The S&P Is Caught In A Gamma Trap, Preventing Turmoil From Record High Valuations

The S&P Is Caught In A Gamma Trap, Preventing Turmoil From Record High Valuations

Over the past three days, despite a barrage of negative news about the global economy and crushed hopes about Gilead’s Remdesivir treatment which according to the FT was a “flop”, stocks have been stuck in a tight range around the 2,800 S&P level, and there is a specific reason for that. As Nomura’s Charlie McElligott notes, the S&P 2,800 has emerged as the “Neutral Gamma” zone for the market “and again, is likely to remain that way, as the 3 largest aggregated Gamma strikes on the board have the S&P surrounded” as follows: $1.128B at 2750, $1.357 at 2800 and $1.154B at 2850:

Here is the data above shown in combine gamma format:

To be sure, with the S&P caught in this “gamma trap” on both sides, bulls will be gunning to close the S&P above the “flip” level 2813 coming out of today’s expiration, which would push dealer gamma in the green, creating a feedback loop whereby higher prices result in even higher prices as dealers are forced to chase the market higher.

Further adding to this market “brake” effect are normalizing Vol Control strategy flows, where the recent violent repositioning in the form of US stock selling over the past 3 month (~$305B estimated) was followed by the pivot towards buying seen more locally (+$13.5B bot the past 2w), which however has slowed to a trickle, reducing “second order” systematic flows which as Nomura explains, typically act as an accelerant following a “Gamma Impulse” which occurs after a macro shock, such as the double-whammy of the COVID pandemic alongside the oil price crash.

That about covers the technicals. Where things get interesting is the fundamentals (assuming those still matter in a world where only the Fed’s liquidity injections have an impact on stock prices), and here -as we first noted two weeks ago – the euphoria is once again unmatched.

Picking up on what we wrote two weeks ago, namely that “As The US Enters A Depression, Stocks Are Now The Most Overvalued Ever“, today the Financial Times writes that “US equity valuations reach near two-decade high after rally“, and points out what our readers have long known, namely that
“the rally has pushed the forward price-to-earnings ratio for the S&P 500 above 21 to its highest level since December 2001 — during the final stages of the dotcom bubble. The ratio reflects the price put by investors on future profits and is one of the most popular tools for investors to value stocks.”

Worse, the estimates shown above are based on highly optimsitic consensus forecasts which have yet to come down sharply. More from the FT:

Some portfolio managers warn that this expansion in the earnings multiple has left investors at greater risk from stale forecasts. Wall Street analysts have faced extra difficulty in gauging earnings given many US blue-chips have withdrawn full-year profit guidance, citing the uncertainty posed by the pandemic.

“A lot of companies are not giving guidance and it’s harder for analysts to revise their numbers,” said James Wong, a portfolio manager who runs the equity group of Payden & Rygel, a fund manager based in Los Angeles. “They’re looking for guidance and without it their numbers are a shot in the dark.”

Here is the truth: if one uses a downside case for forward EPS 2021, which Goldman believes is as low as 115, it means that the current forward PE is not 21 but actually24, the highest on record.

Alas, companies won’t be of any help in sharing hints on what earnings to expect as they themselves don’t know: In the past few weeks of first-quarter earnings, companies including Wells Fargo, IBM and Uber have scrapped the full-year profit guidance they typically share with analysts.

“I would have to close my eyes and throw a dart at a dartboard to guess what earnings will be this year,” said Terri Spath, chief investment officer of Sierra Investment Management also in Los Angeles. “It’s too challenging to put a number to it — this complete contraction of the economy is very painful.”

And while the Fed is doing everything in its power to tear the last links between stocks and fundamentals by injecting gargantuan amounts of credit into the system, some old-school traders remains skeptical and actually focus on near-term valuations. “I’m concerned that earnings haven’t been revised down enough,” said Wong. “If the markets don’t come off here, the price-to-earnings ratio is going to get even higher.”

* * *

One final observation on the S&P getting stuck at 2,800 is that as Credit Suisse chief equity strategist puts it, we’ve been here before on many occasions. Here are his observations:

One of the greatest challenges for investors in the current environment is a lack of comparisons. The cause of the current crisis and the economic damage are unlike anything we’ve experienced. However, we have been at 2800 on the S&P 500 before, in Jan 2018 and again in March 2019. 

The table below highlights just how different conditions are today, with the goal of addressing one simple question: are investors being compensated for the risk being taken?

