Mysterious Colorado Doomsday Shelter For When “Law & Order Breaks Down” Sees Spike In Interest
As the pandemic unfolds across the US, city dwellers are getting the hell out of dodge and escaping to rural areas. We noted this last week, with many leaving large metro areas in California, fleeing for the mountains and rural communities to limit their probabilities of contracting COVID-19. Now it appears the virus crisis is evolving, as fears of social unrest across large US metro areas are spiking interest in doomsday shelters.
The Federation of Red Cross and Red Crescent Societies warned last week that a “social bomb” is getting ready to explode across Western cities amid the collapse of economies and high unemployment. This has forced many people to request information about a mysterious doomsday ranch in Colorado, called Fortitude Ranch, stockpiled with food, weapons, ammo, and designated bunkers, reported CBS4 Denver.
The ranch describes itself as “a survival community equipped to survive any disaster and long-term loss of law and order,” and its actual location is unknown to non-members.
“Fortitude Ranch is a survival community equipped to survive any type of disaster and long-term loss of law and order, managed by full time staff. Fortitude Ranch is affordable (about $1,000/person annually) because of large numbers of members and economies of scale. Fortitude Ranch is especially attractive to join because it doubles as a recreation and vacation facility as well as a survival retreat. Members can vacation, hunt, fish and recreate at our forest and mountain locations in good times, and shelter at Fortitude Ranch to survive a collapse,” the company’s website said.
Drew Miller, a retired Air Force Colonel, operates several ranches in Colorado and West Virginia, with ten more locations expected in the near term.
“If law and order breaks down, then by all means, we will open and ask our members to come, but thus far our members pretty well understand that they really don’t need to be at Fortitude Ranch now,” Miller said.
The beginning innings of social unrest could be unfolding in the US. President Trump signed an executive order last Friday that could call up as many as one million reserves, not to fight the virus solely, but to maintain social order.
If an economic crisis collapses the US government, the doomsday ranch states that it will operate a “fleet of aircraft” that can travel to and from other sites, as it says, “overland travel may be unsafe for a long time.”
And for years, mainstream media laughed at the prepper community – calling anyone who preps a “tin foil hat conspiracy theorist,” but, in a few short months, it’s those who bashed preppers are the crazy ones as they frantically storm big-box retailers without 3M N95 masks for food.
The virus storm has triggered the next big shift: a mass exodus of cities as lockdowns Martial law has confined people to their studio apartments, with no security of land, no weapons for protection, and limited food. And where are the people that manage to escape the city going? Well, besides a doomsday ranch, there is also a huge demand for “prepper properties…”
The next chapter of the virus crisis could be here in a matter of weeks, as lockdowns are being extended across the Western world, now till the end of April, people are now starting to get frustrated with governments.
Chinese Foreign Ministry spokesperson’s retweet of an article blaming the US for infecting Wuhan with coronavirus went viral, viewed 160 million times within hours. But where did the story come from?
By now, the early history of Covid-19 is well known, if not clear in its details. The virus was first detected somewhere around Wuhan, in Hubei province, then appears to have entered the Huanan Seafood Wholesale Market, from where it infected many others. Doctors in Wuhan first noticed the novel coronavirus in December and began exchanging urgent warnings.
Local government authorities set out to silence them; some were detained and made to sign documents admitting wrongdoing.Meanwhile, Wuhan officials went about business as usual, which included a disastrous Lunar New Year banquet attended by about 40,000 families. Soon, many more thousands around Wuhan were infected, with hundreds dead or dying, including ophthalmologist Li Wenliang, who had been punished for trying to raise the alarm.Realising it was in the firing line not just for running the nation that had unleashed the deadly virus on the world but also for ignoring, covering up and denying its spread, China’s Communist Party moved into damage-control mode. This included suggesting it was the United Statesthat was responsible for the virus.
Chinese state media regularly tweet propaganda and what many describe as “fake news”. Global Times has 1.7 million followers on Twitter; China Xinhua News, 12.6 million; People’s Daily, 7.1 million; China Daily, 4.3 million; and China Global Television Network (CGTN), 14 million.
Zhao Lijian, spokesman and deputy director general of China’s Ministry of Foreign Affairs. Photo: Kyodo
Zhao Lijian, spokesman and deputy director general of the Ministry of Foreign Affairs’ information department, had 287,000 followers when he tweeted a link to a conspiracy website alleging the US was responsible for the virus. (Ministry spokeswoman Hua Chunying had 146,700 followers; the ministry’s “spokesperson” account, used by Geng Shuang, had 61,000; and Hu Xijin, editor-in-chief of Global Times, had 175,000.)
With the outbreak of an epidemic, one of the first jobs of scientists and doctors, even while they fight to save lives, is to identify its source. This is critical in the search for medicines to combat a virus and a vaccine to prevent its spread.
On January 24, an article written jointly by 29 Chinese medical doctors and scientists was published in The Lancet, one of the world’s leading medical journals. The authors shared their findings from a study of patients who were suspected of having been infected with 2019-nCoV and had been admitted to a Wuhan hospital. The report said that by January 2, 41 of them had been “laboratory-confirmed” as infected with the virus – which causes Covid-19 – and two-thirds of those infected “had been exposed to the Huanan market”.
The findings appeared to support anecdotal evidence that the source of the virus was the market, which had been closed by city officials on January 1. This had been often repeated by Chinese authorities and reported widely in the global media. The Lancet article gave scientific currency to this narrative.
Then, on February 19, another study – this time published on ChinaXiv.org, an open repository and distribution website used by scientific researchers – suggested the market was likely not ground zero for the virus, but rather that it had been “imported”from outside.
The study was by a team of scientists from several institutions: Xishuangbanna Tropical Botanical Garden of Chinese Academy of Sciences; South China Agricultural University; and the Chinese Institute for Brain Research. It was revised on February 21. Neither version of the study suggested Covid-19 had originated outside China.
But the fake news machine was about to go to work.
On February 23, the People’s Daily’s English-language site reprinted a February 22 Global Times article titled, “Japanese TV report sparks speculations in China that Covid-19 may have originated in US”. The original Global Times article, which is no longer available online, began: “A report from a Japanese TV station that suspected some of the 14,000 Americans died of influenza may have unknowningly [sic] contracted the coronavirus has gone viral on Chinese social media, stoking fears and speculations in China that the novel coronavirus may have originated in the US.
“The report, by TV Asahi Corporation of Japan, suggested that the US government may have failed to grasp how rampant the virus have gone [sic] on the US soil.”
The article continued: “The story sparked various conspiracy theories on [sic] Chinese cyberspace.
“The Military World Games were held in Wuhan in October. ‘Perhaps the US delegates brought the coronavirus to Wuhan, and some mutation occurred to the virus, making it more deadly and contagious, and causing a widespread outbreak this year,’ a user posted on China’s Twitter-like Weibo.
“[An] international relations professor at the Shanghai-based Fudan University, noted that global virologists are working to track the origin of the virus, including the intelligence agencies. Netizens are encouraged to actively partake in discussions, but preferrably [sic] in a rational fashion.”
The original Global Times article appears to have been replaced with one about the US Centres for Disease Control and Prevention’s denial of the TV Asahi report.
On March 4, the People’s Daily reprint of this article was used as the basis for a piece published on conspiracy website GlobalResearch.ca, titled “China’s Coronavirus: A Shocking Update. Did The Virus Originate in the US?” It was the first of two articles on the website that would lead to Zhao’s tweet nine days later suggesting the US Army had brought the virus to Wuhan.
The March 4 article begins: “The Western media quickly took the stage and laid out the official narrative for the outbreak of the new coronavirus which appeared to have begun in China, claiming it to have originated with animals at a wet market in Wuhan.”
This omits a few salient facts: that China’s state-controlled media had also “laid out the official narrative”; that reporters had received that narrative from the Chinese government; and that in the early days of the outbreak, the majority of evidence, including the Lancet article by 29 Chinese doctors, pointed to the Wuhan market.
The Global Research article continues: “In fact the origin was for a long time unknown but it appears likely now, according to Chinese and Japanese reports, that the virus originated elsewhere, from multiple locations, but began to spread widely only after being introduced to the market.
“More to the point, it appears that the virus did not originate in China and, according to reports in Japanese and other media, may have originated in the US.”
Hu Xijin, editor-in-chief of the Global Times. Photo: SCMP / Simon Song
The article then presents a subheading that inflates “may have originated in the US” to “Chinese Researchers Conclude the Virus Originated Outside of China”. Underneath, it quotes two reports – a February 22 article in Global Times and a February 23 article in CGTN – both about the ChinaXiv study, which did not suggest the virus originated outside China.
