Millions Of Small Businesses Stunned To Learn They Are Not Eligible For Bailout Loans
It’s the first day that America’s small businesses can apply for the SBA’s Paycheck Protection Program, i.e., the $350BN program that is part of the bigger $2 trillion bailout package designed to provide small businesses access to capital for payroll and other overhead costs to the tune of 2.5 months of average payroll and which must be accessed via an existing banking relationship – and the rollout is predictably a mess, with some banks such as BofA already accepting loans (which convert to grants if used exclusively for payrolls and business continuity purposes), while others like JPM delaying the roll out to 1pm; a third group of banks such as Wells Fargo has conspicuously failed to provide its rollout plans – perhaps it is scheming how to cross-sell bailout loans with auto insurance or engage in some other typically Wellsfargoian fraud.
$WFC will not be ready to take applications for #PaycheckProtectionPlan today. They’re doing all the can and testing constantly. When you and running you will have to have a checking account and be an online banking customer to qualify. No previous loan requirement.
But a recurring shock as millions of small business owners head to these bank websites to apply for the PPP funds is that contrary to the SBA’s guidance that any small business with 500 or less employees can apply, going to lender portals shows that only a very narrow subset of America’s millions in small businesses are be eligible.
In fact, only those companies that already have a lending relationship, i.e., an outstanding loan with a given bank are – at least as of this moment – able to apply for the rescue funds.
Moynihan making clear on @SquawkStreet that small businesses should not only apply to their existing bank – but primarily to their existing LENDER. Just having a small business checking account will not suffice initially – you need to have borrowed from $BAC in recent past. https://t.co/LvSqMg3Rf8
Bank of America’s website confirms as much, stating on its eligibility page that only “clients with a business lending and a business deposit relationship at Bank of America are eligible to apply for a Paycheck Protection Program through our bank.” In other words, any business that only has a deposit account and no loan or business card is out of luck.
And the kicker, literally, for those BofA clients who would like to become eligible and open a business loan account, well it’s too late: as the bank makes clear, this should have happened as of Feb 15.
To apply for the Paycheck Protection Program through our bank, you must have a pre-existing business lending and business deposit relationship with Bank of America, as of February 15, 2020. A Business Credit Card, line of credit or loan may be the lending product used.
Said otherwise, business who ran a clean balance sheet without debt are seen as riskier than businesses that carry loans, and are unduly penalized just because they never opened a loan with BofA.
JPMorgan is even more draconian in its selectivity of whom it will hand out Treasury-guaranteed money to. As the bank notes in its ironically-named “CARES” website, “You must have a Chase Business checking account as of February 15, 2020.” Anyone who does not is straight out of luck.
And as countless other banks follow suit, the question becomes is this how the banks that were bailed out by ordinary Americans in 2008 will treat those same Americans when they need a rescue too? Alternatively, what happens to these banks when millions of small business fail and America’s economy plunges into an even deeper depression. One final question: how is it logical for banks to only bailout those companies which already have debt and are by extension riskier, than to provide funds to their ordinary clients who only now, for the first time, need a helping hand.
We eagerly await Steven Mnuchin’s answers to these questions.
The Fate Of Oil’s Torrid Rally Hinges On Trump’s Meeting With US Shale Producers Today: Here’s Why
Oil has staged a tremendous surge in the past 48 hours, largely on the back of speculation that Trump will “encourage” Saudi Arabia and Russia to pursue output cuts, even though as it subsequently emerged when Trump tweeted that the “hopes” to see an N-OPEC output cut, it was an “exaggeration” and wishful thinking more than statement of fact. However, whereas the initial rally – which send the price of oil soaring by 25% on Thursday, or the most ever – faded, the rally got a second wind on Friday following reports that the R-OPEC (Russia + OPEC) alliance of oil producers led by Saudi Arabia and Russia is set to debate production cuts of at least 6 million barrels a day Monday and consider inviting U.S. producers to participate, the WSJ reported citing OPEC country officials.
However, even that hypothetical best case outcome for oil bulls – and certainly the US shale industry – comes with strings attached, and the outcome of Monday’s virtual summit between OPEC, which Saudi Arabia effectively crushed one month ago when it decided to flood the market with oil, and non-OPEC nations “will largely depend on a discussion Friday between the White House and U.S. oil companies” according to the WSJ.
The reason: both Saudi Arabia and Russia are demanding that US shale producers, some of whom such as Whiting Petroleum have already filed for Chapter 11 protection yet continue to pump as normal, join the production cuts. As the WSJ reports, “Saudi Arabia and Russia won’t cut unless they get signals from U.S. producers they will reduce output, the officials said. But they added that official joint curbs would be more difficult to enact in the U.S. because of antitrust laws.”
