Gamma-Unwind Sparks Markets’ Worst Week In 6 Months As Dollar Spikes

Gamma-Unwind Sparks Markets’ Worst Week In 6 Months As Dollar Spikes

Tyler Durden

Fri, 09/04/2020 – 16:01

It’s the gamma, stupid!

That much accumulated “short gamma” doesn’t just go away in a ~4% flush – the Street is still very much in a dangerous space, and that flow is still out there in full “Resevoir Dogs” standoff fashion both to UPSIDE AND DOWNSIDE (again, short gamma = sell when mkt going lower, buy when mkt going higher)

Masa-son, Momo, & Gamma-gutted home-gamers…“do you feel lucky?”

Or maybe it’s time to stop playing the game that you really don’t understand…

US equity markets were ugly again today, Nasdaq down 5% at its lows, only to be bid back dramatically higher with the Dow managed to get green briefly

Still an ugly week for stocks overall that was the worst since March for the majors…

Today’s rebounds began as The Dow and Small Caps tested their 50DMA…

The Momo meltdown continued for the 4th week in the last 5…

Source: Bloomberg

A very whippy week in bond land as yields tumbled with stocks cratering yesterday and then were also dumped alongside stocks today and accelerated even as stocks bounced back…

Source: Bloomberg

On the week, yields were mixed with 5Y +3bps, 30Y -4bps…

Source: Bloomberg

10Y surged today, back above 70bps…

Source: Bloomberg

The Dollar managed to rise on the week… for the first time in 10 weeks!

Source: Bloomberg

Cryptos were lower on the week but Ethereum managed to get back to even as Bitcoin Cash was the laggard…

Source: Bloomberg

While copper raged higher today, crude crashed and PMs were unable to hold any gains…

Source: Bloomberg

Oil was ugly with WTI back below $40..

Finally, you now have a long weekend to consider your exposure to this shitshow…

…and what happens next?

Source: Bloomberg

via ZeroHedge News https://ift.tt/3gYcpA8 Tyler Durden

50% Of Americans Fear Bankruptcy Due To Medical Bills 

50% Of Americans Fear Bankruptcy Due To Medical Bills 

Tyler Durden

Fri, 09/04/2020 – 15:50

Despite the Nasdaq and S&P500 soaring to new highs, there are lingering vulnerabilities among the American consumer base, with at least half of all adults concerned they would go bankrupt due to an unexpected medical event, according to a new study.

The study, commissioned by West Health and Gallup, found 50% of respondents were “extremely concerned/concerned” about bankruptcy should a significant health-related expense strike their household. The figure was up five percentage points over the year from 45% in 2019. The largest increase was seen in minority households, increasing 12 percentage points from 52% in 2019 to 64% in July. 

West Health and Gallup surveyed about 1,000 U.S. adults from July 1-24. The survey found millennials and Generation X were also “extremely concerned/concerned” about the risk of bankruptcy if they were slapped with a hospital bill. 

Respondents said at least one person in their household currently has medical debt that cannot be serviced in full or within the next 12 months. This was 12% for white adults and 20% for minorities. In terms of social class, respondents in low-income households had a higher probability of not repaying medical debt versus households with an annual income of over $100,000.

Gallup found nearly a quarter of all U.S. adults must borrow money to pay a $500 medical bill. 

With substantial percentages of adults reporting that they currently have medical debt that they cannot pay in a year or less, it is probably unsurprising that 26% report they would need to borrow money to pay a $500 medical bill. To do this, 12% say they would use a credit card or get a loan from a financial institution, while another 14% would borrow from a family member or friend. For some persons, these forms of borrowing could ordinarily be characterized by prompt repayment (such as simply paying off the credit card at the end of the month), but for many others, it is likely to feed into a cycle of accumulating medical debt that cannot be readily repaid.

The need to borrow money to pay a $500 medical bill is particularly common among non-White adults (43%) and those living in households earning less than $40,000 per year (46%). -Gallup 

Respondents said lowering the cost of prescription drugs is one of the most important issues that will influence their vote in the Nov. 03 presidential elections. 

The study said, “the sharp rise in U.S. healthcare costs, which was already a significant problem for Americans before the COVID-19 pandemic, has only been exacerbated by new challenges presented by the outbreak.” 

It continued, “14% of Americans with likely COVID-19 symptoms reported that they would avoid care because of cost, and 88% are concerned about rising drug costs due to the pandemic. These COVID-19-related cost worries also come with a substantial racial divide. “

The survey was conducted in pre-fiscal cliff conditions. Readers may recall a quarter of all personal income in the U.S. is derived from the government, which means households are more pressured than ever to service their bills. 

