Category: zerohedge

By now it becoming clear to many that demand for precious metals, as the world ‘turns’, is far outpacing supply as major gold suppliers and sellers exclaim “there is no gold.”

One glance at APMEX pages and two things are immediately clear:

1) There is no gold or silver….

2) And if there is, the premium for physical gold and silver over paper is massive…

Put in context, this 100% premium for silver is shocking (h/t @JanGold_)

And the mainstream media is starting to notice as DollarCollapse.com’s John Rubino points out, The Wall Street Journal just published the kind of article gold bugs dream of… Here’s an excerpt:

Coronavirus Sparks a Global Gold Rush

Epic shortage spooks doomsday preppers and bankers alike; ‘Unaffordium and unobtanium.’

It’s an honest-to-God doomsday scenario and the ultimate doomsday-prepper market is a mess.

As the coronavirus pandemic takes hold, investors and bankers are encountering severe shortages of gold bars and coins. Dealers are sold out or closed for the duration. Credit Suisse Group AG, which has minted its own bars since 1856, told clients this week not to bother asking. In London, bankers are chartering private jets and trying to finagle military cargo planes to get their bullion to New York exchanges.

It’s getting so bad that Wall Street bankers are asking Canada for help. The Royal Canadian Mint has been swamped with requests to ramp up production of gold bars that could be taken down to New York.

The price of gold futures rose about 9% to roughly $1,620 a troy ounce this week and neared a seven-year high. Only on a handful of occasions since 2000 have gold prices risen more in a single week, including immediately after Lehman Brothers filed for bankruptcy in September 2008.

“When people think they can’t get something, they want it even more,” says George Gero, 83, who’s been trading gold for more than 50 years, now at RBC Wealth Management in New York. “Look at toilet paper.”

Worth its weight in Purell

Gold has been prized for thousands of years and today goes into items ranging from jewelry to dental crowns to electronics. For decades, the value of paper money was pinned to gold; tons of it sat in Fort Knox to reassure Americans their dollars were worth something. Today they just have to trust. President Nixon unpegged the dollar from gold in 1971.

Gold is popular with survivalists and conspiracy theorists but it is also a sensible addition to investment portfolios because its price tends to be relatively stable. It is especially in-demand during economic crises as a shield against inflation. When the Federal Reserve floods the economy with cash, like it is doing now, dollars can get less valuable.

“Gold is the one money that can’t be printed,” said Roy Sebag, CEO of Goldmoney Inc., which has one of the world’s largest private stashes, worth about $2 billion.

The disruptions this week pushed the gold futures price, on the New York exchange, as much as $70 an ounce above the price of physical gold in London. Typically, the two trade within a few dollars of each other.

That gulf sparked a high-stakes game of chicken in the New York futures market this week. Sharp-eyed traders started snapping up physical delivery contracts, figuring banks would have trouble finding enough gold to make good and they would be able to squeeze them for cash. That set off a scramble by banks.

Goldmoney’s Mr. Sebag said bankers were offering him $100 or more per ounce over the London price to get their hands on some of his New York gold.

What’s more, there is limited new supply. Mines in countries such as Peru and South Africa are shut down because of the coronavirus. Once-busy Swiss refineries that turn raw metal into gold bars closed earlier this week as the country’s coronavirus cases neared 10,000.

David Smith owns a wristwatch business in northern England and said Tuesday his bullion dealers weren’t taking any more orders. He has been scouring social media for individuals who might sell to him.

“You can’t really get physical gold and silver anywhere at the moment,” he said.

He began investing personally in metals a few years ago after watching videos from Mike Maloney, creator of the website goldsilver.com. Like other online dealers, the site currently has a notice saying products are back-ordered up to 12 weeks and that there is a $1,000 delivery order minimum.

The title of Mr. Maloney’s latest podcast: “Unaffordium and unobtanium.” (The latter has popped up in the plots of science fiction movies).

To sum up:

A pillar of the mainstream financial media just acknowledged gold’s multi-millennia role as a store of value, quoted someone calling it “money,” and noted that since the world left the gold standard, we “just have to trust” governments to maintain their currencies.

The article quotes the CEO of GoldMoney and GoldSilver’s Mike Maloney, and calls gold “a sensible addition to investment portfolios.”

It mentions the divergence between paper and physical prices and attributes it to the same kind of buying panic that has emptied stores of toilet paper. “When people think they can’t get something, they want it even more.”

Now pretend you’re an editor at a city newspaper or regional magazine and you’ve just finished reading the above article. What do you do? You immediately call in one of your finance reporters and tell them to look into this “gold shortage” thing.

So prepare for millions of anxious people to get their first exposure to the gold story, just as the supply dries up.

After receiving a controversial $25 million bailout (which would pay for a lot of respirators), the John F. Kennedy Center for the Performing Arts notified nearly 100 musicians with the National Symphony Orchestra that they won’t receive paychecks after April 3rd, according to the orchestra’s COVID-19 Advisory Committee obtained by the Washington Free Beacon.

“The Covid-19 Advisory Committee was broadsided today during our conversation with [Kennedy Center President] Deborah Rutter,” reads the email. “Ms. Rutter abruptly informed us today that the last paycheck for all musicians and librarians will be April 3 and that we will not be paid again until the Center reopens.”

