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With trader attention turning to Friday’s May jobs report, where consensus expects an 8 million increase in unemployment after April’s record 20 million, we took a closer look at which industries are set to report the biggest job losses.

To do that, we looked at the weekly initial jobless claims report where many states release claims on an industry level, which as BofA writes, can be used to think about how national payrolls will evolve. While initial claims only reflect outflows, they are still a crucial component for the net job growth trajectory and therefore useful as a leading signal according to BofA’s economists. As a result, collecting and aggregating these data allows to create proxies that provide a read on national conditions.

To extrapolate the bigger picture, the bank calculates the % change in cumulative initial claims for each industry during the relevant weeks for the April and May jobs reports, apply that to April payroll growth, and then scales to the total NFP forecast of -8.0 million. The exercise suggests that job losses in accommodation & food services-the most pandemic-sensitive sector-could be in the 2.5mn range in May, bringing three month total losses to 9.3mn. Meanwhile, we could see more than 500k job losses in each of the retail trade, healthcare / social assistance, administrative/support services, arts/entertainment/recreation, and public administration sectors. While not scientific, as these remain rough estimates, the table below helps give a sense of the magnitude of the pain that each sector could experience in Friday’s report.

In addition to the aggregate level data, the weekly trajectory of these industry claims data are also insightful.

For most of the sectors, initial claims follow the broad trend of a peaking in early April followed by a gradual decline. However, initial claims are trending sideways in professional /scientific / technical services and management of companies/enterprises – two of the major sub-sectors of professional/business services. Even worse, initial claims are rising and reaching new highs in the educational services, information, finance / insurance, and public administration sectors. Thus, in several sectors we are not seeing improvement, which according to BofA “argues for more persistent labor pain and a more delayed recovery.”

So what will the recovery look like?

According to BofA’s Alex Lin, as states are gradually re-opening, focus is shifting towards what kind of recovery we can expect. A key question will be how many laid off workers will be rehired? At this stage, consumer expectations remain optimistic- an April 27-May 4 Washington Post/Ipsos poll found that 77% of laid off workers expect to hired back to their old job. However, the reality may prove grimmer given such an uncertain outlook. A vaccine for the virus may still be two years away, and businesses cannot discount the risk of another wave of infections as the economy reopens, which would slow the economy.  Meanwhile, a recent paper by Barrero, Bloom, and Davis argue that 42% of jobs lost will be permanent which would be a concerning outcome.

Health officials have confirmed a second Ebola outbreak in Congo, the World Health Organization said Monday, adding yet another health crisis for a country already battling COVID-19 and the world’s largest measles outbreak, according to the AP. Congo also has yet to declare an official end to Ebola in its troubled east, where at least 2,243 people have died since an epidemic began there in August 2018.

The United Nations Children’s Fund said that five people, including a 15-year-old girl, have died of Ebola in a fresh outbreak of the virus in the Democratic Republic of Congo; a total of nine cases total have been reported.

“Four additional people who contracted the virus – all contacts of the deceased and including the child of one of the fatal cases – are being treated in an isolation unit at the Wangata Hospital in Mbandaka,” UNICEF said in a statement. “The deaths occurred between the 18th and 30th of May but they were only confirmed as Ebola-related yesterday.”

The country’s Health Minister Eteni Longondo confirmed that “There are already four deaths and four suspected cases” who are still alive.

Earlier on Monday, embattled WHO Director-General and and Chinese PR spin guru Tedros Adhanom Ghebreyesus tweeted news that six cases had been reported in Mbandaka, in the country’s northwest Equateur province. It’s the country’s 11th outbreak of the potentially deadly virus, which is passed by bodily fluids and has a fatality rate of anywhere between 25% and 90%, depending on the outbreak.

The Democratic Republic of Congo has still been struggling to end an outbreak that started in 2018 in the eastern part of the country, in which 3,406 cases have been reported, with 2,243 deaths, according to WHO. There has not been a new case in the past 21 days in that outbreak and since Ebola has a 21-day incubation period, that particular outbreak may be under control but WHO waits for two full incubation periods, or 42 days, to be sure before determining that an outbreak has ended.