Meanwhile, Trump appears to be left with the impression that Russia and Saudi Arabia will shoot themselves in the foot and cut production on their own:
President Trump said Thursday he had spoken to Saudi Crown Prince Mohammed bin Salman, and that he was hopeful that a truce could be worked out in the oil-price war between the kingdom and Russia. The president’s remarks sparked a record-breaking percentage climb in oil prices, with Brent and U.S. crude notching gains of 21% and 25%, respectively.
R-OPEC sees things differently, and while it is prepared to discuss output curbs of at least 6 million barrels a day Monday on a conference call, it plans on inviting oil producers from Texas and Canada, even though North American producers haven’t attended OPEC gatherings in many years.
Which means that oil producers will only cut if US shale cuts too. As a result, the outcome of Monday’s meeting – and the fate of the torrid oil rally – will depend on a gathering this Friday between Trump and top U.S. producers at the White House, and specifically on whether Trump succeeds in convincing US producers to curb their output to go along with OPEC.
Will he be successful? Whereas some US producers in Texas are pushing for statewide coordinated restrictions amid a ballooning oil glut, others see the rout as an opportunity to take less competitive players out of the market.
As the WSJ further reports, Texas is considering cuts of at least 500b/d, while the group of US, Canada and Brazil would cut a total of 2mmb/d. These cuts would come in addition to a 3mmb/d cut from Saudi Arabia’s current level, which however at a surge 12mmb/d, means Saudi would only reduce output to where it was in February. Finally, Russia would be expected to cut by 1.5mmb/d, which is more than Saudi Arabia demanded of Moscow one month ago when Russia pulled the plug on the deal.
In other words, the two variables here are whether Russia and shale will agree to substantial cuts. And while we await to hear what Moscow thinks, the question whether US shale will agree will depend on how confident US oil producers are that they will be bailed out by the Fed as Steven Mnuchin hinted yesterday, and if so, they will feel no urge to cut, ensuring that oil re-plunges on short notice.
At first blush, it does not look promising: speaking on Friday morning, Larry Kudlow effectively killed the idea that US shale will participate in shale discussions:
KUDLOW: WE TALK TO RUSSIA, SAUDIS, NO NEED TO GO VIA OPEC
KUDLOW: WHITE HOUSE TALKING TO RUSSIA, SAUDIS ON OIL
KUDLOW: TRUMP TALKS WITH RUSSIA, SAUDIS WILL YIELD RESULTS
That said, in the 11th hour, a loophole to overcome any producer “unwillingness” to shutdown appears to have emerged: in what would be a major victory for OPEC, the WSJ reports that the Trump Administration has discussed a mandated shutdown of oil production in the Gulf of Mexico due to the coronavirus spreading among workers on offshore platforms.
It is unclear whether the proposal, which comes as several workers on oil platforms test positive for the new virus, is still under serious consideration. But shuttering gulf platforms over health concerns would also have the effect of curtailing U.S. oil production amid a world-wide glut of oil that has sent prices plummeting.
Finally, one big picture question: in a world where there is now as much as 26 million b/d in less oil demand due to the coronavirus, will a 10 million barrel cut even make a dent? That’s the point raised in Goldman’s latest analysis.
In a note published overnight, the bank’s commodity analyst Damien Courvalin writes that “even if a deal was to be reached, we believe the coordination required would lead to an only delayed and gradual implementation. Given the size of the current demand hit of 26 mb/d and the growing signs that isolation policies are being extended globally, such output cuts are in our view necessary rather than voluntary. This is important as coordinated supply cuts only support prices if they precipitate or come in addition to the shut-in of production that would have otherwise occurred once logistical saturation proved binding.”
Paradoxically, aggressive voluntary or necessary supply cuts and a subsequent market deficit would benefit shale producers given their highly pressurized wells and short drilling times. Such output flexibility is unique to shale and core-OPEC/Russia, implying that the coronavirus led demand collapse may ultimately benefit shale and low-cost producers alike, turning on its head once again the just started Revenge of the New Oil Order.
And because of the already occurring demand collapse, “a coordinated response is therefore likely to be too little to late for inland crude markets, especially in North America, leaving local prices to have to retrace their recent gains. In particular, we believe that a speculative led WTI rally that would delay such a rebalancing would quickly prove self-defeating with our 2Q price forecast still $20/bbl.”
A molecular biologist proclaimed Thursday that the Chinese coronavirus could have originated at the Wuhan Institute of Virology, and been leaked, leading to it’s horrific spread around the globe.