But Global Research wanted readers to draw the conclusion that it did, and so it created some dots to be connected: “Chinese medical authorities – and ‘intelligence agencies’ – then conducted a rapid and wide-ranging search for the origin of the virus, collecting nearly 100 samples of the genome from 12 different countries on 4 continents, identifying all the varieties and mutations. During this research, they determined the virus outbreak had begun much earlier, probably in November, shortly after the Wuhan Military Games.
“They then came to the same independent conclusions as the Japanese researchers – that the virus did not begin in China but was introduced there from the outside.”
That was not the “conclusion” of the scientists who posted their research on ChinaXiv.
Next, citing a February 27 story on Xinhuanet, Global Research invokes a Chinese national hero, Zhong Nanshan, who led the fight to contain severe acute respiratory syndrome in 2003. “China’s top respiratory specialist Zhong Nanshan said on January 27 … ‘Though the Covid-19 was first discovered in China, it does not mean that it originated from China’.”
Global Research translates this for its readers: “But that is Chinese for ‘it originated someplace else, in another country’.”
Zhong did not say that. Neither did Xinhuanet. And the “Japanese researchers” Global Research refers to are never identified. The only reference to a Japanese source is: “In February of 2020, the Japanese Asahi news report (print and TV) claimed the coronavirus originated in the US, not in China …”
Global Research offers no link to Asahi, only a link to the February 23 People’s Daily article, which also has no Asahi link but was a reprint of the Global Times story, which appears to have been revised on February 22, and – you guessed it – provides no Asahi link.
An online search for “Asahi news coronavirus originated in the US” from February 1 to 29 reveals no link to any such Asahi article. Neither does a search of the Asahi news website, which returns 688 articles containing the word “coronavirus” through March 4. But not this one.
Global Research also cites the Fudan University quote in Global Times: “[The professor] stated that global virologists ‘including the intelligence agencies’ were tracking the origin of the virus. Also of interest, the Chinese government did not shut the door on this. The news report stated: ‘Netizens are encouraged to actively partake in discussions, but preferably in a rational fashion.’
“In China, that is meaningful. If the reports were rubbish, the government would clearly state that, and tell people to not spread false rumours.”
Ophthalmologist Li Wenliang, who was reprimanded by the police after alerting colleagues to a Sars-like virus and who later died of Covid-19. Photo: Weibo
The final piece of “evidence” in Global Research’s March 4 article is headed “Taiwan Virologist Suggests the Coronavirus Originated in the US”, and includes an embedded video of a Taiwan television show, identified as This! Is Not News, and a screenshot of a man with a pointer giving a colourful lecture about the origins of the virus. “The man in the video is a top virologist and pharmacologist who performed a long and detailed search for the source of the virus,” claims the article.
Except the man in the video – whom the report does not name – is not a virologist at all. He is a politician from the pro-Beijing New Party and a member of the Taipei City Council, who, before entering politics full time in 2002, was a pharmacology professor.
The clip opens with an introduction from a man in a crew cut, who talks about China and Russia and Georgian defectors carrying American biowarfare secrets, and mosquitoes and bats developed by the US for diabolical purposes. As he talks, tabloid-sized purple characters scroll along the bottom of the screen, punctuated with question marks and exclamation marks, and the one English acronym every conspiracy theorist worldwide knows: “CIA!”
Capping his performance is a 1981 analysis purported to have been carried out by the US Army that showed the attraction of “entomological warfare” to the US military and American taxpayers: 50 per cent of a city of 1.2 million people could be wiped out at a per-corpse cost of 29 cents.
Military Personnel stand guard outside the US Army Medical Research Institute of Infectious Diseases at Fort Detrick. Photo: AFP
Up next, “the man in the video”notes that, while the man with the crew cut had been talking in terms of Cold War-style geopolitics where everybody fears and loathes everybody else, he is there solely to discuss science. Then he waves a pointer with a plastic yellow index finger at its tip, indicating diagrams of multicoloured circles. As the most complex diagram arrives on screen, he reassures the show’s hostess, “The next slide will make it very clear.”
Such was Global Research’s Taiwan “expert evidence”. Undaunted, the article continues: “The Taiwanese doctor then stated the virus outbreak began earlier than assumed, saying, ‘We must look to September of 2019’.
“He stated the case in September of 2019 where some Japanese travelled to Hawaii and returned home infected, people who had never been to China. This was two months prior to the infections in China and just after the CDC suddenly and totally shut down the Fort Detrick bio-weapons lab claiming the facilities were insufficient to prevent loss of pathogens.”
The introduction of the US Army’s Fort Detrick bio-weapons lab is a solid piece of conspiracy theory craftsmanship. The “man in the video” had not mentioned Fort Detrick – Global Research did, in an apparent attempt to tie the Taiwanese “virologist’s” Japanese travellers who visited Hawaii in September to a US Army bioweapons lab.
The Fort Detrick facility had not been “suddenly and totally shut down” – it ceased research in mid-July (and not in September). And how one of the most contagious viruses in history travelled from Maryland to Hawaii over a six- to eight-week period, leaving no trail of illness and death, goes unexamined by Global Research.
Renowned Chinese respiratory specialist Zhong Nanshan. Photo: Xinhua
For good measure, the article closes by listing six outbreaks in 2018, 2019 and 2020 of “pandemics” that “sickened” and “killed” people, chickens and pigs in China. Each includes notes such as, “China needs to purchase US agricultural products,” suggesting that as part of the trade war, the US has been unleashing pathogens in the mainland for more than two years in order to make China buy American.
In summary, the March 4 article invokes mainland hero Zhong, the “Japanese” and the “Taiwanese” – two American allies with no reason to lie – and adds the “CIA” and a leaky US bioweapons research lab for spice. All independent and none really confirming the others while appearing to come close. Perhaps most impressive of all, the author produced almost 2,000 America-bashing words, and not one of them was “Trump”.
On March 5, without citing the Global Research March 4 piece or any of the underlying Chinese media articles, Zhao tweeted: “Confirmed cases of #COVID19 were first found in China, but its origin is not necessarily in China. We are still tracing the origin.”
On March 11, Global Research published a follow-up: “COVID-19: Further Evidence that the Virus Originated in the US”.
The story begins by recapping the March 4 article, upgrading the never-found Japanese Asahi broadcasters and the “man in the video” to “Japanese and Taiwanese epidemiologists and pharmacologists [who] have determined that the new coronavirus could have originated in the US”. The “man in the video” was now also a “physician” and a “scientist”.
Personnel working inside Fort Detrick. Photo: AFP
Recalling his attempt to place the first Covid-19 case in the US, Global Research again points out, “immediately prior to that, the CDC totally shut down the US Military’s main bio-lab at Fort Detrick, Maryland, due to an absence of safeguards against pathogen leakages, issuing a complete ‘cease and desist’ order to the military”.
As evidence, Global Research had posted a screenshot of an August 5 New York Times headline, “Deadly Germ Research Is Shut Down at Army Lab Over Safety Concerns; Problems with disposal of dangerous materials led the government to suspend research at the military’s leading biodefence centre”.
In fact, the New York Times article had not stated the centre had been “totally shut down”. It had reported that 900 people worked at the facility and, “Although many projects are on hold, [a facility spokeswoman] said scientists and other employees are continuing to work, just not on select agents”. Both TheNew York Times and a local newspaper that first reported the cessation of the research noted that no pathogens had escaped the facility.
Global Research’s March 11 story continues: “We also had the Japanese citizens infected in September of 2019, in Hawaii, people who had never been to China, these infections occurring on US soil long before the outbreak in Wuhan but only shortly after the locking down of Fort Detrick.
“Then, on Chinese social media, another article appeared, aware of the above but presenting further details. It stated in part that five ‘foreign’ athletes or other personnel visiting Wuhan for the World Military Games (October 18-27, 2019) were hospitalised in Wuhan for an undetermined infection.”
The opening ceremony of the CISM Military World Games, in Wuhan. Photo: Reuters
That other article is a blog on Chinese social media, identified only by a QR code, that began: “Because there have been so many American dogs recently, in consideration for my account’s safety, [I must write] ‘some country’ or ‘M Country’ [when referring to America].”
The blog entry, which appeared to be a work in progress and is no longer online, recycled much of Global Research’s March 4 article, adding screenshots of local news stories about US military personnel in Wuhan for the October military gameswho were hospitalised.
According to Global Research: “The article explains more clearly that the Wuhan version of the virus could have come only from the US because it is what they call a ‘branch’ which could not have been created first because it would have no ‘seed’. It would have to have been a new variety spun off the original ‘trunk’, and that trunk exists only in the US.”
