Category: zerohedge

Several hedge funds have attempted to tap into the $349 billion Paycheck Protection Program included in the historic $2 trillion US stimulus package designed to keep small businesses afloat during the coronoavirus pandemic, according to Bloomberg.

Managed by the Small Business Administration, the PPP was intended to cover payroll, rent and utilities for up to eight weeks, providing loans which convert to grants if recipients retain or rehire their workers. In fact, an entire cottage industry has sprung up surrounding the program, with law firms hosting webinars for struggling businesses looking for guidance on how to gain access to the funds.

And as Bloomberg reports, some hedge funds have already applied – certifying on an official form that their small businesses (with fewer than 500 employees), and that the “current economic uncertainty makes this loan request necessary to support the ongoing operations.”

While the rules of the program make clear that banks and insurance companies are ineligible for the small-business loans, it’s less clear where hedge funds and proprietary trading shops fall – as the Treasury and Small Business Administration’s policies are unfortunately murky.

One manager, who asked not to be named, said he was outraged when he received a note from his accountant analyzing his potential eligibility. Why, he asked, would a hedge fund that earns its money collecting management fees, and can make money if it’s skilled, avail itself of a government handout? –Bloomberg

The move by hedge funds – endeavors which carry the fundamental risk of loss – has raised more than a few eyebrows.

Ironically, hedge funds are designed to employ as few people as possible so star traders don’t have to share millions of dollars in fees. The industry gets its name from the premise it can generate gains even when markets fall.

The question of whether to partake in the program is dividing members of the money management community. Some traders have called it morally corrupt, while others insist they are small businesses — just like hair salons, restaurants and dry cleaners — that could use a helping hand after global markets tumbled and cost them money. Given that the program is first come, first served, some managers were quick to submit their paperwork, according to market participants, even if eligibility remains unclear. –Bloomberg

One such hedge fund manager is David Motschwiller – head of trading firm First New York, who said he was still deciding whether to try and tap into the funds to pay employees, including a receptionist and office manager who are effectively furloughed since everybody is working from home. After reaching out to around 15 other hedge funds from his network about whether they too were contemplating tapping into the PPP, Motschwiller claims that “no one has said ‘no’.“

Bloomberg notes that while the industry’s top players probably have no interest in the bailouts, money managers who are just starting out might be encouraged to apply in order to help launch their dreams, according to Anthony Scaramucci, founder of SkyBridge. The former White House employee and turncoat says that “Just because the business has a name, private equity or hedge fund manager, doesn’t necessarily mean that they’re loaded with rich people.”

The chatter among money managers has grown loud enough to prompt a warning last week from Aksia, which advises institutional investors on placing money with hedge funds and other alternative investment firms. The firm said it would view any opportunistic use of the program “negatively” when counseling pension funds and other institutions with about $160 billion to invest.

A manager with a healthy business who takes advantage of a program that isn’t “precisely defined, is not only showing poor moral judgment and potentially hurting the reputation of the alternatives industry, but it’s also probably crowding out struggling workers and businesses severely impacted by Covid-19,” Aksia said in the memo. –Bloomberg

“It’s a complete abomination,” said Nate Koppikar – a partner at San Francisco-based money manager Orso Partners, who noted that firms which do end up taking the money may later be publicly identified under the Freedom of Information Act.

Meanwhile, hedge fund industry group The Managed Funds Association has also come out against the use of PPP loans, saying in a statement “While we recognize that every manager must make their own decision about the viability of their firm, we have provided guidance to our members that we do not believe the money in this program was intended for managers general partnership interests.“

Like that’s going to stop them…

The latest, “coronavirus” edition of BofA’s Fund Manager Survey which polled 183 participants with $545bn AUM between April 1 and 7, found widespread fear and pessimism with most expecting a recession, a surge in cash (to levels not seen since Sept 11), expectations for a U not V-shaped recovery, and perhaps most paradoxically, bearishness at record levels… just as the S&P explodes higher with the S&P now up 16% since the start of the “cruelest month.”

