Managing editor, Ed Harrison, joins managing editor, Roger Hirst, to discuss the latest developments in markets, macro, and coronavirus. They talk through why US equities are still not suffering even though the real economic data demonstrates an increasingly bleaker picture. In light of that, Harrison and Hirst break down what lessons to draw from this investing environment. In the intro, Real Vision’s Jack Farley looks at the continued strain on employment in the airline and tech industries.
via ZeroHedge News https://ift.tt/2M8A6Zs Tyler Durden
For all the passion it has unleashed, President Trump’s executive order on section 230 of the Communications Decency Act is pretty modest in impact. It doesn’t do anything to undermine the part of section 230 that protects social media from liability for the things that its users say. That’s paragraph (1) of section 230(b), and the order practically ignores it.
Instead, the order is all about paragraph (2), which protects platforms from liability when they remove or restrict certain content: “No provider or user of an interactive computer service shall be held liable on account of … any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.”
This makes some sense in terms of the President’s grievance. He isn’t objecting to Twitter’s willingness to give a platform to people he disagrees with. He objects to Twitter’s decision to cordon off his speech with a fact-check warning, as well as all the other occasions on which Twitter and other social media platforms have taken action against conservative speech. So it makes sense for him to focus on the provision that seems to immunize biased and pretextual decisions to downgrade viewpoints unpopular in the Valley.
(I note here that the existence of a liberal bias in the application of social media content mediation is heavily contested, especially by commentators on the left. They point out, correctly, that the evidence of a left-leaning bias is anecdotal and subjective. Of course the same could be said of left-leaning bias in media outlets like the Washington Post or the New York Times. I’m friends with many reporters who deny such a bias exists. Yet most readers of these and other traditional media recognize that there is bias at work there—rarely reporting the facts, but often in deciding which stories are newsworthy, or how the facts are presented, or past events are summarized. If you are sure there’s no bias at work in the mainstream press, then I can’t persuade you that the same dynamic is at work on social media’s content moderation teams. But if you have seen even a glimmer of liberal bias in the New York Times, you might ask yourself why there would be less in the decisions of Silicon Valley’s content police, whose decisions are often made in secret by unaccountable young people who have not been inculcated in a journalistic ethic of objectivity.)
What’s interesting and useful in the order’s focus on content derogation is that it addresses precisely the claim that anticonservative bias isn’t real. For it is aimed at bringing speech suppression decisions into the light, where we can all evaluate them.
In fact, that’s pretty much all it’s aimed at. The order really only has two and a half substantive provisions, and they’re all designed to increase the transparency of takedown decisions.
The first provision tells NTIA (the executive branch’s liaison to the FCC) to suggest a rulemaking to the FCC. The purpose of the rule is to spell out what it means for the tech giants to carry out their takedown policies “in good faith.” The order makes clear the President’s view that takedowns are not “taken in good faith if they are “deceptive, pretextual, or inconsistent with a provider’s terms of service” or if they are “the result of inadequate notice, the product of unreasoned explanation, or [undertaken] without a meaningful opportunity to be heard.” This is not a Fairness Doctrine for the internet; it doesn’t mandate that social media show balance in their moderation policies. It is closer to a Due Process Clause for the platforms. They may not announce a neutral rule and then apply it pretextually. And the platforms can’t ignore the speech interests of their users by refusing to give users even notice and an opportunity to be heard when their speech is suppressed.
The second substantive provision is similar. It asks the FTC, which has a century of practice disciplining the deceptive and unfair practices of private companies, to examine social media takedown decisions through that lens. The FTC is encouraged (as an independent agency it can’t be told) to determine whether entities relying on section 230 “restrict speech in ways that do not align with those entities’ public representations about those practices.”
(The remaining provision is an exercise of the President’s sweeping power to impose conditions on federal contracting. It tells federal agencies to take into account the “viewpoint-based speech restrictions imposed by each online platform” in deciding whether the platform is an “appropriate” place for the government to post its own speech. It’s hard to argue with that provision in the abstract. Federal agencies have no business advertising on, say, Pornhub. In application, of course, there are plenty of improper or unconstitutional ways the policy could play out. But as a vehicle for government censorship it lacks teeth; one doubts that the business side of these companies cares how many federal agencies maintain their own Facebook pages or Twitter accounts. And in any event, we’ll have time to evaluate this sidecar provision when it is actually applied.)
That’s it. The order calls on social media platforms to explain their speech suppression policies and then to apply them honestly. It asks them to provide notice, a fair hearing, and an explanation to users who think they’ve been treated unfairly or worse by particular moderators.
I’ve had many conversations with participants in the debate over the risks arising from social media’s sudden control of what ordinary Americans (or Brazilians or Germans) can say to their friends and neighbors about the issues of the day. That is a remarkable and troubling development for those of us who hoped the internet would bring a flowering of views free from the intermediation of traditional sources. But you don’t have to be a conservative to worry about how this unprecedented power could be abused.
In another context, I have offered a rule of thumb for evaluating new technology: You don’t really know how evil a technology can be until the engineers who depend on it for employment begin to fear for their jobs. Today, social media’s power is treated by the companies themselves as a modest side benefit of their astounding rise to riches; they can stamp out views they hate as a side gig while tending to the real business of extending their reach and revenue. But every one of us should wonder, “How they will use that power when the ride ends and their jobs are at risk?” And, more to the point, “How will we discover what they’ve done?”
Such questions explain why even those who don’t lean to the right think that the companies’ control of our discourse needs more scrutiny. There are no easy ways to discipline the power of Big Tech in a country that has a first amendment, but the answer most observers offer is more transparency.
We need, in short, to know more about when and how and why the big platforms decide to suppress our speech.