So there it was. A post on “Chinese social media” about “‘foreign’ athletes or other personnel visiting Wuhan for the World Military Games” in October completed the conspiracy’s journey. The fake news world had rewritten the origin of Covid-19: it was not due to a catastrophic natural occurrence somewhere in or around Wuhan, as the world’s scientists believed, but to a bioweapon brought to Wuhan by the US Army.
At the end of its March 11 article, Global Research returned to January, citing two articles in Science magazine for further “evidence” of its conspiracy – neither of which states the origin of the virus was, as Global Research puts it, “Not in Wuhan” – tying a bow around the package Zhao would soon forward to hundreds of thousands, who would forward it to hundreds of millions.
This article is very much important to each and every one of us. Please read and retweet it. COVID-19: Further Evidence that the Virus Originated in the US. https://t.co/LPanIo40MR
On the morning of March 13, Zhao tweeted links to the Global Research articles: “This article is very much important to each and every one of us. Please read and retweet it. COVID-19: Further Evidence that the Virus Originated in the US. It would be useful to read this prior article for background: China’s Coronavirus: A Shocking Update. Did The Virus …”
Followed by:
“Just take a few minutes to read one more article. This is so astonishing that it changed many things I used to believe in. Please retweet to let more people know about it. China’s Coronavirus: A Shocking Update. Did The Virus Originate in the US? – Global Research: The Western media quickly laid out the official narrative for the outbreak of COVID-19 which appeared to have begun in China …”
By late afternoon, the South China Morning Post reported that the hashtag topic “Zhao Lijian sent out five consecutive tweets questioning the US” had been viewed more than 4.7 million times on Weibo. Twelve hours later, The New YorkTimes reported it had been viewed more than 160 million times.
Zhao’s Twitter followers have increased from 287,000 to more than 500,000. Media worldwide carried stories about his tweets, putting them in front of millions more readers, most of whom would never have seen them on Twitter or Weibo. Fake virus news had gone viral.
In October, the US Senate Select Committee on Intelligence noted in the first line of its report on Russia’s use of social media to meddle in the 2016 US presidential election, that “information warfare [is] designed to spread disinformation and societal division”. Zhao’s tweets accomplished both. The disinformation was obvious. Critical thinking in abeyance, plenty of people will believe a claim that the US Army planted Covid-19 in Wuhan; even more will want it to be true.
When US President Donald Trump, Secretary of State Mike Pompeo and others began fighting back by loudly and repeatedly calling Covid-19 “the Chinese virus”, social division in the US grew, if that is possible. The media accused Trump of being racist and xenophobic, and inciting more of the same towards Chinese-Americans. This only caused Trump to say it louder and more often.
One wonders how much longer Washington will continue fighting the information war against Beijing with one arm tied behind its back. Chinese media enjoy free run of the US, including on Twitter. The US has no such freedom in China.
Not a few pundits in these past few weeks have predicted Covid-19 will end globalisation, or even “life as we know it”. That seems unlikely, given the short-term nature of people’s memories and how profitable “life as we know it” has been for so many. But given the mischief Zhao’s tweets caused, Beijing’s days on Twitter might be numbered.
Putin: Oil Glut Is Really About Saudi Desire To Crush US Shale
While it appears an expected emergency virtual OPEC+ meeting planned for Monday has been postponed, pushed back to later in the week to allow more time for negotiations, it’s likely that we’ll actually see the heated blame-game for the collapse in oil prices ratchet up — and oh,in the meantimeoil is set to crater come Monday as the feud is only expected to get uglier.
Indeed the aggressive war of words has started, with Putin offering a biting Russian narrative aimed at the Saudis in remarks Friday: “It was the pullout by our partners from Saudi Arabia from the OPEC+ deal, their increase in production and their announcement that they were even ready to give discounts on oil” that drove the crash alongside the double-whammy of the coronavirus-driven drop in demand, Putin said according to Bloomberg.
“This was apparently linked to efforts by our partners from Saudi Arabia to eliminate competitors who produce so-called shale oil,” Putin continued. “To do that, the price needs to be below $40 a barrel. And they succeeded in that. But we don’t need that, we never set such a goal.”
Via Daily Mail
Thus in one fell swoop Putin, ironically enough, framed the new ‘war on US shale’ as in reality a Saudi dirty little secret and motive despite all spin to the contrary, perhaps also seeking to inject division and tension in the close Washington-Riyadh alliance.
Both Russia and the Saudis opened the taps and prices soared following Russia’s early March declaration that it would be quitting the OPEC plan to slash output by 1 million bpd, conditioned also on Russia-led non-OPEC countries cutting 500,000 bpd. Moscow reasoned that ultimately US shale-oil producers would be the ones benefiting as they had previously, filling the gaps in earlier curtailments.
Putin’s attack has for the time being had the immediate effect of forcing Riyadh into the awkward position of having to deny it could have been a willing participant in deeper machinations to crush US shale producers in a price war. This as already the steep drop-off in prices have left some US shale producers saying they’re ready to initiate voluntary production cuts amid the ballooning oil glut, as the WSJ reported Friday.
Saudi Foreign Minister Prince Faisal bin Farhan responded to Putin in early Saturday comments, blasting the allegations as “fully devoid of truth.”
“Russia was the one that refused the agreement” the Saudi foreign ministry statement said. “The kingdom and 22 other countries were trying to to persuade Russia to make further cuts and extend the agreement.”
Energy minister and half-brother of Crown Prince Mohamed bin Salman said something similar, noticeably without taking the shale angle to the Russian accusations head-on.
“The Russian Minister of Energy was first to declare to the media that all the participating countries are absolved of their commitments,” he said. “This led to the decision by countries to raise their production in order to offset lower prices and compensate for their loss of returns.”
Interestingly, Bloomberg’s own summary of the OPEC+ unraveling tacitly admits what few pundits are ready to do, namely that the Saudis for all practical purposes have appeared ‘equal partners’ in squeezing US shale: “The Saudis, who have ramped up production to a record 12 million barrels a day in the past month and massively discounted the price of their oil, have insisted a new agreement must involve significant contributions from all OPEC+ nations and major producers outside the coalition, including the U.S. and Canada,” as the report puts it.
Goldman Warns Of A “Significant” Adverse Impact On Stocks As 2020 Buybacks Are Cut In Half
One week ago, following one of the fastest bear market rallies in history (which briefly became a bull market from the March 20 lows), Goldman’s clients – together with everyone else – had just one question: was this the bottom?
One week later, with the market below last Friday’s lows, it appears that nobody knows what the correct answer is. So, to narrow down the confusion, Goldman’s clients have shifted their attention to a just a more easily answerable question: will the buybacks that helped push the market to all time highs on increasingly less volume, still be there in the coming months?
The reason for the angst is the fact that, as we wrote last Sunday, Goldman’s buyback desk warned that nearly 50 US companies have suspended existing share repurchase authorizations in the past two weeks, representing $190 billion of buybacks or nearly 25% of the 2019 total.There’s more: as Goldman’s chief equity strategist David Kostin wrote, reduced cash flows and select restrictions mandated as part of the Phase 3 fiscal legislation “suggest more suspensions are likely.” And since buybacks have represented the single largest source of US equity demand in each of the last several years…
… the strategist concludes that “higher volatility and lower equity valuations are among the likely consequences of reduced buybacks.”
Which brings us to the latest weekly note from the Goldman strategist, in which he writes that in the latest week, “many of our investor discussions gravitated towards the topic of dividends and share repurchases. The intensifying economic crisis, collapse in company revenues, flurry of suspension announcements, and restrictions in the recently-passed $2 trillion fiscal package have raised questions regarding future corporate cash spending priorities.”
His answer will hardly appeal to Goldman’s client base, or anyone else for that matter, so used to corporation repurchasing their stocks when times get rough: in 2020, Goldman forecasts that S&P 500 dividends will fall by 25% and buybacks will plummet by 50% compared with 2019 levels.
Here are the details behind Goldman’s dour assessment, first dividends:
We estimate S&P 500 dividends will decline by 25% in 2020. Dividends actually rose by 9% during 1Q. However, dividend suspensions, cuts, and eliminations will result in DPS falling by 38% during the next nine months so on a full-year basis dividends will be 25% below the level of last year.
And then buybacks:
In total, we expect S&P 500 share repurchases will decline by 50% to $371 billion during 2020. Despite elevated market volatility, a review of sell-side analyst estimates published since the market’s peak suggests buybacks likely fell by 21% during the first quarter. However, Goldman Sachs buyback desk executions actually rose by 25% year/year. Averaging these two approaches, we assume buybacks were flat year/year during 1Q. We forecast buybacks will fall by 75% year/year in 2Q, by 70% in 3Q, and by 65% in 4Q. An additional 40% year/year slide during 1Q 2021 will result in 12-month repurchase volume that is 65% below the 2018 peak.
