This is why it’s imperative to go big now, and make plans to sustain the most vulnerable households and small employers not for two weeks but for six months – or however long proves necessary.
That governments around the world will be forced to distribute “helicopter money” to keep their people fed and housed and their economies from imploding is already a given. Closing all non-essential businesses and gatherings will crimp the livelihood of millions of households and small businesses that lack the financial resources to survive weeks without any revenues.
The only question is whether governments which can borrow or print fresh currency will get ahead of the implosion or fall behind, creating a binary choice: go big now or go home.
Half-measures in helicopter money work about as well as half-measures in quarantine, i.e. they fail to achieve the intended objectives. Dribbling out modest low-interest loans is a half-measure, as is cutting payroll taxes. Neither measure will help employees or small businesses whose income has fallen below the minimum needed to pay essential bills: rent, food, utilities, etc.
Meanwhile, the ruling elites will be under increasing pressure to bail out greedy financial elites and gamblers–the same scoundrels and parasites they bailed out in 2008-09. But this is not just another speculative bubble-pop, this is a matter of life and death and solvency for the masses of at-risk households and small businesses. It is a different zeitgeist and a different crisis, and bailing out greedy parasites (banks, indebted corporations, speculators, financiers, etc.) will not go over big while households and small businesses are going bankrupt.
The Federal Reserve, was just handed a lesson in the ineffectiveness of the usual monetary “bazooka” in bailing out the predatory-parasitic class of overleveraged gamblers.Nearly free money for financiers isn’t going to save the economy or non-elites sliding toward insolvency.
Instead of leaving the bottom 99.5% to twist in the wind while enriching the predatory-parasitic class, the ruling elites will have to let the top 0.5% twist in the wind and save the bottom 99.5%. This will require going against all the thousands of lobbyists, all the chums at the club, and all the millions in campaign contributions, but it’s a binary choice.
Either save your citizenry or sacrifice your legitimacy by bailing out the predatory-parasitic class. If the ruling elites save their parasitic pals, the public will demand the scalps of the predatory-parasitic class, and as the crisis deepens, they will eject every craven, greedy elected toady who caved in to the predatory-parasitic class.
So listen up ruling elites: either go big or go home. Either accept that it’s going to take several trillion dollars in helicopter money to insure the most vulnerable households and real-world enterprises remain solvent, or quit and go home.
The pandemic crisis isn’t going to end in April or May, though the urge to indulge in such magical thinking is powerful. It might still be expanding in August and September.
This is why it’s imperative to go big now, and make plans to sustain the most vulnerable households and small employers not for two weeks but for six months–or however long proves necessary.
Elon Musk Keeps Tesla’s Fremont Factory Open Despite Alameda County Lockdown
We already know that Elon Musk thinks the coronavirus panic is “dumb”. We also know Tesla’s track record for keeping a safe work environment is less than stellar.
So, in what appears to be dissatisfaction unless his workers are directly in the line of harm, Elon Musk is once again creating a new set of rules for himself – just as he has done with the SEC and the NHTSA – and is defying an Alameda County coronavirus lockdown by keeping Tesla’s Fremont factory open and running in the midst of a global pandemic.
The quick spread of coronavirus in the Bay Area has led to lockdowns and the shuttering off all non-essential businesses. Businesses in Alameda County are required to “cease all non-essential operations” at physical locations there, according to Bloomberg.
Alameda County has declared Tesla an “essential business” that is allowed to remain in operation, the LA Times reports.
When an Alameda County official was asked what makes Tesla “essential”, he responded: “That’s a good question. We’re in uncharted waters right now.”
When short seller Nathan Anderson of Hindenburg Research e-mailed Alameda County last night, asking if Tesla would stay open, they punted, telling Anderson he had to direct his question to Tesla. So, it looks like we know who is really running Alameda County.
I emailed Alameda County asking if Tesla is required to shut its Fremont factory down due to the shelter order.
Rather than answer, they redirected me to Tesla, which isn’t responding.
Musk apparently wrote to his staff in an e-mail Monday: “First, I’d like to be super clear that if you feel the slightest bit ill or even uncomfortable, please do not feel obligated to come to work. I will personally be at work, but that’s just me. Totally [OK] if you want to stay home for any reason.”
He continued: “My frank opinion remains that the harm from the coronavirus panic far exceeds that of the virus itself. If there is a massive redirection of medical resources out of proportion to the danger, it will result in less available care to those with critical medical needs, which does not serve the greater good.”
Total Pukefest: Futures Soar Limit Up, Crash, Then Soar Again
The thing about the VIX at 80 – a level it did not hit even during the financial crisis – is that nobody has seen a market as volatile as like this.
Case in point: the rollercoaster in overnight futures alone may have bankrupted an unknown number of traders: after another historic crash on Monday which saw US stocks plunge most since Black Monday 1987, futures initially soared as much as the 3.9% limit up band, before plunging straight down to slightly red on the session(!) after the European open, before surging once again.
Needless to say, anyone who had margin positions on was likely stopped out, while CNBC’s perpetual permabull Jim Cramer had a nervous breakdown.
The futures are a total joke. Don’t even look at them. You can’t have a bull market at 3:30 a.m. and have it end by 7 a.m.
The catalyst for the selloff was fresh signs of stress in short-term funding markets, where as we warned yesterday nothing has been fixed despite the Fed’s multi-trillion waterpistol, and where the premium for getting dollars against the euro and yen exploded to the widest since 2011.
And with the dollar shortage getting worse again, the dollar index continued to surge while Treasuries retreated with gold after yields plummeted almost a quarter percentage point on Monday.
European bonds tracked the US 10Y, while the Stoxx Europe 600 Index swung from limit up to a big loss before recovering, despite a harrowing plunge in the German ZEW expectations, which cratered to -49.5, the lowest since the European sovereign debt crisis.
