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With weeks to go before Donald Trump’s inauguration, former President Obama and VP Joe Biden were briefed by Deputy Attorney General Sally Yates, FBI Director James Comey, CIA Director John Brennan, and Director of National Intelligence James Clapper on matters related to the Russia investigation.

The January 5, 2017 meeting – also attended by former National Security Adviser Susan Rice, has taken on a new significance in light of revelations of blatant misconduct by the FBI – and the fact that the agency decided not to brief then-candidate Trump that a “friendly foreign government” (Australia) advised them that Russia had offered a member of his campaign ‘dirt’ on Hillary Clinton.

The rumored ‘dirt’ was in fact told to Trump campaign aide George Papadopoulos by Joseph Mifsud – a shadowy Maltese professor and self-described member of the Clinton Foundation. Papadopoulos then told Australian diplomat Alexander Downer, who told Aussie intelligence, which tipped off the FBI, which then launched Operation Crossfire Hurricane. Papadopoulos was then surveiled by FBI spy Stefan Halper and his honeypot ‘assistant’ who went by the name “Azra Turk” – while in 2017, Papadopoulos claims a spy handed him $10,000 in what he says goes “all the way back to the DOJ, under the previous FBI under Comey, and even the Mueller team.”

Meanwhile, the Trump DOJ decided last week to drop the case against former Director of National Security, Mike Flynn, after it was revealed that the FBI was trying to ensnare him in a ‘perjury trap,’ and that Flynn was coerced into pleading guilty to lying about his very legal communications with the Russian Ambassador.

And let’s not forget that the FBI used the discredited Steele Dossier to spy on Trump campaign associate Carter Page – and all of his contacts. Not only did the agency lie to the FISA court to obtain the warrant, the DOJ knew the outlandish claims of Trump-Russia ties in the Steele Dossier – funded by the Clinton Campaign – had no basis in reality.

And so, it’s worth going back in time and reviewing that January 5, 2017 meeting which was oddly documented by Susan Rice in an email to herself on January 20, 2017 – inauguration day, which purports to summarize that meeting.

Rice later wrote an email to herself on January 20, 2017—Trump’s inauguration day and her last day in the White House—purporting to summarize that meeting. “On January 5, following a briefing by IC leadership on Russian hacking during the 2016 Presidential election,” Rice wrote, “President Obama had a brief follow-on conversation with FBI Director Jim Comey and Deputy Attorney General Sally Yates in the Oval Office. Vice President Biden and I were also present.”

According to Rice, “President Obama began the conversation by stressing his continued commitment to ensuring that every aspect of this issue is handled by the Intelligence and law enforcement communities ‘by the book.’” But then she added a significant caveat to that “commitment”: “From a national security perspective, however, President Obama said he wants to be sure that, as we engage with the incoming team, we are mindful to ascertain if there is any reason that we cannot share information fully as it relates to Russia.”

The next portion of the email is classified, but Rice then noted that “the President asked Comey to inform him if anything changes in the next few weeks that should affect how we share classified information with the incoming team. Comey said he would.”

At the time Obama suggested to Yates and Comey—who were to keep their posts under the Trump administration—that the hold-overs consider withholding information from the incoming administration, Obama knew that President Trump had named Flynn to serve as national security advisor. Obama also knew there was an ongoing FBI investigation into Flynn premised on Flynn being a Russian agent. –The Federalist

And so, instead of briefing Trump on the Flynn investigation, Comey “privately briefed Trump on the most salacious and absurd ‘pee tape’ allegation in the Christopher Steele dossier.”

The fact that Comey did so leaked to the press, which used the briefing itself as justification to report on, and publish the dossier.

What Comey didn’t brief Trump on was the FBI’s bullshit case against Michael Flynn – accusing the incoming national security adviser of being a potential Russian agent. And according to The Federalist, “Even after Obama had left office and Comey had a new commander-in-chief to report to, Comey continued to follow Obama’s prompt by withholding intel from Trump.“

The Federalist also raises questions about former DNI James Clapper – specifically, whether Clapper lied to Congress in July of 2017 when he said he never briefed Obama on the substance of phone calls between Flynn and the Russian Ambassador Sergei Kislyak.

