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Authored by Kollibri Terre Sonnenblume via Counterpunch.rog,

All smears are boomerang smears. That is why anyone worth a damn does not engage in it. That goes for the Russia-Gaters, the left/right smears on Gabbard, the years of left/right smears on Assange, the attacks on the Green Party and now the Russia narrative attacks on Sanders. Falling into line with the secret police will not save anyone. Red Scares target dissenters and promote war. Isn’t the history clear enough?”

– Richard Moser

The despicable exhuming of “Russia!” to smear Sanders recently smacks of desperation and dishonesty.

Of course, the role played by the preposterous Russiagate conspiracy theory has always been the same: to be a distraction from issues that really matter. At best, it makes a mountain out of molehill. At worst, it’s straight up political psy-op.

For those just tuning in, a re-cap:

In 2016, Wikileaks released a cache of emails from a Democratic National Committee (DNC) server. The electronic correspondence revealed numerous unsavory and unethical activities, among them that the party had been rigging the primary process in favor of Hillary Clinton and against Bernie Sanders from the beginning, and that the Clinton campaign was deceptively funneling money from state parties into her national coffers. Various details of these and other shady endeavors were confirmed by other sources, including Donna Brazille, a party chairperson who personally leaked CNN debate questions to Clinton before the event, and ended up fessing up to it later.

Given the graft-ridden history of US politics, none of this was particularly grievous, honestly speaking, but honestly speaking about it was the last thing the DNC leadership wanted to do, so, with the cooperation of much of the corporate media, they aimed their considerable firepower against Wikileaks and its founder, Julian Assange. That’s what’s called “shooting the messenger.”

Clinton had already made it clear that it was her policy to up US antagonism against Russia, so it wasn’t long before that nation was accused of “hacking” the DNC servers and turning the trove over to Wikileaks in order to hurt Clinton and thereby help Trump. Never mind that the most credible evidence pointed to an inside job—a leak, not a hack—with the responsible party therefore being some US American, not a Russian. Also never mind that claiming the information would negatively affect Clinton was up front admitting that it was incriminating.

Not about to let something as minor as facts or actual culpability get in the way, the DNC and their media allies pushed the “Russia!” narrative hard, especially after Clinton’s election day loss—anything to avoid admitting their own mistakes, such as the lack of campaigning or get-out-the-vote efforts in the key “swing” states that Trump narrowly won. Over the course of the next few months, one shrill accusation after another was blared in screaming headlines, only to be quietly walked back within a day or a few. But accuracy was never important; the goal was to create an impression: that the aberration of Trump could only be explained by the nefarious meddling of those pesky Russkies, not something more mundane and far more likely such as good old fashioned voter suppression. Roundly ignored was the work of investigative journalist Greg Palast in detailing just such malfeasance on a widespread basis—including 60,000 votes not counted in Democrat stronghold Detroit, in a state that Trump won by less than 11,000 votes.

But the cooperation of the corporate media was not enough. Non-corporate, independent media—which could call attention to the truth—needed to be squashed as well. Here the internet giants, such as Google, YouTube and Facebook, patriotically stepped up and began censoring outlets and authors across the political spectrum, both by de-platforming them and by burying them in the noise with algorithms. The excuse was fighting so-called “fake news.” Many well-known leftist websites experienced double-digit percentage declines in readership when these new policies were applied. Nor have the restrictions been lifted since then; rather they have been constantly honed, and the reach of many alternative voices continues to be eroded. It’s all been very Orwellian.

The “Russia!” narrative seemed to fizzle out after former FBI Director Robert Mueller’s investigation failed to turn up more than a few dubious crumbs. Are we supposed to believe the election was swung by a Russian troll farm purchasing $100,000 in Facebook ads, only some of which were actually political? If you’re willing to buy that, I’ve got a bridge for sale in Brooklyn…

In the meantime, the Trump administration had been executing a no-holds-barred attack on virtually every environmental and safety regulation of the last fifty years—including those pertaining to clean air, clean water, and endangered species—with virtually no news coverage or pushback. These are actions with very real consequences, potentially including extinction. Is it possible that some species of plants or animals might die from this planet because the DNC and the corporate media chose to focus on a conspiracy theory instead of the very real policies of the Trump administration? Yes, and that makes me livid.