“The announcement comes as a long, difficult and complex Ebola outbreak in eastern Democratic Republic of the Congo is in its final phase, while the country also battles COVID-19 and the world’s largest measles outbreak,” WHO said in a statement. The central African country has reported 3,195 cases of coronavirus and 72 deaths. By far the worst epidemic affecting the DRC is measles, which has infected nearly 370,000 people and killed 6,779 since 2019.

The Ebola virus lives in bats, and WHO says new outbreaks can be expected in the Democratic Republic of Congo. By far the largest epidemic of Ebola was in 2014-2016 in the West African countries of Liberia, Sierra Leone and Guinea. More than 28,000 people were infected in that epidemic and more than 11,000 of them died.

If that wasn’t enough, Covid-19 already has touched 7 of Congo’s 25 provinces, with more than 3,000 confirmed cases and 72 deaths. However, like many African countries Congo has conducted extremely limited testing, and observers fear the true toll may be far higher.

There’s more: while Ebola and COVID-19 have drawn far more international attention, measles has killed more Congolese than those diseases combined. WHO said there have been 369,520 measles cases and 6,779 deaths since 2019.

“This quadruple threat could prove lethal for millions of children and their families,” said Anne-Marie Connor, national director in Congo for the aid organization World Vision.

Authored by Tom Bevan via RealClearPolitics.com,

I’ve been in the news business for over 20 years now, and among the many things I’ve learned about how the media complex operates is this: One of the favorite tricks journalists and politicians use to control the focus of viewers and push the media’s preferred narrative is to label other stories as “distractions.”

This is especially true when it comes to President Trump. In the recent past, most mainstream media outlets have been obsessed with the pandemic, and his leadership during this crisis. That is certainly understandable. In some ways, it’s the biggest news story in a generation, with a large death toll and global implications about governmental control over the economy, international relations, and the very idea of life-sustaining social interactions between human beings.

But it’s not the only story. And this is where the sleight of hand comes in. Among Democrats and many liberal journalists, it is an article of faith that Trump’s handling of the pandemic has been a disaster. Keeping the focus on Trump’s failures has become a priority. In this framework, anything the president does or says that is not related to the pandemic is labeled a “distraction.”

Nancy Pelosi played this card yesterday, responding to a question about Trump’s proposed crackdown on social media companies.

“I think it’s just typical President Trump,” said the House speaker.

“A distraction. More than 100,000 people have died from the coronavirus. This administration has been a failure in terms of what we’re doing testing, tracing, treating and isolating people. The president has been a terrible example of not wearing a mask, and belittling those who do. So anything he does is a distraction from the problem at hand.”

Just a few weeks ago, any discussion of the troubling Justice Department treatment  of Lt. Gen. Michael Flynn was declared a “distraction” by a flurry of reporters and media outlets. CNN has been particularly fond of the “distraction” theme in recent weeks, as you can see from the following headlines:

“10 things Trump would like to distract you from focusing on” 

“Trump and right-wing media distract from bad virus news with alternate reality” 

“Trump goes on wild tweetstorm to distract from Fauci testimony”  

Notice that when Trump tweets or comments about a subject or story that the media approves of, such as he did with the George Floyd case Thursday, it’s never labeled a distraction. Only stories on subjects in which the press disagrees with the administration earn the “distraction” distinction.  

If this feels familiar, that’s because it’s been going on since the day Trump took office. From the beginning of his presidency, as the Russia collusion stories began peppering the landscape, journalists and Democrats used the technique to make sure audiences stayed focused on what they believed was the most important story in history: the Trump campaign’s supposed collusion with Vladimir Putin. 

Over the last three years media outlets have dismissed dozens of presidential statements and initiatives as efforts by Trump to distract the public from the Russia collusion story or special prosecutor Robert Mueller’s investigation, including tweeting about Iran, pulling John Brennan’s security clearance, starting a cold war with China, meeting with Kim Jong-Un, and even slapping tariffs on Mexico.  

The collusion story turned out to be false. So what exactly was Trump trying to distract you from? The answer is he wasn’t.  

Donald Trump is, by his very nature, an outrageous, impulsive, torrential news-making machine. He seemingly tweets about every thought that enters his head, from consequential policy pronouncements to strange conspiracy theories and petty schoolyard taunts. But it’s up to you, the citizens and voters, and not the media gatekeepers, to decide what is a “distraction” and what isn’t.  

