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Authored by Sharon Lerner via The Intercept,

Gilead Sciences’ Remdesivir has been heralded as our best hope in fighting the coronavirus pandemic. Unfortunately, the antiviral drug doesn’t seem of much help to patients with Covid-19, the disease caused by the coronavirus. And while the company’s clever rollout has generated excitement among investors, politicians, and the public, a combination of generic drugs that appears to be more effective in fighting the coronavirus has flown under the radar.

Desperation for the limited supply of remdesivir is so great that Virginia will hold a lottery to determine which of the almost 1,500 severely ill patients in the state will be able to get its several hundred donated doses of the drug. In Minnesota, state officials have come up with an action plan to allocate their supply of the Covid-19 treatment, which calls for designating “triage officers” who will randomly choose among equally eligible patients. And in Alabama, physicians on a coronavirus task force set up by the governor will determine which patients get remdesivir.

Some hospitals there will receive just a single course of treatment. Still, Alabama’s state health officer, Dr. Scott Harris, recently offered his thanks to Gilead, the drug’s manufacturer, which donated some 940,000 vials of the drug to the federal government that are being distributed by state health departments. “Although the total supply of remdesivir is limited, we are grateful that hospitalized COVID-19 patients with severe disease in Alabama can receive this potentially lifesaving medication,” said Harris.

It is amid these feelings of scarcity and indebtedness that Gilead is setting the price for its antiviral medicine. The company, which has already arranged for distribution of remdesivir in 127 countries, is expected to begin selling it commercially as soon as June. And while a 10-day course of the drug, which was developed as a potential Ebola treatment with at least $79 million in U.S. government funding, costs only about $10 to produce, according to an estimate by the Institute for Clinical and Economic Review, its market price is expected to be several hundred times that amount.

Still, price gouging isn’t what has many scientists upset about remdesivir. It’s the fact that the coronavirus drug that has boosted hopes and sent Gilead’s stock price (and according to some analysts, the entire stock market) soaring doesn’t seem to do much for coronavirus patients.

“Remdesivir doesn’t work at all, as far as I can tell, or has only a minor effect,” said William Haseltine, a scientist who has spent decades studying viruses and helped lead the U.S. government response to the HIV/AIDS epidemic.

“It is comparable to Tamiflu and maybe not even as good,” Haseltine added, referring to another antiviral drug that has been available by prescription for 20 years and is expected to be sold over the counter in the coming months.

Haseltine, who founded the divisions of biochemical pharmacology and human retrovirology at Harvard University’s School of Public Health, pointed out that Gilead hasn’t released data showing remdesivir’s effect on viral load in people with Covid-19. Meanwhile, the only available information on how the drug affects the amount of the coronavirus in patients, a Chinese study of the drug published in The Lancet, showed that the drug did not lower the viral load.

“That’s why I call it the fuzzy-wuzzy drug,” said Haseltine.

“When the Chinese tried to find the antiviral effect, it wasn’t there.”

Instead, the excitement about remdesivir is based largely on a study sponsored by the National Institute of Allergy and Infectious Diseases that showed people taking the drug had a faster recovery than those who didn’t take it: 11 days on average compared to 15 for those taking a placebo. An article published on May 22 in the New England Journal of Medicine showed mild improvement in hospitalized patients that took remdesivir, though the drug didn’t appear to be of any help to the sickest patients, who needed to receive high-flow oxygen through ventilators or other means. Nor did the drug significantly improve a patient’s chance of surviving Covid-19.

Nevertheless, at an April 29 Oval Office press conference with President Donald Trump, NIAID Director Dr. Anthony Fauci declared that preliminary results from that trial proved that “a drug can block this virus.” Since then, remdesivir has been positioned as our savior and Gilead as its benevolent dispenser.

While some patients and their families have spent the past few weeks frantically trying to procure remdesivir, another Covid-19 treatment has been quietly been shown to be more effective. Although neither option appears to be the much-needed cure for Covid-19, a three-drug regimen offered a greater reduction in the time it took patients to recover than remdesivir did. People who took the combination of interferon beta-1b, lopinavir-ritonavir, and ribavirin got better in seven days as opposed to 12 days for those who didn’t take it. Critically, the treatment has another leg up on Gilead’s: It clearly reduced the amount of the coronavirus in patients who took it, according to a study published in The Lancet on May 8.

