A Teenager Posted About Her COVID-19 Infection on Instagram. A Deputy Threatened To Arrest Her if She Didn’t Delete It.

A family in Oxford, Wisconsin, is suing the local sheriff’s department after a patrol sergeant threatened to arrest a teenage girl for disorderly conduct for posting on Instagram about being infected with COVID-19.

Amyiah Cohoon, 16, is a student at Westfield Area High School in Westfield, Wisconsin. According to this lawsuit, she and schoolmates went to Disney World and Universal Studios in Florida for a spring break trip in early March, right as the coronavirus was beginning to spread and businesses began to shut down. She and her classmates canceled the trip early and returned home.

Once home, Cohoon began developing symptoms associated with COVID-19. She sought medical assistance, but at the time they were unable to test her to see if she was infected. She was diagnosed with an upper respiratory infection with “symptoms consistent with COVID-19,” according to the lawsuit.

Cohoon went home and posted on Instagram letting people know that she had COVID-19 and was in self-quarantine. Her condition worsened and she was brought to the hospital for treatment. She posted again about the experience on Instagram. Finally, they were able to test her, but the test came back negative. According to the lawsuit, doctors told her it was likely the missed the window for testing positive, but she probably did have COVID-19, despite the test results. (False negative results have been an ongoing issue in accurately diagnosing infections.)

After she returned home from this visit, she posted again on Instagram and included a picture of herself at the hospital wearing an oxygen mask.

The very next day, Patrol Sergeant Cameron Klump from Marquette County Sheriff’s Department showed up on the family’s doorstep. He was there under orders from Sheriff Joseph Konrath to demand that Amyiah and her father, Richard Cohoon, remove Amyiah’s Instagram posts. If they refused, Klump said the family faced charges for disorderly conduct and Klump told them he would “start taking people to jail,” according to the suit.

Konrath’s justification was that there had been no confirmed cases of COVID-19 in the county. He found out about the Instagram post from Amyiah’s high school. The Cohoon family had contacted the school to let them know about Amyiah’s infection, but nobody ever contacted them back to get more information. It appears that instead the school contacted the police. Under the threat of arrest, Cohoon complied and deleted the allegedly illegal Instagram post.

That evening the family would discover that a school administrator sent out an alert to families accusing Cohoon of making it up and assuring families that any information of infection was just a rumor. “Let me assure you there is NO truth to this,” the message read. “This was a foolish means to get attention and the source of the rumor has been addressed. This rumor had caught the attention of our Public Health Department and she was involved in putting a stop to this nonsense.”

The family then connected with the Wisconsin Institute for Law and Liberty, and the Institute sent a letter to Konrath warning him that he had violated Cohoon’s First Amendment rights and demanded both an apology and the promise that there would be no further threats of criminal charges against the family for Amyiah’s post.

Konrath refused, and now the Wisconsin Institute of Law and Liberty is suing Konrath and Klump in the U.S. District Court for the Eastern District of Wisconsin for violating Cohoon’s First and 14th Amendment rights. Her Instagram posts are protected speech, the Institute argues, and there was nothing about her posts that violated the county’s disorderly conduct law, and even if they did, the Wisconsin Supreme Court has held that disorderly conduct statutes in the state cannot be applied to speech protected by the First Amendment.

The Wisconsin Institute for Law and Liberty is asking the court to rule that Cohoon’s  posts were protected speech and order that the sheriff’s department may not threaten or cite Cohoon or her family for these posts, plus paying “nominal damages.”

The sheriff’s department is not backing down or even acknowledging an overreaction. According to the Milwaukee Journal Sentinel, their position remains that the one negative test means that she did not have COVID-19, which simply isn’t how it works. The Sentinel reports:

Sam Hall, an attorney for the sheriff, said the teenager “caused distress and panic” among other parents by claiming she had contracted the coronavirus despite getting a negative test result.

“This case is nothing more than a 2020 version of screaming fire in a crowded theater,” he said, referring to speech that is not protected by the First Amendment.

That the sheriff’s lawyer is misusing the much-maligned “fire in a crowded theater” argument from Schenck v. United States is a huge tell that these guys don’t have a leg to stand on. It’s a bad argument, a bad precedent (it was about censoring anti-war activism), and the Supreme Court has subsequently weakened that decision and broadened our free speech protections.

And even if that ruling remained relevant, Amyiah Cohoon was not engaging in the equivalent of “shouting fire in a crowded theater.” Because of the significant number of false negative test results, it’s appropriate for health staff to treat her as though she likely has COVID-19 based on her symptoms. It’s also appropriate for the Cohoon family to attempt to warn families of the students who went with her to Florida that they might have been exposed, too.

It’s the school officials and the police who behaved irresponsibly, not Amyiah or her family.

Read the complaint here.

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MSNBC Host Suggests Biden Form “A Shadow Government” To Counter Trump’s COVID Response

MSNBC Host Suggests Biden Form “A Shadow Government” To Counter Trump’s COVID Response

Authored by Jennie Taer via SaraACarter.com,

MSNBC anchor Stephanie Ruhle suggested earlier this week that former Vice President and likely Democratic nominee in the 2020 race Joe Biden form “a shadow government” to counter President Donald Trump’s daily briefing on the White House’s response to the coronavirus pandemic.

