Category: zerohedge

This is just the latest reminder not to believe everything you read on twitter, especially if it’s being reported by Buzzfeed or Vox Media.

According to the New York Times, “Away” co-founder and CEO Steph Korey has decided to stay on at the company as “co-CEO” with a new hire from Lululemon. Back in December, Korey announced that she would resign following a report in the Verge complaining about the company’s “toxic” culture.

Despite the fact that the story read like a hit piece that relied on a handful of clearly disgruntled employees, the stories about Korey’s passive-aggressive management style immediately kicked up a shitstorm on Twitter, where every perceived slight or transgression is immediately blown out of proportion by angry leftists who rarely miss an opportunity to vilify corporate American and, well, pretty much anybody who actually works for a living.

Steph Korey

Shortly after the story was published, Korey released an apology:

“I am sincerely sorry for what I said and how I said it. It was wrong, plain and simple,” she said. “I can imagine how people felt reading those messages from the past, because I was appalled to read them myself,” she wrote.

But Away’s board – and presumably the VCs who backed the company on its way to becoming a Silicon Valley unicorn – feared that the reporting about Korey was an existential threat to Away’s brand.

After all, the hip lifestyle company chiefly markets itself to liberal, urban-dwelling millennials.

But in the weeks since the incident, cooler heads have apparently prevailed. Now, the board has decided to fight back against its critics. Not only has the board decided to allow Korey to stay on, but Away has hired the same lawyer who sued Rolling Stone over its false UVA rape story to take on the Verge and its corporate parent over the company’s “inaccurate” reporting.

“Frankly, we let some inaccurate reporting influence the timeline of a transition plan that we had,” Ms. Korey said in an interview last week. With some time and perspective, she said, the company’s board members decided to reverse themselves.

“All of us said, ‘It’s not right.'”

The members of Away’s board say they feel as if they fell victim to management by Twitter mob.

The company now says it disputes The Verge’s reporting and has hired Elizabeth M. Locke, the lawyer who successfully brought a defamation case against Rolling Stone magazine for a story about a supposed gang rape at the University of Virginia. It is unclear whether Away plans to bring a lawsuit.

For what it’s worth, the Verge is standing by its story.

Korey also shared some of the harassment she was subjected to online after the story broke:

“It’s very upsetting if suddenly total strangers tell you that you should get an abortion,” said Ms. Korey, who is pregnant. One user on Twitter wrote: “Imagine how she’ll treat that baby.”

What’s worse, it seems like the only person to spring to Korey’s defense in the aftermath of the scandal was this Forbes columnist.

It’s certainly a lesson for corporate boards: It’s often wise to wait until your company’s latest scandal has fallen off the trending topic leaderboard before making any critical decisions regarding personnel.

Authored by Mac Slavo via SHTFplan.com,

As we move further into 2020, solar activity dwindles.  This year, solar activity will be marked as the lowest in over 200 years. The low in the sun’s 11-year cycle will also have at least some repercussions for the climate here on Earth.

On December 20, 2019, Iceland received one of the largest snow storms in its history. The so-called “10-year storm,” brought winds of 100 miles per hour (161 km/h), with one weather station reporting gusts of up to 149 mph (240 km/h), according to a report by Interesting Engineering. 

Iceland’s, Europe’s and North America’s weather have historically been tied to the sunspot activity of the Sun. According to NASA, in 2020, the Sun, which is currently in solar cycle number 25, will reach its lowest activity in over 200 years. That means “space weather” will be favorable for exploration beyond Earth, yet it could also very well mean we should prepare for odd or different weather patterns.

The solar cycle is a periodic 11-year fluctuation in the Sun’s magnetic field, during which its North and South poles trade places. This has an enormous effect on the number and size of sunspots, the level of solar radiation, and the ejection of solar material comprised of flares and coronal loops. –Interesting Engineering. 

When solar activity gets really low, it can have the effect of a “mini ice age.” The period between 1645 and 1715 was marked by a prolonged sunspot minimum, and this corresponded to a downturn in temperatures in Europe and North America. Named after astronomers Edward Maunder and his wife Annie Russell Maunder, this period became known as the Maunder Minimum. It is also known as “The Little Ice Age.”

