UK PM Boris Johnson Taken To ICU As COVID-19 Symptoms Worsen Dramatically
After being admitted to the hospital over the weekend, UK Prime Minister Boris Johnson has been taken to intensive care as his condition has apparently worsened dramatically overnight.
Dominic Raab has now been deputized to lead Britain in his place.
The Prime Minister has been taken to intensive care
The news sent GBP/USD tumbling into the red on the day.
In a video message he delivered to the British people on Friday, BoJo looked extremely pale and feverish, his skin glistening with sweat, but although he sounded a bit hoarse, he didn’t appear to be having any trouble breathing. Downing Street has described his condition as “worsening.”
Remember, the thing that makes COVID-19 infections so deadly for some patients is that they can sometimes trigger a secondary bacterial infections in the lungs that lead to the destruction of lung tissue that the body simply cannot repair, or replace.
The news of BoJo’s condition is nothing short of a thunderbolt for the UK press, who will be holding a 24-hour BoJo death watch until he recovers. Of course, Britain has plenty of medical resources available to treat him, and although his condition has worsened, we suspect that doctors would be more willing to move a patient of critical importance to national security to the ICU sooner than some poor shmuck who just stumbled in the door of the nearest NHS hospital.
The futures markets seem to like it, but you decide…
You think the Masters of the Universe and their algos are going to use toilet paper returns as a source of alternative data to signal a economic inflection point and get all lathered up in spooz only to get wiped out?
Wisconsin Governor Postpones Tuesday Primary In Defiance Of Biden Campaign’s Wishes
After the Biden campaign refused to sanction plans to delay the vote, Wisconsin Gov. Tony Evers is taking on both the Republican-controlled state assembly and national figures in the Democratic Party by issuing an executive order postponing Tuesday’s election.
Evers issued the order Monday afternoon, and Republican lawmakers are expected to challenge it almost immediately in the courts. Whether the people of Wisconsin will vote tomorrow remains to be seen.
But the decision is a rare example of a politician actually prioritizing the health of the people of his state over the whims of politicians, something that hasn’t been happening enough amid the worst pandemic in generations.
The Biden campaign felt it would be better for Wisconsin’s primary, which is also a special election for more than 3,000 seats in the state legislature.
“Frankly, there’s no good answer to this problem — I wish it were easy,” Evers said. “I have been asking everyone to do their part to help keep our families, our neighbors, and our communities safe, and I had hoped that the Legislature would do its part – just as the rest of us are — to help keep people healthy and safe.”
“The bottom line is that I have an obligation to keep people safe, and that’s why I signed this executive order today,” he added.
If Evers’ executive order holds, Wisconsin would become the 16th state to delay its election amid the pandemic. The governor previously called a special session of the legislature on Saturday to try to push through legislation barring in-person voting on Tuesday, but Republicans blocked it.
NYC To Bury COVID-19 Victims In Local Parks As Morgues Face “Equivalent Of Ongoing 9/11”
Despite Mayor Bill de Blasio confirming Monday the federal government had sent 600,000 N95 masks to New York City, and that other supplies have been procured, including ventilators — finallyenough at least for the near-term immediate needs of besieged hospitals and panicked health workers — city morgues and burial spaces remain overwhelmed.
According to a breaking report by the New York Post, the city council has come up with a ghastly solution as state-wide the death count reaches 4,159, with more than 1,200 deaths coming in the last two days alone: authorities will begin “temporary internment” in local public parks.
Central Park emergency field hospital, via Reuters.
The Post cited Councilman Mark Levine as confirming Monday emergency plans to begin burying the city’s dead in local parks, though specific park names and locations were not immediately identified.
Levine (D-Manhattan) in a series of tweets detailed the morgue and healthcare system chaos and strain as “the equivalent of an ongoing 9/11” adding that city hospital morgues are “now all full”.
“Grieving families report calling as many as half a dozen funeral homes and finding none that can handle their deceased loved ones,” he said. “Cemeteries are not able to handle the number of burial requests and are turning most down.”
And still the number of bodies continues to increase. The freezers at OCME facilities in Manhattan and Brooklyn will soon be full. And then what? 8/
“Soon we’ll start ‘temporary interment’,” he wrote. “This likely will be done by using a NYC park for burials (yes you read that right). Trenches will be dug for 10 caskets in a line.”