These policy changes have still not received the attention they deserve, by the way, because “Russia!” was followed by “Impeachment!” and now “Primaries!”

What if every social media post about “Russia!” had instead focused on climate change? Or the opening of public lands to resource extraction? Or the gutting of the National Environmental Policy Act? Most people probably don’t even know what that last one is, which is sad. These are issues of immense importance, but they’ve gotten totally short shrift.

And this is where it’s not just about the DNC and their corporate media stooges: it’s about all the people who fell for it and helped spread it around; the people who were not merely gullible, but who were eager to lap up whatever they were served and spit it out again on command; the people for whom “America” was already “great” and who were shocked by Trump’s popularity.

I wasn’t shocked. I’m from Nebraska, and though I was as surprised as anyone that Trump squeaked through on election night, I was not mystified about his appeal. I didn’t need a fairy tale to explain his following. Watching him give his victory speech, I was like, “Yep, I know that guy, and I know the people who like him, and I see why they do.” (I got out of Nebraska as soon as I could!)

But liberal urbanites don’t get that, and they needed an explanation of how His Deplorableness could possibly have won. Hence the psychological attractiveness of the Russiagate narrative: it claimed that the force that propelled him to victory was not “American”; it came from outside. The nation’s deeply ingrained, widespread racism and patriarchy—of which Trump was merely an expression—could be papered over. “We’re better than this,” people could reassure themselves. Yeah, you wish.

A teachable moment came and went. An opportunity for self-examination was passed over. A mirror was held up, but the gaze was quickly averted.

That Trump is as “American” as apple pie was too much to consider.

The new McCarthyism that accompanied Russiagate has exacted a terribly corrosive effect on political and social discourse, besides the damage it has incurred on alternative media.

Anyone disagreeing with the mainline neoliberal Democratic agenda runs the risk of being slandered as a “Russian bot,” “Russian asset,” “Putin puppet” or something else equally as asinine. Maligning dissent—or even merely progressive ideas—with this childish name-calling has become a casual liberal pastime. The range of discussion, which was already far too narrow, has constricted further. Right at a time when the dire state of the planet’s ecosystem and the ability of humans to survive within it requires creativity and big ideas, we’ve been subjected to smack-downs and small-mindedness. It’s enraging, frankly.

So here’s Bernie Sanders, who—realistically—is far from radical, and whose proposed policies fall desperately short of what is needed. But because he’s an FDR capitalist rather than a Clinton capitalist—no, he’s not a socialist—is being maligned by the establishment as if he’s Che Guevara come back from the dead. If only!

The naked antipathy of the DNC and their corporate media shills for Sanders is a sight to behold. They are applying no veneer of impartiality to their smears. It was only a matter of time before “Russia!” was screeched in his direction. The fact that the attack came as a one-two punch from the New York Times and the Washington Post on the eve of the Nevada caucus betrayed its top-down coordination. As has been typical of stories in this genre, hypey headlines are paired incongruously with incoherent articles that fail to support the case. But it doesn’t matter. Again, it’s all about emotional impressions. Edward Bernays wrote the original playbook a century ago, and nothing’s changed except the delivery systems. It’s called propaganda.

Alas, Sanders’ response did nothing to question the false premise of Russiagate, or its toxic effects on discourse, or its irresponsible inflaming of tensions with a nuclear power. If he hasn’t actually been a true believer in the “Russia!” bullshit since the beginning, he’s certainly been giving a damn good impression. But that’s just who he is on subjects of foreign policy: a man of big talk and few principles, all too willing to fold under the pressure of authority, and far too reluctant to challenge the narratives of the establishment. This too, is a teachable moment: If this is the best we can get, then that’s tragic. We need so much more.

So what are we supposed to do?

Well, there’s that old union song, “Which side are you on?” which goes:

“Don’t scab for the bosses,
Don’t listen to their lies.
Us poor folks haven’t got a chance
Unless we organize.”

Indeed. Russiagate is just one of their lies and we’ve got to organize. We must remember, too, that we’ve got far, far more common in with the people of Russia than we do with the DNC oligarchs and their compliant media here.

Earlier this month, we mentioned how the Covid-19 outbreak would force companies with high centration of supply chains in China to “rework” operations to other countries to avoid future disruptions. 