“Do they (the Biden campaign) need to do it in a bigger way? What did you just call it ‘the President’s daily clown show’? That’s his press briefing? Should Joe Biden be counter programming that? Should he be creating his own shadow government, shadow cabinet, shadow SWAT team? And gearing up there at a podium every night saying here’s the crisis we’re in, here’s what we need to do to address this,” Rule said in her interview with former Obama White House Deputy Chief of Staff Jim Messina.

Messina, as Ruhle implied, did earlier in the interview call the President’s daily briefings a ‘clown show’ and suggested that “real upstanding leaders” like former President Barack Obama and Senator Elizabeth Warren endorsing Biden and his message “is a contrast that the Biden campaign is gonna bank on going forward.”

Given President Trump’s push for nationwide testing, DPA-threats on ventilator and PPE manufacture, state-by-state re-opening of the economy, massive money-flow to America, and taxpayer-funding for vaccine/treatments… we wonder just what it is that this new “shadow government” will do to “counter Trump’s response.”


Tyler Durden

Fri, 04/17/2020 – 12:55

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Governments Splurged on Stadiums and Luxury Hotels Before Coronavirus Shut Them All Down

The COVID-19 pandemic has devastated the hotel industry, and in doing so put the taxpayers who funded generous incentives for these hotels at risk of never being paid back.

This week, The New York Times reported on publicly funded hotels from around the country that are having to delay openings, or sitting empty thanks to coronavirus-related shutdowns and cancellations.

That includes the Hyatt Regency Hotel in Portland, Oregon, and the Loews Kansas City Hotel, which respectively received $74 million and $166 million in public incentives. The Hyatt opened in December. The Loews, which was already facing cost overruns, was supposed to open in early April, but that has since been delayed.

The Hyatt’s subsidies, like much of the public assistance detailed in the Times article, were funded by the sale of bonds by Portland’s Metro government (a separate entity from the city of Portland), which planned on paying back bondholders from taxes on hotel room stays in the city.

Metro told the Willamette Week that it has enough reserves to keep servicing the bonds on the Hyatt for the foreseeable future. But the longer COVID-19 shutdowns remain in place, the greater the risk that that governments who splurged on pricey hotel projects will have to pay back their creditors from general funds they’d otherwise be spending on public services.

It’s not just hotels either. Cities across the country are scrambling to figure out how to pay for stadiums, convention centers, and other venues that received taxpayer support. These projects were all pitched as economic development tools. With large gatherings banned in most of the country, they’re now a drain on city revenues that are already being squeezed by the current economic slowdown.

Wichita, Kansas, spent $75 million on a new baseball stadium that was opened in March, before being forced to close because of the pandemic. The city was expecting sales taxes from the stadium and surrounding businesses to pay for the costs of the venue. With games canceled for the foreseeable future, that’s looking increasingly unlikely, reports the Wichita Eagle.

Paducah, Kentucky, had just agreed to build a new aquatic center with the hope of attracting more tourism dollars. Now city leaders are scrambling to figure out how they’ll pay back the $20 million they borrowed to build the facility, according to local NBC affiliate WPSD.

Interestingly, Paducah’s aquatic center was already projected to lose money, even without the pandemic.

That’s because targeted subsidies for things like stadiums and hotels don’t make economic sense even in good times, says Michael Farren of George Mason University’s Mercatus Center.

“Targeted economic development subsidies don’t work. They don’t actually raise the standard of living in the communities that use them,” he tells Reason.

Farren says these kinds of incentives, at best, spend scarce public dollars on economic activity that would have happened regardless of the subsidies offered. That’s a loss for local businesses and residents who have to pay these taxes but don’t receive any of this largess, he says.

“You’re subsidizing one provider of goods and services at the expense [of] other providers of goods and services. You can certainly see winners and losers,” says Farren.

Often, targeted government subsidies can end up distorting markets by oversupplying a good or service, which then creates more demand for subsidies and incentives in order for said business to stay afloat.

Pointing to the research of University of Texas professor Heywood Sanders, Farren argues that local governments have oversupplied the market for convention space, and have since tried to shore up demand for these venues by building luxury hotels.

Now both types of investment are losing money at the worst possible time. Local governments are under tremendous financial strain as sales taxes they rely on evaporate, and the demands for all forms of public services grow.

This would be the case regardless of whether governments had splurged on dubious economic development projects. It nevertheless means that cities across America are having to divert money from providing essential services to cover the costs of luxury hotels.

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A Teenager Posted About Her COVID-19 Infection on Instagram. A Deputy Threatened To Arrest Her if She Didn’t Delete It.

A family in Oxford, Wisconsin, is suing the local sheriff’s department after a patrol sergeant threatened to arrest a teenage girl for disorderly conduct for posting on Instagram about being infected with COVID-19.

Amyiah Cohoon, 16, is a student at Westfield Area High School in Westfield, Wisconsin. According to this lawsuit, she and schoolmates went to Disney World and Universal Studios in Florida for a spring break trip in early March, right as the coronavirus was beginning to spread and businesses began to shut down. She and her classmates canceled the trip early and returned home.