This executive order is a good first step toward finding out.
from Latest – Reason.com https://ift.tt/2AfB9UI
via IFTTT
For all the passion it has unleashed, President Trump’s executive order on section 230 of the Communications Decency Act is pretty modest in impact. It doesn’t do anything to undermine the part of section 230 that protects social media from liability for the things that its users say. That’s paragraph (1) of section 230(b), and the order practically ignores it.
Instead, the order is all about paragraph (2), which protects platforms from liability when they remove or restrict certain content: “No provider or user of an interactive computer service shall be held liable on account of … any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.”
This makes some sense in terms of the President’s grievance. He isn’t objecting to Twitter’s willingness to give a platform to people he disagrees with. He objects to Twitter’s decision to cordon off his speech with a fact-check warning, as well as all the other occasions on which Twitter and other social media platforms have taken action against conservative speech. So it makes sense for him to focus on the provision that seems to immunize biased and pretextual decisions to downgrade viewpoints unpopular in the Valley.
(I note here that the existence of a liberal bias in the application of social media content mediation is heavily contested, especially by commentators on the left. They point out, correctly, that the evidence of a left-leaning bias is anecdotal and subjective. Of course the same could be said of left-leaning bias in media outlets like the Washington Post or the New York Times. I’m friends with many reporters who deny such a bias exists. Yet most readers of these and other traditional media recognize that there is bias at work there—rarely reporting the facts, but often in deciding which stories are newsworthy, or how the facts are presented, or past events are summarized. If you are sure there’s no bias at work in the mainstream press, then I can’t persuade you that the same dynamic is at work on social media’s content moderation teams. But if you have seen even a glimmer of liberal bias in the New York Times, you might ask yourself why there would be less in the decisions of Silicon Valley’s content police, whose decisions are often made in secret by unaccountable young people who have not been inculcated in a journalistic ethic of objectivity.)
What’s interesting and useful in the order’s focus on content derogation is that it addresses precisely the claim that anticonservative bias isn’t real. For it is aimed at bringing speech suppression decisions into the light, where we can all evaluate them.
In fact, that’s pretty much all it’s aimed at. The order really only has two and a half substantive provisions, and they’re all designed to increase the transparency of takedown decisions.
The first provision tells NTIA (the executive branch’s liaison to the FCC) to suggest a rulemaking to the FCC. The purpose of the rule is to spell out what it means for the tech giants to carry out their takedown policies “in good faith.” The order makes clear the President’s view that takedowns are not “taken in good faith if they are “deceptive, pretextual, or inconsistent with a provider’s terms of service” or if they are “the result of inadequate notice, the product of unreasoned explanation, or [undertaken] without a meaningful opportunity to be heard.” This is not a Fairness Doctrine for the internet; it doesn’t mandate that social media show balance in their moderation policies. It is closer to a Due Process Clause for the platforms. They may not announce a neutral rule and then apply it pretextually. And the platforms can’t ignore the speech interests of their users by refusing to give users even notice and an opportunity to be heard when their speech is suppressed.
The second substantive provision is similar. It asks the FTC, which has a century of practice disciplining the deceptive and unfair practices of private companies, to examine social media takedown decisions through that lens. The FTC is encouraged (as an independent agency it can’t be told) to determine whether entities relying on section 230 “restrict speech in ways that do not align with those entities’ public representations about those practices.”
(The remaining provision is an exercise of the President’s sweeping power to impose conditions on federal contracting. It tells federal agencies to take into account the “viewpoint-based speech restrictions imposed by each online platform” in deciding whether the platform is an “appropriate” place for the government to post its own speech. It’s hard to argue with that provision in the abstract. Federal agencies have no business advertising on, say, Pornhub. In application, of course, there are plenty of improper or unconstitutional ways the policy could play out. But as a vehicle for government censorship it lacks teeth; one doubts that the business side of these companies cares how many federal agencies maintain their own Facebook pages or Twitter accounts. And in any event, we’ll have time to evaluate this sidecar provision when it is actually applied.)
That’s it. The order calls on social media platforms to explain their speech suppression policies and then to apply them honestly. It asks them to provide notice, a fair hearing, and an explanation to users who think they’ve been treated unfairly or worse by particular moderators.
I’ve had many conversations with participants in the debate over the risks arising from social media’s sudden control of what ordinary Americans (or Brazilians or Germans) can say to their friends and neighbors about the issues of the day. That is a remarkable and troubling development for those of us who hoped the internet would bring a flowering of views free from the intermediation of traditional sources. But you don’t have to be a conservative to worry about how this unprecedented power could be abused.
In another context, I have offered a rule of thumb for evaluating new technology: You don’t really know how evil a technology can be until the engineers who depend on it for employment begin to fear for their jobs. Today, social media’s power is treated by the companies themselves as a modest side benefit of their astounding rise to riches; they can stamp out views they hate as a side gig while tending to the real business of extending their reach and revenue. But every one of us should wonder, “How they will use that power when the ride ends and their jobs are at risk?” And, more to the point, “How will we discover what they’ve done?”
Such questions explain why even those who don’t lean to the right think that the companies’ control of our discourse needs more scrutiny. There are no easy ways to discipline the power of Big Tech in a country that has a first amendment, but the answer most observers offer is more transparency.
We need, in short, to know more about when and how and why the big platforms decide to suppress our speech.
This executive order is a good first step toward finding out.
from Latest – Reason.com https://ift.tt/2AfB9UI
via IFTTT
The surge in silver (relative to gold) began around the same time as the gold market “broke” with the COVID crisis causing geographical shortages of physically deliverable gold for futures contracts (decoupling the price of gold futures from the physical price for that liquidity/transportation premium).
June futures sank to more than $20 an ounce below August earlier this week, from a premium in mid-April.
Notices to deliver on June contracts begin to be filed on Thursday. The June contract is also below spot prices, after fetching a $12 premium as recently as mid-May and $60 in March. As Bloomberg points out,the steep discount echoes some of what oil traders saw earlier this year, when crude stockpiles surged after fuel demand plunged.