Courtesy of the survey organizer, BofA CIO Michael Hartnett, here are the Top 10 highlights from the latest survey:

1. BofA April FMS shows extreme investor pessimism…cash levels jump from 5.1% to 5.9% = highest level since 9/11 terrorist attacks; we say April = peak pessimism.
2. 93% expect global recession in 2020; investors think global GDP cuts largely over, but global EPS cuts just beginning (rare dichotomy).
3. 52% believe economic recovery from COVID-19 shock will be U-shaped, 22% say W-shaped, just 15% say V-shaped (Exhibit 1)…macro pessimism.
4. FMS equity allocation lowest since Mar’09 (when S&P500 hit 666 low during GFC)…equity pessimism.
5. 79% want corporations to improve their balance sheets, highest in 20 years; just 5% want corporate buybacks, lowest in 20 years…EPS pessimism.
6. FMS investors very long cash, healthcare, staples, utilities, US, tech, bonds (Exhibit 8); very short energy, equities, materials, industrials, UK, banks, Eurozone.
7. 57% say COVID-19 second wave = biggest tail risk, followed by systemic credit event (30%).
8. BofA Bull & Bear Indicator remains pinned at 0.0, i.e. investor positioning very bearish; we say one last leg up in risk rally but take profits SPX 2850-3000.
9. FMS bull catalyst for distressed cyclicals…health breakthrough (“V is for Vaccine”) ends fear of long recession in GDP/EPS; China credit growth kicks-in.
10. FMS bear catalyst for growth stocks…spike in US dollar signalling credit event the 3 “weak links” of energy, Euro-area and/or Emerging Markets

Digging into the survey reveals that over two thirds of respondents expect the recovery to be U or W-shaped, with just 15% expecting a V-shaped rebound (and only 7% expect no rebound, or an L-shaped recovery).

Going down the list, BofA finds that cash levels among Wall Street professionals jumped to 5.9% from 5.1%, the highest cash level since 2001, and well above the 10-year average of 4.6.

Additionally, the surge in cash levels to 5.9%, or the highest level since 9/11 terrorist attacks, (was 5.1% March, 4.0% Feb); “shows extreme investor pessimism”.

The surge in cash means that BofA’s Cash Rule is now in “buy” territory, with the BofA Bull & Bear Indicator at 0.0, a contrarian “buy signal” for risk assets (the FMS Cash Rule works as follows: when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated).

Another way of looking at the cash flood, a record net 50% of FMS investors say they are “overweight” cash relative to benchmark; the previous high was 49% in Oct’08, just after the Lehman bankruptcy.

Another logical consequences of everyone hoarding cash amid a burst in pessimism is that BofA’s risk & liquidity composite indicator has plunged to 28, greater than 1 standard deviation away from average (40) to lowest level since Oct’08 (25).

The surge in pessimism – and cash levels – means that investor equity allocations plummeted 29%  MoM to net 27% underweight; the lowest since March 09…which incidentally happened to be the generational low when the S&P hit 666.

While it is hardly news, now that the US economy is cratering with GDP expected to plunge by as much as 40% in Q2 with tens of millions suddenly unemployed, a record number of survey respondents, net 93%, expect a recession in the next twelve months (the previous peak was in Mar’09 at 86% just as the recession was ending). Ironically, virtually nobody expected a recession at the start of the year.

Tied with the gloomy outlook, 75% of FMS investors said they expect below-trend growth & inflation in the global economy  over the next 12-months, down 8ppt MoM, while just 16% of FMS investors think the global economy will experience below-trend growth and above-trend inflation, up 7ppt MoM.

April’s FMS also showed a rare dichotomy between GDP and EPS expectations: to wit, investors think global GDP cuts are largely over, but global EPS cuts are just beginning, with net 63% believing profits will deteriorate in the next 12 months vs. net 2% expecting worse global growth in the next 12 months.