The growing and disproportionate medical-debt crisis is crushing low-income and minority households who continue to suffer in the virus-induced recession. The Gallop survey sheds new light on just how many folks are one hospital visit from bankruptcy. 

via ZeroHedge News https://ift.tt/2F2cnd8 Tyler Durden

Carolina Panthers Owner David Tepper Under Fire For Laying Off Workers

Carolina Panthers Owner David Tepper Under Fire For Laying Off Workers

Tyler Durden

Fri, 09/04/2020 – 15:35

It’s not easy being a billionaire and owning your own professional sports team. Just ask David Tepper.

On one hand, you can’t remain a billionaire by mindless squandering away money on costs that you no longer need. On the other hand, there’s the growing, angry social justice mob who – despite being mostly unemployed themselves – will still fight for the proletariat to keep their jobs, whether they are actually necessary or not.

Which brings us to why Tepper Sports and Entertainment is under fire this week: billionaire owner David Tepper decided to lay off workers as a result of the coronavirus pandemic. The company – which owns the NFL’s Carolina Panthers – has laid off about 30 employees since May, according to Bloomberg

Carolina announced on Monday of this week that no fans would be attending their season opener. 

Tepper’s decision flies in the face of other team owners, who have worked to keep stadium workers paid despite having no fans at the games. Meanwhile, Tepper is well known as the NFL’s “richest owner”, with a net worth of $12.7 billion, according to the Bloomberg Billionare’s Index.

Tepper said on a Zoom call on Wednesday: “I decide on these decisions based on what’s good for the organization and what’s good for the individual. It’s not good to have an individual sit there idle for a year or a year and a half or two years with nothing to do inside the organization.”

But it isn’t just the Panthers making cuts. The NFL has also announced pay cuts for employees making more than $100,00 per year. Additionally, Bills and Sabres owner Terry Pegula laid off 21 employees and furloughed 100 others. The Atlanta Falcons also eliminated 12 positions; including their stadium’s general manager.

The Baltimore Ravens have taken another route; setting up a fund to pay stadium workers even if games are played without fans. The Dolphins are also trying to avoid layoffs.

Dolphins President Tom Garfinke said: “We feel like the pandemic is a very serious, but hopefully short-term situation. We want to try to keep everything intact if we can and look at it as three years of revenues and expenses, as opposed to one year.”

We guess Tepper simply doesn’t want to pay for work he’s not getting productivity out of. And frankly, we don’t blame him.

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D.C. Prosecutions Highlight the Connection Between Gun Control and Racial Disparities

Muriel-Bowser-8-18-20-Newscom

An anti-gun initiative in Washington, D.C., that was backed by Mayor Muriel Bowser is attracting criticism because it has focused on predominantly black parts of the city. The controversy over the program, which prosecutes residents for violating the federal ban on firearm possession by people with felony records, illustrates the tension between two major items on the progressive agenda: strengthening gun control and reducing racial disparities in law enforcement. Those goals are hard to reconcile because enforcing firearm laws has a disproportionate impact on African Americans.

Originally that was by design. Modern gun control laws have their roots in Southern states’ efforts to disarm freedmen, depriving them of a constitutional right that Chief Justice Roger Taney, author of the Supreme Court’s infamous 1857 decision in Dred Scott v. Sandford, warned black people would enjoy if they were recognized as citizens.

More recently, fear of armed black men has driven white politicians to support new gun restrictions. California’s Mulford Act, a 1967 law backed by then-Gov. Ronald Reagan (and the National Rifle Association), responded to the rise of the Black Panthers by banning the open carrying of loaded firearms. According to The Saturday Night Speciala 1973 book by investigative journalist Robert Sherrill, the federal Gun Control Act of 1968, passed at a time when politicians were alarmed by urban riots, aimed to “shut off weapons access to blacks, and since [legislators] probably associated cheap guns with ghetto blacks and thought cheapness was peculiarly the characteristic of imported military surplus and the mail-order traffic, they decided to cut off these sources while leaving over-the-counter purchases open to the affluent.”

That law included prohibitions on gun sales to and purchases by several broad classes of people, including anyone who had been convicted of “a crime punishable by imprisonment for a term exceeding one year,” meaning almost all felonies. The current federal ban, which applies to possession as well as sales and purchases, carries a penalty of up to 10 years in prison.

On the face of it, the D.C. Code, which also prohibits gun possession by people who have been convicted of felonies, is even more severe, prescribing the same maximum penalty along with a mandatory minimum of one year. If the felony was violent, the maximum penalty is 15 years and the mandatory minimum is three years. But according to the U.S. Sentencing Commission, the average federal sentence for “felon in possession of a firearm offenders” is 64 months. Some of those defendants got enhanced penalties under the Armed Career Criminal Act, which applies to offenders with three prior convictions. But even excluding those defendants, the average sentence was nearly five years.