Yet so far there has been no stampede of patients demanding the new regimen or lotteries to mete out the doses, which may be due at least in part to the fact that the treatment hasn’t been the subject of a major marketing campaign. It’s worth noting that each of the three drugs in the new combination is generic, or no longer under patent, which means that no company stands to profit significantly from its use.

In contrast, Gilead, a company that had more than $22 billion of revenue in 2019 and stands to make money from remdesivir for many years, has been carefully orchestrating the rollout of its new treatment, doling out small, tailored bits of encouraging information to the press and highlighting its compassionate use program.

It’s not unusual for pharmaceutical companies to paint their products in a rosy light or go to questionable lengths to maximize profit. And Gilead, which secured a lucrative orphan drug status for remdesivir in March before reversing course two days later, has faced widespread criticism before — particularly for the exorbitant pricing of its HIV medicine Truvada and hepatitis C drug sofosbuvir, which sells for $1,000 a pill.

But during the pandemic, buzz, politics, and greed are playing an even greater role than usual in determining which drugs are widely used while the usual scientific process for evaluating their safety and effectiveness is being sped up and curtailed. Trump, who whipped up excitement about the malaria drug hydroxychloroquine, a drug he has taken himself despite not having Covid-19, has led the way.

“You have a president putting intense pressure on companies, regulators, and others in an effort to salvage his reelection,” said Dr. Michael Carome, director of health research at Public Citizen. The consequences, Carome warmed, could be deadly.

“My great worry is that with all this hype and the press from the White House, that we’ll bring something to market much too quickly and harm a lot of people. That’s the danger.”

Already, the risk of death has been shown to be elevated in Covid-19 patients who take hydroxychloroquine. According to a study published in The Lancet last week, the approximately 15,000 people who received hydroxychloroquine or the closely related drug chloroquine were roughly twice as likely to die as those who didn’t take them.

The benefits of all drugs have to be balanced against their harms. In the case of remdesivir, those dangers appear to include possible damage to the kidney and liver. While the risks and benefits are typically clarified with further study, the NIAID called off the remdesivir trial that might have offered more information about both so that the patients who were getting the placebo could take the drug.

In addition to possibly hurting patients, basing decisions about coronavirus therapies and vaccines on hype rather than science also carries the risk of prematurely investing in one product at the expense of another. “It’s possible that we’re now investing a lot of effort in pursuing a drug that could lead to less research being done on something that could have been safer or more effective,” Carome said about what he described as questionable enthusiasm for remdesivir. After the drug received Emergency Use Authorization from the Food and Drug Administration on May 1, Public Citizen submitted a FOIA request for the complete data underlying the decision. The FDA has not provided the group with any documents and usually treats such data as proprietary.

Meanwhile, the excitement around another coronavirus development seems to be moving faster than the science. Last week, the biotech company Moderna also moved markets with a vague announcement about the preliminary results of a study. In this case, the company described initial findings of a trial of its potential coronavirus vaccine as “triumphant,” though they were based on eight people from a relatively early stage of research.

“Most products that pass this phase ultimately fail,” said Public Citizen’s Carome. While the company summarized its data, it didn’t release it. “We need to see the details, but we probably won’t.”

The vaccine development process promises to get faster and more vulnerable to conflicts of interest. On May 14, Trump announced Operation Warp Speed, the administration’s effort to produce and distribute a coronavirus vaccine by the end of the year, despite experts’ insistence that the process will likely take years. The operation is being led by former pharmaceutical executive Moncef Slaoui, who has received more than $13.5 million from pharmaceutical and biotech firms since 2016. Slaoui was also holding 155,000 shares of Moderna, whose value increased by more than $2 million after the good news about its vaccine hit the airwaves. In an unusual arrangement, the compensation for his government work is only $1 and is exempt from the usual federal disclosure and conflict-of-interest laws. After Sen. Elizabeth Warren called attention to his conflict of interest, Slaoui divested his shares in Moderna and announced that he would donate to cancer research the money he made off their increase after he joined Operation Warp Speed.

While vaccination may be the best hope to bring an end to the pandemic as quickly as possible, mistakes made because of haste or conflicts of interest could be devastating. Because the plan is to vaccinate some 1 billion people worldwide, even infrequent side effects could manifest on a huge scale. The wrong vaccines could even spread disease. “They could give you a nasty cold that you could give to unvaccinated people,” said Haseltine.