Equities in Asia endured a similarly volatile session, and markets in the region mixed with Jakarta Composite and Taiwan’s Taiex Index falling, and Australia’s S&P/ASX 200 and Japan’s Topix Index rising. The Topix gained 2.6%, with Phyz Holdings Inc and Raksul Inc rising the most. The Shanghai Composite Index retreated 0.3%, with HNA Innovation and Hunan Huasheng posting the biggest slides. Australian stocks posted their biggest jump since 1997 while benchmarks in Hong Kong and China saw more muted moves. The yuan weakened, with economists starting to forecast a contraction in China’s economy for the current quarter.
On Monday, US stocks crashed into the closing bell on Monday after President Trump warned of a possible recession, with economic disruption from the coronavirus potentially extending into summer. In the latest attempts to stem the spread of the virus, Hong Kong was set to issue its second-highest travel alert for residents and extend quarantine measures for people coming from abroad. The Philippines became the first country to shut its financial markets, though it aims to reopen Thursday.
“A bear market does not preclude rallies,” said Eleanor Creagh, market strategist at Saxo Capital Markets. “In fact, the biggest rallies can be in bear markets — erratic swings are exacerbated by the present high-volatility regime and strained liquidity conditions. With VIX remaining significantly above the long-term equilibrium, alarm bells are still sounding and traders should be wary of relief rallies.”
Meanwhile, after the Federal Reserve and other central banks dramatically stepped up efforts to stabilize capital markets and liquidity, traders have been looking to fiscal authorities for action. While Congress is still working on a package that reportedly could be around $750 billion, New Zealand announced a NZ$12.1 billion ($7.3 billion) plan and Australia’s government is preparing to scale up just days after announcing a A$17.6 billion ($10.7 billion) initiative.
In FX, as noted above, the dollar rallied against everything as cross-currency basis swaps kept getting more expensive. The pound fell for a sixth day, the longest losing streak since May, as concern lingered that the U.K. is slow to counter the coronavirus threat even after Prime Minister Boris Johnson escalated the nation’s response to the outbreak. Gilts fell for a third day. Kiwi dollar outperforms its Aussie peer, with pair edging closer to parity after the New Zealand government announced fiscal spending worth 4% of GDP to combat the economic impact of the coronavirus. The Australian dollar hit an 11-year low ahead of a speech by Governor Philip Lowe on Thursday, when the Reserve Bank is set to announce more policy steps.
In rates, US Treasuries fell, underperforming bunds; European semi-core debt extended recent declines led by France, while ECB conducts extraordinary liquidity operation; Swedish bonds rallied after the Riksbank announced additional QE.
In commodities, West Texas Intermediate crude rose 2.2% to $29.34 a barrel, while gold decreased 2.9% to $1,470.09 an ounce as the dollar surge continued.
Looking at the day ahead the data highlights will include employment data from the UK for January and the ZEW survey from Germany for March. Meanwhile from the US, there’ll be retail sales, industrial production and capacity utilisation for February, business inventories and JOLTS job openings for January, and the NAHB housing market index for March. Finally, though it feels somewhat peripheral given the current international situation, there’ll be a further 4 US states holding primary votes today on the Democratic side: Florida, Illinois, Ohio and Arizona. Between them, they hold a further 577 delegates, which is nearly 15% of the total up for grabs. Former Vice President Biden is the favourite to win in all 4 states on both FiveThirtyEight’s models and PredictIt, giving him the chance to further extend his delegate lead over Senator Bernie Sanders. For context, all four states went for Hillary Clinton over Bernie Sanders in the 2016 cycle.
Market Snapshot
S&P 500 futures down 1.2% to 2,376.00
STOXX Europe 600 -2.5% to 277.55
MXAP up 0.3% to 131.14
MXAPJ down 0.1% to 428.37
Nikkei up 0.06% to 17,011.53
Topix up 2.6% to 1,268.46
Hang Seng Index up 0.9% to 23,263.73
Shanghai Composite down 0.3% to 2,779.64
Sensex up 0.3% to 31,490.23
Australia S&P/ASX 200 up 5.8% to 5,293.41
Kospi down 2.5% to 1,672.44
Brent Futures up 1.4% to $30.47/bbl
Gold spot down 1.8% to $1,486.46
U.S. Dollar Index up 0.4% to 98.45
German 10Y yield rose 4.3 bps to -0.418%
Euro down 0.5% to $1.1129
Brent Futures up 1.4% to $30.47/bbl
Italian 10Y yield rose 37.6 bps to 1.987%
Spanish 10Y yield rose 5.6 bps to 0.897%
Top Overnight News
Regulators in France, Italy and Belgium banned short selling in some stocks for the day. France’s AMF halted such trades in 92 stocks, while Italy’s Consob blocked the transactions in 20 and Belgium’s FSMA imposed a similar restriction. Spain went further, telling market participants late Monday they couldn’t bet on share declines for a month
Eight giant U.S. banks said they would access the Federal Reserve’s discount window, in a move meant to remove the longstanding stigma of using it, as the financial system comes under mounting pressure from the coronavirus pandemic
The Bank of Japan vowed to consider additional action if the economic impact from the virus outbreak gets worse
The euro area’s gigantic bailout fund is exploring how it can use its reserves to cushion the impact of a virus-induced recession, in a move that could help reassure markets after a spike in borrowing costs for the region’s most vulnerable economies
The European Union gave Spain the OK to spend its way through the coronavirus crisis. But the left-wing government in Madrid is unsure whether to take full advantage.The socialist economy minister is trying to stop the deficit blowing out, while a former spending watchdog is urging her to open the taps to stop the economy collapsing. The cabinet meets Tuesday to thrash it out
Asia-Pac equity markets traded mixed and US equity futures hit limit up overnight as stock markets attempted to nurse the recent heavy losses that resulted to the worst day on Wall St. since 1987 and a near 3000-point decline in the DJIA for its largest point drop on record, despite the Fed’s recent emergency measures. The tone in Asia improved from the open spurring mixed views regarding a potential capitulation after the recent sell-off and some murmurs of a dead-cat bounce, although there were further supportive measures including a NZD 12.1bln economic package from New Zealand and the US House passing a revised coronavirus bill, as well as efforts from the Trump administration for an additional measure targeting airlines and small businesses. ASX 200 (+5.8%) outperformed after a rebound from support at the 5000 level to recoup some of the prior day’s record losses of 9.7% and eventually post its largest intraday gain since 2008 with miners and financials front running the recovery, while Nikkei 225 (+0.1%) fluctuated between gains and losses with sentiment flimsy alongside an indecisive currency. Hang Seng (+0.9%) and Shanghai Comp. (+0.9%) were both positive in early trade but then reversed course/trimmed gains as early optimism across the region slightly faded and following further liquidity inaction by the PBoC, although reports have suggested the central bank may still reduce the Loan Prime Rate this week even though it opted to maintain rates in yesterday’s Medium-term Lending Facility. Finally, 10yr JGBs were initially lower as they tracked the recent selling in USTs but with some of the downside later reversed after prices found a platform around 152.50 and with the BoJ also in the market today under a special operation for JPY 200bln of JGBs with 3yr-10yr maturities.