Richard H. Ebright, a professor of chemical biology at Rutgers University, told The Daily Caller that he believes it is a distinct possibility that an accident in the laboratory in China could have caused the outbreak.
Professor Ebright said that “A denial is not a refutation,” referring to China’s top virologist Shi Zhengli, who works at the lab in Wuhan, and has repeatedly denied that it was the source of the pandemic.
Zhengli, known as ‘bat-woman’, because she works with bat-borne viruses, has said that the coronavirus spread is “nature punishing the human race for keeping uncivilized living habits.”
“The novel 2019 coronavirus is nature punishing the human race for keeping uncivilized living habits. I, Shi Zhengli, swear on my life that it has nothing to do with our laboratory,” she wrote in early February, adding “I advise those who believe and spread rumors from harmful media sources … to shut their stinking mouths.”
Professor Ebright pointed to the quote, noting that it makes Zhengli’s denial more suspect.
While the professor has been cited by the likes of The Washington Post and MSNBC to dismiss theories about the virus being a bioweapon, the media has not covered his belief that the possibility of a lab accident being the source of the outbreak “cannot–and should not–be dismissed.”
That was scenario discussed in your Fox interview
I am pleased to hear you now distinguish between possibility virus was engineered bioweapon (which can be dismissed) and possibility virus entered human population through lab accident (which cannot–and should not–be dismissed)
To clarify, Professor Ebright categorically does not believe that the virus is an engineered bioweapon, due to the scientific evidence showing otherwise. However, the notion that the strain of coronavirus that has spread around the world, and since mutated, came from the Wuhan lab is a real possibility in Ebright’s opinion.
This notion is also supported by the fact that according to a study contributed to by the ‘bat-woman’ herself, Shi Zhengli, the novel coronavirus is 96.2% identical to a viral strain that was detected in horseshoe bats from the Yunnan Province, which is over 600 miles away from Wuhan.
Separate Chinese research confirmed this and cited testimonies from close to 60 people who lived or stayed in Wuhan for lengthy periods, saying that the bat “was never a food source in the city, and no bat was traded in the market.”
The research paper, which was uploaded to Research Gate on Feb. 6, concluded that “The killer coronavirus probably originated from a laboratory in Wuhan.”
The paper was removed from Research Gate on Feb. 14 or 15, according to internet archives, and it’s author cannot be reached.
A deadly virus leak from a Chinese lab is not unprecedented. The SARS virus escaped twice from the Chinese Institute of Virology in Beijing in 2004, one year after its spread was brought under control.
Many believe that China’s continued subterfuge regarding the coronavirus outbreak, and it’s bizarre accusations that it was spread by the US military, is an effort to divert attention from the possibility that this virus leaked from the Wuhan lab.
Senator Tom Cotton, who has been continually vocal on the matter, told The Daily Caller this week that “The reason I have raised these questions from the very beginning is because of China’s statements and their actions.”
“After concealing the virus for many weeks in December and then minimizing its severity for most of January, they then peddle an origin story about the food market in Wuhan.” Cotton said, adding “Given their dishonesty and the proximity of these labs, which we know were working with coronaviruses, it is only reasonable and responsible for us to ask the question and demand the answers.”
ISM/PMI Surveys Signal Collapse In US GDP “But Companies Expect Worse To Come”
Following the drops in US Manufacturing survey data (even with ISM’s data skewed by the vendor-delivery-bias issues), expectations were for further deterioration in the services side of the economy in March.
Markit’s Services PMI tumbled from 49.4 to 39.8 (but was better than the expected and flash prints)
ISM’s Services survey fell from 57.3 to 52.5 (the biggest decline since 2008) but dramatically better than expected
Source: Bloomberg
While March was well above the median forecast in a Bloomberg survey, the figure was propped up by considerably longer lead times. Similar to the group’s manufacturing report, the supplier deliveries index for service providers surged by the most since 1997 as the Covid-19 outbreak resulted in supply-chain disruptions.
The IHS Markit Composite PMI Output Index sank to a new low of 40.9 in March, notably down from 49.6 in February.
Source: Bloomberg
The marked decrease in business activity stemmed mainly from the outbreak of COVID-19 and the impact of measures to contain the virus spread on companies and households across the country. A key driving factor behind the downturn in output was a sharp reduction in new business.
“Business activity slumped to the greatest extent for more than a decade in March as efforts to contain the spread of the COVID-19 pandemic intensified. The survey indicates that the economy contracted an annualised rate approaching 5% in March, but with more measures to fight the virus outbreak being taken this decline will likely be eclipsed by what we see in the second quarter. More nonessential businesses are being forced to close, some are going bust, and lockdowns are leading to vastly reduced consumer spending.
