Tag: finance

One of the recurring questions amid the year’s countless BLM protests and associated riots has been why instead of burning and looting innocent businesses, does the angry mob not target the source of all wealth, income and social inequality – not just in the US but the world – the US central bank, i.e. Federal Reserve (located at 2051 Constitution Ave. NW, Washington, DC 20418 for those wondering).

Yet while US protesters and rioters still need guidance just what buildings to burn down, their French peers are finally catching on.

Over the weekend, tens of thousands of critics of a proposed security law that would restrict the filming of police officers protested across France on Saturday, and officers in Paris who were advised to behave responsibly during the demonstrations repeatedly fired tear gas to disperse rowdy protesters. The controversial Article 24 of the bill seeks to protect police officers from doxing and harassment, and bans filming of cops on duty and sharing their images online with the “intent to harm.”

Civil liberties groups, journalists, and people who have faced police abuse are concerned that the measure will stymie press freedoms and allow police brutality to go undiscovered and unpunished.

“We have to broaden the debate, and by doing that, we say that if there were no police violence, we wouldn’t have to film violent policemen,” Assa Traore, a prominent anti-brutality activist whose brother died in police custody in 2016, told The Associated Press.

At least 46,000 people packed the sprawling Republique plaza and surrounding streets carrying red union flags, French tricolor flags and homemade signs denouncing police violence, demanding media freedom or calling for the resignation of French President Emmanuel Macron or his tough-talking interior minister, Gerald Darmanin.

The crowd included journalists, journalism students, left-wing activists, migrants rights groups and citizens of varied political stripes expressing anger over what they perceive as hardening police tactics in recent years, especially since France’s yellow vest protest movement against economic hardship emerged in 2018.

Violence erupted near the end of the march as small groups of protesters pelted riot police with small rocks and paving stone. The officers retaliated with volleys of tear gas, prompting minor scuffles.

What we found most remarkable is that as rioting escalated, the protesters set fire to the facade of the central bank.

Certains individus masqués ont mis le feu au bâtiment de la Banque de France, un des symboles de l’État. #28novembre #MarcheDesLibertes #StopLoiSecuriteGlobale pic.twitter.com/7nJUk3KMAK

— Nadège Abderrazak (@Nadege_RTFrance) November 28, 2020

While fire crews reached the central bank building on time, and it did not spontaneously collapse “due to the high temperatures” unlike some other structures, one wonders what happens during the next protest, or the one after. And when will US protesters figure out what the French already have: that burning and looting stores owned by fellow hard-working citizens only exacerbates the inequality. On the other hand, to really make a statement, a couple of Molotov cocktails aimed at the Marriner Eccles building just may attract some attention.

Authored by Stacey Lennox via PJMedia.com,

Better late than never. Perhaps because he believes Joe Biden will be inaugurated in January, Dr. Fauci is finally admitting that children do not get terribly ill from or transmit COVID-19 in any significant way. Weird, since Switzerland figured this out in April. Detailed genetic studies in Iceland showed that children were not passing the virus to adults in any significant numbers in June. And German researchers asserted that children could actually act as a brake on transmission within the community.

But good old “follow the science” Fauci was wringing his hands and hedging his bets in the media and during congressional testimony. Most notably, he got into a heated exchange with Senator Rand Paul, who is also a doctor.

Senator Paul correctly noted Sweden’s experience, which never closed their primary schools and did not see a spike in childhood illness. Germany also reopened schools in July with no significant issues. Since the summer, most industrialized countries have reopened schools, and many do not enforce distancing or mask-wearing. But this did not impress Dr. Fauci.

Paul noted the devastating effects of school closures, especially on disadvantaged children. It is only in the next decade that we will understand the impact of all the missed support services on these children. However, we do know many are not logging in for digital learning. Failure rates have also gone up where children only engage in distance learning.

Doctors and other agencies note increases in child abuse, depression, and other mental health issues in children. There has also been an uptick in self-harm and suicidal ideation. This, over a respiratory virus with an infection fatality rate (IFR) of 0.13%, according to the WHO, which is very stratified by age and tends to affect the very elderly.

This debate raged on through the summer, when President Trump said reopening schools was a priority. It became gobsmackingly stupid when mayors and governors began to convert public space to daycare centers where children could engage in distance learning. Yet, they would not reopen schools. State leaders who chose to, such as Georgia Governor Brian Kemp and Ron DeSantis in Florida, were widely criticized.