“It will be done in a dignified, orderly–and temporary–manner. But it will be tough for NYers to take,” Levine added.“The goal is to avoid scenes like those in Italy, where the military was forced to collect bodies from churches and even off the streets.”
Soon we’ll start “temporary interment”. This likely will be done by using a NYC park for burials (yes you read that right). Trenches will be dug for 10 caskets in a line.
It will be done in a dignified, orderly–and temporary–manner. But it will be tough for NYers to take. 9/
Mayor de Blasio was questioned at a later press briefing about the extreme contingency. He confirmed, “We may well be dealing with temporary burials, so we can deal with each family later,” according to NY Post.
“I’m not going into details,” de Blasio said. “I don’t think it’s a great thing to be talking about.”
Refrigerated trucks in Manhatten being used as makeshift morgues, via Reuters.
Over the past month the COVID-19 epicenter in Italy, Lombardy, witnessed horrific scenes of town morgues becoming so overwhelmed that military trucks were sent by the national government to evacuate bodies for burial in other regions and cities.
Things are really starting to get crazy out there…
All over the country, “non-essential” businesses have been forced to shut down, but because Walmart sells food and other basic supplies it gets to be one of the “essential” businesses that stays open. However, a trip to your local Walmart now will be far different from what you remember previously. When you arrive, you will find that a very narrow entry corridor has been taped off with yellow security tape, and only a very limited number of shoppers are being allowed in at any one time.
And once you get inside, you will discover that there are very strict limits on what you are permitted to purchase.
I know that all of this sounds incredibly bizarre, but it is really happening. The following is what one of my contacts reported when she visited her local Walmart…
Wow, so we just got back from walmart in Pine Bluff, AR….they herded us in, like cattle…I kid you not….we had to go through a taped-off line and they had only one door open instead of the two they normally have. They have a 5 person limit in Magnolia, AR…..and security guards at the door as well…armed security guards. You can only buy one loaf of bread and the store closed at 7PM…normally open 24 hours. It is CRAZY….someone opened a side door by accident and alarms started going off. I joked to the lady next to me “Oh crap, someone must have taken more than a dozen eggs!”
You can see some video of what these taped off entry corridors looks like right here. Obviously a lot of the customers are quite concerned about potentially catching the virus because they are wearing masks or other coverings over their mouths.
And it is also being reported that very creepy social distancing instructions are being repeatedly broadcast over the speakers as shoppers circulate through the stores.
Just days ago, Walmart stores all over the nation were operating normally. But then on Friday, draconian new restrictions were suddenly announced…
Starting Saturday, we will limit the number of customers who can be in a store at once. Stores will now allow no more than five customers for each 1,000 square feet at a given time, roughly 20 percent of a store’s capacity.
To manage this restriction, the associates at a store will mark a queue at a single-entry door (in most cases the Grocery entrance) and direct arriving customers there, where they will be admitted one-by-one and counted. Associates and signage will remind customers of the importance of social distancing while they’re waiting to enter a store – especially before it opens in the morning.
Once a store reaches its capacity, customers will be admitted inside on a “1-out-1-in” basis.
Once shoppers do get inside, they will find that their choices have been significantly narrowed.
Walmart stores in New England are sealing off entire aisles with products deemed “unnecessary” in attempts to combat the scourge of shoppers wandering around to relieve coronavirus quarantine fatigue.
According to CBS Boston, Walmart in addition to Home Depot and BJ’s Wholesale stores in the town of Chicopee, Massachusetts, worked with the city health department to “reduce unnecessary roaming around aisles and putting others at risk.”
Unfortunately, in some stores garden seeds have actually been deemed “non-essential”, and so many that were hoping to grow their own food during this time will be out of luck.
Hopefully once this pandemic is behind us we will see these ridiculous restrictions at Walmart locations go away.
But as we have seen during other moments of crisis in the past, once “emergency measures” get implemented they have a way of sticking around.