According to the report, accounts from Comey and McCabe directly contradict Clapper’s claim.

“Did you ever brief President Obama on the phone call, the Flynn-Kislyak phone calls?” asked Rep. Francis Rooney (R0FL) during Congressional testimony, to which Clapper replied: “No.“

Except, Comey told Congress that Clapper directly briefed Obama ahead of the January 5 meeting.

“[A]ll the Intelligence Community was trying to figure out, so what is going on here?” Comey testified. “And so we were all tasked to find out, do you have anything [redacted] that might reflect on this. That turned up these calls [between Flynn and Kislyak] at the end of December, beginning of January,” Comey testified. “And then I briefed it to the Director of National Intelligence, and Director Clapper asked me for copies [redacted], which I shared with him … In the first week of January, he briefed the President and the Vice President and then President Obama’s senior team about what we found and what we had seen to help them understand why the Russians were reacting the way they did.“

And now to see if anything comes of the ongoing Durham investigation, or if Attorney General Bill Barr will simply tie a bow on the matter and call it a day.

Illinois Democratic Rep. Bobby Rush has introduced the H.R. 6666 TRACE Act, which includes a $100 billion grant program which would authorize the Secretary of Health and Human Services to create an army of contact tracers operating through healthcare, schools and nonprofit entities, who would perform COVID-19 diagnostic testing “through mobile health units and, as necessary, at individuals’ residences, and for other purposes.”

Absolutely. My bill, the COVID-19 TRACE Act (H.R. 6666) would create a $100 BILLION grant program for local organizations to hire, train, and pay individuals to operate mobile testing units and conduct contact tracing in hot spots and medically underserved areas. https://t.co/5YGK34ifsU

— Bobby L. Rush (@RepBobbyRush) May 5, 2020

“Until we have a vaccine to defeat this dreaded disease, contact tracing in order to understand the full breadth and depth of the spread of this virus is the only way we will be able to get out from under this,” Rush says on his website.

And when will that be?

According to Heavy, Rush’s words echo those of Johns Hopkins Senior Scholar Dr. Crystal Watson, lead author of a recent report which concludes that contact tracing is vital to reopening the country.

“In order to save lives, reduce COVID-19’s burden on our healthcare system, ease strict social distancing measures, and confidently make progress toward returning to work and school, the United States must implement a robust and comprehensive system to identify all COVID-19 cases and trace all close contacts of each identified case.”

The bill’s co-signers include Reps. Rashida Tlaib (D-MI), Gwen Moore (D-WI), Debbie Wasserman Schultz (D-FL), Steve Cohen (D-TN) and Republican Jefferson Van Drew of New Jersey.

In addition to the petition, Rush has received a fair amount of social media backlash, mainly out of concern for privacy.

Reactions on Twitter have ranged from Third Reich and Hitler comparisons, to people suggesting that Rush wants to hire spies, make lepers of those who are identified as sick and waste money.

Senate Republicans have been working on their own bill focused on contract tracing privacy to “provide all Americans with more transparency, choice, and control over the collection and use of their personal health, geolocation, and proximity data (and) hold businesses accountable to consumers if they use personal data to fight the COVID-19 pandemic.” –Heavy

Last week, former President Clinton, NY Governor Cuomo, Chelsea Clinton and CA Governor Newsom called for an ‘army of contact tracers’ to monitor citizens who have tested positive for COVID-19 and their contacts – shortly after which the Washington DC Department of Health posted job listings for investigators with “Trace Force.”

Those who sign on will interview those who have tested positive for the virus – collecting “demographic, clinical, social and historical data,” while “conducting an assessment to determine whether safe isolation can be achieved at home.” The program is a 13-month appointment.

Those who have been in contact with a positive case will be contacted to assess whether they have symptoms and require quarantine, and will ‘appropriate escalate’ cases when needed. Investigators will also use ‘data management systems’ to log interactions.

Meanwhile, many believe it’s too late for contact tracing to work – and it’s simply going to allow government to intrude further into the lives of Americans.

Trouble is, a mountain of scientific evidence indicates contact tracing won’t work against the coronavirus. And given the virus’ nature, deploying it earlier probably wouldn’t have stopped the spread.