Key takeaways and observations:

  1. While treasury yields are lower today, credit spreads are wider. As a result, the cost of capital is higher, implying lower valuations.
  2. Volatility (as a measure of uncertainty) is 3-4x higher today.
  3. Consensus Forward P/Es (next 12 months) are higher today. We believe this will be stretched even more as estimates continue to fall.
  4. Consensus Forward P/Es (second 12 months) are relatively comparable to other periods. These multiples assume a sharp V in corporate profits.
  5. EPS growth is expected to be weaker over the next 12 and 24 months than in comparable periods.

Finally, here is what the macro backdrop looked like in the last two times when the S&P was “stuck” at 2,800: long story short, it has never been as ugly as it is right now.

Which begs the question: How much longer can technicals and the Fed defy the fundamentals?


Tyler Durden

Fri, 04/24/2020 – 10:50

via ZeroHedge News https://ift.tt/3cQdhVT Tyler Durden

Cellphone-Tracking Can Help Fight the Pandemic Only If Governments Resist Their Snoopy Instincts

In the battle against COVID-19, public health types desperately want the ability to track people’s movements to test the effectiveness of social-distancing commandments and also to trace contacts between people who carry the disease and members of the public they may have inadvertently infected. Understandably in our device-crazed age, attention has turned to cellphones, those location beacons that most of us voluntarily carry.

Properly implemented, cellphone tracking might offer hope for slowing the spread of the pandemic. Improperly implemented—as has already happened—such monitoring promises to fulfill every Big Brother-ish fear privacy advocates have ever raised.

“When California officials wanted to see how closely people were following social distancing guidelines last month, they tapped a powerful new data set—a map that Facebook provided to state authorities derived from the location coordinates of tens of millions of smartphones,” The Washington Post reported last week. “The map showed with alarming clarity that large numbers of people were still gathering on beaches and in public parks. Soon after, Gov. Gavin Newsom (D) ordered them closed to vehicles, sharply restricting access.”

With its combination of the use of location data—however anonymous—shared without people’s permission, and a resulting restrictive and likely counter-productive crackdown on the ability to escape to the healthy outdoors, the California case manages to be thoroughly creepy without any benefit.

South Korea’s government at least manages to be creepy to some seemingly good end.

“South Korea quickly implemented legislation that would allow health officials to aggressively trace the footsteps of citizens who test positive for an emerging infectious disease. Using security camera footage, credit-card records, GPS data from cellphones and car navigation systems, they are able to pinpoint exactly where a person has been,” notes MarketWatch.

South Koreans can also download apps that tap into government tracking data to get details on any infected people in their vicinity. The system is very intrusive, but arguably helps people reduce the risk of getting sick.

China cranked the creepy factor up to 11 by requiring people to use apps that monitor their movements, assess their supposed risk of infection, and then present the results as a color-coded QR code that has to be shown to authorities on request. “A green code shows the user is not under quarantine and can move around the city freely, but those with yellow and red codes need to quarantine themselves at home or undergo supervised quarantine respectively,” according to the South China Morning Post.

Reports of privacy breaches, erroneous results, and an opaque appeals process were inevitable from any government-imposed system. They were especially unsurprising under an authoritarian regime.

Aware of earlier flaws and privacy invasions, public health scientists and their allies in the tech industry are pushing for contact-tracing that would be, well, less horrifying than what has gone before. Apple and Google are working together on a decentralized system that would use Bluetooth and pseudonyms to preserve privacy while alerting users to encounters with people likely to have the virus.

That sounds like a promising approach if it lives up to its billing. But already the tech companies are running up against resistance from French authorities, who want to preserve privacy between private citizens but allow governments to know people’s identities.

European governments, overall, prefer systems they are developing themselves which are intentionally centralized and do away with anonymity.

“The Pan-European Privacy-Preserving Proximity Tracing system, or PEPP-PT, is supported by German authorities and French institutions,” reports Slate. “Where the decentralized approaches propose to generate pseudonyms on your phone, the PEPP-PT protocols generate your pseudonyms on a centralized server. This server will be able to link each pseudonym back to your real identity. Worse: If you’re diagnosed positive, your phone will not simply upload the list of its own pseudonyms; it will also upload the identifiers of every person you’ve come into contact with so the authorities can track them down and notify them directly.”

A system that nosy and centralized might be a hard sell to populations that have grown increasingly disenchanted with the powers-that be in recent years. The Chinese government has been able to strongarm much of its population into downloading and using tracking apps (though not without significant pushback), but few other governments have the clout to make that happen. Interestingly, even the de facto one-party regime in Singapore, which enjoys high levels of public trust, hasn’t been able to get people to adopt its TraceTogether tracking app.

“More than a million users, or about one in five people here, have downloaded TraceTogether,” the Straits Times of Singapore reveals. But “in order for TraceTogether to be effective, Singapore needs about three-quarters of the population to have it.”