They were also widely covered for a bumpy first week. Then nothing bad happened. So, you really don’t hear about them anymore, likely because these states would blow up the preferred narrative. Your children can’t go to school because Donald Trump is president, basically. A health official in Los Angeles even said the quiet part out loud.

Because Dr. Fauci and other Health Experts™ would not realistically frame the virus’s risk for children, teachers’ unions used the pandemic as cover for their destructive political agenda. In many urban districts, they refused to return unless political demands were met. We also saw just how far left these organizations were when they joined radical protests with the Democratic Socialists of America and other groups. Their list of demands was a cornucopia of dangerous policies, such as defunding the police. Now, one of these radicals will likely lead the Department of Education. Fabulous.

But now that the Very Bad Orange Man is presumed to be leaving office, Dr. Fauci can report what this author and many other outlets have been reporting for months:

“Look at the data, the spread from children and among children is not very big at all, not like one would have suspected.”

Team Reason has known this since April and pushed the data, despite Fauci saying (fearfully) otherwise – https://t.co/lqqddqhVAlpic.twitter.com/i9ME6tNf8j

— Aaron Ginn (@aginnt) November 29, 2020

Actually, it was what anyone who was paying attention should have expected. By the time the virus ripped through Italy, it was apparent that the elderly and those with preexisting conditions were at the greatest risk. Dr. Birx was communicating that in the earliest briefings. Once the Iceland genetic and German studies came out, it should have been confirmed. As we watched other nations’ experiences, especially those that never closed schools, we could have made reasonable assumptions and moved forward.

But we didn’t. And our children will be paying for years to come in some of the more ridiculous areas of the country. New York City and Kentucky just closed schools again. Los Angeles has never opened them. One has to wonder what excuse they will use now—or if one is no longer necessary because they believe they won an election.

By Michael Every of Rabobank

Let’s start nice and light for a Monday morning. Most readers probably have a passing knowledge of quantum physics: that a “quantum state” is a mathematical entity that provides a probability distribution for the outcomes of each possible measurement on a system; or, in this case, that particles at the quantum level can exist in two different states at once –until measured— at which point they become “fixed” (and in the case of some particles, “entangled”). Think of Schrödinger’s cat or Heisenberg’s indeterminacy.

So? Well, a research paper published in 2019 but suddenly doing the social media rounds in 2020, goes a step beyond this: as the MIT Technology Review put in its headline, “A quantum experiment suggests there’s no such thing as objective reality”

The article underlines that…

“The idea that observers can ultimately reconcile their measurements of some kind of fundamental reality is based on several assumptions. The first is that universal facts actually exist and that observers can agree on them; [second] is that observers have the freedom to make whatever observations they want; and another is that the choices one observer makes do not influence the choices other observers – an assumption that physicists call locality.….If there is an objective reality that everyone can agree on, then these assumptions all hold.”

That all seems reasonable, right? But the results of the 2019 University of Vienna quantum experiment suggested that one or more of the above assumptions – that there is a reality we can agree on, that we have true freedom of choice, or that what one decides does not influence the decisions of others must be wrong. Pretty head-spinning stuff… unless you have spent any time near social media (slash media?), where all three are demonstrably false.

Yet quantum physicists saying there is no objective reality is perfectly 2020: making a terrible pun, we seem to have some ‘quantum states’ to worry about.

