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Well that escalated quickly…

Dow down over 400 points as reality bites on the the global pandemic

The Dow joins Trannies and Small Caps in the red for the year…

Testing its 50DMA for the first time since October…

And 30Y broke to a 1 handle…

It’s been quite a year already…

Somebody do something!

The war between chicken companies Popeye’s and Chick-Fil-A – most recently in the news for various fights and arguments in Popeye’s drive-thru lines – carries with it another negative consequence: the two companies are using up the world’s supply of little chickens.

Both companies use little chickens because the size of the quarter pound breasts fits perfectly inside of a bun. 

A shortage of the little chickens was the cause of Popeye’s having to halt their challenge to Chick-Fil-A last summer. The supply is going to be further put to the test as McDonald’s is now also entering the fray, testing fried chicken sandwiches in four U.S. cities. Wendy’s is also spending $30 million to “beef up” its chicken supply chain. 

Scott Sechler, owner of poultry producer Bell & Evans, said: “Consumers don’t want tough and tasteless big chickens. There’s increasing consumer demand for smaller, premium-quality birds.”

Chickens have been the most popular meat in the U.S. for a long time and more chicken is eaten in the U.S. than anywhere else in the world. The average person in the U.S. eats 93.5 pounds of chicken per year, according to the National Chicken Council (yes, apparently this is actually an organization). 

Today’s chickens raised for meat average about 6 pounds, compared to the 2.5 pounds they weighed on average in 1925. But birds lighter than 4.25 pounds are the ones now in demand by restaurants in the chicken sandwich market. 

David Maloni, executive vice-president of analytics at supply-chain consultant ArrowStream said: “It’s getting harder and harder to get that smaller bird, so they’re paying a premium. The fast-food chains won’t settle for bigger birds.”

Chick-Fil-A total sales were up 13% last year on the backbone of its flagship chicken sandwich, leading analysts to believe it poses “the largest competitive threat” to McDonald’s in the U.S. 

Popeye’s said the demand for its chicken sandwich was so overwhelming last year that it went through several months of supply in just 14 days. The sandwich, which debuted in the summer, didn’t come back until November. In the 3rd quarter, it helped propel Popeye’s same store sales to rise 10%, the highest it has risen in decades. 

McDonald’s and Wendy’s are now targeting the same success. In 2017, Wendy’s said it was cutting its average chicken size by 20%. 

“We saw instant feedback from our customers, who told us our sandwiches across the entire chicken lineup were juicier and more tender,” said Liliana Esposito, chief communications officer for Wendy’s. 

The demand has redlined production for suppliers. 

Will Sawyer, an animal-protein economist at Colorado-based rural lender CoBank ACB said: “Whatever demand growth we might have on smaller breasts, there’s no new supply to meet that demand. Everyone wants a bite out of that market.”

Authored by Paul Joseph Watson via Summit News,

According to CNN, the real concern about the coronavirus is not the potential for a global pandemic, it’s the fact there are too many white people trying to stop it.

That was the message sent by an article posted on the news network’s website entitled ‘Coronavirus task force another example of Trump administration’s lack of diversity’.

The two images illustrating the article showed Barack Obama’s circle of advisers during the 2017 Ebola outbreak and President Trump’s advisers during a recent meeting about the coronavirus outbreak. In the photograph showing Trump’s advisers, most of them are, God forbid, white men.

Coronavirus task force another example of Trump administration’s lack of diversity | Analysis https://t.co/bs7L1rUZzc pic.twitter.com/MzzoslqZpT

— CNN Politics (@CNNPolitics) January 30, 2020

“Who are these experts?” whined CNN’s Brandon Tensley. “They’re largely the same sorts of white men (and a couple women on the sidelines) who’ve dominated the Trump administration from the very beginning.”

Tensley called the image, “a statement that’s as predictable as it is infuriating: President Donald Trump’s administration lacks diversity.”

He concludes by complaining about how “Trump values the opinions of: mostly white men who are mirror images of the President himself.”

Apparently, wanting to not appear racist is more important than stopping a rapidly spreading global pandemic which has now reached at least 23 countries.

This is yet another example of how “diversity” just means ‘less white people’. At its heart is the flagrantly racist premise that people should not be judged on the content of their character but on the color of their skin and that people with white skin should be discriminated against.

Respondents on Twitter were incredulous.

“When I lay dying of bat soup fever, I want to be able to say that the task force may not have been the most qualified, but goddamn they were a diverse bunch,” joked Carpe Donktum.

This needs to be fixed immediately.

When I lay dying of bat soup fever, I want to be able to say that the task force may not have been the most qualified, but goddamn they were a diverse bunch.

— Carpe Donktum🔹 (@CarpeDonktum) January 30, 2020

“Maybe, when the goal is to protect the country against a deadly virus, there are more important things than the race and genitals of the people in the room,” remarked Garrett Gutierrez.

Maybe, when the goal is to protect the country against a deadly virus, there are more important things than the race and genitals of the people in the room.