Top Asian News
Abe Taps Hitachi Executive Nakamura for BOJ Policy Board
Singapore’s Largest Companies Raise Female Board Participation
Singapore Faces Bigger Contraction as Malaysia Shuts Borders
Thailand Confirms Plan to Shut Schools, Delay Holidays on Virus
Choppy trade in the equity sphere [Euro Stoxx 50 +1.0%] following on from a mixed APAC session, as what seemed like a sentiment turnaround subsided in early EU trade – although reports that US Treasury Secretary Mnuchin is seeing a USD 850bln package later induced a modest bounce off lows. Major bourses are mixed with Spain’s IBEX (+2.4%) the standout outperformer amid after Spain banned short-selling for a month amid the virus-induced selloff. DAX 30 cash briefly dipped below 8500 before trimming some losses, albeit remain some way off its 9145 session high. CAC (-0.6%) failed to glean much support after AMF regulator’s announcement of a 24hr short-selling ban on 92 stocks vs. Spain’s carpet ban, although France’s measure seems more of a cushion against losses as opposed to a deterrent. Sectors are mixed with no clear reflection of the risk tone, with energy and material benefitting from the overnight rebound in respective complexes. In terms of individual movers. Iliad (+18.0%) tops the gains in the Stoxx 600 post-earnings in which anticipated coronavirus losses are expected to be less severe than feared. Elsewhere, Pandora (-2.9%) withdrew guidance amid the outbreak and noted that China since Jan LFL sales fell 70-80% on a YY basis.
Top European News
Global Deaths Top 7,000; San Francisco Shuts Down: Virus Update
Europe Weighs Using Bailout Fund Bazooka In Virus Crisis
Battered European Stocks Stage a Comeback Tour: Markets Live
Compass Drops After Profit Warning; MS Notes Sharp Slowdown
In FX, the Dollar is firmer across the board after losing momentum during Monday’s global stock market swoon, with the DXY firmly back on the 98.000 handle and breaching resistance ahead of the next big figure (like February 13’s 98.810 high) amidst more reports of the White House mulling a big aid package (Usd850 bn or perhaps more). However, safer-havens are clawing back some lost ground as the mood remains extremely fragile on COVID-19 factors and ahead of US data (retail sales and ip) that could highlight more of the economic contagion like yesterday’s NY Fed manufacturing survey.
AUD/NZD – Minutes from the RBA’s March policy meeting did not offer anything new in terms of forward guidance overnight, but the Aussie is on the defensive in advance of Thursday’s new measures from the Central Bank that could include QE. Aud/Usd is slipping back towards 0.6000 and Aud/Nzd remains south of 1.0100 even though Nzd/Usd has retreated through 0.6000 and the Kiwi only got a fleeting fillip from Nzd12.1 bn fiscal stimulus in similar vein to the Aussie after Government and RBA cash/liquidity injections.
GBP/EUR – A relatively upbeat UK labour and wage report has been dismissed as too old or irrelevant in the context of nCoV, as the Pound weakens across the board towards 1.2100 in Cable terms and sub-0.9100 on the Eur/Gbp cross. Indeed, Sterling is marginally underperforming vs the single currency despite a dire ZEW survey that has pushed Eur/Usd below 1.1100 (close to the 200 DMA) and eyeing Monday’s session trough just under 1.1050.
CHF/JPY – The Franc and Yen are both off best levels vs the Greenback, but retaining an underlying bid within 0.9458-0.9554 and 105.88-107.18 respective ranges in advance of the SNB quarterly review and following ramped ETF purchases from the BoJ today.
CAD/SEK/NOK – The Loonie is trying to stop the rot after losing 1.4000+ status against its US counterpart and tumbling to new multi-year lows not far from 1.4100, while the Swedish Crown is weaker vs the Euro inches from 11.0000 in wake of the Riskbank unleashing QE, finally and lagging its Scandi peer the is benefiting from a degree of consolidation and comparative stabilisation in crude prices, albeit choppy and still trending lower.
In commodities, WTI and Brent front-month futures have trimmed overnight gains during early EU trade, with the latter dipping into negative territory as the sentiment/consolidation seen in the APAC session abated as the underlying themes persist. WTI Apr’20 futures have extended losses below the USD 30/bbl mark, having earlier briefly breached the level to the upside, with the next pertinent support level at the YTD low around USD 27.40/bbl. Meanwhile, Brent May’20 underperforms its WTI counterpart given the OPEC rhetoric surrounding the global benchmark, with the front-month contract back below USD 30/bbl and just off its YTD lows at ~USD 29.50/bbl vs. intraday high of USD 31.20/bbl. Meanwhile, the spread between the two contracts continue to narrow and currently stands at under USD 1/bbl vs. ~USD 1.30/bbl at yesterday’s close. Elsewhere, spot gold continues to bear the brunt of liquidating positions as investors convert to cash and remain on the sidelines. The yellow metal trades firmly below 1500/oz (200 DMA ~1498/oz) ahead of the 50WMA (1462/oz) and yesterday’s 1450/oz low. Similar losses are seen across other precious metals with Silver approaching 12/oz after fleetingly dipping below the figure during yesterday’s trade. Copper prices unsurprisingly conform to the risk-turnaround as prices slide further below 2.5/lb and eyes USD 2.0/lb for barriers.