Nikkei Asian Review confirmed our thoughts on Wednesday when sources said Google and Microsoft, who are currently experiencing supply chain disruptions in China, will shift production of their phones, computers, and other devices to factories in Vietnam and Thailand in the coming months. 

Two sources with direct knowledge of the shift said Google would begin production of its Pixel 4A smartphone in northern Vietnam in April. The Pixel 5 will start production in 2H20 in the Southeast Asian nation.

Google asked a manufacturing partner in Thailand to immediately start production of its “smart home” related products, with expected delivery no later than 1H20, one source said. 

Microsoft could have production online of its Surface devices, notebooks, and desktop computers in northern Vietnam sometime in 2Q, another two sources said. “The volume in Vietnam would be small at the beginning, but the output will pick up, and this is the direction that Microsoft wants,” a supply chain executive told Nikkei.

Google smartphones and Microsoft computers are mostly manufactured in China. From trade wars to virus impacts, the overreliance and high concentration of supply chains have left both firms in shock after production was recently halted as economic paralysis in China develops factory shutdowns. These firms are learning the hard way of overexposure of a supply chain to one particular geographical region. 

“The unexpected coronavirus hit will definitely push electronics builders to further seek production capacity outside their most cost-effective production base of China,” a supply chain executive said. “No one could ignore risks after this. … It’s more than just cost — it’s about the continuity of supply chain management.”

Another source indicated that Google had asked suppliers to send production equipment from China to Vietnam as quickly as possible. 

Microsoft also accelerated efforts to shift production to Vietnam after the virus outbreak became more severe earlier this month, the source added. 

As we’ve noted, Apple has a tremendous overexposure of their supply chain to China and will find it challenging to shift lines – this means shortages of iPhones and Airpods could be seen in the coming months.

But here’s the dilemma, even if Google and Microsoft move production lines to Vietnam and Thailand, many of the parts used in their products are from China. The next obstacle that both companies have to overcome is finding alternative suppliers. 

“It’s reasonable for companies like Google to want to speed up its pace of diversifying from China amid the coronavirus threat, while the trade war remains an uncertainty. But even if the final assembly process is outside of China, suppliers still need to ship some components from the country. … It’s a matter of the supply chain ecosystem, which takes time to rebuild,” IDC tech analyst Joey Yen told Nikkei. 

It remains to be seen just how significant the impact of the epidemic on Google and Microsoft will be, but already judging by the supply chain shifts out of China and possible supplier issues that may occur after, it seems the virus impact is going to be a full year problem. 

Authored by John Vibes via TheMindUnleashed.com,

Dr. Barbara Ziv the forensic psychologist who played a key role in the conviction of Harvey Weinstein by testifying as a witness in his trial was recently hospitalized after being hit by a car.

Not much is known about her condition or the circumstances of the incident aside from the fact that she was hit by a car while crossing the street and is in the hospital with multiple broken bones.

Law and Crime noted that there is no evidence that Ziv’s injuries have anything to do with her role as a witness in the Weinstein trial, but the timing and the fact that Weinstein is notorious for his ruthless intimidation tactics makes the incident suspicious. Weinstein’s reputation led many potential witnesses and even journalists to fear for their lives when dealing with his case.

Ziv took the stand last month as an expert witness in the case against Weinstein where she gave in-depth psychological analysis about why his victims did not initially report the crimes and why survivors of sexual assault will often continue friendships or business relationships with their attackers, especially when that person is extremely powerful and influential as Weinstein was.

“As devastating as sexual assault is, most individuals think, ‘Ok, I can put it behind me. I can move on with my life. I don’t want it to get worse. I don’t want this person who sexually assaulted me to ruin my friendships or put my job in jeopardy. I am just going to put it in a box and forget what happened. I don’t want it to get worse, but they can’t,” Ziv said in court.

Ziv also testified as an expert witness in the case against Bill Cosby.

This week, a jury in New York found Harvey Weinstein guilty on charges of rape and criminal sexual act in the first degree. He was initially supposed to be sent to Rikers Island but ended up being diverted to a local hospital after complaining of chest pains.