The coronavirus is fast-moving and transmitted in multiple ways, such as touching contaminated surfaces like subway poles and door knobs. It can become aerosolized when someone sneezes two aisles over in the supermarket or coughs in an elevator. The virus is found in feces and may even spread when a toilet is flushed and viral particles become airborne.

The “disease detectives” will have to ask: “Who was that at the supermarket or in the public restroom?” In many cases, they won’t have an answer.

Lancet Global Health scientists conclude that contact tracing will work when “less than 1 percent of transmission occurred before the onset of symptoms.” That’s the opposite of the coronavirus: Victims are most contagious before or just as their symptoms begin, research indicates. By the time they are diagnosed and asked for contacts, those contacts are already infecting others. Oxford University scientists also caution that the coronavirus spreads by too many mechanisms “to be contained by manual contact tracing.” –NY Post

Read the bill below:

In yet another unprecedented COVID historic first, insurance companies are actually turning away Americans who want to purchase a life insurance policy.

Who would have ever thought insurers would turn you away flat out? But the unthinkable is happening, details The Wall Street Journal:

The driving force behind the action: a collapse in interest rates tied to the spread of the new coronavirus and an expectation from insurers that rates won’t rebound significantly anytime soon.

Life insurers earn much of their profit by investing customers’ premiums in bonds until claims come due. In simplest terms, when they price policies, they make assumptions about how much interest income they will earn investing these premiums years into the future. The less they earn, the more they may need to collect in premium or fees to turn a profit.

The report includes stories of Americans being advised to act fast ahead of looming premium hikes.

“In 33 years, I have never seen more changes come more quickly to the life-insurance products we sell,” head of the Akron, Ohio-based ValMark Financial Group said. “It is unprecedented how fast and widespread — it is across lots of carriers.”

Another was quoted as saying: “It is difficult for consumers to have a lot of empathy for the life-insurance companies, but I can imagine they’re really getting squeezed by low rates.”

Via WSJ/A.M. Best:

WSJ summarizes:

Typically, life insurers hold about 70% of their general investment account in long-term bonds. In general, the yields on these holdings, many of them corporate securities, follow the 10-year U.S. Treasury. Its annual yield has been mostly declining since the 1980s, when it peaked at nearly 16%.

The yield dove after the 2008-09 financial crisis and was as low as 1.366% in 2016 before rebounding to about 3% in 2018. In March, it plummeted again as coronavirus sparked a rush to safer assets and investors feared interest-rate cuts from the Federal Reserve.

The yield on Friday: 0.679%.

Corporate-bond yields have held up better than the 10-year of late, but the overall trend has been tough on life insurers. Life insurers’ net portfolio yield averaged 4.4% last year, down from 9.9% in the mid-1980s, according to ratings firm A.M. Best Co.

In some cases insurers are reacting directly to the trend of coronavirus’ more devastating impact on the elderly: 

Penn Mutual Life Insurance Co., among others, has temporarily halted life-insurance sales to people 70 and older and who are in poor health. Insurance-industry executives say that analysis shows older people with underlying medical problems are dying at much higher rates from Covid-19 than younger people.

In a memo to brokers, Penn Mutual said it expects “to revisit these and other changes as we gain better insight into the impact of the Covid-19 pandemic.”

But in other cases even the type of 30-year “term-life” policies most often popular with young families are being temporarily suspended.

More specifically, Prudential halted sales of 30-year “term-life” policies, while Penn Mutual has ceased selling policies to people over 70 and in poor health. 

And further, Nationwide Mutual and AIG  have capped the size of guaranteed universal-life policies. No doubt this list is set to grow amid the extended COVID-19 crisis uncertainty.

* * *

The below clip illustrates the typical relationship in more ‘normal’ times between potential customers and insurance salesman, but apparently no longer while weathering the corona-storm:

In the first of the week’s refunding auctions, which as we discussed last week were not only supersized to pay for the government’s helicopter money, but also now include a 20Y auction on May 20 – the first such tenor since the 1980s – moments ago the Treasury sold a supersized 3Y auction – coming at a record high amount of $42Bn vs $40Bn last month…

… and a record low yield of 0.230%, which also stopped through the 0.231% When Issued, the first non-tailing 3Y auction of 2020.