“Employment and prices charged for goods and services are already being slashed at rates not seen since 2009 as companies seek to aggressively cut costs and discount charges in the face of collapsing revenues.
Given that the survey does not include the self-employed, the jobless numbers are likely to rise at a much faster rate than even the slide in the PMI indicates. The policy response to the economic damage from the virus has already been unprecedented, but the collapse in business expectations for the year ahead tells us that companies are expecting far worse to come.”
IHS Markit is now forecasting an around 5.5% contraction of US GDP in 2020. Not pretty!
Shocking Footage Inside NYC Hospital Reveals Outbreak ‘War Zone’ As Patients Pour In
“Well, this is a warzone, a medical warzone,” Dr. Arabia Mollette told CBS New York at Brooklyn’s Brookdale Hospital Medical Center, which has been at maximum capacity after a huge influx of critical COVID-19 patients. “Every day I come, what I see on a daily basis is pain, despair, suffering and healthcare disparities.”
Currently there are over 51,000 confirmed cases in New York City, after earlier this week Gov. Cuomo predicted as many as 16,000 deaths would result across New York state. “This is not just New York,” he said, citing projections produced by the Gates Foundation. “If you believe these numbers — 16,000 deaths in New York — that means you’re going to get tens of thousands of deaths outside of New York.”
The below shocking footage was produced by the CBS affiliate, revealing the growing strain and chaos which has hit New York hospitals over the past week, now as the total US death toll has soared past 6,000 with 1,562 of these in NYC alone.
“Patient beds line the hallways at Brookdale – there’s physically no more room as every inch of this building is now being used,” the CBS narrator observes in the segment.
CBS New York provided the following description of what its reporters saw:
This hospital has 370 beds, but that’s not enough.
Not only are they running out of room for the sick, they’re running out of room for those who’ve died. The morgue is filled and a refrigerated trailer is now parked outside for overflow.
One thing they have been able to do is develop rapid testing in-house with the ability to conduct 300 tests per day.
“It’s a medical war zone,” says a doctor at Brookdale Hospital.
Thus far over 100 COVID-19 infected patients have walked through the ER doors, with at least another 70 suspected cases under investigation.
“This virus sees no it is no difference,” Dr. Mollette said further. “It has nothing to do with age, has nothing to do with access to healthcare, has nothing to do with socio-economics, race or ethnicity. This virus is killing a lot of people.”
“We need prayer, we need support, we need gowns, we need gloves, we need masks, we need more vents, we need more medical space, we need psychosocial support as well,” she said.
“It’s not easy coming in here when you know that what you’re getting ready to face,” the doctor added.
The footage confirms an alarming scenario likely soon to come to other major urban hot spots across the country: dozens of the sick are being treated in open hallways for lack of enough patient rooms, creating a more dangerous ‘high risk’ atmosphere for the doctors, nurses, and staff on the front lines.
As this working week comes to a close we pass one grim milestone: over a million people world-wide are now infected with COVID-19, and likely already many millions given how poor global testing efforts have been. The disaster is probably only just getting started in countries with poor public health systems, where social distancing and regular hand-washing are sick jokes for those living ten to a shack without running water.
Tellingly, even as far, far richer Wuhan moves towards lifting its travel ban on 8 April, all its residents have been told to stay indoors and strengthen protection measures. The Caixin services PMI likewise printed at just 43.0 today, above consensus at 39.0, but far below the manufacturing measure’s just-over-50, underlining that even when using a helpful month-to-month measure of sentiment, smaller services businesses still feel terrible (though last month’s 26.5 print is thankfully behind us). A long, hard road lies ahead of us yet on many fronts.
As such, the RBNZ have just underlined that borrowing costs are staying low for a long time and that there is much more they can do to boost liquidity. (Presumably more QE.) Fiscally, we also continue to see billions being thrown around from those who can afford it. Japan is planning to hand over JPY200,000 (USD1,851) to households who have seen their incomes fall, for one example. For another, yesterday’s daily COVID-19 press briefing saw newly-recovered Health Secretary Matt Hancock state that GBP13.4bn in pre-existing NHS debt would be written off. Once upon a time that was a lot of money in the UK budget – now it’s a rounding error.
We at least saw the beginnings of a UK plan to win the war based on mass testing, and the gradual emergence of an “immunity passport” – based on the assumption that reinfection can’t happen, which is not yet scientifically verified. As in all wars, having a plan to win is crucial, but it being realistic helps. And implementing it rapidly and effectively is vital.