“It’s a little bit of a game of chicken,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets.
“All of a sudden you get into a similar problem that you had in crude, but slightly different: for crude they literally didn’t have a place to put it — whereas in this case speculative longs don’t want the logistical hassle of holding physical metal, which is why cost to roll has blown out.”
Just as we saw with the June crude expiration, technical pressures are likely to lift as the arb is narrowed:
“It is a seller’s market because of the premium and the buyers are stuck right now,” Peter Thomas, a senior vice president at Chicago-based broker Zaner Group, said in a telephone interview.
“Do you want to deliver now, or do you want to deliver into the back, where the premium is high?”
But, of course, the imbalance in the New York market is a localized phenomenon: gold remains in high demand around the world among investors concerned about the state of the global economy.
And, as Simon Black pointed out recently, EVERY possible scenario is on the table as far as policymakers are concerned, and no one can say for sure what’s going to happen next.
There are very few things that are clear. But in my view, one thing that has become clear is that western governments will print as much money as it takes to bail everyone out.
According to the Congressional Budget Office, the US federal government will post a $3.6 TRILLION deficit this Fiscal Year due to all the bailouts. Plus the Federal Reserve has already printed $2 trillion.
Frankly, they’re just getting started.
With this incomprehensible tsunami of government debt and paper money flooding the system, real assets are a historically great bet.
We’ve talked about this before: real assets are things that cannot be engineered by politicians and central banks– assets like productive land, well-managed businesses, and yes, precious metals.
And they all tend to do very well when central banks print tons of money.
Farmland, for example, was one of the best performing assets during the stagflation of the 1970s.
And financial data over the past several decades shows that whenever they print lots of money, the price of gold tends to increase.
Right now, in fact, the price of gold is relatively cheap compared to the current money supply.
And the price of silver is ridiculously cheap compared to gold. Again, silver has never been cheaper in 5,000 years.
This is why I’d rather just own physical silver. I’m not interested in betting against gold because I expect they’ll continue to print money. In fact I’m happy to buy more gold.
And while we cannot be certain about anything, there’s a strong case to be made that the price of silver could soar alongside gold.
via ZeroHedge News https://ift.tt/36ET3MC Tyler Durden
Masks have become a symbol of which “side” you’re on in the coronavirus debate in the United States and for some folks, whether you choose to wear one or not says a lot about you.
If you don’t wear a mask, you’re seen as a callous brute who doesn’t care whether you spread your germs and kill grandma. If you do wear a mask, you’re seen as a quivering sheep, someone who has been willingly muted by the government.
Rationally, we know there’s a lot more to it than that, however, rational thinking is rarely at the forefront when tempers are flaring. Whether or not you choose to wear a mask is an incredibly visible sign that many will read as an alliance to one “side” or the other. It’s becoming almost tribal. It’s like the Bloods and the Crips of suburbia getting ready to throw down at Trader Joe’s.
The Mask Wearers
There are a lot of folks who come down on the side of wearing a mask. Why? Most of them say it’s to protect others from them in case they’re unwittingly carrying and spreading the virus. Asymptomatic COVID is a mystery. Scientists have said anywhere between 5% and 80% of carriers are asymptomatic, which really tells us nothing except, maybe you are, maybe you aren’t.
The Centre for Evidence-Based Medicine at Oxford University summed it up after assembling the data from 21 reports:
What did we learn (see the table for the analysis)
That between 5% and 80% of people testing positive for SARS-CoV-2 may be asymptomatic
That symptom-based screening will miss cases, perhaps a lot of them
That some asymptomatic cases will become symptomatic over the next week (sometimes known as “pre-symptomatics”)
That children and young adults can be asymptomatic
We also learnt that there is not a single reliable study to determine the number of asymptotics. It is likely we will only learn the true extent once population based antibody testing is undertaken. (source)
So with that in mind, the case for mask-wearing does carry some weight.
However, it also depends on what kind of mask you’re wearing whether or not the protection is present. Everyone knows that N95 and N99 masks are nearly impossible to find and most want to leave those for healthcare workers anyway. The data regarding the cloth masks that most people are wearing doesn’t really support their use. But again, we don’t have very much data, so it’s not a definitive answer. The Center for Infectious Disease Research and Policy reports:
Limited, indirect evidence from lab studies suggests that homemade fabric masks may capture large respiratory droplets, but there is no evidence they impede the transmission of aerosols implicated in the spread of COVID-19, according to a paper published yesterday by the National Academy of Sciences, Engineering, and Medicine. (source)
So while science does not dispute the wearing of cloth masks, science doesn’t back it up, either.
Those Who Won’t Wear Masks
On the other side of the debate we have those who refuse to wear masks. Some folks won’t do business in stores that require them. Others try to enter the establishments that require masks without adhering to the requests. Others just stay at home because they refuse to comply.
There are a couple of other reasons, too. First, many feel based on the information above that the masks are not effective. If they don’t work, why should they go through the discomfort and for some, the difficulty breathing that mask-wearing brings?
Some see it as a symbol of weakness.
To some, wearing a mask means admitting a fear they may not have consciously confronted yet, said David Abrams, a clinical psychologist and professor of social and behavioral science at New York University’s School of Global Public Health.
Many view the mask as a walking symbol of vulnerability that tells others you’re scared about contracting the virus. So to compensate for that fear, and as a show of strength, they may reject the masks entirely, he said. (source)
For others, it’s a matter of liberty. They feel that wearing a mask is a symbol of bowing down to tyranny or a symbol that the wearer has been silenced.
Even though wearing masks isn’t compulsory in much of the US, adhering to these rules may feel like, to some, a forfeiture of their freedoms.