The irony, of course, is that company should not have been repurchasing their stock at the all time S&P500 highs, yet that’s precisely what they were doing. In fact, as we explained in late 2019, the main reason why stocks were at all time highs at a time when virtually every investor class was selling, was because of stock buybacks!
To be sure, our insistence ever since 2012 that it was only buybacks behind the market’s relentless grind higher, was met with stern opposition and mockery from some of the more imbecilic financial commentators, most of whom were either tweeting from their parents’ basement or the AQR trading floor, although suddenly their vocal “explanations” how buybacks had nothing to do with the stock market – even though it was painfully obvious why speculators would always frontrun and buy ahead of price indiscriminate CFOs and treasurers who had billions in freshly minted dollar burning a hole in their pockets thanks to a record amount of debt issuance and who were buying up their stock to make sure their equity-linked comp was deep in the money – have gone very mute.
So for the benefit of all those “financial expert” idiots who did not have a grasp of the simplest concept in capital markets, namely supply and demand (and likely still don’t now), here is not some fringe blog but Goldman Sachs setting the record straight once and for all:
“The decline in share repurchases will have a significant impact on the equity market.”
Got that fintwit echo chamber? We doubt it, so here is Kostin’s fuller explanation: “Corporate buybacks have far exceeded demand from all other investor categories combined since 2010.“
It only took nearly a decade for what we said – which was year after year mocked and ridiculed by the so-called “experts” – to become Wall Street gospel. With that we give the floor back to Kostin: “The removal of the principal buyer of shares will widen trading ranges and increase volatility.”
And the punchline: “Reduced buyback spending means less downside support for equity prices since fewer firms will step in to repurchase shares if their stock prices fall. During the past 25 years, the 20th percentile return for stocks within the S&P 500 has averaged -27% annualized during buyback blackout periods compared with -16% when companies can freely repurchase their shares. Fewer buybacks also means slower EPS growth. Since 2008, the gap between EPS growth and earnings growth for the aggregate S&P 500 index averaged 1-2 pp annually. “
And just like that the debate whether stock buybacks propped up stock prices is over, and anyone who has ever told you otherwise should be ignored.
A few more points before we close the chapter on this formerly controversial topic forever, here is Goldman’s explanation why buybacks are about to fall off a cliff:
The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act prohibits buybacks and dividends among companies that accept assistance from the Treasury. The bill stipulates that any company that borrows money from the Treasury may not repurchase stock or pay a dividend until 12 months after the loan is repaid. The bill explicitly provisions assistance for airlines, air cargo, and aerospace companies, but our economists believe any company receiving assistance under the Treasury’s $454 billion credit facility could also be subject to these restrictions. More guidance from the Treasury is expected soon.
Since the start of March, 51 S&P 500 companies accounting for 27% of 2019 aggregate buybacks have suspended their repurchase programs. While United Airlines, Delta Airlines, Southwest Airlines, and Alaska Air have suspended buybacks, not all repurchase suspensions have come from companies expected to receive government assistance. Eight of the largest US banks recently announced that they would suspend buybacks through at least the second quarter and allocate that capital toward supporting the global economy. Prominent retailers, hoteliers, and cruise operators have also suspended their buyback programs.
What about the sectors that have mattered the most in recent years, namely tech?
Yep, them too.
Semiconductor and Pharmaceutical buybacks are also likely to decline. Intel recently announced that it was suspending its buyback program, which totaled $13.5 billion last year (nearly 2% of S&P 500 total). Broadcom reiterated that buybacks are on hold. Our semiconductors analysts expect other chipmakers will follow suit and noted that many investors have indicated they would prefer firms focus on shoring up the balance sheet rather than repurchasing stock. Our biopharma analysts believe that the current political spotlight on repurchases may result in firms reducing repurchase spending in 2020 despite significant outstanding authorizations.
And while we already know that such a plunge in buybacks which was last observed during the financial crisis will have a “significant” and not positive “impact on the equity market”, what does it mean quantitatively?
The historical relationship between EPS growth and buyback growth would suggest a roughly 30% decline in buybacks during 2020.
However, we believe the decline in share repurchases will be worse than this relationship implies. Our quarterly review of S&P 500 earnings transcripts consistently reveals that management teams view buybacks as the lowest priority use of cash. A spate of recent suspensions, escalating employee layoffs, and increasing political and social pressure will curtail buyback spending, which remains historically elevated following the passage of corporate tax reform
In historical context, a 50% decline in buybacks would be consistent with the 8-quarter, 67% peak-to-trough decline during the Global Financial Crisis.
Repurchases also declined by 56% peak-to-trough over a period of 11 quarters during the early 1990s. Following each of these sharp declines, equity issuance actually exceeded share repurchases: so are we about to see a flood stock buybacks in reverse as cash-strapped companies flood the market with their shares a la what Carnival did last week? Back in 2008/2009 S&P 500 firms issued $453 billion of equity during the 12-month period ended September 2009, more than double the $208 billion of aggregate share repurchases. Will the number this time be above $1 trillion?
Finally, with everyone fleeing away from companies that have historically returned most capital to investors due to fears such shareholder friendly activity is now over, Goldman is too, and as Kostin concludes, “we rebalance our baskets of stocks with the largest spending on buybacks and dividends. Our sector-neutral Buyback basket (GSTHREPO) consists of the 50 S&P 500 stocks with the largest trailing 12-month buyback spending as a share of market cap. Our Total Cash Return basket (GSTHCASH), also sector-neutral, consists of the stocks with the highest combined buyback and dividend spending over the same period. Both of these baskets have underperformed sharply YTD…
… as investors skeptical of the sustainability of buybacks and dividends have instead rewarded firms with safe balance sheets and those paying down debt” as well as those companies that generate cash flow instead of “pie in the sky” growth narratives that only a Tesla lemming could believe.
In other words, the Fed may well be on its way to nationalizing the entire market, but in its last gasps of normalcy, the market is finally exhibiting the kind of lucid efficiency, at least briefly, that was missing for much of the past decade, and for once is actually doing the right thing in rewarding prudent corporate behavior and debt repayment while punishing all those companies that hit all time highs only because their management teams knew nothing more than “wave it in.”
We doubt the Fed will allow this kind of rational behavior to last too long before it goes “full USSR” and completely takes over the stock market as well, at which point capitalism will officially be dead.
From ‘Nightmare’ To ‘Surprisingly Seamless’ – Small Business Owners Describe COVID-19 Bailout Experiences
The Trump administration’s $350 billion SBA Paycheck Protection Program was launched on Friday as part of the $2 trillion bailout package, letting small businesses gain access to capital for payroll and other overhead costs.
As we reported on Friday, the rollout went horribly awry for some – with banks such as BofA requiring an existing credit line to qualify, surprising many. JPM delayed the rollout until 1pm, while Wells Fargo and others completely dropped the ball.
That said, it wasn’t all bad on Friday – with some business owners such as small business owner Kyle Stewart, who told Bloomberg that the process was “surprisingly seamless” when he applied for a loan to keep his batting-cage and baseball training business afloat.
After spending two hours gathering the payroll and business information required and completing the Paycheck Protection Program application Thursday night, Kyle found uploading the form to the bank’s portal Friday morning was “surprisingly seamless” and automated.
After San Francisco announced a shelter-in-place order on March 16, Stewart told his five hourly workers he wouldn’t be able to pay them going forward. The timing couldn’t have been worse, as his company makes 60% of its profit in the month of March ahead of the baseball season. He’s hoping the loan will help keep them on until the business is able to reopen. –Bloomberg
“We are still stuck on second base with 2 outs in the ninth inning,” said Stewart. “Here is to hoping for a clutch hit from the Feds.“
Cute.
Others, such as Ohio hair salon owner Clara Osterhage found the process to be a “nightmare.” After gathering documents in preparation to be one of the first in line with her application on Friday, she was told by her small regional bank at 11 a.m. that they weren’t going to be able to submit applications that day, and that ‘even big banks weren’t able to do it.’
“This is a nightmare,” she said, adding that she doesn’t have a clue when she’ll gain access to the funds she needs.
“How do I feel? Uncertain with a capital ‘U.’“
Goat’s milk soap maker Theresa Richard of Arnaudville, Louisiana was “at a loss” after trying to obtain a loan for her Youngsville store, Bain Amour Bath & Body Co., which has been shut since the state’s March 22 stay-at-home order, which has left her lone employee without work.
Richard’s local bank, Farmers and Merchants Bank & Trust Co. of Beaux Bridge told her they’re still waiting on more information about the program. Her other bank, Chase, sent her an email notifying her that they wouldn’t be ready for the program’s Friday morning launch.