And right now many Americans seem to be in the mood to sacrifice their liberties and freedoms for an illusion of safety. If you can believe it, one recent survey actually found that 67 percent of us actually want restrictions put on interstate travel…
Although America has a reputation for being rather libertarian with regards to personal rights and one’s freedom of movement, a new opinion poll by Rasmussen Reports shows that Americans are turning hardline in the face of the new and deadly Chinese coronavirus. Two out of three want to ban interstate travel and fine those who violate social distancing guidelines.
To be precise, 67% of likely U.S. voters say they want to ban all out-of-state travelers from entering their state — except for emergencies. A mere 21% are opposed, 12% are undecided. As for fining those who break social distancing guidelines: 68% support such a measure, while 20% oppose it and, again, 12% are not sure.
Yes, we should all work together to defeat this virus, but once we lose our most cherished liberties and freedoms they will be exceedingly difficult to get back.
So we should definitely take common sense precautions to prevent the spread of COVID-19, but we must also diligently guard our rights wherever they are threatened.
As this pandemic stretches on, people all over the world are going to be clamoring for a “solution”, and without a doubt the elite will gladly give us one once it is ready.
We are being told that life will not get back to “normal” until a vaccine arrives, and we are also being told that the elite are feverishly working toward that goal.
In fact, it is being reported that Bill Gates is spending billions of dollars building seven different vaccine factories…
Bill Gates is plugging money into building factories for seven promising coronavirus vaccine candidates, even though it will mean wasting billions of dollars.
On Thursday’s episode of “The Daily Show,” the Microsoft billionaire told the host Trevor Noah that his philanthropic organization, the Gates Foundation, could mobilize faster than governments to fight the coronavirus outbreak.
Our society is being transformed at a pace that is absolutely breathtaking, and life as you have known it will never be the same again.
These are perilous times, and things are only going to get stranger from this point forward.
So work hard, pray hard and hold on tight, because the road ahead is going to be really bumpy.
Banks To Make Risk-Free Killing On Small Business Bailout: Fed Will Buy Payroll Loans Issued By Banks
And just like that, the big banks are about to make a killing (again) thanks to the Fed.
As a reminder, as part of the SBA and Treasury’s Payroll Protection Program plan to bail out small and medium business, it gave America’s banks and credit unions some $350BN in guaranteed cash to use to make loans to America’s struggling small and medium business, which proceeds would be use to fund payroll. However, in a bizarre twist, the banks were reluctant to pass through the money to America’s middle class, ostensibly due to concerns about the low rate on the loans (which was originally 0.5%, and was subsequently raised to 1%) and also concerns who these loans could be sold and/or repackaged to if and when the economy turned sour and banks were stuck holding hundreds of billions in NPLs.
Moments ago we got the answer, when the Fed announced it will start another bailout program to provide financing backed by the same loans being made to small businesses through the government’s coronavirus stimulus program.
“To facilitate lending to small businesses via the Small Business Administration’s Paycheck Protection Program (PPP), the Federal Reserve will establish a facility to provide term financing backed by PPP loans. Additional details will be announced this week”, the Fed said in a brief statement. “Additional details will be announced this week.”
Effectively, the Fed will establish a secondary market for loans guaranteed by the Small Business Administration’s Payroll Protection Program, and where the end buyer will be the Fed itself.
And so, what was supposed to be a no string attached rescue of America’s small business, the PPP program has now mutated in yet another massive handout to the big banks, who will collect servicing costs ranging from 5% for small loans to 1% for larger ones, using Treasury capital (no origination risk) and then immediately selling these loans to the Fed if they turn sour (no balance sheet risk).
While the Fed buying to loans would certainly free up bank balance sheet space to issue more loans (who in their right mind would be taking on more non-guaranteed debt, or debt that does not turn into a grant as the PPP loans do, just as the US economy slides into depression), the Fed’s involvement whereby Powell takes on all the balance sheet risk, begs a question: why are banks intermediating this process at all if all they do is convert Treasury capital into loans which they then sell to the Fed, and why doesn’t the Fed simply hand out the loans itself?
The fees will vary with loan size: 5% for loans under $350,000, 3% for loans under $2MM, and 1% for loans greater than $2MM. The loans will not incur a capital charge.