Privacy concerns play a major role in resistance to adopting the app. “I have no idea what kind of data is being taken away from me,” one Singapore resident told the Wall Street Journal.

Imagine the reactions French and German officials will run into with apps explicitly designed to bypass privacy protections in countries where the population generally doesn’t trust the state.

And, unless people are going to be forced to use these apps, public cooperation will be necessary for any tracking effort aimed at fighting the pandemic. To get that cooperation, people will have to be persuaded of the benefits to be had—most especially from contact-tracing (there’s no reason to try to salvage California’s “too many people are walking around in public” approach). And they’ll need to be able to trust assurances that their privacy is protected.

If that’s not forthcoming, cellphone users can sabotage most of these tracking efforts pretty easily. Turning off Bluetooth would hobble just about all the contract-tracing apps. Disabling location services and WiFi would do that much more to shield users’ whereabouts.

In China, where tracking apps are mandatory, people have taken to installing anti-spying software and to owning two phones—one with tracking software to show the police and the other for sensitive travel and unapproved uses.

There are sophisticated tracking techniques that might allow the authorities to bypass the permissions we give to apps on our cellphones, but those are more appropriate for monitoring specific targets than for contact tracing. If their use becomes widespread, the most appropriate reaction might be to shut our phones off or learn, once again, to live without them.

The burden is on public health authorities to convince us that, by working with them, the new COVID-19 pandemic can be battled without making ourselves vulnerable to the ancient pestilence of official nosiness.

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“Washed Under The Rug”: Small Business Owners Livid Over PPP Bailout Debacle

“Washed Under The Rug”: Small Business Owners Livid Over PPP Bailout Debacle

Small business owners who were shut out of the government’s $349 billion Paycheck Protection Program (PPP) after it ran out of money last week are livid after learning that banks doled out tens of billions in funds to large corporations – around 20% of which were public companies who had other means of accessing capital.

Bloomberg highlights Robyn Schultz, a small business owner who was waiting on approval for a $40,000 PPP loan for her Birmingham, Alabama electrical company when the PPP ran out of funds. Schultz, 60, and her husband Steve Bearden are struggling to keep their six full-time employees on the payroll. The couple isn’t sure they can wait for the additional $320 billion approved by Congress on Thursday.

Steve Bearden of Quality Electric in Birmingham, Alabama

“Smaller companies like us are probably just going to be washed under the rug,” said Schultz.

The swift and unprecedented response by the U.S. government and the Federal Reserve to the coronavirus’s economic fallout doesn’t mean much to folks like Shultz, who see help coming too late or not at all.

Policy makers in Congress, the Treasury Department and the central bank have taken a lesson from the last financial meltdown, 12 years ago, when ordinary Americans were left to fend for themselves and millions lost their homes. This time, they’ve included individuals and small businesses in their aid packages in a way they didn’t in 2008, when bank bailouts, even as they saved the system from collapse, sparked outcry over tilted playing fields for the rich and ignited a backlash that altered the political direction of the country.

But if one of the lessons of 2008 is to help Main Street as well as Wall Street, the lesson seems to be only partly learned. Americans live in two separate and unequal worlds, and the bailouts reflect this. –Bloomberg

Some of the 1.7 million PPP applicants describe drowning in red tape, as they waited for the Treasury Department to provide clarification and guidance as Congressional Democrats held up additional funds in order to negotiate for their interests. 

“It just seems like the left hand doesn’t know what the right hand is doing,” said Schultz. “I don’t know where to turn for guidance.”

The fact that large corporations appear to have been prioritized over the small businesses the PPP was intended to help was insult on top of injury – after the Small Business Administration’s clunky and confusing rollout left small business owners scrambling to tap funds, while Fed Chairman Jerome Powell kept cash flowing into the financial system – a $1.25 trillion buying spree which limited losses for some billion-collar hedge funds which made wrong-way bets with leverage, according to the report.

“In 2008, they forgot about Main Street and thought only about Wall Street,” said Lawrence Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota. “In 2020, they did a parade down Main Street and forgot to leave the goodies.”

In total, the federal government and central bank have committed a combined $2.6 trillion to stem the economic fallout from the Wuhan coronavirus – which includes the two tranches of PPP funds, and $77 billion for the SBA Economic Injury Disaster Loan program. Another $600 billion in not-yet distributed funds have also been set aside for mid-sized companies, which will be able to access capital from the Fed’s two Main Street Lending facilities.

“A lot of the pressure came from outside the government, and I do think Treasury has been very attuned to it,” said Columbia University professor Glenn Hubbard, who served on president George W. Bush’s Council of Economic Advisers. Hubbard says he thought the Treasury Department had learned from the mistakes of 2008, and was going to take greater measures to help those in economic distress.