“Nobody has a real clear idea of what they need in place to start doing the loans,” she said.
Community bankers are “rightfully frustrated and, in many cases, livid” after promised online portals never went live on Friday, said Rebeca Romero Rainey, chief executive officer of Independent Community Bankers of America.
It was “a nightmare situation,” Rainey said. “Media reports continue to indicate successful launches through the country by community banks, few of which we have been able to confirm.” –Bloomberg
Robin Schultz, who operates Birmingham, Alabama commercial lighting company Quality Electric, says that despite using the same lender for over two decades that she was surprised to receive an email from them Thursday night notifying her that it hadn’t received guidelines from the feds.
After trying to apply at 4 a.m. Friday morning, she received an email around noon to let her know that the site was operational. Moments later, it was down, and she still wasn’t able to file paperwork for the loan.
More tales of woe and optimism (via Bloomberg):
‘Eight Weeks Is Ten Years’
Erik Bruun owns SoCo Creamery, an ice cream shop and wholesale supplier in Great Barrington, Massachusetts. Foot traffic into his store is slower this time of the year, but is down 60% from where it typically is.
Wholesale ice cream sales, which make up the majority of revenue during the off-season, have completely stopped.
Bruun applied for an emergency loan last week but has yet to hear back. He tried to apply to the paycheck protection program as well, but his local bank told him the application changed and he’d have to wait until they receive instructions to proceed.
The application made it sound like the money would be dispersed in 72 hours. Time is critical right now, and even if his paycheck protection application is approved he’s not sure if the duration will be enough.
“Eight weeks? Eight weeks is ten years right now,” he said. “Eight weeks ago we lived in the allegedly good times. Now we live in the Great Depression.”
One small perk with the lockdown: as people hunker down, pint sales in local grocery stores are up.
‘So Much Confusion’
Wahid Nassar, who runs a restaurant in Highlands, New Jersey, tried going online Friday morning to apply for the loan through his lender, Bank of America, but repeatedly got error messages.
“There’s so much confusion and hard to get a straight answer from anyone right now,” he said.
‘Bringing Hope’
At 9:30 a.m. Friday, the paperwork, so utterly confusing at times, was finally in order for Jason Maxwell. The CEO of MassPay, a payroll and human resources firm that employs 59 people in Beverly, Massachusetts, faxed his application for an SBA loan to his banker in nearby Salem.
Late Thursday, Maxwell was told the federal loan program had tweaked its application. Luckily, Maxwell has a good relationship with his banker, Ed Lomasney, a senior vice president at Salem Five Bank. Lomasney contacted Maxwell, who immediately filled out the new form.
Maxwell has worked with Lomasney for seven years, even switching lenders when the banker relocated to a new financial-services institution three years ago.
“He’s the kind of guy who would knock down doors for us,” Maxwell said of his financial guru, who was too busy Friday with applications to comment.
Maxwell has also been helping other business owners navigate the programs and loans available. He called the owner of his favorite coffee shop, who is not a client, when he heard the man was feeling utterly hopeless, and offered information and advice on how to get some relief.
The programs “are bringing hope to a pretty grim situation,” Maxwell said.
‘Somewhat Optimistic’
Steve Vernetti, owner of Vernetti, an Italian restaurant in Los Angeles that’s a favorite of Mayor Eric Garcetti, said he had to fill out multiple applications because they kept changing, including as recently as Friday morning.
“It seems like the program is being fleshed out in real-time,” Vernetti said.
Vernetti said his business manager has a close relationship with his bank that’s keeping them in the loop, and that “I can only imagine what the confusion is like for those who don’t have the advantages we have.”
The restaurant owner said he’s been paying his 20 employees for two weeks out of his own pocket but won’t be able to continue. If he gets some confirmation of the SBA funding, he’ll consider opening for pickup and delivery services in two weeks.
“I am starting to see a way through this, and I am feeling somewhat optimistic,” Vernetti said.
Let’s see what next week brings in the land of struggling business loans…
The Speaker is using the coronavirus to push through legislation for her very wealthy, very loyal base…
On Wednesday, Democratic presidential candidate Joe Biden (who, one must remember, holds no elected office at the moment) promised that any further coronavirus legislation might just contain something of “my green deal.” It’s not clear if he was referring to some sort of environmental plan—or how he expects to craft legislation from his basement in Delaware—but even Sleepy Joe seems to think that a global pandemic signals a time for pork-barrel politics.
None among the Democrats has embraced this ethos more than House Speaker Nancy Pelosi, however. As the coronavirus crisis rages on around us, Pelosi is still looking for creative ways to spend your tax dollars.
After failing to stuff the $2.2 trillion coronavirus stimulus package with a bevy of her social justice pet projects, Pelosi had the gall to announce that Democrats had made the bill about “workers first.”
“It went from a corporate first proposal that the Republicans put forth in the Senate to a workers first—Democratic workers first—legislation,”said Pelosi, at one of her increasingly bizarre news conferences where the grand dame of Congress appears to be crumbling under the weight of her own rhetoric.
“The bill that was passed in the Senate last night [Wednesday] and that we will take up tomorrow [Friday] is about mitigation: mitigation for all the loss that we have in our economy while still addressing the emergency health needs that we have in our country.”
What the Speaker neglected to mention, however, was how her bill would have forced any airline receiving government bailout money to cut their carbon footprint in half and any business to implement a “diversity plan.” Oh, and she made sure the Kennedy Center for the Performing Arts received a handsome handout (note: after they grabbed the $25 million in cash, the management promptly started laying-off musicians).
Now, Pelosi is moving on to “phase four” of the Democrats’ coronavirus rescue package: save the (Democratic) millionaires.
PELOSI WAGES CLASS WARFARE—BUT NOT ON BEHALF OF THE CLASS YOU’D EXPECT
The Pelosi plan would remove a cap on the state and local tax deduction (SALT) that could quickly put cash in people’s pockets—but the beneficiary won’t be average American workers. The beneficiaries will be the real base of the Democratic Party: millionaire liberals from coastal states.
The tax rebates would affect approximately 13 million families—very wealthy families, all of which are earning at least $100,000 and many over a million per annum. “More than half of the proceeds from fully repealing the SALT cap would go to the top 1 percent, households making more than about three-quarters of a million dollars a year,”reports Politico.
To hear Nancy explain the cash infusion, it’s just some extra beer money at the end of the month: “We could reverse that for 2018 and 2019 so that people could refile their taxes” and receive more substantial rebates, Pelosi told The New York Times. “They’d have more disposable income, which is the lifeblood of our economy, a consumer economy that we are.”
The cruel irony of this latest Democratic ploy is that the SALT cap was put in place as part of President Donald Trump’s tax cuts in 2017. Those are the same tax cuts that Pelosi wanted to repeal because, supposedly, only the wealthy would benefit from them.
Democrats have wanted the cap removed for quite some time. Democratic New York Gov. Andrew Cuomo was so angry about it in 2017 that he accused the president of waging “economic civil war” on blue states with the measure. It was a huge issue during the 2018 midterm elections, especially among bleeding heart Democrats fighting for their millionaire friends.
“In the 2018 midterm elections, Democrats wielded the SALT limits in House campaigns against Republicans in wealthy blue-state suburbs of cities like New York, Los Angeles and Chicago,” writes the Times. According to Politico, House Democrats “who made large gains in upscale suburbs as they took the majority in the 2018 elections” voted last year to repeal the cap, but the effort died in the Republican-controlled Senate—“where few states represented by Republicans are all that troubled by the $10,000 limit.”
Removing the SALT cap benefits the people who really embody what Pelosi’s party has become: a coffee clatch of free-thinking progressives who have nothing better to do with their time but think of ways to socially re-engineer the rest of society by obsessing over the LGBT-GQ agenda, inventing genders that don’t exist, and worrying about hate speech lurking under every bed. The kind of people who have the inclination to attend a Seattle yoga class in “undoing whiteness.” The only blue-collar workers they know are the ones who fix the plumbing and pick up the garbage.
“These are people who won’t spend the extra money and don’t really need it,” Michael Linden, executive director of the progressive Groundwork Collaborative, told Politico.
“That’s why they were left out of the cash assistance in the first place.”
But, as Pelosi demonstrated during the last COVID-19 stimulus bill, a health crisis provides a serendipitous opportunity to pass a plethora of unrelated legislation—and Madame Speaker is apparently up to her antics again.
Looting Wave Strikes New York City Amid Coronavirus Lockdown
We’ve been laying out the possible case for the next phase of the COVID-19 pandemic could be social unrest.
Millions of Americans have just lost their jobs, have no saving, and insurmountable debts, are flooding food banks across the nation to survive. With the economy crashed and now entering a depression, last week was a significant milestone in the progression of the crisis, as looting of businesses in California and South Carolina began.
