Tag: finance

Democratic Pennsylvania Governor Tom Wolf’s pandemic restrictions – including a requirement that “non-life-sustaining” businesses were to shut down – has been ruled unconstitutional by a federal judge.

US District Judge William Stickman IV, a Trump appointee, ruled on Monday in a 66-page opinion that the restrictions were overreaching, arbitrary, and violated citizens’ constitutional rights. Plaintiffs in the case include hair salons, a farmer’s market vendor, a horse trainer drive-in movie theaters, and several GOP lawmakers, according to 6ABC.

The ruling means that the current restrictions – including limitations on the size of all gatherings, cannot be enforced.

“It’s really 100% in our favor. The court found in all respects that the orders issued by the governor and the secretary of health were unconstitutional. What it means is they can’t do it again, and they should not have done it in the past,” said attorney Thomas W. King III, who represents the plaintiffs. “It’s a complete and total victory for the counties, the businesses and the representatives,” he added.

Wolf said in a statement that his office would seek an immediate stay to halt the order while they file an appeal.

“The actions taken by the administration were mirrored by governors across the country and saved, and continue to save, lives in the absence of federal action,” said Lyndsay Kensinger, a spokesman for the governor, adding “This decision is especially worrying as Pennsylvania and the rest of the country are likely to face a challenging time with the possible resurgence of covid-19 and the flu in the fall and winter.”

Kensinger noted that Monday’s order does not apply to the mandatory mask order or the mandatory work-from-home order according to  triblive.com.

After reviewing the record, Stickman said that he “believes that defendants undertook their actions in a well-intentioned effort to protect Pennsylvanians from the virus. However, good intentions toward a laudable end are not alone enough to uphold governmental action against a constitutional challenge. Indeed, the greatest threats to our system of constitutional liberties may arise when the ends are laudable, and the intent is good — especially in a time of emergency.”

Stickman, who was appointed to the bench in 2019, said that “even a vigilant public may let down its guard over its constitutional liberties only to find that liberties, once relinquished, are hard to recoup and that restrictions — while expedient in the face of an emergency situation — may persist long after immediate danger has passed.” –triblive.com

“You can’t just shut down American society,” said King, the plaintiffs’ attorney.

Real Vision senior editor Ash Bennington hosts managing editor Ed Harrison to discuss the animal spirits that are driving this market. After reviewing historical financial panics, Ed and Ash take another look at whether options mania is exerting influence on equity price action. They explore the “Softbank narrative” through the lens of volatility investor and arbitrageur Benn Eifert, and examine how speculators are buying options from market makers who are forced to delta-hedge their position, as they don’t want to take a directional position. Lastly, Ed and Ash look forward and see if there is “another shoe to drop” as fall approaches. In the intro, Jack Farley and Ash Bennington discuss the OPEC’s latest monthly oil market report.

In an NFL season that seems to be more about social justice and Covid precautions instead of; well, playing football, perhaps it should come as no surprise that ratings for Sunday Night Football tanked on NFL’s Week 1.

Initial ratings from Sunday night’s game featuring “America’s Team” – the Dallas Cowboys, and the newly moved Los Angeles Rams plunged from last year. 

Sunday Night Football ratings plunged, according to Yahoo Finance. The game posted a 4.7 among the key Adult 18-49 demographic with 14.81 million viewers. Although the numbers may still rise after West Coast numbers are factored in, the article notes it is still a “steep decline” from 2019. 

For comparison, last year’s Patriots vs. Steelers Sunday night opener had 22.2 million viewers. This total was generally in-line with the opener the year before, indicating that even with West Coast viewers factored in, this Sunday’s ratings were significantly lower. 

The idea that NFL viewership is suffering due to the league’s social justice message isn’t especially farfetched. The Dallas Cowboys are one of the most widely supported teams in the league, across the nation, and their presence often helps draw in viewers. The Los Angeles Rams are also widely considered to be playoff contenders this year. 

Which leaves many to wonder: what could the NFL be doing wrong?

Prime Minister Boris Johnson has effectively placed Britain on the path to an “Australia-style” trade arrangement with the EU after his “intermarket bill” – which has been criticized for effectively overriding parts of the UK-EU withdrawal treaty – passed its first important procedural vote in the House of Commons Monday.

Passage has opened the door to a messier exit from the EU for Britain, while also raising the possibility that a “hard” border could return to the island of Ireland separating Northern Ireland from the Republic of Ireland (an EU member state). Many fear that could lead to a revival of sectarian violence in a return to “the troubles”.

Though cable’s reaction to the news was relatively muted, investors are now faced with the likelihood that the EU27 will walk away from negotiations, as they have threatened to do. Brussels has also threatened legal action against London should the bill move forward.