People naturally rebel when they’re told what to do, even if the measures could protect them, said Steven Taylor, a clinical psychologist and author of “The Psychology of Pandemics.”
“People value their freedoms,” he said. “They may become distressed or indignant or morally outraged when people are trying to encroach on their freedoms.” (source)
That last reason shouldn’t come as a surprise. Our nation was built on refusing to be told what to do.
There has already been violence over masks
People have already expressed their displeasure on both sides of this debate…sometimes violently.
Unfortunately, retail workers are often the ones bearing the brunt of the anger when they’re simply trying to enforce the policies set forth by their employers. One of my daughters is a retail worker. She and her coworkers have been warned they’ll be fired on the spot if they haven’t followed the arbitrary guidelines of people standing on Xs and limiting the number of customers in the store. Officials from corporate headquarters have dropped in unbeknownst to employees to check that their measures are being enforced. She’s definitely not alone and the risk of violence is high. But she – like many others – is just happy to still have a job.
Earlier this month, I wrote about three violent incidents that occurred when people refused demands that they wear a mask in certain establishments:
A physical fight erupted at a gas station in Decatur, Illinois when a customer refused to don a mask to pay for his fuel. Sgt. Brian Earles with Decatur Police spoke to the press about the incident. It seems that a 59-year-old customer got into a verbal altercation with a 56-year-old cashier when he was trying to pay for gasoline without a mask, as is mandated by the state of Illinois. The customer allegedly shoved the cashier, who said he felt threatened, and the cashier responded by punching the customer in the face. The customer was arrested and charged with battery over the incident.
In Holly Michigan, a Dollar Tree customer refused to follow the posted store policy of wearing a mask. When a young female employee approached him and let him know of the policy he responded by saying, “Here, I will just use this as a mask,” and wiped his face on her sleeve. The customer continued to behave belligerently until he left. The entire incident was caught on store surveillance.
At a Family Dollar store in Flint, Michigan, the most violent response yet occurred when Calvin Munerlyn, a security guard for the store, was shot and killed after he refused to allow a customer’s daughter to come into the store without a mask. (source)
And the violence is not one-sided. In Johnstown, Pennsylvania, a fight broke out when someone coughed in a parking lot.
A 53-year-old man confronted a motorist who reportedly coughed without covering his mouth in a convenience store parking lot. The argument sparked a physical confrontation, and the coughing man opened fire. No one was injured. Both men were arrested for assault. (source)
More than one woman has been violently assaulted because she chose to wear a mask:
An Asian woman wearing a mask was attacked by two men and called “diseased” in a subway station in New York City’s Chinatown, according to the New York Police Department (NYPD). Four people were arrested in March in Hilton, New York, after they allegedly punched and taunted a woman for wearing a respirator mask in a store, according to the Monroe County Sheriff’s Department. (source)
In Vermont, people are snitching on members of their communities to publicly shame them for not wearing masks. [Grammatical errors are quoted directly from the source]
Some of the messages read like field reports: “The sidewalks between price chopper and walmart had groups of people standing together no mask or social distances.”
Others like warnings: “I want to make you aware of the health crisis that is ongoing at the floating bridge in Brookfield. Since fish were stocked in the pond it’s become a daily gathering spot of dozens of covid ignoring people.”
Others are more inquisitive: “Picture below shows people at Roxie’s in Bomoseen VT around 5 pm. I am the only one wearing a mask. Can u ask the Governor at his Monday press conference what citizens should do if they witness these blatant violations of his mandatory mask order?” (source)
Peter Erb, a Hinesburg, Vermont resident believes these attempts at citizen enforcement are dangerous.
Erb said it’s also dangerous to have citizens enforcing the rules against each other — pointing to violent incidents in other states when citizens have attempted to enforce the rules. In Michigan, a security guard at a Family Dollar was shot and killed after he told a shopper to wear a mask. An order requiring people to wear masks in a city in Oklahoma was dialed back to a recommendation after a slew of threats of violence in the first hours the order was in place.
Erb said he worried the coronavirus compliance divide, played out nationally, could turn angry and politically partisan. He also pointed to a more personal experience.
“You know my wife got into a fairly contentious discussion in a grocery store when somebody wouldn’t back off, had no mask and just wouldn’t distance,” he said. “And, you know, that’s a fairly controlled situation, and, you know, in Hinesburg.” (source)
Erb isn’t wrong about this becoming a partisan topic, either.
Is this where the battle lines will be drawn?
This debate is somewhat, but not entirely, divided down partisan lines. It’s notable that you will rarely see President Trump or Vice President Pence wearing one.
Here are the demographics of mask-wearing:
Whether Americans are embracing the change may depend on their political party. While most other protective measures like social distancing get broad bipartisan support, Democrats are more likely than Republicans to say they’re wearing a mask when leaving home, 76% to 59%, according to a recent poll by The Associated Press-NORC Center for Public Affairs Research.
The split is clear across several demographics that lean Democratic. People with college degrees are more likely than those without to wear masks when leaving home, 78% to 63%. African Americans are more likely than either white people or Hispanic Americans to say they’re wearing masks outside the home, 83% to 64% and 67%, respectively.
The notable exception is among older people, a group particularly vulnerable to serious illness from the virus. Some 79% of those age 60 and over were doing so compared with 63% of those younger. (source)
The issue now is that those with masks and those without masks are clearly members of a “team” or a “tribe.” And a return to tribalism can be dangerous when paired with the many things that we’ve lost over the first half to 2020. We’ve lost loved ones, we’ve lost jobs, we’ve lost businesses, we’ve lost our incomes, and many are on the verge of losing homes and cars.
It isn’t a stretch of the imagination to think that if violence were to erupt, people who feel the opposite way about masks could become targets of the outraged group. Outrage and the potential for civil unrest are things I’ve written about numerous times throughout this pandemic.