1. The US election has two ‘winners’ – at least in the minds of the two main candidates who ran and the majority of the public who voted for them. Opinion polls show a very large number of Republicans believe President Trump when he says he actually won and it was all “rigged”; and the majority of Democrats of course believe former Vice-President Biden as he carries on assembling a provisional cabinet for January – and spraining his ankle playing with a dog. This week should see developments that will make the final outcome more “measured” in the quantum sense: will the Supreme Court or state legislatures prove wild cards?  On which note, I have been arguing for some time that in many senses we are heading back to a more 19th century world: a multi-polar environment of populism, nationalism, mercantilism, neo-imperialism, militarism, etc. In such a polarizing environment between and within countries, why *wouldn’t* US elections echo 19th-century (1824, 1876) templates rather than 2008 or 1980, etc.? There is also a story going round that Trump, if he loses, will hold his own shindig on inauguration day to announce the launch of his campaign for re-election in 2024: that certainly puts us straight into potential 1824 > 1828 territory, something Newt Gingrich has also tweeted about recently. While quantum physics knows as well as markets that past does not predict future, don’t forget the populist Andrew Jackson won in 1828 after claiming he was cheated in 1824.
2. Brexit also has two (short-term) outcomes: a deal or no deal. It seems that if there is movement on fishing rights, then we get the former; and if there isn’t, then there isn’t: so is it a case of Schrödinger’s fish? Word at time of writing was that things were looking up. (Again, the British tone is all very 19th century, right the way down to the Brits no longer being funny anymore – except inadvertently.)
3. China’s economy continues to power ahead, with bumper net exports and capital inflows and industrial profits all being recorded: and yet the PBOC just had to inject CNY200bn (USD30bn) in MLF a month ahead of the end of the year to ease liquidity tightness, and that on the back of CNY800bn two weeks ago. Yes, this is gross not net: but why the need for so much PBOC help when everything is going so well? Perhaps because Chinese banks are still trying to repay CNY3.7 trillion of short-term interbank debt and purchase CNY1 trillion of government bonds and repay maturing MLF injections,…and are worrying about SOE bond defaults. Again, everything is going so well though: there just isn’t any cash as a result. Isn’t the most dangerous part of the Heisenberg below the water?

In all three cases, markets decided which way to “measure” these quantum states weeks ago – and without digging down too many levels in detail, let alone to the sub-atomic. Should any outcome start to look indeterminate again, the current halo of market risk-on invincibility may slip.

Other matters, like the assassination of the head of Iran’s nuclear program Fakhrizadeh by a remote-control automatic weapon, and threats of retaliation from Tehran, can more easily be brushed aside by Wall Street, no doubt, after a brief knee-jerk risk-off response (as they were, correctly, back in January when Soleimani was assassinated).

The Arizona State Legislature is scheduled to hold an election integrity hearing this morning that will include President Trump’s lawyers Jenna Ellis and Rudy Giuliani.

Notably, officials are expected to certify the state’s election results today and give Arizona’s 11 electoral votes to President-elect Joe Biden.

Trump’s legal team dropped its lawsuit in Arizona after it was rendered moot, and a state judge threw out a lawsuit filed by the Arizona Republican Party seeking an audit of the votes cast on Election Day, according to CNN. The Trump team has since adjusted its tactics, attempting instead to convince state legislatures to select representatives to the Electoral College that would overturn the results of the election and vote for Trump.

State Rep. Mark Finchem confirmed the hearing on Friday:

“After a review of the statistical anomalies, and there are to numbers [sic] to count, affidavits of improper actions, and community outrage that has grown out of what appears to voters to be an attempt to throw the election through a number of fraudulent efforts, we decided as a Members [sic] of the Legislature, and not as members of any specific committee, that we should move forward with a public hearing.”

Watch Live (due to start at 11amET):

Today’s selling began as Joe Biden announced his economic team – coincidence?

Janet Yellen – Biden’s nominee for Treasury Secretary – tweeted for the first time:

We face great challenges as a country right now. To recover, we must restore the American dream—a society where each person can rise to their potential and dream even bigger for their children.

As Treasury Secretary, I will work every day towards rebuilding that dream for all.

— Janet Yellen (@JanetYellen) November 30, 2020

And stocks tanked…

Additional selling catalysts include major month-end selling, as JPMorgan recently noted.

According to Panigirtzoglou, “if the picture in Figure 1 is a true reflection of how balanced mutual funds have been positioned in recent weeks, then there would be some vulnerability in equity markets in the near term from balanced mutual funds having to sell equities to revert to their 60:40 equity:bond target allocation, either by the end of November or by the end of December at the latest.”

There’s more: according to JPM, the equity rebalancing flow is likely to also be an issue into year or quarter-end, i.e. the end of December, especially if equity markets continue to grind higher into December. This is because of likely negative pending rebalancing by entities that tend to rebalance on a quarterly basis, such as US defined benefit pension plans, Norges Bank, i.e. the Norwegian  oil fund, and the Japanese government pension plan, GPIF.

• US defined benefit pension plans are a big $7.5tr AUM universe. They tend to rebalance more slowly over 1-2 quarters or so. Assuming they were fully rebalanced at the end of September, and by taking into account the QTD performance of US equities and bonds, JPM believes that the pending equity rebalancing flow by US defined benefit pension plans into the current quarter-end is negative at around -$110bn.