Once home, Cohoon began developing symptoms associated with COVID-19. She sought medical assistance, but at the time they were unable to test her to see if she was infected. She was diagnosed with an upper respiratory infection with “symptoms consistent with COVID-19,” according to the lawsuit.

Cohoon went home and posted on Instagram letting people know that she had COVID-19 and was in self-quarantine. Her condition worsened and she was brought to the hospital for treatment. She posted again about the experience on Instagram. Finally, they were able to test her, but the test came back negative. According to the lawsuit, doctors told her it was likely the missed the window for testing positive, but she probably did have COVID-19, despite the test results. (False negative results have been an ongoing issue in accurately diagnosing infections.)

After she returned home from this visit, she posted again on Instagram and included a picture of herself at the hospital wearing an oxygen mask.

The very next day, Patrol Sergeant Cameron Klump from Marquette County Sheriff’s Department showed up on the family’s doorstep. He was there under orders from Sheriff Joseph Konrath to demand that Amyiah and her father, Richard Cohoon, remove Amyiah’s Instagram posts. If they refused, Klump said the family faced charges for disorderly conduct and Klump told them he would “start taking people to jail,” according to the suit.

Konrath’s justification was that there had been no confirmed cases of COVID-19 in the county. He found out about the Instagram post from Amyiah’s high school. The Cohoon family had contacted the school to let them know about Amyiah’s infection, but nobody ever contacted them back to get more information. It appears that instead the school contacted the police. Under the threat of arrest, Cohoon complied and deleted the allegedly illegal Instagram post.

That evening the family would discover that a school administrator sent out an alert to families accusing Cohoon of making it up and assuring families that any information of infection was just a rumor. “Let me assure you there is NO truth to this,” the message read. “This was a foolish means to get attention and the source of the rumor has been addressed. This rumor had caught the attention of our Public Health Department and she was involved in putting a stop to this nonsense.”

The family then connected with the Wisconsin Institute for Law and Liberty, and the Institute sent a letter to Konrath warning him that he had violated Cohoon’s First Amendment rights and demanded both an apology and the promise that there would be no further threats of criminal charges against the family for Amyiah’s post.

Konrath refused, and now the Wisconsin Institute of Law and Liberty is suing Konrath and Klump in the U.S. District Court for the Eastern District of Wisconsin for violating Cohoon’s First and 14th Amendment rights. Her Instagram posts are protected speech, the Institute argues, and there was nothing about her posts that violated the county’s disorderly conduct law, and even if they did, the Wisconsin Supreme Court has held that disorderly conduct statutes in the state cannot be applied to speech protected by the First Amendment.

The Wisconsin Institute for Law and Liberty is asking the court to rule that Cohoon’s  posts were protected speech and order that the sheriff’s department may not threaten or cite Cohoon or her family for these posts, plus paying “nominal damages.”

The sheriff’s department is not backing down or even acknowledging an overreaction. According to the Milwaukee Journal Sentinel, their position remains that the one negative test means that she did not have COVID-19, which simply isn’t how it works. The Sentinel reports:

Sam Hall, an attorney for the sheriff, said the teenager “caused distress and panic” among other parents by claiming she had contracted the coronavirus despite getting a negative test result.

“This case is nothing more than a 2020 version of screaming fire in a crowded theater,” he said, referring to speech that is not protected by the First Amendment.

That the sheriff’s lawyer is misusing the much-maligned “fire in a crowded theater” argument from Schenck v. United States is a huge tell that these guys don’t have a leg to stand on. It’s a bad argument, a bad precedent (it was about censoring anti-war activism), and the Supreme Court has subsequently weakened that decision and broadened our free speech protections.

And even if that ruling remained relevant, Amyiah Cohoon was not engaging in the equivalent of “shouting fire in a crowded theater.” Because of the significant number of false negative test results, it’s appropriate for health staff to treat her as though she likely has COVID-19 based on her symptoms. It’s also appropriate for the Cohoon family to attempt to warn families of the students who went with her to Florida that they might have been exposed, too.

It’s the school officials and the police who behaved irresponsibly, not Amyiah or her family.

Read the complaint here.

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Will COVID-19 Help Americans Break the Habit of Deferring to Centralized Authority?

American government-level responses to the COVID-19 pandemic predictably divide along partisan lines. That’s meant a lot of televised sniping between Republicans and Democrats, as well as competing narcissistic windbaggery from President Donald Trump and New York’s Gov. Andrew Cuomo. It has also meant a revival of the tension between dispersed decision-making and concentrated authority. With Americans pulling away from each other into opposing camps, the time is ripe for breaking centralized control over our lives.

This week, the Democratic governors of Connecticut, Delaware, New Jersey, New York, Pennsylvania, and Rhode Island announced the creation of a “multi-state council” intended “to develop a fully integrated regional framework to gradually lift the states’ stay at home orders while minimizing the risk of increased spread of the virus.”

Simultaneously, the governors of California, Oregon, and Washington – also all Democrats – proclaimed a “Western States Pact” based on “a shared vision for reopening their economies and controlling COVID-19 into the future.”