Solar Minimum Madness: Is Thanksgiving’s Winter Wonderland A Preview Of The Bitterly Cold Winter To Come?

Predictions for solar cycle #25 made by the National Oceanic and Atmospheric Administration’s (NOAA) Space Weather Prediction Center (SWPC), NASA and the International Solar Energy Society (ISES) anticipate a deep minimum and a maximum that will occur between the years 2023 and 2026. During that maximum, they predict the Sun will have between 95 and 130 sunspots.

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Just don’t tell Greta that climate change could be related to solar activity… and not Trump flying Air Force One to murder koala bears…

Just when you thought you couldn’t handle any more wonderful factoids about Elon Musk’s total airhead of a brother/Board Member, Kimbal, we find out that he was fixed up with a previous girlfriend by sex criminal Jeffrey Epstein.

Even better is the fact that the woman was reportedly Epstein’s ex-girlfriend, too. 

Epstein was in “regular contact” with Kimbal Musk, who serves on the boards of Tesla and SpaceX, according to a stunning new report from Business Insider. 

BI reports that although it was “unclear” how Epstein met Kimbal, Elon’s brother began dating a woman in “Epstein’s entourage” who lived in an apartment building that Epstein’s brother owned. The building had also been used by Epstein himself to house people close to him, including Eastern European models.

Nothing to see here…

Musk and the woman reportedly dated from 2011 to 2012 after being set up by Epstein personally. Their relationship is said to be what brought Epstein in touch with the Musk family, as we have previously reported on. 

Authored by Tyler O’Neil via PJMedia.com,

Far-left activists don’t just want Americans to approve of transgender ideology and to call people by preferred pronouns unmoored from biological sex – they also want to force taxpayers to foot the bill for dangerous experimental surgeries that leave people infertile and scarred for life.

On December 23, Illinois joined 19 other states and the District of Columbia to explicitly require Medicaid to pay for transgender surgeries. The Department of Healthcare and Family Services, the state’s primary Medicaid agency, published new administrative rules mandating the coverage of certain “gender-affirming” services. Illinois formerly excluded “transsexual surgery” from the taxpayer-funded program.

“Health care is a right, not a privilege, and I’m committed to ensuring our LGBTQ community and all Illinoisans have access to that right,” Gov. J.B. Pritzker (D-Ill.) said in a statement in April.

“Expanding Medicaid to cover gender affirming surgeries is cost effective, helps avoid long-term health consequences, and most importantly is the right thing to do. With continued attacks coming from Washington, this administration will always stand with our transgender community and their right to lead safe and healthy lives.”

Almost everything in this statement was dead wrong. Health care should not be considered a “right,” because it involves the hard work of doctors and nurses, who deserved to be compensated for their work. Perhaps most importantly, however, the idea that “gender-affirming” surgeries help “avoid long-term health consquences” is false, as is the idea that covering these surgeries is necessarily “the right thing to do.”

Transgender activists have pushed this narrative based on the idea that the only way to curb the high rate of suicide among people who identify themselves as transgender is to force society to accept transgender identity. Te thinking goes like this: When transgender people have surgery to “affirm” their identity as the opposite sex, they will be less likely to commit suicide. Therefore, transgender surgery is essential to their health, and the government paying for it actually saves money in the long run.

The evidence actually suggests the opposite. While there are few long-term studies on transgender health available, the most thorough follow-up study involving transgender people — extending over 30 years and conducted in Sweden, where there is a strong pro-transgender culture — found that transgender surgery does not paper over mental unrest. Ten to fifteen years after surgical reassignment, the suicide rate of those who had undergone the surgery rose to 20 times that of their peers!

Many of those who undergo the surgery experience deep and painful regret.