The email went out to members on Friday evening, shortly after President Trump signed the $2 trillion CARES Act, a stimulus package intended to provide relief to people left unemployed by the coronavirus pandemic. Congress included $25 million in taxpayer funding for the Kennedy Center, a provision that raised eyebrows from both Democrats and Republicans, but ultimately won support from President Trump. The bailout was designed to “cover operating expenses required to ensure the continuity of the John F. Kennedy Center for the Performing Arts and its affiliates, including for employee compensation and benefits, grants, contracts, payments for rent or utilities, fees for artists or performers,” according to the law’s text. The arts organization decided that the relief did not extend to members of the National Symphony Orchestra, its house orchestra. –Washington Free Beacon

“Everyone should proceed as if their last paycheck will be April 3,” the email continues. “We understand this will come [as a] shock to all of you, as it did to us.”

One veteran member of the orchestra (who we suspect forwarded the email to the Beacon) told the outlet that the decision has “blindsided” musicians.

“It’s very disappointing [that] they’re going to get that money and then drop us afterward,” the musician said. “The Kennedy Center blindsided us.”

The cente, which received $41 million from taxpayers in 2019, just completed a $250 million renovation – however it faced insurmountable deficits after shuttering its doors on March 12 due to COVID-19.

Rutter, meanwhile, told the Washington Post that she would forego her $1.2 million salary while the JFK center was closed – while orchestra members bristled at the idea of doing the same.

“While the Union understands that the Kennedy Center has decided to cancel all performances through May 10, 2020 because of the COVID-19 pandemic, those cancellations do not give the Association any contractual basis for failing to comply with the sections of the [agreement],” reads a grievance filed by the orchestra, claiming that the center has violated its contract with members that stipulates members be given at least six-weeks notice before they can stop paychecks.

“There is no provision of our collective bargaining agreement that allows the Kennedy Center to decide to stop paying us with only one week of notice,” the email says. “While we fully expect that an arbitrator would agree that management violated the CBA and that we are entitled to continued salary and benefits, this process takes time.“

Authored by Sven Henrich via NorthmanTrader.com,

Answers

The year is 2020. A new virus is spreading across the planet like a wildfire. More lethal than the flu, highly contagious with no cure. Stocks markets collapse, global economies are shutting down with billions of people quarantined to their homes and millions losing their jobs overnight. What do you do? What DO you do?

While it sounds like the script of a bad disaster movie, it is nevertheless the world we suddenly find ourselves in. If you’d outlined this script to anyone just a couple of months ago nobody would’ve believed you.

But here we are and everyone has to adapt and get on with it.

Everyone searches for answers. Is it a short term thing and a big recovery is just around the corner with the help of unprecedented monetary and fiscal stimulus, or will the monetary and structural consequences be so severe that a larger recession, depression even, is inevitable?

The Big Battle is unfolding right in front of us.

Markets, following the biggest crash off of all time highs since 1929, also just managed the sharpest rally since 1933. A bear market rally similar to many seen during the 2008 crisis?

Or a V shaped bottom similar to December 2018?

A retest of the lows for a “W” bottom, or the beginnings of a much more sinister stair step descent to new lows? Lots of questions, but few answers amid evolving data points that do not offer clarity where the current shock will settle.

Fact is the long term monetary and fiscal consequences of the current interventions will reverberate for years to come. Fact is also the global recession that was already at risk of playing out in 2019, but was delayed by aggressive global central bank action, but has now come to fruition anyways. Sparked by a trigger that has rendered all these policy actions of the past year ineffective and meaningless.

And now the forces of intervention have gone straight the MMT route. I urge caution once again:

This crisis is every MMT proponent’s wet dream.
Don’t let them lead you astray with promises of magic money.
They are even more dangerous than the easy money hacks that have steered us into this latest disaster.

— Sven Henrich (@NorthmanTrader) March 28, 2020

Since the advent of cheap money the crashes are getting worse. 2000 was bad, 2008 was worse and now 2020 is even worse than 2008. The trend is your friend? Not so. The trend suggests ever cheaper money, ever more debt and ever more interventions lead to ever more severe consequences and all is reliant on the forces of intervention to retain their efficacy and double, triple, quadruple down, a proposition whose wisdom is highly debatable.

Many now say the shock will be short lived and the market is a forward discounting mechanism and will look to brighter things to soon to come. If the market is a forward discounting mechanism why did this just happen:

If markets were forward looking they wouldn’t have made all time highs on February 19th.

— Sven Henrich (@NorthmanTrader) March 28, 2020

My view: Flexibility over certitude. Anyone expressing certitude about what will or will not happen has access to information I don’t have or perhaps they are simply projecting of what they would like to see happen.

What I do know is that technicals are working and they help guide us through this complex jungle and I’ll demonstrate that in the video below. But technicals also have to negotiate the complex web of artificial liquidity which is now entering markets to a degree never before seen in human history, even dwarfing the interventions of 2008/2009.

This week’s technical market assessment:

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Please be sure to watch it in HD for clarity. To get notified of future videos feel free to subscribe to our YouTube Channel. For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

COVID-19 cases and deaths are soaring in New York and New Jersey, prompting President Trump on Saturday to consider a short-term quarantine for the tri-state area — New York, New Jersey, and Connecticut. 