As in many previous cases, the survey showed that virtually every investor wants companies to focus on cleaning up their balance sheets and halt buybacks, which is ironic because without buybacks stocks would collapse, which in turn would put most of the survey respondents out of a job. Maybe they don’t understand this, but in any case BofA reports that a record high 79% of FMS investors want to see corporations improve balance sheets vs. only 5% want corporates to boost buybacks.

A record net 68% of FMS investors say companies are overleveraged (72% overleveraged, 4% under-leveraged).

Tied to this, just 5% of FMS investors think corporates should return cash to shareholders via buybacks, dividends or M&A (20-year low)…a record low. Maybe instead of FMS investors they should just be called “masochists”?

So how are investors positioned amid this apocalyptic sentiment:as BofA shows, the entrenched recession concerns have led FMS investors to slash exposure to cyclical assets and rotate into defensive assets this month.

And since this is the “apocalypse” edition, BofA also notes that 90% of Wall Street respondents believe credit default risk poses biggest threat to financial market stability, highest credit default risk since Mar’09 (91%).

And just in case all of this needed some wrapper, for the second month in a row investors are most concerned about the Coronavirus, which they see as the “biggest tail risk”, although this month it is the second wave of the epidemic, which we profiled last week in “This Is What Happens After We Pass The Virus Peak.”

Putting it all together, with pessimism and cash levels at all time highs, with liquidity, equity allocations and hope of the future either at record lows or at levels last seen during the March 2009 generational lows, it is probably not a surprise that since the start of the month in which Wall Street turned apocalyptic, the S&P is up 16%.

As NYC’s total Covid-19 cases skyrocket past 105,000 – the The New York City Department of Education (DOE) has released an alarming figure, saying that over 50 of its school employees have died in connection to coronavirus.

This includes 21 teachers, according to the DOE, with others being administrators and various school support staff. A 36-year old principal named Dez-Ann Romain at a Brooklyn high school was the first New York City Public Schools employee to die last month after contracting Covid-19. 

“This is painful news for too many of our communities — each number represents a life, a member of one our schools or offices, and the pain their loved ones are experiencing is unimaginable,” New York City Schools Chancellor Richard Carranza said in a statement, per CNN.

“We will be there to support our students and staff in any way they need, including remote crisis and grief counseling each day. We mourn these losses and will not forget the impact each person had on our DOE family,” Carranza said.

Early in the crisis last month Mayor Bill de Blasio came under fire for not closing the city’s schools fast enough. He argued that underprivileged students could not go without school-provided meals and needed the safe confines of the classroom. The mayor finally ordered the city’s schools to temporarily shut on the weekend of March 14.

And this past weekend he ordered all public school sites closed for the remainder of the year. This impacts some 1.1 million-students in the New York City district. Recently de Blasio and New York Governor Andrew Cuomo have publicly been at odds over the question of potential school re-openings.

Likely the growing loss of school staff due to the pandemic was a strong factor in the mayor declaring schools going to ‘online only’ instruction for the remainder of the year.

“In addition to the loss of teachers, the DOE reported the deaths of 22 paraprofessionals, two administrators, a facilities staffer, a guidance counselor, a food service staffer and two central office employees,” CNN reports of the latest tragic DOE announcement.

Authored by Steve Watson via Summit News,

CNN anchor Chris Cuomo made a startling confession Monday, declaring that he doesn’t value his job and that CNN is “trafficking in things that I think are ridiculous.”

In a Howard Beale-esq moment, Cuomo made the comments on his SiriusXM show, apparently having an epiphany after contracting coronavirus.

“I don’t want to spend my time doing things that I don’t think are valuable enough to me personally,” Cuomo said, adding “I don’t value indulging the rationality, hyper-partisanship.”