“Now that I’m all healed from the surgeries, I regret them,” a 19-year-old man who had himself surgically mutilated to affirm a female identity, wrote in a letter. “The result of the bottom surgery looks like a Frankenstein hack job at best, and that got me thinking critically about myself. I had turned myself into a plastic-surgery facsimile of a woman, but I knew I still wasn’t one. I became (and to an extent, still feel) deeply depressed.”

Transgender activist Jazz Jennings experienced complications during the surgery to remove his male genitals, leaving him with scars across the top of his legs.

Even those who stopped shy of the genital mutilation have found themselves permanently scarred.

“I am a real, live 22-year-old woman, with a scarred chest and a broken voice, and five o’clock shadow because I couldn’t face the idea of growing up to be a woman, that’s my reality,” admitted Cari Stella.

The medical establishment has rushed to affirm transgender “health care” that often involves giving healthy people a disease or urging genital mutilation on perfectly healthy men and women.

After the case of the 6-year-old boy James Younger seized national attention, states across the nation are expected to pass laws protecting children from the damaging effects of transgender drugs.

Yet Illinois joined 19 other states and the District of Columbia in going the opposite direction — forcing taxpayers to foot the bill for transgender surgery. California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin also use Medicaid funds for transgender surgery.

Sixty-two percent of Americans said employers should be able to opt-out of covering transgender surgeries, and 80 percent of them said doctors and medical professionals should be able to opt-out of performing surgeries they think dangerous to their patients.

If businesses should be able to opt-out of footing the bill for dangerous and controversial surgeries, why shouldn’t taxpayers?

Shopping malls across the country are under severe financial distress, with vacancy rates hitting two-decade highs in 2019, reported the Financial Times, citing a new report from Reis Moody’s Analytics. 

US retailers announced 9,300 store closings in 2019, according to Coresight, indicating that the retail apocalypse and a massacre of malls are far from over. 

Mall operators saw a surge of store closures in 2H19 and ahead of Christmas despite a relatively stable consumer that has been leveraging up via the use of credit cards. 

Barbara Denham, a senior economist at Reis, said one notable trend during the 2019 holiday season was the shift in spending habits from brick and mortar stores to online. 

Denham said recent vacancy statistics paint a disastrous picture for shopping malls as vacancy rates have surged to a record high of 9.7%.

The latest trend of record-high mall vacancies could be a warning to investors who own retail REITs that are exposed to regional malls and outlet centers. 

Mastercard data for the 2019 holiday season confirmed Denham’s view that consumer shifts are underway from brick and mortar to online. Retail sales growth at physical stores between Nov. 1 through Christmas Eve was about 1.2% Y/Y. Overall retail sales, including online sales, for the same period was a modest 3.4%. 

Roxanne Meyer, an analyst at MKM Partners, said sales promotions at brick and mortar stores were “shocking” in late 2019. Many of these stores heavily discounted items to attract consumers but even that wasn’t enough to draw in crowds.

Mall landlords have sought to find alternatives for ailing properties; one option has been designating 50% of the mall to retail space and the other 50% to entertainment, such as sports fields to amusement parks. Another option has been the construction of multifamily complexes on the property to keep consumers close to stores.

The death of American malls is real, and it’s not being overstated, the worse has yet to come as more stores are expected to close in 2020.

 

Authored by Sven Henrich via NorthmanTrader.com,

We’re still only a few days into 2020 but a very reliable trend has already emerged and bears watching. The trend: No matter what happens anywhere in the world or even if markets flush a quick 50 handles in overnight (i.e. on the recent Iran mini crisis) by morning all is well. Why? Because the Fed’s daily liquidity injections are filtering into market behavior every single day and you can see it in the chart action.

Every trading day this year the Fed has unleashed repo operations of varying size in premarket. These are the daily liquidity injections the New York Fed provides in overnight repo markets to keep overnight rates artificially suppressed and to meet rising demand of banks for liquidity. The temporary liquidity crisis has apparently become permanent.

What do you call all this? Some call it a subsidy:

The New York Fed is basically giving big banks a subsidy with its ongoing repo operations because its rate is below the market’s rate: @irajersey of Bloomberg Intelligence on @BloombergRadio

— Lisa Abramowicz (@lisaabramowicz1) January 14, 2020

I call it a perversion of financial markets. Why? Because it has now become permanent and it distorts everything.