A person wearing or not wearing a mask is as clearly marked as somebody wearing a red bandana in the wrong neighborhood during a tense moment when people are butting heads during the mask debate. Is that really the hill you’re prepared to die on, metaphorically speaking?
What should you do?
I’m not here to tell you whether or not you should wear a mask when you leave the house. I strongly believe we should be responsible for our own health and therefore make these choices ourselves. At the same time, I support the right for businesses to choose whether or not to serve people who refuse to wear masks. If you, as a customer, feel strongly about not wearing a mask, you should vote with your wallet and go to stores that don’t require it. This is a purely libertarian point of view. It’s about personal responsibility and the free market.
Personally, I keep a mask tucked into my purse and wear it if the establishment I’m visiting has a policy requiring it. If I had to visit a hospital or a friend with a health vulnerability, I’d wear a mask out of caution and courtesy. I do choose which grocery store I shop at based on the mask policy (I go to the store that doesn’t have a mask policy) and I do not wear one unless it’s required.
However, from a preparedness point of view, there’s a different angle.
If your goal is to blend in with the crowd and not be a person who draws the attention of others, then it’s good to check the local baseline and see what other people are doing. In areas where the majority is wearing a mask, the gray thing to do would be to wear one too.
If you are in an area where nobody is wearing a mask, the gray thing would be to go along with that group with a caveat. If you are extremely concerned about your health or the health of a loved one, forget about the crowd and do what you think is right. Just don’t try to force others to conform to what you think is right.
via ZeroHedge News https://ift.tt/3exjGWP Tyler Durden
Japanese Farmers Lose $3.7 Billion In US CLOs, Are Done Investing In Crazy Products Tyler Durden
Thu, 05/28/2020 – 17:41
The last time we looked at the participation of Japanese banks in the CLO market, we found that they have historically been some of the largest buyers in the structured credit space, as many were forced to take on more risk in search of yield to cover rising hedge costs as the USD yield curve flattens late in the cycle. And here one bank stood out: Norinchukin Bank – better known as Nochu – a cooperative that invests the deposits of millions of Japanese farmers and fishermen, and which has emerged as the biggest CLO whale – had bought $10 billion of CLOs in the U.S. and Europe in the last three months of 2018, accounting for almost half of the top-rated issuance for the period.
How big is Nochu in the US CLO market? Let’s just say there is no single bigger player in the $700 billion CLO market, where until very recently it was buying as much as half of the highest-rated bonds in the fourth quarter of 2019 in Europe and the U.S, owning over $70 billion in CLOs, more than twice as much as the two other largest players combined, Wells Fargo and JPM, each of which owns about $30 billion.
Then, following the late 2018 crash in the leveraged loan market, Nochu’s appetite for structured credit quietly faded in mid-2019 after Japanese authorities tightened financial regulations.
Alas, if Nochu though that its CLO troubles were behind it, it was in for the shock of a lifetime, because following the crash in the CLO market due to the recent covid shutdowns which have sparked an unprecedented crisis among the leveraged loan market, crippling cash flows and priming a bankruptcy wave the likes of which have never been seen before…
… the company that invests on behalf of millions of Japanese farmers, fishermen and retirees, suffered a record JPY400 billion ($3.7 billion) loss, and more importantly, announced it was no longer going to invest in such crazy products and was pulling out of the CLO market.
“We will limit making new investments” in CLOs, Chief Executive Kazuto Oku said.
Norinchukin suffered nearly 5% losses on its $71 billion CLO portfolio despite being invested exclusively in the AAA-tranche of CLOs.
It was only recently that Wall Street found out about the massive role Nochu played in the CLO market, where it hoped to avoid Japan’s negative interest rates by buying “safe” structured credit tranches. Like most investors in the safe parts of CLOs, the banks have sought extra yield for the same level of risk. That strategy blew up in the financial crisis when supposedly safe securities backed by mortgages caused big losses for banks; and then it blew up again during the coronavirus crisis, when as we reported last month, something supposedly impossible happened: “A CLO Failed Its AAA Overcollateralization Test.“
This took place as an avalanche of default slammed the corporate bond and leveraged loan markets – with companies like Hertz and J.C. Penney filing Chapter 11 bankruptcy – prompting Moody to place the ratings on 859 securities from 358 U.S. CLOs, worth some $22 billion, on review for downgrade.
But where it gets really scary is that the “diversification” model behind CLOs, which we dubbed modern-day alchemy…
… no longer works when there is a uniform wave of defaults wiping out the cash flows of most companies that make up the structure obligation. The result could be a total wipe out to the very top of the bond stack created from the underlying junk loans.
Rod Dubitsky, who headed U.S. asset-backed securities research at Credit Suisse until 2009, confirmed as much saying that a critical risk right now is that the mathematical models that created the safe securities didn’t take into account a scenario like the coronavirus pandemic. Dubitsky argued back then that subprime mortgage-backed securities were due for a wave of downgrades, and he recently issued the same warning for triple-A rated CLO bonds. In a recent paper, he claimed that the securities don’t deserve such high ratings because of the impact of the pandemic on the economy.
“The entire concept of triple-A CLOs goes out the window because there is not much diversification left when the entire portfolio is subject to a global economy that is in deep recession,” Dubitsky told the WSJ in an interview, confirming precisely what we said three weeks ago.
Right or wrong, Dubitsky’s thesis will be tested very soon: in recent weeks, Moody’s, S&P and Fitch have collectively placed more than 1,600 bonds from mostly lower rated CLOs on review for possible downgrades.
Meanwhile, should other investors follow in Nochu’s footsteps and exit the CLO market, it could have catastrophic consequences for Wall Street, where CLOs have been the biggest source of funding for private-equity buyouts and a source of funds for struggling companies that are owned by PE firms. But there is another risk: if too many loans held by the funds are downgraded to the lowest levels, the funds may not be able to buy new loans, further tightening the lending markets.