The current power of politics and greed over science make such outcomes more likely.

“I fear that the warp speed group will distort our regulatory process and that the administration will put its thumb on the scale to favor an outcome regardless of the cost to human life,” said Haseltine.

“People think warp means very fast, but warp also means distorting.”

One month after Venezuela asked the Bank of England to sell part of the South American nation’s gold reserves held in its vaults and send the proceeds to the United Nations to help with the country’s coronavirus-fighting efforts, Venezuela has reached a deal with the U.N. Development Programme (UNDP) to use a part of its gold reserves Bank of England accounts to finance the purchase of food and medicine during the coronavirus pandemic, its central bank governor said on Wednesday according to Reuters.

The deal comes after the central bank made a legal claim earlier this month to force the bank to hand over part of the 31 tonnes of gold in accounts belonging to the government of President Nicolas Maduro, who Britain does not recognize as Venezuela’s legitimate leader due to allegations he rigged his 2018 re-election, and has effectively “temporarily” confiscated Venezuela gold until the country has a leader that is internationally recognized.

Central bank governor Calixto Ortega told Reuters that under the arrangement, the UNDP would receive the funds directly, a move meant to assuage concerns about potential corruption in the management of the money.

“It’s not my word, it’s not me saying that I am going to buy food, medicine and medical equipment,” Ortega said in an interview in his downtown Caracas office. “It’s the United Nations who is saying that, and they are not going to be involved in anything dark that is not neutral and independent.”

Venezuela for decades stored gold that makes up part of its central bank reserves in the vaults of foreign financial institutions including the Bank of England, which provides gold custodian services to many developing countries, before former president Hugo Chavez repatriated 160 tons of fold, worth more than $11BN at the time.

But the Bank of England has since 2018 refused to transfer the 31 tonnes of gold it still holds to the government of President Nicolas Maduro, whom Great Britain has refused to recognize as the country’s legitimate leader after his disputed 2018 re-election.

The ongoing effort signals that Maduro is desperately seeking financial resources around the world as the country’s economy struggles under low oil prices, crippling U.S. sanctions and a paralyzing coronavirus quarantine.

As Reuters reported last month, it was not immediately evident how much gold Venezuela was asking the Bank of England to sell. At current market prices, Venezuelan gold on deposit at the Bank of England would be worth around $1.7 billion.

Venezuela has lived a six-year economic crisis driven by an collapsing socialist system and a decaying oil industry, driving a mass migration of nearly 5 million people and fueling hyperinflation that has left many unable to obtain basic food. Recent tightening of U.S. sanctions meant to oust Maduro have strangled fuel imports, prompting Venezuelans to wait for hours in fuel stations queues or turn to the pricey black market.

* * *

Maduro’s government has for years raised cash by selling or pledging gold, both from artisanal mines in the southern Amazon jungle and from gold reserves held by the central bank.

The central bank has continued to remove gold from its coffers in the last month with the hopes of exporting it, according to three sources, one of whom said eight tonnes have been removed since quarantine started in mid-March.  Central bank data shows that total monetary reserves fell more than $500 million between April 14 and 24.

Employees who work in the wing of central bank where the gold vaults are located have been arriving to work despite the quarantine, according to Reuters. It was not immediately evident how many gold sale operations had been carried out or where the gold was sold.

Part of the proceeds were used to acquire supplies to refine the country’s crude in response to the near collapse of the country’s 1.3 million barrel-per-day refining circuit.

Six tons of gold had already been withdrawn from the central bank between the end of 2019 and beginning of 2020 and sold to acquire euros in cash, which the institution channeled through local banks and the government used to pay suppliers.

Following the latest withdrawal, the central bank would still have more than 80 tonnes of gold in its vaults, according to sources, compared with 129 tonnes at the start of 2019.

Facebook has slammed a Tuesday report in the Wall Street Journal  accusing the company of ‘shutting down efforts to make the site less divisive’ and ‘largely shelved’ internal research on whether social media increases polarization in general.

“Unfortunately, this particular story willfully ignored critical facts that undermined its narrative. The piece uses a couple of isolated initiatives we decided against as evidence that we don’t care about the underlying issues – and it ignored the significant efforts we did make,” said Facebook VP of Integrity, Guy Rosen.