“The bad press from ’08, not dealing with homeowners, was probably on people’s minds,” he added.

Bloomberg notes that small businesses provide nearly half of America’s jobs, accounting for roughly 45% of national production and almost all the growth in employment.

Another shafted small business owner, Alex Steed, who owns a video-production company in Portland, Maine, says he wasn’t even able to get someone from the SBA on the phone after applying for a loan.

“I was told I was caller number 1,403, and it would be around a three-hour wait,” said Steed. “I stayed on the line for several hours before it went dead. I never ended up connecting with anyone.”

“The government and people are touting how they have this program ready, but from my perspective there’s just a big disconnect, said Melissa White, a self-employed hair salon owner of 18 years in San Antonio, Texas. “Everybody’s confused.”

Meanwhile resentment is growing over the bigger companies which have received PPP loans as smaller businesses have limited borrowing options. Restaurants and hospitality companies were able to take advantage of a loophole by dividing their workforce into smaller units – receiving stimulus funds by ensuring that each location had fewer than 500 employees.

Companies receiving the maximum loan amount of $10 million include Hallador Energy Co., a Terre Haute, Indiana-based coal company that had more than 900 employees at the end of last year; San Jose, California-based Quantum Corp., a tech firm with more than 800 workers in December; and Potbelly Corp., which operates 428 sandwich shops. A Potbelly spokesman said Congress allowed funding for restaurants because their workers are “vital to our economy.” Hallador and Quantum didn’t respond to requests for comment.

Ruth’s Chris Steak House’s parent, Ruth’s Hospitality Group Inc., received two loans, each for $10 million, because it has two holding companies. Ruth’s owns 83 restaurants and has 5,740 employees. It decided on Thursday to give back the money, a few days after Shake Shack Inc., the national burger chain, said it would return the $10 million it received from the SBA. –Bloomberg

“When I think of small businesses, I think of mom-and-pop stores with a handful of employees,” said Texas energy consultant Alex Gonzalez – who applied for an SBA loan but wasn’t able to receive funds. “You wonder how much of this money that was intended for companies with 3, 4, 5, 6, 10 or 20 employees were left off.“

 


Tyler Durden

Fri, 04/24/2020 – 10:35

via ZeroHedge News https://ift.tt/2Y99y1c Tyler Durden

Martenson: Debunking The Hydroxychloroquine “Controversy”

Martenson: Debunking The Hydroxychloroquine “Controversy”

Update (1005ET): Minutes after this post was created, the U.S. Food and Drug Administration (FDA) warned patients against taking two malaria medications that have been talked up by President Trump for Covid-19, unless carefully monitored in a hospital or as part of a clinical trial.

The FDA said it was issuing the warning after reports that patients taking the drugs, especially in combination with the antibiotic azithromycin, had experienced heart issues.

“The FDA is aware of reports of serious heart rhythm problems in patients with Covid-19 treated with hydroxychloroquine or chloroquine, often in combination with azithromycin,” the health agency said in the warning.

Additionally, the cost of hydroxychloroquine ingredients is soaring.

Cadila Healthcare managing director Sharvil Patel said contracts with Chinese suppliers of ingredients for hydroxychloroquine production had not been honored as they were signed and suppliers were asking to pay multiple times more, Financial Times reports, citing an interview with the executive.

Anhui Haihua Chemical Technology, a Chinese supplier of hydroxychloroquine ingredient m-chloroaniline, confirmed the product’s 375% price increase to about $26,840 a ton since the start of the year, FT says citing an identified official at the company

*  *  *

Via PeakProsperity.com,

The media’s now saying it doesn’t work. Is that actually true?

There sure has been a lot of recent press about how ineffective hydroxychloroquine is. That’s a real letdown given how promising it was thought to be.

But are the headlines true?

To answer that, Chris pulls up the original VA study all of the recent headlines are referencing. Well, it turns out, it’s based on quite poor “science”.

For example, it wasn’t randomized; by its own admission, hydroxychloroquine was given to sicker patients, closer to death, when we know HCQ works best when given early on. And zinc, a key component to its efficacy, wasn’t administered. Nor was azithromycin in a number of cases.

Right now, the “HCQ shows no benefit” claim appears more an intentional narrative than a science-backed finding. In fact, there is growing empirical evidence, notably in France and Costa Rica, that it can work amazingly well when applied under the right conditions.

For now, it seems we remain best served by keeping our eyes open and doing our own investigation versus relying on what the media is telling us.

To that end, Peak Prosperity will keep up our efforts and continue producing these videos for as long as needed.

Key your own mind sharp, research and think before taking action, and ask questions in the Comments section below if you’d like to tap the PP tribe’s expertise.