Authored by Mac Slavo via SHTFplan.com,

The one good thing to come out of the COVID-19 panic is the increasing awareness of the general public.  The scamdemic has exposed the futility of most rules, laws, and regulations, as people have found out they don’t have to obey any ruler or politician because they were born free.

Regulations that needlessly restrict liberty, reduce innovation, and reduce Americans’ access to care are being suspended all over the country, and not because politicians woke up and decided to cede some power.  Instead, Americans have decided to disobey the laws into nonexistence. People are finally figuring out that ink on paper cannot control them useless they allow it to.  Since March, Isabelle Morales of Townhall has compiled over500 such examples of regulations that are nothing more than commands to the people the government wants to enslave. These regulations are being suspended in order to provide relief for care providers, hospitals, businesses, and citizens during the coronavirus plandemic.

Governors and other politicians recognize that the mere enforcement of these rules and laws places a heavy burden on some of the most important markets in the United States. Hence, their suspension is deemed necessary in these times of hardship. Ultimately, none of these regulations should have been created in the first place. Under other circumstances, the effects of these regulations go unnoticed because the strength of the market covers the government’s tracks. –Isabelle Morales of Townhall

Often, the markets will survive in spite of regulations, however, people are beginning to realize these rules were not created in their best interest, but in the interest of the state. Once people disobey in larger numbers, they will fully awaken to the fact that they’ve been controlled for their entire lives.  The fact that these regulations should have never been created in the first place, is a moot point. What’s important is that people are finally realizing that the government isn’t there to help them and protect them. It’s there to control and manipulate them, with the help of the mainstream media, of course.

The only way out of this has always been, and will always be civil disobedience. It doesn’t matter how many rules, laws, or regulations, the government creates or eliminates because free people operate solely on their own morality. Free people already know they have no obligation to obey a command, especially ones that violate their individual God-given human rights.

One of the bedrocks of modern US capitalism – which is now mutating by the day if not hour as the Fed scrambles to preserve at any cost its the towering edifice after decades of malinvestment, even the nationalziation of the very capital markets that made America great – and one of the constants along with death and taxes, is that residential debt is non-recourse, meaning one can simply walk away from one’s mortgage if the bill is untenable, while commercial debt is recourse, or pledged by collateral that has to be handed over to the creditor if an event of default occurs.

However, in the aftermath of the sheer devastation unleashed upon countless small and medium commercial businesses which will be forced to file for bankruptcy by the thousands, this may all change soon.

As the Commercial Observer reports, last Friday, the California Senate Judiciary Committee advanced a bill that would allow small businesses — like cafes, restaurants and bars — to renegotiate and modify lease deals if they have been impacted by shelter-in-place orders and economic shutdowns. If an agreement isn’t reached after 30 days of negotiations, the tenant can break the lease with no penalty, effectively starting a revolution in the world of credit by retroactively transforming commercial loans into non-recourse debt.

Landlord advocates have, predictably, been mobilizing in opposition, arguing that the proposal is unconstitutional, and that it would “upend” leases around the state. Justin Thompson, a real estate partner with Nixon Peabody, told Commercial Observer that it was illuminating to see so many industry organizations come out “so vehemently opposed” in a short period of time. Having heard from industry groups all week, Thompson said the general consensus in the commercial real estate community is that the bill is “overly broad, overreaching, and it is a bit of a sledgehammer” when something less blunt would do.

“Everyone recognizes that restaurant tenants and smaller non-franchise retail tenants in particular really are in dire straits and in need of assistance,” Thompson said. “But I think the implications of SB 939 are really laying it at the feet of landlords, and putting them in the situation where, even if they have tenants that were going to make it through this, they might now rethink that and leave the landlord in the lurch.”

Senate Bill 939 was initially introduced as a statewide moratorium that would prohibit landlords from evicting businesses and nonprofits that can’t pay rent during the coronavirus emergency. But it was amended in the week to also give smaller businesses the ability to trigger renegotiations if they have lost more than 40 percent of their revenue due to emergency government restrictions, and if they will be operating with stricter capacity limits due to continued social distancing mandates.

If the parties do not reach a “mutually satisfactory agreement” within 30 days after the landlord received the negotiation notice, then the tenant can terminate the lease without liability for future rent, fees, or costs that otherwise would have been due under the lease.