“The piece disregarded how our research, and research we continue to commission, informed dozens of other changes and new products. It also ignored other measures we’ve taken to fight polarization. As a result, readers were left with the impression we are ignoring an issue that in fact we have invested heavily in.” –Guy Rosen, Facebook VP of Integrity

The Journal claims that Facebook’s interest in tackling “sensationalism and polarization” was “fleeting” – as “Mr. Zuckerberg and other senior executives largely shelved the basic research, according to previously unreported internal documents and people familiar with the effort.”

Not true, says Rosen, who cited several initiatives the company undertook to fight polarization:

• In 2018 we made a fundamental change to the way content is surfaced in people’s News Feed to prioritize posts from friends and family over news content.
• Over the past four years, we’ve built a global team of more than 35,000 people working across the company on issues to secure the safety and security of our services, including those related to polarization.
• We’ve added more restrictions to the types of Pages and Groups that we recommend to people.

Rosen also says the site is combating hate speech by prohibiting attacks on “race, ethnicity, national origin, religious affiliation, sexual orientation, caste, sex, gender, gender identity, and serious disease or disability,” claiming that the company has “expanded our proactive detection technology to find such content faster and in more languages.”

Via Greg Hunter’s USAWatchdog.com,

Everyone needs be looking past the Coronavirus crisis and at what governments are trying to do to counter the economic destruction and massive unemployment. Is the financial cure worse than the disease?

Financial writer John Rubino says look at commercial real estate as an omen of what is to come. Rubino explains, “Sooner or later you’ve got to pay your bills…”

“…and if you don’t have anybody paying your bills to you, then you go bankrupt. Commercial real estate could just be a blood bath, which take us back to all the bailouts.

You can’t let a big sector go bust in this world because suddenly everything is too big to fail. There is not a major sector out there that can be allowed to go bust. Not the airlines, not commercial real estate, certainly not the banks, you name it and it has to be bailed out.

That’s where the really crazy stuff starts. When people figure out we are basically bailing out everybody from home owners to student loan holders, to car loan holders and right down the line, and then we get state and local governments with this gigantic multi-trillion dollar problem . . . and the amount of debt is off the charts to bail all of these guys out, that is when the real fun starts.”

How long will the bailouts go on? Rubino says,

“We are heading into a Presidential election, which means we cannot let anything major fail. If you are the Trump Administration and Congress, you can’t let something big fail because it’s a crisis right before you need to get re-elected. So, you’ve got to bail people out. That’s what California, Illinois and Chicago, New York, Kentucky and all the bankrupt and badly run states have been hoping for all along. They have been hoping there would be a big crisis that would bail them out of their horrendous mismanagement of the past 20 or 30 years.

There was no way that Illinois was not going to go bankrupt in normal times . . . or Chicago… Now, they can go to the federal government and say we need a trillion dollars right now or we are going to lay off all the cops and all the teachers, and they think they have a pretty good chance of getting the bailout because the alternative is poison for the people running for office…

If you are the Trump Administration or Congress, I don’t see how you stop bailing people out before the election.”

What could go wrong? Rubino says, “They have control of the money supply, and they think that’s enough. That’s only half of the ledger…”

“What they don’t have control of is the value of these currencies that they are creating infinite amounts of…

You can’t control what people think the currencies are worth, or what the dollar is worth going forward. Once these currencies start falling in a disorderly way, and not 1% or 2% a year, then it’s game over. They will find out at some point a printing press is good as long as the currency maintains value, but as soon as it starts falling, a printing press does you no good because the more you print, the faster the currency falls. So, that day is coming, and these never ending bailouts might be the catalyst that takes us there, and it’s been a long wait.”

The case for owning precious metals is easy to make, especially silver. According to Rubino, it now takes 100 ounces of silver to equal the value of 1 ounce of gold. That’s a near record of 100 to 1 silver/gold ratio. Rubino contends,

“The silver/gold ratio says silver is clearly a buy based on historical trends and the relationship between gold and silver… You would expect silver going forward to outperform gold, and you would expect gold to go up as well…

This is now a bull market, and they will both go up, but silver will outperform gold. . . . There is just so much more debt in the world, and there is so much more of a need for safe haven assets that you would expect silver to blow right through its previous high levels. This time around, it could be totally spectacular with what happens with silver. There is going to come a time when everyone will want to talk about silver, but that day is not yet.”