The new bill, which had its first reading on Wednesday, outlines a new “safety net” of rules for trade between England, Scotland, Wales and Northern Ireland to prevent disruption to the internal market inside the UK, even in the event that Britain and the EU do not reach a comprehensive trade agreement by the end of 2020. The bill would ensure there will be no new checks on goods moving from Northern Ireland to the rest of the UK, and gives Parliament the power to “disapply” rules relating to the movement of goods. It also specifically states that provisions in the law will override parts of the withdrawal agreement, where applicable.

The bill will now pass on to its 2nd reading after a vote of 340 vs 263. Following the second reading is the final vote to make the bill into legislation. Though, as ITV’s Paul Brand points out, a large number of abstentions in this vote suggests the bill could face tougher votes in the future.

BREAKING: MPs vote for the Internal Market Bill to progress to next stage, despite concerns it could break international law.

AYEs 340
NOEs 263

Seems there were a fair few abstentions – suggests there may be a closer fight over next week’s amendments.

— Paul Brand (@PaulBrandITV) September 14, 2020

Once again, Johnson was credited with putting down a “conservative rebellion” , according to a report published a few hours ago by the FT, as more MPs fret over Johnson’s confrontational style, which has infuriated the UK’s former continental partners.

Source: Bloomberg

Importantly, the vote comes just as hedge funds turned the most bullish they’ve been in five months, Bloomberg reports.

A team of Goldman FX analysts said in a note to clients that the market is currently pricing in a 40-45% chance of the “no deal” Brexit outcome. The team says it sees potential long-term upside for any traders able to persevere through some short-term volatility, since “beyond the very short-term we would see meaningfully lower odds of a ‘no deal’ Brexit than the market appears to be implying,
the bank said.

They argued that while a “no deal” scenario would ultimately be bad for Britain’s economy, Johnson has often favored such tough negotiating tactics in the past. In the end, Goldman believes, a trade deal is still the most likely outcome, which could send the pound to 87 pence to the euro.

Authored by Charles Hugh Smith via OfTwoMinds blog,

When the money runs out or loses its purchasing power, all sorts of complexity that were previously viewed as essential crumble to dust.

Four D’s will define 2020-2025: derealization, denormalization, decomplexification and decoherence. That’s a lot of D’s. Let’s take them one at a time.

I use the word derealization to describe the inner disconnect between what we experience and what the propaganda / marketing complex we live in tells us we should be experiencing.

Put another way: our lived experience is derealized (dismissed as not real) by official spin and propaganda.

The current state of the economy is a good example. We see the real-world economy declining yet the officially approved narrative is that there’s a V-shaped recovery underway because Big Tech stocks are hitting new highs. In other words, we don’t need a real-world economy, all we need is a digital economy provided by Big Tech platforms.

This is derealization at its finest: the everyday world you experience directly no longer matters; what matters is stock prices and various statistics that all paint a rosy picture.

Meanwhile, the wealthiest class is fleeing soon-to-be-bankrupt cities. The wealthiest class has the means to buy the best advice and also has the most to lose, so I give their actions far more credence than official propaganda.

I’ve sketched out my thesis on denormalization in The “New Normal” Is De-Normalization and Here’s Why the “Impossible” Economic Collapse Is Unavoidable:

This is why denormalization is an extinction event for much of our high-cost, high-complexity, heavily regulated economy. Subsidizing high costs doesn’t stop the dominoes from falling, as subsidies are not a substitute for the virtuous cycle of re-investment.

The Fed’s project of lowering the cost of capital to zero doesn’t generate this virtuous cycle; all it does is encourage socially useless speculative predation. Collapse isn’t “impossible,” it’s unavoidable.

The basic idea is that all the structures of the “normal” economy only function at full capacity, as costs have moved higher, unproductive complexity has increased and our ability to pay these higher costs is based on ever-expanding debt.

As a result, “normal” became extremely fragile and binary: it’s either fully funded at full capacity or it collapses. The structures of everyday life (to use Braudel’s apt phrase) are incapable of downsizing to 70% of their previous complexity and cost, much less 50%.

There won’t be any “new normal” because the system has become too rigid, ossified, over-regulated and controlled by entrenched interests and elites. It is incapable of reducing complexity and cost, and bailouts via borrowed money are stopgaps, not actual solutions.

Decomplexification is a mouthful, and everyone inside the machine knows the impossibility of paring organizational complexity. Everyone who is a stakeholder in the status quo (which is virtually every employee, manager, etc.) will fight to keep the status quo intact as is, for fear that any re-organization might imperil their livelihood or security. This is entirely understandable, of course.

Modern life is inherently complex. Democracy is complex and cumbersome because having a bunch of stakeholders all competing for public resources and advocating for a bigger slice of the pie is inherently messy. There must be oversight and feedback to minimize the possibility of one clique gaining complete power.

Long global supply chains are inherently complex. Managing ever-increasing regulations is inherently complex. And so on.

When the money runs out or loses its purchasing power, all sorts of complexity that were previously viewed as essential crumble to dust. We’re witnessing the early stages of this in real time in healthcare and education: overly complex and costly systems are breaking down not just from the challenges of the pandemic but because they’re structurally incapable of adapting or evolving beyond pseudo-reforms and policy tweaks.

