. Market participants also increasingly pointed to concerns in other segments of the debt market. In securitized markets, including those for asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS), primary market is-suance slowed, and secondary market trading had be-come less orderly, with money managers selling short-dated liquid products to meet investor redemptions.

Fed on Treasury Markets

In the Treasury market, following several consecutive days of deteriorating conditions, market participants re-ported an acute decline in market liquidity. A number of primary dealers found it especially difficult to make markets in off-the-run Treasury securities and reported that this segment of the market had ceased to function effectively. This disruption in intermediation was at-tributed, in part, to sales of off-the-run Treasury securi-ties and flight-to-quality flows into the most liquid, on-the-run Treasury securities

Fed on short-term funding markets

Conditions in short-term funding markets also deterio-rated sharply amid a decline in market liquidity and chal-lenges in dealer intermediation. Over recent days, the premium paid to obtain dollars through the foreign ex-change swap market increased sharply, and the volumes in term repurchase agreement (repo) markets dropped significantly. Issuance of commercial paper (CP) matur-ing beyond one week reportedly almost dried up at the end of the week before the meeting, and primary- and secondary-market liquidity for financial and nonfinancial CP was described as nearly nonexistent at a time when investor concern about issuer credit risk was rising.

Fed on stress in the housing market

…social distancing, by financial uncertainty—including difficulties that households and businesses would face in meeting mortgage or rental payments—and by volatility in the market for MBS. Participants stressed the major down-side risk that the spread of the virus might intensify in those areas of the country currently less affected, thereby sidelining many more U.S. workers and further damping purchases by consumers. Participants expressed con-cern that households with low incomes had less of a sav-ings buffer with which to meet expenses during the in-terruption to economic activity. This situation made those households more vulnerable to a downturn in the economy and tended to magnify the reduction in aggre-gate demand associated with the nation’s response to the pandemic.

On ZIRP

“With regard to monetary policy beyond this meeting, these participants judged that it would be appropriate to maintain the target range for the federal funds rate at 0 to 1/4 percent until policymakers were confident that the economy had weathered recent events…”

On NIRP:

A few participants also remarked that lowering the target range to the ELB could increase the likelihood that some market interest rates would turn negative, or foster investor expectations of negative policy rates. Such expectations would run counter to participants’ previously expressed views that they would prefer to use other monetary pol-icy tools to provide further accommodation at the ELB.

On Bank buybacks:

“Several participants commented that banks should be discouraged from repurchasing shares from, or paying dividends to, their equity holders.”

Developing…

*  *  *

Full Minutes below:

Sen. Kelly Loeffler (R-GA) and her husband Jeffrey Sprecher are liquidating the rest of their stock holdings and will instead invest in exchange traded funds (ETFs), according to Axios.

The move comes after Loeffler and other lawmakers came under fire for selling stocks following a private congressional briefing on coronavirus, and shortly before the market crashed. Loeffler bought and sold roughly $1.4 million in stock, according to the Wall Street Journal.

“Ms. Loeffler reported that she and her husband bought about $590,000 of stock and sold about $845,000 of stock from Feb. 18 through March 13. If they had held the shares they sold through Monday, the stock would have been valued at $86,000 less than what they sold it for, according to the Journal analysis.” -WSJ (03/31/2020)

In a Wednesday WSJ op-ed, Loeffler wrote that while she fully complied with the law, the move into ETFs will hopefully “end the distractions” caused by the corona-controversy. Of note, she faces a competitive election fight in November – while her Senate campaign told Axios that her opponents “are clearly using her stock portfolio as a political weapon for an assault on her character during a national crisis,” adding that the new strategy will end “untrue” accusations of insider trading.

More via Axios:

The campaign explains Loeffler’s investments are managed by third-party advisors at Morgan Stanley, Goldman Sachs, Sepio Capital and Wells Fargo, and neither Loeffler nor her husband — the CEO of the New York Stock Exchange’s owner — direct trading in these accounts.