The decision to charge defendants in federal court, which in D.C. is made by Acting U.S. Attorney Michael Sherwin, therefore exposes them to “harsher penalties compared to similar convictions in local court,” The Washington Post notes. So when it turns out that black defendants are especially likely to be charged in federal court, progressives tend to get upset.

Bowser, who is herself African American, presumably was not driven by racial animus when she backed the D.C. initiative, which aims to reduce gun crimes by disarming and locking up people thought likely to commit them. But the racially disproportionate results were predictable, since one-third of African-American men have felony records (compared to 8 percent of the general population) and police and prosecutors were apt to concentrate on high-crime, predominantly black neighborhoods.

That is what happened, as federal prosecutors recently acknowledged. Instead of targeting illegal gun owners throughout the city, as originally advertised, the program has focused entirely on three police districts that overlap with Ward 5, which is 64 percent black; Ward 7 (92 percent black); and Ward 8 (89 percent black). By comparison, blacks represent 44 percent of the District’s total population.

The program “exclusively—and now we know, by design—targets District residents of color via specific police districts,” D.C. Council Member Charles Allen complained in a press release. “It is one more policy defaulting to harsh penalties on Black residents whose neighborhoods have historically been underinvested in and overpoliced. We must end this policy. It is taking us in the wrong direction.”

D.C. Attorney General Karl Racine, an elected official who enforces the D.C. Code, was likewise appalled by the “discriminatory application” of federal gun charges. According to the Post, D.C. Police Chief Peter Newsham said “he was unaware the initiative was being implemented in only certain parts of the District.”

Sherwin, the acting U.S. attorney, “criticized the program as implemented, saying he began a review when he took over the office in May and ended the program’s geographic focus last week.” While denying that the program is racially discriminatory, Sherwin said the “most equitable” approach would to make prosecutorial decisions based on each defendant’s criminal history, including prior gun charges and convictions for violent crimes, rather than the neighborhood where he happened to be arrested. The program, he said, should be “designed to charge the most violent offenders with the most significant federal charges.”

While a ban on gun possession by “violent offenders” might make sense, assuming their crimes were recent enough to suggest they still pose a threat to public safety, both the federal and D.C. laws sweep much more broadly than that. People convicted of violent crimes long ago—a youthful bar fight, say—can still be prosecuted for felonies if they keep guns for self-defense. And people convicted of nonviolent felonies, including drug offenses, also lose their Second Amendment rights.

Keeping in mind that one-third of black males in the United States have felony records, this policy permanently deprives 7 million African-American men of the constitutional right to armed self-defense—a right that is especially important in neighborhoods like the ones federal prosecutors have been targeting in D.C.—even when they pose no plausible danger to the general public. Within the District, we are talking about something like 150,000 black men who, should police catch them with a firearm, could be sent to prison for a year if they are prosecuted in D.C. court or five years if if they are prosecuted in federal court.

Is every one of these men a menace to public safety? Sherwin implicitly concedes that the vast majority are not. But the distinction between the unauthorized gun owners who should go to federal prison and the unauthorized gun owners who should not rests entirely in his hands. D.C. residents who illegally arm themselves for self-protection just have to put their faith in his ability to identify “the most violent offenders.”

This is what gun control looks like in practice. When the New York Police Department tried to reduce violent crime by stopping pedestrians, questioning them, and patting them down for weapons, the overwhelming majority of the people subjected to such treatment were black or Hispanic. And when they were frisked, which happened about half the time, police almost never found guns and rarely discovered weapons of any kind. That track record contradicted the pretense that the pat-downs were based on the “reasonable suspicion” that the Supreme Court says the Fourth Amendment requires. But according to Michael Bloomberg, a leading gun control advocate who was New York’s mayor when these stops skyrocketed, the whole point was not to find guns but to deter young men from carrying them to begin with.

Given these realities, it is more than a little puzzling that people who are concerned about racial disparities, potentially deadly police encounters, and the life obstacles created by felony records would advocate new gun controls and stronger enforcement of existing restrictions. If you worry about those problems, why support policies that are bound to make them worse?

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Cops Use Pictures of Adult Women To Trick Men Into Meeting for Sex, Arrest Them as Child Predators

dreamstime_xxl_69423969

Instead of going after actual sexual predators, some police officers have discovered that it’s easier to just trick people. These cops go on adult dating sites, pose as grown women, find lonely guys, flirt, and then claim they are actually underage. The photos they send of “themselves” depict real women in their 20s. When the mark arranges a date, the cops arrest him as a predator.

These stings are the subject of a remarkable piece in The New York Times Magazine by Michael Winerip. He begins by profiling 20-year-old Jace Hambrick, a young man living at home, working in construction and doing a lot of gaming in Vancouver, Washington. When Hambrick found “Gamer Gurl” on Craigslist (which requires users to be 18) he couldn’t believe his luck: A woman who professed to love gaming and was looking for a boyfriend. They chatted for awhile and then “Gamer Gurl” said she was actually 13.