As an illustration, consider the current overly complex way our healthcare system funds itself and a system in which customers pay cash for medical care: no insurance, minimal oversight auditing, etc. Regulations boil down to a requirement to publicly post prices for services and actually charge only the posted prices.

In higher education, as per the model I outline in my book The Nearly Free University, the campus and its entire bureaucracy becomes superfluous. Classes, embedded apprenticeships and in-person workshops are organized online. The entire scheme of accrediting colleges is jettisoned in favor of accrediting each student.

And so on. You can see the problem: eliminating unproductive, obsolete layers of costly complexity will eliminate millions of middle-class jobs that can’t be replaced with new expansive bureaucracies.

Yes, paying cash for healthcare and campus-less, mostly automated universities are oversimplifications. So where is the middle ground between current costly complexity and some “new normal” with half the costs and complexity? There’s no way to accomplish this while retaining the payrolls, priorities, processes and structures of the existing systems.

The point here is that when the money runs out or loses much of its purchasing power, overly costly complexity collapses whether we like it or not.

Decoherence is an interesting word. In science, “Decoherence can be viewed as the loss of information from a system into the environment, since every system is loosely coupled with the energetic state of its surroundings.”

Decoherence refers to the loss of systemic coherence between narratives, values, processes and systems. Simply put, stuff no longer works right and it no longer makes sense.

What worked in the past has been transformed by two systemic drifts:

1. Systems that evolved to function in a specific socio-political-economic context continued adding complexity and cost because debt-based funding was available, not because they were becoming more efficient or effective.

2. The socio-political-economic context has changed and so the status quo systems are mal-adapted, i.e. obsolete.

These two systemic drifts occur so slowly that we aren’t even aware of the loss of coherence unless we compare the current system to a previous set point or look at it from the perspective of starting from scratch: what would the most sustainable, lowest-energy consumption, most efficient and productive system look like if we designed it from scratch? It certainly wouldn’t be the system we have now,

The four Ds help us understand why the status quo is incapable of adapting / evolving fast enough and effectively enough to manage a controlled collapse to a much lower level of cost and complexity.

The status quo can’t even admit the need for a controlled collapse, much less manage it.

We can add a fifth D: denial. The four Ds are already in motion and denial is only accelerating systemic decoherence.

*  *  *

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Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.

*  *  *

My recent books:

A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

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Over a month after widespread allegations that China has been routinely using its Muslim Uighur population as prison laborers for products shipped to the West — specifically after 13 tons of human hair in weave products estimated to be worth over $800,000 was seized as a US port — the Department of Homeland Security announced Monday five new orders blocking the importation of products believed to be the result of forced labor.

Acting Customs and Border Protection (CBP) Commissioner Mark Morgan underscored the new measures send a “clear message” concerning forced labor entering US supply chains. 

“Today’s Withhold Release Orders send a clear message to the international community that we will not tolerate the illicit, inhumane, and exploitative practices of forced labor in U.S. supply chains,” Morgan said, according to The Hill.

The directives are aimed at blocking products from multiple facilities in China’s Xinjiang Uyghur Autonomous Region that are suspected of being either internment or ‘re-education camps’ or as including staff made up of forced labor.

A brief listing of the five orders via the DHS website includes the following: 

1. All products made with labor from the Lop County No. 4 Vocational Skills Education and Training Center in Xinjiang Uyghur Autonomous Region, China. 
2. Hair products made in the Lop County Hair Product Industrial Park in Xinjiang Uyghur Autonomous Region, China. 
3. Apparel produced by Yili Zhuowan Garment Manufacturing Co., Ltd. and Baoding LYSZD Trade and Business Co., Ltd in Xinjiang Uyghur Autonomous Region, China. 
4. Cotton produced and processed by Xinjiang Junggar Cotton and Linen Co., Ltd. in Xinjiang Uyghur Autonomous Region, China.
5. Computer parts made by Hefei Bitland Information Technology Co., Ltd. in Anhui, China. 

Morgan added of these tightening of controls that “The Trump Administration will not stand idly by and allow foreign companies to subject vulnerable workers to forced labor while harming American businesses that respect human rights and the rule of law.”

The statement went so far as to call China’s practice “modern slavery” and said DHS would do everything in its power to protect American workers, citizens, and the supply chain.

It comes after over much of the past year international human rights groups have published a mountain of photographic and satellite evidence showing a sprawling network of Uighur Muslim camps being run by the Chinese communist government, which Beijing has consistently downplayed or denied altogether. 

Previously China has leveled retaliatory sanctions against the US over criticism related to the sensitive issue of treatment of the minority Chinese Muslim community.

In a rollercoaster day for Nikola, the company’s shares slumped after the close following a Bloomberg report that the SEC has started an examination of the company to “assess the merits” of Hindenburg’s allegations that the company is an “intricate fraud.” The news sent NKLA shares down 4% after hours.