• “As longtime executives at a Fortune 500 financial-services firm, my husband and I put this arrangement in place to insulate ourselves and our colleagues from these sorts of unfounded accusations,” Loeffler said.
• “I’m not doing this because I have to. I’ve done everything the right way and in compliance with Securities and Exchange Commission regulations, Senate ethics rules and U.S. law. I’m doing it because the issue isn’t worth the distraction,” she added.

Loeffler’s full statement: 

I have not profited or attempted to profit at any time based on my service in the Senate. This story was manufactured by a left-wing website, never fact checked and used as a weapon by the media and my political opponents as a baseless attack. There is no truth to any of it.

Our family’s investments have long been managed by outside investment advisors at Morgan Stanley, Goldman Sachs, Sepio Capital, and Wells Fargo. They make their investment decisions for our accounts, including buying and selling securities like stocks and options —without our input, direction or knowledge.

For my over-20-year career in the financial services industry—as well as since I’ve been in the Senate—I have done everything according to the spirit and the letter of the law, and have been recognized for my integrity, professionalism and hard work.

Amid this health crisis, the temptation to circulate lies and misinformation is too great for the media and my political opponents. That is why I’m taking steps to remove this temptation so that we can turn our focus back to where it belongs: on combating COVID-19 and restoring our country to health and economic recovery.

All of the individual stock and options holdings in these managed accounts will be liquidated by the investment managers and the proceeds will be reinvested into ETFs and mutual funds.

Let me be clear: I do not have to do this. I’ve done everything at or above the requirements for complying with the STOCK Act, SEC regulations, Senate Ethics rules, and US law, and of course, will continue to do so.

I’m doing this because this transparency is being abused for political gain, and the steps I’ve taken to distance myself from these accounts are being ignored. I left the private sector to serve the people of Georgia, not make a profit, and in fact donate my Senate pay to Georgia charities.

I believe Georgians can see with my results in just three months in the Senate that my focus is on delivering results for them, and delivering relief for those impacted by COVID-19. As an outsider, I came to get results and I won’t let politics get in the way of public service and keeping our state and our country strong.

Yesterday, Twitter CEO Jack Dorsey got a break from being the near-constant punching bag for tech “journalists” (a solid 50% of whom are leftwing hacks who lazily press him to hire more minorities while banning every conservative under the sun) and was lauded for dedicating (notice we didn’t say “donating”) one-third of his net worth, supposedly, to fighting the coronavirus, and then, whatever is left will be used to advance causes Dorsey cares about, namely, the advancement of women, and UBI.

In an attempt to appear “transparent”, Dorsey issued a few tweets explaining why he structured this new organization dedicated to seeing these efforts (the so-called “Start Small” initiative) as a “Donor-Advised Fund” or DAF.

I’m moving $1B of my Square equity (~28% of my wealth) to #startsmall LLC to fund global COVID-19 relief. After we disarm this pandemic, the focus will shift to girl’s health and education, and UBI. It will operate transparently, all flows tracked here: https://t.co/hVkUczDQmz

— jack (@jack) April 7, 2020

Why pull just from Square and not Twitter? Simply: I own a lot more Square. And I’ll need to pace the sales over some time. The impact this money will have should benefit both companies over the long-term because it’s helping the people we want to serve.

— jack (@jack) April 7, 2020

Why now? The needs are increasingly urgent, and I want to see the impact in my lifetime. I hope this inspires others to do something similar. Life is too short, so let’s do everything we can today to help people now. ✌🏼

— jack (@jack) April 7, 2020

Why the transparency? It’s important to show my work so I and others can learn. I’ve discovered and funded ($40mm) many orgs with proven impact and efficiency in the past, mostly anonymously. Going forward, all grants will be public. Suggestions welcome. Drop your cash app 😉

— jack (@jack) April 7, 2020

However, one thing he neglected to explain, or even mention, was how this decision would allow Dorsey maximum tax benefi.

As it turns out, Recode published a lengthy investigation into these “DAFS” last year. The rise of these “DAFs” in the philanthropy world, particularly within Silicon Valley, has raised questions about their founders’ motives. As the story points out, not only is there an instant tax benefit, but the fund is under zero pressure to spend that money. Legally, Dorsey could simply leave it alone, then claim it as an asset for his children.