Listen:

.@CNN‘s Chris Cuomo went on a rant today about how having the coronavirus has made him reconsider his life. He said he doesn’t like what he does, that it isn’t worth his time and even ranted about a “jackass, loser, fat tire biker”:https://t.co/ctHzceHlO1 pic.twitter.com/btHJRu41nI

— Shelby Talcott (@ShelbyTalcott) April 14, 2020

“I don’t like what I do professionally,” Cuomo said. “I don’t think it’s worth my time.”

Cuomo also said that he dislikes “talking to Democrats about things that I don’t really believe they mean” and “talking to Republicans about them parroting things they feel they have to say.”

The host seems to be reevaluating his role in the fake news system that has become purely about winning ratings by saying ridiculous things.

“I don’t think its worth it to me because I don’t think I mean enough, I don’t think I matter enough, I don’t think I can really change anything, so then what am I really doing?” Cuomo continued.

“I’m basically being perceived as successful in a system that I don’t value. I’m seen as being good at being on TV and advocating for different positions… but I don’t know if I value those things, certainly not as much as I value being able to live my life on my own terms.” he added.

The host also related an experience about being approached by a biker on Easter Sunday, being verbally abused while he was out with his family, adding that he wants to be able to act like any other member of the public, so he told the biker to ‘go to hell’.

“I don’t want some jackass, loser, fat tire biker being able to pull over and get in my space and talk bullsh** to me, I don’t want to hear it.” Cuomo ranted.

“That matters to me more than making millions of dollars a year…because I’ve saved my money and I don’t need it anymore. I want to be able to tell you to go to hell, to shut your mouth…I don’t get that doing what I do for a living.” he added.

Last year, Cuomo made headlines when he was caught on video threatening a guy who called him ‘Fredo’, the name of the ‘weak’ middle brother in ‘The Godfather’.

Cuomo told the person that he would “f***ing throw you down the stairs like a f***ing punk”:

“So, I’m gonna make changes,” Cuomo concluded.

“Why? Because I’ve gotta be happy. Why? Because life is short. Life is short. And I’m pretty far down the road – I’m gonna be 50.”

He also admitted that he doesn’t want to be like other network anchors who are open about their partisanship.

“I’ll never be Sean Hannity. I’ll never have this mass following that echoes a political set of ideas and principles that I’ll agree with. Similarly, Rachel Maddow.” Cuomo announced.

It seems that Cuomo is ‘mad as hell and he aint gonna take it no more!’

While some companies may be wasting time asking for rent concessions as a result of the coronavirus lockdown, Tesla, which is now valued at about $130 billion as of Tuesday morning’s trading, is telling its landlords its going to be paying less in rent.

The company sent out an e-mail to landlords as part of a broader push to find cost savings during the coronavirus lockdown, according to the Wall Street Journal. In it, they unilaterally decided they would be paying less in rent.

The e-mail read: “The rapid world pandemic that is now affecting our country has led Tesla to make strategic decisions to ensure the company’s long term success and growth. As a result of the increasing restrictions on our ability to conduct business, we would like to inform you that we will be reducing our monthly rent obligations effective immediately.”

The company, after unilaterally deciding rent concessions were in order, then said it hopes it can discuss options with its landlords in the days and weeks to come “so we can continue to partner and work together to ensure a continued and mutually beneficial relationship.”

The demand by Tesla raised some eyebrows on social media:

Look who’s panicking now? $TSLA valued at $120 billion should not be asking for rent savings due to coronavirus
Unless of course @Tesla @ElonMusk are engaged in overvaluation fraud via false sales projections to give the appearance of hypergrowth, eh @TheJusticeDept & @FBI? https://t.co/b8kmQ3XztP pic.twitter.com/Ucs7rVWn1L

— KillingMyCareer (@MelaynaLokosky) April 14, 2020

one of these companies is faking deliveries and can’t afford to pay rent pic.twitter.com/3Cm9JrnSZO

— EVent Horizon (@evdefender) April 14, 2020

Recall, just two days ago, we reported that Tesla had furloughed 50% of its sales and delivery team in the U.S. 