Oh, and as always, keep working on your garden.


Tyler Durden

Fri, 04/24/2020 – 10:16

via ZeroHedge News https://ift.tt/3bypEWk Tyler Durden

Cellphone-Tracking Can Help Fight the Pandemic Only If Governments Resist Their Snoopy Instincts

In the battle against COVID-19, public health types desperately want the ability to track people’s movements to test the effectiveness of social-distancing commandments and also to trace contacts between people who carry the disease and members of the public they may have inadvertently infected. Understandably in our device-crazed age, attention has turned to cellphones, those location beacons that most of us voluntarily carry.

Properly implemented, cellphone tracking might offer hope for slowing the spread of the pandemic. Improperly implemented—as has already happened—such monitoring promises to fulfill every Big Brother-ish fear privacy advocates have ever raised.

“When California officials wanted to see how closely people were following social distancing guidelines last month, they tapped a powerful new data set—a map that Facebook provided to state authorities derived from the location coordinates of tens of millions of smartphones,” The Washington Post reported last week. “The map showed with alarming clarity that large numbers of people were still gathering on beaches and in public parks. Soon after, Gov. Gavin Newsom (D) ordered them closed to vehicles, sharply restricting access.”

With its combination of the use of location data—however anonymous—shared without people’s permission, and a resulting restrictive and likely counter-productive crackdown on the ability to escape to the healthy outdoors, the California case manages to be thoroughly creepy without any benefit.

South Korea’s government at least manages to be creepy to some seemingly good end.

“South Korea quickly implemented legislation that would allow health officials to aggressively trace the footsteps of citizens who test positive for an emerging infectious disease. Using security camera footage, credit-card records, GPS data from cellphones and car navigation systems, they are able to pinpoint exactly where a person has been,” notes MarketWatch.

South Koreans can also download apps that tap into government tracking data to get details on any infected people in their vicinity. The system is very intrusive, but arguably helps people reduce the risk of getting sick.

China cranked the creepy factor up to 11 by requiring people to use apps that monitor their movements, assess their supposed risk of infection, and then present the results as a color-coded QR code that has to be shown to authorities on request. “A green code shows the user is not under quarantine and can move around the city freely, but those with yellow and red codes need to quarantine themselves at home or undergo supervised quarantine respectively,” according to the South China Morning Post.

Reports of privacy breaches, erroneous results, and an opaque appeals process were inevitable from any government-imposed system. They were especially unsurprising under an authoritarian regime.

Aware of earlier flaws and privacy invasions, public health scientists and their allies in the tech industry are pushing for contact-tracing that would be, well, less horrifying than what has gone before. Apple and Google are working together on a decentralized system that would use Bluetooth and pseudonyms to preserve privacy while alerting users to encounters with people likely to have the virus.

That sounds like a promising approach if it lives up to its billing. But already the tech companies are running up against resistance from French authorities, who want to preserve privacy between private citizens but allow governments to know people’s identities.

European governments, overall, prefer systems they are developing themselves which are intentionally centralized and do away with anonymity.

“The Pan-European Privacy-Preserving Proximity Tracing system, or PEPP-PT, is supported by German authorities and French institutions,” reports Slate. “Where the decentralized approaches propose to generate pseudonyms on your phone, the PEPP-PT protocols generate your pseudonyms on a centralized server. This server will be able to link each pseudonym back to your real identity. Worse: If you’re diagnosed positive, your phone will not simply upload the list of its own pseudonyms; it will also upload the identifiers of every person you’ve come into contact with so the authorities can track them down and notify them directly.”

A system that nosy and centralized might be a hard sell to populations that have grown increasingly disenchanted with the powers-that be in recent years. The Chinese government has been able to strongarm much of its population into downloading and using tracking apps (though not without significant pushback), but few other governments have the clout to make that happen. Interestingly, even the de facto one-party regime in Singapore, which enjoys high levels of public trust, hasn’t been able to get people to adopt its TraceTogether tracking app.

“More than a million users, or about one in five people here, have downloaded TraceTogether,” the Straits Times of Singapore reveals. But “in order for TraceTogether to be effective, Singapore needs about three-quarters of the population to have it.”

Privacy concerns play a major role in resistance to adopting the app. “I have no idea what kind of data is being taken away from me,” one Singapore resident told the Wall Street Journal.

Imagine the reactions French and German officials will run into with apps explicitly designed to bypass privacy protections in countries where the population generally doesn’t trust the state.

And, unless people are going to be forced to use these apps, public cooperation will be necessary for any tracking effort aimed at fighting the pandemic. To get that cooperation, people will have to be persuaded of the benefits to be had—most especially from contact-tracing (there’s no reason to try to salvage California’s “too many people are walking around in public” approach). And they’ll need to be able to trust assurances that their privacy is protected.