On the latter front, in the US the White House again invoked the Defence Production Act to compel six US firms to produce medical equipment such as N95 masks and ventilators. It helps to have the right equipment, after all (and the UK is also painfully short there, as are others). US banks are doing their part too – refusing to lend to struggling small businesses at 0.5% with no credit risk at all due to a government backstop as the USD349bn part of the USD2.2 trillion fiscal package; they have successfully lobbied to make the loans at 1.0% instead. Yet banks are also reported as far from ready to start rolling out liquidity to SMEs as from today as scheduled. Details of the loan scheme are apparently unclear: is due diligence required? And can the loans be sold on again? Because, having had regulatory requirements loosened and funding costs slashed, they don’t want to actually keep these low-yielding assets on their balance sheets. Is there a financial equivalent of the Defence Production Act, one wonders?
Clearly,, the need for action not talk or questions was underlined dramatically with the US initial claims print of 6.65 million, up from 3.3 million the week before. These kind of readings are, literally, off the chart. That is a Great Depression happening in the blink of an eye.
Yet, the major market mover yesterday was oil, which just after I had floated the hypothetical idea of the US imposing energy tariffs to set a price floor to match the ceiling that US shale already brings, heard Trump claim that the Saudis and Russia were set to slash output by up to 15m barrels per day. Initially, oil rallied hard. Then it gradually dawned that Trump’s talk of output cuts was an aspiration in line with reopening the US economy for Easter. Oil has fallen around 4% again, and we should probably expect it to continue to slump as the market tries to force the Kremlin and Riyadh to agree to something thought up in the White House.
Who is going to be the next market mover? Perhaps mortgages, where Moody’s warns that 30% of US home loans may stop being serviced, which seems entirely logical if everyone is out of work and small business aren’t getting the lifelines they need. But, frankly, who knows where the damage will spread to, and when, if we are going to see 25% unemployment across much of the developed world for an extended period?
Mnuchin Confirms ‘Paycheck Protection Program’ Is Up And Running; UK Suffers Biggest Daily Jump In Deaths: Live Updates
Summary:
US nonfarm payrolls was an unmitigated disaster.
Russia reports drop in cases after extending quarantine
Bolsonaro urges country to “go back to work” as Brazil’s governors say opposite
Brazil says first COVID-19 case and death in South American happened 1 month earlier
Beijing says more than half of foreign diplomats identified as close contacts of COVID-19 patients
Japan sees resurgence of cases continue
UK reports biggest daily jump in deaths
Spain, Germany report encouraging deceleration in new cases
Singapore launches strict 14-day lockdown to fight virus resurgence
Trump slams 3M on twitter
400M in loans doled out
Bank of America becomes first big bank to issue loans via the plan
Mnuchin confirms ‘Paycheck Protection Plan’ is a go
Tokyo mayor warns about resurgence of cases on CNN
* * *
Update (1053ET): As PM Johnson tries to guide his government through an unprecedented crisis while struggling with the brutal flu-on-steroids symptoms of COVID-19, UK Health Secretary Matt Hancock, who has also tested positive for COVID, has confirmed that UK saw its biggest jump in deaths over the last day.
As the latest data throw cold water on the hopes for a “flattening” in the UK curve, Hancock suggested to a terrified public that deaths could peak on April 12 – Easter Sunday – as some models have shown, according to the FT.
Meanwhile, here are the latest numbers.
UPDATE on coronavirus (#COVID19) testing in the UK:
As of 9am 3 April, a total of 173,784 people have been tested of which 38,168 tested positive.
As of 5pm on 2 April, of those hospitalised in the UK who tested positive for coronavirus, 3,605 have sadly died. pic.twitter.com/vmTosNMPyS
— Department of Health and Social Care (@DHSCgovuk) April 3, 2020
Testing update for England from Public Health England (@PHE_uk):
11,764 tests were carried out yesterday in England.
Testing capacity for inpatient care in England currently stands at 12,799 tests per day. pic.twitter.com/NOKmW39Gsb
— Department of Health and Social Care (@DHSCgovuk) April 3, 2020
Downing Street has said it will next review the UK’s lockdown conditions after Easter. In the meantime, Hancock and Johnson have their hands full trying to get tests to frontline workers, while trying to stave out an all-out collapse of the NHS.
* * *
Update (1038ET): Just as yet another reputable scientist declares that the theory that COVID-19 may have leaked out of a Chinese biolab shouldn’t be dismissed, Beijing is cranking up its propaganda machine and doubling down on its blaming of “foreign visitors” for igniting a second wave of COVID-19 infections.
The Global Times just reported that out of 84 foreign diplomats who recently returned to China, 66% were traced as close contacts of confirmed patients.