The company announced on Friday that about half of the company’s entire U.S. sales and delivery staff would be affected.

Workers in sales and deliveries were furloughed by their rank and their tenure, not on the basis of their performance. Anyone with entry-level roles or lower sales quotas each quarter have all been furloughed, according to sources at Tesla. Employees in senior sales and delivery roles who have been with the company for less than two years have also been furloughed.

One furloughed employee worried that permanent layoffs could be next as a way for Tesla to continue cost cutting that began in 2019.

Tesla had suspended production at Fremont and in New York on March 24. The Fremont suspension came after a spat with the Alameda County Sheriff’s department about whether or not Tesla was an “essential” business. It also came 8 days after Musk told his workers they were “more likely to die in a car crash” than from coronavirus. 

Two days after Tesla’s delayed close, on March 26, it was reported that two Tesla employees had tested positive for coronavirus.

According to an email sent to U.S. employees by in-house counsel Valerie Capers Workman, workers pay is going to be cut 10%, directors will have their salaries cut by 20% and VP salaries will be cut by 30%, the company said.

Tesla said that pay for salaried employees would be reduced on April 13 and that cuts would remain in place until the end of the second quarter, despite the company’s plans to re-open in early May.

Authored by Patrick Buchanan via Buchanan.org,

The same day the number of U.S. dead from the coronavirus disease hit the 15,000 mark, we also crossed the 15 million mark on the number of Americans we threw out of work to slow its spread and “bend the curve.”

For each American lost to the pandemic, 1,000 Americans have lost their jobs because of conscious and deliberate decisions of the president and 50 governors.

Some 60,000 citizens, we are told, will likely be lost in this pandemic. Are we prepared to accept 60 million unemployed to “mitigate” those losses?

What price victory in this good and necessary war to kill the virus? Is it unseemly or coldhearted to ask?

At what point do we “declare victory and get out,” as one senator told us to do in Vietnam, rather than continue to sustain the U.S. war dead, even if that meant South Vietnam would fall to our common enemies?

Economists at J.P. Morgan are forecasting that the U.S. gross domestic product will fall by 40% this spring and unemployment will reach 20% of the labor force this month.

These are numbers not seen since the Great Depression.

What does this deliberate decision to shut down the country and carpet-bomb our own economy, upon which we all depend, tell us about what we Americans value?

Consider. In a nation one-tenth as populous as ours today, Abe Lincoln sent more than 600,000 men and boys, North and South, to their deaths rather than let seven Deep South states secede and depart in peace.

While the daily loss of Americans to the virus appears to be leveling off, one-third of the way to that 60,000 figure, the other losses from the social and economic devastation we have invited upon ourselves have just begun to mount and will continue far longer.

How many millions of sick and elderly have we sent into solitary confinement? How many families have we forced into a daily struggle for the means to put food on the table and get medicine from the pharmacy?

When the decisions come from President Donald Trump and the governors to open up the economy and encourage Americans to go back to work, will the nation respond?

Will movie theaters and malls all reopen? Will shuttered hotels and motels fill up again? Will professional teams — the NFL, MLB, NBA or NHL — play again to the crowds they knew?

Will public, private and parochial schools, charter and high schools, colleges and universities, all open again to the same-sized classes?

Will conventions, concerts, rallies and recitals begin anew?

To save Americans from contracting a virus that may kill 1-3% of those infected, we have put America on a ventilator.

By courting a depression — a certain consequence of having a nation of 328 million mandatorily sheltering in place and socially distancing — we are telling the world the price we will pay to help save the lives of the thousands who might otherwise contract the virus and die.

Yet this decision raises related questions of life and death.

Can a nation that will accept a depression that destroys the livelihoods of millions of its citizens be credible when it warns another great power that it is willing to fight a nuclear war — in which millions would die — over who rules the Baltic states or who controls the South China Sea?