See here’s the thing: Every day is the same. Whether markets open down (up mostly) the ample liquidity appears to make it immediately into markets.

The New York Fed publishes its running repo operations and sizes for each day on their website. You can see the daily operations there every day.

All these operations occur prior to US market open, and then lightning strikes. Spot the trend:

Each market open gets vertically jammed higher. The only obvious exception was the first trading day of the year, also the smallest repo operation of the year. Initial selling came in, but not to fear, the lightning effect took hold after all with a vertical ramp into close.

Correlation does not necessarily equate causation, but we can observe regular, get me in at all cost, vertical jams in prices with little to no price discovery in between except the now also regular tight intra day ranges.

How to test the theory? Simple. Try not doing repo for a few days and watch what happens. Just try it. But of course they won’t. Too scary.

This has been going on for a while, since September and in full force with $60B per month in treasury bill buying on top of that.

Why are markets not going down? Perhaps because they can’t. Fed liquidity is too overwhelming and the Fed, all too eager to toss cash around like a drug dealer coke packets at a frat party, does not appear to want to stop.

The Fed once was an insurance vehicle for the economy. No longer:

I’m so old I remember when the Fed was to be a lender of last resort. An emergency backstop.
Now they’re just reckless liquidity hacks.

— Sven Henrich (@NorthmanTrader) January 14, 2020

And don’t think they are content to stop here. Now that they see themselves as the permanent intervener in everything one can never be sure of what they’ll come with next.

Since the Fed has so much cash to throw around to lend to banks worth hundreds of billions of dollars how how about some cash for the most needy in society?

Fear not, the Fed has apparently already identified the needy, the most obvious next choice: Hedge funds.

Federal Reserve officials are considering lending cash directly to hedge funds through clearinghouses to ease stress in the repo market. But that could be a tough sell for policy makers. https://t.co/CUlI4o943Q

— WSJ Markets (@WSJmarkets) January 14, 2020

Good, because I was really worried about needy hedge funds:

The Fed has appointed itself to be the fighter of danger everywhere in the world not realizing itself has become the danger. The danger that fuels asset bubbles in markets and in stocks.

What? You think this one way asset price inflation nonsense they have unleashed is normal, safe or sound?

$AAPL:

$TSLA:

Yea I too remember two way price discovery. Repo striking like lightning before market open has killed it. For now.

At the heart of it the Fed is trying to keep the ball in the air and has done so for years and you all know it:

Market.
Fed.pic.twitter.com/6Jr9wgX8GR

— Sven Henrich (@NorthmanTrader) January 13, 2020

In process they’ve now created a massive asset bubble. When and how will it pop? We can only know after the fact, but if it does you know who to blame:

If this market ever crashes you can blame the Fed who was too scared to endure a larger correction when trying to normalize and instead proceeded to blow an even bigger asset bubble with even more liquidity injections.

— Sven Henrich (@NorthmanTrader) January 13, 2020

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Any time the US Department of Labor releases the jobs report on the first Friday of the month, wire agencies such as Bloomberg and Reuters already have a prepared barrage of market-moving data points ready to go to their paying subscribers (and, on the nanosecond, to frontrunning HFT clients) together with a commentary wrapper that is prepared in the 30-60 minutes before the official data release, prepared by journalists who are in “lockup” in a given government data room, which is meant to prevent them from leaking the data to other, more interested (and better funded) parties.

This is shown schematically in the image below.

However, starting as soon as this week, the “lockup” may now be history, as well as those flashing red jobs headlines that set the market mood for the day, and often, the rest of the month (assuming, of course, that eventually fundamentals will matter again), because in what Bloomberg dubbed the “biggest change to economic data releases in decades“, the Trump administration plans to limit the news media’s ability to prepare advance stories on market-moving economic data, such as the monthly jobs report, “in a move that could create a logjam in accessing figures such as the monthly jobs report.”

