German Government Offers Lufthansa $10 Billion Bailout

German Government Offers Lufthansa $10 Billion Bailout

Tyler Durden

Tue, 05/26/2020 – 08:30

Authored by Eric Kulisch of FreightWaves

After fully privatizing Deutsche Lufthansa AG a quarter-century ago, the German government will become a minority owner in an effort to rescue the country’s largest airline from economic devastation wrought by coronavirus travel restrictions.

The airline group, which includes Lufthansa Airlines, SWISS International Air Lines and Austrian Airlines, agreed Monday to a 9 billion euro ($9.8 billion) bailout package in which the federal government will receive a 20% stake in the company in return for two board seats and veto power over any hostile takeover bid. Lufthansa agreed to limit dividends and management pay.

The government will also give Lufthansa 5.7 billion euros in nonvoting capital, part of which could be converted to an additional 5% stake in the event of a hostile takeover or the company is unable to make coupon payments. The loan carries interest of 4% through 2021 and increases to 9.5% by 2027.

Lufthansa will separately receive a 3 billion-euro three-year loan from a quasi-private lender and private banks.

Germany  said it planned to sell its shares by the end of 2023.

The deal, which is designed to preserve thousands of jobs, still requires approval by Lufthansa shareholders and the European Commission.

Lufthansa has been negotiating for weeks with the government on an emergency aid package. Meanwhile, it has taken drastic self-help measures such as slashing about 95% of its schedule, encouraging workers to take unpaid leave and accept fewer hours, cutting training, decommissioning aircraft, terminating aircraft operating leases with third-party carriers, and halting other discretionary expenses. It also is converting passenger planes for dedicated cargo operations to earn revenue.

The German aid represents the largest rescue for any airline so far. The U.S. government has approved $25 billion in direct grants for domestic passenger carriers to prevent involuntary furloughs through September, with another $25 billion in loans also available. American Airlines is the largest recipient of U.S. aid at $5.8 billion, followed by Delta Air Lines at $5.4 billion.

The International Air Transport Association has estimated airlines are on track for revenue to be $314 billion lower than budgeted this year. It has urged governments to provide cash infusions, loans and tax relief for the industry, saying it is a foundational part of the global economy and will be essential to restarting economic activity once the pandemic calms down.

Some airlines are already in trouble. Virgin Australia and Latin American carrier Avianca recently filed for bankruptcy protection, El Al warns it could fold without a bailout from Israel’s government, and U.K. regional carrier Flybe has ceased operations.

via ZeroHedge News https://ift.tt/3d5ynjg Tyler Durden

“This Ship Is Sinking” – The Economy Is Holed Below The Waterline

“This Ship Is Sinking” – The Economy Is Holed Below The Waterline

Tyler Durden

Tue, 05/26/2020 – 08:19

Authored by Bill Blain via MorningPorridge.com,

“Until then men felt they had found the answer to a steady, orderly, civilized life. For 100 years the Western world had been at peace. For 100 years technology had steadily improved. For 100 years the benefits of peace and industry seemed to be filtering satisfactorily through society. Life was all right. The Titanic woke them up.”

We seem engaged in an all-out civil war to determine where to put the deckchairs on this Titanic of a country.  Credibility is shot. The UK is holed below the waterline.  This ship is sinking.  All is lost.. all is lost..

It’s difficult to resist a cataclysm of clichés this morning… But, I’m buying dollars and switching out Gilts for Treasuries.

The reality is the UK faces its greatest ever economic crisis. Q2 GDP is going to fall by 25% plus. There will be no V shape recovery. We are going to fail badly.  The treasury is wrestling with the implications of Project Birch – the plans to bail-out the failing large UK companies critical to the economy. Company balance sheets across the country are being distorted by increasing debt – the only way to pay down will be to cut costs. Retail sales are collapsing. Gilts are at negative yields.  Government borrowing in April exceeded £62 bln as expenditure rose 54% (compared to April 2019), while tax revenues tumbled 35%. Unemployment is going to explode. Companies across the nation are going bust at a record rate. Social deprivation is going to go through the roof. 