Join Greg Hunter as he goes One-on-One with John Rubino, founder of DollarCollapse.com.

*  *  *

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Oil prices slipped notably today (WTI below $33) as investors weighed whether or not Russia would agree to extend output curbs when OPEC+ meets in two weeks.

“It’s really important to provide stability in the market going forward and have some kind of coordinated effort together that helps not only Russia but OPEC and provides stability in the prices,” said Phil Streible, chief market strategist for Blue Line Futures LLC.

OPEC+’s commitment to reducing output by almost 10 million barrels a day starting in May has helped to lift oil prices by about 75% this month. But the market’s recovery remains fragile, with higher prices likely to prompt producers to turn the taps back on even as the pandemic continues to quash energy demand.

So all eyes will now be focused back on inventories (delayed reporting this week due to Monday’s holiday).

API

• Crude +8.731mm (-2.32mm exp)

• Cushing -3.37mm

• Gasoline +1.12mm (-675k exp)

• Distilates +6.907mm (+2.55mm exp)

US crude inventories were expected to fall for the 3rd week in a row but instead saw a major 8.73mm barrel build (and a big distillates build)…

Source: Bloomberg

Notably, warning signals remain. Demand for gasoline fell 25% to 35% from a year earlier over the U.S. Memorial Day weekend, which usually heralds the start of the summer driving season and the peak of fuel consumption.

BREAKING: GasBuddy gasoline demand data shows Monday gasoline demand -0.5% from the Monday prior. Thur-Mon demand is now -1.34% from same period a week ago. #gasoline #oil #OOTT pic.twitter.com/P2z9LoYRRy

— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 26, 2020

WTI (July 2020) was hovering between $32.50 and $33 ahead of the print and extended losses down to a $31 handle…

Separately, as Bloomberg reports, the U.S. is considering a range of sanctions to punish China for its crackdown on Hong Kong, including controls on transactions and freezing assets of Chinese officials and businesses. Additionally, the U.S. certified Wednesday that Hong Kong is no longer politically autonomous from China. The deteriorating relationship between the world’s two largest economies could complicate the market’s comeback from a historic demand crash.

Update (16:46 ET): President Trump canceled the rest of his trip “due to the scrubbing,” and will return to DC. He will not be “delivering scheduled remarks.” 

Due to scrubbing of launch, Pres Trump cancelling the rest of his visit to @NASAKennedy and will be returning to DC. He won’t be delivering scheduled remarks to @NASA personnel. Remains to be seen if Pres will return for rescheduled launch on Saturday. pic.twitter.com/Bjb3PBFeg7

— Mark Knoller (@markknoller) May 27, 2020

* * *

Update (16:25 ET): Via NASA TV, it appears the SpaceX launch has been scrubbed due to bad weather. 

Here’s the moment when NASA determined the launch was “scrubbed.” 

“We are not going to launch today.”

Due to the weather conditions, the launch is scrubbing. Our next opportunity will be Saturday, May 30 at 3:22pm ET. Live #LaunchAmerica coverage will begin at 11am ET. pic.twitter.com/c7R1AmLLYh

— NASA (@NASA) May 27, 2020

Virgin Galactic shares moved higher on the postponement news. 

It appears the next launch attempt will be on Saturday at 3:22pm ET (19:22 UTC).

* * * 

On Wednesday afternoon, NASA is preparing to send two of its astronauts, Bob Behnken and Doug Hurley, to orbit aboard a spacecraft built by Elon Musk’s SpaceX. 

The launch will mark the first time a private US company has catapulted astronauts into space. It has also been about a decade since NASA retired its space shuttles in July 2011.

“For the first time since 2011, we are sending American astronauts back to space, on an American rocket, from American soil. And we would like you to join us for launch – at a safe virtual distance, of course,” NASA said in an announcement.

NASA’s live broadcast of the launch begins 12:15 p.m. EST with liftoff scheduled for 4:33 p.m. EST. It will be held at the Kennedy Space Center in Florida. If the weather holds up, SpaceX’s Crew Dragon will launch on a Falcon 9 rocket to the International Space Station (ISS). 