Around March 10, New Jersey residents started to reduce their mobility around their respective communities, all because the government asked people to stay home as confirmed cases and deaths increased. On March 21, New Jersey Gov. Phil Murphy ordered all residents to “stay at home” to flatten the curve and reduce infections to prevent hospital systems in the state from being overwhelmed. 

The changes in the travel of New Jersey residents have been monitored on a new app called “Social Distancing Scoreboard,” which tracks the GPS location of smartphones in a geographical area, to make sure people are abiding by the government enforced public health order. The app gives the state an “A” for its residents following the rules.  

With that being said, stunning drone footage of Newark Avenue, one of the busiest streets in Jersey City, was uploaded to YouTube on Saturday morning. The short video shows shuttered shops and the overall area resembling a ghost town. The video confirms the Social Distancing Scoreboard app’s finding of how many residents in the state have reduced travels. During the video, maybe two people were spotted. 

New Jersey closed all non-essential business one week ago. The state’s Attorney General’s Office said anyone who doesn’t abide by the public health order could face criminal charges. 

Murphy called up the National Guard on Friday evening, as it appears a lockdown of the tri-state area could be next, as per President Trump’s comments on early Saturday. 

Authored by Charles Hugh Smith via OfTwoMinds blog,

There are only two ways to survive a decline in income and net worth: slash expenses or default on debt.

In post-World War II America, the cultural zeitgeist viewed frugality as a choice: permanent economic growth and federal anti-poverty programs steadily reduced the number of people in deep economic hardship (i.e. forced frugality) and raised the living standards of those in hardship to the point that the majority of households could choose to be frugal or live large by borrowing money to enable additional spending. Either way, rising income and net worth would raise all ships, frugal and free-spending alike.

For everyone above the bottom 20%, frugality was viewed as a sliding scale of choice: if you couldn’t increase your income fast enough, then borrow whatever money you needed. If you chose to be frugal, in moderation (i.e. clipping coupons and shopping for the cheapest airline seats, etc.) this was viewed as admirable fiscal prudence; if pushed beyond moderation then it was dismissed as counter to the American spirit of everlasting expansion: tightwad is not an endearment.

Thus none of us immoderately frugal folks ever fit in. Our frugality raised eyebrows and drew derogatory exhortations from indebted free-spenders to “get out there and live a little,” i.e. blow hard-earned money on aspirational gewgaws or status-enhancing fripperies, including the oh-so-precious “experiences” that have now replaced gauche physical markers of status-climbing.

We are now entering a new era of forced frugality in which incomes and net worth stagnate or decline while the cost of living rises and borrowing is no longer frictionless.

To say that these changes will shock the system is putting it mildly. Here’s the key dynamic in forced frugality: income can drop precipitously without any ratcheting to slow the decline, but costs only ratchet higher, or decline by nearly imperceptible degrees; that is, costs are “sticky” and refuse to slide down as easily as income.

The second key dynamic in forced frugality is the tightening of lending and the rising cost of borrowed money. When lenders could assume that almost every household’s income would increase as a byproduct of ceaseless economic expansion, and assets such as stocks, bonds and houses would always increase in value (any spots of bother are temporary), then the odds of a nasty default (in which the borrower stiffs the lender–no monthly payments to you, Bucko)–were low.

But once incomes and asset valuations are more likely to fall than rise, the door to lending slams shut. Why would lenders extend loans to households and enterprises that are practically guaranteed to default? Any lender that self-destructive would soon be stripped of their capital and solvency.

The general assumption is that since central banks are buying bonds, interest rates for borrowers can only go down. This assumption is misguided. The base assumption of all lenders is that a very thin layer of borrowers will default. Once this layer thickens, it makes no sense to lend to everyone who can fog a mirror.

Unwary lenders are about to learn a very painful lesson about the creditworthiness of supposedly solvent middle-class households: since income isn’t “sticky,” households that had high credit scores for years can quite suddenly default on their loans once their incomes plummet.

As for the borrower’s assets, those too can plummet in value, leaving the lender with zero collateral or an asset for which there is no buyer, regardless of the appraised value.

The income/assets slope is greased while the cost slope is on a resistant ratchet. Income can slide down effortlessly while costs stubbornly refuse to fall.

The net result of this dynamic is forced frugality. For the first time in decades, households and enterprises cannot count on a resumption of growth in a few months and higher incomes and asset valuations.

To the dismay of living-large-on-debt households and enterprises, the only way to get more than you have now will be to save, save, save cash. Earning more from one’s labor will be difficult, as will reaping easy speculative gains from simply owning assets.

The debt-free frugal may be forgiven for indulging in a bit of schadenfreude toward those who scorned frugality in favor of living large in the moment. Now who’s living large? Not the extremely frugal, because squandering money gives them no pleasure, and they prefer the anti-status “status” of old cars and trucks, tools that have lasted decades and assets that look like everyone else’s except they’re debt-free.

As for income–those who control and invest their own capital and labor, the class I’ve long called mobile creatives–will have far more opportunities than those chained to the monoculture plantations of corporate cartels and government agencies squeezed by collapsing tax revenues.