At the same time, we’re fighting to put together a new future for the UK outside the Eurozone, trying to agree the terms of trade deal with our former EU partners by the end of June, and struggling to avoid the breakup of the United Kingdom as nationalist pressures mount. 

Last week the UK was already a screaming sell, but you kind of believed there was hope, and on a relative basis to Europe, it wasn’t so bad. 

Never underestimate our ability to make a bad situation worse. Our nation of Lemmings found the proverbial cliff and plunged over it. 

Whatever the rights and wrongs, the Dominic Cummings farrago feels like it just popped a massive bubble. The outlook is bleaker than ever. So much for wartime spirit and consensus.  (My yacht is fuelled up, provisioned, ready to go, and I’m brushing up my schoolboy Spanish.. just in case.)

The fervid media hysteria over the bank holiday demonstrated just how badly the UK has lost the plot. Rather than facing up to the acute economic danger, addressing the critical issue of getting the country working again, demonstrating firm leadership and consensus and a plan to recovery… what we got were raging emotional responses from top to bottom of the country.  

Emotional responses to looming and very real economic catastrophe are not a good thing.

The results will be to deepen the coming recession, increase the likelihood the UK fractures into a hopeless sub-set of smaller irrelevant countries off the unfashionable edge of an economically depressed Europe. The opportunity for the UK to make something out of our new found Brexit independence will be lost. We just lost the initative in the EU Trade deal. If anyone seriously suggests we should now rejoin the EU – I shall deck them. 

In short… we are.. well it rhymes with “rubber ducked“. 

It was an extraordinary weekend. But it wasn’t actually about Dominic Cummings – although all the pundits will tell you it was. It was the opportunity for an angry, sidelined establishment to attack an unbalanced, flailing government. Points scoring as our economy crumbles. None of them could resist, and how the dogs turned. The visceral hatred in the mouths of some journalists for Cummings, the sanctimonious opposition politicians calling for Boris’s head, and the general tone of righteous indignation was staggering. 

They were just doing their jobs… Problem is… if the aim was to destabilise the country and ensure the coming crisis is deeper and more tragic, then it pretty much worked. 

Rather than addressing crisis, we are facing another leadership meltdown – AGAIN! It’s put the UK right back where we were at the depth of the Brexit crisis. 

Can Boris win the country back? His best hope is people are so bored, and turned off by Laura Doomsburg and the rest, they quickly forget. The last thing we need is desperately unpopular government at odds with the electorate running around in ever decreasing circles… (or at least that’s how the establishment will paint it). 

Why didn’t Boris just do the smart thing and put Cummings up against a wall immediately? I suspect because Government has known about it for weeks and we’re trying to keep it quiet – in the hope it could blow over. 

The first challenge for Boris will be to undo the immediate Cummings damage. Dom has become a massive short-term liability, but is part of the long-term solution. Cummings is almost unique in the corridors of power – he gets things done. He knows how to pull the levers. He knows the UK’s Civil Service bureaucracies don’t work and are likely to hamper evolutionary recovery. Some call him a disruptor – and when it comes to bureaucracy, that’s a good thing. When it comes to his ability to really really upset people – he’s at the top of the league.

On the other hand, if Cummings is so clever, why has the government failed to present a discernible and coherent smart plan to put the UK back on its feet? Communications have not been good. Chancellor Rishi Sunak is apparently the most popular UK politician – and 3 months ago no one had heard or him.. 

Here in the UK, the virus has become an emotional issue. The population are divided – and I fear we’re heading towards the kind of civil war division we saw during the 3 years of Brexit. They are divided between those who fear the virus will kill us all today, and those who reckon it won’t be the virus, but economic collapse that kills us all tomorrow. 