Would a nation so unwilling to accept 60,000 dead in a pandemic it would induce a depression to cut the casualties, engage in a nuclear exchange with Russia over Estonia?

The longer the shutdown continues, the broader, deeper and more enduring the losses the country will sustain.

We Americans already live in a nation and world atop a mountain of debt.

Student loan debt. Mortgage debt. Consumer debt. Corporate debt. Municipal, county and state debt. A national debt of $22 trillion now soaring into the stratosphere.

Then there is the sovereign debt of the Third World and of nations like Argentina and Italy. If we bring the U.S. and world economy down, who pays that debt? Or is that a ridiculous question?

The decisions we are taking today, hurling scores of thousands of small businesses and millions of citizens toward bankruptcy, could start a rockslide of loan defaults that will start tumbling the banks as well.

The decisions we take in this coronavirus crisis are defining us as a nation and a people. They are telling the world what we Americans will sacrifice and what and whom we will seek to save at all costs. They will tell us who and what is expendable and who and what is not.

They will establish a hierarchy of values that may not correlate exactly with what we Americans publicly profess.

Our decisions may tell us who we truly are.

For the first time since early March, Nasdaq has scrambled back above key technical levels as Dow futures test Sunday night opening highs…

Nasdaq Composite is back above its 50- and 200-day moving-averages…

Dow futures are soaring…

Will the machines extend or bend here?

After staying on the sidelines for the entire primary, President Barack Obama will officially endorse his former VP, longtime purported friend and now finally the presumptive Democratic nominee Joe Biden in the race for president.

NEW: Former President Barack Obama will endorse his former vice president Joe Biden in a video to be released this morning, according to a source close to the former president.

— Peter Alexander (@PeterAlexander) April 14, 2020

The endorsement is expected to come in the form of a video to be released via social media.

Late last week in a piece entitled “Barack Obama Wins The Democratic Primary”, Politico examined Obama’s reluctance to take the spotlight during the primary, and his weariness with the Democratic Party’s “bullshit”.

Though they tried to portray Obama as taking steps to bolster Biden behind the scenes, the details provided by the reporters don’t really support this. Instead, it looks like Obama sat out the whole primary, and didn’t even start talking about a Biden endorsement until after South Carolina, when Biden effectively clinched the nomination thanks to a strong debate performance, a solid win and the implosion of the Bloomberg campaign.

But some of his aides now concede that behind the scenes Obama played a role in nudging things in Biden’s direction at the crucial moment when the Biden team was organizing former candidates to coalesce around Biden.

“I know he did a few things,” said one longtime close adviser to Obama. “He was talking to Biden regularly in that period. I don’t know exactly what he said, but you can speculate! It’s noteworthy that he called Klobuchar and the others right when they got out.”

A person with knowledge of Obama’s conversation with Buttigieg after the former Indiana mayor exited the race explained it this way:

“Obama talked to Pete the night that Pete dropped out. When Pete told Obama that he was 99.9 percent of the way there in terms of endorsing Biden, I would say that Obama was encouraging. But I would also say that Obama was very careful not to be seen as putting a thumb on the scale. He and the people close to him are very careful about the optics – the 2016-style optics. Sanders and his supporters had reason to believe the party put the thumb on the scale for Hillary in 2016 and he wanted to avoid that. Obama wasn’t the driving force, but he was encouraging of people who had those instincts to rally around Biden. But he was very cautious and discreet in how he operated.”

A Democratic strategist added, “The truth is, he’d rather be on David Geffen’s yacht than dealing with internal Democratic party bullshit.”

And as the New York Times explained yesterday, while Biden appears to have a solid lead in ‘national’ polls, a close reading of polling data shows the race for the Electoral College is much closer than it seems, with the two candidates at a virtual draw, since the swing states that will decide the election have a disproportionate number of poorer whites with no college education who represent a huge chunk of the president’s base.