Both groupings emphasize public health considerations over restarting the lockdown-crippled economy. They object to the president’s push for reopening businesses and getting Americans back to work.

In response, Trump insisted that he has “total authority” over decisions about when life should get back to normal. That’s a patently false claim that he had to walk back. We may be accustomed to the federal government exercising near-absolute power, but the Constitution reserves most tasks for the states, no matter what they’ve willingly surrendered over the years.

The battle we’re watching isn’t a principled dispute over federalism and the Constitution. Nothing converts Democrats into fans of state power like Republican control of the White House, and it’s exactly that control that makes Republicans into cheerleaders for the federal government. Their positions will reverse just as soon as the major parties’ fortunes do. Given the deep partisan polarization in the U.S., which has seen Republicans and Democrats come to not just oppose but actually hate each other, change in control of Congress or the White House is just a recipe for flipping the script. Republicans and Democrats may trade places, but half the country will continue to resist whatever is happening in Washington, D.C.

This also isn’t a contest between heroes and villains.

Trump is right to worry about the implications of a national suspension of economic activity to slow the spread of COVID-19. But he’s also turned televised pandemic briefings into opportunities to rant about his political enemies and berate members of the press. And, under his watch, the federal government hijacks shipments of medical supplies ordered by hospitals.

Likewise, governors justifiably fret over the pandemic’s lethal impact on densely populated urban areas in their states. But Cuomo’s threat to send the National Guard to steal ventilators from upstate hospitals looked very much like an exercise in rewarding the New York City residents who vote for him at the expense of voters elsewhere who don’t. And many of the restrictions imposed by state officials responding to COVID-19 are nothing less than intrusive and bizarre.

Besides, if Trump lacks the authority to open and close the economy at will, it’s not clear that governors possess it, either.

“Americans should know that ample legal precedents suggest that most shelter in place orders are unlawful and unconstitutional,” Robert E. Wright, professor of political economy at Augustana University, wrote for the American Institute for Economic Research. He points to a history of quarantine orders much more limited in scope than what we’ve seen this year.

But if we’re going to have bad policy, better to have it imposed at the state and local level than by the feds. Then, it can be compared to differing approaches elsewhere. It can also be evaded if necessary, the way Pennsylvanians poured across the state line to make purchases in neighboring communities after their government monopoly liquor stores closed as part of the pandemic response.

Truthfully, governors rediscovering the pleasures of state power likely have more on their minds than the “laboratories of democracy” that U.S. Supreme Court Justice Louis Brandeis described in his discussion of federalism and policy experiments. The partisan divide built into the revolt of the coastal states’ alliances against federal power makes their efforts look like yet another salvo in the increasingly nasty political warfare that has engulfed the country in recent years.

Gov. Gavin Newsom, for his part, has the habit of referring to California as a “nation-state.” That raises questions about just how far he plans to take his assertion of independence from federal policy set by Trump and Republicans.

But if Newsom and company have learned to enjoy going their own way, they might want to remember that it doesn’t have to stop at the state level. Protests against strict lockdown rules in Michigan, North Carolina, and Ohio make it clear that shifting power from the federal governments to the states doesn’t eliminate disagreement and resistance. Officials in some placesincluding county sheriffs in Idaho and Michiganrefuse to enforce at least parts of state stay-at-home orders that they consider unconstitutional and violations of civil liberties.

“In the spirit of liberty and the Constitution, you can request those of us that are sick to stay home, but, at the same time, you must release the rest of us to go on with our normal business,” Sheriff Daryl Wheeler of Idaho’s Bonner County wrote to Idaho Gov. Brad Little.

If states dissent from federal policy and try to pursue a different approach, localities certainly feel justified in doing the same. And if local policies rub individuals the wrong way, you can expect plenty of people to insist on making their own decisions for themselves.

And why not? Decentralized decision-making doesn’t guarantee better results than the centralized kind, but it affects and offends fewer people. It allows greater respect for people’s varying circumstances and their different tolerances for risk.

Of course, the same can be said about all sorts of decisions that are traditionally left to the powers-that-be to impose one-size-fits-all mandates that end up fitting very few. If we can break the habit of deferring to centralized authority, we may find that we like making our own choices.

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After Deadly Easter, More Tornados Expected For South This Weekend

After Deadly Easter, More Tornados Expected For South This Weekend

Severe thunderstorms and tornadoes are expected for much of the South on Sunday, including areas that are still recovering from last weekend’s deadly storm.

“The highest probability will be on Sunday across many of the same areas that saw severe weather on Easter,” CNN meteorologist Dave Hennen said. “This storm will be similar, but not as strong.”

About 105 tornadoes were spotted across the South during Easter weekend.

The devastating storms resulted in at least 32 deaths, and dozens of homes and buildings ripped apart across the South. At one point, nearly 25 million people on the East Coast were under a tornado watch.

At the time of the storms, the National Weather Service (NWS) Eastern Region tweeted a map of the most heavily impacted areas.

Hennen says this weekend’s storm will develop in East Texas on Saturday night and early Sunday, with potential for large hail, damaging winds, and tornados.