Our point here is: He’s benefiting from a massive tax windfall before he even contributes anything to a noble cause. Then afterwards, he’d be free to do little or nothing with the money. Though the funds can’t be returned to Dorsey, and they must be spent on the fund’s intended purpose, many have pointed out that the structure lends itself to tax abuse.

One Silicon Valley VC said as much on twitter, and was soundly bashed for making Dorsey “look bad” by raising a legitimate point.

Jack is smart
Jack’s PR people very smart
Jack’s tax-advisers are smartest

The REAL INEQUALITY is not wealth of the 1%––but the cynical knowing of stuff––the masses don’t.

This is not illegal, not tax evasion
But it IS tax avoidance––spun brilliantly
WIT https://t.co/UgzIbUHg0S https://t.co/7Wl4l5kRDz

— Josh Wolfe (@wolfejosh) April 7, 2020

2/ IF
Jack gives to charity (so far $100k—not $1B even though tax benefits accrue go to full $1B)
THEN
he is heroic + humanitarian + awesome

BUT if it is used like others than it deserves public scrutiny.

Don’t read if you just prefer headline good newshttps://t.co/z0IpqXUBP7

— Josh Wolfe (@wolfejosh) April 8, 2020

3/ You can interpret the take as overly cynical. This is a system that was set up for good intentions but is abused. https://t.co/KY7GIDfD4T

— Josh Wolfe (@wolfejosh) April 8, 2020

In response to one of his interlocutors, Wolfe clarified that the tax benefits accrued to Dorsey can be used the same year the fund is established, meaning before the money is actually spent on anything charitable.

pic.twitter.com/hRLpYM47ww

— Josh Wolfe (@wolfejosh) April 8, 2020

Few probably remember this, but Dorsey pledged to give away a huge chunk of his Square wealth years ago, but that never materialized.

Like everything else he does, this definitely deserves scrutiny.

Remember when Jack Dorsey said he would give away nearly a third of his stake in Square?

That was five years ago. Spoiler: He never did.

Why we should be asking @jack more questions about his new philanthropic promises, in my latest @techchronicle: https://t.co/7C31iALg25

— Owen Thomas (@owenthomas) April 8, 2020

For everyone on twitter complaining that this is a “harsh” or “uncharitable” (no pun intended) interpretation of Dorsey’s motives here, we wonder: Would you say the same if it was Trump, not Dorsey, doing the giving?

No, in that case it would be critical analysis that the public deserves to understand.

Authored by BMO Capital Markets rates strategists Ian Lyngen, Ben Jeffery and Jon Hill

It’s Wednesday morning – or effectively Thursday afternoon when accounting for Friday’s market holiday and tomorrow’s early close. Yep, still counting the hours to the long weekend; gotta have a goal. Suffice it to say, the pace of trading, volatility, macro developments, policy responses, and the outbreak itself resulted in the year-long month of March – at least it felt that way. This week has brought with it a sense of market calm and budding optimism largely lacking in the crisis up to this point. This followed what appears to be a plateau in Covid-19 in parts of Europe and the subsequent extrapolation of the overseas timeline to the domestic outbreak. What remains to be seen is whether the experience in other nations truly translates onshore.

In assessing this question, investors will continue to track the incoming coronavirus stats and gauge the official response. Lockdown life will continue for the time being, even as the macro conversation has shifted to reopening strategies and the prospects of getting back to the new normal.

This is a generation defining episode in world history; an observation which isn’t intended as needless hyperbole. The fact of the matter is that investor and consumer behavior will change in the wake of the current health crisis… for a while.

The reality of emptied college campuses, mothballed air fleets, shuttered car plants, and retail ghost towns will have a dramatic impact on the labor force statistics over the coming months; a massive drain, followed by a reemployment surge. This much is easy enough to envision, if not perfectly forecast. The next major unknown is how the reopening transpires – and of course when.