Needless to say, Bloomberg – along with Reuters, and countless other wire services, who sell lockup data to extremely generous HFT clients for a lot of money – are not happy.

As noted above, currently the Labor Department hosts “lockups” for major reports lasting 30 to 60 minutes, where journalists receive the data in a secure room, write stories on computers disconnected from the internet, and transmit them when connections are restored at the release time.

However, for reasons not fully clear, the department under pressure from the administration, is looking at changes such as removal of computers from that room, and an announcement could come as soon as this week, said Bloomerg sources.

That, as Bloomberg which would be directly and very adversely affected notes, “could hinder the media’s ability to provide headlines, comprehensive stories and tables at the exact release time.”

That’s one interpretation, another is that it will further democratize information, allowing, or rather forcing, everyone to come up with their own fast take of the data, and even open up the field to new competitors who currently don’t have access to the lockup.

Indeed, as one FX strategist noted, “Quant strategies focusing on reading headlines will need a rethink. Will lead to huge info asymmetry post data releases. Although may boost role of market economists who need to digest raw data as quickly as possible.“

This is big for markets. Quant strategies focusing on reading headlines will need a rethink. Will lead to huge info asymmetry post data releases. Although may boost role of market economists who need to digest raw data as quickly as possible. Watching closely 👀 #GameChanger pic.twitter.com/y0vPeLYGcP

— Viraj Patel (@VPatelFX) January 14, 2020

Did we mention that Bloomberg isn’t happy? As the news organization belonging to the Demcoratic presidential candidate notes, “the move would upend decades of practice, and media organizations including Bloomberg News and Reuters have challenged prior changes to procedures. The shift could also spur an arms race among high-speed traders to get the numbers first and profit off the data, raising questions about fairness in multitrillion-dollar financial markets.”

Thank you for the spin Bloomberg, but the arms race between HFTs has been going on for a decade, and it is companies like Bloomberg that not only enabled it but profited generously from it. In fact, a contract that shoots over the data with zero latency is said to cost millions of dollars, something which Bloomberg will not be too happy to see flee to those who are faster and more accurate at reading the data in real time.

There is another fringe benefit such an action would deliver: the US government would finally have to enter the 21st century with modernized websites:

Without news services transmitting their reports at the release time and allowing additional access points, the government may have to prepare its websites to handle potentially heavier loads under the new system, which could mean adding security measures or increasing the traffic capacity.

To be sure, this is not the first time the government tried to overhaul the lockup structure: in 2012, Obama’s Labor Department sought to alter lockups to require journalists to use government-owned computers to write their stories. Officials at the time framed the change as addressing security risks.

After protests from Bloomberg News and other news organizations, and a congressional hearing in which editors testified, the department agreed to allow the media to continue using their own equipment and data lines. Reporters are required to leave mobile phones and other electronic devices in lockers outside of the lockup room, along with personal effects such as umbrellas and purses.

On the other hand, it’s not like this move would be unprecedented: the Labor Department move would follow a similar decision by the U.S. Department of Agriculture in 2018 to scale back lockups covering farm products, particularly the closely-watched monthly crop forecasts that typically move markets in soybeans, corn and wheat.

Finally, the big question remains: why is Trump doing this? One potential explanation is that Trump is seeking to hit his political challenger, Mike Bloomberg, where it hurts: As we noted earlier, if the BLS removes lockups, “billions in HFT data feed fees to wire services like Reuters and Bloomberg go up in smoke.” Leading to the logical question: “Is this Trump targeting Bloomberg terminal?”, which for decades has been Mike Bloomberg’s golden goose, spewing billions in annual subscription fees, allowing him to spend a similar amount to remove Trump at any cost…

If BLS removes lockups, billions in HFT data feed fees to wire services like Reuters and Bloomberg go up on smoke.

Is this Trump targeting Bloomberg terminal?

— zerohedge (@zerohedge) January 14, 2020

After 5 straight down days, oil managed modest gains today with WTI bouncing off $58.00 on the heels of some optimism surrounding the imminent signing of the trade deal.