We need strong and clear communication to the population. You are not going to catch COVID if someone walks past you at less than 2 m. You are not going to die because of a bunch of kids are sitting in the park. Sending kids back to school is not the equivalent of Herod’s massacre of the innocents.

Meanwhile…

The rest of global markets don’t make much more sense than the UK. They are rallying because lockdown is ending, but also on yet more hopes for vaccines and drugs. Rising stocks are apparently pricing in recovery rather than recession.  But, if you want a really clear example of how this plays out.. look at Hertz. Bust. 

via ZeroHedge News https://ift.tt/2XyrtMT Tyler Durden

Futures Soar Above 3,000, Dollar Tumbles On Vaccine Hopes, Reopening Optimism

Futures Soar Above 3,000, Dollar Tumbles On Vaccine Hopes, Reopening Optimism

Tyler Durden

Tue, 05/26/2020 – 08:04

S&P futures continued their Memorial Day surge, rising 2% and breached the key 3,000 level on Tuesday morning as global easing of lockdowns, hope over new vaccines and business restarts boosted optimism about economic recovery among investors returning from a long weekend while putting concerns over a Hong Kong crackdown on the backburner. The Bloomberg dollar index concurrently tumbled below the key 1,240 level while 10Y yields jumped to 0.70%.

Following disappointing news from Remdesivir late on Friday, Merck has become the new vaccine darling du jour, jumping in pre-market trading after it unveiled development plans on both a treatment for Covid-19 and a vaccine against it. Beaten down travel-related stocks gained in premarket trading with United Airlines Holdings, Expedia, and Marriott all up about 8% each. This is a continuation of the trends seen last week, when indexes ended mixed on Friday as China-U.S. tensions heated up, but still managed to log more than 3% gains for the week, fueled by hopes of an eventual coronavirus vaccine and easing of virus-related curbs.

Europe’s Stoxx 600 Index jumped, with travel stocks surging on reports that Berlin plans to lift travel warnings for 31 European countries from June 15. The Stoxx 600 Travel & Leisure Index jumped 5.7% to the highest since April 30. Package holiday company TUI was the biggest gainer, up 37%; British Airways parent IAG gains 18%, EasyJet +9.8% and Intercontinental Hotels +9.6%. Deutsche Lufthansa, which rose 7.5% Monday after Germany reached agreement on a bailout, gains 6%. 

Also on the reopening front, Spain urged foreign holidaymakers to return from July as it eases one of Europe’s strictest curbs, while Britain was looking to reopen thousands of High Street shops, department stores and shopping centers next month, sending the pound up by the most in almost a month.

In Asia, Japan led the equity advance as the world’s third-largest economy reopened, and shares rose in Hong Kong, which showed signs of stabilizing after weekend unrest. Asian stocks gained, led by materials and industrials, after rising in the last session. Most markets in the region were up, with Australia’s S&P/ASX 200 gaining 2.9% and Japan’s Topix Index rising 2.2%, while India’s S&P BSE Sensex Index dropped 0%. The Topix gained 2.2%, with J-Lease and Nippon Chemi-Con rising the most. The Shanghai Composite Index rose 1%, with Panda Financial Holding and Shanghai Fenghwa Group posting the biggest advances.

Largely locked down investors have come out of the holiday weekend in a swinging risk-on mood, even as tensions between Washington and Beijing continue to flare. Over the weekend, China condemned the U.S. for adding 33 Chinese entities to a trade blacklist, but without announcing any retaliatory steps even as it accused the US of being a paper tiger and one unwilling to intervene in Hong Kong due to its own pandemic problems. Meanwhile, Beijing sought to reassure Hong Kong that its judiciary would remain independent under a new national security law.

Offsetting geopolitical tensions are mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while Germany recorded a decline in the number of new virus cases. Signs that more euro area stimulus is on the way is also helping support the appetite for risk.