Ironically, this means that the company’s founder, Trevor Milton, has gotten his wish: on Monday, Nikola pulled a Wirecard and encouraged the laughably toothless SEC to get involved to settle the report claims, perhaps hoping that the SEC would pull a “Tesla” and find nothing terminally wrong.

As reported previously, the Phoenix-based company said it reached out to the SEC to discuss its issues with the Hindenburg report, and ultimately held a call with agency officials on the morning of Sept. 11. Nikola says Hindenburg was attempting to profit from a “manufactured decline” in its share price.

“Nikola has contacted and briefed the U.S. Securities and Exchange Commission regarding Nikola’s concerns pertaining to the Hindenburg report,” the company said in a Monday statement. “Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters.”

In a lengthy report on Sept. 10 Hindenburg Research compared Nikola to Theranos, calling it an “intricate fraud” which overstated the capabilities of its earliest test trucks among many other allegations. Nikola pushed back, accusing the short seller of making misleading statements that were designed to manipulate its shares.

The feud prompted the SEC to examine Hindenburg’s claims to determine whether Nikola may have violated securities laws, said Bloomberg’s anonymous sources.

The regulator’s review is preliminary and may not lead to allegations of wrongdoing according to Bloomberg; according to us the most likely outcome – if one judges how the SEC has handled Tesla – is something between Herbalife and Wirecard, where the SEC finds one or more wrist-slappable violations but nothing terminal, “punishes” the company with a modest fine, and everyone moves on sparking a furious short squeeze as those betting on a catastrophic plunge in the stock are forced to cover.

Furthermore, with GM involved and Mary Barra vouching today for the company’s due diligence in Nikola, it is unlikely that the SEC will dare to end Barra’s career, destroy Nikola and ruin hundreds of thousands of Robinhood traders who have been busy buying the dip in the alleged fraud.

The one positive outcome to come from all of this is that if and when the SEC slaps Nikola with a modest fine, it will be officially time to declare that the SEC is now hopelessly captured and will allow frauds to persist with little concern for long-term capital markets implications… similar to what the German regulator Bafin did amid a chorus of allegations that Wirecard was a fraud when instead of ending the charade, Bafin instead lashed out at the shorts and skeptical voices.

Authored by Jim Quinn via The Burning Platform blog,

As I’ve been observing the actions and justifications of men like Jerome Powell, Anthony Fauci, Andrew Cuomo, Joe Biden and Donald Trump during this self-inflicted global depression, I can’t help but channel the iconic American actor Clint Eastwood and his most famous role – Dirty Harry, when assessing whether they have an understanding of their limitations. If a man doesn’t know his limitations, he can ruin his own life.

When men in positions of immense power don’t know their limitations, they can ruin the world, destroying the lives of millions and propelling the world towards a catastrophic financial collapse and likely global conflict. Our benevolent leaders act as if they know what is best for mankind, when they are actually flailing about blindly, corrupted by their own power and wealth, leading us on a path to destruction, because their immense egos won’t allow them to humbly admit their dreadful mistakes and take corrective actions.

The second Dirty Harry movie, Magnum Force, came out in 1974, with Harry taking on vigilante cops in San Francisco. His lieutenant, played by Hal Holbrook, tries to keep Harry off the case of bad guys being executed by the lieutenant’s squad of dirty cops, using the logic that Harry posed a risk to society by not following proper police and justice procedures.

It’s funny how people in positions of power accuse others of doing what they in fact are doing themselves. In a condescending tone, the lieutenant boasts that he has never had to take his gun out of his holster as he has risen to a rank above Harry’s. The sarcastic response from Harry shows his contempt for those not willing to do the dirty work, keeping the streets safe from criminals:

“You’re a good man lieutenant. A good man always knows his limitations.”

At the end of the movie, after Harry has killed all the vigilante cops, the lieutenant pulls a gun on Harry and smugly tells him he will frame him for the murder of the cops. He then gets into the car Harry had been driving, not knowing Harry had activated a mailbox bomb and tossed it into the back seat. As he slowly drives away, the bomb goes off, killing the lieutenant. Another Dirty Harry happy ending. The movie ends with Harry saying:

“A man’s gotta know his limitations.”

That phrase keeps popping into my mind lately. Watching the world burn while what amounts to leadership bloviates, lies, misinforms, and makes decisions which condemn the masses to a future of poverty, homelessness, violent upheaval, and an economy gutted by reckless central bankers and feckless politicians, is infuriating to critical thinking rational people. I’m constantly baffled by the lack of forethought regarding how actions taken today by leaders, to supposedly alleviate problems created by their previous solutions, will lead to long-term disaster.

I used to blame these decisions on stupidity and incompetence. But I now attribute it to malice of forethought, driven by greed, envy and a sociopathic desire for power and control over others. Those chosen to hold the key positions in government, central banking, and in the media are hand-picked and groomed by shadowy billionaire types whose agenda is to reap riches, hijack the financial system and exercise control over the population.