The storm will trek east throughout the day. “Tornadoes will be possible, but this time the ingredients will favor strong winds as the most prevalent threat,” CNN meteorologist Taylor Ward says.

The most high-risk regions for severe weather on Sunday will be North Louisiana, Southern Mississippi, Alabama, and West Georgia.

Since the ground is mostly saturated from last weekend’s storm, there’s an elevated risk of flooding in the South on Sunday.

NOAA’s Weather Prediction Center shows rain totals for southern states could be exceptionally high in Alabama and Georgia through Monday. 

By Monday afternoon, the system is expected to move off the Carolina coast. 


Tyler Durden

Fri, 04/17/2020 – 12:40

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“Let Them Eat Stocks”: Top Market Strategist Says “In 20 Years I Have Never Seen Anything Like This”

“Let Them Eat Stocks”: Top Market Strategist Says “In 20 Years I Have Never Seen Anything Like This”

Submitted by Michael Every of Rabobank

It’s Hard Not to Be ‘Depressed’

Here come the depression-level data. US jobless claims soared a further 5.2 million in the past week, meaning that around 22 million jobs have now been shed in the past four weeks. That undoes all the jobs created since the end of the Global Financial Crisis, which is seen as unprecedented in the structural economic damage that it wrought. Yet we are still only four weeks in to this: does anyone think the sudden slump in demand from 22 million newly unemployed, let alone the broader impact of ongoing lockdowns, won’t see a further massive initial claims print next week, and the week after, and the one after that, and so on?

I have written about economics and markets for over 20 years and try (and often fail) to detach myself from some of the wilder, more unusual, or more illogical and/or unsustainable movements one sees. However, US equities rallying for a fourth successive week on the back of a fourth successive print showing millions of US citizens losing their jobs is a real splinter in the mind’s eye: maybe if everyone loses their job equities could double?

This all goes far beyond the pre-Covid metric of ‘bad news is good news’ because we already have zero rates and apparently infinite quasi-fiscal Fed liquidity on offer: what more is being priced in by further economic misery? To the increasingly depressed it smacks dangerously of depression alongside a Marie Antoinette-esque “Let them eat stocks” from Wall Street – as does Treasury Secretary Mnuchin stating in a TV interview that a check for $1,200 is bridge finance supposed to last the recipient for 10 weeks: I am sure he has vast experience of living on that kind of breadline.

Yes, US President Trump is now flagging that some parts of the US economy can open up again in four weeks – but that’s another month of massive job losses to then try to recover from, and to eke out on USD1,200. Moreover, as we keep repeating, one cannot assume that there is going to be a binary switch back to normal. Voluntary lockdowns, in terms of consumers not going out to many places, are going to linger for a long time – we have evidence of that from China, where things are still not back to normal at all, and from Sweden, where things aren’t locked down and yet where people won’t go to cinemas, etc. Add on top recent evidence that social distancing needs to be MUCH more than two meters OR that masks must be worn inside and outside at all times to ensure that two metres is enough, and normal economies are not on the horizon.

On that front, the headlines today are that China’s GDP collapsed -9.8% q/q and -6.8% y/y in Q1, the inverse of what one would normally expect to see in a series that is carefully pruned and polished before public outings. That was actually better than the -12.0% q/q consensus but oddly worse than the -6.0% y/y consensus – but this is all probably still the market-friendly version of the actual facts in many places.

We also saw industrial production for “back to normal” March at -1.1%, far better than the -6.2% expected, and fixed investment was -16.1% y/y YTD, although up from -24.5%. Yet retail sales, on which hopes for Chinese recovery are based given global demand is absent, were -15.8% y/y, worse than the -10.0% the market was looking for. Lastly, the unemployment rate was DOWN to 5.9% from 6.2%, which is why nobody pays any attention to it at all. Also worth noting was a survey on SME activity released yesterday by the PBC School of Finance at Tsinghua University. It shows daily revenue is running around half the level it was in 2019, and monthly revenue for March is -60% y/y. That is with an economy that has been opened up – and those are still depression level data.

Even some Fed members are hedging their bets. Bullard notes that while a V-shaped US recovery is possible, so is a “depression”. Yes, he mentioned the D word. Kaplan sees unemployment hitting the high teens (it’s already there, so that’s another great Fed look into the distant future) and is “open minded” about the Fed now including financial aid to non-profits. One could quip that by covering junk bonds the Fed is already bailing out non-profits: that as GOP Senator Crapo (no typo), who heads the powerful Banking Committee, is stressing that transparency over the eligibility for the coming flood of trillions of USD is required.

Meanwhile, Europe is having its own drama. French President Macron has given an interview with the FT in which he argues that fiscal transfers are needed if the EU is to “hold on” through this crisis, underlining that globalisation as we knew it is over, and that tomorrow belongs to populists and Euroskeptics if the EU won’t agree to burden sharing. With opinion so split on the issue of coronabonds, and the nuts and bolts of it so complex, large parts of the EU are going to face ‘depression’ in a least one sense no matter how this binary issue is finally resolved – though if that will be at next week’s virtual summit remains to be seen.