“The broader energy market is likely falling back into its familiar range with WTI trading between $52 and $63” a barrel, analysts at Sevens Report Research wrote in their latest newsletter.

Fundamentals are largely bearish due to oversupply concerns, especially given the huge build in stockpiles reported in the refined products last week, so all eyes will be on tonight’s API data (barring any geopolitical headlines)…

API

• Crude +1.1mm (-1.1mm exp)

• Cushing -69k (-1.0mm exp)

• Gasoline +3.2mm  (+3.4mm exp)

• Distillates +6.78mm (+1.1mm exp)

After the prior week’s surprise build, analysts expected a small draw in crude (but continued builds in products). However, crude saw a build and products saw significant builds…

Source: Bloomberg

WTI hovered around $58.40 ahead of the data, and dropped modestly on the surprise build…

“Unfortunately for the bulls, the fundamental outlook over the first half of this year is not overly constructive. The market is set to see a sizable surplus, which should mean weakness for both the flat price and time spreads,” said Warren Patterson, head of commodities strategy at ING, in a note.

Authored by Nouriel Roubini, op-ed via Project Syndicate,

Following the United States’ assassination of Iranian Quds Force commander Qassem Suleimani and Iran’s initial retaliation against two Iraqi bases housing US troops, financial markets moved into risk-off mode: oil prices spiked by 10%, US and global equities dropped by a few percentage points, and safe-haven bond yields fell. In short order, though, despite the continuing risks of a US-Iran conflict and the implications that it would have for markets, the view that both sides would eschew further escalation calmed investors and reversed these price movements, with equities even approaching new highs.

That turnabout reflects two assumptions.

• First, markets are banking on the fact that neither Iran nor the US wants a full-scale war, which would threaten both the Iranian regime and US President Donald Trump’s re-election prospects.

• Second, investors seem to believe that the economic impact of a conflict would be modest. After all, oil’s importance as an input in production and consumption has fallen sharply since past oil-shock episodes, such as the 1973 Yom Kippur War, Iran’s 1979 Islamic Revolution, and Iraq’s 1990 invasion of Kuwait. Moreover, the US itself is now a major energy producer, inflation expectations are much lower than in past decades, and there is little risk of central banks hiking interest rates following an oil-price shock.

Both assumptions are clearly flawed. Even if the risk of a full-scale war may seem low, there is no reason to believe that US-Iranian relations will return to the status quo ante. The idea that a zero-casualty strike on two Iraqi bases has satisfied Iran’s need to retaliate is simply naive. Those Iranian rockets were merely the first salvo in a response that will build up as November’s US presidential election approaches. The conflict will continue to feature aggression by regional proxies (including attacks against Israel), direct military confrontations that fall short of all-out war, efforts to sabotage Saudi and other Gulf oil facilities, impeded Gulf navigation, international terrorism, cyber attacks, nuclear proliferation, and more. Any of these could lead to an unintentional escalation of the conflict.

Moreover, the Iranian regime’s survival is more threatened by an internal revolution than by a full-scale war. Because an invasion of Iran is unlikely, the regime could survive a war (despite a very damaging aerial bombing campaign) – and even benefit as Iranians rally around the regime, as they briefly did in response to the killing of Suleimani. Conversely, a full-scale war and the ensuing spike in oil prices and global recession would lead to regime change in the US, which Iran badly desires. So Iran not only can afford to escalate, but it has all the incentives to do so, initially through proxies and asymmetric warfare, to avoid provoking an immediate US reaction.

The assumption about what a conflict would mean for markets is equally mistaken. Though the US is less dependent on foreign oil than in the past, even a modest price spike could trigger a broader downturn or recession, as happened in 1990. While an oil-price shock would boost US energy producers’ profits, the benefits would be outweighed by the costs to US oil consumers (both households and firms). Overall, US private spending and growth would slow, as would growth in all of the major net-oil-importing economies, including Japan, China, India, South Korea, Turkey, and most European countries. Finally, although central banks would not hike interest rates following an oil-price shock, nor do they have much space left to loosen monetary policies further.