A great many people who reckoned moderate frugality was more than enough will discover it no longer suffices. A great many other people who reckoned they were rich enough to spurn frugality will discover their income no longer covers their expenses and so expenses will have to be slashed and burned to the ground.

And many frugal people who did the best they could with limited income will find that even extreme frugality can’t fix a decline in income.

An economy-wide reckoning of what’s essential is just starting. Netflix subscription? Gym membership? Fast food takeout a couple times a week? No, no and no. A thousand no’s as there are only two ways to survive a decline in income and net worth: slash expenses or default on debt. Both are toxic to “growth” in spending and debt.

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My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

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The last time Dr. Anthony Fauci did the Sunday Shows a few weeks back, he achieved a vaunted Washington milestone by doing all five network and cable Sunday shows – NBC, ABC, CBS, Fox News & CNN – in one day. That was back when President Trump’s approval rating was soaring, and the good doctor was indisputably the lead ‘subject matter expert’ guiding the White House’s response.

That was less than a month ago. But in that time, so much has changed.

President Trump and the good doctor are said to be at odds over some vaguely critical statements made by Fauci. Of course, that didn’t stop the administration and that task force’s media team from sending him out to do more Sunday Show appearances as officials hope futures will open higher after Friday’s selloff following the first three-day rebound since February.

Still, as the death toll in the US crept above 2,000, Dr. Fauci, officially the director of the National Institute of Allergy and Infectious Diseases and a member of the White House coronavirus task force told CNN’s “State of the Union” that models suggest the coronavirus will infect millions of Americans and could kill between 100,000 to 200,000.

However, he stressed that these projections are really a “moving target”, and that it’s possible the numbers could be much lower – or much higher – depending on how the US handles the response. So far, the disorganized response at the federal level has left a hodge podge of states to deal with their own problems, which is why Louisiana Gov. John Bel Edwards – a Democrat – is begging the Feds for help before the outbreak completely overruns his state’s capacity to handle it.

Video of Dr. Fauci telling @jaketapper that “Looking at what we’re seeing now, I would say between 100,000 and 200,000 cases… excuse me, deaths. I mean, we’re going to have millions of cases.” #CNNSOTU

These next few weeks could be pretty rough.pic.twitter.com/Vh6xB4Fele

— Josh Jordan (@NumbersMuncher) March 29, 2020

Back to the interview, Dr. Fauci told Jake Tapper that “Looking at what we are seeing now, I would say between 100,000-200,000” deaths from the coronavirus. “We’re going to have millions of cases,” he added.

“But it’s such a moving target and you could so easily be wrong…what we do know is we have a serious problem in New York, we have a serious problem in New Orleans and we’re going to be developing serious problems in other areas. Although people like to model it, let’s just look at the data that we have, and not worry about these worst case and best case scenarios.”

Dr. Fauci also cautioned the public about how to interpret models:

“There are things called models, and when someone creates a model, they put in various assumptions. And the model is only as good and as accurate as your assumptions.”

“And whenever the modelers come in, they give a worst case scenario and a best case scenario. Generally, the reality is somewhere in the middle. I’ve never seen a model of the diseases that I’ve dealt with where the worst case scenario actually came out. They always overshoot.”

Dr. Fauci stressed that Trump’s hope to reopen the country by Easter will greatly depend on whether the public complies with the ‘shelter in place’ recommendations, though he said he greatly doubts that the US will be able to reopen by next week (Easter is April 12, still a couple of weeks away). And notably, when Tapper pressed Dr. Fauci about rumors the administration was ignoring Democratic governors pleas for more federal assistance simply because they were Democrats, Dr. Fauci assured CNN that anybody asking for assistance would get it.

#CNNSOTU Watch Tapper tried to trap Dr. Fauci to smear President Trump😂😂😂
Dr. shut him down quickly again and again throughout the whole interview. pic.twitter.com/wlcFa0VTg1

— MAGA Immigrant (@RealCindy9) March 29, 2020

That last clip is really something: but the takeaway from the interview is this: prepare for the worst, but hope for the best. The result is going to depend on whether millions of Americans do their part not to spread the virus. So, instead of focusing on the projections, focus on reacting to the situation at hand.

Authored by Daniel Lacalle,

The economy is the heart of the social body. If we shut down the heart of an organism to safeguard the hands and brain, the body dies.

The data on deaths and infected from the Covid-19 coronavirus epidemic is alarming. Let us remember the deceased, the infected and their families, and applaud the response of civil society, businesses, and citizens.

A pandemic crisis is addressed by providing safety protocols and sanitary equipment for businesses to continue to run and keep employment, not shutting down everything, which may create a larger social and health problem in the long term regardless of the massive liquidity and fiscal policies. Why? Because demand-side policies never work in a forced shutdown of all sectors. There is no demand to “incentivize” when the government orders the closing of all activities. And there is no supply to follow when the economic crisis creates a collapse in employment and consumption.

Many commentators are saying that shutting down the economy is an essential measure to gain time to control the virus. This analysis comes from people who simply do not understand the ripple effects and massive ramifications of a complete shutdown. They perceive that it is small collateral damage because they also believe that everything can go back to normal in one month. They are wrong. The impact is severe, widespread and exponential.