According to Marc Ostwald, chief economist at ADM Investor Services, “the narrative for markets is shifting somewhat, with hopes associated with the easing of lockdown measures in many countries and still very exaggerated hopes of a vaccine being found short-term, needing to be balanced against escalating U.S./China tensions.”

In rates, Treasuries begin holiday-shortened U.S. week under pressure as bear-steepening left yields cheaper by 1bp to 3bp ahead of $127 billion auction cycle consisting of 2-, 5- and 7-year notes this week. Treasury 10-year yields around 0.687%, cheaper by nearly 3bp vs Friday’s close, with 2s10s steeeper by ~2bp, 5s30s by ~ 1bp. Bunds cheaper by 2.5bp vs U.S. 10year, gilts by ~2bp. Auction cycle begins Tuesday with $44b 2-year note sale at 1pm ET, followed by $45b 5-year and $38b 7-year Wednesday and Thursday. The German government’s 2-year debt auction received bids worth more than 3 times the amount on offer. Germany currently pays around -60bps to borrow money for two years. “That and the demand at auction speak volumes”, according to BMO strategist Stephen Gallo.

In FX, the broad USD declined sharply as risk appetite rallied while commodity-related currencies paced gainers vs the USD (NOK, NZD, AUD, ZAR & MXN jumping from +1.0% to +1.7%).

The dollar fell against all peers except for the yen, while commodity currencies rallied as oil prices advanced following a prediction from Russia that the market may rebalance as early as next month after historic output cuts from global producers to drain a glut. The euro rallied after touching more than a one-week low against the dollar on Monday; German bonds fell, extending declines and underperformance against Treasuries as haven demand was unwound; Italian bonds rallied, tightening the spread over Bunds. The pound rose against the dollar and the euro, helped by news that restrictions on U.K. retailers will begin to ease next week. Australia and New Zealand’s currencies advanced as the end of a nationwide emergency in Japan and a slowdown of U.S. virus infections bolstered risk sentiment. According to Stephen Gallo, “a close in the BBDXY below the 1,240 level – which looks increasingly likely – could cement near-term USD weakness. When deciding whether this is a positioning story for FX or a realignment, we would err on the side of realignment. This move in the USD should not be fought (yet).”

In commodities, WTI crude oil advanced to around $34 a barrel on hopes the market may rebalance after historic output cuts. WTI and Brent front month futures continue to post gains, albeit the benchmarks have waned off highs in recent trade. Eyes remain on the wider implications on global trade and sentiment from the fallout of the US-Sino trade spat threatening a cold war, whilst investors must not be distraction from the prospects of reinstated lockdowns should COVID-19 cases rise again. On the supply front- Russian Energy Minister Novak is to reportedly meet with Russian oil majors to discuss an extension of current cuts past the end of June – the checkpoint for OPEC to reduce output curbs.

Looking at today’s calendar, the expected data include new home sales and consumer confidence. AutoZone is reporting earnings.

Market Snapshot

  • S&P 500 futures up 1.8% to 3,006.00
  • STOXX Europe 600 up 0.9% to 348.43
  • MXAP up 1.9% to 148.89
  • MXAPJ up 1.8% to 473.73
  • Nikkei up 2.6% to 21,271.17
  • Topix up 2.2% to 1,534.73
  • Hang Seng Index up 1.9% to 23,384.66
  • Shanghai Composite up 1% to 2,846.55
  • Sensex up 0.02% to 30,678.38
  • Australia S&P/ASX 200 up 2.9% to 5,780.05
  • Kospi up 1.8% to 2,029.78
  • German 10Y yield rose 4.9 bps to -0.445%
  • Euro up 0.4% to $1.0944
  • Italian 10Y yield fell 2.2 bps to 1.403%
  • Spanish 10Y yield fell 1.2 bps to 0.6%
  • Brent futures up 1.6% to $36.11/bbl
  • Gold spot down 0.3% to $1,727.40
  • U.S. Dollar Index down 0.5% to 99.41