Now the looting is spreading across the nation. We noted how stores in New York, San Francisco, Seattle, and Chicago, were boarding up their windows, preparing for civil unrest.
After all, when 10 million people lose their jobs in two weeks, and an estimated unemployment rate that could reach 15-20% in the second quarter, as per RealInvestmentAdvice.com’s Lance Roberts latest report, the ripple effect on society is so sudden that there could very well be an outbreak of unrest when the weather shifts too much warmer trends, and geographically be situated in low-income areas of inner cities. Hence why the National Guard was called up and now being positioned around and or in major metros.
The beginning innings of social unrest could now be unfolding across New York City. Households are cracking as hundreds of thousands have lost their jobs over several weeks. The city has become the epicenter of the virus crisis, recording 103,060 confirmed cases and 2,935 deaths (as of Saturday afternoon, April 4).
The Wall Street Journal reports an increase in burglaries of commercial establishments across all five boroughs from March 12-31, coinciding when mass shutdowns went into effect.
The New York City Police Department (NYPD) recorded a 75% jump in burglaries of businesses during the period, or about 254 burglaries, compared with 145 over the same period last year.
“The increase in burglaries coincided with steps to stop the spread of the coronavirus. On March 15, the city ordered restaurants and bars to cease on-site service, prompting many establishments to close altogether or limit operations. A March 20 decree by Gov. Andrew Cuomo called for the closure of all nonessential businesses, leading many retail stores to shutter,” the Journal noted.
“We knew with the closing of many stores that we could see an increase and, unfortunately, we are,” said NYPD Chief of Crime Control Strategies Michael LiPetri.
LiPetri said the most targeted establishments by criminals had been restaurants, supermarkets, and retail stores. Between March 12-31, there were over 30 reports of burglaries of supermarkets, a 400% increase over the same period last year.
He said thieves were specifically after food, alcohol, and retail goods. Many gained entry from rooftops and or forcing doors open or breaking windows.
The Journal notes that some retail chains have boarded up shops across the city, citing fears that social unrest could soon follow. Here are some shops that have already boarded up windows:
Thousands of stores in New York have boarded up their doors and windows to avoid possible looting pic.twitter.com/Bc0UvZGuoO
New York Gazette ™ Store owners boarding up buildings across Manhattan: https://t.co/aEawtKmPAq – NEW YORK – A growing scene for those who venture out into the streets of Manhattan these days is boarded up storefronts. From luxury retailers to small… https://t.co/te7a7D74atpic.twitter.com/Bo5wbvFMWh
As looting surges in New York City, the next fear is that the NYPD could become overwhelmed by virus-related incidents and or a shortage of officers.
On Friday, one out of every six NYPD officers was sick or in quarantine. Over 1,500 have tested positive for the virus, which could lead to decreased patrols while crime is surging across the city.
“It’s a worst-case scenario across the board,” a sergeant told The New York Times.
And now it should make sense why President Trump recently signed an executive order to activate up to one million troops – that is because the evolution of the virus crisis and economic collapse, is social unrest and looting and whatever else that may bring.
There’s no proof the coronavirus accidentally escaped from a laboratory, but we can’t take the Chinese government’s denials at face value.
It is understandable that many would be wary of the notion that the origin of the coronavirus could be discovered by some documentary filmmaker who used to live in China. Matthew Tye, who creates YouTube videos, contends he has identified the source of the coronavirus — and a great deal of the information that he presents, obtained from public records posted on the Internet, checks out.
The Google translation of the job posting is: “Taking bats as the research object, I will answer the molecular mechanism that can coexist with Ebola and SARS- associated coronavirus for a long time without disease, and its relationship with flight and longevity. Virology, immunology, cell biology, and multiple omics are used to compare the differences between humans and other mammals.” (“Omics” is a term for a subfield within biology, such as genomics or glycomics.)
On December 24, 2019, the Wuhan Institute of Virology posted a second job posting. The translation of that posting includes the declaration, “long-term research on the pathogenic biology of bats carrying important viruses has confirmed the origin of bats of major new human and livestock infectious diseases such as SARS and SADS, and a large number of new bat and rodent new viruses have been discovered and identified.”
Tye contends that that posting meant, “we’ve discovered a new and terrible virus, and would like to recruit people to come deal with it.” He also contends that “news didn’t come out about coronavirus until ages after that.” Doctors in Wuhan knew that they were dealing with a cluster of pneumonia cases as December progressed, but it is accurate to say that a very limited number of people knew about this particular strain of coronavirus and its severity at the time of that job posting. By December 31, about three weeks after doctors first noticed the cases, the Chinese government notified the World Health Organization and the first media reports about a “mystery pneumonia” appeared outside China.
Scientific Americanverifies much of the information Tye mentions about Shi Zhengli, the Chinese virologist nicknamed “Bat Woman” for her work with that species.
Shi — a virologist who is often called China’s “bat woman” by her colleagues because of her virus-hunting expeditions in bat caves over the past 16 years — walked out of the conference she was attending in Shanghai and hopped on the next train back to Wuhan. “I wondered if [the municipal health authority] got it wrong,” she says. “I had never expected this kind of thing to happen in Wuhan, in central China.” Her studies had shown that the southern, subtropical areas of Guangdong, Guangxi and Yunnan have the greatest risk of coronaviruses jumping to humans from animals — particularly bats, a known reservoir for many viruses. If coronaviruses were the culprit, she remembers thinking, “could they have come from our lab?”
. . . By January 7 the Wuhan team determined that the new virus had indeed caused the disease those patients suffered — a conclusion based on results from polymerase chain reaction analysis, full genome sequencing, antibody tests of blood samples and the virus’s ability to infect human lung cells in a petri dish. The genomic sequence of the virus — now officially called SARS-CoV-2 because it is related to the SARS pathogen — was 96 percent identical to that of a coronavirus the researchers had identified in horseshoe bats in Yunnan, they reported in a paper published last month in Nature. “It’s crystal clear that bats, once again, are the natural reservoir,” says Daszak, who was not involved in the study.
Analyses of the SARS-CoV-2 genome indicate a single spillover event, meaning the virus jumped only once from an animal to a person, which makes it likely that the virus was circulating among people before December. Unless more information about the animals at the Wuhan market is released, the transmission chain may never be clear. There are, however, numerous possibilities. A bat hunter or a wildlife trafficker might have brought the virus to the market. Pangolins happen to carry a coronavirus, which they might have picked up from bats years ago, and which is, in one crucial part of its genome, virtually identical to SARS-CoV-2. But no one has yet found evidence that pangolins were at the Wuhan market, or even that venders there trafficked pangolins.
On February 4 — one week before the World Health Organization decided to officially name this virus “COVID-19” — the journal Cell Research posted a notice written by scientists at the Wuhan Institute of Virology about the virus, concluding, “our findings reveal that remdesivir and chloroquine are highly effective in the control of 2019-nCoV infection in vitro. Since these compounds have been used in human patients with a safety track record and shown to be effective against various ailments, we suggest that they should be assessed in human patients suffering from the novel coronavirus disease.” One of the authors of that notice was the “bat woman,” Shi Zhengli.
In his YouTube video, Tye focuses his attention on a researcher at the Wuhan Institute of Virology named Huang Yanling: “Most people believe her to be patient zero, and most people believe she is dead.”
There was enough discussion of rumors about Huang Yanling online in China to spur an official denial. On February 16, the Wuhan Institute of Virology denied that patient zero was one of their employees, and interestingly named her specifically: “Recently there has been fake information about Huang Yanling, a graduate from our institute, claiming that she was patient zero in the novel coronavirus.” Press accounts quote the institute as saying, “Huang was a graduate student at the institute until 2015, when she left the province and had not returned since. Huang was in good health and had not been diagnosed with disease, it added.” None of her publicly available research papers are dated after 2015.
The web page for the Wuhan Institute of Virology’s Lab of Diagnostic Microbiology does indeed still have “Huang Yanling” listed as a 2012 graduate student, and her picture and biography appear to have been recently removed — as have those of two other graduate students from 2013, Wang Mengyue and Wei Cuihua.
Her name still has a hyperlink, but the linked page is blank. The pages for Wang Mengyue and Wei Cuihua are blank as well.
(For what it is worth, the South China Morning Post — a newspaper seen as being generally pro-Beijing — reported on March 13 that “according to the government data seen by the Post, a 55 year-old from Hubei province could have been the first person to have contracted Covid-19 on November 17.”)