This means that banks stand to earn as much as $17.5 billion – and $10 billion if one assumes an average rate of 3% – for doing something the government is incapable of doing: handing out hundreds of billions in loans/grants to America’s businesses in the shortest possible time.
However, back then banks would at least hold the loans on their balance sheet so they were providing a modest service. Now, they no longer taking any risk whatsoever, and are still going to collect up to $10 billion for what – having a website where people can apply for loans that will be sold right back to the Fed?
As for the Fed, recall that as we explained previously, it can issue as much as $4.5 trillion in loans direct based on how the fiscal stimulus package was structured, whereby the Treasury gives the Fed $454BN in “equity” which is then levered up to 10x in what Bloomberg defined as “A Multitrillion Dollar Helicopter Credit Drop“
It also means that the Fed will be tapped to buy hundreds of billions more in PPP loans as the current $350BN small business program will be woefully insufficient to cover the needs of America’s small businesses. Finally even assuming the full $350BN is entirely purchased by the Fed, that’s just a tiny 6% of the Fed’s $6 trillion balance sheet as of Friday.
That said, banks no longer have any reason to delay disbursement of loans as they can just be dumped to the Fed which is now a rescuer of first and last resort for America’s small and medium, and if for some reason the delays which prevent countless companies from operating, continue then America’s anger at the big banks will be fully justified.
Roughly a month ago on the afternoon of Sunday, March 8th, Fed Chairman Powell had an emergency staff meeting.
Powell: I want the nuttiest money printing plan ever. What action plans do we have that are prepared and ready to initiate?
Admin: Well, we have this one named “GFC 2.0”
Powell: Sounds tame and sedate. Won’t impress anyone.
Admin: What about this one named “Whatever It Takes”
Powell: Lemme look… Meh… I want more shock and awe. This needs at least two more zeros.
Admin: Well, we have this other one named “Project Zimbabwe” but it’s so ridiculous that the Fed would forever lose all credibility…
Powell: hmmm… I like the sound of “Project Zimbabwe.” Just makes you want to turn dollars into toasters and washing machines to preserve wealth. This one will force guys so far out on the risk curve that they’ll think crypto-coins are value investments.
Admin: Yeah, it’s absolutely Wuhan-bat-shit nutty. We’d be criminally insane to unleash this on a population that isn’t prepared for hyperinflation…
Powell: Perfect!! Let’s have a press conference.
A few hours later…
Powell: Mr. President, I finally took rates to zero and launched QE infinity. Can you stop trolling me on twitter already? I can’t take any more of my wife cracking jokes about your tweets.
Trump: Be a man. You got it easy. Wait until you see what I do to Biden. He puts the “Dem in Dementia” haha…
Powell: Please, no more nasty tweets. Even my kids laugh at me.
Trump: Fine, but you’re thinking too small with “Project Zimbabwe.” Figure out how to print more aggressively. Look at what Mnuchin is doing with all his bailout programs. He’s gonna blow $10 trillion by early summer, then try to double that by election time. You better crank up that printing press of yours. I’ll stop tweeting if you keep monetizing the “Mnuchin Money.”
Look, everyone knows the bull thesis for gold, so I won’t wade into the weeds here.
It was never a question of if, but of when. I’d say that if not now, then when?
With every government and Central Bank in full-on Weimar-mode, gold’s potential upside will surprise people, especially as mines shut down from COVID-19 and limit supply. The best part is that margin calls and liquidations have capped the gold price, giving investors one last chance to get in before the run. As people catch their breath and realize what’s happening with simultaneous monetary and fiscal stimulus, gold will be going higher.
Never has a trade been this well telegraphed by this many government officials in my lifetime. Do you have enough gold to survive “Project Zimbabwe”…???
Disclosure: Funds that I control are long gold. I personally own gold.
Will We Revisit The Lows? The Answer – Is It 1987 Or 1929
Two weeks ago, on quad-witch Friday March 20 which (so far) marked the lows of the coronavirus crisis, when US stocks plunged to levels not seen since late 2016, we showed a staggering chart from BofA putting the crash of 2020 in its historic context: in less than a month, the US stock market has crashed faster than both the Great Depression and Black Monday, and in terms of the total drawdown, the crash of 2020 is now worse than 1929 and is fast approaching 1987.