Falcon 9 rocket and Crew Dragon spacecraft this morning  

Scheduled events for today:

• 12 p.m. – Live Views of the SpaceX Falcon 9 Rocket on Launch Pad 39-A at the Kennedy Space Center for NASA’s SpaceX Demo-2 launch to the International Space Station.

• 12:15 p.m. – Coverage of NASA’s SpaceX Demo-2 launch to the International Space Station (Launch scheduled at 4:33 p.m. EDT).

• 7:30 p.m. – NASA/SpaceX Demo-2 post-launch news conference with Administrator Jim Bridenstine

NASA will stream the launch event live on YouTube 

This is a big day for Musk, considering last night his electric car company, Tesla, cut prices across the entire US lineup, as it appears a demand problem is forming. 

President Donald Trump will be in attendance today to witness the launch of the first manned space mission for the US in a decade. Vice President Mike Pence will attend as well.

The president has bragged about the public/private program for space travel, by allowing “rich guys” to bankroll the missions.

“We are letting those rich guys [Elon Musk] that like rockets, go ahead, use our property, pay us some rent,” Trump said at a rally in Tupelo, Mississippi, in Nov. 2018. “Go ahead. You can use Cape Canaveral. You just pay us rent and spend that money.”

Peter Diamandis, founder of the X Prize, the first private company to launch a rocket to the edge of space, told Financial Times if Musk is successful today, it will mark a period where space flight has become ‘reliable and cheap.’ 

 “It’s the first, fully commercially built, entrepreneurial capability,” Diamandis said. “What Elon Musk has done is nothing short of extraordinary, outpacing the US government-backed industries, Russia and China.”

Ahead of the launch, SpaceX raised $346 million, which was $100 million more than it originally disclosed in March. In the company’s existence, it has raised $3.5 billion, according to Crunchbase data.

Greg Autry, a former White House liaison to Nasa, said the commercialization of space flight is equivalent to when the internet was first created by the US Defense Department. He called today’s flight a “tipping point we’ve been waiting for in the commercial space industry for a number of years.” 

Financial Times describes the SpaceX and Boeing competition over the last decade to drive commercialization of space. 

“Nasa, which commissioned both SpaceX and Boeing seven years ago to build human launch systems, is counting on commercial incentives and market competition to drive down the price of getting into space. It has estimated that the $400m SpaceX spent to develop its Falcon 9 rocket, which has become the workhorse for lifting cargo to the ISS, was only a tenth what it would have cost Nasa itself to build a similar rocket.

“Since the Space Shuttle was retired in 2011 and the US was forced to buy seats on Russian rockets to propel its astronauts to the ISS, the cost of getting into space has risen sharply. Dennis Tito, the first space tourist, paid $20m in 2001 for a ride to the ISS on a Russian rocket. The price of a seat has now ballooned to more than $90m.

” A competitive commercial market could quickly push that price back below $50m, said Mr Autry. Boeing’s rival space capsule suffered a setback earlier this year because of software glitches but is expected to make its first manned test launch next year. Other companies, including Jeff Bezos’s Blue Origin and Sierra Nevada, a Californian company that has built a space vehicle with wings, also hope to cash in.

“As competition increases and the process for mounting human flights becomes more streamlined, the price for a trip into orbit could fall below $10m over the next decade, Mr Autry predicted.” 

Targeting 4:33 p.m. EDT today for Falcon 9’s launch of Crew Dragon with @NASA astronauts on board. Teams are closely monitoring launch and downrange weather → https://t.co/bJFjLCilmc pic.twitter.com/XyyT9YgESB

— SpaceX (@SpaceX) May 27, 2020

A boom in commercial space travel could be ahead if Musk is able to pull off today’s launch. It could signify affordable space flight is here. This could also unleash new industries such as space tourism, something that, Laura Forczyk at Astralytical, a US space consultancy, said could see exceptional growth in the 2020s. 

The next big step in commercializing space will need to be the retirement of ISS with private companies launching a new space station. That could be possible by the midpoint of the decade. 

Ahead of the launch, Musk said: “I’m Chief Engineer of the thing. If it goes right, it’s credit to the SpaceX/NASA team. Goes wrong, it’s my fault.” 

“I’m Chief Engineer of the thing. If it goes right, it’s credit to the SpaceX/NASA team. Goes wrong, it’s my fault.” — @elonmusk

💯 leadership. pic.twitter.com/tKPIpq0CRH

— Viv 🐉 (@flcnhvy) May 27, 2020

Authored by Charles Hugh Smith via OfTwoMinds blog,

Re-opening a fragile, brittle, bankrupt, hopelessly perverse and corrupt “normal” won’t fix what’s broken.