— Garrett Gutierrez 🚫👢🐍 (@GGarrett2000) January 30, 2020

“I completely agree with you. A solution to any epidemic requires the input of non-binary people of color. Diversity of gender expression and of skin color is the only way to crack major epidemiological challenges,” commented Professor Gad Saad.

I completely agree with you. A solution to any epidemic requires the input of non-binary people of color. Diversity of gender expression and of skin color is the only way to crack major epidemiological challenges.

— Gad Saad (@GadSaad) January 31, 2020

And that in a nutshell is why CNN is a complete joke.

*  *  *

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It would appear, once again, that the stunning ignorance of the machines in believing ‘this’ is over has been proven wrong by the reality on the ground and in bond markets…

The Dow is down over 300 points (would be more if IBM wasn’t helping), erasing the constant BTFD ‘Dead-Bat-Bounce’ ramps we have seen this week…

And 30Y Yields are testing a 1 handle for the first time since October

Source: Bloomberg

Yuan also dumped, erasing yesterday’s spike…

Source: Bloomberg

Small Caps and Trannies are 2020 lows and The Dow is struggling to stay green…

So what will be the idiotic catalyst for a ramp today into the close to keep The Dow green for 2019?

Update (1015ET): Just minutes ago, The Lancet just noted that this new modelling study estimates 75,800 individuals in the Chinese city of Wuhan may have been infected with 2019 novel coronavirus (2019-nCoV) as of January 25, 2020 – but authors caution that the true size of the epidemic remains unclear:

“Not everyone infected with 2019-nCoV would require or seek medical attention. During the urgent demands of an expanding epidemic of a new virus, especially when system capacity is getting overwhelmed, some of those infected may be undercounted in official register.”

*  *  *

Authored by Michael Snyder via The Economic Collapse blog,

The World Health Organization says that we are facing an “unprecedented outbreak”, and they are basing that assessment on the official numbers that we have been given so far.  But what if those numbers are not accurate and this outbreak is actually much, much worse than we have been led to believe?  According to the Chinese government, there are now 9,692 confirmed coronavirus cases in China, and the official death toll has risen to 213. 

But the Wall Street Journal has already documented the fact that the death toll is being artificially suppressed.  As I discussed the other day, many of those that have died are being categorized as dying from “severe pneumonia” so that they won’t count as coronavirus deaths.  Meanwhile, it is becoming exceedingly clear that the number of confirmed cases is also much lower than it should be.  Large numbers of victims are being classified as “suspected cases” even after it is quite obvious that they have the virus.

CNN spoke to a Chinese woman named Shi Muying who has been told by her doctor that she has the coronravirus, but because a fourth test has not been administered yet she is still considered to be a “suspected case”…

By January 26, Shi began to have a fever — one of the symptoms of the novel coronavirus. She went to the hospital’s fever clinic where she found over 20 patients, all waiting to be tested by one doctor.

She says she was given three tests — a nasal swipe to rule out the flu, a CT scan to compare her lungs against those of infected patients, and a blood test. After nine hours of tests and waiting for results she says the doctor told her that she had coronavirus, but because he could not give her the fourth and most definitive test, she could only be considered a suspected patient. Her 67-year-old father is in the same situation.

So this woman and her father do not count as confirmed cases at this point.  Instead, they are among the 12,100 suspected cases that are still supposedly waiting to be confirmed.

Of course Shi and her father were quite fortunate to actually be tested in the first place.  Many others have visited hospital after hospital only to be turned away each time.

The truth is that the Chinese medical system is simply unable to handle an outbreak of this magnitude.  The hospitals are being absolutely flooded by very sick people, and there aren’t enough doctors or enough resources to deal with them all.

According to a nurse that works at a hospital in Wuhan, what they are facing is truly a very desperate situation…

According to a nurse in Wuhan who asked not to be identified for fear of professional repercussions, staff are overwhelmed, resources are running low, and there are no beds. There are so few hazmat suits that staff disinfect them at the end of their shift to wear again the next day, she said. Around 30 of the 500 medical staff at her hospital are now sick and admitted to hospital, and others — including her — have self-quarantined at home.

“There really are a lot of people who can’t get admitted, but there’s no point in blaming the nurses. There are no beds, no resources. Are we supposed to just fight this battle bare-handed?” she said. “Right now, loads of medical staff are at breaking point … I see my sisters charging toward the front line and I feel so powerless.”

Will similar things start happening in other countries all over the globe?

On Thursday, the number of confirmed cases outside of China surpassed 100 for the first time.  The World Health Organization finally declared a global health emergency, and the head of the WHO warned that this is truly “an unprecedented outbreak”…

“Over the past few weeks we have witnessed the emergence of a previously unknown pathogen that has escalated into an unprecedented outbreak,” WHO Director-General Tedros Adhanom Ghebreyesus said during a news conference at the organization’s Geneva headquarters on Thursday. “We must act together now to limit the spread.”

Of course there has only been a handful of cases in the United States so far, and so most Americans are not really overly concerned about this crisis at this point.