But going back to Nochu, anb its chief, Oku, he sounded only slightly chastened by the losses, saying it was his job to extract return from the bank’s portfolio and pass it on to members.
“It is difficult to disagree with the opinion that we have to use member banks’ money more effectively instead of investing in overseas CLOs,” he said. “But we have to steadily try to make investments that are profitable.”
Ah yes, the old risk vs return calculus which unfortunately no longer works under central planning, as risk is either zero for along time, or virtually unlimited when central bank credibility is threatened.
Speaking to the Journal, Oku didn’t say what specifically caused losses in his bank’s portfolio, but he held out hope that his holdings might keep their value even in a bad situation. In any case, the bank was stepping away from new investments in that market, he said.
“We will have to examine risks in two stages: how many U.S. companies will go bankrupt or file for chapter 11, and after that, in how many of these cases we will see AAA-rated CLOs being affected,” he said at a news conference.
Ironically, even as Nochu waves goodbye to CLOs, it refuses to admit just how much it has lost: the bank isn’t reflecting CLO losses on its bottom line, suggesting that the pain is only now starting for millions of japanese retirees and savers who had naively believed that investing money in the scam that is the US structured market will make someone, besides the Wall Street bankers who arranged them or the companies that issued them, richer.
Norinchukin acts as a central pool for funds gathered by local farming and fishing cooperatives throughout Japan, and it holds $600 billion in deposits from member cooperatives. It can use the money to make loans to companies in farming, forestry or fisheries, or it can simply invest it in global markets like any money manager, apparently hoping to make money on CLOs.
The irony is that Nochu may not even have had much of a choice: its problem for years has been a shortage of loan opportunities – just the problem CLO managers love to fix – leaving the money-management side of the business as the dominant one. The number of people working in agriculture as their main job has fallen 35% during the last decade, and those who remain are mostly over 65.
via ZeroHedge News https://ift.tt/36LObFO Tyler Durden
Police in Minneapolis catalyzed Wednesday night’s violent protests by killing George Floyd on Monday. They’ve since done a terrible job of protecting innocent property owners from being victimized by the rioting that’s erupted in response to Floyd’s death.
Floyd was killed Monday night after being stopped by four officers with the Minneapolis Police Department (MPD) on suspicion of forgery. During his arrest, one of the officers held his knee on Floyd’s neck for eight minutes while the man complained that he couldn’t breathe. Floyd later died in the hospital.
Video of the incident, and later factual discrepancies in the police account of the event, was enough to get all four officers fired on Tuesday, and for the U.S. Department of Justice to open a civil rights investigation into Floyd’s death.
Neither move has been enough to mollify many in Minneapolis, who’ve taken to the streets for two nights of demonstrations that have turned increasingly violent.
On Tuesday, protestors vandalized police vehicles and threw rocks at a local MPD precinct building where the four fired officers involved in Floyd’s death were assigned. Police responded with rubber bullets and tear gas.
Things escalated dramatically last night when further demonstrations resulted in the looting of local businesses. At least 16 buildings were damaged in the protests, according to the city’s fire chief.
Videos and photos of the protests and their aftermath show an Autozone being torched, a Target being looted, and an under-construction apartment complex being set on fire.
One of the few bright spots was video captured by reporters of several armed men protecting a tobacconist from rioters. Their presence could well have prevented the business from being vandalized or even destroyed.
WATCH: Armed citizens are attempting to stop looters in Minneapolis
“Before there were cops, there were just Americans. So, here we are.”
“Justice for Floyd but we don’t support looting…”@maxnesterak
That these four amateurs were able to protect this one business raises the question of why the city’s more numerous and better equipped professional police weren’t able to protect other businesses in a similar fashion.
Police departments exist, at least on paper, in order to protect people’s rights and people’s property. Over the past couple of days, police in Minneapolis have proven unable to do either.
Minneapolis City Councilmember Jeremiah Ellison summed up their failure pretty well in a tweet.
If the strategy was to:
keep residents safe—it failed
prevent property damage—it failed
None of MPDs actions have accounted for the spread of this infectious disease
Why are our officers firing at people from rooftops?
Why is MPD not acting like they work for Minneapolis?
Obviously, the destruction of businesses that had nothing to do with Floyd’s death is unjustified. Anyone guilty of vandalism or theft during the past few days of protest deserves to be punished.
None of this relieves police of their responsibility to ensure public order or protect innocent people and businesses from being violated.
In response to questions about last night’s destruction, Minneapolis Police Chief Medaria Arradondo put the blame onto outside agitators, saying, “People involved in the criminal conduct last night were not known Minneapolitans.” Perhaps he should look closer to home when trying to assign blame for the root of the destruction of the past few days.
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After President Trump declared that he uses hydroxychloroquine, the Food and Drug Administration (FDA) walked back its advice against the drug and seemingly all others as well. “The decision to take any drug,” the head of the agency said, is “between a patient and their doctor.”
The FDA has had two shining moments during the spread of the coronavirus. At neither time did the agency do something so much as it undid something.
The first moment was March 13, when the FDA dropped its onerous approval process for coronavirus test kits. It was still late to the game, but the move helped save face.
On Tuesday, there wasn’t much left to preserve after the FDA commissioner issued a statement essentially nullifying much of his own bureaucracy’s purpose for existing.
“The decision to take any drug is ultimately a decision between a patient and their doctor,” FDA commissioner Dr. Stephen Hahn said in an emailed statement to various news outlets, including the Hill and CNBC.
This came in response to President Trump’s remarks that same day that he had been taking hydroxychloroquine (HCQ) as a preventative measure against COVID-19 for “a couple weeks.”
“I think people should be allowed to,” Trump said.