One of the bill’s authors, Sen. Scott Wiener, said during the hearing that the bill is focused on the hospitality sector, which has been most devastated. The renegotiation provision will not apply to publicly owned companies or their businesses. The law would be in effect until the end of 2021, or two months after the state of emergency ends, whichever is later.

Quoted by the Commercial Observer, Wiener argued that the state faces “a mass extinction event of small businesses and nonprofits in every neighborhood,” and the “very real prospect” of them permanently closing due to prolonged mandates that reduce capacity, “chopping in half someone’s business.”

“This would change the face of our state permanently,” he said. “It would severely hamper our ability to recover.”

And while not everyone shares this view, most seem to agree on one thing: one way or another California is screwed. Matthew Hargrove, senior VP of government relations for the California Business Properties Association (CBPA), wrote a letter to the committee saying SB 939 “could cause a financial collapse.”

So, the choice facing California is either a “mass extinction event of small businesses” or “financial collapse.” Sounds about right.

* * *

“This postponement of rents will cause … landlord’s financials to crumble and lead to lenders putting out cash calls to lower loan balance and foreclose when landlords cannot pay, and cripple landlords’ abilities to keep their properties open and maintained,” the letter read. CBPA also argued it is unconstitutional for a state to pass a law impairing the obligation to contracts, and warned it would “allow one party to unilaterally abrogate real estate leasing contracts.”

CBPA is the designated legislative advocate in California for the International Council of Shopping Centers, the California Chapters of the Commercial Real Estate Development Association, the Building Owners and Managers Association of California, the National Association of Real Estate Investment Trusts, AIR Commercial Real Estate Association, and others. Those groups also warned members and clients about the bill, and voiced opposition during the hearing on Friday.

Thompson added that the bill risks crushing foundational landlord-tenant relationships throughout the state. Worse, if it passes in California and is adopted in other states across the country, the very foundations of modern finance would be shaken resulting in catastrophic consequences.

“Everything we do, especially in real estate, runs on relationships,” he said. “I think that when you tip the balance so far in favor of the tenant the way that [SB 939] does, it certainly strikes at the heart of the idea that we are in this together. … This does not make it feel like landlords and tenants are in this together anymore.”

The law firm Buchalter, which has offices in L.A., Orange County, San Francisco and around the West Coast, warned clients that the bill sets a “terrible precedent” that will “upend all your leases.”

“The rights afforded under SB 939 would effectively rewrite every commercial lease in California” other than publicly traded companies, the firm said. It “negates all current commercial leases to the benefit of one business over another.” 

Instead, Buchalter said the state should provide assistance to tenants impacted by the stay-at-home orders, and pointed to the “more reasonable” renter relief proposals introduced by Senate Pro Tem Toni Atkins

Wiener said they are sensitive to the needs of property owners in terms of their loan obligations. 

“It’s a complicated issue. We don’t want these property owners to default on their loans,” he said. “But we also need to be clear: these landlords aren’t going to be able to collect the pre-COVID rents from these restaurants, bars and cafes. That is not the reality. The choice is not between full rent and reduced rent. The choice is between reduced rent and no rent.”

He argued current leases negotiated before the pandemic reflect a “different financial reality.”

“Restaurants, bars, and cafes are expected, frankly, to just suck it up, and magically come up with the high rent that was obtained in pre-COVID circumstances,” he said. “This provision is not for leases to be terminated. It is to provide space and incentive to actually get the renegotiation done. … We know that overwhelmingly, these businesses don’t want to close down. This is their life’s work, they want to find a way to survive.”

Wiener said many commercial landlords are already working with renters, waiving backrents, and restructuring leases.

“It’s not in anyone’s interest where the landlord gets no revenue,” he said. “Sadly, on the other hand, all too many commercial landlords are refusing to renegotiate; are insisting that the pre-COVID, unrealistic rent be paid; are invoking lease-rent escalators; are imposing late fees on backrent. That is happening all over the state.”

During a press conference Thursday, Roberta Economidis, a partner with GE Law Group hospitality law practice, said that in order to survive, “hospitality-related businesses need long-term rent relief, not simply a deferral of high rents now that will become an insurmountable debt later.”

Governor Gavin Newsom already gave local governments authority to halt commercial evictions, and some cities like San Francisco and Los Angeles quickly did so. But SB 939 would cover all California businesses and nonprofits from eviction, whether their local jurisdictions have acted to do so or not.