The bid to cover jumped from 2.27 in April to 2.54, the highest since February and well above the 2.440 recent average,

The internals were quite solid as well, with Indirects taking down 54.4%, while Directs jumped from 4.1% to 13.1%, the highest since February, and leaving 32.6% to Dealers, the lowest since December.

Why the stellar demand? Because all the buyers know they just need to hold on the paper for a few days before they can flip it back to the Fed for some risk-free profits.

So a solid start to yet another upsized Treasury issuance slate – because those trillions in stimulus checks won’t pay for themselves – although the real question is how will the 20Y auction price when it is offered next week to the public.

Amid the ongoing diplomatic spat between Washington DC and Beijing, which now also includes the deployment of B-1B bombers and warships in the South China Sea, late on Monday (local time) China’s Global Times reported, citing sources close to the Chinese government, that some “hawkish” officials in China are calling for a renegotiation the the “phase one” trade deal with Washington as well as a “tit-for-tat approach on spiraling trade issues after US’ malicious attacks on China ignited a tsunami of anger among Chinese trade insiders.”

The calls to renegotiate the current version of the deal – which has yet to be actively implemented – emerge amid  dissatisfaction because “China has made compromise for the deal to press ahead.”

While in the past, these same trade negotiators “believed that it would be worthwhile to make certain compromise to reach a partial truce in the 22-month trade war and ease escalating tensions”, given what the Global Times called “President Donald Trump’s hyping an anti-China conspiracy that aims to cover up his mishandling of the COVID-19 pandemic”, advisors close to the trade talks have suggested Chinese officials rekindling the possibility of invalidating the trade pact and negotiating a new one to tilt the scales more to the Chinese side, sources close the matter told the Global Times.

A former Chinese trade official told the Global Times on condition of anonymity on Monday that China could complete such procedures based on force majeure provisions in the pact.

“It’s in fact in China’s interests to terminate the current phase one deal. It is beneficial to us. The US now cannot afford to restart the trade war with China if everything goes back to the starting point,” another trade advisor to the Chinese government told the Global Times, pointing to the staggering US economy and the coming of the US presidential election this year.

“After signing the phase one deal, the US intensifies crackdown in other areas such as technology, politics and the military against China. So if we don’t retreat on trade issues, the US could be trapped,” the former official noted.

Some could disagree, and counter that Trump can certainly restart the trade war especially since it suits his pre-election agenda – after all, now that the fate of the market is entirely in the hands of the Fed which has gone full MMT, Trump is no longer afraid by the market’s response to a renewed trade war. In fact, with over 60% of the US population seeking to distance US from China, it would appear that Trump’s best bet to winning independent votes is precisely to keep hammering China.

Confirming this, Trump said on Friday that he was “very torn” about whether to end the China-US phase one deal, Fox News reported, with some observers interpreting his words as equating to a threat from the US to re-launch a trade war against China.

Then again, over the weekend, the SCMP reported that US source familiar with recent discussions stated US officials acknowledged China was largely delivering its pledges on structural issues such as opening market access and improving IP protection but they have yet to agree in some details including IP action plan and easing equity caps for foreign investors. Furthermore, the source stated fallout from the virus meant agreement on purchasing US goods has become much more important and that many believe China needs to increase pace on purchases.

Meanwhile, Gao Lingyun, an expert at the Chinese Academy of Social Sciences who advises the government on trade issues, told the Global Times on Monday that China has “well documented” Washington’s usual threats after previous rounds of confrontation. That means if the trade war restarts, “China knows how to respond, and it is able to retaliate quickly and inflict serious harm on the US economy,” Gao said.

Still, as the Global Times concludes, analysts noted that terminating the phase one trade deal would be China’s “last option” and one that China would only resort to under extremely hostile conditions.

Not even in Khruschev’s wildest dreams did central planners ever conceive of anything so absolutely batshit insane as what is taking place in the centrally-planned US economy and “markets” right now.