The decision to shut down the economy may cause long-lasting damages to job creation and businesses that cannot be unwound in a few months. Yes, it is essential to contain the virus spread and drastic measures are warranted, but we cannot forget that each month means millions of unemployed and thousands of business closures.

Each month of lockdown means more than millions of unemployed. It means thousands of businesses that go bankrupt and have to close forever. This debunks the V-shaped recovery theory (even with Congress package, which does not address the working capital nightmare unraveling). The best course of action to tackle the health crisis, as well as the economic collapse risk, is to follow the South Korea and Singapore strategy. This is not a spending crisis, but a test and prevention crisis.

The healthcare crisis has to be tackled from three angles: prevention, testing and ensuring that treatment and vaccines will be widely available when ready. If governments fall prey to panic and destroy the economic fabric of the country they will add poverty, misery, and bankruptcy to the fatalities of the epidemic, thus creating a larger, longer-lasting social and health depression.

The debate in the media has tried to focus on the issue of austerity and government spending as if this had been solved by having massive budgets.

This is not a crisis due to a lack of health spending but from the lack of foresight, prevention, and management of some countries.

South Korea is, with 51 million inhabitants, is one of the countries with a higher ranking in economic freedom (ranked 25 globally), public spending to GDP is much lower than most leading economies, at 30%, and per-capita health expenditure is much lower than in the EU or US. South Korea is also a world example in managing the pandemic, with 139 deaths and 9,332 cases at the end of this article. The same can be said of Singapore, also a leader in economic freedom and with much lower spending to GDP (18%).

On the opposite side, Spain or Italy, with large government spending (above 40% of GDP) and vast public healthcare systems, stand unfortunately at the top of the list in deaths. There may be many factors involved, but one is clear. More spending is not the magic solution to a crisis generated by poor prevention and mismanagement.

What has been the success of the leading countries? Little bureaucratic administration and a fast, effective and efficiently managed prevention, analysis and containment system.

Any Spanish or Italian citizen can understand that the accumulation of inefficiencies they have experienced in managing the pandemic would have been the same if in the past they had spent much more because resources would have been allocated to other things, not to an epidemic that the governments failed to recognize. It is a management problem, not necessarily of funding, and much less of funds managed by the government.

This leads us to another fallacy which is the concept of “public health” when what most politicians want to impose is “political health”. An efficient public service health system not only does not have to be a single-payer but much less a single manager and less so a political one.

Recall that in July last year that same government called on the autonomous communities to reduce spending on Health (“urgent plan for adjustments in pharmaceutical and health spending”, demanding measures “in the outpatient and hospital pharmaceutical provision, as well as in health products” ).

Public services and the private sector are giving everything and more in this crisis. This is the evidence of social capitalism that I comment on in my book, Freedom or Equality (PostHill Press).

The crisis has shown that the only solution to future challenges comes precisely from greater collaboration, with a solid and powerful private sector. There is no public sector without the private sector. There is no public health without the technology, innovation, research, products, and drugs of the private sector. No leading state in the world faces the challenges of health in the future by imposing political management as the only option.

Everyone knows that we will need all-important competition, freedom of choice, and technological leadership to serve many more people while maximizing the use of resources. Anyone who thinks that by destroying the private sector they are going to guarantee greater and better access to goods and services has a problem with history and statistics. No leading healthcare system is only state-managed. And none works only with state-owned resources.

Health professionals do not belong to the Government. They are free individuals, many of them working in the private and public sector at the same time, and they are part of civil society that provides a service with their magnificent work, which we taxpayers pay for.

This crisis has demonstrated the reality of capitalism as the most efficient and social system. Companies and self-employed workers have responded in an exemplary way. The number of businesses, entrepreneurs, and organizations that have acted quickly and efficiently to support countries like Spain or Italy in difficult times is enormous. Unfortunately, these days the examples of solidarity and contribution shown by anti-capitalist agitators are almost non-existent.

It is curious that those “anti-capitalists” who previously encouraged debt defaults and anti-business slogans today demand the most capitalist instruments in the world, support from the balance sheet of multinationals, multibillion-dollar bond issuances that they will have to sell to the investment funds they hate, and massive debt that will be financed by the investors they abhorred, with investments that will be made by the companies they condemn and giant loans from the banks they wanted to destroy. I have never seen more capitalist anti-capitalists.

Thanks to capitalism, we are going to get out of this crisis of poor prevention and worse management in a record period, if there are no more obstacles for economic recovery. In socialism, we would be forced to choose between misery and more misery, added with repression once the citizens began to show their discontent with the Government.

When the Government stands as the only power without checks and balances, the door is opened to incompetence, authoritarianism, and misery. Competition is essential for progress. The moment competition and freedom are curtailed, progress is destroyed.

That is the great advantage of a free economy. Progress in competition and freedom. The government is at the service of civil society and taxpayers, and not the other way around.

This crisis is going to destroy millions of jobs, but these can recover quickly and heal the economy if governments don’t make the mistake of addressing a pandemic crisis by creating an economic depression. Spain and Italy show why this is a grave mistake. The vast majority of small and medium companies are sent en masse to collapse, leading to years of economic stagnation, poverty, and massive unemployment. Destroying the economy is not a social policy.

Governments need to provide citizens and businesses with the tools to ensure safety, not kill the social fabric of the nation.