The stock market is in a frenzy of euphoria at the re-opening of the economy. Too bad the re-opening won’t fix what’s broken. As I’ve been noting recently, the real problem is the systemic fragility of the U.S. economy, which has lurched from one new extreme to the next to maintain a thin, brittle veneer of normalcy.

Fragile economies cannot survive any impact with reality that disrupts the distortions that are keeping the illusion of “growth” from shattering. For the past two decades, every collision with reality cracked the illusion, and the “fix” was to duct-tape the pieces together with new extremes of money-creation, debt, risk and speculative excess.

While the stock market has soared, the real world falls apart. If your region needs a new bridge built, count on about 20 years to get all the “stakeholders” to agree and get the thing actually built. Count on the cost quintupling from $500 million to $2.5 billion. Count on corners being cut as costs skyrocket, so those cheap steel bolts from China that are already rusting before the bridge is even finished? Oops. Replacing them will add millions to the already bloated budget.

Want to add a passenger stop on an existing railroad line? Count on 20 years to get it done. The complexity thicket of every regulatory agency with the power to say “no” basically guarantees the project will never get approved, because every one of these bureaucracies justifies its existence by saying “no.” Sorry, you need another study, another environmental review, and so on.

Need a new landfill? I hope you started the process 15 years ago, so you’ll get approval in only five more years. Every agency with the power to say “no” will stretch out the approval, so they have guaranteed “work” for another decade or two.

Did your subway fares double? Was the excuse repairing a crumbling system? Did the work get done on budget and on time? You must be joking, right? All the fare increase did was cover the costs of skyrocketing salaries, pensions and administrative costs. Repairs to the tracks and cars– that’s extra. Let’s float a $1 billion bond so nobody have to tighten their belts, and have riders pay for it indirectly, through higher taxes to pay the exorbitant costs of 20 years of interest on the bond.

Have you been thrown off your bicycle by the giant potholes in the city’s “bike lanes”? The city reluctantly admits that these streets that haven’t been maintained for decades–yes, decades. The city once paid for street maintenance out of its general budget, but alas, that’s been eaten up by skyrocketing salaries, pensions and administrative costs, so now we need to float $100 million bond to fund filling potholes. If all goes according to plan (ha-ha), we should be able to re-pave the streets that have been crumbling for 20 years in… the next 20 years.

These real-world examples are just four of thousands of manifestations of a broken system. Rather than make tough choices that drain power and wealth from vested interests, we simply borrow more money, in ever increasing amounts, to keep the entrenched interests and elites happy.

There are two “solutions” in the status quo: dump the debt on taxpayers or on powerless debt-serfs–for example, college students. (See chart below of the $1.6 trillion that’s stripmining student debt-serfs.)

Who benefits from selling all the municipal bonds, bundled student loans, etc. to investors starving for a yield above 0.1%? Wall Street, of course.

The problem is that while debt has soared, productivity and earned income have stagnated. The statistical narrative has been ruthlessly gamed to hide the erosion of living standards, but even with the bogus “low inflation” of official statistics, wages for the bottom 95% have stagnated for decades.

Measures of productivity have also been gamed to mask the ugly reality that the vast majority of the U.S. economy is stagnating under the weight of interest payments on debt, mal-investments in speculative gambles, higher junk fees and taxes, crushing regulatory compliance, high costs imposed by monopolies and cartels and a well-cloaked decline in the quality of just about everything the bottom 95% uses or owns.

What little productivity gains have been made have been skimmed by the top 5%. Coupled with the Federal Reserve’s single-minded goosing of the one signaling device it controls, the stock market, the top 0.1% in America own more wealth than the bottom 80%.

If productivity stagnates and winners take all, the wages of the bottom 95% cannot rise. Real wealth is only created by increases in the productivity of labor and capital; everything else is phantom wealth.

The only way stagnant incomes can support more debt is if interest rates decline. Presto, the Fed dropped interest rates to near-zero a decade ago. Of course you and I can’t actually borrow millions for 0.1%; that privilege is reserved for financiers and other financial parasites and predators.