Trump is reportedly crafting a plan to reopen certain sections of the economy not particularly hard hit by the coronavirus, while keeping areas still struggling with significant cases shuttered; New York is top of mind in this regard. Partial reopenings will be undoubtedly be the unifying theme of the headlines on this topic over the course of the next several sessions and our expectation is that it will be a net positive for risk assets. Before investors can move forward with estimating the cost of the outbreak in economic terms, an end date is required and this has become the market’s newest preoccupation. Our take is there will be an eventual return to pre-virus normality, but the timeline will be measured in quarters, or years – not weeks or months.

This brings us to the current stage of evaluating the leg in Treasury yields. Our base case for this week remains the process of defining the near-term range will extend – although to a large degree there are a several key levels already in place. In 10-year yields there are two trading zones to watch; the narrower at 56.4 bp to 89 bp and the broader at 31.4 bp to 127.3 bp. The tighter range has held since March 23 and there is no reason to anticipate it breaks in the coming weeks. It will take a concrete reopening schedule and significant progress in battling Covid-19 in the US before 1-handle 10s return to the realm of conceivable outcomes.

The very front end of the curve is going to remain in a much narrower and lower range for a very long time – 2s at 25 bp appears to be establishing some semblance of equilibrium. Negative front-end yields are still on our radar in the event of another risk-off impulse from new depths of the economic fallout expectations; the bounce in risk assets has lessened the urgency for the sector at the moment. It’s difficult to envision another liquidity crunch and dash for cash comparable to that seen during March, therefore another repricing to lower rates will be a slow and methodical grind as recovery prospects eventually come into finer focus.

There isn’t a cookie jar in the world that Nancy Pelosi (D-CA) and Chuck Schumer (D-NY) won’t stick their hands in – as the pair have insisted on adding hundreds of billions of dollars ‘for their own priorities’ on top of $250 billion in new emergency aid for small businesses requested by President Trump, according to the New York Times.

Trump is looking to secure congressional passage of the additional $250 billion for the recently launched small-business payroll program, for which he’ll need the support of top Democrats.

Blocking his path, per usual, are Peosi and Schumer, who say they will approve Trump’s request as long as $125 billion of that is diverted to ‘community-based financial institutions that serve farmers, families, women, minorities and veterans.’

They say they will approve the $250 billion in assistance to small businesses, but want $125 billion of that channeled through community-based financial institutions that serve farmers, families, women, minorities and veterans.

They’re also calling for an additional $100 billion for hospitals and community health centers to provide testing supplies and protective equipment like masks and gowns. They are seeking another $150 billion for state and local governments to manage the coronavirus crisis

They also want a 15 percent increase to the maximum Supplemental Nutrition Assistance Program food stamp benefits, a proposal that could draw GOP opposition. -New York Times

“The heartbreaking acceleration of the coronavirus crisis demands bold, urgent and ongoing action from Congress to protect Americans’ lives and livelihoods,” said Pelosi and Schumer in a Wednesday joint statement. “The American people need to know that their government is there for them in their time of great need.”

The new stimulus would follow a sweeping $2.2 trillion coronavirus rescue package after unemployment claims spiked by more than 10 million in March. One of the programs, a $350 billion Paycheck Protection Program, has been plagued with technical glitches as businesses rush too tap into more than $10 million in forgivable loans in order to maintain payroll during the pandemic.

The additional $250 billion was requested by Treasury Secretary Steven Mnuchin during private calls to Pelosi and Senate Majority Leader Mitch McConnell (R-KY) – the latter of whom wants to swiftly pass the legislation through Congress this weed amid a virtual shutdown.

Meanwhile, congress is also compiling the next coronavirus rescue package.

After two consecutive mediocre auctions, when the sales of 3Y and 10Y debt earlier this week tailed modestly, moments ago the Treasury concluded this week’s coupon issuance (which comes alongside a biblical flood of Bill and CMB sales), when it sold $17BN in 30Y paper (technically a 29-Year, 10-Month reopening) in what was a very strong auction.