If that’s not forthcoming, cellphone users can sabotage most of these tracking efforts pretty easily. Turning off Bluetooth would hobble just about all the contract-tracing apps. Disabling location services and WiFi would do that much more to shield users’ whereabouts.

In China, where tracking apps are mandatory, people have taken to installing anti-spying software and to owning two phones—one with tracking software to show the police and the other for sensitive travel and unapproved uses.

There are sophisticated tracking techniques that might allow the authorities to bypass the permissions we give to apps on our cellphones, but those are more appropriate for monitoring specific targets than for contact tracing. If their use becomes widespread, the most appropriate reaction might be to shut our phones off or learn, once again, to live without them.

The burden is on public health authorities to convince us that, by working with them, the new COVID-19 pandemic can be battled without making ourselves vulnerable to the ancient pestilence of official nosiness.

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Should the Coronavirus Lockdowns End Immediately? A Soho Forum Debate

The U.S. economy should be liberated from governments’ lockdowns right away.

That was the resolution of a virtual debate hosted by the Soho Forum via Zoom on Tuesday, April 21, 2020. Arguing for the affirmative was David Henderson, an economist and research fellow with the Hoover Institution at Stanford University, and for the negative Justin Wolfers, a professor of economics and public policy at the University of Michigan. Soho Forum Director Gene Epstein moderated.

The Soho Forum typically hosts Oxford-style debates, in which a live audience votes before and after the event, and the debater who swayed the most people wins the contest. Because this debate took place over Zoom, we did things a little differently: The online audience was asked to vote before the debate. If you voted before the debate, please go to sohovote.com after you watch the video and cast your final vote. However, if you didn’t register your initial vote before the debate started on Tuesday evening, your final vote won’t be counted.

Henderson is the author of the recent article, “Liberation from Lockdown Now.” He was a senior economist for health policy with President Reagan’s Council of Economic Advisers. Wolfers serves as a member of the Congressional Budget Office Panel of Economic Advisers.

The Soho Forum, which is sponsored by the Reason Foundation, is a monthly debate series that’s usually held at the SubCulture Theater in Manhattan’s East Village. This debate, however, was conducted via Zoom.

Produced by John Osterhoudt.

Photo credit: Joe Burbank/TNS/Newscom; Pacific Press/Sipa USA/Newscom; Lannis Waters/ZUMA Press/Newscom; Karen Focht/ZUMA Press/Newscom

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Should the Coronavirus Lockdowns End Immediately? A Soho Forum Debate

The U.S. economy should be liberated from governments’ lockdowns right away.

That was the resolution of a virtual debate hosted by the Soho Forum via Zoom on Tuesday, April 21, 2020. Arguing for the affirmative was David Henderson, an economist and research fellow with the Hoover Institution at Stanford University, and for the negative Justin Wolfers, a professor of economics and public policy at the University of Michigan. Soho Forum Director Gene Epstein moderated.

The Soho Forum typically hosts Oxford-style debates, in which a live audience votes before and after the event, and the debater who swayed the most people wins the contest. Because this debate took place over Zoom, we did things a little differently: The online audience was asked to vote before the debate. If you voted before the debate, please go to sohovote.com after you watch the video and cast your final vote. However, if you didn’t register your initial vote before the debate started on Tuesday evening, your final vote won’t be counted.

Henderson is the author of the recent article, “Liberation from Lockdown Now.” He was a senior economist for health policy with President Reagan’s Council of Economic Advisers. Wolfers serves as a member of the Congressional Budget Office Panel of Economic Advisers.

The Soho Forum, which is sponsored by the Reason Foundation, is a monthly debate series that’s usually held at the SubCulture Theater in Manhattan’s East Village. This debate, however, was conducted via Zoom.

Produced by John Osterhoudt.

Photo credit: Joe Burbank/TNS/Newscom; Pacific Press/Sipa USA/Newscom; Lannis Waters/ZUMA Press/Newscom; Karen Focht/ZUMA Press/Newscom

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UMich Consumer Sentiment Crashes By Most Ever, Home-Buying Conditions Worst In 37 Years

UMich Consumer Sentiment Crashes By Most Ever, Home-Buying Conditions Worst In 37 Years

The preliminary April UMich confidence data was a bloodbath, and the final data (albeit very marginally better than the flash print) offered little hope for any change anytime soon…

The University of Michigan’s final sentiment index for April slumped 17.3 points to 71.8 from a month earlier after a preliminary reading of 71, according to data Friday. The measure, while the lowest since 2011, was higher than the median projection of 68 in a Bloomberg survey of economists.