Instead of protecting the productive fabric to create more jobs when the pandemic is controlled, some countries are going to lead hundreds of thousands of small businesses to bankruptcy. Businesses that will not come back when, thanks to science, the crisis passes.

The health pandemic will be overcome thanks to human ingenuity, science, technology, and business. The interventionist pandemic will cost a lot more, in lives, in employment, in growth, and in opportunities.

In the past three weeks, oil plunged and has continued to plunge even more in the aftermath of the oil price war declared between Saudi Arabia and Russia, and where US shale (and its junk bonds) has been caught in the crossfire. However, as we reported last week, we may get to the absurd point when the price of a barrel of oil not only hits $0 but goes negative.

The reason: according to Mizuho’s Paul Sankey, at a whopping 15MM b/d in oversupply, crude prices could go negative as Saudi and Russian barrels enter the market. According to Sankey, much of the US 4MM bpd in crude exports will be curtailed as prices fall and tanker rates soar. And with US storage roughly 50% full, and able to take another 135MM bbl more, assuming a build rate of 2MM b/d, the US can add 14MM bbl/week for 10 weeks until full.

As a result, there is a now race between filling storage and negative pricing “unless U.S. decline rates can outpace inventory builds, which we very much doubt.” Said otherwise, absent dramatic changes, in roughly 3 months, energy merchants will be paying you if you generously take a couple million barrels of crude off their hands.

It went from bad to an outright disaster earlier this week when Goldman, Vitol, and the IEA all raised their estimate for daily oil oversupply to an unthinkable 20 million barrels per day, as a result of the collapse in oil demand as the global economy grinds to a halt coupled with Saudi Arabia’s determination to put all of its higher-cost OPEC peers out of business.

This means that for the oil market to rebalance, both Saudi Arabia and Russia would have to halt all output. Needless to say that is not happening, in fact Saudi Arabia is now pumping between 2 and 3 million barrels more than it did last month, which is why the negative oil price scenario envisioned by Sankey is looking more real by the day.

So real, in fact, that the US energy industry is starting to contemplate the all too real possibility of running out of storage and as Bloomberg reports American pipeline operators have begun asking oil producers to voluntarily ratchet back their output in the clearest sign yet that a growing glut of crude is overwhelming storage capacity.

As Bloomberg details, Plains All American Pipeline, one of the biggest shippers of crude in the U.S., sent a letter this week asking its suppliers to scale back production. The notice came from the company’s marketing unit that buys and sells oil to customers. At the same time, a Texas oil regulator said Saturday that drillers were getting similar notices from pipeline operators.

“We are sending this proactive request to our suppliers to ask that you take steps to reduce oil production in response to the pandemic,” Plains said in the letter obtained by Bloomberg. Good luck with that: in an industry geared to always producing, that’s similar to asking the Nile to reverse course.

The company sent a separate letter requiring customers to prove they have a buyer or place to offload the crude they’re shipping, according to people familiar with the matter. Enterprise Products Partners LP put out a similar call, one person said. The firm didn’t immediately have comment. The idea is to prevent anyone from parking oil in pipelines, an unprecedented step which suggests pipeline are now convinced US commercial storage will soon be full, at which point oil producers will have no choice but to pay customers to take the oil or wreck unprecedented havoc on the US oil infrastructure.

If there is any confusion, Bloomberg explains the situation succinctly: “the messages signal the oil market is fast approaching the moment traders have been warning about – when crude supplies overflow storage tanks and pipelines as the coronavirus pandemic drags down oil demand by the most in history.“

* * *

Also on Saturday, Ryan Sitton, a member of the Texas Railroad Commission that regulates the state’s oil industry, said he’d heard that “some Texas producers are starting to get letters from shippers (pipelines) asking for oil production cuts because they are out of storage.”

There were already signs that North America’s storage system was nearing its limit. On Friday, prices for physical delivery of several key crude grades in North America plunged to the lowest levels in decades. West Texas Intermediate crude in the heart of the Permian shale region plunged to $13.01 a barrel, the lowest since 1999. Meanwhile, West Canada oil is just $5 away from turning negative.

It gets crazier: trading giant Mercuria Energy Group bid just 95 cents for Wyoming Asphalt Sour, a dense oil used mostly to produce paving bitumen, and said the same barrel was bid at below zero earlier this month.

Surprisingly this plunge in oil prices has yet to really hit the gas pump, perhaps because US oil refiners have been steadily cutting back on the amount of crude they buy and process as lockdowns across the nation keep cars off the road, sending gasoline demand plummeting.

Meanwhile, a new wave of defaults is coming as US shale producers have begun to anticipate the day their product will be rejected by intermediaries, and are throttling back drilling even if it means they are staring a bond default squarely in the face. That said, it could take weeks if not months before that translates into a meaningful decline in oil production. Meanwhile, America’s largest oil-storage hub at Cushing, Oklahoma is already more than half full, and filling up at a furious pace.

Sitton has been pushing a plan that would have Texas imposing limits on its crude production as part of a deal with the Organization of Petroleum Exporting Countries. “We need to get in front of this,” he said on Twitter Saturday.

Ok, so ground storage is almost full but what about filling up all those tankers that are floating around aimlessly now that global demand has collapsed? After all it wouldn’t be the first time the US commercial storage was nearly exhausted forcing tankers to be deployed as temporary warehouses of physical product?