The high yield of 1.325% was just 0.5bps above last month’s record low yield of 1.32%, and also stopped by 0.5bps through the When Issued.

The bid to cover was almost unchanged from last month’s 2.358, dripping fractionally to 2.352%, which was also just below the 6 auction average of 2.377%.

The internal was also a bit softer than last months, as Indirects took down 66.4%, down from 69.5% which however was above the 62.5% recent average, and with Directs taking down 11%, more than the 8.9% in March, Dealers were left with 22.6%, a slightly higher than average number, and one which Dealers will promptly make sure eases as they sell the long end back to the Fed.

Overall, this was a solid, stopping through auction and one which underpinned the long-end of the curve.

 

The World Trade Organization (WTO) published a new report on Wednesday that is truly apocalyptic, and crushes all hopes that a V-shaped recovery would be seen this year (similar to what Morgan Stanley said last week): 

“World trade is expected to fall by between 13% and 32% in 2020 as the COVID 19 pandemic disrupts normal economic activity and life around the world,” the WTO report said. 

The Geneva-based body does not see a recovery in global trade until 2021, and even then, the outcome of recovery is mainly dependent “on the duration of the outbreak and the effectiveness of the policy responses.” The economic recovery could be anywhere from 21% and 24%. 

“This crisis is first and foremost a health crisis which has forced governments to take unprecedented measures to protect people’s lives,” WTO Director-General Roberto Azevêdo said.

“The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself.” 

“The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policymakers must start planning for the aftermath of the pandemic,” he said.

“These numbers are ugly – there is no getting around that. But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. We need to lay the foundations for a strong, sustained and socially inclusive recovery. Trade will be an important ingredient here, along with fiscal and monetary policy. Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical to spur the renewed investment we will need. And if countries work together, we will see a much faster recovery than if each country acts alone.”

Shown in the chart below, the WTO has modeled three scenarios of world trade through 2022 against a trendline from 1990-2008 and a trend line from 2011-2018. Notice the giant gap forming verses both trend lines as the global economy is undoubtedly in trouble. 

WTO said world trade was already slowing before the virus outbreak, mainly because of the trade war. 

“Trade was already slowing in 2019 before the virus struck, weighed down by trade tensions and slowing economic growth. World merchandise trade registered a slight decline for the year of ‑0.1% in volume terms after rising by 2.9% in the previous year. Meanwhile, the dollar value of world merchandise exports in 2019 fell by 3% to US$ 18.89 trillion.”

Chart 2: Ratio of world merchandise trade growth to world GDP growth, 1990‑2020 (% change and ratio)

Chart 3: New export orders from purchasing managers indices, Jan. 2008 – Mar. 2020 (Index, base=50)

Chart 4: World merchandise exports and imports, 2015Q1‑2019Q4 (Index 2015Q1=100 and year‑on‑year % change)

And to confirm WTO’s thoughts on collapsing global trade, the OECD was also out with a report outlining all major economies had plunged into a “sharp slowdown,” or as some like to say: depression. 

Seperate from the WTO press release, WTO’s Azevêdo was quoted in a headline on Wednesday that read: “crisis shouldn’t mean reversal of globalization.” 

Except for the stock market it does! 

Authored by Ryan McMaken via The Mises Institute,

About 2.9 million people die in the United States each year from all causes. Monthly this total ranges from around 220,000 in the summertime to more than 280,000 in winter. 

In recent decades, flu season has often peaked sometime from January to March, and this is a major driver in total deaths. The average daily number of deaths from December through March is over eight thousand.

So far, total death data is too preliminary to know if there has been any significant increase in total deaths as a result of COVID-19, and this is an important metric, because it gives us some insight into whether or not COVID-19 is driving total death numbers well above what would otherwise be expected. 