Finally, more international drama. Stand-in UK PM Dominic Raab has decided to go on a “Raab araaand” (apologies to the late Mike Reid) on the foreign policy front, stating “There is no doubt we can’t have business as usual” with China and that “After this crisis, we’ll have to ask the hard questions about how it came about and how it couldn’t have been stopped earlier.“ Anglo-US solidarity? One wonders if the Huawei greenlight still stands when Boris gets back to No. 10.

Likewise, Reuters reported yesterday that the US has blocked the IMF from issuing more SDR to free up lending capacity specifically over objections to USD funding being made without conditions to Iran….and China. Why does China need USD from the IMF? Why doesn’t the US want the IMF to lend them to it? And why is China on the same list as Iran at all? Perhaps this is nothing – but for those who want to see, it looks a lot like another facet of USD/Eurodollar power-play akin to the “He who controls the spice controls the universe!” going on inside the US in terms of who the Fed/Treasury channel cash to.

It really is all very depressing – and so I get why people don’t want to see it.


Tyler Durden

Fri, 04/17/2020 – 12:25

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In Sweden, Will Voluntary Self-Isolation Work Better Than State-Enforced Lockdowns in the Long Run?

“Sweden’s suffering very, very badly” according to President Donald Trump. Nope, says Denmark’s former Prime Minister Lars Løkke Rasmussen, who suggested April 7 that Denmark should have followed the cautious Swedish way of responding to COVID-19.

Views diverge on Sweden’s unique strategy of not closing borders and shutting down schools, workplaces, restaurants, libraries, gyms and shopping centers. The Swedish government has declared no state of emergency and no orders to shelter in place. Young Swedes are even encouraged to continue with their sports training and events.

Some Brits think that we Swedes are crazy, The Spectator‘s Fraser Nelson told Swedish radio last week, but added that other Brits admire how the Swedish people have largely followed scientific advice—no mandatory lockdown needed.

One reason why some believe Sweden is a disaster zone while others see it as a role model is that currently available data can be interpreted many different ways. 

For example, the number of deaths as a share of total cases is a useless statistic, since countries have completely different testing regimes. It is at best an indication of a country’s testing capacity and how many people with more mild cases are being tested—an area where Sweden has not impressed. 

Those who want to show how great Sweden is doing have produced charts comparing us to countries like Britain, Belgium, France, Spain, and Italy. Those who want to prove the opposite replace those countries with Norway, Denmark, and Finland, all of which have fewer deaths. 

If you want Sweden to look bad, compare it to the U.S. as a whole—120 deaths per million in Sweden vs. 94 in the U.S. according to Our World in Data’s April 16 numbers. If you want Sweden to look good, compare it to New York state, which is at a more similar stage to us in the virus’s spread—120 vs. 580.

The truth is that Sweden is somewhere in the European middle when it comes to deaths per capita, which in itself is interesting. We are outliers in terms of policy, but not in terms of outcomes. 

There are also reasons to think that Sweden is doing better than these comparisons suggest. Many countries don’t count COVID-19 deaths outside of hospitals. When people die at home, in nursing homes, or in prisons, they don’t show up in the coronavirus death count. 

In the Stockholm region of Sweden, 42 percent of deaths took place in nursing homes for the elderly. In many countries, and some U.S. states, those deaths would not show up in the data. 

This has a major effect on where you are compared to other countries. According to Johns Hopkins University, Belgium has twice as many COVID-19 deaths per capita as the Netherlands. But in Belgium, almost half of those deaths are from nursing homes, while testing is more rare in Dutch nursing homes so fewer deaths there are attributed to the disease.

After France started to include nursing homes in the statistics, the total number of French COVID-19 deaths jumped by almost a third.

While some Swedish regions have also underreported nursing home deaths, there are good reasons to believe we count deaths more accurately than many other countries. Sweden is a statistics powerhouse—we have had a disturbingly nosy government long before countries like the United States even existed. Every Swede has a 10-digit personal number. It is similar to a Social Security number, but it’s mandatory and we have to identify ourselves with this number, validated by an ID card, during every contact with authorities and doctors. 

There are obvious downsides to having the government make lists and find out who’s naughty and nice, but in the present context, one benefit is that we know with good confidence who has died.

During the present pandemic, Sweden systematically checks the list of people who have tested positive for the virus against the population register. Every time the government discovers that someone who had the virus has died, that person is registered as a COVID-19 death if it happened within 30 days of the diagnosis—even if the cause of death was cancer or a heart attack. 

It means that Sweden reports the number of people who die with COVID-19, not of COVID-19.

Even in a culturally and geographically similar country like Norway—celebrated for its low death rate—they do things differently. The Norwegians only count something as a COVID-19 death if a doctor concludes that someone was killed by the disease and decides to report it to the country’s public health authority. 

This means that we have to wait a long time for more detailed data on deaths and specifically excess deaths—those who would not have died from something else close in time—before we proclaim victory or defeat.

No matter how we count, though, I assume that Sweden has had more COVID-19 deaths per capita than our Nordic neighbors. But that is an obvious result of those countries’ decisions to postpone cases and deaths by locking down whole societies for a period of time. The thing to watch is what happens when they begin to open up again and will face a new wave of COVID-19. No government can keep people locked up until we have a vaccine, and most are now loosening restrictions.