US Event Calendar
8:30am: Retail Sales Advance MoM, est. 0.2%, prior 0.3%; Retail Sales Ex Auto MoM, est. 0.1%, prior 0.3%
8:30am: Retail Sales Ex Auto and Gas, est. 0.3%, prior 0.4%; Retail Sales Control Group, est. 0.4%, prior 0.0%
9:15am: Industrial Production MoM, est. 0.4%, prior -0.3%; Capacity Utilization, est. 77.1%, prior 76.8%
10am: Business Inventories, est. -0.1%, prior 0.1%;
10am: JOLTS Job Openings, est. 6,400, prior 6,423;
10am: NAHB Housing Market Index, est. 73, prior 74
DB’s Jim Reid concludes the overnight wrap
Also today we are going to start publishing a daily table and graph looking at new case growth of the virus in the main impacted countries around the world. The table will look at the last 5 days of % growth for each of the top 10 countries and where we were in % growth terms 14 days ago. We’ll refresh this at 5am every day and you’ll find it in the pdf link. At the moment new cases are growing at between 15-30% per day in the main European countries. If you’re looking for good news Korean cases have been growing at ‘only’ 0.9-1.5% over the last 5 days after being at c.14% daily growth two weeks ago.
For now though, it’s becoming clearer that the impact of the various Western World shutdowns will mean that at its peak the Covid-19 impact on the global economy will likely be worse than the peak of the GFC. It is also looking increasingly likely to linger well into the summer. Once you shut down economies, the hurdle rate to reopen them is pretty high. The good news is that the response from the authorities might eventually (but not yet) end up being greater too. It will need to be, because many individuals and businesses will risk losing their livelihoods as a result of this crisis. I suspect central banks will end up printing fresh money to hand to those most impacted. Because of the nature of this event there will unlikely be any moral hazard warnings, which will give the authorities the political capital to act. There are many longer-term implications if we go down that route but that’s a topic for another day.
It was another wild and historically significant day in financial markets yesterday with traders having to navigate further wild swings across different asset classes. In fact for the S&P 500, we haven’t seen a daily move of less than 1% either way all month. Indeed 12 of the last 16 trading sessions have now seen moves of at least 3% in either direction. Yesterday’s moves were yet another in this pattern, with trading halted at the open after the S&P fell through the -7% circuit breaker, before falling to just shy of the lows of the day (-11.41%) after trading restarted. The S&P 500 then recovered much of its losses to be down “only” -5.37% before closing at the lows of the day at -11.98%. This leaves the index down -29.53% since its peak less than 4 weeks ago. In terms of our worst days in history this ranked 3rd out of 23,161 since 1927 behind only 19 October 1987, down -20.47%, and 28 October 1929, down -12.94%. These are truly historical moments in the history of financial markets. 2020 will go alongside 1929, 1987 and 2008 in the text books of financial market panics.
The sell-off accelerated into the close after President Trump held a press conference where his tone was more sombre on the virus than it had been previously. The President urged Americans to practice social distancing and then warned that the economic impact could last well into the summer, as late as August. He also signalled that a recession was possible – a big admission for him. At the same time French President Macron said that EU borders would close from today for at least 30 days, and that French citizens should stay home in lockdown for 15 days starting midday today. I’m really not sure I’ll see anything like this again in my lifetime. It’s remarkable and global economies have effectively been put on war footing but without the usual intense war time economic activity.
We also heard more about the possibility of a coordinated response from the G7 yesterday. In a joint statement the G7 leaders said they would “do whatever is necessary” to support the global economy, in what is quickly becoming a common refrain. There was little else for now but it was a strong statement.
In the US Senate Democrats are preparing a new coronavirus aid package, with at least $750 billion in funding for increasing hospital capacity, unemployment insurance and other direct aid toward American households and businesses. This is a separate bill than the earlier aid package from the House, which provides sick pay, free testing, and emergency food aid for families that will soon be voted on in the Senate that already has President Trump’s approval. Senator Mitt Romney also backed the idea of cash stipends of $1000 to every American in order to help people meet obligations and spur economic activity. This effectively amounts to helicopter money so we’re getting closer to this.
Over in Europe, the Eurogroup announced that they “have, so far, decided fiscal measures of about 1% of GDP, on average, for 2020 to support the economy, in addition to the impact of automatic stabilisers, which should work fully. They added that “we have, so far, committed to provide liquidity facilities of at least 10% of GDP, consisting of public guarantee schemes and deferred tax payments. These figures could be much larger going forward”. My colleague Mark Wall notes that this first wave response is basically in line with what he was expecting in his note from Sunday night we mentioned yesterday. There is likely more to come as there are increased chances of the ECB’s additional EUR 1.2 trillion (12% of GDP) in TLTRO3 liquidity being used, and that the package as a whole is not capped and “could be much larger going forward”.
Following yesterday’s decline, futures on the S&P 500 (+3.66%) and Nasdaq (+3.36%) are trading higher this morning after hitting their respective limit ups. Asian markets are trading mixed amidst continued volatility with the Nikkei (+0.20%) and Hang Seng (+1.18%) up while, the Shanghai Comp (+0.03%) is flat and the Kospi (-1.55%) is down. The ASX has just closed up +5.8% the largest gain since October 1987. Yields on 10y USTs are up +5.5bps to 0.776% and brent crude oil prices are up +2.40% this morning.
Overnight, one of the key stories is that the Philippines became the first country to shut its stock, bond and currency markets until further notice. Will this be the first in a trend? Meanwhile, New Zealand became the latest country to announce a fiscal package of NZD 12.1bn ($7.3bn), worth c. 4% of GDP, to counter the economic impact from the virus. Brazil also said overnight that it will inject BRL 150bn ($30bn) in to the economy with more than half of that amount earmarked to support the poor and elderly. Today, we are also likely to hear from the UK Chancellor Rishi Sunak on the measures he promised to deliver, during last week’s budget, to help companies and individuals pushed to the brink by the virus. So one to watch. On the monetary policy front the State Bank of Vietnam cut its refinance rate to 5% from 6%, and Japanese banks tapped $32bn from the Fed’s revamped swap lines in the first operation.