“Why did you post an ad in craigslist if your 13? You mean 23?” asked Hambrick.

They emailed, then texted, and she eventually shared a photo of herself. She looked like she was in her late teens or early 20s, she made cultural references most 13-year-olds wouldn’t get, and she gave Hambrick driving directions to her home. When he arrived, the person who greeted him was the same woman from the picture. But when he entered the home, two cops handcuffed him. The beautiful young woman was an adult police officer.

Hambrick was sentenced to 18-months-to life, and a minimum of 10 years on the sexual offense registry. (The “to-life” part is real: The state reserves the right to keep extending the sentence indefinitely.)

The Times article explains that cops have arrested 300 men over the past four years via what the Washington state police dubbed “Operation Net Nanny.” Many end up serving more time than men convicted of actually raping real kids. The disconnect between their “crime” and the fact no flesh-and-blood child was actually ever in danger—nor were the men looking for under-age partners—does not seem to matter to the cops.

Yet a state police captain giddily described the stings as an amazing return on investment:

“Plea bargains start at 10 years in prison. Compared to other criminal cases that can take a year or longer, may result in a few years in prison, costs hundreds of man-hours and still only result in a single arrest, this is a significant return on investment. Mathematically, it only costs $2,500 per arrest during this operation! Considering the high level of potential offense, there is a meager investment that pays huge dividends.”

Apparently sending people away for the longest possible time, not actually protecting the public, is the goal.

That the “meager investment” means locking away chumps who bit the confusing bait of a middle-aged male cop posing as a 20-something female cop posing as a 13-year-old female gamer, well, who cares? “Think of the “dividends.”

Winerip’s article also details the cozy relationship between the police and a non-profit ostensibly dedicated to saving children from trafficking: Operation Underground Railroad. OUR, as it’s called, donated more than $170,000 to the Washington police to support these stings. These funds “paid for additional detectives, hotels, food and overtime.” Seemingly in return, the police helped the organization reap positive publicity. And of course, the more predators the cops catch, the more people are eager to donate to an organization focused on this scourge.

They must donate generously. OUR’s founder, Tim Ballard, earned $343,000 in 2018. The fact that his organization supports a police operation that doesn’t help any real child victims and seems to create predators out of lonely men falling for fictional characters? Details, details. Think of the dividends!

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D.C. Prosecutions Highlight the Connection Between Gun Control and Racial Disparities

Muriel-Bowser-8-18-20-Newscom

An anti-gun initiative in Washington, D.C., that was backed by Mayor Muriel Bowser is attracting criticism because it has focused on predominantly black parts of the city. The controversy over the program, which prosecutes residents for violating the federal ban on firearm possession by people with felony records, illustrates the tension between two major items on the progressive agenda: strengthening gun control and reducing racial disparities in law enforcement. Those goals are hard to reconcile because enforcing firearm laws has a disproportionate impact on African Americans.

Originally that was by design. Modern gun control laws have their roots in Southern states’ efforts to disarm freedmen, depriving them of a constitutional right that Chief Justice Roger Taney, author of the Supreme Court’s infamous 1857 decision in Dred Scott v. Sandford, warned black people would enjoy if they were recognized as citizens.

More recently, fear of armed black men has driven white politicians to support new gun restrictions. California’s Mulford Act, a 1967 law backed by then-Gov. Ronald Reagan (and the National Rifle Association), responded to the rise of the Black Panthers by banning the open carrying of loaded firearms. According to The Saturday Night Speciala 1973 book by investigative journalist Robert Sherrill, the federal Gun Control Act of 1968, passed at a time when politicians were alarmed by urban riots, aimed to “shut off weapons access to blacks, and since [legislators] probably associated cheap guns with ghetto blacks and thought cheapness was peculiarly the characteristic of imported military surplus and the mail-order traffic, they decided to cut off these sources while leaving over-the-counter purchases open to the affluent.”

That law included prohibitions on gun sales to and purchases by several broad classes of people, including anyone who had been convicted of “a crime punishable by imprisonment for a term exceeding one year,” meaning almost all felonies. The current federal ban, which applies to possession as well as sales and purchases, carries a penalty of up to 10 years in prison.

On the face of it, the D.C. Code, which also prohibits gun possession by people who have been convicted of felonies, is even more severe, prescribing the same maximum penalty along with a mandatory minimum of one year. If the felony was violent, the maximum penalty is 15 years and the mandatory minimum is three years. But according to the U.S. Sentencing Commission, the average federal sentence for “felon in possession of a firearm offenders” is 64 months. Some of those defendants got enhanced penalties under the Armed Career Criminal Act, which applies to offenders with three prior convictions. But even excluding those defendants, the average sentence was nearly five years.