The year 2020 has revealed the type of men we’ve allowed to control our economy, our government and our lives. We have become a nation of willfully ignorant, technology addicted, moronic dupes, being led down a path to destruction by sociopathic egomaniacal traitors to our country. These men have a high opinion of their intellectual talents and arrogantly believe they know the answers to all the questions and confidently put forth solutions designed to benefit themselves and those they serve – not you.

This is not a new development for mankind. Greed, envy and desire for control have driven a minority of men throughout history. A sociopath has no empathy for other human beings. They have no conscience, therefore have no qualms about lying, stealing, sending men to their deaths for oil or destroying the lives of millions. Their hubris and arrogance always lead to their downfall because they are incapable of the self-reflection necessary to understand their limitations.

There are three men, among many, who history will treat poorly when the story of 2020 is written (depending on who writes it). Anthony Fauci, Andrew Cuomo and Jerome Powell are men with high IQs, large egos, slaves to reputational accolades and used by the billionaires running this planet to implement their plans to control the world. Are they just pawns or active participants in the conspiracy to financially, politically, socially medically and militarily enslave the population of the planet through false narratives and financial engineering designed to impoverish the many and enrich the few?

It’s a question that reverberates through my mind constantly, as I watch in disbelief while these men continually do the exact opposite of what needs to be done to improve the lives of Americans and blatantly lie, misinform, and obscure the truth. Not being a sociopath, it is difficult for me to comprehend what drives men like these. It appears power to rule over others, admiration from the masses, corporate media enhanced status, wealth seeking, an over-inflated opinion of their intellectual talents and an inability to acknowledge their own limitations are their key traits. They have no second thoughts about sacrificing you at the altar of their gods – corporate billionaire oligarchs.

Anthony Fauci has been a government bureaucrat in charge of the U.S. infectious diseases department for the last thirty-six years. You can only last that long in one position by pleasing those who matter. In a rational world his performance over the last year would be considered disastrous, since his organization failed to see the pandemic coming, ignored it when the WHO and China conspired to cover it up, had absolutely no plans in place to combat it, downplayed the threat into early March, told people masks were useless (they are) before demanding the whole nation mask up, used the ridiculous Neil Ferguson model predicting 2 million deaths to convince the country to lockdown, has continuously provided conflicting advice, and has contributed greatly to the biggest economic collapse since the Great Depression.

He is clearly a tool of the left as he is a big fan of Hillary Clinton and does the bidding of Bill Gates on the need for a vaccine for a flu that will not kill 99.9% of all Americans. He clearly loves the limelight, appearing on dozens of TV shows every week, as his bureaucrat ego grows in proportion to the accolades he receives from the corporate media and the sheep who worship at the feet of the lockdown cult. He portrays himself as a scientist following the facts. He wasn’t lying about masks back in March.

The CDC’s own literature prior to the pandemic said masks are useless in stopping the spread of viruses, because they are. If he was a real scientist following the data, he would humbly admit Sweden was right all along, with no lockdown, no mandatory masking, no school shutdowns, and developing herd immunity as the infection rate reached 20%. The vulnerable (old and those with pre-existing conditions) should have quarantined and the young and healthy should have gone on with our lives. He is too proud and agenda driven to ever admit he was appallingly wrong. His guidance during this pandemic has been as accurate as his pitching.

Fauci and his acolytes have convinced the masses masking protects them as a way to exercise control and conformity, testing the limits of governmental authority. Compliance with the tyrannical dictates of governors and health “experts” (who are uniformly unhealthy looking) is a test run for further mandates and forced vaccines. For doing his part on behalf of Gates and the other billionaire oligarchs, Fauci will reap riches, with book deals, positions on drug company boards, speaking fees at healthcare conferences and TV appearances.

Fauci’s inability to realize his limitations and/or his moral failing as a supposedly neutral scientist have led to death and economic destruction on a far greater scale than if he had admitted what he did not know and didn’t fear monger the nation into a complete shutdown. The suicides, riot death and destruction, undiagnosed cancer and heart disease deaths, mental health epidemic, millions of jobs lost and hundreds of thousands of small business closures are real blood on his hands.

Andrew Cuomo is a particularly vile character whose enormous ego is so inflated it convinces him to write a book in the midst of the pandemic about what a stupendous job he did by having the largest number of Covid-19 deaths in the nation, by far, and murdering thousands of nursing home residents by purposely directing infected patients back into the nursing homes. I wonder how a man like this can sleep at night, with that many corpses on his conscience. But there is the answer.

Sociopaths have no conscience. Cuomo is so arrogant and self-loving; he actually believes he’s done an outstanding job. He believes he’s earned his position of governor when he rode the coattails of his daddy’s name recognition. He married a Kennedy (who he eventually divorced) and asked journalists how it would play, before proposing. He is nothing more than an ambitious self-promoting climber, willing to do anything to get ahead. Some animals are more equal than others when it comes to masking.