On February 17, Zhen Shuji, a Hong Kong correspondent from the French public-radio service Radio France Internationale, reported: “when a reporter from the Beijing News of the Mainland asked the institute for rumors about patient zero, the institute first denied that there was a researcher Huang Yanling, but after learning that the name of the person on the Internet did exist, acknowledged that the person had worked at the firm but has now left the office and is unaccounted for.”
Tye says, “everyone on the Chinese internet is searching for [Huang Yanling] but most believe that her body was quickly cremated and the people working at the crematorium were perhaps infected as they were not given any information about the virus.” (The U.S. Centers for Disease Control and Prevention says that handling the body of someone who has died of coronavirus is safe — including embalming and cremation — as long as the standard safety protocols for handing a decedent are used. It’s anyone’s guess as to whether those safety protocols were sufficiently used in China before the outbreak’s scope was known.)
As Tye observes, a public appearance by Huang Yanling would dispel a lot of the public rumors, and is the sort of thing the Chinese government would quickly arrange in normal circumstances — presuming that Huang Yanling was still alive. Several officials at the Wuhan Institute of Virology issued public statements that Huang was in good health and that no one at the institute has been infected with COVID-19. In any case, the mystery around Huang Yanling may be moot, but it does point to the lab covering up something about her.
China Global Television Network, a state-owned television broadcaster, illuminated another rumor while attempting to dispel it in a February 23 report entitled “Rumors Stop With the Wise”:
On February 17, a Weibo user who claimed herself to be Chen Quanjiao, a researcher at the Wuhan Institute of Virology, reported to the public that the Director of the Institute was responsible for leaking the novel coronavirus. The Weibo post threw a bomb in the cyberspace and the public was shocked. Soon Chen herself stepped out and declared that she had never released any report information and expressed great indignation at such identity fraud on Weibo. It has been confirmed that that particular Weibo account had been shut down several times due to the spread of misinformation about COVID-19.
That Radio France Internationale report on February 17 also mentioned the next key part of the Tye’s YouTube video. “Xiaobo Tao, a scholar from South China University of Technology, recently published a report that researchers at Wuhan Virus Laboratory were splashed with bat blood and urine, and then quarantined for 14 days.” HK01, another Hong Kong-based news site, reported the same claim.
The first conclusion of Botao Xiao’s paper is that the bats suspected of carrying the virus are extremely unlikely to be found naturally in the city, and despite the stories of “bat soup,” they conclude that bats were not sold at the market and were unlikely to be deliberately ingested.
The bats carrying CoV ZC45 were originally found in Yunnan or Zhejiang province, both of which were more than 900 kilometers away from the seafood market. Bats were normally found to live in caves and trees. But the seafood market is in a densely-populated district of Wuhan, a metropolitan [area] of ~15 million people. The probability was very low for the bats to fly to the market. According to municipal reports and the testimonies of 31 residents and 28 visitors, the bat was never a food source in the city, and no bat was traded in the market.
The U.S. Centers for Disease Control and Prevention and the World Health Organization could not confirm if bats were present at the market. Botao Xiao’s paper theorizes that the coronavirus originated from bats being used for research at either one of two research laboratories in Wuhan.
We screened the area around the seafood market and identified two laboratories conducting research on bat coronavirus. Within ~ 280 meters from the market, there was the Wuhan Center for Disease Control & Prevention. WHCDC hosted animals in laboratories for research purpose, one of which was specialized in pathogens collection and identification. In one of their studies, 155 bats including Rhinolophus affinis were captured in Hubei province, and other 450 bats were captured in Zhejiang province. The expert in Collection was noted in the Author Contributions (JHT). Moreover, he was broadcasted for collecting viruses on nation-wide newspapers and websites in 2017 and 2019. He described that he was once by attacked by bats and the blood of a bat shot on his skin. He knew the extreme danger of the infection so he quarantined himself for 14 days. In another accident, he quarantined himself again because bats peed on him.
Surgery was performed on the caged animals and the tissue samples were collected for DNA and RNA extraction and sequencing. The tissue samples and contaminated trashes were source of pathogens. They were only ~280 meters from the seafood market. The WHCDC was also adjacent to the Union Hospital (Figure 1, bottom) where the first group of doctors were infected during this epidemic. It is plausible that the virus leaked around and some of them contaminated the initial patients in this epidemic, though solid proofs are needed in future study.
The second laboratory was ~12 kilometers from the seafood market and belonged to Wuhan Institute of Virology, Chinese Academy of Sciences . . .
In summary, somebody was entangled with the evolution of 2019-nCoV coronavirus. In addition to origins of natural recombination and intermediate host, the killer coronavirus probably originated from a laboratory in Wuhan. Safety level may need to be reinforced in high risk biohazardous laboratories. Regulations may be taken to relocate these laboratories far away from city center and other densely populated places.
However, Xiao has told the Wall Street Journal that he has withdrawn his paper. “The speculation about the possible origins in the post was based on published papers and media, and was not supported by direct proofs,” he said in a brief email on February 26.
The bat researcher that Xiao’s report refers to is virologist Tian Junhua, who works at the Wuhan Centre for Disease Control. In 2004, the World Health Organization determined that an outbreak of the SARS virus had been caused by two separate leaks at the Chinese Institute of Virology in Beijing. The Chinese government said that the leaks were a result of “negligence” and the responsible officials had been punished.
In 2017, the Chinese state-owned Shanghai Media Group made a seven-minute documentary about Tian Junhua, entitled “Youth in the Wild: Invisible Defender.” Videographers followed Tian Junhua as he traveled deep into caves to collect bats.
“Among all known creatures, the bats are rich with various viruses inside,” he says in Chinese.
“You can find most viruses responsible for human diseases, like rabies virus, SARS, and Ebola. Accordingly, the caves frequented by bats became our main battlefields.” He emphasizes, “bats usually live in caves humans can hardly reach. Only in these places can we find the most ideal virus vector samples.”
One of his last statements on the video is:
“In the past ten-plus years, we have visited every corner of Hubei Province. We explored dozens of undeveloped caves and studied more than 300 types of virus vectors. But I do hope these virus samples will only be preserved for scientific research and will never be used in real life. Because humans need not only the vaccines, but also the protection from the nature.”
The environment for collecting bat samples is extremely bad. There is a stench in the bat cave. Bats carry a large number of viruses in their bodies. If they are not careful, they are at risk of infection. But Tian Junhua is not afraid to go to the mountain with his wife to catch Batman.
Tian Junhua summed up the experience that the most bats can be caught by using the sky cannon and pulling the net. But in the process of operation, Tian Junhua forgot to take protective measures. Bat urine dripped on him like raindrops from the top. If he was infected, he could not find any medicine. It was written in the report.
The wings of bats carry sharp claws. When the big bats are caught by bat tools, they can easily spray blood. Several times bat blood was sprayed directly on Tians skin, but he didn’t flinch at all. After returning home, Tian Junhua took the initiative to isolate for half a month. As long as the incubation period of 14 days does not occur, he will be lucky to escape, the report said.
Bat urine and blood can carry viruses. How likely is it that bat urine or blood got onto a researcher at either Wuhan Center for Disease Control & Prevention or the Wuhan Institute of Virology? Alternatively, what are the odds that some sort of medical waste or other material from the bats was not properly disposed of, and that was the initial transmission vector to a human being?
Virologists have been vehemently skeptical of the theory that COVID-19 was engineered or deliberately constructed in a laboratory; the director of the National Institutes of Health has written that recent genomic research “debunks such claims by providing scientific evidence that this novel coronavirus arose naturally.” And none of the above is definitive proof that COVID-19 originated from a bat at either the Wuhan Center for Disease Control & Prevention or the Wuhan Institute of Virology. Definitive proof would require much broader access to information about what happened in those facilities in the time period before the epidemic in the city.
But it is a remarkable coincidence that the Wuhan Institute of Virology was researching Ebola and SARS-associated coronaviruses in bats before the pandemic outbreak, and that in the month when Wuhan doctors were treating the first patients of COVID-19, the institute announced in a hiring notice that “a large number of new bat and rodent new viruses have been discovered and identified.” And the fact that the Chinese government spent six weeks insisting that COVID-19 could not be spread from person to person means that its denials about Wuhan laboratories cannot be accepted without independent verification.
“Medical Supply Arbitrage”: How Hordes Of Middle Men, Profiteers & Scammers Massively Inflated Prices Of N95s
Americans hear it every day now during Gov. Andrew Cuomo’s press briefings. In the middle of a crushing pandemic, New York and other states are being grossly gouged as they shop around for medical supplies. With most of their regular relationships exhausted, states are competing against each other, a nonsensical and costly “bidding war” that Cuomo has blamed on President Trump.
N95 masks, which are now among the most prized commodities on the planet, are in such short supply, that some hospitals in NYC simply don’t have them to provide to workers, forcing them to improvise. Cuomo says masks that recently cost just 40 or 50 cents are now being sold for $7 a pop, a roughly 13x markup.