But if this virus continues to spread, that will soon change.

Reuters interviewed a 21-year-old American-born college student that is living in Wuhan named Nicholas Schneider, and he told Reuters that he has been trying to find a way out of the city.  Now that Wuhan has been totally locked down, he says that he feels “like I’m in an apocalypse somehow”…

An eerie calm has descended on the normally bustling streets of the city of 11 million people, where Schneider has been studying geodesy – a branch of applied mathematics – at Wuhan University, about 10 miles (16 km) from where experts believe the new coronavirus originated in a market illegally trading in wildlife.

“It’s like a ghost town, barely any people and cars. It’s a weird feeling. I feel like I’m in an apocalypse somehow,” said Schneider in a phone interview with Reuters on Wednesday.

If this virus starts spreading like wildfire in the U.S., it is just a matter of time before U.S. cities are locked down in a similar manner.

And will our medical system be able to handle a large scale outbreak?

Certainly our system has more resources than China’s does, but the truth is that there aren’t enough hospital beds for all of us.

In fact, right now there are less than a million hospital beds in the entire country.

And there won’t be enough test kits for everyone either.  So far, all testing in the U.S. has been done at the CDC, and officials are hoping to make test kits available to local communities soon.

But what if thousands of sick people showed up at your local hospital demanding to be tested?

Would there be enough test kits?

In China, one journalist tried to get tested, and he was told there are only “100 or several hundred test-kits per hospital per day”…

I tried getting tested at a hospital to see what the process was like. They asked me questions and told me to queue for testing. I went with a patient to Tongji Hospital. Lots of patients had been to multiple hospitals. I was genuinely scared.

The corridors in the out-patients department were all full of beds, lots of people were breathing with masks and oxygen tanks. In the corridors. They had to be seriously ill.

Dr said we need to select which patients to do the test on. There are only I was told 100 or several hundred test-kits per hospital per day. There aren’t enough, so doctors need to select those to check. So some people have been to 5-6 hospitals trying to get tested.

So a lot of sick people in Wuhan may never get tested at all.  Instead, many of them will just sit at home “and wait to die”.

Ultimately, we really do not know how many coronavirus victims there are in China right now.  As I discussed yesterday, researchers at the University of Hong Kong are estimating that there could be 44,000 victims at this point, but they have no way of knowing for sure.

But what we do know is that this pandemic is getting worse with each passing day.  Even if you just look at the official numbers, they are growing at an exponential rate.  Mysterious pandemics are one element of “the perfect storm” that we have been anticipating, and it looks like this current pandemic is only going to intensify in the months ahead.

And the more this pandemic grows, the more fear we are going to see.  Large numbers of people are going to be desperately afraid of getting sick and dying, and that has the potential to paralyze our society to an extent that we have never seen before.

Headline UMich sentiment data beat expectations in January, back near its highest since Jan 2004 as expectations improved but current situation dipped…

Source: Bloomberg

Democrats have started to accept the economic improvements…

Source: Bloomberg

The resilience of consumers is remarkable and due to record low unemployment, record gains in income and wealth, as well as near record lows in inflation and interest rates. Gains in personal finances were reported by 53% of all consumers in January, exactly equal to the 2018 and 2019 averages–the highest two years in the past half century.

Combined net changes in household income and wealth were cited in 40% of all mentions in January, comparable to the 1966 and 2000 peaks.

Buying conditions for major discretionary purchases showed mixed changes in January.

• Home buying attitudes improved to the best level in the past year, mainly due to references to lower mortgage rates; home selling conditions were judged slightly less favorably, largely due to lower selling prices.

• Vehicle buying conditions, in contrast, slipped in January from last month’s 2019 peak, but still remained more favorable than last January.

The Michigan measure of sentiment follows Bloomberg’s weekly consumer comfort index, which has climbed to a 20- year high.

Source: Bloomberg

After slumping into year-end, Regional Fed surveys have (surprisingly) exploded higher this month with Richmond and Philly surveys spiking almost by the most on record.

Today’s Chicago PMI was expected to follow suit – though less excitedly – with a modest gain but instead it missed massively, plunging to its lowest since Dec 2015 – printing 42.9 vs 48.9 expectations.

Source: Bloomberg

This was the biggest miss of expectations since Dec 2015…

Source: Bloomberg

None of the underlying components rose in December:

• Business barometer fell at a faster pace, signaling contraction

• Prices paid rose at a slower pace, signaling expansion

• New orders fell at a faster pace, signaling contraction

• Employment fell at a faster pace, signaling contraction

• Inventories fell at a faster pace, signaling contraction

• Supplier deliveries rose at a slower pace, signaling expansion

• Production fell at a faster pace, signaling contraction

• Order backlogs fell at a faster pace, signaling contraction

Having tumbled by the most in 39 years last year, Chicago PMI has no been in contraction (sub-50) for 7 months in a row – something it has not done outside of recession… ever

Source: Bloomberg

As a reminder Dec 2015 was the last time China’s economy was in freefall.