Indeed, according to some sources, it is not clear that total deaths have increased significantly as a result of COVID-19. In a March 30 article for The Spectator, former UK National Health Service pathologist John Lee noted that the current number of deaths from COVID-19 does not indicate that the UK is experiencing “excess deaths.” Lee writes:

The simplest way to judge whether we have an exceptionally lethal disease is to look at the death rates. Are more people dying than we would expect to die anyway in a given week or month? Statistically, we would expect about 51,000 to die in Britain this month. At the time of writing, 422 deaths are linked to Covid-19—so 0.8 per cent of that expected total. On a global basis, we’d expect 14 million to die over the first three months of the year. The world’s 18,944 coronavirus deaths represent 0.14 per cent of that total. These figures might shoot up but they are, right now, lower than other infectious diseases that we live with (such as flu). Not figures that would, in and of themselves, cause drastic global reactions.

How do these numbers look in the United States? During March of 2020, there were 4,053 COVID-19 deaths according to Worldometer. That is 1.6 percent of total deaths in March 2019 (total data on March 2020 deaths is still too preliminary to offer a comparison). For context, we could note that total deaths increased by about four thousand from March 2018 to March 2019. So for March, the increase in total deaths is about equal to what we already saw as a pre-COVID increase from March 2018 to March 2019. 

As Lee notes, total COVID-19 deaths could still increase significantly this season, but even then we must ask what percentage of total deaths warrants an international panic. Is it 5 percent? Ten percent? The question has never been addressed, and so far, a figure of 1 percent of total deaths in some places is being treated as a reason to forcibly shut down the global economy.

Yet, as a CDC report recently noted, pneumonia deaths have often been far more common than COVID-19 deaths are right now: “Based on National Center for Health Statistics (NCHS) mortality surveillance data available on March 26, 2020, 8.2 percent of the deaths occurring during the week ending on March 21, 2020 (week 12), were due to [pneumonia and influenza].”

Meanwhile there is a trend toward to attributing more of those pneumonia deaths to COVID-19 rather than influenza, although this doesn’t actually mean the total mortality rate has increased. The CDC report continues: “the percent of all deaths with Influenza listed as a cause have decreased (from 1.0% to 0.8%) over this same time period. The increase in pneumonia deaths during this time period are likely associated with COVID-19 rather than influenza.” This doesn’t represent a total increase in pneumonia deaths, just a change in how they are recorded.

This reflects an increased focus on attributing deaths to COVID-19, as noted by Lee:

In the current climate, anyone with a positive test for Covid-19 will certainly be known to clinical staff looking after them: if any of these patients dies, staff will have to record the Covid-19 designation on the death certificate—contrary to usual practice for most infections of this kind. There is a big difference between Covid-19 causing death, and Covid-19 being found in someone who died of other causes. Making Covid-19 notifiable might give the appearance of it causing increasing numbers of deaths, whether this is true or not. It might appear far more of a killer than flu, simply because of the way deaths are recorded.

Given this rush to maximize the number of deaths attributable to COVID-19, what will April’s data look like? It may be that COVID-19 deaths could then indeed number 10 or 20 percent of all deaths. 

But the question remains: will total deaths increase substantially compared to April 2019 or April 2018? If they don’t, this will call into question whether or not COVID-19 is the engine of mortality that many government bureaucrats insist it is. After all, if April’s mortality remains “about the same” as the usual total and comes in around 230,000–235,000, then obsessive concern over COVID-19 would be justified only if it can be proven April 2020 deaths would have plummeted year-over-year had it not been for COVID-19.

Update:

Meanwhile the CDC is instructing medical staff to report deaths as COVID-19 deaths even when no test has confirmed the presence of the disease. In a Q and A on death certificates published by the CDC on March 24, the agency advises:

COVID-19 should be reported on the death certificate for all decedents where the disease caused or is assumed to have caused or contributed to death. Certifiers should include as much detail as possible based on their knowledge of the case, medical records, laboratory testing, etc. If the decedent had other chronic conditions such as COPD or asthma that may have also contributed, these conditions can be reported in Part II. [emphasis in original.]