That’s because Biden’s bumbling primary campaign, where he frequently looked confused or even as if he were suffering from early-onset dementia, has not been forgotten, and the only reason that Biden even made it this far is because the public bought the DNC’s “most electable” narrative, hook, line and sinker.

It’s officially “anyone but Trump” 2020 as Bernie Sanders’ diehard fans weigh whether to just sit this one out.

The US State Department received two cables from US Embassy officials in 2018 warning of inadequate safety at a Wuhan, China biolab conducting ‘risky studies’ on bat coronaviruses, according to the Washington Post, which notes that the cables have “fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus.”

A US delegation led by Jamison Fouss, the consul general in Wuhan, and Rick Switzer, the embassy’s counselor of environment, science, technology and health took the unusual step of repeatedly visiting the Wuhan Institute of Virology (WIV) – which had become China’s first laboratory to achieve the highest level of international bioresearch safety (BSL-4) in 2015. The last of the visits, which occurred on March 27, 2018, was documented on WIV’s website and subsequently scrubbed (archive).

US officials were so concerned by what they saw that they warned of a potential pandemic stemming from the lab’s work on bat coronaviruses.

“During interactions with scientists at the WIV laboratory, they noted the new lab has a serious shortage of appropriately trained technicians and investigators needed to safely operate this high-containment laboratory,” reads a January, 2018 cable drafted by two officials from the embassy’s environment, science and health sections who met with scientists from the WIV.

Interestingly, the Chinese researchers were receiving assistance from the Galveston National Laboratory at the University of Texas Medical Branch and other U.S. organizations, however the Chinese had requested additional help. Consequently, the cables warned that the US should give the WIV additional support because of how dangerous the research on bat coronaviruses was.

“Most importantly,” the cable warns, “the researchers also showed that various SARS-like coronaviruses can interact with ACE2, the human receptor identified for SARS-coronavirus. This finding strongly suggests that SARS-like coronaviruses from bats can be transmitted to humans to cause SARS-like diseases. From a public health perspective, this makes the continued surveillance of SARS-like coronaviruses in bats and study of the animal-human interface critical to future emerging coronavirus outbreak prediction and prevention.”

Shi and other researchers have strongly denied that the new virus known as 2019-nCoV came from WIV, after her team was the first to publicly report it.

According to the report, the bat coronavirus research was aimed at preventing the next SARS-like pandemic “by anticipating how it might emerge,” however according to the report “even in 2015, other scientists questioned whether Shi’s team was taking unnecessary risks.”

In October 2014, the U.S. government had imposed a moratorium on funding of any research that makes a virus more deadly or contagious, known as “gain-of-function” experiments.

WaPo is careful to note that ‘many‘ have said there’s no evidence that COVID-19 was engineered, and that concensus is that it came from animals, “that is not the same as saying it didn’t come from a lab, which spent years testing bat coronaviruses in animals,” according to Xiao Qiang, a research scientist at UC Berkeley.

“The cable tells us that there have long been concerns about the possibility of the threat to public health that came from this lab’s research, if it was not being adequately conducted and protected,” he said.

Meanwhile, similar concerns remain about the nearby Wuhan Center for Disease Control and Prevention Lab – a level 2 biosecurity facility, while the Chinese government refuses to say whether either lab was involved.

Notably, the Wuhan CDC is located roughly 900 feet from the wet market which accounted for roughly half of the new COVID-19 cases late last year.

That said, the report notes that the wet market didn’t sell bats – and the first known patient had no known connection to the market. That said, there’s nothing to say that an employee from the Chinese CDC didn’t accidentally infect themselves and go shopping for meat during the virus’s well known asymptomatic incubation period.

According to WaPo, citing sources familiar with the cables, the US embassy wanted to sound an alarm about the grave safety concerns at the WIV lab, “especially regarding its work with bat coronaviruses.”

“The cable was a warning shot,” said one US official. “They were begging people to pay attention to what was going on.”