Debt-serfs were able to refinance their crushing mortgages to save a few bucks, and so they can afford to 1) take on more debt and 2) pay higher taxes to fund the ballooning public debt.

Every one of these extremes has increased the systemic fragility of the American economy. This fragility is reflected in the impoverishment of the bottom 95%, the thin line between solvency and bankruptcy, the decay of public trust in institutions run for the benefit of entrenched interests, and the quickening erosion of America’s social contract.

Re-opening a fragile, brittle, bankrupt, hopelessly perverse and corrupt “normal” won’t fix what’s broken.

*  *  *

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Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
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Barely a week after a trial balloon about the Biden campaign vetting Amy Klobuchar – aka the stapler assassin – revived speculation about the doddering nominee’s hunt for a VP in the middle of a pandemic (likely dealing a serious blow to the bank accounts of big-wig political consultants) – several anonymously-sourced reports have claimed that Sen. Kamala Harris, who was among the first wave of would-be “frontrunners” to drop out of the race, is Biden’s top pick.

Oh my fuck https://t.co/AR2UUtmZL3

— Quoth the Raven (@QTRResearch) May 27, 2020

We must admit, the headline provoked a big ol’ belly laugh.

What’s so comical about all this? Well, the notion that Biden is leaning toward Harris, a faux-progressive who is widely despised by the Sanders-loving lefties he need to show up on election day in droves, seems like an obviously poor choice. Is this just the latest sign of the former VP’s purportedly deteriorating mental state?

Assuming the coronavirus doesn’t suddenly spring back to life across the US in September, Biden needs a VP who will, above all, help him pick up traction with the swing voters in the Midwest who handed Trump his upset victory over Hillary Clinton four years ago. That’s why Klobuchar was such a common-sense pick: her Midwestern roots and popularity in the region. Did the Minnesota Senator’s famously prickly personality get in the way of her prospects? And remember, Biden has already promised to pick a woman, which is why Andrew Cuomo is out of the question.

Or is there, perhaps, another motive?

Last week: Biden was vetting Klobuchar as leading VP candidate

This week: Kamala Harris now VP frontrunner

What changed? pic.twitter.com/Lnc1hVJAcR

— Quoth the Raven (@QTRResearch) May 27, 2020

For what it’s worth, the insiders at Vanity Fair predicted this weeks ago.

But is Biden really ready to let go one of the most punishing smackdowns he suffered during the debates?

Perhaps a better question: Does he even remember this?

Or maybe Harris has embraced another approach?

 

Big rollercoastery day in stocks as overnight gains in futuresville were once again erased after the open, only to be ramped back magically…Small Caps ended the day up over 3%… for absolutely no good reason at all (and don’t ask us why it was panic-bid into the close, why not!)

For some context, May has been a terrible month for anyone buying during the US day session. The S&P 500 is up 171 points during the overnight sessions and up 1.3 points during the day session…

So, adjust accordingly…

Fears over mega-tech Chinese firms delisting and increased sanctions against China over its dealings with Hong Kong, sent the yuan to its record low intraday…

Source: Bloomberg

These headlines also hit FANG stocks hard (as well as threats from Trump over social media bias)…

Source: Bloomberg

Trannies are now up around 8% on the week (as airlines take off on re-opening/vaccine “hope”), and Nasdaq scrambled back into the green on the week…

The market was helped early on when Robinhood went down and that reversed the downtrend…

Source: Bloomberg

The major reversal in momentum vs value in the last two days continues…

Source: Bloomberg

The Dow pushed up to its 100DMA today

Bank stocks surged for the second day in a row…

Source: Bloomberg

Bonds were mixed today with the long-end bid and short-end seeing modestly higher yields…

Source: Bloomberg

10Y Yields tumbled from overnight spike highs back to unch on the week…

Source: Bloomberg

Choppy day in the dollar today, but it ended higher..

Source: Bloomberg

Bitcoin appeared to benefit from yuan weakness…

Source: Bloomberg

Oil was down hard today ahead of tonight’s API inventory data after headlines about Russian production…

Precious metals were punched lower once again around the London Fix but bounced back dramatically…

Silver outperformed gold, pushing the gold/silver ratio to 98x – its lowest since 3/12…

Source: Bloomberg

Gold in Yuan fell back within its recent range…

Source: Bloomberg

Finally, this won’t end well…

Source: Bloomberg