The decision to charge defendants in federal court, which in D.C. is made by Acting U.S. Attorney Michael Sherwin, therefore exposes them to “harsher penalties compared to similar convictions in local court,” The Washington Post notes. So when it turns out that black defendants are especially likely to be charged in federal court, progressives tend to get upset.

Bowser, who is herself African American, presumably was not driven by racial animus when she backed the D.C. initiative, which aims to reduce gun crimes by disarming and locking up people thought likely to commit them. But the racially disproportionate results were predictable, since one-third of African-American men have felony records (compared to 8 percent of the general population) and police and prosecutors were apt to concentrate on high-crime, predominantly black neighborhoods.

That is what happened, as federal prosecutors recently acknowledged. Instead of targeting illegal gun owners throughout the city, as originally advertised, the program has focused entirely on three police districts that overlap with Ward 5, which is 64 percent black; Ward 7 (92 percent black); and Ward 8 (89 percent black). By comparison, blacks represent 44 percent of the District’s total population.

The program “exclusively—and now we know, by design—targets District residents of color via specific police districts,” D.C. Council Member Charles Allen complained in a press release. “It is one more policy defaulting to harsh penalties on Black residents whose neighborhoods have historically been underinvested in and overpoliced. We must end this policy. It is taking us in the wrong direction.”

D.C. Attorney General Karl Racine, an elected official who enforces the D.C. Code, was likewise appalled by the “discriminatory application” of federal gun charges. According to the Post, D.C. Police Chief Peter Newsham said “he was unaware the initiative was being implemented in only certain parts of the District.”

Sherwin, the acting U.S. attorney, “criticized the program as implemented, saying he began a review when he took over the office in May and ended the program’s geographic focus last week.” While denying that the program is racially discriminatory, Sherwin said the “most equitable” approach would to make prosecutorial decisions based on each defendant’s criminal history, including prior gun charges and convictions for violent crimes, rather than the neighborhood where he happened to be arrested. The program, he said, should be “designed to charge the most violent offenders with the most significant federal charges.”

While a ban on gun possession by “violent offenders” might make sense, assuming their crimes were recent enough to suggest they still pose a threat to public safety, both the federal and D.C. laws sweep much more broadly than that. People convicted of violent crimes long ago—a youthful bar fight, say—can still be prosecuted for felonies if they keep guns for self-defense. And people convicted of nonviolent felonies, including drug offenses, also lose their Second Amendment rights.

Keeping in mind that one-third of black males in the United States have felony records, this policy permanently deprives 7 million African-American men of the constitutional right to armed self-defense—a right that is especially important in neighborhoods like the ones federal prosecutors have been targeting in D.C.—even when they pose no plausible danger to the general public. Within the District, we are talking about something like 150,000 black men who, should police catch them with a firearm, could be sent to prison for a year if they are prosecuted in D.C. court or five years if if they are prosecuted in federal court.

Is every one of these men a menace to public safety? Sherwin implicitly concedes that the vast majority are not. But the distinction between the unauthorized gun owners who should go to federal prison and the unauthorized gun owners who should not rests entirely in his hands. D.C. residents who illegally arm themselves for self-protection just have to put their faith in his ability to identify “the most violent offenders.”

This is what gun control looks like in practice. When the New York Police Department tried to reduce violent crime by stopping pedestrians, questioning them, and patting them down for weapons, the overwhelming majority of the people subjected to such treatment were black or Hispanic. And when they were frisked, which happened about half the time, police almost never found guns and rarely discovered weapons of any kind. That track record contradicted the pretense that the pat-downs were based on the “reasonable suspicion” that the Supreme Court says the Fourth Amendment requires. But according to Michael Bloomberg, a leading gun control advocate who was New York’s mayor when these stops skyrocketed, the whole point was not to find guns but to deter young men from carrying them to begin with.

Given these realities, it is more than a little puzzling that people who are concerned about racial disparities, potentially deadly police encounters, and the life obstacles created by felony records would advocate new gun controls and stronger enforcement of existing restrictions. If you worry about those problems, why support policies that are bound to make them worse?

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Cops Use Pictures of Adult Women To Trick Men Into Meeting for Sex, Arrest Them as Child Predators

dreamstime_xxl_69423969

Instead of going after actual sexual predators, some police officers have discovered that it’s easier to just trick people. These cops go on adult dating sites, pose as grown women, find lonely guys, flirt, and then claim they are actually underage. The photos they send of “themselves” depict real women in their 20s. When the mark arranges a date, the cops arrest him as a predator.