Next, WaPo moves on to the ‘blame the Trump admin’ phase of the report, noting that “no extra assistance to the labs was provided by the US government in response to the cables” which “began to circulate again inside the administration over the past two months as officials debated whether the lab could be the origin of the pandemic and what the implications would be for the U.S. pandemic response and relations with China.”

Of note, the Obama administration ‘paused’ funding to the WIV, which was lifted a year into Trump’s presidency according to the National Review.

“The idea that is was just a totally natural occurrence is circumstantial. The evidence it leaked from the lab is circumstantial. Right now, the ledger on the side of it leaking from the lab is packed with bullet points and there’s almost nothing on the other side,” said one WaPo source.

Meanwhile, the CCP has put a complete lockdown on information related to the origins of the virus – refusing to provide US experts with samples collected from the earliest cases, and quickly shutting down the Shanghai lab which published COVID-19’s genome on January 11th for “rectification.”

As WaPo notes, “Several of the doctors and journalists who reported on the spread early on have disappeared.”

And now – considering the source of the report, the bat’s out of the bag and the official narrative has been set – which we were called conspiracy theorists for positing three months ago.

Authored by Richard Breslow via Bloomberg,

One thing you hear a lot of is, “I’m no epidemiologist, but…”

• The stock market will make new lows.

• The bottom is in.

• If we get a second round of infections, earnings will continue to be hurt and valuations are too high.

• If we come up with a vaccine faster than we thought, the recovery could come sooner than we are expecting.

None of the above is all that convincing when making predictions about where equity prices are likely to go.

All we can go on is what we know now. Whether the policies put in place seem sensible and whether we can catch a break.

We know for a fact that global economic numbers will be horrid. We just don’t know for how long and to what lasting effect.

I’m not at all sure why there’s this fascination over arguing vehemently about the issue of this being a dead cat bounce or the resumption of the rally. The truth is, we haven’t seen this before. There have been some big, quick and tradeable moves. They counted if you caught them. And also if you didn’t. And now we move on.

Lots of markets are at interesting pivot levels. Which matter more in the moment than earning bragging rights over calling the next big one.

The S&P 500 at and around 2,800 matters. Euro Stoxx 50 anywhere between 2,900 and 3,000 is as well.

Get the little things right and the rest will be much more likely to work out as hoped.

Guessing where the next home run will come may be a coin flip at this point.

But we do know that the market has friends within the halls of the central banks. And they care about the level of asset prices. They’ve gone, or are going, pretty much all-in. Doing so doesn’t always work out and, absolutely, not necessarily in a straight line. But it’s worth factoring it into your calculus. We all know what the Fed has been up to. Thankfully, they did a masterful job keeping the financial plumbing functioning. In any case, they didn’t, and perhaps shouldn’t have, stopped there. But, I don’t for a second think they will be able and willing to “take it back” when the time is right as easily as they hope. We’ve seen this play before.

Bloomberg News ran a really eye-opening article this morning detailing the extent of the BOJ’s activities in supporting the economy. And markets. Apparently there is always room to do more. What’s a balance sheet for, if not to use it? The line, however, that stood out came in an attached table. In listing purchases of ETFs and J-REITS was the explanation, “No schedule is announced. They tend to be conducted when equities drop.”

As we wait to see how the various pivot levels play out, it’s worth paying attention to how Italian fixed income trades. BTPs sagged right from the get-go. They have tried to rally since. There was a lot of criticism in Italy over the weekend about the terms that Finance Minister Roberto Gualtieri agreed to last Thursday as part of the euro zone rescue package. And he received some harsh criticism by the populist parties. Whether this becomes a lasting political problem for the government remains to be seen. But it should be on the radar. The Europeans tend toward needing to take multiple bites at the apple. And, to be fair, their equities are up on the day.

Another thing to follow will be the dollar. Maybe it really is going down. It just is unlikely to do so as easily as many forecast. Rates are low. They are going to stay there. Who else can afford to be jacking up theirs?