Social media platforms accused of politically biased, selective enforcement policies will be allowed to continue discriminating against conservatives, according to a Wednesday court ruling from the Ninth Circuit court of appeals – which has been heavily criticized for anti-Trump rulings on immigration and other matters.

The court rejected an argument by conservative radio talk show host Dennis Prager, who claimed that his conservative PragerU videos were receiving unfair treatment by the Silicon Valley behemoth – determining that YouTube, which is owned by Google, is not a state actor subject to First Amendment constraints.

A California federal judge first dismissed the 2017 complaint in March 2018 on the grounds that YouTube isn’t a public forum and can regulate content as they see fit, according to the Hollywood Reporter.

On Wednesday, the 9th Circuit Court of Appeals upheld that decision and rejected PragerU’s contention that the site has become a digital-era public forum and its power to moderate content is a threat to fair dissemination of conservative viewpoints on public issues.

“Using private property as a forum for public discourse is nothing new,” writes Circuit Judge M. Margaret McKeown. “Long before the internet, people posted announcements on neighborhood bulletin boards, debated weighty issues in coffee houses, and shouted each other down in community theaters.“

While those methods seem “quaint” compared to the 400 hours of video uploaded to YouTube each day, the underlying issues don’t change.

“Despite YouTube’s ubiquity and its role as a public-facing platform, it remains a private forum, not a public forum subject to judicial scrutiny under the First Amendment,” writes McKeown, adding that both the First Amendment and Supreme Court precedent present “insurmountable barriers” to PragerU’s argument. –Hollywood Reporter

“Just last year, the Court held that ‘merely hosting speech by others is not a traditional, exclusive public function and does not alone transform private entities into state actors subject to First Amendment constraints,” McKeown wrote. “The internet does not alter this state action requirement of the First Amendment.”

Prager’s lawsuit focused on YouTube’s so-called Restricted Mode, which slaps age constraints on content, requires viewers to click to watch, and disallows videos from being embedded on websites. The restrictions are aimed at videos containing alcohol, sexual situations, violence and other mature subjects – such as conservative content apparently. Restricted videos are also demonetized, so creators cannot derive income from third-party advertisers.

Creators can appeal restricted mode.

“YouTube does not perform a public function by inviting public discourse on its property,” McKeown added. “To characterize YouTube as a public forum would be a paradigm shift.”

The court notes that both sides made hyperbolic arguments about decisions not in their favor, with PragerU attempting to instill fear about the tyranny of big-tech and YouTube arguing the Internet itself would be undone by government speech regulation.

“While these arguments have interesting and important roles to play in policy discussions concerning the future of the Internet, they do not figure into our straightforward application of the First Amendment,” writes McKeown. “Because the state action doctrine precludes constitutional scrutiny of YouTube’s content moderation pursuant to its Terms of Service and Community Guidelines, we affirm the district court’s dismissal of PragerU’s First Amendment claim.” –Hollywood Reporter

The 9th Circuit also tossed PragerU’s claim of false advertising.

“YouTube’s braggadocio about its commitment to free speech constitutes opinions that are not subject to the Lanham Act,” reads the decision. “Lofty but vague statements like ‘everyone deserves to have a voice, and that the world is a better place when we listen, share and build community through our stories’ … are classic, non-actionable opinions or puffery.”

Authored by Antonis Giannakopoulos via The Mises Institute,

One of the defining characteristics of advocates for socialism is an obsession with equality. According to this line of thinking, inequality is the central problem of the modern world, and it demands a centralized solution. Thus, socialists – and more mild social democrats – push to use the power of the state to force the transfer of wealth from the productive and successful to those who are less so. This is the way to achieve social justice, they contend.

But inequality is not the societal plague that socialists allege it to be.

The Source of Wealth: Consumer Judgment

Contrary to popular belief, the way to make money is not to exploit one’s customers. The reality is the opposite. Wealth is created by identifying the problems that people have and creating products that provide a solution and improve their lives.

In this process, the consumer leads the process by expressing his own preferences in the marketplace. If a consumer feels that a product is overpriced, he will not make an exchange. If a product seems worthwhile, he will buy it willingly. The sum of these individual choices—to purchase or not—make or break a business on the market, and this is the consumers’ prerogative. In order to meet his own needs, a person must produce something that satisfies another’s needs, whether they be labor, industrial machinery, or fine cuff links.