And while we have shown that the initial drop of the current crisis was more violent and rapid than the first leg of either the Black Monday crash or the Great Depression, the far more relevant question asked by traders, is what happens next if we use the 1987 and 1929 benchmarks as a reference. Will we “retest”, or was March 20 the low, something which Morgan Stanley says is “the number one question we continue to discuss with clients”, the same “number one” question that Goldman’s clients were asking a week ago.
To answer that question we show Morgan Stanley’s updates to these charts as they both remain remarkably on track for one of these episodes to play out.
In other words, if we are now re-living 1987, then a retest of the lows is imminent at which point the last of the bulls will be cleared out, leading to more near-term pain but also a faster recovery.
Alternatively, if 2020 “is” 1929, then prepare for a lengthy period of pain as stocks struggle for the next decade, with the silver lining that at least they won’t drop below the late-March lows.
But, be careful what you wish for as that 1929 ‘no retest’ ended very, very badly…
What does Morgan Stanley think? The bank, which as we noted on Sunday has now become one of Wall Street’s most prominent bulls in a dramatic almost-overnight reversal in sentiment, is predictably cheerful, with Michael Wilson writing this morning that while the bank appreciates these analogs always break down at some point, “we stand by our view at the time of the first publication that even in the very bad outcome of the 1930s, there was an extraordinary and tradeable rally from those initial price lows (Exhibit 1).”
For what it’s worth, Morgan Stanley notes that it does not think we will have full retest of the lows nor do we think this is the beginning of a depression” which is surprising to say the least for a bank whose economists not only expect GDP to crash 38% in Q2, but for the full GDP loss to be recovered only by the end of 2021.
Indeed, ignoring its own economic forecast, the Morgan Stanley equity stratey team says that “as we have discussed in prior notes, we think this is the end of a cyclical bear market that began 2 years ago in the context of a secular bull market that began in 2011.”
BMO: The US Recession Is About As Subtle As A Network Outage At Netflix
Authored by BMO Capital Markets rates strategists Ian Lyngen, Ben Jeffery, and Jon Hill
It’s an optimistic start to the week in decidedly pessimistic times. With chatter that Spain and Italy may have crossed the Covid-19 apex and a slowing of US fatalities, global risk assets have outperformed overnight and Treasury yields increased. It’s a holiday shorted week with limited data of note except for the March CPI release; this is, however, a uniquely non-tradable event given it prints on April 10 when the market is closed for Good Friday. It’s not inconceivable that it would be brought forward, but as it currently stands odds favor an ignorable report – if for no other reason than the drop in energy prices will impact the headline figure to such a degree as to undermine its relevance in influencing medium-term inflation expectations. March data has taken on a dismissible character given the distortions created by the coronavirus.
US rates has lost all correlation with economic data. The number of releases which would have warranted massive repricing, but instead have been largely ignored by investors is lengthy – and surprising insofar as they have primarily been related to the labor market. It follows intuitively that the ISM series, durables, housing data, etc. would be dismissed as irrelevant in assessing the economic damage from the pandemic; employment on the other hand will prove to be the beginning (and eventual end) of the recession which is surely upon us.
At the beginning of 2020 we highlighted the risk that the US would slip into a recession so subtly that investors might be caught unaware until after the fact; couldn’t have been wronger (it really should be a word). Not only is it blatantly obvious the recession is nigh; but it’s about as subtle as a network outage at Netflix. We physically shudder at the thought. This has altered the timeline of trading the hit to the domestic economy and the path of rates going forward – as well as led to a collective disinterest in the incoming data.
We’ve been on about how economic reports are in the process of being defined in three stages: pre-virus, mid-virus, and post-virus. This logic continues to hold; although we’ll add another nuance – as we’ve seen investors willing to use the pandemic’s path in Europe as a guide for US expectations, so will be the case for any eventual recovery.
Of course, this will not be one-for-one as the structures and risks on the Continent differ significantly from those in the US – to state the obvious. Nonetheless, in the coming weeks/months it is reasonable to assume the market will be anxiously watching the depths of the European recession for guidance on the magnitude of what to anticipate domestically. This will function with a discount of applicability – but still prove the next phase in trading the pandemic. This presupposes the transition from apex to reopening is forthcoming as the realities of the shutdown remain close at hand.