66% of 84 foreign diplomats who recently returned to #China were traced as close COVID19 contacts, and China suggests all diplomatic missions temporarily suspend personnel returns or rotations due to #COVID19 prevention & control: Chinese FM pic.twitter.com/cYzybLby2T
This statement, if accurate, offers a glimpse into the depth and complexity of China’s surveillance network, which it has marshaled to help trace the contacts of confirmed COVID-19 patients. It also sets up the foreign ministry to propagate another round of conspiracies that blame the US and the West for the outbreak.
* * *
Update (0944ET): Is Mnuchin going to keep a running ticker of loan figures? It’s starting to look that way:
Update (0920ET): Bank of America just confirmed that it has started issuing loans through the program. Now, will we see the rest of the big banks turn on the taps in the next few hours?
* * *
Update (0912ET): Thousands of small and medium-sized business owners just breathed a huge sigh of relief.
After reassuring the public during last night’s press conference that the bailout bill’s “Paycheck Protection Program” would be up and running “tomorrow” (i.e. Friday), Mnuchin tweeted Friday morning that the first loans had been issued via the program, and that small business owners are now welcome to apply.
So far, community banks have issued 700 loans…
Congratulations to @SBAgov and @USTreasury teams!! I just got first report on #PPPloan The system is up and running. Community banks have already processed over 700 loans processed for $2,500,000. Great work!! #CARESAct#SmallBizRelief
All of this comes after the BLS released a surprisingly discouraging jobs report, showing that more than 700k jobs have been destroyed in the last month, ending a more than 110-month streak of job creation that began after the end of the financial crisis.
* * *
As we arrive at the end of another week, In NYC, subway trains are still crowded with commuters as the MTA is forced to reduce trains and cars as more of its workforce falls ill or simply refuses to show up. As the number of hospitalized patients surges, the city’s hospital system has already run out of ICU beds, forcing Gov. Cuomo to move coronavirus patients to the Javits Center, which was initially intended for hospital overflow patients. Amid all of this, the state’s unemployment fund is in worrisome shape, meaning New Yorkers will soon need to depend solely on federal benefits if the state well runs dry.
After the global number of confirmed coronavirus cases topped 1 million on Thursday, several Asian territories and countries, including Singapore and Hong Kong, are struggling with a second wave of COVID-19 cases that health officials claim is mostly travel-related. As we reported a few days back, China has reimposed lockdowns as begins to disclose “asymptomatic” cases that government functionaries explained were left out of China’s initial case totals.
One month ago, on March 3, there were 92,000 coronavirus cases, most of them in mainland China. As of Friday, the US and Europe account for the bulk of the world’s more than 1 million confirmed cases.
Professor Gabriel Leung, an epidemiologist at the University of Hong Kong, warned on Friday that the pandemic would likely last a few more months, even if heavy-handed prevention strategies are adopted. He also said the warmer weather would give the world no respite from the virus: “Is warmer weather going to give us some respite? The answer is maybe, but probably not,” Leung said during a live-streamed forum, pushing back against prognostications made by the mainland’s leading respiratory disease expert, who assured the public that this would all be over by late April, even as Beijing continues to impose a near-moratorium on international and domestic flights.
In Singapore, Prime Minister Lee Hsien Loon on Friday announced a major shift as Singapore shutters workplaces and schools for a month, beginning next week, with the government calling the more aggressive containment measures a “circuit breaker” to avoid using the word “lockdown.’
As Nikkei explains, Lee’s decision marks a major shift in strategy for the city-state. Until now, Singapore had focused on strict border controls, thorough contact tracing of patients as well as extensive “social distancing” campaigns. While it encouraged telecommuting, it tried to keep life for businesses as normal as possible.
One major change that could foreshadow a similar move by the White House: The Singaporean government is now advising citizens to wear facemasks in public.
Big shift: Singapore government says due to some unexplained community transmissions of #COVIDー19, it will no longer discourage the wearing of face masks.
Lee also addressed the “psychological toll” of the “circuit-breaker” (don’t call it a lockdown), in what one reporter described as a surprisingly thoughtful and forward-thinking change.
I like the fact that he talked about the psychological toll involved. Something I can’t imagine his predecessors doing. https://t.co/TZa60b2pyB
Despite the new measures, Singaporeans will need to continue sharing all their cell phone location data with the government as part of a sweeping program of monitoring and contract tracing that has alarmed privacy advocates.
This is how seriously Singapore takes contact tracing in the fight against COVID-19 – My dad, a taxi driver in Singapore, said his friend recently drove a passenger who subsequently tested positive. Hours within the ride, Singapore’s health ministry called him on his cell phone
Singaporean Manpower Minister Josephine Teo told reporters that “all of the workplace activities will have to come to a stop, meaning that everyone will have to work from home and at the work premises, there will be no one.” Unless a business has special permission or is deemed an essential service, “it will be an offense to still have operations at the workplace” and any violators will be punished.