As with the other left-wing governors (Murphy, Wolf, Witmer, Newsome), Cuomo became intoxicated with the power he assumed during this pandemic. Governors are essentially figureheads during normal times. They rarely impact the day to day lives of their constituents. But, with the panic induced by medical “experts” and Trump buying into the end of the world scenarios from purposely faulty models, governors and mayors throughout the country assumed almost dictatorial power to control our lives, with threats of imprisonment or fines for not following their authoritarian decrees. They have had no legislative or judicial checks on their illegal mandates.

Cuomo was clearly inebriated with the attention he got from his daily briefings, copying Trump’s daily updates. He invoked a draconian lockdown, blamed the Feds for all his shortfalls, invoked fear among the populace rather than portraying the required stoicism, rational consideration of risks, and fortitude in the face of uncertainty. This maniacal blowhard has the gall to take a victory lap and ridicule other governors when his death count is twice any other state and three times as high as the states he has scorned.

If this man was capable of self-reflection, he would be on his knees begging forgiveness from thousands of families for his fatal error of putting infected patients into nursing homes, sentencing thousands of seniors to death. Instead he glories in the accolades of the left-wing media, who ignore his disastrous decisions, and support his claims Trump is to blame. Even though lockdowns have proven to be the wrong solution, Fauci proclaims Cuomo’s actions as an outstanding response to the pandemic.

I guess destroying the economy of the world financial capital, presiding over a self-imposed mass death event, encouraging BLM and ANTIFA terrorists to riot, murder and destroy businesses, and treating the public like pawns in a political game, constitutes success in Cuomo world. Cuomo’s limitations are many and his talents few, but he would never admit it. Mencken’s words from decades ago have never been truer:

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

That brings us to Jerome Powell, the man who sold the world. How could a man with such an undistinguished career of working as an underling on Wall Street and as a mid-level government bureaucrat, become the most important man in the world? As with his two predecessors, Yellen and Bernanke, they all had the mundane unimpressive careers of academics and bureaucrats. None of them distinguished themselves as brilliant thinkers or leaders. They fit Taleb’s description as IYI (intellectual yet idiot).

They all achieved “success” by playing the game, ingratiating themselves to the ruling class, and proving to be pliable tools to those pulling the strings. The reward for doing the bidding of the banking cabal and billionaire oligarchs running the Deep State is fame, media accolades, book deals, positions on boards, outrageous speaking “fees” (aka payoffs) and wealth they never dreamed of. Bernanke made more for giving a one-hour speech at a Bank of America conference than he was paid annually as chairman of the Federal Reserve.

Bernanke didn’t allow the creative destruction of capitalism to put a recklessly corrupt organization like Bank of America out of business, and reaped riches for doing so. Powell knows who butters his bread and will be compensated handsomely for saving the Wall Street cabal once again, while throwing Main Street and senior citizens under the bus.

As you can see from the chart below, the Fed Funds rate averaged between 4% and 5% from 1990 through 2008. A senior citizen could get a similar return on a safe money market fund, to supplement their Social Security. But thanks to Bernanke, Yellen and Powell, rates have essentially been zero for over a decade. These actions have benefited their true constituency – criminal bankers, hedge fund managers, wealthy oligarchs, mega-corporations, and politicians.

They have impoverished the middle class, encouraged market speculation rather than capital investment and destroyed the retirements of low-income senior citizens. They are solely responsible for the greatest level of wealth inequality in history. They have created two bubbles (2000, 2008) with their easy money policies which burst, leading to widespread economic destruction. But those bubbles pale in comparison to the world destroying bubble they have created as the “solution” to their last bubble.

Powell and his compadres have created a financial system so fragile that it couldn’t handle interest rates at 2.5%. By handle, I mean the stock market threw a tantrum and the spineless Wall Street lackey Powell did what he was told and started to cut rates in the summer of 2019. Something broke within the fetid rigged machinery of financial market chicanery in September, with overnight repo rates soaring to 10% – a level reflecting the true risk in the markets. Rates reflecting the true market risk are unacceptable to the powers that be. Powell was already doing the bidding of his bosses by lowering rates into the year-end and conducting stealth QE, while denying it was QE.

Powell is not a dumb man. He knows a country cannot run up it’s national credit card without negative consequences at some point – default, currency collapse, hyperinflation, civil chaos, global conflict. It would require a man of courage, fortitude and morality to stand up to the evil forces controlling the systematic pillaging of the nation. Powell is not that man.

His limitations are self-evident, as he has put the country on a path to destruction, while exacerbating the gulf between the Haves (Powell’s people) and the Have Nots (you and me). His monetary machinations have fueled the riots roiling the country, which is possibly exactly what his oligarch superiors desire. If the country is distracted by false narratives about systematic racism, with fighting in the streets, the systematic reaping of the national wealth can go on behind the curtain.