Does Wealth Accrue at the Expense of the Poor?

One of the socialists’ key assumptions is that there is always a losing side in a transaction. They think that wealth is like a pie, and that the rich take the largest slice, leaving workers and customers with almost nothing. In reality the market is always expanding the pie, and voluntary exchanges are always win-win when they are made.

Bill Gates, Jeff Bezos, and all the other “evil capitalists” have managed to create an unprecedented amount of wealth, but not only for themselves. Those working for them have benefited from their jobs, and the people who buy their products and services have benefited from better or cheaper goods (or both). Other benefits include more time to pursue more important things, and in ways that cannot be quantified (i.e., they are measured in psychic profit). The entrepreneurs, in turn, have benefited from the services of their workers—which are well worth paying for. Entrepreneurs also benefit from the voluntary purchases made by their customers.

Profit and Competition Are Not Antithetical to Collaboration

Socialists pit profit and competition against an ideal of sharing and collaboration. But rather than being a wicked, stolen good, profit is a crucial incentive for collaborative human action.

People are always searching for the best and cheapest products in order to satisfy their needs, and their demands raise prices. The prospect of profit quickly pushes entrepreneurs into producing what people want—and what they are willing to pay for. Profits illustrate how much people value an entrepreneur’s services. Consumers only pay if the entrepreneur satisfies their desires.

As long as there are profits to be made, others enter the market. The competition spurs entrepreneurs to make production more efficient and cheaper, because the greater the competition, the more the businessman will have to do to earn the customer’s business. As more goods enter the market, consumers can be more picky about whom to purchase from, and prices drop. It’s their own demand that sets the prices, and once they are satisfied and there’s not as much profit in the business, entrepreneurs shift to making other things that people want.

As many Austrian and non-Austrian economists have figured out, the market is an everyday “voting system” of what needs to be produced. Every penny acts as a vote for how best to use limited resources. Profits point entrepreneurs toward what people want most badly. The resulting production is a form of collaboration rather than exploitation. People can do more, because they don’t have to do everything themselves, and they can focus on what they do best.

Income Inequality Is Heightened by a Restrained Market

The Left makes the mistake of arguing that only the rich have gotten richer and attack capitalism without looking at the facts. The market has made nearly everyone richer, not only in terms of income but also in terms of the overall quality of life and the products that they own.

Leftists also ignore income mobility in market economies, when studies show that in fact most people born to the richest fifth of Americans fall out of that bracket within twenty years while most of those born to the poorest fifth climb to a higher quintile and even to the top.

Though their rhetoric makes it seem surprising, this makes sense. As Ludwig von Mises pointed out in The Anti-Capitalistic Mentality, the businessman owes his wealth to his customers, and this wealth is inevitably lost or diminished when others enter the market who can better satisfy the consumer through lower prices and/or a better quality of goods and services.

The problem with income inequality today is that it isn’t entirely a byproduct of the free market but instead is the result of a market crippled by interventionist policies, such as regulations, expensive licenses, and the most complicated tax system in the history of this country. Such restrictions have limited competition and made wealth creation more difficult, causing the stagnation of the middle and lower classes.

Though leftists contend that these restrictions protect people from the “dangers” of the free market, they actually protect the corporate interests that progressives claim to stand against.

Colossal businesses like Amazon and Walmart in fact favor higher minimum wages and increased regulations. They have the funds to implement them with ease, and such regulations end up acting as a protective barrier, keeping startups and potential competitors from entering the market. With competition blocked, these businesses can grow artificially large and don’t have to work as hard to earn people’s business. Instead they can spend money on lawyers and DC lobbyists to fence small businesses out of the market.

Ironically, efforts to regulate businesses in the name of protecting laborers and consumers harms small businesses and makes everyone less equal than they could be in a free market.

Conclusion

Markets are not the enemy of inequality. Regulated markets are. The income inequality that naturally occurs in the free market as a result of human uniqueness is needlessly amplified by restrictive government policies to the detriment of all.

Voluntary exchanges in capitalism are mutually advantageous. If they weren’t, the exchange would never take place. People who live in countries with more economic and social freedom enjoy greater incomes and a higher standard of living. Free trade has contributed more to the alleviation of poverty than have all the government-run programs. Socialist intervention in the market can only distance man from eradicating poverty and from happiness: only unrestrained competition driven by profit can bring about the expansion of choice, the fall in prices, and the increased satisfaction that make us wealthier.