Singapore’s decision comes after more local transmission and new clusters have been identified in recent days, including cases of undetermined origin. As of Friday morning, Singapore had reported 1,049 infections with five deaths. Additionally, China, Hong Kong, Singapore and Taiwan have barred foreigners from entering in recent days. Early Friday morning, the Communist Party boss for the city of Wuhan warned that the risk of a full-on “resurgence” of the virus in the city was “still high.” Meanwhile, Japan has barred visitors from dozens of countries, including South Korea and the US. South Korea is mandating that foreign visitors spend 14-days in a government lockdown facility, though it hasn’t outright banned travelers from any country, though individuals from Hubei Province are banned.
Tokyo’s governor even appeared on CNN last night to warn that the situation in her city is rapidly worsening, as the number of new cases skyrockets.
#breaking Tokyo Governor says city is on the verge of a major outbreak & situation is worsening. Number of daily coronavirus cases has more than doubled in one week. Tokyo has 120 hospital beds left for coronavirus patients. An epidemiologist warns Tokyo could be ‘the next NYC.’ pic.twitter.com/y0H5oD68iD
By comparison, in US, over 75% of individuals, and 90% of GDP, are under mandatory lockdown, including 38 state-wide orders.
Additionally, in other US news, President Trump bashed 3M, one of America’s largest manufacturers, in a late-night tweet, where he claimed he used DPA authority so speed up manufacturing of ventilators.
We hit 3M hard today after seeing what they were doing with their Masks. “P Act” all the way. Big surprise to many in government as to what they were doing – will have a big price to pay!
In other international news, a British-made invention that can reduce the spread of coronavirus is being bought up by governments around the world, but not by the NHS, the FT reported Friday. In Germany, health officials recorded more than 6,174 new coronavirus cases over the past 24 hours, the latest sign that the growth rate of the virus is slowing. Spain also reported an encouraging slowdown in new cases.
Russia reported 601 new cases of coronavirus on Friday, a 17% jump in total cases that marks a slight slowing in the spread of the outbreak in the country. So far, Russia has reported 4,149 cases and 34 deaths from the virus, a much lower per-capita rate than many of its European peers.
Meanwhile, in Brazil, where President Jair Bolsonaro has continued to dismiss the risks of the virus. During a recent visit to a gas station in Sao Paolo covered by WSJ, Bolsonaro empathized with a worker to whom he spoke in the crowd.
“Sometimes, the cure is worse than the disease,” he told him, according to the report. “People should go back to work.” But 25 of 27 of Brazil’s governors feel differently, and have been pushing Bolsonaro to endorse their safety guidelines. After Brazil’s case total ballooned to nearly 8,000 cases and 299 deaths, officials confirmed that a woman who died on Jan. 23 had been infected, more than a month before South America’s first confirmed case. It’s just the latest sign that the virus may have spread more widely across Latin America than many had previously believed.
A Feverish Boris Johnson Will Continue To Isolate As COVID-19 Symptoms Worsen
UK Prime Minister Boris Johnson does not look good.
In a short video posted to twitter, the British Prime Minister urged Britons to stay at home, lauding those who have obeyed the national lockdown orders for “saving lives.”
Another quick update from me on our campaign against #coronavirus.
— Boris Johnson #StayHomeSaveLives (@BorisJohnson) April 3, 2020
During the video, Johnson also urged Britons to stay home this weekend, despite what’s expected to be nice weather (an extremely rare occurrence in Britain).
But with UK and European stocks already in the red, the video did nothing to lift investor confidence, as Johnson, pale as a sheet and shiny with sweat, appears to be extremely ill.
For a virus that has infected the rich and powerful as much as the poorest of the poor, Johnson is one of dozens of public officials, including dozens in Iran and a handful in Brazil, who have contracted the virus. At least three US lawmakers have also contracted the virus.
Johnson’s condition has reportedly grown so grave, that there are rumors about him temporarily ceding power to Michael Gove, who, like Johnson, started his career as a journalist in the British press. Gove also lost to Gove and May during two Tory leadership contests. But he remains a member of the cabinet and one of the most visible and trusted conservatives in the UK.
I’m hearing more and more about Gove being lined up to take over from an ‘ill’ Johnson and what a result that will be. One unscrupulous chancer journalist with rich pals replaced by another one.
As if this wasn’t enough, Johnson has been under assault by the British press, who have been attacking everything from his reluctance to take heavy handed measures early in the crisis, to the continuing shortage of COVID-19 tests for frontline medical workers, an issue that has become a huge scandal for his government, as CNBC explains.