Well, that’s precisely what is going on. With the oil market falling into a so-called super contango, which means it is now profitable for traders to buy oil today, store it, and reap the profits by selling it at a higher price months or even years down the line, traders are scrambling to dump oil in portable storage. Firms including Vitol Group and Gunvor Group, two of the world’s largest oil traders, say there’s intense demand to keep barrels at sea.

Traders typically look to use the largest ships for oil storage as they are the most cost-effective. In recent days though, shipowners have also been receiving inquiries about smaller vessels that can hold a million barrels or fewer and for periods of time longer than 12 months, said International Seaways Chief Executive Officer Lois Zabrocky.

“This is a once-in-a-generation type of event,” she said Thursday, quoted by OilandGas360.

As Bloomberg reported separately, citing Robert Hvide Macleod, CEO of tanker owner Frontline Management, “oil is going on ships at a speed never seen before,” as a result of the market’s glut; he added that vessels are being filled at five times the pace of 2015, when oil market was last heavily oversupplied.  International Seaways, another owner, said on Thursday that the total volume of oil in floating storage may top 100 million barrels during this glut.

Why? Because the bottom line bears repeating: “The world is producing 20 million barrels of oil too much every day”, or said otherwise there is no demand for roughly 20% of global output every single day. At this rate, how long before all the storage in Cushing, ARA and China is overflowing and every single tanker in the world is full?

And what happens to the oil price then? One thing is certain – there will be blood.

In a shocking and tragic development, the deadly Coronavirus has struck at the epicenter of Wall Street: moments ago, investment bank Jefferies announced that its CFO Peg Broadbent, has passed away from coronavirus complications, making him the first top financial executive to pass away from the deadly pandemic.

The full press release is below:

With Profound Sadness, Jefferies Announces Death of Jefferies Group LLC CFO, Peg Broadbent

Jefferies Financial Group Inc. (NYSE: JEF) today announced with profound sadness that Peg Broadbent, the CFO of Jefferies Group LLC, has passed away from coronavirus complications. The entire Jefferies family mourns Peg’s loss. On behalf of our Board of Directors, management team and all our global employees, we extend our deepest sympathies to Peg’s family.

Rich Handler, our CEO, and Brian Friedman, our President, expressed their most heartfelt condolences and stated: “We are heartbroken and grieve that our friend and colleague, Peg Broadbent, has passed away from coronavirus complications. Our thoughts, prayers and love go out to Peg’s dear wife, Hayley, and their young children, Sebastian and Peg, as well as Peg’s older children, Anna, Sophie and Charlie, and all of Peg’s extended family here and in the United Kingdom.

The loss of Peg is incredibly personal for us as he was a member of our own extended family. For over a dozen years, Peg has been our CFO and partner, and helped us build Jefferies from less than half its current size, and navigate through hard times and good times. He has also been a much-loved and respected leader to the incredible global team that provides the support, foundation and glue across our firm. But Peg was so much more. Part of what made Peg the great partner he was to all of us was his core humanity. No matter what the occasion, his decency, calmness and dry wit were always there, always making things better. We will miss him terribly.

We know Peg would want his passing to serve as a reminder to all of us of how much he cared for all of his friends at Jefferies and that our priority must be the health and happiness of our loved ones. May Peg’s memory be for a blessing for his family, for us and for all who loved him.”

Teri Gendron, CFO of Jefferies Financial Group, has been appointed as the interim CFO and Chief Accounting Officer of Jefferies Group LLC.

Late last night, President Trump said he wasn’t planning on quarantining New York, New Jersey and Connecticut, but that the governors of other states like Florida had complained about the number of travelers from out-of-state bringing disease and pestilence with them from the big city.

So, instead of a quarantine, governors are taking measures into their own hands, and authroizing the police and the national guard to interrogate anybody with an out-of-state license plate, or a rental vehicle or an out-of-state driver’s license about the steps they’re taking to quarantine themselves, and issue fines if necessary.

Spain on Sunday reported yet another record rise in the death toll – another 838 fatalities – bringing the total to about 6,500 deaths and almost 79,000 registered coronavirus cases, the fourth highest in the world. It’s at least the second day in a row that Spain has reported a ‘record-breaking’ jump in its death toll.

But the US, with its total number of cases climbing at the fastest pace on record anywhere – even as large swaths of the country still have trouble accessing tests – is really starting to panic. The number of confirmed cases globally is nearing 682k, and in the US, 124,866 have been confirmed as of Sunday morning, Johns Hopkins said. Another 2,191 deaths had been recorded, with nearly 200 of those having occurred since late Saturday.

Last night, Jim Dolan, the owner of NBA team New York Knicks, has tested positive for the coronavirus, the basketball team said in a Twitter post.

The Madison Square Garden Company Executive Chairman and Chief Executive Officer Jim Dolan has tested positive for coronavirus. He has been in self-isolation and is experiencing little to no symptoms. He continues to oversee business operations.

— NY_KnicksPR (@NY_KnicksPR) March 29, 2020

In other news, Peg Broadbent, the CFO of investment bank Jeffries, has passed away due to “complications” related to contracting COVID-19.