The death toll from days of riots which coincided with President Trump’s first ever official visit to India early this week has risen to at least 20 killed and nearly 200 wounded, Reuters reports. 

New Delhi has seen the worst sectarian violence in decades after Hindus and minority Muslims clashed — along with security forces attempting to put down the violence —over the controversial new citizenship law, which prioritizes citizenship for non-Muslims from neighboring countries who immigrate.

“This was the first time that the protests have set off major bloodshed between Hindus and Muslims,” crossing “an old and dangerous fault line,” The New York Times reports.

Shortly before concluding his two day visit Trump was asked about the unrest by reporters. He said he “heard about” the law but that it is “up to India” to handle.

“As Air Force One flew Trump and his delegation out of New Delhi late Tuesday, Muslim families huddled in a mosque in the city’s northeast, praying that Hindu mobs wouldn’t burn it down,” The Associated Press reports. 

GRAPHIC CONTENT: At least 20 people have died in the riots in India’s capital New Delhi over a citizenship law https://t.co/VqWL5YvmxZ pic.twitter.com/GBDqW7iiha

— Reuters (@Reuters) February 26, 2020

The riots are considered a deep embarrassment for Indian Prime Minister Narendra Modi, who appealed for calm on Wednesday.

“Peace and harmony are central to our ethos. I appeal to my sisters and brothers of Delhi to maintain peace and brotherhood at all times,” Modi said in a tweet.

Men marching on top of a mosque in Delhi, India’s capital city, vandalising it, and placing a Hindu far-right saffron flag over itpic.twitter.com/3wANfPoVZQ

— Alfons López Tena (@alfonslopeztena) February 25, 2020

Police and paramilitary security forces were out in greater force on the streets of the Indian capital Wednesday, after sectarian mobs had been engaged in running clashes involving guns, knives, clubs, and stones.

Violence is soaring high in Delhi.
No police or other help is available. #DelhiBurning
pic.twitter.com/xcKdOIA60p

— Shahjhan Malik (@shahjhan_malikk) February 26, 2020

An eyewitness report by Reuters detailed the following: 

Critics say the law is biased against Muslims and undermines India’s secular constitution. Modi’s Bharatiya Janata Party has denied it has any bias against India’s more than 180 million Muslims.

Reuters witnesses saw mobs wielding sticks and pipes walking down streets in parts of northeast Delhi on Tuesday, amid arson attacks and looting. Thick clouds of black smoke billowed from a tyre market that was set ablaze.

Many of the wounded had suffered gunshot injuries, hospital officials said. At least two mosques in northeast Delhi were set on fire.

At least 20 people are dead after right-wing Hindu groups attacked mostly-Muslim protesters in New Delhi over India’s new citizenship law.

The violence began over the weekend and intensified on Tuesday during Trump’s state visit. More @business: https://t.co/i7cbE1X2qm pic.twitter.com/0kobPGw1rP

— QuickTake by Bloomberg (@QuickTake) February 26, 2020

Throughout Trump’s visit, widely viewed as a success, the president frequently sidestepped the issue of the citizenship law.

He had said during his opening visit remarks Monday at Motera Stadium: “Your nation has always been admired around the Earth as the place where millions upon millions of Hindus and Muslims and Sikhs and Jains, Buddhists, Christians, and Jews worship side by side in harmony.” And further: “Your unity is an inspiration to the world.”

The country has seen months of protests over the citizenship law, but exploded into their worst violence upon Trump’s visit. 

Chinese auto sales continue to be a sinking ship on the heels of both an auto recession that has been in full swing for the last 18-24 months – and now the impact of the coronavirus.

Though the narrative coming out of China is that the country is attempting to return to some normalcy, the data from the company’s auto market tells us very differently. Retail car sales in the country are down 83% year over year for the third week in February. For the week, the country’s auto sales dropped to 5,411 units per day, according to the China Passenger Car Association.

They also stated that vehicle production and sales would show a “more noticeable” drop in February than in January, something Zero Hedge readers already knew based on our analysis of January numbers out of China, where we said exactly that. The CAAM said that January vehicle sales fell 18.7% on the year and 27.5% on month.