SB 939 will be heard in the Senate Appropriations Committee this month; if passed it will trigger the next wave of devastation in the commercial real estate space.

Most people who haven’t worked in the financial services industry probably wouldn’t understand the distinction between being a ‘hedge fund analyst’ and a ‘hedge fund trader’. But the two rolls are completely different. And while one of them – the analyst – might benefit from a shift in skill-set preferences and the ongoing retrenchment in sell-side research shops, the other – the trader – is increasingly seeing their jobs outsourced to a handful of major sell-side players who are offering a new service effectively allowing clients (ie counterparties whom these banks are also trading against) to outsource trading operations.

And according to a Monday report published by Bloomberg, the coronavirus outbrek is reportedly accelerating this shift toward ‘outsourced’ trading roles in the hedge fund world.

At this point, only the largest hedge funds even bother to build their own in-house operations. Staffing at smaller and boutique shops is typically no frills: limited to only a small team of analysts and maybe some researchers, led by a portfolio manager or two (or more). This is intentional: it allows star PMs to hog those juicy fees.

But in the age of COVID, even the bigger shops are outsourcing, and smaller firms are expanding their use of these services, as wealthy investors demand that money managers keep one eye on the exit at all times. Recent crashes of retail platforms like Robinhood and Charles Schwab are worrying reminders about what can happen to retail investors when a real market panic gets going.

Here’s more on the trend from BBG:

As the pandemic unleashes unprecedented operational risks, asset managers are joining peers who have flocked to these services in recent years to keep up with new technologies and to cut costs — while liquidity gets ever-more fragmented.

Among the more established names, Outset Global LLP says its client list has grown 45% in the year through April. Tora Trading Services Ltd. says sales increased 105% in the first three months of the year from the prior period, as existing clients expanded usage and new ones signed on. Tourmaline Partners LLC, an outsourcing firm based in Stamford, Connecticut, just clinched a majority investment from a private equity firm that will help expansion plans.

While smaller firms often outsource all of these responsibilities to their prime brokers, larger firms with in-house operations are increasingly outsourcing more to these upstart shops and established players.

At this point, some of you might be wondering: what’s the difference between offering prime brokerage services, and trading services? These trading operations don’t just execute buy and sell orders; the services they offer are often so comprehensive, they can allow clients to “set it and forget it” – leaving specific instructions with traders to execute in Asian or European hours while traders in New York are asleep – or vice versa.

It’s part of a broader shift in trading that has allowed greater levels of automation to creep into the market. Even if you’re skilled enough to program your own trading algorithms, wouldn’t you sleep better knowing a human was somewhere nearby, keeping one eye on the tape?

While some smaller funds opt to outsource entirely, many larger managers use such services to supplement their own operations, like buying and selling Asian stocks when their traders in New York are asleep.

Unlike agency or prime broking, outsourced players conduct relationships with the sell side on behalf of the client and offer more comprehensive services including monitoring exposures and providing market color.

“It does appear there has been increased interest in outsourced trading,” said Shane Swanson, an analyst at consultancy Greenwich Associates. “That does go hand-in-hand with the explosion in technology we’ve seen across the past 10, 15 years — in particular in how that has been utilized as part of this response to the Covid crisis.”

He calls the recent turmoil a “proof of concept” for outsourcing for a host of new managers.

Market analytics firms told BBG that some of the biggest players in this space – Cantor Fitzgerald and Jeffries – have seen their trading businesses expand by more than 45% over the last year.

Outsourced traders essentially act as a middleman between the buy side and sell side in handling trading flows. Some outsourced trading divisions are run inside bigger financial services firms, like Jefferies Financial Group Inc., while others operate as small, standalone shops. Their pitch to asset managers: Ensuring best execution with an extensive network of brokerages and high-speed technology, which can be expensive for smaller funds to maintain on their own.

“We’ve seen folks add our outsourced trading team just to be able to say that they have systems in place and a set-up in place should their traders get sick with Covid,” said Bobby Croswell, head of U.S. outsourced trading at Cowen Inc. The firm’s outsourcing revenue more than doubled in the first quarter compared with the same period in 2019.

Volatility has undoubtedly accelerated this trend, which is widely expected to continue.

On the subject of whether this trend is a waste of money, or an overreaction to the recent shock selloff, we suspect all the 20- and 30-something year-old traders running the market these days could probably use a little hand-holding. As far as market stability is concerned, it’s probably not a bad thing.