Top Overnight News from Bloomberg

  • Sterling traders look set to face heightened uncertainty on multiple fronts next month — the end-June deadline to extend the Brexit transition period, the possibility of negative interest rates in the U.K. and the economy’s tentative exit from the pandemic lockdown
  • A German Ifo gauge measuring trade expectations among manufacturers jumped by a record but remained below zero, indicating that pessimism receded even though it was still the prevailing sentiment
  • Wuhan found 206 asymptomatic patients from 6.68 million people as it concluded a campaign to test the entire population after several infections prompted fears of a second wave
  • With inflation low, there is room for the ECB to innovate and act “rapidly and powerfully,” Bank of France Governor Francois Villeroy de Galhau told a conference in Paris on Monday. He also signaled that he’d like to see even looser limits on the 750 billion-euro ($817 billion) plan
  • Singapore’s economy is facing its worst contraction since independence more than a half-century ago as the coronavirus outbreak and measures to contain it pummel the trade-reliant city state
  • Dominic Cummings, one of Boris Johnson’s closest allies, refused to quit his job in the U.K. government, refuting claims he flouted lockdown rules that he had helped to draft. Japan ended its state of emergency everywhere in the country and made reviving the economy its top priority. The World Health Organization temporarily halted tests on hydroxychloroquine
  • China sought to reassure Hong Kong that its judiciary would remain independent under a new national security law, as concerns grow that the city may lose one of its key selling points for international companies
  • People’s Bank of China Governor Yi Gang said the domestic economy is improving despite global uncertainty, and indicated the bank will continue with the current targeted easing approach.
  • The Bank of Japan would consider changing interest rates for its yield curve control program if it were necessary, Governor Haruhiko Kuroda told lawmakers in parliament Tuesday
  • England’s outdoor markets and car showrooms will be able to re-open from June 1, as soon as they are able to meet the coronavirus guidelines to protect shoppers and workers, Prime Minister Boris Johnson said on Monday. All other non-essential retail outlets including shops selling clothes, shoes, toys, furniture will be expected to be able to reopen from June 15 if the government can control the spread of the virus
  • Oil rose above $34 a barrel following a prediction from Russia that the market may rebalance as early as next month after historic output cuts from global producers to drain a glut

Asian equity markets were higher across the board and US equity futures also extended on gains in which the E-mini S&P prodded the 3000 focal point, as trade picked up from the holiday lull and given the lack of fresh catalysts to force a shift in the recent constructive narrative. ASX 200 (+2.9%) was lifted as all sectors traded positive and with notable gains seen in both financials and energy, while Nikkei 225 (+2.6%) outperformed as exporters cheered a weaker currency and after PM Abe formally lifted the nationwide state of emergency. Hang Seng (+1.8%) and Shanghai Comp. (+1.0%) also conformed to the positive tone with the surge in Hong Kong attributed to dip buying and with sentiment underpinned after the PBoC injected liquidity through reverse repos for the first time in almost 2 months, while PBoC Governor Yi reiterated that prudent monetary policy will be more flexible and that they will strengthen macro policy, as well as counter cyclical adjustments. Finally, 10yr JGBs were range bound with prices marginally higher amid mixed results at the 40yr JGB auction and despite the gains in stocks, while there were comments from BoJ Governor Kuroda who reiterated the central bank stands ready to act further through various policy tools and suggested that they will conduct appropriate easing measures after the coronavirus is contained.