But the story is going to be from February onward. 

Recall, just 5 days ago we wrote that Chinese auto sales had gone into “full collapse” and fell 92% for the first half of February. 

China recorded 4,909 units sold in the first 16 days of the month, which is down from 59,930 in the same period last year. We said then what we’ll say again today: “If this figure doesn’t make it clear that the pandemic is having an effect outside of Hubei province in China, we’re not sure what will do it.

 

The China Passenger Car Association said days ago: “Very few dealerships opened in the first weeks of February and they have had very little customer traffic.”

Photographs out of China, as the virus rages its way through several major eastern cities, make the country look like something between a ghost town and wasteland. 

Which it why it wasn’t surprising late last week to hear CPCA Secretary General Cui Dongshu say: “There was barely anybody at car dealers in the first week of February as most people stayed at home.”

Again, Zero Hedge readers should not be surprised by the February numbers. We noted that while China’s January decline was partially attributable to the coronavirus outbreak, it wasn’t until the end of January and early February when China was placed essentially on a full lockdown due to the outbreak of the virus.

We’d like to speculate that the small tick up in the third week of February is a promising sign, but we think we know better. We’ll continue to follow the story very closely and will update when new data becomes available. 

 

Democrats are failing to halt Bernie Sanders’ march toward the nomination after the latest Democratic debates. This has prompted two Tallahassee men to file a lawsuit against Sanders to remove him from the Florida primary ballot, reported Tallahassee Democrat. 

Frank Bach, a retired mail carrier, and George Brown, a retired social worker, filed their lawsuit in a Leon County circuit court on Monday, requesting a judge to exclude Sanders from the primary ballot because he’s not a genuine Democrat, but rather an “independent.” 

The complaint read that the Vermont senator would be “interloping improperly” and “unlawfully” in the March vote if he remained on the ballot. 

“The plaintiffs have the right to cast their March 17 Democratic presidential preference primary votes for those who are really Democrats, not independents, and are entitled to this court’s protection of their right to vote for a Democrat, with the results not diluted by Defendant Sanders’ unlawful participation as an independent interloping improperly in the (primary),” the complaint said.

Welcome to Florida, @BernieSanders

This was filed in state court today pic.twitter.com/Rf2NVMFUJt

— Matt Dixon (@Mdixon55) February 25, 2020

“Defendant Sanders is clearly an independent and is clearly not a Democrat, by his own definition,” the complaint adds. “His current ‘day job’ is as a United States senator, and he has consistently, proudly asserted his service in that role as an independent.”

Juan Penalosa, executive director of the Florida Democratic Party, dismissed the lawsuit and called it absolutely “ridiculous.” Penalosa said, ” the Florida Democratic Party Executive Committee voted unanimously to place Sen. Sanders on the Florida ballot. Votes cast for the senator are valid and must be counted.”

The lawsuit comes as Sanders is seen as an early front-runner to become the Democratic nominee after he won the popular vote in New Hampshire, Nevada, and Iowa. VP Joe Biden and billionaire Michael Bloomberg have intensified their attacks on Sanders as his popularity increases among US voters. 

While it’s too late to withdraw Sanders from the Florida ballot, the complaint notes that any mailed ballots in the Democratic primary should be set aside if in favor of Sanders. 

As far as the complaint succeeding in court, it’s a long shot but should outline just how much the Democratic party is willing to do directly or indirectly, to make sure Sanders does not become the nominee. 

In the early days, when virtually nobody paid attention to the coronavirus pandemic which China was doing everything in its power to cover up, markets were not only predictably ignoring the potential global plague – after all central banks can always print more money, or is that antibodies – but until last week, were hitting all time highs. All that changed when it became apparent that for all its data manipulation, China was simply unable to reboot its economy as hundreds of millions of workers refused to believe the government had the viral plague under control, starting a potentially catastrophic 2,3 month countdown to millions of small and medium Chinese businesses going bankrupt, resulting not only in untold devastation in the world’s 2nd largest economy but paralyzing and crippling supply chains across the world. Worse, it also triggered the biggest equity selloff in years.

And now, the coronavirus pandemic is about to leave yet another market in critical condition as the global credit machine is grinding to a halt.