A Harvard model projects that a 60 percent suppression of the disease will result in a higher peak later on and a higher number of total deaths than a mitigation strategy like the one Sweden used, where the spread is reduced by no more than 20 or 40 percent, so that the disease can pass through the population to create herd immunity during a period when the vulnerable are protected. Other models come to other conclusions, depending on what you put into them, of course. We just don’t know yet, and only time will tell. Herd immunity might yet beat herd mentality.

Sweden’s strategy would have been considered a failure if it had resulted in a peak of cases so high that the health care system had become overwhelmed and people who could have otherwise been saved died from lack of care. We are nowhere close to the end of this, but the models and pundits that predicted this outcome happening as early as late March were wrong. 

The Swedes who have died from the coronavirus did not die due to lack of hospital beds or ventilators. Thanks to a rapid increase in intensive care unit capacity, 20 percent of Sweden’s ICUs are unoccupied. Stockholm has built a new field hospital, already equipped to receive hundreds of COVID-19 patients, including 30 ICU beds. So far it has not had to open. The average age of the dead has been 81, which is close to our average life expectancy. 

And it seems like the disease is now slowing down in Sweden, not speeding up. The number of COVID-19 patients newly admitted to the ICU has been relatively stable since March 23, and since people are also getting better and leaving the hospital, the total number of patients in ICU treatment is declining somewhat, at least for the moment. 

The number of deaths in Sweden has been in slight decline for more than a week. We must be extremely careful in interpreting such recent trends, but at least it is far from the exponential increase many feared. 

Why has Sweden done so much better than many predicted? Because others failed to see that society could respond voluntarily to the pandemic. For example, the influential Imperial College model estimates a higher reproduction rate of the disease in Sweden than in other countries, “not because the mortality trends are significantly different from any other country, but as an artefact of our model…because no full lockdown has been ordered.”

In other words, the model could only handle two scenarios: an enforced national lockdown or zero change in behavior. It had no way of computing Swedes who decided to socially distance voluntarily. But we did. You have probably seen pictures of crazy Swedes in crowded restaurants, defying sanity and the international consensus, but chances are you saw the same pictures of the same restaurants at that particular evening when it was indeed crowded—had the camera pointed toward a different part of the same restaurant, it would have shown many empty tables. Swedes, though imperfect, have generally done a good job of voluntarily self-isolating.

Swedes have reduced their mobility substantially, even without police enforcement. For example, cell phone data shows that the inhabitants of Stockholm reduced their trips to the most popular Swedish holiday destinations during Easter by around 90 percent.

This means that our economy still hurts despite more liberal policies (even apart from the fact that export-dependent Swedes suffer from lockdowns in other places). We are not going to shops and restaurants like we used to. But losing two-thirds of your revenue rather than 100 percent might mean the difference between life and death for many entrepreneurs. 

We are nowhere close to the end of the pandemic. Perhaps Sweden will do worse long term, and then we’ll have some serious self-examination ahead. Or perhaps Sweden is the one place that is succeeding in limiting long-term damage, caring for the sick, and protecting the vulnerable, all while working toward herd immunity.

We don’t know whether the Swedish model is better or worse yet. What we do know is that Sweden has not cracked down on basic liberties like others have, and has not wrecked society and the economy to the same extent. 

As Hippocrates might have put it, “First, do no harm.”

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Nasdaq Tumbles Into Red As Markets Realize “There Is No Reopening Plan”

Nasdaq Tumbles Into Red As Markets Realize “There Is No Reopening Plan”

Update (1215ET): While Small Caps remain up over 3.5%, Nasdaq has dropped into the red on the day…

*  *  *

US equity market have been roaring higher (especially so overnight) as hope trumped reality once again.

But bonds were not buying it…

And neither was oil…

Maybe this is why.

As Nomura’s Charlie McElliigott summed up so perfectly this morning:

The “TL;DR version” of the U.S. reopening guidelines is simple: There is no “plan” as:

1) there are no deadlines;

2) there are no guidelines or protocols to businesses on protective gear / temperature checks / testing / sanitizing; and

3) the plan offers little to no federal assistance, with states being asked to “independently” secure PPE and medical equipment for their hospitals.

And finally, it seems like Nasdaq has woken up to the reality of the Gilead drug bullshit and Nasdaq futures are red on the day…

It’s a long way to catch down to reality…


Tyler Durden

Fri, 04/17/2020 – 12:11

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“Spectacular Momentum Crash” Imminent As Record Human Hedge Fund Selling Meets Furious Robot CTAs Buying

“Spectacular Momentum Crash” Imminent As Record Human Hedge Fund Selling Meets Furious Robot CTAs Buying

One of the reasons cited for the explosive move overnight in futures – along with the sketchy STATnews/Feuerstein leak of Gilead’s remdesivir coronavirus trial – is optimism over the upcoming reopening of the US. However, as Nomura’s Charlie McElligott writes this morning, “the “TL;DR version” of the U.S. reopening guidelines = there is no “plan,” as there are 1) no deadlines; there are 2) no guidelines or protocols to businesses on protective gear / temperature checks / testing / sanitizing; and 3) offers little to no federal assistance, with states being asked to “independently” secure PPE and medical equipment for their hospitals.”