Back to yesterday and the VIX index surged to its highest closing level ever recorded as equities sold off into the US close. The vol index was up +24.86pts to 82.69, which puts it higher than the closing peak reached in November 2008, at the height of the financial crisis. Meanwhile credit spreads continued to widen massively. US IG and HY cash spreads were +26bps and +107bps wider with the European equivalents +15.4bps and +99bps wider. CDX HY and EUR Crossover widened +113bps and +100bps respectively.
Staying with fixed income, 10yr Treasury yields traded in a 23bps range after gapping lower after the Fed announcements Sunday night but ended up closing in the middle of it and -24.2bps lower. Sovereign debt sold off in Europe however, with yields on 10-year Italian debt closing above 2% for the first time since June, with the spread over bunds widening by a further +29.7bps to 2.63%, also their widest since June.
Airlines experienced some of the largest declines in equity markets yesterday, with the STOXX 600 Travel and Leisure index down -10.06% as it fell to its lowest level since October 2012. It comes as a number of major airlines have said they’ll be reducing the number of flights, with IAG, the owner of British Airways announcing that in April and May they’d be reducing capacity “by at least 75 per cent compared to the same period in 2019”. In terms of the individual movers, Tui fell -12.72%, recovering from an intraday low of -39.44%, following the previous day’s reports that it would apply for state aid guarantees and withdrew its guidance for FY 2020. Meanwhile Easyjet was down -19.32% (up from an intraday low of -32.77%) after the company said it wasn’t possible to provide guidance for the rest of FY20. Finally Reuters reported that the Italian government plans to renationalise the already bankrupt Alitalia as a planned sale has found no bidders.
Commodity markets provided their own headlines, with Brent Crude trading below $30 a barrel for the first time since 2016, closing at $30.05 down -11.23%. The impact of the oil moves were seen elsewhere, with the currencies of oil-producing nations suffering on the back of the moves. Indeed, the Norwegian Krone and the Canadian Dollar were the two worst-performing G10 currencies yesterday, falling -1.95% and -1.50% against the US dollar respectively. For energy stocks the picture was similarly dire, with the STOXX Oil & Gas index down -5.59% and at its lowest level since 1996, while the S&P 500 Energy industry grouping fell -13.63%.
Data releases have understandably taken a back seat to the coronavirus, though we did get the New York Fed’s Empire State manufacturing survey for March, which fell to -21.5 (vs. 3.0 expected), which was its lowest level since March 2009 and the largest monthly decline in the index on record. Sadly there wasn’t much optimism about the coming months either, with optimism about the six-month outlook now at 1.2, its lowest level since February 2009 .The responses for this survey were collected from March 2nd to 10th, so after concerns over the coronavirus had gone global.
To the day ahead now, and the data highlights will include employment data from the UK for January and the ZEW survey from Germany for March. Meanwhile from the US, there’ll be retail sales, industrial production and capacity utilisation for February, business inventories and JOLTS job openings for January, and the NAHB housing market index for March. Finally, though it feels somewhat peripheral given the current international situation, there’ll be a further 4 US states holding primary votes today on the Democratic side: Florida, Illinois, Ohio and Arizona. Between them, they hold a further 577 delegates, which is nearly 15% of the total up for grabs. Former Vice President Biden is the favourite to win in all 4 states on both FiveThirtyEight’s models and PredictIt, giving him the chance to further extend his delegate lead over Senator Bernie Sanders. For context, all four states went for Hillary Clinton over Bernie Sanders in the 2016 cycle.
DOJ Files To Drop Charges Against Russian ‘Bot Farms’ That Fought Mueller Indictment
Less than a year after a US District court judge dealt a blow to the “Russian active measures” talking point when she ruled that Robert Mueller failed to link them to the Kremlin, the Justice Department has moved to drop all charges against the shell companies accused of interfering in the 2016 US election.
Mueller charged the companies, Concord Management and Concord Consulting in 2018 – along with 13 Russians and another company, the Internet Research Agency – in what prosecutors claimed was a sophisticated scheme to “knowingly and intentionally” divide America through disinformation and election interference.
To Mueller’s surprise, Concord actually showed up to a Washington courtroom to fight the charges – which Mueller’s team tried to delay by claiming that Concord never served in the case, as they didn’t ‘properly’ answer the special counsel’s summons. When Concord argued that they appeared as provided by the Federal Rules of Criminal Procedure, US District Court Judge Dabney Friedrich agreed.
I don’t think anyone (including Mueller) anticipated that any of the defendants would appear in court to defend against the charges. Rather, the Mueller prosecutors seem to have obtained the indictment to serve a public relations purpose, laying out the case for interference as understood by the government and lending a veneer of respectability to the Mueller Switch Project.
One of the Russian corporate defendants nevertheless hired counsel to contest the charges. In April two Washington-area attorneys — Eric Dubelier and Kate Seikaly of the Reed Smith firm — filed appearances in court on behalf of Concord Management and Consulting. Josh Gerstein covered that turn of events for Politico here. –Powerline Blog
Prosecutors fought tooth and nail to keep confidential information out of Concord’s hands – arguing that the defendants would obtain details about the government’s sources and methods. Judge Friedrich, however, ruled last September that it was “significant and prejudicial that the government itself drew a link between these defendants and the Russian government,” adding “In short, the Court concludes that the government violated Rule 57.7 by making or authorizing the release of public statements that linked the defendants’ alleged activities to the Russian government…”
This is a major blow not just to Mueller but to the entire “Russian Active Measures” talking point. As the judge acknowledges, the IRA (which, btw, put out juvenile clickbait mostly unrelated to the election) is a private entity & Mueller never establishes a Kremlin connection. pic.twitter.com/WT2n5nZ5Fy
So, with trial approaching next month, prosecutors recommended that the Justice Department drop the charges against the companies in order to preserve national security interests and, as the New York Times describes it, “prevent Russia from weaponizing delicate American law enforcement information.” Another factor was that the defendants – even if found guilty, would be difficult to meaningfully punish in the United States.