Powell has made a mockery of price discovery by buying up one third of the mortgages in the country, billions in junk bonds of companies that should be bankrupt, and convincing unemployed Robinhood day traders that stocks only go up, because Powell will rescue them if stocks start to drop. After observing the clearly desperate actions taken by Powell to prop up his Wall Street puppeteers, under the cover of a pandemic, one must wonder whether he has been threatened to do so or actually believes his traitorous actions are beneficial to the country.

By lowering rates to zero, expanding his balance sheet by $3 trillion in a matter of months, enabling the Federal government to run $3 trillion deficits, and providing the fuel for an epic stock, real estate, and bond bubble, Powell is solely responsible for the banquet of consequences we will experience. Powell has pushed all his chips on the table. A man of much higher character and intellect than this cowardly Powell character explained what will happen seven decades ago:

“There is no means of avoiding the final collapse of a boom brought about by credit expansion.  The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises, Human Action [1949]

When this Powell-created bubble explodes, there will be many Dirty Harry type characters cracking a wry smirk and saying, “a man’s gotta know his limitations”.

*  *  *

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Authored by Mark Jeftovic via OutOfTheCave.io,

We hear a lot of talk in financial and economic circles about “reversion to the mean” or some variation: reversion through the mean or that reversion typically overshoots the mean. If you believe in cycles or oscillations, when you see something get wayyyyy out of whack, you may not know how much further out of whack it’ll go (“the market can remain irrational longer than you can stay solvent”), or when it’ll stop. But the typical belief, based largely on historical observations, is that when a move to an extreme finally exhausts itself and begins the countermove in the other direction, it will revert to, and then overshoot the mean.

How far will it overshoot the mean? To the extent whatever you are measuring had extremely overshot to one side, or the upside, it is generally expected to overcompensate to a comparable extent in other direction. Most of the time when we talk about this, we’re thinking about financial markets and it is most poignantly reflected in The Hype Cycle or some other variation of the wild gyrations between Irrational Exuberance and Maximum Pessimism.

To the shrewd speculator or contrarian investor, you can become exceedingly rich if you just know when everything has either peaked or bottomed. But, of course, that’s easier said than done.

There are people who think gold and silver, with investment portfolios holding somewhere around 0.5% globally and near universally reviled by the financial press, are in a bubble.

(via Forbes)

…and then there are people who think that TSLA, at 1000X carbon credits “earnings” is some kind of bombed-out value play.

Warren Buffett is credited with saying to be fearful when everybody else is greedy, and greedy when everybody else is fearful. I always thought he was channelling Jesse Livermore, who said as much back in the 1920’s….

“The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. ”

– Edwin Lefévre, Reminiscences of a Stock Operator

“It is a human trait to to be hopeful and equally so to be fearful, but when you inject hope and fear into the business of speculation, you are faced with a very formidable hazard, because you are apt to get the two confused and in reverse positions”

– Jesse Livermore, How To Trade in Stocks

Where are we today? Well like I said, that’s hard to say exactly, and it’s been hard to say for a long time.

Another old expression is that “the graveyards of Wall Street are littered with the skulls of those who were too early.” Betting against the extreme sentiment of these last few years hasn’t gone well.

We are obviously somewhere out the extreme sentiment side of something, but the point of today’s piece is to make the case that it’s not just stonks that are teeing up for some kind mean reversion. Central banks think inflation has been too low for too long, and for most of that time interest rates have been squashed at zero, in some places negative. Trying to go long volatility has been the widowmaker trade for years, while value guys have entire podcasts devoting a lot of airtime to how lousy value has been doing. While entertaining, I feel bad for them.

I look at all this and wonder what the world looks like if all of this snaps back other way in some kind of cascading Great Reversion.

Extremes in finance brings extremes in side effects: including things like hysteria, alarmism, political intolerance, media concentration, partisanship and just overall hypocrisy and hypernormalization. Although these are all difficult intangibles to measure and quantify.

I’ve cited the Pew Research on political polarization before, where they show how it is no longer possible to gain a plurality in the middle – centrism is dead and moderates are reprobates. The result would be a pendulum beat between ever increasing extremes – far left, hard right, until the center literally cannot hold.

In Ronald Baily & Marian L. Tupy’s “Ten Global Trends Every Smart Person Should Know”, they distinguish between extractive and inclusive societies and make the case that an exogenous shock to one, like The Great Depression or a global war, would finish off an extractive society while inclusive ones weather the storm and perhaps even grow stronger.

An extractive society is one where a cadre of elites operates the system in a manner that strips wealth from the wider population and concentrates it within the ruling class. A lot of people are writing about this dynamic lately and I’ve long suspected the structure of the monetary system and the Cantillon Effect as being the primary driver of it. Contrast with an inclusive society, which they don’t mean in a “woke” sense but rather:

“Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few,…They include democratic politics, strong private property rights, the rule of law, enforcement of contracts, freedom of movement, and a free press. Inclusive institutions are the bases of the technological and entrepreneurial innovations that produced a historically unprecedented rise in living standards in those countries that embraced them”

To me, that sounds like a pretty good framework for free market capitalism. Something Charles, Jesse and I were trying to articulate in our last AxisOfEasy podcast. When Jesse contrasted what I call capitalism with “Neoliberalism”, I wondered afterward if there was a enough of a distinction between the two terms. But since I started reading Ten Global Trends I realized the significance of this distinction between inclusive and extractive societies.