• By doing the same calculation for Norges Bank, a $1.2tr AUM entity, the bank estimates that the pending equity rebalancing flow by Norges Bank into the current quarter-end is likely negative at around $15bn.

• A similar calculation for the giant Japanese government pension plan, GPIF, a $1.5tr AUM entity, JPM estimates that the pending equity rebalancing flow by GPIF into the current quarter-end is likely negative at around -$25bn.

In all, Panigirtzoglou echoes Goldman’s month/quarter end year-end selling concerns, writing that he sees “some vulnerability in equity markets in the near term from balanced mutual funds, a $7tr universe, having to sell around $160bn of equities globally to revert to their target 60:40 allocation either by the end of November or by the end of December at the latest.”

Of course, if this is the real catalyst, there is a lot more downside here, but did these massive managers really leave their allocation shift until the last day of the month?

As the global economy makes its way through the covid pandemics, the question asked by all economists is when do we return to normal; one asset class that is especially interested in the answer is oil, having suffered tremendous losses in a year when virtually every other asset generated tremendous returns on the back of a liquidity firehose from central banks, even though oil prices did reach their highest post-COVID levels last week, with Brent spot near $48/bbl, supported by encouraging vaccine results as well as rising tensions in the Middle East.

One attempt to answer the question of when oil will “normalize” comes from Goldman commodity strategy Damien Courvalin who wrote overnight that he expects further oil price upside to $65/bbl through 2021 “as the oil market rebalances due to a large vaccine-led demand rebound as well as an only modest non-OPEC supply response.”

Where there is uncertainty is what happens in the next few months: as he adds, “in the short-term, however, the oil market faces spreading lockdowns with demand declining in Europe and the range of infections likely asymmetric to the upside through the winter. We expect this winter wave to generate a 3 mb/d hit to global oil demand, only partially offset by heating, EM and restocking demand, although this demand hit has so far been masked by strong Asian crude buying and restocking.“

As such, Goldman expects these “muddied short-term fundamental signals” and the opposite pulls of lockdowns vs. vaccines to keep oil prices volatile in coming weeks. These cross-currents will further complicate OPEC+’s decision this week to delay or implement its scheduled 1.9 mb/d January production increase. Indeed, moments ago the first OPEC meeting closed with no resolution on whether to extend production cuts over objections from UAE and Kazakhstan. Here is Goldman on what happens next:

While we base-case a 3-month delay to prevent a return to a global oil surplus through 1Q21, not all producers appear onboard, with a lack of extension representing $5/bbl downside from current spot levels on our modeling, further contributing to short-term price gyrations.

That said, while spot prices are likely to remain unanchored, Goldman sees crude timespreads as physically bound and screen as too strong relative to still elevated inventory levels, buoyed by recent short-covering financial flows and transient Asian crude buying. The bank therefore expects a pull-back in Brent timespreads, with sustainable backwardation not likely until 2H21:

We therefore recommend taking profit on our long Jun-21 vs. Jun-22 Brent timespread trade recommendation, first recommended on May 1, for a total potential profit of $4.82/bbl (as of market open on Sunday, November 29).

In conclusion, the Goldman strategist who correctly called April’s WTI plunge into negative over a month before it happened, believes “that these winter headwinds are just speed bumps on the path to a tightening oil market, with the winter COVID wave delaying but not derailing the oil market rebalancing, with normalized OECD stocks, OPEC+ spare capacity returning to 1Q20 levels and finally needed shale production growth all occurring by 4Q21.”

The bank’s recommendation: “go long Dec-21 Brent forwards, our preferred expression of oil’s 2021 rally, as well as for producers to wait to hedge.”

Well, it’s becoming evident in Baltimore, Maryland, that teaching remotely in the pandemic is not sustainable as hackers have hit Baltimore County Public Schools (BCPS) with a ransomware attack, forcing the school system to close schools for Monday and Tuesday, reported CBS Baltimore. 

“Due to the recent ransomware attack, Baltimore County Public Schools will be closed for students on Monday, November 30, and Tuesday, December 1. BCPS offices will be open and staff will receive additional information about Monday and Tuesday,” BCPS tweeted.