“Concord has been eager and aggressive in using the judicial system to gather information about how the United States detects and prevents foreign election interference,” prosecutors said in a Monday court filing.
Of note, the day the charges were levied against the Russians which included allegations of a wide-ranging influence campaign over social media, former Facebook then-VP of advertising Rob Goldman admitted in a series of tweets that the majority of advertising purchased by Russians on Facebook occurred after the election – and their strategy was to “sow discord and divide Americans”, as opposed to help Donald Trump win.
The main goal of the Russian propaganda and misinformation effort is to divide America by using our institutions, like free speech and social media, against us. It has stoked fear and hatred amongst Americans. It is working incredibly well. We are quite divided as a nation.
Hillary Clinton, meanwhile, paid a former UK spy to use Russian sources in a sham dossier, which the Obama FBI used to obtain a warrant to spy on the Trump campaign – while rumors of the Trump colluding with Russia were seeded to the media a month before the election by said operative. Meddlingly.
Beijing Slams Trump’s “Racist” ‘Chinese Virus’ Comment; US Covid-19 Deaths Hit 85 After Record Daily Jump: Live Updates
US stock futures stabilized overnight after another widowmaking session on Monday, even as strategists across Wall Street warned their clients not to try and ‘catch the falling knife’ – but in the absence of any concrete headlines, it seems traders in Japan are finally realizing that the White House is moving closer to the type of fiscal stimulus they want to see. And in Europe, though the G-7’s “whatever it takes” pledge didn’t do much to quiet local markets, reports about the Eurogroup potentially tapping into a €410 bailout fund appear to have done the job.
Another snippet of good news overnight: Tom Hanks and Rita Wilson have been released from their quarantines, signaling that they have won their battles with the virus.
But perhaps the biggest headline, which landed late last night, was certainly discouraging: The death toll in the US saw its largest daily jump yet on Monday. The US death toll climbed to 85, with more than 4,660 cases confirmed, according to Johns Hopkins. Worldwide, more than 182,424 coronavirus cases have been confirmed, along with 7,155 deaths, affecting at least 155 countries according to data compiled by Johns Hopkins University.
But there was also positive news: Regeneron reported that tests for its “antibody-based” remedies for the coronavirus infection could be ready for the final round of clinical testing by the beginning of the summer, which could see a drug shipped by the end of the summer, according to CNBC’s Meg Tirrell.
Pfizer, meanwhile, announced it would partner with a Swiss biotech company to produce a vaccine using a technology similar to Moderna.
Reporting from Beijing, CNBC’s Eunice Yoon, reported that a Chinese trial for favipiravir, another antiviral designed to treat the virus, showed “promising” results.
After Senate Minority Leader Chuck Schumer said last night that he would push for an $840 billion economic rescue package for the administration’s third rescue bill, Treasury Secretary Steven Mnuchin one-upped him in a leaked report to Politico’s Morning Playbook (which hits at around the time most US traders are beginning their pre-market research) claiming that he was pushing for an $850 billion package.
NEW … PLAYBOOK: MNUCHIN seeking $850 billion from Congress …
… @united CEO: “The financial impact of this crisis on our industry is much worse than the stark downturn that we saw in the aftermath of the 9/11 attacks.”https://t.co/BQ70UXWH1G
California Gov. Gavin Newsom yesterday ordered all bars, restaurants and wineries in the state closed, one day after Los Angeles Mayor Eric Garcetti acted unilaterally to impose similar restrictions in LA. California, the largest state in the US which accounts for 1/5th of US GDP, also suspended its state legislature for the next month. New Jersey Gov. Phil Murphy ordered residents in his state not to leave their ho,es between the hours of 8 pm and 5 am.
Restrictions have also been imposed by other states, including New York, Connecticut, Indiana, Maryland and others. in Connecticut, there have been whispers about a full quarantine and the call-up of national guard troops in the state.
With a hodgepodge of local authorities moving to combat the virus in their communities, more businesses and brands are ordering stores to close. After McDonald’s closed its dining rooms and play areas, fitness classes like SoulCycle and OrangeTheory have suspended all classes.
Finally, 8 US banks also got together overnight and accessed the discount window to try and “remove the stigma” as Steve Leisman reported in the midst of the central bank’s additional repo-market interventions.
In China, official data suggests the domestic outbreak is over. Across the country, 20 new cases were reported last night, 19 of whom were ‘travelers’ from abroad. Of course, any new arrivals to China will be herded into 14-day quarantines as Beijing tightens its borders, like everybody else.
At this point, much of the Balkans and Central Europe has shut its borders: Slovenia, Slovakia, Poland, Hungary, the Czech Republic and a handful of others have instituted strict restrictions or all-out bans on non-citizen, non-resident travelers entering their borders. Last night, French President Emmanuel Macron shut down France and tightened borders as the EU declared that it would begin limiting travel into the Schengen Area.
Some other good news overnight: Swiss pharmaceutical company Roche has shipped some 400,000 tests. As drug trials continue at a breakneck pace in China and in the US, the Washington Post has published perhaps the most comprehensive investigation into the CDC’s failure to distribute tests. The story seems to suggest that the errors were largely made by CDC bureaucrats and Obama-administration holdovers, though that wasn’t WaPo’s angle.
Yesterday, the CDC confirmed that one of its employees had tested positive for the virus. On Tuesday, the WHO followed up by reporting that two of its staffers had tested positive.
Poland has become the latest government to confirm that at least one senior official has caught the virus. In the Philippines, the quarantine ordered for the island of Luzon, where roughly half the country’s 104 million people live, has created complications, including preventing health-care workers from getting home, and from getting to work.
Late last night, when President Trump blamed the “Chinese Virus” for hurting American businesses, we suspected that American liberals and the Chinese regime (two groups that have been oddly in sync as of late) would respond with fury.