If what we call (free market) Capitalism is inclusive, I would argue that what we Neoliberalism (or Globalism) is extractive.

And the reason I mention it all here is because I think this is another axis along which we are out on the far end of the tail, and we may even have a way to measure it. Central Bank intervention and monetary policy has transformed our society from an inclusive free market capitalist one into an extractive, neoliberal, globalist one.

Many people quibble over when this started, looking at the creation of The Fed in 1913 or Nixon’s shutdown of Breton Woods in ‘71, I think even those developments didn’t necessarily make this swing from inclusive to extractive inevitable until we started making bail-outs the expected outcome every time a bunch of banksters and  financiers over-extended themselves and blew themselves up.

With the bailouts of 2020, when innumerable small businesses were ordered closed, by edict, many of whom will never reopen, while central banks directly support superhuge businesses, and lucrative government contracts are awarded to cronies, what was a slow, seemingly inexorable slide into this extractionist regime was suddenly and dramatically pushed into overdrive.

Billionaires getting more billionairey…

(Note that 4 of the 5 billionaires depicted in this info graphic own companies whose bonds are being purchased by The Fed as part of the SCCMF)

When the types of things that are too far out the extreme end of the tail snap back it won’t just feel like another financial crisis, because this time I think, all the underlying factors that baked in the next crisis will also revert, including this reaction against our newfound extractionist overlords.

What would mean reversion and overshoot look like?

While some of it is financial and economic and would look like a meltdown, these other aspects are cultural, even geopolitical. When it all snaps the other way it will affect economies, financial markets, but also system fragility, supply chains, social cohesion, even living standards.

I just think things have gotten so fugly, and so polarized, contentious to the point where being a centrist is considered an extremist position in itself, that it’s all going to snap back in the other direction so fast and so hard it’s going to rip everybody’s faces off. It may be so disorderly it will even disorient those who were presumably positioned on “the correct side” of the move.

We are at a kind of hinge moment in history, just imagine where things will have to go for you to remember recent years as some kind of bygone era. That’s where The Great Reversion will take us. Nobody can say for sure what it will look like, or when it will happen, but I do fear one thing in particular.

The reversion, will be mean.

The ‘Rick Astley’ market is back… “Never gonna let you down”…

Another day, another short-squeeze (“most shorted” stocks rose 3% on the day, erasing the losses from Thursday and Friday)…

Source: Bloomberg

Which explains why Small Caps outperformed so handsomely. Note how everything went turbo higher at the cash open (interesting that small-caps and Nasdaq diverged notably at the European close). As we neared the close, the ubiquitous buying panic reasserted itself (for absolutely no good reason at all)…

Nasdaq tagged its high stops from Friday then faded…

Nasdaq, S&P, and Russell 2000 all bounced off their 50DMAs…

But, as Bloomberg notes, European equities are waiting for their next catalyst, having been stuck in a tight range since mid-June with the Stoxx Europe 600 Index unable to pierce above its 200-day moving average.

Source: Bloomberg

While the benchmark has stalled below this ceiling, European equities have been relatively immune to the U.S. tech selloff this month. Improvement on the macroeconomic or the virus front may be needed to create momentum.

Exxon is down 10 days in a row…

Very odd day overall with the opening panic being entirely erased in momo/value…

Source: Bloomberg

Seems like the European close triggered an end to it…

Source: Bloomberg

The US Tech sector surged at the cash open, then faded…

Source: Bloomberg

Stocks saw extremely positive breadth today with advancers dominating decliners..

Source: Bloomberg

Treasuries traded in an extremely narrow range…

Source: Bloomberg

With 10Y stalled around 67bps…

Source: Bloomberg

The Dollar dived to what appears to be notable support from last week…

Source: Bloomberg

Mixed bag in Cryptos with Bitcoin best and Litecoin underwater…

Source: Bloomberg

Gold futures bounced off $1950 once again…

Silver outperformed, pushing back above $27 once again…

WTI chopped around between $37 and $38, ending the day marginally lower…

 

Finally, in case you were wondering where the ammo came from to squeeze the shorts, it’s simple. As Bloomberg notes, hedge funds have turned the most negative on U.S. technology stocks in more than a year and half as the sector’s high-flying rally comes to a screeching halt.

Source: Bloomberg

Speculative positions in Nasdaq 100 mini futures flipped from net long to short and slumped to the most bearish since March 2019, according to the latest Commodity Futures Trading Commission data. The tech-heavy gauge just posted its worst week since March amid a recent reassessment of valuations and volatility in the options markets.

And of course, the 1930s analog remains…

Source: Bloomberg