Texas, Florida, Maryland and South Carolina are among the other states that have ordered people arriving from New York to self-quarantine. In Texas, the authorities said on Friday that Department of Public Safety agents would make surprise visits to see whether travelers were adhering to the state’s mandate, and they warned that violators could be fined $1,000 and jailed for 180 days. Conn. Gov. Ned Lamont last week urged all travelers from New York City to self-quarantine for two weeks upon entering the state, but he stopped short of issuing an order requiring it.

Just like in the US, where national guard troops in multiple states are now stopping anybody with a New York license plate to ask them, kindly, what in the hell they are doing driving around in a different state, European police are struggling to stop wealthier Europeans from fleeing to their cottages by the lake and/or mountains, which purportedly ‘lessen the difficulty of confinement’.

Even political leaders have faced criticism. In Spain, José María Aznar, the former prime minister, departed for his holiday villa in Marbella, a celebrity resort on the Mediterranean, leaving Madrid on the day that schools were shuttered. News of his move prompted an angry backlash as the public demanded he shut himself inside his villa.

Meanwhile, after a hospital system in Michigan revealed new protocols that would prioritize life-saving equipment for younger patients with fewer co-morbidities, the US civil rights office released a new bulletin arguing that protocols to ration lifesaving medical care adopted by Alabama, Washington State and elsewhere were discriminatory and impermissible. This comes as more hospitals develop plans to ration care that sometimes involves making uncomfortable choices. This is “war”, right?

Many plans would prioritize patients who were most likely to survive their immediate illness, and who also had a better chance of long-term survival. Some assign patients a score based on calculations of their level of illness, with decisions on patients with similar scores being made by chance. Some plans instruct hospitals not to offer mechanical ventilators to people above a certain age, or with a certain combination of high-risk conditions.

In Louisiana, where Gov. Jon Bel Edwards is begging for more federal aid as the outbreak ramps up, an inmate at a federal prison also died from the coronavirus, according to an employee at the facility. The death is the first involving an inmate in the Federal Bureau of Prisons system. Yesterday, we reported that an infant had died in Chicago, possibly the first in the US. Authorities have apparently confirmed this is, unfortunately, the truth.

Newborns and babies have seemed to be largely unaffected by the coronavirus, but three new studies suggest that the virus may reach the fetus in utero.

“There has never before been a death associated with Covid-19 in an infant,” said Dr. Ngozi Ezike, the director of the Illinois Department of Public Health. “A full investigation is underway to determine the cause of death.” Older adults, especially those in their 80s and 90s, have been viewed as the most vulnerable in the outbreak, but younger people have also died despite having no co-occurring conditions, as we’ve pointed out.

The BoP website presently lists five inmates and no staff members at the Oakdale prison as having tested positive, and across the federal system, at least 27 inmates and prison workers have tested positive for the virus.

Along the border, a judge concerned that thousands of migrant children in federal detention facilities could be in danger of contracting the coronavirus ruled late Saturday that the government must “make continuous efforts” to release the migrant children from custody, which would seem to violate the spirit of the whole ‘shelter in place’ idea.

The order, from Judge Dolly M. Gee of the United States District Court, came after plaintiffs in a long-running case over the detention of migrant children cited reports that four children being held at a federally licensed shelter in New York had tested positive for the virus.

In New York City, still the center of the outbreak across the US, the number of infections has overwhelmed city systems in a matter of days. The city’s 911 system has been overwhelmed by calls for mostly virus-related medical problems. Typically, the system sees about 4,000 Emergency Medical Services calls a day.On Thursday, dispatchers received nearly double that number. They haven’t seen this many calls since 9/11.

Yesterday, we shared a video made by Taiwanese journalists involving a senior WHO official who steadfastly refused to say anything about China’s response or the WHO’s dismissive treatment of Taiwan.

oh. my. god. pic.twitter.com/GAwEj5yvT0

— masks work (@wilfredchan) March 28, 2020

Now, the NYT reports that the WHO official “ducked questions about Taiwan’s response to the coronavirus pandemic,” reviving suspicions about China and the “undue influence” that Beijing has over the WHO.

Thank god New Yorkers have Andrew Cuomo to lead them through this crisis, because it seems like despite all of the government’s efforts, the outbreak is still accelerating faster than most models had projected.

The NY curve is accelerating against our model… pic.twitter.com/Us3FoaBe9p

— Remi Tetot (@RemiGMI) March 29, 2020

“While the president has said he’d like to open the country up in weeks not months, we’re going to be bringing that data forward to him,” Pence said in an interview with Fox News. “Ultimately, the president will make a decision that he believes is in the best interest of all of the American people”

Over in Italy, where the pace of new cases is finally starting to slow, a top Italian health official said Sunday that he believes the country is at the “peak” of the coronavirus outbreak and that within a week to 10 days the number of cases will start dropping. Deputy Health Minister Pierpaolo Sileri told the BBC that Italy’s lockdown is starting to work. The country is the world’s worst-hit by the pandemic, having overtaken the official Chinese death toll 10 days ago. “I believe we are living in the peak of this epidemic,” Sileri said. “In one week time, 10 days maximum, we will see a drop, a significant drop in positive cases.”

Let’s hope, for the Italians sake, and for the Americans’ sake, that he’s right.