The gauge of current conditions fell to 74.3, better than the 72.4 preliminary reading, while a measure of expectations dropped to 70.1.

Source: Bloomberg

Buying Conditions collapsed across the board with home-buying intentions at their lowest since 1983 (and buying conditions for large household durables are the worst ever…

Source: Bloomberg

While all income levels were affected, it appears the wealthiest suffered the biggest drop but the poorest are the worst levels since 2013…

Source: Bloomberg

Shutdowns of non-essential businesses across most U.S. states have resulted in an unprecedented 26.5 million applications for jobless benefits in the past five weeks. With thousands of storefronts closed as governments await some semblance of easing in the health crisis, consumer spending has weakened significantly.

“In the weeks ahead, as several states reopen their economies, more information will reach consumers about how reopening could cause a resurgence in coronavirus infections,’’ said Richard Curtin, director of the survey, in a statement.

“Consumers’ reactions to relaxing restrictions will be critical.’’

The share of respondents who reported improved finances fell to 38% this month, a sharp reversal since reaching an all-time high of 58% in February, the university said. A worsening economy was expected by 89% of all consumers, only below the peak of 96% in February 2009, during the last recession.


Tyler Durden

Fri, 04/24/2020 – 10:07

via ZeroHedge News https://ift.tt/2Vz0GAx Tyler Durden

California Bans ‘Gatherings’ On State Properties After Protests Surge Against Newsom’s ‘Stay-At-Home’ Orders

California Bans ‘Gatherings’ On State Properties After Protests Surge Against Newsom’s ‘Stay-At-Home’ Orders

After Monday’s anti-quarantine protests at the California State Capitol building and across many other cities in the state, California’s Highway Patrol (CHP) will no longer grant permits to demonstrators on state property, reported The Sacramento Bee.

“Permits are issued to provide safe environments for demonstrators to express their views,” the CHP said in a statement. “In this case, the permit for the convoy was issued with the understanding that the protest would be conducted in a manner consistent with the state’s public health guidance.”

The decision to ban future protests on state property was in the public safety and health interests of all Californians, the CHP said, adding that it wasn’t pleased with protesters who neglected to follow Governor Gavin Newsom’s social distancing rules:

“…CHP will take this experience into account when considering permits for this or any other group.”

Protests in California were held at the capitol building in downtown Sacramento and other cities. It was a continuation of anti-lockdown demonstrations that first started in Lansing, Michigan, last Thursday, demanding Governor Gretchen Whitmer to reopen the economy.

We noted over the weekend that protests in Oregon, Idaho, Minnesota, Michigan, Florida, Virginia, and Maryland, collectively drew thousands of people demanding state governments reopen their economies.

Then on Monday, a military truck with the “Pennsylvania Militia” rolled up to the Pennsylvania State Capitol Complex in Harrisburg, Pennsylvania, demanding the state government reopen the economy.

All of these protests, including the ones in California, have been dubbed “Operation Gridlock.”

While some claim the Lansing protest last week were of “grassroots” origins, it appears the demonstrations were “funded in large part by the DeVos family,” Whitmer said while referring to Betsy DeVos, secretary of the US Department of Education.

Footage from Monday’s protest in California shows pro-Trump crowds not abiding by social distancing rules nor wearing protective masks to mitigate the virus spread. That is what angered CHP: 

Newsom told residents on Saturday that he won’t be swayed by protests in across the state: 

“We are going to do the right thing, not judge by politics, not judge by protests, but by science,” Newsom told the Los Angeles Times.

The Californian ban of protests on state property will certainly outrage Republicans who feel their freedoms have been evaporated under mass quarantines. All of this is creating an environment for social unrest as warmer weather trends are ahead. 


Tyler Durden

Fri, 04/24/2020 – 09:45

via ZeroHedge News https://ift.tt/3bCiPCT Tyler Durden

Can Nicotine Treat COVID-19? French Researchers Think So

New study will test whether nicotine patches can keep the coronavirus away. The more we find out about COVID-19, the less sense it makes. Originally seen as a standard respiratory ailment that primarily affected the lungs, there’s mounting evidence that COVID-19 can cause serious damage to the heart, neurological system, and kidneys, too. In young people, it’s been shown to sometimes cause sudden strokes, even absent other symptoms. Doctors are also reporting COVID-19 patients with blood clots.

One particularly weird element is conflicting reports on whether cigarette smokers are more or less likely to get COVID-19 and whether they have worse cases if they do.

Now, in France, they’re testing whether nicotine may help prevent COVID-19 infections.

It might sound zany at first, or like a piece of bad satire about French people (What’s next, testing to see if baguettes and brie cure COVID-19?), but there’s actually good evidence that nicotine plays a role in regulating humans’ response to the virus.