These stings are the subject of a remarkable piece in The New York Times Magazine by Michael Winerip. He begins by profiling 20-year-old Jace Hambrick, a young man living at home, working in construction and doing a lot of gaming in Vancouver, Washington. When Hambrick found “Gamer Gurl” on Craigslist (which requires users to be 18) he couldn’t believe his luck: A woman who professed to love gaming and was looking for a boyfriend. They chatted for awhile and then “Gamer Gurl” said she was actually 13.

“Why did you post an ad in craigslist if your 13? You mean 23?” asked Hambrick.

They emailed, then texted, and she eventually shared a photo of herself. She looked like she was in her late teens or early 20s, she made cultural references most 13-year-olds wouldn’t get, and she gave Hambrick driving directions to her home. When he arrived, the person who greeted him was the same woman from the picture. But when he entered the home, two cops handcuffed him. The beautiful young woman was an adult police officer.

Hambrick was sentenced to 18-months-to life, and a minimum of 10 years on the sexual offense registry. (The “to-life” part is real: The state reserves the right to keep extending the sentence indefinitely.)

The Times article explains that cops have arrested 300 men over the past four years via what the Washington state police dubbed “Operation Net Nanny.” Many end up serving more time than men convicted of actually raping real kids. The disconnect between their “crime” and the fact no flesh-and-blood child was actually ever in danger—nor were the men looking for under-age partners—does not seem to matter to the cops.

Yet a state police captain giddily described the stings as an amazing return on investment:

“Plea bargains start at 10 years in prison. Compared to other criminal cases that can take a year or longer, may result in a few years in prison, costs hundreds of man-hours and still only result in a single arrest, this is a significant return on investment. Mathematically, it only costs $2,500 per arrest during this operation! Considering the high level of potential offense, there is a meager investment that pays huge dividends.”

Apparently sending people away for the longest possible time, not actually protecting the public, is the goal.

That the “meager investment” means locking away chumps who bit the confusing bait of a middle-aged male cop posing as a 20-something female cop posing as a 13-year-old female gamer, well, who cares? “Think of the “dividends.”

Winerip’s article also details the cozy relationship between the police and a non-profit ostensibly dedicated to saving children from trafficking: Operation Underground Railroad. OUR, as it’s called, donated more than $170,000 to the Washington police to support these stings. These funds “paid for additional detectives, hotels, food and overtime.” Seemingly in return, the police helped the organization reap positive publicity. And of course, the more predators the cops catch, the more people are eager to donate to an organization focused on this scourge.

They must donate generously. OUR’s founder, Tim Ballard, earned $343,000 in 2018. The fact that his organization supports a police operation that doesn’t help any real child victims and seems to create predators out of lonely men falling for fictional characters? Details, details. Think of the dividends!

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A COVID Vaccine Will Mark The “Big Top” For The Market, According To BofA

A COVID Vaccine Will Mark The “Big Top” For The Market, According To BofA

Tyler Durden

Fri, 09/04/2020 – 15:20

While 2020 has been an unprecedented year in so many ways, in one way it reminds us of 2008. Consider that it was Jerome Kerviel’s infamous bad trade in January 2008 which sent stocks plunging (and ended up costing SocGen a lot of money) that prompted the Fed to cut rates by a remarkable 75bps to stabilize markets amid fears that a systemic threat was imminent, when in reality it turned out to be a bad trade by just one trader. So much for macroprudential regulation (in retrospect, a systemic threat was imminent as first Bear failed then Lehman).

Fast forward to 2020 when in the past few weeks we have seen one bank after another rush to hike their price targets on Apple, Tesla and, of course, the S&P500, which as we noted is perhaps understandable because the broad market index just hit the biggest difference with the average sellside target on record.

Then, on Thursday just as stocks peaked, Bank of America unveiled that it was hiking its year-end price target from 2950 to 3250 (even though it admitted it had absolutely no visibility and in fact forecast a range of 2200 to 4000). This just days after BofA analysts raised their price targets on both AAPL and TSLA.

Of course, we now know that behind the massive meltup in stocks over the past month was nothing fundamental, but merely one massive call-buying trade by SoftBank which now appears to have blown up leading to major losses for the same tech companies that soared in the past few weeks as Masa Son was aggressively buying calls on stocks it had purchased in the second quarter in what appears to have been an attempt to corner gamma and reprice its portfolio higher.

To be sure, neither BofA nor any of the other analysts who rushed to upgrade their price targets (read: slap an even higher P/E multiple forecast) to chase the price knew that they were not in fact justifying a fundamental repricing but merely validating what was yet another whale trade, this time by SoftBank pushing a handful of stock higher courtesy of gamma, which eventually spilled over and pushed the broader market higher as well.

It just goes to show that analysts really don’t know anything more than average Joes, and their whole role is to give their clients peace of mind when they too chase prices higher (and occasionally lower).