The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!
Individual epidemiologists warned the comment could strain relations with Beijing at a critical time…
Calling it a “Chinese Virus” makes me incredibly sad. I’m a proud American (happen to be born in China), who is an American thru & thru. This global 🌎 virus knows no race, no creed, or ethnic origin. Let’s conquer #COVID19 together, not apart.🙏 https://t.co/Pzpvy3PAiD
The Chinese Foreign Ministry slammed Trump for “insulting China”, and said the US should “learn to take care of its own business.” Just like how China should learn to develop their own technologies instead of just stealing everyone’s trade secrets.
And of course the Chinese press once again blasted the president’s “racism” in blaming China for a virus that originated in China, and was unleashed upon the world thanks to the CPC’s callousness and indiscretion .
Of course, if Beijing finds this phrasing so offensive, then why does it continue to call Swine Flu the ‘African Swine Flu’?
So why do prc officials not insist on a name change for African swine fever? Or did I miss their repeated expressions of indignation about a name that stigmatizes an entire continent? https://t.co/OOVW0d5TmY
Military-Style Bunkers, IV Cocktails, & Private Testing: How Elites ‘Self-Quarantine’
The most interesting thing about Covid-19 is that it’s a problem that is affecting everyone, mostly skewed to baby boomers, but nevertheless is a terrifying, fast-spreading virus that has consumed the world. And as medical test kits lack, no vaccine for 12-18 months, that means the super-rich can’t buy themselves out of this crisis. So that’s why they’re loading up their designer travel bags on private jets and heading to military-style bunkers to survive the pandemic.
Well, sh*t, like the rest of us, we’re just going to have to adapt to the new normal of wearing 3M N-95 masks, and periodically applying Purell on our hands if we go out in public. But for the super-rich, they have the luxury of hopping on a private plane to a specifically designed and prepared disaster bunker in countries or regions that are seeing relatively low community spreading.
The Guardian says private jet demand has soared as the world’s wealthiest people avoid airports and are taking “personal doctors or nurses” to their disaster bunkers to weather the virus storm.
Mark Ali, chief executive and medical director of the Private Harley Street Clinic, told The Guardian that wealthy folks have been demanding Covid-19 virus test kits, willing to pay top dollar for a test, but as Ali explained:
“This has led to huge demand from very wealthy people asking if they can pay for private testing. Unfortunately, we are unable to offer testing, as the NHS London has said all tests should be done centrally.”
Ali said the wealthy had requested Covid-19 vaccines. He also told them treatments wouldn’t be expected until next year.
“[The Covid-19 outbreak] certainly fired up people’s reactions,” He said. “We have given a lot general flu vaccines and consultations to people wanting to talk in detail about their health and lifestyle.”
Ali said his clinic has been offering an intravenous infusion of vitamins and minerals to boost the immune system of the wealthy. In essence, the treatment is expensive, he said, and not the average person could afford it.
“We know that 90% of adults have a deficiency in vitamins – what better to improve that than an IV immune boost? An intravenous infusion ensures instant and optimal delivery of these nutrients to the body’s cells and the nutrients should include vitamins such as vitamin C, vitamin B12 complex, glutathione, zinc and essential amino acids such as arginine, taurine, lysine and citrulline.”
The lack of vaccines for a year has placed fear in the eyes of the wealthy. Adam Twidell, CEO of private jet booking service PrivateFly, said bookings have jumped for wealthy clients since the virus outbreak began, adding that these people are evacuating from areas where cases and deaths are increasing.
Twidell said wealthy clients have been arranging flights out of Italy, UK, and other countries in Europe amid virus crisis fears.
When it comes to disaster bunker demand, Robert Vicino, CEO of California-based Vivos Group, a doomsday bunker specialist, said virus fears had spurred demand for bunkers.
Denmark has passed an emergency law that allows for the government to force people to take a vaccine for coronavirus.
The emergency law gives authorities sweeping powers to tackle the COVID-19 pandemic and will remain in force until March 2021.
Citizens who refuse to be tested for the coronavirus will face fines and potential prison time, and will be prevented from entering shops, grocery stores, public institutions and hospitals while also being restricted from using public transport.
“As well as enforcing quarantine measures, the law also allows the authorities to force people to be vaccinated, even though there is currently no vaccination for the virus,” reports the Local.
Copenhagen University law professor Jens Elo Rytter said the new measures were “certainly the most extreme since the Second World War.”
The initial draft of the law was even more draconian, and would have allowed police to enter private homes without a warrant if there was a suspicion of a coronavirus infection.
However, this measure was dropped after opposition from other parties in the Parliament.
Denmark currently has 875 recorded coronavirus cases and has registered 2 deaths.
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“The problem with socialism is eventually you run out of other people’s money.”
– Margaret Thatcher
For months myself and very few others have been warning about the problems in Europe. That the real problem isn’t in the U.S., though it’s certainly a mess, it is in Europe.
It’s why I focused so hard on Brexit. Would the U.K. actually get out of the EU before it all came crashing down around the deaf and now stunned Brussels technocrats?
A U.K. outside of the EU meant localizing a major problem on the backs of those that 1) engineered it and 2) cheered it as they literally stole hundreds of billions of pounds from them.
But while everyone has been focused on the melting equity markets and what the high priests of monetary wizardry at the central banks were going to do, did anyone notice the complete collapse of European bonds last week?
I could go on with this but I think you get the point.
But what happens when the rate of selling overwhelms their buying programs?
What happens when they expand those programs, like they did last week, and the selling still overwhelmed them?
More importantly, what happens when short-term spread traders no longer front-run the ECB’s buying chasing nickels in front of a freight train?
Scroll up.
For years those momo-monkeys made it easier for the ECB to keep the fiction of a functional bond market alive. This distorted them beyond all recognition.
And now they’ve run out of other people’s money to bid them higher.
Forget 2008 folks. This is a once-in-a-lifetime event. It will likely be a once-in-five-lifetimes event if Martin Armstrong’s cycle projections are anything close to accurate.