This is extremely likely to inflate the number of deaths attributed to COVID-19 while pulling down deaths attributed to other influenza-like illnesses and to deaths caused by pneumonia with unspecified origins.  This is especially problematic since we know the overwhelming majority of COVID-19 deaths occur in patients that are already suffering from a number of other conditions. In Italy, for example, data shows 99 percent of COVID-19 deaths occurred in patients who had at least one other condition. More than 48 percent had three other conditions. Similar cases in the US are now likely to be routinely reported simply as COVID-19 cases.  

Source: Total death and flu/pneumonia death data via National Center for Health Statistics (www.cdc.gov/flu/weekly/weeklyarchives2019-2020/data/nchsData12.csv). COVID-19 totals via Worldometer COVID stats.

Unfortunately, because total death data is not reported immediately, we have yet to see how this plays out.

We do know historically, however, that deaths attributed to flu and pneumonia over the past decade have tended to make up around five to ten percent of all deaths, depending on the severity of the “season.”  Last week (week 14, the week ending April 4) was the first week during which COVID-19 deaths exceeded flu and pneumonia deaths, coming in at 11 percent of all death for that week. The prior week, (week 13, the week ending Mar 28) COVID-19 deaths made up 3.3 percent of all deaths. 

Until we have reliable numbers on all deaths in coming weeks, it will be impossible to know the extent to which COVID-19 are “cannibalizing” flu and pneumonia deaths overall. That is, if the COVID-19 totals skyrocket, but total deaths remain relatively stable, than we might guess that many deaths formerly attributed simply to pneumonia, or to flu, are now being labeled as COVID-19 deaths. Potentially, this could also be the case for other patients, such as those with advanced cases of diabetes.

Iran is desperately pleading for the International Monetary Fund to approve a $5 billion emergency loan to help the outbreak-ravaged country to survive.

“I urge international organizations to fulfill their duties… we are a member of the IMF… There should be no discrimination in giving loans,” President Hassan Rouhani said in televised remarks Wednesday.

He further slammed US sanctions on the Islamic Republic as “economic and medical terrorism” — given the US-led near total economic blockade of the country has severely hampered Tehran’s response to the COVID-19 pandemic. There are currently over 64,500 confirmed cases and as of Wednesday this includes a grim milestone of surpassing 4,000 deaths after months ago Iran became the first epicenter outside China, followed by Italy.

Of course, the U.S. is expected to block the loan:

The U.S. plans to block Iran’s requested $5 billion emergency loan from the International Monetary Fund for funding Tehran says it needs to fight its coronavirus crisis.

Advocates for sanctions relief say that current sanctions will ultimately make the global response to the pandemic worse for populations in other countries as well, given without Iranian hospitals having necessary access to supplies and crucial medicines, the virus will continue to fester there even after the rest of the world pivots toward recovery.

But as the WSJ reports, Tehran is unlikely to see a single penny in IMF relief:

The IMF has said it is in talks with officials in Iran to determine its eligibility for the loan.

However, the Wall Street Journal reported on Wednesday that the US – the IMF’s largest shareholder – planned to block the request.

It cited senior Trump administration officials as saying that Iran’s government had billions of dollars in bank accounts still at its disposal, and that the loan might be used to help its economy rather than on combating Covid-19 or fund terrorist operations.

In early March Iran’s Central Bank chief Abdolnaser Hemmati first addressed a letter to the head of the IMF requesting the five billion dollars from the RFI emergency fund “to help our fight against the coronavirus”.

US administration gleefully takes pride in killing Iranians citizens on #Nowruz—our New Year.

The White House takes its “maximum pressure” to a new level of inhumanity with its utter contempt for human life.

Iran to US: Your policy will live in infamy. But Iran won’t break. pic.twitter.com/2xGWG8xxH8

— Javad Zarif (@JZarif) March 20, 2020

At that time Iran’s death toll was 500, but now stands at just over 4,000.

Iran has argued that it is “a dues-paying member of the IMF and has not had a loan in decades,” according to the assessment of Mohammad Marandi, professor of American Studies at Tehran University.

“As a country that has paid its dues and without any debt to the IMF, Iran is entitled to a loan to fight the coronavirus pandemic at the time when the US has weaponised the virus against Iran,” Marandi added.