According to an estimate by JPMorgan, a conflict that blocks the Strait of Hormuz for six months could drive up oil prices by 126%, to more than $150 per barrel, setting the stage for a severe global recession. And even a more limited disruption – such as a one-month blockade – could push the price up to $80 per barrel.

But even these estimates do not fully capture the role that oil prices play in the global economy. The price of oil can spike much more than a basic supply-demand model would suggest, because many oil-dependent sectors and countries will engage in precautionary stockpiling. The risk that Iran could attack oil production facilities or disrupt major shipping routes creates a “fear premium.” Hence, even a modest oil-price increase to $80 per barrel would lead to a sustained risk-off episode, with US and global equities falling by at least 10%, in turn, hurting investor, business, and consumer confidence.

It is worth remembering that global corporate capital spending was already severely dampened last year, owing to worries about an escalation in the US-China trade and technology war and the possibility of a “hard” Brexit. Just as these risks – that is, the “option value of waiting” – were receding, a new one has emerged. Leaving aside the direct negative impact of higher energy prices, fears of an escalating US-Iran conflict could lead to more precautionary household saving and lower capital spending by firms, further weakening demand and growth.

Moreover, even before that risk emerged, some analysts (including me) warned that growth this year might be as tepid as growth in 2019. Markets and investors had been looking forward to a period of easier monetary policies and an end to the tail risks associated with the trade war and Brexit. Many market watchers were hoping that the synchronized global slowdown of 2019 (when growth fell to 3%, compared to 3.8% in 2017) would end, with growth approaching 3.4% this year. But this outlook ignored many remaining fragilities.

Now, despite Wall Street’s optimism, even a mild resumption of US-Iran tensions could push global growth below the mediocre level of 2019. A more severe conflict that falls short of war could increase oil prices to well above $80 per barrel, possibly pushing equities into bear territory (a decrease of 20%) and leading to a global growth stall. Finally, a full-scale war could drive the price of oil above $150 per barrel, ushering in a severe global recession and a fall of over 30% for equities markets.

While the probability of a full-scale war remains low for now (no more than 20%, in my view), the chances of simply returning to the pre-assassination status quo are even lower (say, 5%). The most likely scenario is that the situation escalates into a new grey area (indirect conflict and direct clashes falling short of war) that would drive up the risk of a full-scale war.

At that new baseline, the market’s current complacency will look not just naive, but utterly delusional.

The risk of a growth stall or even a global recession is now much higher and rising.

A Delta flight from Los Angeles International Airport to Shanghai made an emergency U-turn on Tuesday, dumping fuel on a group of schoolchildren as it returned to LAX, according to CBS Los Angeles. The plane departed shortly after 11 a.m.

pic.twitter.com/tM3WjWk1Bg

— Bodiaz Rising ⭐️⭐️⭐️ (@BodiazRising) January 14, 2020

LA County firefighters report that students at Park Avenue Elementary School report that 17 children and 9 adults were exposed to an unknown type of fuel, and were evaluated by paramedics on scene.

BREAKING: #Delta Flight 89 dumps fuel on approach to Los Angeles International Airport; fire crews are assessing dozens of children at a Cudahy elementary school pic.twitter.com/gFBjKuw21h

— 🌐FNR- FRUM NEWS REPORT🌐 (@FrumNewsReport) January 14, 2020

UPDATE*** Patient count updated to 17 children, 9 adults. All minor injuries w/ no transports to local hospital from school. There are no evacuation orders for the immediate area. Substance was confirmed JET FUEL.

Refer to school regarding plans for child pick-up. #LACoFD

— L.A. County Fire Department (@LACoFDPIO) January 14, 2020

UPDATE*** Patient count updated to 17 children, 9 adults. All minor injuries w/ no transports to local hospital from school. There are no evacuation orders for the immediate area. Substance was confirmed JET FUEL.

Refer to school regarding plans for child pick-up. #LACoFD

— L.A. County Fire Department (@LACoFDPIO) January 14, 2020

LA Unified school officials told CBS they are aware of the situation and are looking into it. There is no word on why the fuel was dumped.