So why this tremendous surge in risk assets, which pushed Russell emini futures limit up overnight?

It is certainly not coming form hedge funds, which according to Goldman, saw the largest monthly dollar net selling since Aug ’16 in the month though April 15, with all 11 US sectors sold MTD, led by Cyclical sectors. In other words, hedge funds are not driving this rally, but instead are (panic) selling in droves into it.

One possible explanation for the move higher – especially in the Russell/small caps – is that, as Nomura notes, “the big talking-point in equities-circles of the past week has been the extreme mega-cap outperformance over small-cap; thus, our U.S. Equities “Size” factor market-neutral strategy has experienced the largest 4d cumulative drawdown experienced over the past decade at -11.3%, which is a a -6.3 sigma event (10Y rel)”

Ok we get the rotation, but someone must be buying into it, and since it is clearly not hedge funds, and retail investors probably have record unemployment to worry about, the answer must lie elsewhere.

Well, according to Nomura’s other quant, Masanari Takada, that someone is CTAs, with the strategist writing that trend-following buying has picked up speed in US equity futures markets, and CTAs appear to have flipped long not only on NASDAQ 100 futures but also on S&P 500 futures now.  Which makes sense: CTAs, which are computer-driven models, do not care about such trivial facts as mass layoffs, millions of people infected with a deadly virus, and instead they only care if others are buying at which point they too join the buying frenzy, making them the dumbest of momentum-chasing investors. This pick-up in trend-following buying is getting a boost from the narrative among market participants having taken on a more positive tone, playing catch-up with a rebound that is already under way.

However, as discussed previously, Nomura thinks that CTA buying of NASDAQ 100 futures may hit a slowdown next week (around 22 April). Also, and this goes without saying, the coronavirus pandemic has left a deep imprint on both the real economy and investor confidence, and the bank suspects that “doubts about the sustainability of the rally are strongest among those investors most focused on fundamentals” such as hedge funds, if not pure momentum chasers like CTAs. Having sold record amounts in recent weeks – as per Goldman above – Nomura calculates that the US equity exposure of hedge funds in the aggregate is trending generally sideways, with bullishness among technical investors and bearishness among fundamentals-focused investors more or less canceling each other out.

In other words, a clash has broken out between human (fundamentally-concerned) and CTAs (momentum-chasing) traders.

So who wins?  Here, Nomura is skeptical that mere momentum will be sufficient, with Takeda writing that algos they may be, but CTAs cannot go against economic fundamentals for long:

Zooming out a bit, we note that while CTAs’ trading decisions are technically driven, their trades that go against the direction of global economic momentum tend to end in failure. Looking specifically at historical trends in the relative positioning of CTAs in major equity futures (S&P 500 futures, Nikkei 225 futures, DAX futures) and major government bond futures (UST futures, JGB futures, Euro-bund futures), we find that when global economic growth momentum is collapsing (as it is now), CTAs take a more pronounced tilt towards bonds (overweighting long positions in bond futures).

One can track how this premise plays out with reference to the OECD composite leading indicator and the frequently updated Citi Economic Surprise Index for major economies. With so much uncertainty surrounding when the global economy might actually bottom out, Nomura predicts that CTAs as a group are likely to either:

  1. execute an allocation shift by selling equity futures and buying bond futures (on the expectation of falling stock prices and falling bond yields); or
  2. increase their gross exposure by continuing to buy equity futures while focusing even more intently on buying bond futures (on the expectation  of rising stock prices and falling bond yields).

So who wins this man vs machine? On at least this occasion, the Japanese bank is taking the side of the humans, with Takeda warning that “expectations for a swift economic recovery could lead to a momentum crash.”

As the Nomura quant explains, the biggest risk the bank sees is that global economic growth expectations fail to pick up rapidly in a way that confounds these CTA trading scenarios. Such a “gap between reality and the expectations of trend-following investors can sometimes result in a spectacular momentum crash in equity markets and bond markets.”

Adding to this paradoxical divergence, the outperformance of the US equity momentum factor is currently aligned with growth in CTAs’ net long position in 10yr UST futures (TY). With lower yields as the backdrop, investors have been favoring tech stocks and defensive stocks by process of elimination, causing the momentum factor to start to look overheated.

And here is the flashing red light: this alignment between the outperformance of the US equity momentum factor and growth in CTA’s net long TY position was also in evidence in August-September 2019, at the height of the US-China trade war.

Takeda concludes that “the lesson here is that when the market mood does a 180-degree about-face from pessimism to optimism—and when that optimism turns out in retrospect to have been well justified—momentum tends to crash abruptly, with CTAs dumping long TY positions (spelling a surge in US longterm yields) and the US equity momentum factor running out of steam.”

How to determine precisely when the next crash – which will be a repeat of the Aug/Sept 2019 quantastrophe – comes? Pay attention – in the coming week and beyond – to momentum positions in equity and bond markets, and “look for clues as to how realistic some market participants are being by letting themselves start to become optimistic.”


Tyler Durden

Fri, 04/17/2020 – 11:55

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