Everyone with any position in today’s market will be able to say they lived through a real Bear Market.
In the echo chamber of a Bull Market, there’s always a reason to get bullish: the consumer is spending, housing is strong, the Fed has our back, multiples are expanding, earnings are higher, stock buybacks will push valuations up, and so on, in an essentially endless parade of self-referential reasons to buy, buy, buy and ride the rocketship higher.
The classic Bull Market reason to get extremely bullish is, yes, bearish sentiment: sentiment is terrible, and bearish sentiment is the surefire marker of a stock market bottom. The more bearish the sentiment, the more reasons to get bullish and start buying with abandon: max out the margin account, hock the farm, empty the kids’ college savings, whatever you need to do but dang it, dump every cent you have into stocks when sentiment gets bearish.
Since only those of us with gray hair have actually lived through a real Bear Market, younger participants cannot imagine sentiment is bearish because conditions are bearish. The last real Bear Market was in the 1970s and early 1980s, about years ago. By “real” I mean deep, enduring and pervasive.
Each of the recessions / Bear Markets since 1982 have been relatively brief and in the downturns of 2000-02 and 2008-09, the result of extreme excesses in specific financial sectors of the economy: the tech sector in the dot-com bubble-burst and subprime mortgages in the housing bubble burst.
If you didn’t work in the tech sector or speculate in tech stocks, the 2000-02 downturn wasn’t that wrenching or pervasive. The 2008-09 Global Financial Meltdown affected more people because it deflated the core asset of household wealth, the home, and toppled the dominoes of banking / Wall Street’s institutionalized fraud and extreme excesses of debt and leverage.
A real Bear Market is different. It’s systemic, i.e. it can’t be reversed with “the Fed has our back” tricks; it’s pervasive, i.e. it affects every sector of the economy, and because it’s systemic, it’s enduring–it doesn’t end in a quarter or two or even a year or two.
Real Bear Markets end not when sentiment gets extremely bearish but when all the mal-investments, inefficiencies, excesses and institutionalized skims/scams are squeezed out of the system. To the degree that the status quo works tirelessly to maintain the inefficiencies, excesses and institutionalized skims/scams because they enrich insiders and elites, then the Bear Market never ends.
The Bulls have been trained by the Federal Reserve and “buy the dip” to respond with Pavlovian enthusiasm to signals such as bearish sentiment and a whole tramp steamer of other technical analysis signals: price is stretched below the 200-day moving average, this is the signal to buy, the Fed is printing trillions, you can’t lose if you buy now, etc.
It never occurs to over-anxious-to-buy Bulls that all their analogs and signal are misleading because this situation is fundamentally different. Even 1929 and the starts of the Great Depression isn’t an accurate analog, as the Roaring Twenties were just another bubble of excesses in debt, leverage and risk-taking that eventually popped.
The Great Depression was exacerbated by the collapse of small banks, which wiped out savings, and the Dust Bowl (caused in part by the plowing of huge swaths of marginal land to increase production, all of which was funded by debt that could never be paid back).
The reason why sentiment is bearish is because the situation–the popping of a vast, 20-year expansion of excessive debt, leverage, state/monopoly abuses and risk in an unprecedented Everything Bubble–is definitively bearish. Sentiment is bearish because reality is bearish, and taking that reality as a bullish signal to buy is delusional.
No, no, no, cry the Bulls: the market discounts reality, and therefore it’s time to buy, buy, buy because we’re already turning the corner. And how do we know this? Because sentiment is so bearish! This self-referential dependence on sentiment readings and signals rather than on reality is the key dynamic in delusional bullishness.
An abundance of Bulls over-anxious to “buy the dip” to catch the rocketship higher is not evidence of a bottom, it’s evidence of a top. At the bottoms of real Bear Markets, few are anxious to buy the dip because sentiment is bearish. All those who were so anxious to buy the dip based on bearish sentiment have been wiped out and are now cubby-holed somewhere, reliving past glories when they made fortunes buying the dip because the Fed has our back, sentiment was bearish and the 5-day EMA blah, blah, blah.
Case in point, every institution’s favorite stock of the past decade: Apple. Interestingly, Apple’s operating earnings have been flat for years–never mind what the global lockdown will do to aspirational longings for $1,000 smart phones.
Yet plateauing operating earnings meant nothing to Apple bulls, who doubled the stock’s value because…. another tramp steamer full of bullish hyperbole.
Everyone with any position in today’s market will be able to say they lived through a real Bear Market. The trick is to survive the bullish echo chamber and have some capital left to deploy when all the bulls so anxious to buy the dip will have vanished.