In another post, BCPS said, “this provides much-needed time for our staff to continue working on setting up the instructional platform and to communicate next steps regarding devices. On Mon. and Wed., free student meals will be available at 300+ locations as usual, including all middle and high schools.”

The school system ended the statement by saying, “We understand how challenging this situation is for families and staff, and we thank you for your patience as we work through this crisis. Please note that future daily updates will be available at 5 pm.”

On Friday, the 11 News I-Team reported that Maryland state auditors found significant risks within the BCPS network.

Days before the ransomware attack was discovered, early last week, findings from the Office of Legislative Audits showed BCPS did not properly secure sensitive personal information. 

At the moment, there’s still no source behind the ransomware attack or much money hackers want to restore computer network systems. 

Last month, the public school system in Yazoo County, Mississippi, revealed that it paid upwards of $300k to help recover its network that was overrun by a ransomware incident.

There have been major US hospital systems hit with “paralyzing” ransomware attacks this fall. 

So the real consequence of a school system going offline because of a ransomware attack is that children may not be able to learn for as long as the systems are down – as seen in Baltimore this week.  

Submitted by MarketCrumbs,

It’s not surprising that online shopping stole the spotlight on Black Friday as Covid-19 continues to limit the amount of time people want to spend in public.

Online spending on Black Friday jumped by 21.6% to a record $9 billion, according to data from Adobe Analytics, which analyzed transactions from 80 of the top 100 U.S. online retailers. The total makes this year’s Black Friday the second-largest single day for online shopping in U.S. history behind last year’s Cyber Monday, when shoppers spent $9.4 billion.

The total breaks down to $6.3 million spent per minute online, according to Adobe. Consumers increasingly shopped from the palm of their hands as spending from smartphones jumped by more than 25% to $3.6 billion, accounting for 40% of the day’s total online spending.

“New consoles, phones, smart devices and TVs that are traditional Black Friday purchases are sharing online shopping cart space this year with unorthodox Black Friday purchases such as groceries, clothes and alcohol, that would previously have been purchased in-store,” Adobe Digital Insights director Taylor Schreiner said.

Online spending on Thanksgiving also hit a record this year as consumers spent $5.1 billion, according to Adobe. Despite jumping more than 21% compared to last Thanksgiving, the total fell shy of Adobe’s estimate of $6 billion.

“While yesterday was a record-breaking Thanksgiving Day with over $5 billion spent online, it didn’t come with the kind of aggressive growth rate we’ve seen with the start of the pandemic,” Schreiner said. “Heavy discounts and aggressive promotions starting in early November succeeded at getting consumers to open their wallets earlier.”

As for today’s Cyber Monday, Adobe expects it to break last year’s record with sales totaling between $10.8 billion and $12.7 billion, which would be an increase of 15% to 35% from last year.

With Americans largely at home shopping online, foot traffic at stores fell by more than 52% compared to last year’s Black Friday, according to Sensormatic Solutions. Traffic on Thanksgiving fell by 94.9% as retailers such as Walmart and Target closed their stores this year.

“We knew Black Friday [traffic] was going to be down, we just didn’t know how much it was going to be down,” Sensormatic Solutions senior director of global retail consulting Brian Field said. “Black Friday this year, from a traffic impact perspective, looked a lot like a typical Saturday after a Black Friday.”

With Covid-19 giving e-commerce a boost, it will be interesting to see if the days of people trampling over each other to get into stores on Thanksgiving and Black Friday will ever make a comeback.

Today’s pending home sales data  (expected to rise modestly MoM) is October’s tie-breaker after new home sales dipped and existing home sales ripped. After unexpectedly dropping in September, pending homes also unexpectedly fell in October (down 1.1% MoM vs +1.0% MoM exp).

Source: Bloomberg

This is the second monthly decline in a row.

“The housing market is still hot, but we may be starting to see rising home prices hurting affordability,” Lawrence Yun, chief economist at the NAR, said in a statement.

The combination of low rates, lean inventory and “very strong demand has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers.”

On a YoY basis, sales remained impressive (up 19.5%) but that also slowed.

Source: Bloomberg

By region, pending home sales declined in two of four major U.S. regions, including a 5.9% decrease in the Northeast and a 0.7% drop in the Midwest. The gauge of contract signings in the South crept up 0.1%, while the index was unchanged for the West.