With the US economy sliding into a depression with the BLS reporting – when one reads between the lines as Standard Chartered did over the weekend – that there were 42 million unemployed workers in April, pushing the unemployment rate to an unheard of 25.5%, far above the reported 14.7% (forget any hope for a V-shaped recovery as millions of those recently laid off will never get back to full-time work )…

… it is not a surprise that according to the latest New York Fed survey of consumer expectations, virtually every metric having to do with one’s financial well being – income, wealth, debt sustainability and earnings expectations – is cratering with expected earnings, income, and spending growth each hit survey lows which is what one would expect in a depression.

For example the expected probability of losing one’s job jumped to an all-time high of 20.9% from 18.5% in April; the probability of missing a minimum debt payment over the next three months surged to 16.2% – a 7 year high – from 15.1%, while expected earnings growth tumbled to the lowest on record at 1.87%, down from 2.05% in April .

Adding to the apocalyptic picture, median one-year ahead expected changes in home prices dropped to 0% for first time in survey history – as the average US consumer no longer expects their primary asset to increase in value – with 44.2% of respondents expecting home prices to decline over the coming year.

Finally, confirming that an inflation wave is coming, over the next year consumers expect gasoline prices to rise 4.9%; food prices to rise 5.43%; medical costs to rise 9.25%; the price of a college education to rise 4.64%; rent prices to rise 4.57%; needless to say all of these are far, far higher than the Fed’s “target” inflation rate of 2%.

But while the above data may not have been surprising, what was shocking is what the central bank reported was the average consumer expectation for stock prices in the future: according to the NY Fed, the mean probability that US stock prices will be higher one year from now surged to 51.8% up from 47.7%, above 50% for the first time ever and the highest print on record.

That this happens right after we posted that “Stocks Go Up As Everything Is Going Down In Flames“, is just perfectly appropriate: Because with his job gone, his $400 dollars of emergency savings just spent on a roll of toilet paper, his bank preparing to foreclose on his home, all while a deadly virus lurks in dark corners, all Joe Sixpack can think of is how to get his “money on the sidelines” into the stock market as it is about to soar to all time highs.

And so, thanks to the Fed’s now grotesque interventions in all capital markets, including the purchase of over $2.6 trillion in securities in the past two weeks, the stock market is now perceived by conventional wisdom as a depression hedge – a countercyclical indicator which surges the worse the economy gets, and since the economy is sliding into a depression it is only “logical” – we use the term loosely – that expectations of higher stock prices have never been higher.

That of course is the absurdist interpretation of the above “data’. There was, naturally, a serious way of looking at this delightfully ridiculous data and lacking a sense of humor, David Rosenberg applied just that, tweeting last month when this series again hit an all time high that “I was so close to turning more bullish (less bearish?) until I see this metric was released by the New York Fed on consumer expectations.  Since when do bear markets end on record optimism?”

I was so close to turning more bullish (less bearish?) until I see this metric was released by the New York Fed on consumer expectations. Since when do bear markets end on record optimism? pic.twitter.com/Gddwl5JDbj

— David Rosenberg (@EconguyRosie) April 6, 2020

Well, David, you should have turned bullish because since April 6 – when you tweeted this and when consumer expectations for higher stock prices hit a record high for the first time  – stocks are up 18%!

Of course, since everything is now batshit insane thanks to the Fed, this was precisely what we warned would happen one month ago, to wit:

Oh David, “since when” do you still think that anything you observe in this economy or market, both stuffed to the gills with trillions and trillions in freshly printed fiatscoes, matters or makes sense. And to answer your question: bear markets end when the Fed says so, and proceeds to do to stocks what it did to IG bonds – and start buying directly.

Continuing our address to the bearish bond strategist, we also said “David, you may want to reasses your nothing can beat deflation thesis. Albert Edwards already has, and has said farewell to his “great ice age” thesis that defined his work for the past 30 years.” Also read Paul Tudor Jones’ latest letter which laid it out best: “We are witnessing the Great Monetary Inflation (GMI)—an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”

We ended our rhetorical address to Rosenberg by asking “how long it will take you to realize that we now live in a time of helicopter money and that markets – by any definition  – no longer exist, and what comes next it a tsunami of debt and money much of which will finally make its way, kicking and screaming into the broader economy.”

Ironically, what this career economist and widely-respected bond strategist still can’t grasp is by now all too clear to every Joe Sixpack on mainstreet, namely that the only thing that matters is this: