Tag: finance

Postmaster General Louis DeJoy is set to testify before the Senate Homeland Security Committee on Friday morning amid concerns the United States Postal Service’s (USPS) cost-cutting measures hinder its ability to adequately process and deliver mail-in ballots for the U.S. presidential election in November. 

DeJoy will appear before the committee at 9:00 E.T. to defend his three months at USPS and denounce what he alleges are “false narratives” that have been created. 

Ahead of the DeJoy’s testimony, The New York Times obtained his prepared remarks that show he will defend his cost-cutting measures that have been misconstrued “into accusations that we are degrading the service provided to election mail.”

DeJoy is at the center of a political firestorm as a series of cost-cutting measures, including removal of specific mail sorting machines and reduction of overtime pay ahead of the elections, has fuelled concerns the influx of mail-in ballots could become overwhelming and lead to election delays. 

“I recognize that it has become impossible to separate the necessary long-term reform efforts we will need to undertake from the broader political environment surrounding the election,” DeJoy is expected to tell senators. “And I do not want to pursue any immediate efforts that might be utilized to tarnish the Postal Service brand, particularly as it relates to our role in the democratic process.”

DeJoy is part of an effort by the Trump administration to overhaul the USPS financially.  

“Had Congress and the commission fulfilled their obligations to the American people concerning the Postal Service, I am certain that much of our cumulative losses that we have experienced since 2007 could have been avoided, and that the Postal Service’s operational and financial performance would not be in such jeopardy,” DeJoy will say. 

DeJoy is also expected to reject the notion that his cost-cutting measures at the USPS were to influence the presidential election. 

“A false narrative has developed that the two steps we have taken to improve efficiency – running on time and on schedule and realigning our organizational structure – are somehow designed to harm the ability of voters to use the mail to vote,” he will say. 

On Tuesday, DeJoy released a statement that the USPS will be able to handle “whatever volume of election mail it receives this fall” despite challenges posed by “keeping our employees and customers safe and healthy as they operate amid a pandemic.”

He also noted that the USPS would suspend further reorganization efforts ahead of the election. 

Watch DeJoy’s testimony live, starting at 9:00 E.T.:  

*  *  *

Below is the prepared opening remarks by Postmaster General Louis DeJoy: 

“This is my first open session of the Board of Governors and I would like to offer my public thanks to the Governors for entrusting me with this role. It is an incredible honor to serve the public and this organization as Postmaster General. 

I look forward to working with all of you, our management team, and the men and women of the Postal Service – as well as our postal unions, management associations, customers and other stakeholders. 

We are at the beginning of a transformative process.  Our goal is to change and improve the Postal Service to better serve the American public, and I am excited about the opportunities ahead.

I would also like to add my public welcome to Governors Lee Moak and Bill Zollars. Thank you for joining this Board and for serving the American public.  I look forward to working with you.

My first day on the job as Postmaster General was June 15th. Since then, I have been fully immersed in understanding and evaluating all aspects of the postal organization and business model.

We have conducted numerous deep-dive meetings in every core area of our business.  We have assessed previous plans as well as research and analysis about our products and services and the competitive marketplace.

We have also dug deeply into our operational practices and the many ways we deliver value for our customers, as well as the drivers of our troubling financial condition. 

Let me start by saying that I am an optimist by nature, and as I take on this new role, I am enthusiastic and energized about the prospects for our future and our untapped promise.   I have been extremely impressed by the dedication of the Postal Service workforce and their commitment to the public service that we provide to the American people, and I am excited about the fantastic competencies of this organization.  I believe that there are tremendous opportunities available to us, and I am very confident that we can turn our business around and become financially healthy, while remaining a vital part of the nation’s critical infrastructure. 

That said, I am a realist, and am keenly aware of the magnitude of the financial challenges we face.  Our financial position is dire, stemming from substantial declines in mail volume, a broken business model and a management strategy that has not adequately addressed these issues.  As a result, the Postal Service has experienced over a decade of financial losses, with F.Y. 2019 approaching $9 billion and 2020 closing in on $11 billion in losses. Without dramatic change, there is no end in sight, and we face an impending liquidity crisis.  

At the same time, there is a critical need to make capital investments in order to ensure effective and efficient operations, and meet the needs of the American people.  Our financial situation has forced us to defer capital investments over the past decade in order to preserve liquidity, which is not a sustainable strategy for success.  Most vitally, we need to invest in new delivery vehicles so that our letter carriers can safely serve the American people and we can participate in the growth of the new economy.

As we have repeatedly stated, Congress and the Postal Regulatory Commission have long delayed much needed legislative and regulatory reforms to help address the situation.  Congress must enact reform legislation that addresses our unaffordable retirement payments.  Most importantly, Congress must allow the Postal Service to integrate our retiree health benefits program with Medicare, which is a common-sense best practice followed by all businesses who still offer retiree health care.  Rather than sensationalizing isolated operational incidents that I acknowledge can occur and have always occurred in a business of our size and scope or attempting to impose unfunded mandates unrelated to any postal policies, I ask members of Congress to take action on this one legislative burdensome issue that will actually make a difference.

The Commission, meanwhile, must expeditiously resolve the 10-year review, and a design a more rational regulatory system for our mail products.  The 10-year review has been ongoing for nearly 4 years, and it has been nearly 3 years since the Commission concluded that the current system is not working, yet it has still not finalized a replacement system. Since that time we have delivered over 480 billion pieces of mail and packages under a system that our regulator acknowledges is not working, and we continue to wait for the required relief. Had Congress and the PRC fulfilled their obligations to the American people concerning the Postal Service, I am certain that nearly $80 billion of cumulative losses we have experienced since 2007 could have been avoided, and that the Postal Service’s operational and financial performance would not be in jeopardy. 

Drama and delay does not get the mail delivered on time, nor does it pay our bills.  Without timely legislative and regulatory reform, we will be forced to take aggressive measures to cut costs and bridge the divide.

At the same time, the Postal Service has failed to engage a sufficient operating strategy that adequately mitigated these predicted annual financial losses.  We will not and cannot wait for the legislative and regulatory process to save us. The Postal Service must do our part, by pursuing every strategy within our control to ensure our success, and in that regard I know we can do more.  If we want to be viable for the long term, it is absolutely imperative for the Postal Service to operate efficiently and effectively, while continuing to provide service that fulfills our universal service mandate and meets the needs of our customers. 

There are competitive alternatives to every product that we offer, and for that reason high-quality, reasonably-priced service is an absolute necessity, but it is equally important for us to embrace the reality that high quality service and efficient service are not mutually exclusive, but instead must go hand-in hand if we are going to keep pace with our competition and be self-sustaining, as our mandate requires. 

The Postal Service is a great American institution with tremendous capabilities and prospects, and I know there is tremendous additional value within the Postal Service that needs to be unlocked.  To reach our full potential we need to be even better at everything we do well now, but we also need to recognize our issues and urgently embrace the changes required to unleash the full range of possibilities, and we need to start yesterday. 

For that reason, we have begun by vigorously focusing on the ingrained inefficiencies in our operations.  To start with, we have taken immediate steps to better adhere to our existing operating plans, which were developed precisely to ensure that we meet our present service standards in an efficient and effective manner. By running our operations on time and on schedule, and by not incurring unnecessary overtime or other costs, we will enhance our ability to be sustainable and to be able to continue to provide high-quality, affordable service.  I call on every executive, employee, union and management association leader to join me in pursuing this simple objective that every service organization needs to achieve in order to be successful.

As we implement our operating plans, we will aggressively monitor and quickly address service issues.  You can rest assured that we will continually review our operational practices and make adjustments as required to ensure that we operate in an efficient and effective manner.        

During the early days of my tenure we have also taken a fresh look at our operations and considered any necessary organizational and structural adjustments that will best position us to maximize our core competencies and key strengths.  We are highly focused on our public service mission.  However, we collectively recognize that changes must be made, and for that reason we will implement an organizational realignment that will refocus our business, improve line of sight, enable faster solutions, reduce redundancies, and increase accountability.  This realignment will strengthen the Postal Service by enabling us to identify new opportunities to generate revenue, so that we will have additional financial resources to be able to continue to fulfill our universal service obligation to all of America.

Further, we also are now in the process of developing a series of additional actions,  which, if approved by the Board, will include new and creative ways for us to fulfill our mission, and will likewise focus on our strengths to maximize our prospects for long-term success.  We will improve the products and services we provide, pursue new revenue areas, and continue to operate more efficiently.  The plan will consist of actions that the Postal Service can undertake with the approval of the Governors, as well as elements requiring Congressional and Postal Regulatory Commission actions.

As we move forward in developing and implementing these initiatives, I’m especially appreciative of the strong efforts of our management team, and the many contributors within our internal organization who are involved in this important process, and I likewise welcome the good discussions and healthy debate that I have had with our union leadership already.

I am also thankful for the ongoing consultation with this Board regarding our business planning, and I look forward to our ongoing dialogue.

While I have the pulpit, I also want to take the opportunity to clear up some misconceptions some may have about me and the positions I intend to advance on behalf of the Postal Service. 

First, while I certainly have a good relationship with the President of the United States, the notion that I would ever make decisions concerning the Postal Service at the direction of the President, or anyone else in the Administration, is wholly off-base.  I serve at the pleasure of the Governors of the Postal Service, a group that is bipartisan by statute and that will evaluate my performance in a nonpartisan fashion.  The Postal Service itself has a proud tradition of being a nonpartisan organization, which I believe is one reason why the Postal Service is consistently rated by the public as the most trusted federal entity.  I intend to uphold the trust that has been placed in me by the Governors, and to fulfill my responsibilities to this organization and to the public interest, by trying to make good decisions through the exercise of my best judgment and business acumen gained through 35 years of commercial experience, and not based upon any partisanship. 

Second, let me be clear that with regard to Election Mail, the Postal Service and I are fully committed to fulfilling our role in the electoral process.  If public policy makers choose to utilize the mail as a part of their election system, we will do everything we can to deliver Election Mail in a timely manner consistent with our operational standards.  We do ask election officials and voters to be mindful of the time that it takes for us to deliver ballots, whether it is a blank ballot going to a voter or a completed ballot going back to election officials.   We have delivery standards that have been in place for many years. These standards have not changed, and despite any assertions to the contrary, we are not slowing down Election Mail or any other mail.  Instead, we continue to employ a robust and proven process to ensure proper handling of all Election Mail.  

We have been working closely with election and other public officials throughout the country to ensure that they are well educated about the mailing process and can use the mail effectively to administer elections.  Ensuring that election officials throughout the country have an understanding of our operational parameters, including the circumstances under which we postmark mail and our delivery standards, so that they can educate voters accordingly, is important to achieving a successful election season.  Although there will likely be an unprecedented increase in election mail volume due to the pandemic, the Postal Service has ample capacity to deliver all election mail securely and on-time in accordance with our delivery standards, and we will do so.  However, as discussed, we cannot correct the errors of the Election Boards if they fail to deploy processes that take our normal processing and delivery standards into account.

Third, I was not appointed by the Governors to position the Postal Service to be privatized or to manage its decline.  To the contrary, I accepted the job of Postmaster General fully committed to the role of the Postal Service as an integral part of the United States Government, providing all Americans with universal and open access to our unrivalled processing and delivery network, as reflected in the Mission Statement that the Board adopted on April 1, 2020.  I fully embrace six-day delivery of mail and packages as one of this organization’s greatest strengths and I plan to invest in tools and equipment for our letter carriers, as well as enhance the stability of our non-career workforce, to continue to provide the nation’s most trusted service.   I accept the responsibility that the Governors gave me to maintain and enhance our reputation and role as a trusted face of the federal government in every community, and I intend to work with postal executives, management associations, managers, union leadership, and our craft employees to do everything I can to put us back on a financially stable path. I am confident that we can chart a path forward that allows the Postal Service to fulfill our vital public service mission in a sustainable manner.  I look forward to the challenge, and know we are up to it. 

Today, we are releasing our results for our third quarter, ended June 30. Joe Corbett, our Chief Financial Officer, will review those results in detail this morning.  I would like to provide just a couple of comments on overall business conditions.

We have experienced some dramatic shifts in our business since the COVID-19 pandemic began.

First and foremost, we have taken the steps necessary to make sure that our employees can work safely.  We have worked closely with our unions to assess the needs and fill the gaps, and now there is a solid process in place to ensure the right protective equipment and other supplies are in the right places.

We have also seen an unprecedented increase in package deliveries since March.  We expect elevated package volumes will continue through the end of the year at least – and may have some long-term staying power.

We are obviously highly attentive to changing consumer e-commerce behaviors and what this means for our business.  We are proud to be the carrier of choice for companies to reach homes and businesses, especially during the current situation.

On the whole, while package growth has been strong, the changes in U.S. economic conditions due to the pandemic are straining our financial situation.   We have seen substantial declines in mail volume, as well as significantly increased costs.

On Wednesday of last week, I announced that we have reached an agreement in principle with the Department of the Treasury on the terms and conditions associated with $10 billion lending authority provided in the CARES Act.  I very much appreciate Treasury Secretary Steven Mnuchin for working with me to reach mutually acceptable terms and conditions. 

Access to an additional $10 billion in borrowing authority will delay the approaching liquidity crisis and is a positive development.  However, we remain on an unsustainable path which cannot be solved simply by borrowing money which needs to be paid back with interest, since our current path does not enable us to pay even our current bills, let alone new ones.   We will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability.

Before I conclude, I’d like to comment briefly on the public service mission of the organization.

I have been struck by the commitment and dedication of postal employees, who have truly gone above and beyond in dealing with the COVID-19 pandemic.

The public support for the organization is extremely high because postal employees are so committed to serving their communities and their customers. We aim to continually earn the trust and support of the public.  

In that regard, I’d like to conclude by thanking the 630,000 men and women of the Postal Service for their hard work serving America’s communities.  In addition to the challenges presented by the pandemic, many parts of the country have experienced extreme heat this summer, and the hurricane season has begun.

Thank you for your exceptional commitment to our mission of serving the nation.  We appreciate all you do, every day.”

Lebanon – or rather, what’s left of Lebanon following this month’s horrifying explosion – has imposed a new ‘partial’ lockdown and an overnight curfew to try and battle COVID-19 as the country’s creaky health-care system is overrun by the confluence of the virus and the lingering aftermath of the blast.

The new measures, announced by the interior ministry, come into effect on Friday and will last for two weeks. The restrictions would not affect the clean-up and aid effort following the deadly blast in the capital that killed at least 180 people and pushed the government to resign.

According to Al Jazeera, all markets, malls, gyms and pools, among other private businesses, have been ordered shut during the lockdown. Restaurants are restricted to delivery with curtailed operating hours. All social gatherings have also been banned.

The curfew will extend from 6 pm local time to 6 am local time, exempting workers in the medical and food sectors, as well as the army, diplomats and journalists.

Somehow, Beirut’s airport will remain open, with travelers having to take a polymerase chain reaction test before boarding.

The country reported 605 new cases and four deaths on Thursday, taking its total caseload to 10,952 with 113 related deaths.

Moving on to the worst-hit countries, India has moved extremely close to the three million mark for coronavirus cases, reporting 68,898 new infections in the last 24 hours. This followed a study which we noted yesterday that found that some 30% of New Delhi residents had already been infected with the virus, and now have antibodies.

The total number of cases in the country now stands at 2.9 million, compared with more than 5 million in the US. Furthermore, India reported 983 new deaths on Thursday, bringing the total to 54,849.

India is the worst-hit country in Asia, and third globally behind the US and Brazil.

Russia reported 4,870 new cases, pushing its confirmed national tally to 946,976, just shy of 950k. As Russian scientists become pressed to deliver more vaccine-related ‘good news’ to prop up public and market confidence, the clinical trial of a Russian COVID-19 vaccine is now expected to be completed in September, according to Interfax, a month earlier than initially expected.

The agency cited Russia’s healthcare watchdog as its source for the report. Poland reported 903 new coronavirus cases, yet another daily record. Poland has counted 60,281 cases in all, and 1,938 deaths. Slovakia reported 123 new infections, the largest daily total ever for the landlocked country of 5.4 million.

More than 22.5 million people have been diagnosed with COVID-19 around the world, and more than 14.4 million have recovered. More than 790,500 people have died, according to JHU data.

Moving on, as the virus continues to wane in Sweden, the country’s leaders said Friday that they plan to ease pandemic rules to allow more spectators to attend cultural and sporting events, so long as they can be organized to prevent the risk of spreading the new virus. In March, Sweden limited public gatherings to 50 people to halt the spread of the virus, effectively preventing theaters, soccer clubs and concerts from being able to bring in revenues.

Elsewhere in Europe, Germany announced 1,586 new cases on Friday, the same number as Thursday, marking a 1,000+ reading for the 4th straight day.

Total cases rose to 231,292, while there were 14 new deaths, bringing the total to 9,263. Like many of its European neighbors, Germany has experienced an uptick in recent weeks that has been blamed on travelers and a rise in “illicit” parties and social gatherings.

In Hong Kong, Chief Executive Carrie Lam said the city is launching a campaign to test its entire population on Sept. 1, in the first such effort attempted outside of mainland China. Aided by Chinese experts and labs, the blitz will last two weeks. Residents will be entitled to one free voluntary test. In South Korea, 324 new cases were reported Friday, higher than the 288 reported a day ago. President Moon Jae-in has called for “strict law enforcement” that includes arresting anyone who violates mandatory quarantine measures as the president threatened a return to a lockdown if cases don’t fall.

Last night, in the US, Robert Redfield, the head of the CDC, said Infections in southern states are slowing, and deaths should start to fall over the next week.

In Argentina, where a lengthy strict lockdown failed to contain the virus, the country reported a record 8,225 new cases, bringing the total to 320,884. There were 111 new deaths, taking the total to 6,517.

As Argentina’s outbreak worsens, the situation in neighboring Brazil continues to slowly improve, with health officials reporting 45,323 new cases, almost 4,000 fewer than the number reported during the prior day. While progress in stemming the pandemic has been uneven, weekly new cases declined the most since the ‘peak’ of Brazil’s outbreak in late July. Deaths increased by 1,204 to 112,304, the smallest increase since Monday.

Authored by Bill Blain via MorningPorridge.com,

“Earlier today apparently a woman rang the BBC and said she had heard that there was a hurricane on the way. Well if you are watching, don’t worry, there isn’t.”

It’s blowing a full hooley out there this morning, which is very bad news for my olive trees as the storm is shaking the ripening fruit off. Shame. It’s the first time our little olive grove has produced what looked likely to become full-sized olives. I was going to add them to Dirty Martinis. Meanwhile, mink farms are being wiped out by coronavirus which is proving 100% fatal to the well-dressed ferrets. Interesting, but what does it mean…?

It’s Friday, which means I am allowed to go off on something of a tangent – so let’s not worry about how long this tech rally continues, the rising tensions in Europe, Apple spending $17bln on stock buybacks, China vs US, or the US election. 

What’s got me worried this morning is the headline in the FT: UK Public Debt tops £2 trillion for first time on Covid Spending Boom.

Should we worry or should we not? (Clue: the first one…)

Let me ask the question: how long can governments continue to spend their way out of the Coronavirus crisis? The bills for long-term furlough programmes and sectoral bailouts and support, increased social services as unemployment rises, and the urgent need for health spending are going to come due at some point. Is it going to be a problem, and if yes, how big?

Government debt is rocketing higher – but does it matter? Conventional thinking, based on Reinhart and Rogoff, is when debt/GDP exceeds 77% there will a significant slowdown in growth.

Interest rates are abnormally low (a product of central bank action for the last 10-years) and yields can be controlled via QE infinity monetary policy. In Zero rate environment, at what point does rising government debt start to drag down all other economic activity by a) the discount rate stifling any risk based economic activity, and b) crowding our entrepreneurial animal spirits, and c) acting like cement to create long term stagnation.  

Through this crisis we’ve seen helicopter money in action with direct government cheques to individuals to tide them over and spur consumption. We’ve seen direct central bank lending. Governments and central banks assure us they are committed to doing “whatever it takes”. This crisis could drag on for years, in which case we better start believing in the concepts of Modern Monetary Theory – basically the theory sovereign governments using their own currency and printing presses can’t go bust because they will churn out more fiat money to cover their debts. 

It requires a bit of suspension of disbelief… but if MMT works – then we have nothing to worry about…

But… 

The key thing to understand about Modern Monetary Theory is there is nothing new about it. It’s been tried before.

It’s a fact of history that many of the great economists, bankers and investors are Scottish. Adam Smith is just one in a great line of Scots economic thinkers. (I am quite sure the main reason I got hired by a US investment bank was my Scots accent – they figured out American corporate treasurers would find my soft Edinburgh brogue to be a voice they could trust – more fool them if they did.) 

Of course, there are a couple of exceptions to Scotland’s exceptional record of economic productivity – one of whom is John Law. He was a genius, but flawed. Still, he wasn’t all bad; he managed to effectively bankrupt France… which should mean he’s better commemorated with at least a statue somewhere like Waterloo Station. (I should also note, Law was educated in Edinburgh’s Royal High School – the primary school I also attended!)

In 1705, ahead of the Act of Union with England, Law proposed that bankrupt financially-challenged Scotland should fund urgent recovery by printing money via a new central bank, and that money should be raised by selling shares in state controlled monopolies. His theories were rejected by the soon to be defunct Scot’s Parliament – a parcel of rogues soon to be bought out by English gold by the Act of Union in 1707. 

Law spent the next 10-years in trade in Europe and saw the opportunity to apply his early take on Modern Monetary Theory in France. After 72 years of the Sun King, Louis XIV, France was in crisis from a shortage of gold, huge national debt after a succession of ill-judged wars, and economic stagnation brought on by an overregulated economy and tax-farming. 

After impressing the regent, the Duke d’Orleans, on the gambling tables, Law managed to secure an appointment as Controller General of Finance of France under the young Louis XV. He founded what became the Banque Royale, the first French Central Bank. He funded it by printing paper money – arguing that monetary creation and zero interest loans would stimulate the whole economy. Law’s printed money was backed by gold, but fractionally, so the amount of gold backing money was 20% of money in circulation. It enabled law to leverage up the whole economy.

To an extent Law’s policy worked in terms of economic stimulus. But it also triggered massive market speculation and ultimately inflation as gold remained scarce. Next Law set up monopolies to finance the state, including France’s very own take on the South Sea Bubble, the Mississippi Company – which was offered to investors. It very quickly rose to a bubblicious price before it predicably collapsed and brought France’s first central bank and the whole economy crashing down. Law was forced to flee the country. 

If you think there are lessons in the story of John Law.. perhaps there are.. 

The first is confidence. People then and now are confident in Gold. 

Yesterday a porridge reader posted on the website about the Italian Job – the great if highly improbable film where 3 Minis spirit away tons of Bank of Italy gold. Michael Caine’s character says the haul was worth £4 million. Today that would be worth £433 million. Meanwhile, £1 in 1969 would buy you half a dozen pints. Today £1 is worth effectively nothing. 

How confident are the people in Fiat money – i.e. money that is backed by the Government’s (central bank) promise to pay, unsecured by gold or silver.  That’s all we’ve had since the final abandonment of Gold standard 49 years ago, although some would say the US dollar effectively became gold. (My problem with Bitcoin is its fiat money unbacked by any meaningful promise (and the fact it looks easy to nick it out of digital wallets.)) 

The value of fiat currencies goes up and down in the Foreign Exchange markets depending on relative interest rates and the confidence of the markets that the host nation will maintain the “value” of the currency – measured in terms of economic performance, and national deficits. One aspect of FX is a nation borrowing too much will see its currency deteriorate because its tax-revenues are not covering its spending – thus market confidence in that nation’s ability to support its fiat currency will slide. 

Tax revenues are actually pretty important in terms of confidence. They demonstrate two things – i) that the nation’s business and commerce is producing taxable revenues, and ii) the government is able to collect it. It’s much easier to be confident in a nation where companies are paying regular, reliable and predictable levels of tax, than it is to be confident in a nation that condones tax-avoidance, is seen to be weak on collection, and where businesses successfully minimise their payments. 

Tax revenues are seen as a good indicator of how much the state can pay on public goods like education, health and social care. If they are out of balance, then confidence will slide. For an example compare Germany and Italy. 

At present, every nation is engaged not just in competitive devaluation to boost exports, but massive monetary creation via central banks QE Infinity Programmes. If everyone is doing it – does it matter? If we are equally confident in all nations – then perhaps it works. But if we lose confidence… well that’s another matter. 

Is the sudden appetite for Gold – even Warren Buffet is a buyer – a signal of declining confidence in fiat money? Does it matter that confidence in the mighty US Dollar is beginning to waver? Is it the dollar’s decline that’s pushing us back to gold? Is the increasingly scathing condemnation of everything the current UK Conservative government gets wrong – everything – a sign of coming monetary confidence collapse in sterling leading to a debt/FX crisis? 

As I said, Modern Monetary Theory is not new. “Money and Trade Considered, With a Proposal for Supplying the Nation With Money” was the tract Law wrote in 1705 proposing Scotland issued paper money and state banking of the whole economy. Many of the concepts he described turn up (unacknowledged) in both Adam Smith and John Maynard Keynes’ later works. The difference is Law’s MMT was based on fractional backing of the currency by gold, today its pure fiat money – which is government/sovereign risk. 

I am not a monetary expert. I struggle to understand the complexities… but it strikes me we are getting in an awful pickle with money. 

For instance, it seems remarkably easy to create money. The Bank of England holds (as I write) about £651 billion of UK government bonds – Gilts. There are an asset on the books of the Bank, and a liability of the Treasury. The Bank and Treasury are both UK Inc. Write the matching book entries off with two strokes of the pen, and you just created £651 bln of new money. It’s not even that difficult – the moment the BOE bought the bonds via QE it effectively created the money… 

Today’s economy is now based around a vastly speculative stock market fuelled by ultra-low rates and government’s effectively printing money. As I’ve written many times, most of the money created by QE has remained in Financial Assets; stocks and shares, causing massive inflation in prices. 

Today we don’t have a South-Sea bubble or Mississippi Company, but we do have an utterly mis-priced corporate bond market, and stocks like Tesla which make even the most expensive Dutch tulip bulb look cheap. I am wondering about the parallels between France in 1720 and the global economy today – which is another reason central banks can’t countenance a market crisis. 

If we are confident in our government, banks and our economy, then Magical Monetary Trees will continue to yield new money in abundance. That’s the magic of Fiat Money… But every time you say you don’t believe in Fiat Money… a central banker expires… or something like that…

US stock index futures dropped, tracking European markets a day after the tech-heavy Nasdaq closed at a record high, as optimism in a virus-vaccine breakthrough and faith in the record tech rally was challenged by concerns over an unexpected frop in Eurozone PMIs which put the biggest recovery narrative in recent months in doubt.

Among US stocks, Deere & Co rose 4.5% premarket after it revised up its full-year earnings forecast and reported a smaller-than-expected decline in quarterly profit. Pfizer rose 1.5% after reporting positive additional data from an early-stage study of its experimental coronavirus vaccine being developed in collaboration with German biotech firm BioNTech. U.S.-listed shares of BioNTech jumped 8.1%. Tesla gained another 1.8% after surging past the $2,000 mark on Thursday for the first time and extending its rally ahead of an upcoming share split.

US stocks finished higher on Thursday as investors continued to bet on tech heavyweights including Apple and Amazon.com to ride out the pandemic as U.S. data painted a picture of a wobbly economic recovery. However the market’s bad breadth is getting extremely narrow: yesterday stocks closed green even though 70% of all companies closed in the red.

U.S. tech darlings “continue to mask the broader concerns spearheading an end-of-week rally,” said Nema Ramkhelawan-Bhana, head of research at Johannesburg-based Rand Merchant Bank. “Wider credit spreads and bond bidding suggest an air of nervousness is starting to creep in.”

Joe Biden accepted his party’s nomination Thursday to challenge President Donald Trump in a speech that cast November’s election as not merely the choice of a president but a fundamental referendum on the nation’s character.

European stocks and the euro slumped after European PMI composite readings unexpectedly declined in August from July, missing expectations even as U.K. data was materially stronger (UK flash composite PMI 60.3 vs 57; est. 56.9). Job losses were a notable feature of the surveys.

As Goldman writes, after a record, better-than-expected cumulative improvement of 41.2pt over May-July, the Euro area composite PMI declined by 3.3pt to 51.6 in August, notably below expectations. The overall decline was heavily skewed towards the service sector, with the manufacturing PMI little changed from July. Across countries, the German and French composite PMIs were also weaker than expected, with the sequential weakening in France broad-based across sectors but solely concentrated in services in Germany. The implicit decline in the composite PMI outside of France and Germany was only marginally smaller than the decline in the Franco-German composite PMI. The weakening in the PMIs suggests that the pace of sequential growth has moderated as the gap in the level of activity relative to pre-Covid narrows (consistent with high-frequency activity indicators):

• Euro Area Composite PMI (August, Flash): 51.6, consensus 55.0, last 54.9.
• Euro Area Manufacturing PMI (August, Flash): 51.7, consensus 52.7, last 51.8.
• Euro Area Services PMI (August, Flash): 50.1, consensus 54.5, last 54.7.
• Germany Composite PMI (August, Flash): 53.7, consensus 55.0, last 55.3.
• France Composite PMI (August, Flash): 51.7, consensus 57.0, last 57.3.

The broader miss was led by France whose manufacturing PMI unexpectedly dropped in August after a two-month rebound. The sharp fall put in doubt the country’s recovery and led to a decline in the euro. Meanwhile Germany’s recovery also lost momentum, with mixed PMI figures. PMI for services declined while manufacturing continued to improve

Earlier in the session, Asian stocks gained, led by communications and IT, after falling in the last session. Most markets in the region were up, with Taiwan’s Taiex Index gaining 2% and South Korea’s Kospi Index rising 1.3%, while Australia’s S&P/ASX 200 dropped 0.1%. The Topix gained 0.3%, with Fujikyu and TSUNAGU GROUP HOLDINGS I rising the most. The Shanghai Composite Index rose 0.5%, with Whirlpool China and Ningbo Jifeng Auto Parts posting the biggest advances.

Earlier this week, the S&P 500 clinched a record high, recouping the last of its losses caused by the coronavirus-driven slump and joining the Nasdaq in notching new highs even as investors remained on edge over a stalemate in talks between House Democrats and the White House over the next coronavirus aid bill as about 28 million Americans continued to collect unemployment checks. There was some hope that a deal would be reached tomorrow when a $25BN post office spending proposal is considered.

In FX, the dollar gained against a basket of its peers largely thanks to a sharp drop in the Euro which reversed an early gain that came at the back of hopes over a coronavirus vaccine after the latest PMI data challenged the narrative that euro area growth will outperform the US; the EURUSD slumped after data showed French manufacturing unexpectedly contracted in August after a two- month rebound; German and euro area data also missed expectations. The common currency retreated as much as 0.6% to 1.1780.

The euro poised for first weekly drop in nine; interbank desks fade the dip given Thursday’s rebound after 21-DMA support held, yet short-term traders look for a move toward 1.1750, three traders in Europe said.

The offshore yuan rose to its strongest level in seven months against the dollar, as China’s economic and market rebound from the pandemic has proved one of the world’s fastest.

Elsewhere, Turkey’s lira gained amid speculation President Recep Tayyip Erdogan will announce a major Turkish energy discovery in the Black Sea later Friday.

In rates, Treasuries advanced while European bond yields were flat to 1bp lower across the curves; the 10Y Treasury yield dropped -3bp to 0.6282%, flattening the 2s-10s curve. German 2-yr, 10-yr yields 1bp lower.

In commodities, Brent ($44.72) and WTI ($42.57) traded lower but were on track for a third weekly gain in New York trading. Gold slumped to $1920 as the dollar surged.

Looking ahead, expected data include PMIs and existing home sales. Deere is reporting earnings

Market Snapshot

• S&P 500 futures little changed at 3,380.00
• MXAP up 0.8% to 170.76
• MXAPJ up 0.9% to 562.42
• Nikkei up 0.2% to 22,920.30
• Topix up 0.3% to 1,604.06
• Hang Seng Index up 1.3% to 25,113.84
• Shanghai Composite up 0.5% to 3,380.68
• Sensex up 0.8% to 38,515.19
• Australia S&P/ASX 200 down 0.1% to 6,111.18
• Kospi up 1.3% to 2,304.59
• STOXX Europe 600 up 0.3% to 366.72
• German 10Y yield fell 1.1 bps to -0.507%
• Euro down 0.4% to $1.1813
• Italian 10Y yield unchanged at 0.789%
• Spanish 10Y yield fell 0.2 bps to 0.289%
• Brent futures down 0.7% to $44.59/bbl
• Gold spot down 0.8% to $1,932.61
• U.S. Dollar Index up 0.2% to 92.98

Top US News from Bloomberg

• France’s manufacturing PMI unexpectedly dropped in August after a two-month rebound. The sharp fall put in doubt the country’s recovery and led to a decline in the euro. Meanwhile Germany’s recovery lost momentum, with mixed PMI figures. PMI for services declined while manufacturing continued to improve
• Composite PMI fell below estimates in the euro-area.
• The U.K. economy rebounded to a seven-year high, with composite PMI performing better than expected, while retail sales for July beat estimates, pushing the pound upwards momentarily

Global market snapshot courtesy of NewsSquawk:

Asian equity markets traded mostly positive as the region benefitted from the tech-led gains on Wall St where Apple prodded above the USD 2tln market cap status and as firm gains in Tesla, Microsoft, Intel and Facebook also fuelled the big tech resurgence resulting to outperformance in the Nasdaq, although upside was capped in the broader market amid mixed data releases including higher than expected Initial Jobless Claims. ASX 200 (-0.1%) and Nikkei 225 (+0.2%) both initially took impetus from the constructive handover from US peers but with upside in Australia later retraced following soft PMI data and with weakness seen in defensives as well as the top-weighted financials sector, while the Japanese benchmark contended with the effects of a mixed currency and resistance at the 23,000 level. Hang Seng (+1.3%) and Shanghai Comp. (+0.5%) were underpinned amid the continued PBoC liquidity efforts in which it injected CNY 150bln through 7-day reverse repos and CNY 50bln in 14-day reverse repos. This was the first occasion the central bank utilized the latter instrument in around 2 months, and there was also recent confirmation from China’s MOFCOM that the US and China will be conducting the delayed trade discussions in the approaching days. Finally, 10yr JGBs were flat and continue to eye the 152.00 level to the upside despite the gains in Japanese stocks, with mild support provided by the BoJ’s presence in the market for JPY 870bln of JGBs and the central bank also offered to purchase JPY 200bln in corporate bonds from 25th August with a remaining 3-5yrs to maturity.

Top Asian News

• Pressure Grows on Hong Kong to Re-Open Economy as Cases Drop
• Hong Kong to Start Virus Testing Blitz of Whole City on Sept. 1
• India Slaps New Curbs on Visas, Schools to Stem China Influence
• Millions Escaped Caste Discrimination. Covid-19 Brought It Back

European equities (Eurostoxx 50 +0.3%) have held onto opening gains despite a brief dip lower in the wake of French PMI metrics. However, the pessimism surrounding the August outturn for France was short-lived for broader European assets with equities paring declines ahead of the German release. The German release painted a slightly less downbeat picture with a firmer manufacturing outturn alongside a softer than expected services, with the eventual EZ-wide release posting a miss on expectations for both sectors but ultimately remaining in expansionary territory. IHS Markit noted “the eurozone stands at a crossroads, with growth either set to pick back up in coming months or continue to falter following the initial post-lockdown rebound”. Nonetheless, sentiment for European equities remains afloat in what has been a relatively choppy week in terms of price action for the region. Sectoral performance in Europe is broadly firmer with the exception of energy names which are tracking crude prices lower. Travel & Leisure names are faring the best thus far with some reprieve been granted to the likes of Ryanair (+1.6%) and easyJet (+1.4%), however, with the UK continuing to add more countries to its quarantine list (albeit, has removed Portugal), it’s difficult to see how much conviction will be placed upon a recovery in the sector. Elsewhere, individual movers include Kingspan (+7.4%) post-earnings, Wirecard (+5.4%) amid reports that it has found a suitor for its UK assets, whilst Accor (+2.6%) shares continue to remain supported alongside talk of a potential bid for InterContinental Hotels. To the downside, laggards are relatively sparse with Maersk (-2.8%) and Saipem (-2%) lower on the day following downgrades at JP Morgan Chase and Bernstein respectively.

Top European News

• Europe’s Economic Recovery Stumbles After Initial Bounceback
• U.K. Economy Rebounds With Activity Rising to Seven-Year High
• Pessimism Returns to Brexit Talks as Hopes for Deal Slip Away
• Advent Said to Mull Over $1.2 Billion Sale of Health Firm Mediq

In FX, sub-par French Flash PMIs triggered the losses in the Single Currency, with the French manufacturing metric surprisingly falling back into contraction, whilst Germany and EZ held their heads above the 50 threshold, but largely missed forecasts. EUR/USD has receded from its 1.1882 high and took out an interim support area around 1.1840-45 to test 1.1800 to the downside. Participants will now be eyeing any updates on the Belarus front in regard to sanctions, with little on the docket in terms of scheduled events. Conversely, UK Retail Sales and PMIs topped forecasts across the board but gains Sterling were short-lived as the currency succumbs to the Buck, whilst Brexit talks remain in limbo as officials suggest no progress has been made on outstanding points in the latest round of negotiations. Cable has given up its 1.3200 status (vs. high 1.3255) and continues declining in light of pessimistic comments from both the EU and UK Chief Brexit negotiators, with the former nothing that at this stage, a deal seems unlikely and both sides highlight the little progress mate. EUR/GBP has recovered off lows amid the latest Brexit headlines, with the cross initially dipping below the Aug 13th low ~0.8948 before rebounding to session high at 0.8980.

• DXY – Propped up by the post-PMI Euro – the index is back around 93.000 from an overnight base of 92.570 , with the highs from Wednesday (93.059) and Monday (93.124) the next points of resistance ahead of yesterday’s peak at 93.248. Looking ahead to today, the calendar remains light with US Markit PMIs and Existing Home Sales the only scheduled events.
• JPY – USD/JPY had been ebbing overnight in light of the weaker Dollar during APAC hours, but the JPY holds onto gains in early EU hours despite the Dollar rebound as PMI-related haven flows keeps the Japanese currency buoyed. USD/JPY dipped below 105.50 from 105.80 at best ahead of the weekly base at 105.104. Note: USD/JPY sees around USD 550mln in options rolling off at 105.00 at the NY cut.
• AUD, CAD, NZD – All narrowly softer in what is a Dollar story. AUD/USD as dipped back below 0.7200 (vs. high 0.7215), whilst Westpac raised its year-end forecast to 0.7500 from 0.7200 as their case of a momentum stall is still not convincing. NZD/USD remains contained within a tight current range of 0.6525-0.6550, with overnight comments from the RBNZ Chief economy noting that the Central Bank has scope to act aggressively if needed. Similarly, the revival of the Dollar and declines in the crude complex sees the Loonie yield, with USD/CAD testing resistance at 1.3200 (vs. low 1.3159) ahead of Canadian Retail Sales, with today’s option expiries seeing USD 505mln at 1.3225 alongside a sizeable USD 1.7bln between 1.3250-60.
• EM – Mixed trade across EMs but the Lira stands out as the outperformer after the CBRT lifted the TRY interest rate on swap transactions from 8.25% to 9.75% yesterday to match the lending rate. Furthermore, the Turkish President is expected to announce “good news” today in regard to an energy discover in the black sea, most likely natural gas. USD/TRY has trades sub-7.2500 from a high of 7.3380.

In commodities, WTI and Brent October futures have waned off overnight highs, albeit with the magnitude of price action relatively small thus far. Crude-specific news flow has remained light, but the contracts saw a sentiment-driven leg lower amid the overall down-beat flash PMIs from the EU. Both contracts trade lower by some USD 0.20/bbl apiece, with WTI testing USD 42.50/bbl to the downside (vs. high 42.96./bbl) whilst its Brent counterpart dipped below USD 44.75/bbl  from around USD 45/bbl at best, with only the weekly Baker Hughes rig count slated on the calendar. Elsewhere, spot gold and spot silver yield to the post-PMI Dollar strength, with the former losing further ground below USD 1950/oz (vs. high 1956/oz) whilst latter briefly dipped below USD 27.00 from 27.54 at best. In terms of base metals, copper continued to grind lower with the Shanghai inventories again posting another rise in stocks. Dalian iron ore prices fell overnight as the steel-demand-driven rally somewhat fizzled whilst China’s iron ore portside stockpile rose to four-month highs.

US Event Calendar

• 9:45am: Markit US Manufacturing PMI, est. 52, prior 50.9
• 9:45am: Markit US Services PMI, est. 51, prior 50
• 9:45am: Markit US Composite PMI, prior 50.3
• 10am: Existing Home Sales, est. 5.41m, prior 4.72m; MoM, est. 14.62%, prior 20.7%

DB’s Jim Reid concludes the overnight wrap

The brief excitement that we got in markets late Wednesday proved to be fairly short-lived in the end with equities at least pretty much back to the status quo again yesterday. Indeed there were more gains for the S&P which nudged up +0.32% with the NASDAQ (+1.06%) once again leading the way and finishing at yet another record high. However, all this came on a foundation of low volumes and pretty thin breadth of gains when you dig below the surface – a theme that’s been fairly consistent all week. A stat that stood out yesterday was that just 30% of the S&P 500 actually advanced with the equal weighted index down -0.55%. In fact, while the benchmark S&P 500 is up +0.38% this week the equal weighted index is actually down -1.43%.

In fairness markets did open on the back foot after the latest weekly initial jobless claims data came in at a higher-than-expected 1.106m for the week through August 15. That was well above the consensus forecast of 920k, and marks a rebound from the prior week’s 971k reading, which was the first time the weekly number had fallen below a million since the pandemic began. Though it’s only one week, the +135k increase in claims is the largest weekly jump since late March, and raises fears that the labour market recovery is unlikely to be a smooth one. While continuing claims represented somewhat better news, with a decline to 14.844m in the week through August 8 (vs 15m expected), they still remain at more than twice the peak after the GFC back in 2009, suggesting there’s still a long way to go before we get back to any king of normality.

Treasury yields were already a couple basis points lower going into that and they held that level into the evening with 10y yields in particular closing -2.9bps lower. The curve also keeps doing its best to unwind some of last week’s bear steepening with 2s10s and 5s30s curves both -3.1bps flatter yesterday. Meanwhile the USD had a more choppy session but ultimately ended a shade weaker with the dollar index down -0.10%. It’s also down a further -0.16% this morning.

On that, it’s worth noting that yesterday our FX team took profit on their EURUSD trade having nearly reached their 1.20 target earlier this week. They now see a more balanced outlook approaching September, with positioning becoming stretched, virus statistics becoming worse in Europe, and the Fed signalling a less dovish stance for September. This isn’t to say that they’re turning bullish on the dollar all of a sudden, but having nearly reached 1.20 the risks are more evenly balanced in comparison to their strong conviction view earlier this year. See their full note here.

Looking ahead to today, the highlight will likely be the release of the flash PMIs for August, which will give us one of the first indications of global economic performance into the month. Overnight, we’ve already had the Australian and Japanese numbers with Japan’s manufacturing PMI coming in at 46.6 (vs. 45.2 last month) however the services print fell to 45.0 (vs. 45.4 last month). The decline in the services PMI was more pronounced in Australia given the localized lockdowns as it came in at 48.1 (vs. 58.2 last month) but the manufacturing PMI was relatively stable at 53.9 (vs. 54.0 last month). Later today, we’ll hear from Europe and the US, where the consensus is expecting a continued rebound in activity from the lows of the initial lockdowns. Remember though that these are diffusion indices, so they simply ask respondents whether conditions are better or worse than in the previous month, rather than measuring growth itself. As a result they can struggle to capture the extent of any declines or rebounds when the numbers are at extreme levels as they’ve been recently.

This will be important to keep in mind if the current uptick of coronavirus cases persists and causes partial shutdowns of economies in infected areas. Italy reported the most new cases since mid-May yesterday, while weekly cases in the UK have recently risen over 8000 for the first time since early June. However, despite cases rising, German Chancellor Merkel and French President Macron have indicated they oppose nationwide lockdowns, and want the continent to coordinate a strategy for avoiding a further economic slowdown from the virus. In Asia, South Korea’s new infection wave has spread nationwide and the country reported additional 324 cases in the past 24 hours. On the positive side, Pfizer and BioNTech said that their vaccine candidate is on track for regulatory review as early as October, assuming clinical success. Meanwhile, the NHK reported that Japan is set to allow foreign residents shut out by virus-related restrictions back into the country from September.

Asian markets have followed Wall Street’s lead this morning with the Nikkei (+0.43%), Hang Seng (+1.25%), Shanghai Comp (+0.78%) and Kospi (+2.27%) all up. The positive vaccine news mentioned above seems to be aiding sentiment. Futures on the S&P 500 are also up +0.27%. In terms of other data releases, Japan’s July CPI came in line with consensus at +0.3% yoy while both core and core-core CPI came in a shade lower than expectations at unchanged and +0.4% yoy respectively.

In other overnight news, President Trump said that “We will give tax credits to companies to bring jobs back to America, and if they don’t do it, we will put tariffs on those companies, and they will have to pay us a lot of money,” if he gets re-elected.

Back to yesterday, there weren’t any major surprises from the release of the ECB minutes. In terms of things to note, they showed that the Governing Council’s focus was shifting away from market stabilisation as a focus towards price stability. For example, the number of references to “financial conditions” fell to 8 in the latest minutes, having been 23 back in June. There was also more time devoted to the weakness in longer-term inflation expectations, with 3 mentions versus 1 in the last minutes. The STOXX 600 closed down -1.07% in Europe yesterday while bond yields on the continent were 1-3bps lower with the exception of BTPs which finished flat.

In other news, yesterday we got confirmation that China and the US are to have a call soon to discuss the progress of their trade deal, expected in the “near term” although no exact date was given. Kudlow confirmed yesterday that Lighthizer “has said a number of times that he actually is pleased with the progress” on the trade pact. Further evidence therefore of ring-fencing the trade pact in the US-China tit for tat. Staying with US politics, moderate Democrats from swing states are urging Speaker Pelosi and Congressional Republicans to restart stimulus talks that have stalled. However Pelosi also noted that she would not support a ‘skinny bill that only dealt with the unemployment benefits without offering funding help to the states that need it.

As for the remaining data yesterday, August’s Philadelphia Fed business index came in at 17.2 (vs. 20.8 estimated), down from last month’s 24.1 reading. This is the second month in a row that the gauge has fallen, though the ISM adjusted index ticked up higher to 54.1 from 53.6. Over in Europe, the German PPI reading for July was up 0.2% from the previous month (vs. 0.1% expected), while down -1.7% YoY.

To the day ahead now, and the data highlight is likely to be the aforementioned flash PMIs for August. As well as that, we’ll get UK retail sales and public finance data for July, the advance Euro Area consumer confidence reading for June, US existing home sales for July, and Canada’s retail sales for June.

A Hong Kong court has just denied bail to the first individual arrested under the new Beijing-imposed national security law, rejecting his lawyers’ argument that the controversial Nat Sec law was invalid because it conflicts with the “Basic Law”, the British-designed constitution that has governed Hong Kong for decades.

Tong Ying-kit, 23, is a waiter who was arrested in July after riding his motorcycle, festooned with flags bearing “illegal” messages about an independent Hong Kong, into a crowd of police officers. He was charged with “inciting separatism and terrorism,” for carrying a flag that read “Liberate Hong Kong Revolution of our Times”.

According to the SCMP, Tong’s application for a writ of habeas corpus hinged on the interpretation of Article 42 of the Nat Sec law, which specifies that “no bail shall be granted…unless the judge has sufficient grounds for believing the criminal suspect or defendant will not continue to commit acts endangering national security.”

His lawyers argued during the hearing that Article 42 is inconsistent with the Basic Law due to what they argued is a “no bail” provision, which enables arbitrary detention and undermines constitutional protections, both of which are guaranteed to Hong Kongers under the Basic Law.

But the court determined that Tong’s detention was lawful, and argued that Hong Kong’s legal system has no provision to invalidate the Nat Sec law.

Tong has been held at Lai Chi Kok Reception Center since July 6, when he became the first person brought to court to face charges of inciting secession and engaging in terrorism after the Nat Sec law came into effect on the day prior to his arrest. He was arrested for the incident we mentioned above on July 1.

Despite the ruling, Tong has reportedly not given up on seeking his release, and the High Court will hear an “ordinary” bail application on Tuesday. Tong’s criminal case is set to return to West Kowloon Court on October 6.

It was very much the speech that Joe Biden has been preparing for his entire life. After half a century as one of Washington’s most supremely polished politicians, Biden humbly accepted the nomination of his party during a 25-minute speech comprised of cliches and rhetoric recycled from all the Democrats who spoke before him during what has been, judging by the ratings, a supremely boring stretch of prime time programming.

There were no surprises in Biden’s speech. Rather, the most surprising thing, perhaps, was the fact that he was able to stand up and deliver it with a minimal number of flubs. Say what you will about the man, but on Thursday night, his teleprompter-reading skills were on point.

He started by asking Americans to embrace the “Path of hope and light” (the Democrats) over the “Path of darkness” (Trump and his Republican “enablers”) – though throughout the entire speech he never once mentioned Trump by name, referring to him only as “our president” or “our current president”.

“May history be able to say that the end of this chapter of American darkness began here tonight,” Biden said.

“I will be an ally of the light, not the darkness.”

He then evoked an image of American chaos and disorder that, if it had come from Trump, would have been castigated by the MSM as another piece of bombastic fearmongering from a president who rode to power on a wave of “racial hysteria”.

But unlike Trump’s predecessor, President Obama – a president whom “our children could look up to”, Biden said – Trump feeds off of creating division, and beyond that, failed in his duty to “protect” all Americans.

“Our current president has failed in his most basic duty to the nation,” Biden said. “He has failed to protect us. He has failed to protect America. My fellow Americans, that is unforgivable. As president I will make you a promise: I will protect America.”

The coronavirus loomed large in Biden’s speech, as he rattled off a list of COVID-19 stats and insisted that Trump is responsible for “the worst outbreak of any country on earth”. Businesses are closing, people are dying, and all the while, the rich are getting richer, Biden said. All of this is Trump’s fault (actually, blame for that last bit should rest with the Fed), before attacking Trump’s tax cuts and his efforts to gut the ACA and Medicaid. He even claimed the current president is threatening “the sacred promise” of Social Security by cutting a vital revenue stream. 

“If I’m your president, we’re going to protect social security and medicare, you have my word,” Biden said.

As far as COVID-19 goes, President Trump “doesn’t have a plan”, having committed the “unforgivable” sin of “failing to protect [Americans]”, Biden insists that he very much does, and then rattles off a list of talking points stolen from Trump, before throwing in his national mandatory mask mandate, as if this “patriotic duty” is capable of single-handedly extinguishing COVID-19.

Aside from that, Biden’s only real promise is to move supply chains for essential medical supplies and equipment to the US, a Trump talking point that Biden and other globalists dismissed – like they dismissed the trade war – before they quietly came around.

Biden drew on his strengths as a “retail” politician when he briefly ventured onto the subject of loss, from losing his first wife, to losing his son Beau, before offering some kind words about his wife, Jill, “an educator” and a “wife and mom – a military mom”.

Biden talked about the “black hole that opens up in your heart” when a loved one is lost. These were undoubtedly the most humanizing stretches of a speech that was otherwise a heady brew of platitudes, boilerplate and sanctimony.

Just in case progressives forgot how important it is to get out and vote, Bernie Sanders made his second appearance of the convention (after his speech earlier in the week) to introduce Biden and remind his supporters how important it is to drive the Trumps out of the White House.

Of course, Biden wasn’t the only speaker of the night.

In keeping with the unconventional nature of this year’s convention, it’s likely the first in modern American political history to prominently feature both an avowed socialist and a billionaire. Enter Mike Bloomberg, whose speech was about as rousing and confidence-inspiring as that debate performance.

Just think, one slip up (like, if Biden had literally taken a hard fall or something) and maybe the former Veep would be introducing Bloomberg…

Earlier, Atlanta Mayor Keisha Lance Bottoms, the sitting big-city mayor with the largest number of Rap Genius citations, invoked the legacy of civil rights icon John Lewis, whose “spirit” loomed large over the entire 4 day convention.

And with that, the Democrats’ “Virtual Convention” is finally over.

Now the spotlight shifts back to Trump, who will accept his party’s nomination for the second time during a headlining spot at the Republican National Convention, which begins tonight in Charlotte. Unlike the Dems, the Republicans still plan on hosting some in-person business, and attendees will need to wear masks and social distance. Republicans in Charlotte will also don Bluetooth badges that allow for tracking and contact tracing.

Authored by Steven Mosher via LifeSiteNews.com,

It will not be possible for the Dr. Fauci’s of the world to dismiss Professor Giuseppe Tritto as a crank. 

Not only is he an internationally known expert in biotechnology and nanotechnology who has had a stellar academic career, but he is also the president of the World Academy of Biomedical Sciences and Technologies (WABT), an institution founded under the aegis of UNESCO in 1997. 

In other words, he is a man of considerable stature in the global scientific community.  Equally important, one of the goals of WABT is to analyze the effect of biotechnologies – like genetic engineering – on humanity.  

In his new book, this world-class scientist does exactly that.  And what he says is that the China Virus definitely wasn’t a freak of nature that happened to cross the species barrier from bat to man.  It was genetically engineered in the Wuhan Institute of Virology’s P4 (high-containment) lab in a program supervised by the Chinese military.

Prof. Tritto’s book, which at present is available only in Italian, is called Cina COVID 19: La Chimera che ha cambiato il Mondo (China COVID 19: The chimera that changed the world).  It was published on August 4 by a major Italian press, Edizioni Cantagalli, which coincidentally also published the Italian edition of one of my books, Population Control (Controllo Demografico in Italian) several years ago. 

What sets Prof. Tritto’s book apart is the fact that it demonstrates – conclusively, in my view – the pathway by which a PLA-owned coronavirus was genetically modified to become the China Virus now ravaging the world.  His account leaves no doubt that it is a “chimera”, an organism created in a lab. 

He also connects the dots linking the Wuhan lab to France and the United States, showing how both countries provided financial and scientific help to the Chinese as they began to conduct ever more dangerous bioengineering experiments.  Although neither American nor French virologists are responsible for the end result—a highly infectious coronavirus and a global pandemic—their early involvement may explain why so many insist that the “chimera” must have come from nature.  The last thing they want to admit is that they might have had a hand in it.

Those of us who, early on, argued for a laboratory origin were dismissed as conspiracy theorists. Our articles were censored as “fake news,” often by American virologists who knew perfectly well what the truth was, but preferred to protect China, and themselves, from scrutiny lest they themselves be implicated. 

Dr. Tritto’s 272 pages of names, dates, places, and facts leaves such apologists with no place to hide. 

The story begins following the SARS epidemic of 2003, as the Chinese attempt to develop vaccines to combat the deadly disease.  Dr. Shi Zhengli, about whom I have previously written, was in charge of the program at the Wuhan Institute of Virology.

In vaccine development, reverse genetics is used to create viral strains that have reduced pathogenicity but to which the immune system responds by creating antibodies against the virus. But reverse genetics can also be used to create viral strains that have increased pathogenicity.  That is what Dr. Shi, encouraged by PLA bioweapons experts, began increasingly to focus her research on, according to Prof. Tritto.

Dr. Shi first solicited help from the French government, which built the P4 lab, and from the country’s Pasteur institute, which showed her how to manipulate HIV genomes. The gene insertion method used is called “reverse genetics system 2.”  Using this method, she inserted an HIV segment into a coronavirus discovered in horseshoe bats to make it more infectious and lethal.  

The U.S. was involved as well, particularly Prof Ralph S. Baric, of the University of North Carolina, who was on the receiving end of major grants from the National Institute of Allergy and Infectious Disease.  This is, of course, Dr. Anthony Fauci’s shop.  Fauci was a big proponent of “gain of function” research, and when this was prohibited at Baric’s lab because it was considered to be too dangerous, the research was shifted to China.

Prof. Tritto believes that, while Dr. Shi’s research began as an effort to develop a vaccine against SARS, it gradually morphed into an effort to use “reverse genetics” to build lethal biological weapons.  This was the reason that the Wuhan lab became China’s leading center for virology research in recent years, attracting major funding and support from the central government.

I would add that the rule in Communist-controlled China is “let the civilian support the military,” which means that as soon as Dr. Shi’s research showed any potential military uses the PLA would have begun exercising control of the research.  This came out in the open with the outbreak, when China’s leading expert on bioweapons, People’s Liberation Army Major General Chen Wei, was immediately placed in charge of the Wuhan Institute of Virology. As for Dr. Shi Zheng-Li, she seems to have disappeared.

As Dr. Tritto explained in an interview with Italian media:

In 2005, after the SARS epidemic, the Wuhan Institute of Virology was born, headed by Dr. Shi Zheng-Li, who collects coronaviruses from certain bat species and recombines them with other viral components in order to create vaccines. In 2010 she came into contact with American researchers led by Prof. Ralph Baric, who in turn works on recombinant viruses based on coronaviruses. Thanks to the matrix viruses provided by Shi, Baric created in 2015 a mouse Sars-virus chimera, which has a pathogenic effect on human cells analyzed in vitro. 

At that point, the China-US collaboration becomes competition. Shi wants to work on a more powerful virus to make a more powerful vaccine: it combines a bat virus with a pangolin virus in vitro and in 2017 publishes the results of this research in some scientific articles. 

Her research attracts the interest of the Chinese military and medical-biological sector which deals with biological weapons used as a deterrent for defensive and offensive purposes. Thus Shi is joined by doctors and biologists who belong to the political-military sphere, such as Guo Deyin, a scholar of anti-AIDS and anti-viral hepatitis vaccines and expert in genetic recombination techniques. The introduction of the new engineered inserts into the virus genome is the result of the collaboration between the Shi team and that of Guo Deyin. The realization of this new chimera, from a scientific point of view, is a success. So much so that, once the epidemic has broken out, the two researchers ask WHO to register it as a new virus, H-nCoV-19 (Human new Covid 19), and not as another virus derived from SARS. It is reasonable to think that Shi acted only from the point of view of scientific prestige, without however taking into account the risks in terms of security and the political-military interests that her research would have aroused.

When asked why China has refused to provide the complete genome of the China Virus to the WHO or to other countries, Dr. Tritto explained that “providing the matrix [source] virus would have meant admitting that SARS-CoV-2 [China Virus] was created in the laboratory. In fact, the incomplete genome made available by China lacks some inserts of AIDS amino acids, which itself is a smoking gun.” 

The key question, for those of us who are living through the pandemic, concerns the development of a vaccine.  On this score, Prof. Tritto is not optimistic:

Given the many mutations of SARS-CoV-2, it is extremely unlikely that a single vaccine that blocks the virus will be found. At the moment 11 different strains have been identified: the A2a genetic line which developed in Europe and the B1 genetic line which took root in North America are more contagious than the 0 strain originating in Wuhan. I therefore believe that, at the most, a multivalent vaccine can be found effective on 4-5 strains and thus able to cover 70-75% of the world’s population.

In other words, by withholding from the world the original genetic code of the China Virus that it created, the Chinese Communist Party is ensuring that no completely effective vaccine will ever be developed by the West.

In other words, China continues to lie, and people continue to die. 

As Epic Game’s battle over Apple’s 30% App Store fee enters the seventh day – Fortnite, the popular videogame, developed by Epic, is still removed from the App Store. This has resulted in potentially profitable arbitrage opportunities for people who have iPhones with the installed app are listing their phones on eBay and other online marketplaces for upwards of $15,000. 

While the game has been removed from the App Store, Apple has yet to remove it from user devices, which means anyone who had previously installed the game can still access it. 

EPIC GAMES: APPLE WILL TERMINATE OUR DEVELOPER ACCOUNT AUG 28

— zerohedge (@zerohedge) August 17, 2020

A search of eBay and Facebook Marketplace for search term “iPhone Fortnite” turns up hundreds of listings:  

Searching “iPhone Fortnite” on eBay categorized under “most expensive:” 

An Apple iPhone XS Max with Fortnite currently (Aug. 20 (9:40ET)) has a bid of around $4,100. 

More results came up while searching Facebook Marketplace in New York City. Iphones with the app were listed for a few thousand dollars. 

And the reason fools are paying thousands of dollars for an iPhone with Fortnite, is that the game, in some respects, is “as addictive as cocaine.”

Authored by Lily Zhou via The Epoch Times,

Almost a fifth of adults in Britain were likely to have experienced depression in June, double the amount before the pandemic, according to the Office for National Statistics (ONS).

In a newly released report, the ONS compared the proportion of the British population with depressive symptoms before and during the CCP (Chinese Communist Party) virus pandemic.

Among the 3,527 participating adults, 19.2 percent showed moderate to severe depressive symptoms during the pandemic, almost double the number before the pandemic (9.7 percent).

Of the people surveyed, 6.2 percent had been experiencing moderate to severe depressive symptoms before the pandemic and continued to have the symptoms during the pandemic, while another 3.5 percent who had been experiencing depression improved during the pandemic.

You will find more infographics at Statista

Another 12.9 percent who had no or mild symptoms before the pandemic developed moderate to severe symptoms during it.

People under 40 were more likely to experience some form of depression during the pandemic than the older population.

Women, disabled, and poorer people, were also more likely to experience depressive symptoms during the pandemic.

Almost 1 in 6 (84.9 percent) identified stress and anxiety as the symptoms they were experiencing.

Adults experiencing depression are more likely to have their relationships affected during the pandemic.

Maudsley Hospital Director of Pharmacy and Pathology David Taylor told The Pharmaceutical Journal that the lack of human contact, which mental health “depends upon,” is one of the things that can cause anxiety and depression.

“Humans are social animals whose mental health depends upon frequent interaction with others and with the outside world,” he said.

Taylor suggested people experiencing these symptoms to go outdoors and interact with other people, as well as getting professional help when necessary.

The ONS’s report is based on the Opinions and Lifestyle Survey that usually surveys 2,010 individuals every month for 8 months of the year. Participants are asked to fill in an eight-item questionnaire.

Those who took part in the survey between July 2019 to March 2020 were asked to repeat it during June.

Tim Vizard, principal research officer for the ONS, said the comparison of the same group before and after the pandemic provided “a unique insight into how their symptoms of depression have changed over time.”

The Lancet in July published a similar study using different survey data. The study also found an increase of mental stress during the pandemic.

Amid the recent euphoria over DeFi (or decentralized finance) in crypto space which leverages decentralized networks to transform old financial products into trustless and transparent protocols, which among other things provide loans to businesses or the public with no intermediaries are present, a Russian bank has become the first lender in the country to issue a loan secured by cryptocurrency tokens, Russia’s Kommersant reported.

Lender Expobank said it issued an individual loan to businessman Mikhail Uspensky earlier this week, with Uspensky putting up Waves crypto tokens as collateral for the agreement, The Moscow Times noted. The size of the loan was not disclosed.

Kommersant said the bank consulted a number of lawyers and crypto experts on the deal beforehand, resulting in the Waves tokens being defined as “other property” and placed in an escrow account for the purposes of securing the loan.

Tanzila Yandieva, head of Expobank’s legal department said the deal was “precedent-setting for both the banking and legal communities.”

Russia passed its first law on cryptocurrency earlier this summer. The digital currency industry saw its provisions as overly restrictive, as the rules will ban Russians from using cryptocurrencies as a form of payment when they come into force next year. Businesses will also be barred from advertising crypto payment options.

Expobank believes the use of the crypto tokens as collateral for a loan, defined as “property”, would be allowed under the new guidelines.

The loan comes at a challenging time for cryptocurrency fans in Russia, which passed its first law on cryptocurrency earlier this summer. The digital currency industry saw its provisions as overly restrictive, as the rules will ban Russians from using cryptocurrencies as a form of payment when they come into force next year. Businesses will also be barred from advertising crypto payment options.

Despite the new law, Expobank believes the use of the crypto tokens as collateral for a loan, defined as “property”, would be allowed under the new guidelines.

Meanwhile, in the US, DeFi tokens like ChainLink, YAM, NXM, Datamine and Yearn.Finance…

… have exploded in recent week as the promise of decentralized finance in crypto has sparked a new flood of investors in the space.