So today, in what may be an attempt to mitigate some of the damage from the latest S&P PT hike, BofA’s Chief Investment Strategist Michael Hartnett tried to put the brakes on the rampant euphoria – which his own bank helped magnify with its rampant upgrades, explaining why we may see a dip to 3300 in the coming days.

Accusing the Fed of remaining “the Pied Piper”, Hartnett writes that a “historic policy shift underway at Fed, willing to let financial assets overshoot to a. stoke employment & wages, b. finance fiscal excess (via YCC & MMT).” He then adds that the “market knows Fed will “intervene” to prevent <1% GT10 which has allowed SPX multiple to break 20x; policy has become more explicit in recent weeks" and while the recent change in Fed policy "is not factor behind sell-off, it will be factor causing dip in SPX to 3300” according to Hartnett.

And while taking note of the current “September wobble”, looking ahead to 2021 Hartnett says that the “recovery = weaker Wall St: Sept’20 volatility and reversal in summer outperformance cyclicals/defensives (see TRAN/UTIL) reflects impatience with delayed U.S. phase IV stimulus at a time of “peak” V-recovery (see offthe-chart global orders/inventories – Chart 5); weak Aug payroll required to settle market nerves; Covid-19 “misery index” is improving (Chart 6) and global consensus forecasts for 2021 are GDP 5.1%, EPS 29.0%; note rare combo of surging stocks & higher VIX in Aug, happens only 1.5% of the time since 1990 – more typical after big market events e.g. LTCM, WorldCom, GFC, Covid-19 (Chart 7) than before.” Well, at least we now know what the reason for the “rare combo” was even if it remains unclear just how it will impact risk prices going forward.

What about a longer-term perspective?

Here, as we have noted in the past, it will be up to inflation to halt the rally in mostly-deflationary assets.

Hartnett agrees and writes that “stocks are toppy and credit has stalled after historic rally” yet with consensus getting bullish – in no small part thanks to his own bank – he “still thinks vaccine, big jobs recovery, disorderly dollar/yield events required for Big Top.”

Here, too, he breaks out the forecast in two parts, notably pre-election where he sees “correction risk/choppy range rising as yields/vol/spreads trough” while longer term the “big picture trends are higher vol, weaker US dollar, allocation to inflation assets in coming quarters as Fed’s deliberate inflation of Wall St mutates via fiscal policy into higher rates, steeper curves.”

The bottom line, is that the market will ultimately “sell the news” of a vaccine, which will ikely be the “big top for credit & stocks and big low for value vs growth.

In terms of portfolio allocation, Hartnett sees the S&P at “3630 pre-election; but choppy, long vol, short $; inequality real estate and stocks”, or summarizing the rest of 2020 “don’t fight the Fed” while in 2021 it becomes “don’t fight inflation…long run contrarian entry point into inflation theme attractive; redistribution of wealth from metro-states to suburbs.”

via ZeroHedge News https://ift.tt/3brv0mM Tyler Durden

“End Of Quote”: Biden Goes Full Ron Burgundy, Accidentally Reads Teleprompter Cues

“End Of Quote”: Biden Goes Full Ron Burgundy, Accidentally Reads Teleprompter Cues

Tyler Durden

Fri, 09/04/2020 – 15:05

Joe Biden engaged in a giant softball game with the press today – perhaps best described by Newsbusters‘ Curtis Houck as not “even putting the ball on the tee. This is hitting the ball over the stands and letting Biden run the bases.

Screenshot via John Gabriel

But before we get the choreographed Q&A, you should know that Biden went full Ron Burgundy today – reading “end of quote” off the teleprompter.

The Friday flub comes just one day after Biden read ‘topline message’ off another teleprompter.

In short, Biden is now having issues with ‘behind the curtain’ media cues.

Meanwhile, check out these softballs:

Nothing about meeting with raging antisemite, Jacob Blake Sr, in the pursuit of more woke points? Nothing about his tax plan that he said his people would ‘shoot me’ for revealing?

Perhaps people will take the press seriously when they start asking serious questions. 

via ZeroHedge News https://ift.tt/2Z7UlNX Tyler Durden

How To Turn A Corporate Credit Crisis Into A Currency Crisis

How To Turn A Corporate Credit Crisis Into A Currency Crisis

Tyler Durden

Fri, 09/04/2020 – 14:55

Authored by MN Gordon via EconomicPrism.com,

Surely, Thursday’s stock market selloff didn’t catch you by surprise…now did it?  Why would it?  After going nearly straight up for the last five months, it’s only natural for there to be a pullback.

This was particularly true for technology stocks.  They’d reached such dizzying heights it was just a matter of time before the thin air got to them.  And get to them it did.  Some of the mania’s favorites, like Apple, Tesla, and Nvida, fainted in unison…dropping 8 percent, 9 percent, and 9.3 percent, respectively.