The FDA would say that, technically, people are allowed to use HCQ. It’s just not government approved for anything other than malaria, lupus, and rheumatoid arthritis. And although doctors may, and do, prescribe it for “off-label” treatments, a prescription—a government-mandated document that controls public access—is still required.
What does it matter, beyond the legal consequences, whether a prescription is written for HCQ or not? In Trump’s case, the president merely requested HCQ from his doctor. It wasn’t even recommended to him. Suppose no prescription were required and HCQ were over the counter. Might Trump or anyone else consult their physician or a pharmacist anyway?
All the prescription law can do is potentially weaken the doctor-patient relationship.
As the late Dr. Thomas Szasz observed in his book Our Right to Drugs, a “colossal charade” between patients, doctors, insurance companies, and the government arises from this regulatory framework of prescription drug laws. He wrote:
The fact that our drug laws require people to secure a prescription for many of the drugs they want (but cannot get on the free market) fosters a mutually degrading dishonesty between physicians and patients.
The FDA’s latest statement that taking “any drug” is a decision between doctors and patients contrasts sharply with the one it made a little over three weeks prior regarding HCQ. On April 24, the agency cautioned against using HCQ “for COVID-19 outside of the hospital setting or a clinical trial due to risk of heart rhythm problems.”
Although not a direct contradiction, the May 19 statement makes a substantial difference in the April 24 statement’s effect. That’s because it’s reasonable to expect that the FDA will typically enforce its opinions through a perceived threat of coercion.
As investigative reporter James Bovard wrote in this space last month, the FDA has a history of using intimidation tactics to secure compliance with unfinalized prohibitions, including against “off-label” drug treatments.
In 1991, then FDA commissioner Dr. David Kessler told the Drug Information Association that the FDA would use seizures, injunctions, and prosecutions to enforce its ban on drug companies sharing “off-label” use information with doctors. The ban was never formalized, but Kessler said:
“I would urge all members of the pharmaceutical industry to take a long and hard look at their promotional practices. I do not expect companies to wait until this guidance becomes final to put their advertising and promotional houses in order.”
Kessler would not be proud of the current FDA head, who concedes that “ultimately” doctors and patients have the decision-making power over drug use.
If members of our society were empowered to make their own decisions…then the whole rationale for the [FDA] would cease to exist.
At least Kessler was more consistent than Hahn is. There’s no sign that Hahn will follow through his words that doctors and patients may decide how “any drug” should or shouldn’t be taken.
That’s too bad, because when the doctor-patient relationship isn’t interrupted by bureaucratic third parties or red tape, it is the strongest bulwark against drug and prescription abuses.
What benefit is a layer of FDA regulations that simply restrict everyone’s freedom for the sake of those who will circumnavigate the rules, anyway? The principle is more commonly accepted in the gun control debate, but it is the same in the prescription drug control debate.
Trump got it right when he said people should be allowed to decide for themselves. His words clearly influenced the FDA’s messaging. We can allow ourselves a little hope, but realistically, substantial reform towards more freedom in medicine may have to wait until a worse crisis demands it.
* * *
As an aside, the controversy over HCQ’s use – and apparent worldwide damnation of the drug (since President Trump suggested it) has raised a few eyebrows recently.
The Indian government is courting controversy by continuing to give the antimalarial drug hydroxychloroquine to health care workers on the front lines of the fight against the coronavirus, despite safety concerns that have prompted the World Health Organisation to pause a large-scale trial of the drug.
Scientists at the Indian Council of Medical Research (ICMR), the body leading the coronavirus battle in India, say their studies have shown definitively that the drug – also known as HCQ – helps to prevent infections among health care workers exposed to Covid-19.
The ICMR has conducted three studies, involving control groups of between 330 and 1,300 people, in which frontline health care staff have taken the drug as a preventive measure.
And the Australian study that has been ‘touted’ around the world as “proving” HCQ is unsafe against COVID-19 is now being questioned openly…
Questions have been raised by Australian infectious disease researchers about a study published in the Lancet which prompted the World Health Organization to halt global trials of the drug hydroxychloroquine to treat Covid-19.
Specifically, the study, led by the Brigham and Women’s Hospital Center for Advanced Heart Disease in Boston, examined patients in hospitals around the world, including in Australia. It said researchers gained access to data from five hospitals recording 600 Australian Covid-19 patients and 73 Australian deaths as of 21 April.
But data from Johns Hopkins University shows only 67 deaths from Covid-19 had been recorded in Australia by 21 April. The number did not rise to 73 until 23 April. The data relied upon by researchers to draw their conclusions in the Lancet is not readily available in Australian clinical databases, leading many to ask where it came from.
…
“If they got this wrong, what else could be wrong?” Dr Allen Cheng, an epidemiologist and infectious disease doctor with Alfred Health in Melbourne, said. It was also a “red flag” to him that the paper listed only four authors.
Bear in mind that – before Trump’s recommendation – it was once viewed as among the most promising medicines to treat the virus, and the Australian Department of Health had been stockpiling millions of doses of the drug in case clinical trials found it proved useful.
Serious concerns have being raised by bioethicists, clinicians and scientists that scientific rigour and peer review is falling by the wayside in the race to understand how the virus spreads and why it has such a devastating impact on some people.
* * *
It is difficult to avoid the conclusion that HCQ/zinc is being sidelined in order to clear the way for a profitable vaccine and a vaccination mandate.
via ZeroHedge News https://ift.tt/36KX3vd Tyler Durden
98.1% Of ‘COVID-19 Deaths’ In Massachusetts Had An Underlying Health Condition Tyler Durden
Thu, 05/28/2020 – 17:05
As the debate rages on about re-opening, new data continues to paint the picture that liberal groupthink and media panic about the virus prompted a massive overreaction.