In other new, Bloomberg says, stock market participants want a reduction in the world’s longest trading hours, which they say can improve liquidity and industry diversity, according to the results of a London Stock Exchange survey.

Authored by Turner Wright via CoinTelegraph.com,

Updating its popular BTC price model, crypto analyst PlanB predicts the cryptocurrency could see a rally to $100K by 2021.

image courtesy of CoinTelegraph

Crypto analyst PlanB released a key indicator for its stock-to-flow price prediction model which could signal a Bitcoin bull run to $100,000 by 2021 has just begun.

PlanB confirmed on Twitter on May 31 that the red dot — indicating a price increase — was now present in its stock-to-flow (S2F) model, a price prediction model for Bitcoin (BTC).

#Bitcoin S2F chart update .. RED DOT RELEASED!!! pic.twitter.com/iNTjbf9b9K

— PlanB🔴 (@100trillionUSD) May 31, 2020

The S2F model treats BTC as a commodity like gold or silver, evaluating the existing supply of the cryptocurrency against the amount mined. 

Though many have predicted BTC bullish behavior in the wake of the May 11 rewards halving, PlanB’s model marks when a run would occur with a red dot. Under this model, the chart shows a BTC price of $100,000 by the end of 2021. 

Stock-to-flow model

Cointelegraph reported in April that PlanB had used its new cross-asset S2F model — S2FX — to predict a BTC price of $288,000 by 2024. Crypto analyst Harold Christopher Burger used the same data to forecast a rally to $1 million by 2025.

The S2F model does have its detractors. Ethereum co-founder Vitalik Buterin has expressed some reservations about stock-to-flow, calling it part of the 95% of crypto articles that are “post-hoc rationalized bullshit.”

As of this writing, BTC is priced in the $9,400s, having fallen 2% in the last 24 hours.

US auto sales are expected to continue their historic plunge in May, further pressuring an industry that is on the brink of all out collapse due to the pandemic lockdowns, plunging used car prices and suffering from a pre-virus recessionary environment.

Sales figures for May are expected to fall 33% to just 1.05 million units, according to Cox Automotive and CNBC. Even worse, data from Bank of America indicates that demand for new vehicles could be dropping off a cliff at the same time the industry is getting ready to ramp up production again. 

The numbers show a sequential improvement from April, but still offer an ominous outlook for the auto industry heading into the second half of 2020. Cox Automotive estimates the pace for U.S. car sales to be about 11.4 million units sold by the end of the year, which would make 2020 the worst year for car sales since 2009. These numbers compare to 17.4 million cars sold in 2019. 

And it may not be because drivers are staying home anymore. Bank of America data from gas stations shows that drivers are back on the road again. “We estimate that gas consumption (in gallons) was still down about 30% YoY in April, but improved to -14% for the week ending May 23rd (latest available),” the bank wrote in a May 29 note. 

May’s numbers are in focus since the month kicks off summer sales season, traditionally the point in the year when dealers try to move inventory to make room for new models. Last weekend, some dealers offered incentives like 0% financing and 84 month financing offers to try and entice buyers into showrooms. 

Some of the most generous incentives, offered around the time the virus started, are already being roped in as sales dead-cat bounce off their 2020 monthly lows. Auto analysts are blaming a lack of readily available inventory for the drop in sales, which is hilarious since the country is suffering from an unprecedented glut. 

“At a minimum, selection may become more limited as the desired model may be in stock but not in the consumer’s preferred color or trim, potentially resulting in the consumer delaying purchase, switching brands, or moving into the used-vehicle market,” Cox Automotive explains.

Jessica Caldwell, Edmunds’ executive director of insights, said: “We can safely say that April was the bottom for auto sales during the coronavirus pandemic. There’s still a long road to recovery ahead, but May auto sales are a really encouraging sign for the industry.”

But experts that are sure the bottom is in are focused on manufacturing without any regard as to whether or not demand is going to pick up. 

Thomas King, president of the data and analytics division and chief product officer at J.D. Power, said Thursday: “The good news is that in general manufacturing is restarting. Even with our diminished sales pace, we are still in an environment where the industry is selling more vehicles than it produces.”