“It’s an interesting possibility,” and “we’ll know more soon,” French Health Minister Olivier Veran said on France Inter radio this week.

The mitigating effect of nicotine could explain conflicting results on smokers and COVID-19.

Initially, high rates of smoking in places like China and Italy were offered as reasons why the illness might be striking these places especially hard. In Wuhan, China, “the percent of current and former smokers were higher among the severe cases: 17% and 5%, respectively, than among the nonsevere cases (12% and 1%, respectively),” according to an article published in Nicotine & Tobacco Research on April 3.

Worse outcomes for smokers still might be the case—smoking involves a lot more than just nicotine, and many of the health issues seen in long-term smokers are the same underlying conditions that have been found to provoke more severe symptoms of COVID-19.

Yet “doctors at the Pitie-Salpetriere hospital in Paris observed that few Covid-19 patients hospitalized were smokers,” notes Bloomberg.

Some have theorized this away by noting that old age is a hospitalization risk factor, and smokers are less likely to live to an older age. But others are trying to tease out whether there’s a possible mechanism by which smoking could prove protective.

“Based on the current scientific literature and on new epidemiological data which reveal that current smoking status appears to be a protective factor against the infection by [COVID-19], we hypothesize that the nicotinic acetylcholine receptor (nAChR) plays a key role in the pathophysiology of Covid-19 infection and might represent a target for the prevention and control of Covid-19 infection,” wrote French researchers in an April 21 paper.

How would this work? Well, it’s known that COVID-19 binds to a protein in the human body called angiotensin-converting enzyme 2 (ACE2), and previous research has shown that nicotine helps regulate ACE2 expression. The authors of the paper hypothesize a way in which this could contribute to a lessening of the hyper-inflammation thought to be responsible for some of the worst cases of COVID-19.

“Until recently, no firm conclusions could be drawn from studies evaluating the rates of current smokers in Covid-19,” states the paper. More:

All these studies, although reporting low rates of current smokers, ranging from 1.4% to 12.5%, did not take into account the main potential confounders of smoking including age and sex.

In the study that two of us are reporting, the rates of current smoking remain below 5% even when main confounders for tobacco consumption, i.e. age and sex, in- or outpatient status, were considered. Compared to the French general population, the Covid-19 population exhibited a significantly weaker current daily smoker rate by 80.3 % for outpatients and by 75.4 % for inpatients. Thus, current smoking status appears to be a protective factor against the infection by SARS-CoV-2.

Although the chemistry of tobacco smoke is complex, these data are consistent with the hypothesis that its protective role takes place through direct action on various types of nAChRs expressed in neurons, immune cells (including macrophages), cardiac tissue, lungs, and blood vessels.

No one is suggesting that people take up smoking to ward off the new coronavirus. But nicotine can be introduced into the body in ways other than smoking—French scientists will be using nicotine patches for their upcoming study. And synthetic substitutes for nicotine may be able to overcome any possible addiction issues.

“There are substitutes to nicotine that can be developed in laboratories that would enable [users] to avoid its addictive effects,” Veran said on French radio.

Back in the U.S., health regulators were warning that smoking cigarettes or vaping could increase COVID-19 complications. Food and Drug Administration officials have since backed down on the vaping aspect. “E-cigarette use can expose the lungs to toxic chemicals, but whether those exposures increase the risk of COVID-19 is not known,” it told Bloomberg News.

Meanwhile, at the White House: President Donald Trump suggested in a televised Thursday night address that since disinfectants (like bleach and Lysol) work at killing the new coronavirus on surfaces outside the body, perhaps Americans could inject disinfectant as a cure. (Yes, really.)

Since then, companies like Lysol have put out statements declaring that—contra the leader of the country—injecting, ingesting, or otherwise imbibing disinfectant cleaners is not safe. (The New York Times would only attribute the don’t-drink-bleach position to “some experts,” as if this is really a matter up for debate…)

QUICK HITS

• New Jersey tried to tell prisoners released because of COVID-19 that they weren’t allowed to talk to the media. The American Civil Liberties Union (ACLU) intervened.

• “A federal court extended relief for Ohio patients today by continuing to block the Ohio Department of Health from using its COVID-19 order to ban abortion access,” the ACLU announced Thursday. In addition, the U.S. Court of Appeals for the 11th Circuit rejected Alabama’s attempt to reverse an earlier court ruling against its attempted abortion ban.

• Researchers wonder whether COVID-19 will create demographic change, disproportionately killing off Trump voters, who tend to skew older.

• In case you had any doubt about whether to voluntarily participate in contact tracing app efforts, this should swing you firmly into stay-the-hell-away territory.

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