While antibody testing, despite inaccuracies, indicates that many more people have had the virus in the U.S. than first thought, obviously reducing the total mortality rate, we continue to get ancillary data that supports the idea that the virus may not have been as dangerous as we first thought.
One example is Massachusetts, which revealed yesterday that nearly every single coronavirus-related death had been a patient with an underlying condition or previous hospitalization, according to WHDH.
“98.1 percent (1,289) of people who died after contracting the disease had an underlying condition, such as chronic lung disease, serious heart ailments, obesity, diabetes, chronic kidney disease, or liver disease,” the report showed.
59% of the state’s 3,003 total deaths have included people who spent time in the hospital prior to contracting the virus. 1,905, or 63% of the state’s deaths, have been people aged 80 or older.
Recall, we published this piece in late April, claiming that the virus mortality rate was likely 25x to 65x lower than the government claimed based on studies from across the globe.
One such study was done by Stanford and found that the prevalence of the virus was 50x to 85x higher in Santa Clara County than first thought. The study concluded:
The population prevalence of SARS-CoV-2 antibodies in Santa Clara County implies that the infection is much more widespread than indicated by the number of confirmed cases.Population prevalence estimates can now be used to calibrate epidemic and mortality projections.
via ZeroHedge News https://ift.tt/2TM4mNU Tyler Durden
The Company Store is open, buy whatever you want on easy credit, and don’t forget to take an approved narrative with you.
I’ve been discussing the neocolonial-plantation structure of the U.S. economy since 2008, and now this model has reached perfection in social media’s Plantation of the Mind. Once you’re firmly enmeshed in this social media Plantation, you lose sight of the fact that there’s a larger world outside the plantation: social media platforms aren’t exploitative plantations in the World Wide Web/Internet, they are the Internet as far as their users are concerned.
Since I spent some of my youth in a classic Plantation town (and worked on the plantation as a laborer in summer), the concept of a Plantation Economy is not an abstraction to me, but a living analogy of the way our economy works.
In the classic Plantation, everything is managed by those in charge to benefit the owners. Workers are forced to buy their necessities at The Company Store, and since the entire town and plantation is owned by the corporation, there’s no private ownership of land or housing; everyone is a serf, beholden to the owners, and since costs are artificially high at The Company Store (due to the lack of competition), the serfs have to go into debt to survive: they become debt-serfs.
In the Plantation Economy, the Company suppresses any innovation that threatens its monopoly and the state enforces whatever means the Corporation deploys: buying up patents and small companies, predatory pricing to bankrupt competitors, etc.
The Plantation Economy is a mono-culture of large corporations and their partner in rentier skimming, the state. Our economy is a state-cartel finance-debt system; it’s only capitalist on the margins, that is, in the fringes that aren’t profitable enough for corporations to control.
The core feature of this Plantation Economy is the privileges of accumulating capital are all in the hands of the state-cartel elites. The foundation of classical capitalism is the accumulation of capital, which in our era is not just cash, factories, mines, etc.–financial and industrial capital– but knowledge capital: intellectual property, knowledge of processes, creation and control of content, research and development, control of information streams (that is, maintaining information asymmetry) and so on.
One of the key concepts in the Survival+ critique is the politics of experience. This is an elusive concept because what we take for granted is invisible to us, and we have to go back in time, so to speak, to rediscover a history in which the experience of daily life was quite different from the present.
Today, we accept it as “normal” that marketing worms into every once-private area of our lives. Not that long ago, adverts and marketing were limited to print media (newspapers and magazines) and TV–fundamentally passive media that you could opt out of by setting the paper aside or turning off the TV.
The key concept in all marketing now is supremely pernicious: any advert or campaign which reaches deep into the last refuges of privacy is considered highly valuable. This is of course the raison d’etre of social media: to weave highly profitable marketing into every process we consider essential.
To perfect this colonization of the mind, social media has persuaded users that they no longer need unfettered access to the entire World Wide Web/Internet: we’ll give you everything you want right here on our Plantation of the Mind.
Including, of course, what you should think, feel and buy. Since Google dominates “search,” and since Google has complete control over what is “found” in searches and what is buried and rendered invisible, i.e. whatever is “not found,” then our access to the entire Web is limited in ways we cannot see or understand, because the process and filters are invisible to us.
Once you control the politics of experience, the user isn’t even aware that what they now consider “obvious” has been molded by the plantation owners to maximize their private profits. In social media’s Plantation of the Mind, users are assured they have complete access to everything that is “fact” and “safe,” when in reality everything they see has been filtered to the benefit of the Plantation owners and their political allies in the state hierarchy.
In a democracy, voters must be trusted to make assessments and judgments on their own, i.e. as adults. They must be trusted to realize that marketers are everywhere, attempting to sell something or other, not just goods and services but narratives, which benefit those in power or threaten those in power.
They must be trusted to understand the difference between their own private stake in political decisions and the broader public good.
Alas, the voters are no longer trusted by the elites. They are chattel on the plantation, and have to be managed and coerced for their own good. Enter the perfect tool to do so, social media’s Plantation of the Mind.
The entire purpose of social media’s Plantation of the Mind is to maximize profits by limiting user’s experience and awareness to what is unthreatening to the corporate-state elites. Rather than the old model in which the Web was a free-for-all which included all sorts of content which required users to sort the wheat from the chaff, social media’s Plantation of the Mind seeks to sanitize all that chaos into “approved content” which users aren’t even aware has been carefully selected for their consumption by hidden processes and filters.
The intent of those filters are also hidden, as is the selection process of those filters.
Who gets to decide what’s filtered out “for our own good”? Who gets to decide what is “our own good”?
Welcome to social media’s Plantation of the Mind. The Company Store is open, buy whatever you want on easy credit, and don’t forget to take an approved narrative with you. Don’t worry, we’ve planted that in your mind without you even realizing it–for your own good, of course.