Armstrong from 2015:
There is interaction also between the different fractal levels. The grand or major level at the 309.6 scale shows that the current major trend is a PUBLIC WAVE. since the late 1700s into 2032.95. This has been the age of big government and the shift from Laissez-faire economics in which transactions between private parties are free from government interference such as regulations, privileges, tariffs, and subsidies. This is the primary difference between a PUBLIC and PRIVATE WAVE.
And looking at the events of the past few days it’s pretty clear everyone who is anyone believes that our institutions are there to save us from our own excesses and mistakes.
But they aren’t. The Fed did what it was supposed to do: lower rates, create liquidity, support falling capital markets and buy up government debt so that the Trump administration can spend it.
And it didn’t work. The Dow crashed, and government bonds are hitting their peaks. And still there is an unquenchable need for dollars.
Zero-bound and negative interest rates created this mess, they won’t get us out of it.
The central banks stand naked along the shore as the tide rolls out.
And this morning financial analysts of all stripes are whistling past their own graveyards. They are trying to make sense of it all when it simply comes down to the following…
It creates the terrible dynamic we’re in now: hyper-inflation of risks which come through the selling debt to fund social engineering.
The money printing obfuscates the lack of real capital and the rest is credit pulled from a future incapable of supporting it.
It doesn’t matter the form the spending takes. It doesn’t matter what programs it was used to fund. The end will always be the same.
Epic deflation as the Ponzi scheme of your government paying off its Visa with its MasterCard runs out of people to sell the debt to.
Socialized banking of any form has never worked and it never will. To protect the lower and middle classes from future global bankruptcies we need a free market for money.
Money which is free from the avarice of psychopaths with guns extracting unearned wealth or rent from the people they say they serve. Money is supposed to measure the profit of a voluntary exchange between two actors with productive advantages in different goods or services.
The hard truth is that until we embrace that conceit again we will be at the mercy of these terrible people.
Today, the ECB is powerless to stop this. They don’t have the tools nor the expertise. And they won’t even after they get the reforms they believe they need. It is bankrupt now and it will need external help to survive.
What will the numbers be in 2021? And who will actually be there to pay for it?
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UK Covid-19 Could Last Until Spring 2021 With Millions Hospitalized
A public health document viewed by The Guardian says the Covid-19 outbreak could last until spring 2021 and lead to millions hospitalized.
The secret document was written by the Public Health England (PHE) reveals the virus crisis could be sticking around for another 12 months and infect upwards as 80% of Britons over time.
The document says that: “As many as 80% of the population are expected to be infected with Covid-19 in the next 12 months, and up to 15% (7.9 million people) may require hospitalisation.”
UK Covid-19 Cases And Deaths (as of March 15)
Chief Medical Officer Professor Chris Whitty recently said the worst-case scenario has modeled 80% of the population “are expected” to contract the virus.
Paul Hunter, a professor of medicine at the University of East Anglia, told The Guardian that if the public were to hear that the virus would be disrupting their lives for one year, then they would be “really upset” and “pretty worried about that.”
“A year is entirely plausible. But that figure isn’t well appreciated or understood,” added Hunter.
“I think it will dip in the summer, towards the end of June, and come back in November, in the way that usual seasonal flu does. I think it will be around forever, but become less severe over time, as immunity builds up,” he added.
As we noted Sunday, the UK likely missed the containment window to implement social distancing policies that would flatten the curve to slowdown infections, suggesting the country could see an exponential rise in Covid-19 cases over the next month, sort of like what’s happening in Italy at the moment.
It’s becoming increasingly apparent that the military could be deployed to keep order at supermarkets, hospitals, and in the streets, as Britons could soon find out that virus disruptions may extend into early 2021.
Presently NATO is in the initial stages of military operations called Defender-Europe 20. The 40,000 soldier strong war game exercise includes roughly 20,000 American troops and accompanying weaponry. This witnesses the largest deployment of US personnel in Europe since 1983 Operation Re-forger exercises in the height of the Cold War era. Dutifully, Canadian forces based in Latvia are poised to play their willing role in this exercise. Despite some amusing logistical glitches in Poland (no re-fuelling stations, no bivouac for US troops) Operation Defender is scheduled to run into June. There is some speculation that the contagion of the COVID-19 virus, much to the chagrin of the NATO brass, may cause some re-assessment of this operation.
So why exactly do the brain trusts of this British/US-led bully boy global army deem this silly stomping of boots and rattling of sabres necessary?
Because of course… as the leaders of the desperate, morally and financially bankrupt so-called rules-based western liberal democracies and the lying legacy media have been shouting for the last two decades… that evil thug and dictator Vladimir Putin and his “Red Army” is intent on invading and conquering Europe and world domination.
In a press service sidebar blurb found in sundry print media, according to NORAD commander US General Terrence O’Shaughnessy, Mad Vlad and his evil Kremlin cohorts have designs of military dominance of the arctic and thus “…an avenue through which Russia can quickly attack…” US targets.
O’Shaughnessy should cause Irish folk everywhere to be embarrassed.
In the initial stages of Defender 20 at the Strategic Command Centre in Nebraska, US Defence Sect. Esper participated in computer scenarios simulating nuclear exchanges between the U.S. and Russia.
In statements made to the US Senate earlier this month, General Tod Wolters, the commander of US European Command and head of all NATO armed forces has fully embraced what he defined as a “flexible first strike” doctrine which exposes the US and allies’ “nuclear deterrence” policy a sham.
When the commander of NATO makes such insane statements at the same time that NATO is flexing its military muscle on Russia’s border, the risk of inadvertent nuclear war is real.
The Russian enclave of Kaliningrad is NATO’s main target. All economic, geopolitical and military policy that both Russia and China have adopted over the last two decades, have been a direct reaction to unwarranted and unjustified British/US/NATO aggression.
In an interview on a Russian TV station Putin stated,
“We are not going to fight against anyone. We are going to create conditions so that nobody wants to fight against us.”
The YouTube video of Vladimir Putin’s comments made at the 2007 Munich Security Conference should be earnestly heeded.