With manufacturing picking up, we’ll see how long that lasts. Meanwhile, Bank of America notes that spending in auto parts is ramping up, indicating that OEM demand could be slipping as car owners may be more inclined to fix their current cars instead of buying new ones. 

The bank thinks that many Americans spend their stimulus checks on fixing their cars:

“This data remained weak in the first two weeks of April, but took a sharp uptick in mid-April as stimulus checks began to reach US consumers. This benefit has lingered since mid-April, and auto parts demand now has additional support from increased driving activity as US markets begin to reopen for business. Daily auto parts spending was up approximately 23% YoY on average during the week ending May 23rd (latest available) according to the aggregated card data.”

The industry is expected to have a lost a total of 1.2 million to 1.6 million total sales as a result of the pandemic. 

King concluded: “Many of those will be recovered in the future, but some of them will be lost. Many consumers have lost the accountability to purchase a new vehicle or no longer need one because they no longer commuting to work.” 

We’ll take the “under”…

Authored by Eric Peters, CIO of One River Asset Management

“Protests are being manipulated by domestic terrorists and international forces trying to destabilize the nation,” declared Minnesota Governor Waltz, calling out the National Guard. George Floyd’s video raced through social media, and for an instant, America mourned in collective outrage.

But no sooner had protests begun, then violence started. Waltz said white supremacists and drug cartels were responsible. Many believe that’s true.

Trump tweeted, “It’s Antifa and the Radical Left.” Others believe that’s true. Some believe both. A few believe none of it.

There are as many truths today as there are tribes. “Everything we do is focused on creating an environment in which people will have their best chance to keep their job or maybe get a new one,” explained Jerome Powell.

“Fed policies absolutely don’t add to inequality,” continued the Chairman. And some think that’s true. Many others believe the opposite. And each tribe finds ample supporting studies to support their respective realities, while unemployment claims surpassed 40mm (1-in-4 workers) and the S&P 500 completed a 36% rally from the lows.

“Mr. President don’t hide behind the Secret Service. Go talk to demonstrators seriously. Negotiate with them, just like you urged Beijing to talk to Hong Kong rioters,” taunted Hu Xijin, editor-in-chief for the Global Times, a Chinese government-controlled paper.

Some of China’s 1.4bln citizens see a moral equivalent between HK/US protestors, while others just as clearly don’t. And as images of American riots captivated the world, Beijing imposed a national security law on Hong Kong, protests erupted, hundreds were arrested.

China denounced Taiwan’s offer to resettle HK citizens, saying it was seeking to “loot a burning house” and sow discord. “Bringing black, violent forces into Taiwan will bring disaster to Taiwan’s people,” warned Beijing. And as Xi Jinping told his military officers “to step up preparations for armed combat,” some thought this was true.

* * *

Anecdote

“Nothing is so painful to the human mind as a great and sudden change,” wrote Mary Shelley in 1818, exploring our humanity through her hideous creation, Frankenstein. And ever since, we’ve leapt from one change to the next, those periods in between marked by an eerie calm that we desperately embrace, mistaking stability for reality.

“We’ll continue to point out incorrect or disputed information about elections globally, and we will admit to and own any mistakes we make,” declared Jack Dorsey, Twitter CEO, tormented by the staggering consequences of his creation. Social media has emerged as the principal battleground for what will surely be the most bitterly contested presidential election in modern American history. And this will likely be followed by a constitutional crisis in a devastatingly divided nation.

Misunderstanding our own nature, we convinced ourselves the internet would be a force for unambiguous good, connecting humanity to a singular truth, inoculating us from our lies. But instead, our reality splintered into a million dimensions.

Truth has died, replaced by a widening range of alternative realities, each one as vivid as the next to its inhabitants. So Dorsey is in search of something that no longer lives. His reality is another’s fantasy, as sure as the sky is blue, and those who would defend one, by definition, threaten the other.

“Internet platforms are not arbiters of truth,” declared Mark Zuckerberg, defending his hideous creature from the villagers, their pitchforks. And no doubt, few would want to inhabit a world where Zuckerberg defined reality.

“I have love in me the likes of which you can scarcely imagine and rage the likes of which you would not believe. If I cannot satisfy the one, I will indulge the other,” warned Frankenstein, Shelley’s eternal monster, alive within us all. And we are left to ponder a paradox as the consequences of this great and sudden change become manifest. To whom will we entrust the truth now that it no longer exists?