As Bloomberg points out, the $2.6 trillion international bond market, where the world’s biggest companies raise money to fund everything from acquisitions to factory upgrades, came to a virtual standstill as the coronavirus spreads panic across company boardrooms.

While hardly a surprise with US equity markets suffering one of their worst selloffs since the great depression, Wall Street banks recorded their third straight day without any high-grade bond offerings, an unheard of event – especially in this day and age of ravenous yield apetite – outside of holiday and seasonal slowdowns. Across the Atlantic, European debt bankers had their first day of 2020 without a deal on Wednesday. And bond issuance in Asia, where the virus first emerged, has also slowed to a trickle.

As Bloomberg puts it, “it has been a remarkable turn of events for a market where investors had been snapping up almost anything on offer amid a global dash for yield. Europe had been enjoying its strongest ever start to a year for issuance, and sales of U.S. junk bonds have been on the busiest pace in at least a decade. With so many borrowers having postponed their issuance plans, a calming in global markets could kickstart debt sales again.”

Honeywell, Virgin Money UK and Transport for London were among the numerous European borrowers who had lined up deals before financial markets turned upside down. Before the slowdown, Europe had seen 239 billion euros ($260 billion) of bonds sold in January alone. Across in the US, the investment-grade market was expecting around $25 billion of sales this week before virus fears froze the market on Monday. Excluding the seasonally dead December holiday season and typical two-week summer hiatus in late August, there hasn’t been that long of a break to start the week since July 2018.

As shown in the chart below, after record new issuance in the investment grade market, the last week of September has seen a total paralysis in the primary market, similar to the freeze of China’s economy.

Amid a surge in uncertainty that has crushed dip buyers, and left even central bankers scrambling to figure out what the proper response is, credit investors have been rattled by the potential impact on company earnings – now that most realize collapsing supply chains could result in catastrophic number in coming quarters – from disruption caused by the virus, which has seen huge parts of global supply chains shutting down. Meanwhile, as traders await the the panic selling to kick in, a derivatives index that gauges credit market fear in the U.S. had its biggest jump in more than three years on Monday as investors rushed to hedge against a wider selloff.

“It’s a coin toss as to what tomorrow will look like, or even the rest of today,” said Tony Rodriguez, head of fixed income strategy at Nuveen. “You have to respect the fact that when you don’t have an information advantage to not make any significant moves.”

It’s not just the IG market: offerings also came to a halt in the junk-bond market, where until the past week, $67 billion of sales had been running at the fastest pace since at least 2009, Bloomberg data showed. Mining giant Cleveland-Cliffs was the latest to try and crack the primary market freeze on Wednesday, with a $950 million offering of secured and unsecured notes testing the market in an attempt to refinance an acquisition target’s debt. And the Canadian market remained open for business as utility company Hydro One Ltd. raised C$1.1 billion ($827 million) in the largest Canadian dollar bond from a non-financial company this year.

Ironically, one can argue that there is a simple way to reboot the credit market: just offer higher yields:

Overall borrowing costs remain very low, however. A rally in U.S. Treasuries has sent all-in yields on U.S. investment-grade debt to record lows. U.S. investment-grade funds have reaped near-record inflows each week this year, as investors seek high-quality income assets. High-yield and leveraged loanfunds, however, have seen more outflows.

Almost as if investors don’t buy credit for the (relative) yield, but for the capital gains from selling it to a greater fool.

Meanwhile, the worsening pandemic is already taking a toll on companies’ balance sheets, with drinks maker Diageo set to book as much as a 325 million-pound ($422 million) hit to organic net sales. In the U.S., United Airlines Holdings withdrew its 2020 profit forecast Tuesday as it can’t guarantee its earlier earnings goal. Microsoft was the latest to cut its guidance for personal computer sales. And it’s all downhill from here.

The biggest concern however: with bond markets frozen, just how will IG-rated companies obtain the funding they need to keep buying back their stock, and pushing the market higher. In fact, one can argue that the freeze of the credit market is far more dangerous to the stock market than the inability to refinance a 1% bond with something paying 0.5%. If that’s the case, expect far more pain for stocks in coming weeks and months as the market’s entire buyback spree of the past three years goes into a very painful and dramatic reverse.