The day ahead holds remarkably little to occupy investors in terms of incoming information; there is a 3-year auction which promises to gauge the market’s appetite for new Treasury notes in the present environment. Our expectation is for the event to come and go, leaving no discernable impact on the outright level of yields or sentiment. As the largest 3-year offering since April 2010 and the backdrop of a Fed actively monetizing the deficit, we’re reminded that March’s comparable issuance tailed 2.9 bp. In an homage to Bobby Zimmerman’s newest release; Rub a Dub Dub, An Auction so Foul. Hats off not only for the artist still recording at 78, but also for offering an anthem for a pandemic.
“Money Doesn’t Grow On Trees… It Floats On The Ocean”
“There’s oil all over the oceans right now. That’s where they are storing oil; we have never seen anything like that,” Trump, rather oddly bringing up such an archaic topic, said this week from the podium of the White House.
“Every ship is now loaded to the gills.”
And he was right.
With oil demand in freefall, traders are resorting like never before to using the world’s fleet of supertankers as temporary floating storage facilities, filling them with millions of unsold barrels until better times.
As Bloomberg’s Javier Blas notes, it’s an unusual trade, but one that’s among the most lucrative around right now, just when everyone on Wall Street struggles to make money.
What Trump didn’t say is that the most intriguing facet of the floating storage trade is just how profitable it is. In the industry, it’s often described as a money printing press: traders buy oil on the cheap, and immediately sell their cargo forward in the futures market, locking in a chunky profit – with very little risk.
Before oil prices rallied on Thursday on talk of an OPEC+ output cut, traders were easily able to lock-in a 20% annualized return on their money.
In fact the profits from storing oil at sea have soared massively in March as money no longer grows on Wall Street trees, but lives on the oceans…
I have followed tankers for two decades now. Ever since 2009, every spike was short-lived as there was incessant oversupply. This one is truly different. No national leader wants to end lock-down too soon and then have people die. Instead, the incentive is to be as aggressive as possible with the lock-down, strangle the economy and look like they’re doing something to protect people from something terrifying that most people don’t understand. Which politician wouldn’t want to stand up there on national TV, flanked by important sounding people and talk about what they’re doing to protect you, while giving you free stimulus money? It’s the greatest election campaign ever. Even Trump is getting in on the act and we all know that he’s singularly focused on the stock market.
And sure enough, as Platts detailed earlier, some super tankers are being booked to store crude for up to three years – potentially the longest ever duration for floating storage – as traders seek to profit from hoarding oil to cope with the current oil demand and supply shocks. The race to secure floating storage has picked up significantly in recent weeks, with up to 40 VLCCs and 20 Suezmaxes already placed on long-term chartering, according to S&P Global Platts estimates.
“There’s been a huge interest in storage and that’s helped to lift freight rates,” said Halvor Ellefsen, a tanker broker at Fearnley’s A/S.
“The bottom line is that everybody in the shipping market is acutely aware of the contango, and the profits it can give traders.”
Freight rates and storage costs have ballooned as the market faces the prospect of more oil just as demand destruction due to the spread of coronavirus escalates.
This has raised the stakes over how the world’s biggest producers, the US, Russia and Saudi Arabia will confront the challenges of competition over market share, lower prices and potentially a lack of buyers for their crude.
“The world is overproducing oil at a historic rate,” said Robert Hvide MacLeod, the head of Frontline Management, one of the world’s largest operators of supertankers.
“Land-based storage is limited and selling out fast. Storage on ships will be the only solution.”
I know what the obvious next question is; what if the Saudis stop flooding the market? My response is, “who cares?” We’re all on lock-down. I’m watching out my window. Car traffic is down by half. Cruises aren’t going past my pool deck as frequently and air travel is down dramatically. We’ll eventually beat this flu, but by then, there will be billions of excess barrels to deal with.
The Saudis are a rounding error in all of this. Our government is saying this could go on for 18 months or longer. Are you kidding? Where will all the oil go? This is the time to be greedy on tankers.
Kupperman discloses that funds that he controls are long: DHT, EURN, LPG, STNG, TNK