While the administration’s failure to better prepare for the epidemic certainly hasn’t helped, the New York Times on Friday pointed out another, bigger factor that’s greatly contributed to this problem. Complex globalized supply chains have been disrupted by the outbreak, and with production largely centered in China, producers are effectively using the masks as political chits: Beijing has given them to Italy, and the UK – and even a few to the US.
But beyond that, the chaos caused by the outbreak caused such a mad scramble to buy up these supplies, that brokers are selling them at crazy markups, many because they bought them at already-crazy markups, and are now either trying to make a sliver of profit, or just break even. Even wannabe ‘Good Samaritans’ have fallen prey to this cycle, as the dogooders ask simply to be reimbursed for their costs, or just accept that they will lose money, which is hard to do during a time of looming economic catastrophe. At a certain point, it almost becomes difficult to differentiate the scammers from the do-gooders.
Others are exploiting relationships to act as ‘brokers’, middle-manning N95 masks and other supplies – the masks especially will become even more scarce and costly once the White House and CDC inevitably advise people to wear them in public – for modest profits.
Rampant crisis profiteering has already been well-documented by the press, as have the efforts by states and the federal government to police it. Earlier this week, AG Barr got up at the White House’s daily press conference and warned that federal prosecutors would be cracking down. And many have been publicly shamed.
But even as Amazon bans the sale of masks to the general public, next-level ‘brokers’ are using the power of the internet to deal with hospital systems and other health-care providers who have essentially been forced to participate in the shadowy grey market to acquire essential supplies at a time when people’s lives – even the lives of young, healthy people – are very much on the line.
One of the details that most stood out to us in Friday’s New York Times story was the description of the practice as “medical supply arbitrage.” Here’s how it works, according to NYT:
Not every new entrant to the market is a good Samaritan. Groups on Facebook, WhatsApp and Telegram are teeming with posts hawking thousands of masks at inflated prices.
Some are wholesalers who bought pallets of masks from China or in liquidation sales and then marked them up. Many more are simply middlemen who call themselves brokers. They scour the groups for masks advertised for a relatively low price, and then repost the offer for a few thousand dollars more. They don’t handle the masks or put up their own money.
Yaear Weintroub is one of those brokers. A 22-year-old community college student from Brooklyn, he typically sells wholesale electronics to Amazon sellers. But the online forums he searches for deals became flooded with listings for masks last month, so he now spends his days trying to connect buyers and sellers for a bit of medical-supply arbitrage.
In a recent interview, he said he was working with a partner to close a deal for 280,000 surgical masks that would increase their price 20 percent and net the pair a roughly $40,000 profit. He said many of the brokers sold to other brokers, each one marking up the price, until the masks presumably make it to a nursing home or a hospital. He said he would prefer to sell directly to hospitals.
“They’re just more serious,” he said. “So if I have the goods, I want a serious buyer for them. And besides, it’s a morally good reason.”
To these sellers, medical supplies are simply another hot product to flip for a profit. Avraham Eisenberg, a New York wholesaler who is trying to ship masks from China, compared the rush for masks to the fad several years ago for fidget spinners.
As prosecutors crack down on re-sellers of medical supplies, the line between what constitutes ‘gouging’ and simple sales of products that aren’t illegal to sell to the general public is becoming more difficult to discern. Barr’s press conference appearance aside, last month, the DoJ said it would investigate people manipulating the medical-supply market. Then, five days later, federal authorities charged a Brooklyn man with lying about price gouging after he tried to sell 1,000 masks and other supplies to a doctor for $12,000 (he was also charged with assault for coughing on one of the agents).
It might still be legal, but anybody who’s still doing this should watch their backs.
COVID-19 is caused by a coronavirus called SARS-CoV-2. Coronaviruses belong to a group of viruses that infect animals, from peacocks to whales. They’re named for the bulb-tipped spikes that project from the virus’s surface and give the appearance of a corona surrounding it.
A coronavirus infection usually plays out one of two ways: as an infection in the lungs that includes some cases of what people would call the common cold, or as an infection in the gut that causes diarrhea. COVID-19 starts out in the lungs like the common cold coronaviruses, but then causes havoc with the immune system that can lead to long-term lung damage or death.
SARS-CoV-2 is genetically very similar to other human respiratory coronaviruses, including SARS-CoV and MERS-CoV. However, the subtle genetic differences translate to significant differences in how readily a coronavirus infects people and how it makes them sick.
SARS-CoV-2 has all the same genetic equipment as the original SARS-CoV, which caused a global outbreak in 2003, but with around 6,000 mutations sprinkled around in the usual places where coronaviruses change. Think whole milk versus skim milk.
Compared to other human coronaviruses like MERS-CoV, which emerged in the Middle East in 2012, the new virus has customized versions of the same general equipment for invading cells and copying itself. However, SARS-CoV-2 has a totally different set of genes called accessories, which give this new virus a little advantage in specific situations. For example, MERS has a particular protein that shuts down a cell’s ability to sound the alarm about a viral intruder. SARS-CoV-2 has an unrelated gene with an as-yet unknown function in that position in its genome. Think cow milk versus almond milk.
The infection begins when the long spike proteins that protrude from the virus particle latch on to the cell’s ACE2 protein. From that point, the spike transforms, unfolding and refolding itself using coiled spring-like parts that start out buried at the core of the spike. The reconfigured spike hooks into the cell and crashes the virus particle and cell together. This forms a channel where the string of viral genetic material can snake its way into the unsuspecting cell.
An illustration of the SARS-CoV-2 spike protein shown from the side (left) and top. The protein latches onto human lung cells. 5-HT2AR/Wikimedia
SARS-CoV-2 spreads from person to person by close contact. The Shincheonji Church outbreak in South Korea in February provides a good demonstration of how and how quickly SARS-CoV-2 spreads. It seems one or two people with the virus sat face to face very close to uninfected people for several minutes at a time in a crowded room. Within two weeks, several thousand people in the country were infected, and more than half of the infections at that point were attributable to the church. The outbreak got to a fast start because public health authorities were unaware of the potential outbreak and were not testing widely at that stage. Since then, authorities have worked hard and the number of new cases in South Korea has been falling steadily.
How the virus makes people sick
SARS-CoV-2 grows in type II lung cells, which secrete a soap-like substance that helps air slip deep into the lungs, and in cells lining the throat.
As with SARS, most of the damage in COVID-19, the illness caused by the new coronavirus, is caused by the immune system carrying out a scorched earth defense to stop the virus from spreading. Millions of cells from the immune system invade the infected lung tissue and cause massive amounts of damage in the process of cleaning out the virus and any infected cells.
Each COVID-19 lesion ranges from the size of a grape to the size of a grapefruit. The challenge for health care workers treating patients is to support the body and keep the blood oxygenated while the lung is repairing itself.
How SARS-CoV-2 infects, sickens and kills people.
SARS-CoV-2 has a sliding scale of severity. Patients under age 10 seem to clear the virus easily, most people under 40 seem to bounce back quickly, but older people suffer from increasingly severe COVID-19. The ACE2 protein that SARS-CoV-2 uses as a door to enter cells is also important for regulating blood pressure, and it does not do its job when the virus gets there first. This is one reason COVID-19 is more severe in people with high blood pressure.
SARS-CoV-2 is more severe than seasonal influenza in part because it has many more ways to stop cells from calling out to the immune system for help. For example, one way that cells try to respond to infection is by making interferon, the alarm signaling protein. SARS-CoV-2 blocks this by a combination of camouflage, snipping off protein markers from the cell that serve as distress beacons and finally shredding any anti-viral instructions that the cell makes before they can be used. As a result, COVID-19 can fester for a month, causing a little damage each day, while most people get over a case of the flu in less than a week.
At present, the transmission rate of SARS-CoV-2 is a little higher than that of the pandemic 2009 H1N1 influenza virus, but SARS-CoV-2 is at least 10 times as deadly. From the data that is available now, COVID-19 seems a lot like severe acute respiratory syndrome (SARS), though it’s less likely than SARS to be severe.
What isn’t known
There are still many mysteries about this virus and coronaviruses in general – the nuances of how they cause disease, the way they interact with proteins inside the cell, the structure of the proteins that form new viruses and how some of the basic virus-copying machinery works.
What is amazing so far in this outbreak is all the good science that has come out so quickly. The research community learned about structures of the virus spike protein and the ACE2 protein with part of the spike protein attached just a little over a month after the genetic sequence became available. I spent my first 20 or so years working on coronaviruses without the benefit of either. This bodes well for better understanding, preventing and treating COVID-19.