A company called PagerDuty garnered the honor of the day’s biggest loser.  The San Francisco based company, which operates in the cloud, made a graceful 25.8 percent swan dive from its heavenly realm.

So, what should you do about it?  Should you buy the dip?

As far as we can tell, there’s currently no fundamental reason to buy stocks.  But like a pair of Yeezy sneakers or avocado toast, if buying expensive stocks makes you happy…go for it.  Just realize, we are in the midst of a reckoning.  A great catastrophe is upon us.  What’s more, stocks should be the least of your concern.

Where to begin?

U.S. gross domestic product (GDP) dropped below $20 trillion during second quarter.  But while the economy has slumped, government debt has spiked.  The U.S. national debt’s now over $26.7 trillion.  Of this, the federal debt held by the pubic amounts to over $20.5 trillion.

This is significant for several reasons.  First, the gap between national debt and GDP is widening.  Second, the federal debt held by the public has eclipsed 100 percent of GDP.  This unsettling factoid was presented in a report released this week by the Congressional Budget Office.

To be fair, the CBO report says federal debt held by the public will hit 98 percent of GDP in 2020.  By our back of the napkin calculations, the 100 percent mark was notched in June.  But that’s beside the point.

For the point is, debt ratios near or above 100 percent of GDP severely encumber economic growth.  And if debt’s hampering economic growth, then how can the economy grow its way out of its massive debt?  Quite frankly, it can’t.

Silly Putty

Remember, federal government debt’s just one slice of the overall debt pie.  There’s also corporate debt, consumer debt, and state and local government debt.  Alas, these debt slices are all near or at record levels.

For example, U.S. corporations, following the lead of Uncle Sam, now owe a record $10.5 trillion to creditors, either in the form of bonds or loans.  This pile of debt is over half of U.S. GDP.  Like the national debt, corporate debt has also outpaced economic growth.

According to a new BofA Global Research report, corporate debt of $10.5 trillion represents a 30-fold increase from a half-century ago.  Yet, over the past 50 years, U.S. GDP has only increased about 20-fold.  Can corporate debt, in relation to the economy, continue in this fashion?

Well, not if the economy and financial system were supported by sound money.  If this were the case, interest rates would have spiked and debt levels would have collapsed long ago.  But what we have is the opposite of sound money.  Rather, we have debt based fake money (i.e. government fiat) where the supply can be pulled and stretched out like Silly Putty.

Of course, the Federal Reserve takes an active role in stretching the money supply.  In doing so, the Fed promotes debt levels that would have otherwise been impossible.  By stretching the money supply, the Fed also promotes malinvestment into business activities that would have otherwise been unprofitable.

Since the early 1980s, for instance, the Fed has generally nudged interest rates lower and lower.  Each time, as borrowing costs fall, U.S. companies issue a flood of fresh debt.  Cheaper and cheaper credit has the effect of papering over the poor decisions of corporate managers.  The ultimate debt load grows, but the short term debt burden is lightened.

How to Turn a Corporate Credit Crisis into a Currency Crisis

The mechanics of persistently falling yields (as yields move inversely to price) over several decades have also acted to inflate a massive bond bubble.  The demand for corporate bonds come from a variety of sources.  These mainly include foreign investors, investment funds (i.e. mutual funds, ETFs, and closed end funds), life insurance companies, and pension funds.

Yet, now, with corporate debt levels greater than half of GDP, the quality of corporate bonds appears to be slipping.  Roughly $7.2 trillion of the $10.5 trillion in corporate debt is investment-grade, meaning of a credit rating of AAA to BBB.  However, about half of the investment-grade corporate debt, or $3.6 trillion, falls within the BBB credit-ratings category, just one notch above junk.

A stagnating economy resulting in a deluge of BBB downgrades by credit-rating firms could overwhelm the much smaller junk-bond market.  We suspect, as the long-term consequences of government lockdown orders work their way through the economy, the credit ratings of many companies will suffer.

Of course, a determined Fed can take it upon itself to turn a giant mess into a fatal disaster.  That is, the Fed can turn a corporate credit crisis into a currency crisis.

If you recall, the CARES Act pushed the Fed into the corporate debt buying business for the first time ever.  In late-June and early-July, the Fed bought the bonds of some of the world’s largest corporations.  Companies like Toyota, AT&T, Apple, Verizon, GE, Ford, Microsoft, GM, CVS Health, and many, many, more.

We suspect this was merely a warm up.  A trial run.  When the time comes, the Fed will stretch the money supply like Silly Putty in an attempt to backstop the $10.5 trillion corporate bond market.  The value of the dollar will be eroded in kind.

via ZeroHedge News https://ift.tt/3hZukaZ Tyler Durden