Top Asian News

  • Wuhan Tests Millions in 12 Days as China Fears Second Virus Wave
  • Singapore Slashes Growth Target With 7% Contraction Possible
  • Indonesia Deploys Army to Enforce Lockdown Before Reopening
  • Speculators Target Hong Kong’s Currency on Outflow Concern

European indices have extended on yesterday’s gains (Eurostoxx 50 +0.8%) with the FTSE 100 (+1.4%) top of the pile as UK participants return from their extended weekend. In terms of over-arching macro themes, there hasn’t been much in the way of fresh fundamental catalysts since yesterday’s close, however, from a technical perspective, market participants may seek some encouragement from the e-mini moving back above the psychological 3000 mark. Additionally, looking at some of the top gainers thus far, the reopening narrative appears to be playing a key role once again. The main source of traction thus far has been in the travel & leisure sector with UK-listed IAG (+15.4%), Intercontinental Hotels (+12.4%), easyJet (+11.6%) and Ryanair (+7.6%) all showing substantial gains from Friday’s close with optimism for the sector buoyed by ongoing border reopenings across the continent, whilst Deutsche Lufthansa (+5.3%) shares remain elevated after agreeing to a rescue deal with the German government. Asides from the travel & leisure sector, reopening optimism can also be seen in names such as Cineworld (+18.7%), JD Sports (+9.7%) and Hammerson (+7.9%) with UK PM Johnson’s latest update noting that the government plans to allow car showrooms and outdoor markets to reopen from June 1st and will allow all non-essential retail to open from June 15th. Elsewhere, other notable movers include Rolls-Royce (+11.4%), who, asides from benefiting from recent optimism surrounding travel, are looking to negotiate price cuts with certain supplier. Finally, Wirecard (-1.6%) are off worst levels but lower nonetheless after delaying their earnings from 4th June to the 18th June on the basis that audits of annual financial statements for 2019 will not be completed by the planned date.

Top European News

  • ECB’s Villeroy Says More Stimulus Is Probably on the Way
  • Dominic Cummings Refuses to Quit in Row Over U.K. Lockdown; U.K. Minister Quits in Protest as Johnson Refuses to Fire Aide
  • Macron Set to Unveil Aid for Embattled French Auto Industry
  • JDE Peet’s Sets Price Range for $2.5 Billion Amsterdam IPO

In FX, the Dollar continues its pullback early EU-doors, with little by way of fresh fundamental catalysts, but some estimates of month-end FX flows favour modest USD selling heading into the May 29th month-end fix.  Looking ahead to the session, month-end factors are likely to influence the Buck in the current absence of fresh macro developments. Meanwhile, State-side data is unlikely to sway the Dollar much, but Fed’s Kashkari (2020 vote) is slated for 1800BST – who stated two weeks ago that there is unanimous opposition against NIRP, but refrained from ruling it out in the future. DXY has retreated further below the 99.500 mark (vs. high 99.979), with its 21 DMA coinciding with the psychological 99.000 mark.

  • CNH, HKD – Notwithstanding Dollar softness, little action is seen in the currencies thus far. Political tensions remain elevated as Hong Kong’s special status assessment deadline at month-end, and with China threatening retaliation should US impose HK-related sanctions. Meanwhile, PBoC opted for another softer CNY fixing which participants should keep on the radar amid the looming US Currency Manipulation report. Offshore Yuan trades flat around 7.1450 vs. the USD and within a tight band. USD/HKD dipped below yesterday’s low at 7.7530 in early trade.
  • EUR – EUR gains remain dimmed after dovish Villeroy alluded to a longer period of negative rates and posited possible further measures – ahead of the June 4th meeting. EUR/USD keeps its head above 1.0900 and eyes its 21 DMA at 1.0958 to the upside, having found an overnight base at 1.0890. Option expiries see EUR 720mln at 1.0900 and a some 1.3bln between 1.0935-45. Traders eye comments from ECB’s Chief Economist Lane (1345BST) and VP de Guindos (1630BST) for signs of agreement with Villeroy’s remarks.
  • GBP, AUD, NZD, CAD – All beneficiaries of the USD pullback but the Aussie, Kiwi and Sterling outpace as risk appetite intensifies.  Cable topped 1.2300 (vs. low 1.2175), after taking out its 50 DMA at 1.2275, 55 DMA at 1.2288 and a Fib 1.2292 (38.2% of the Apr-May fall) on the back of source reports that EU are preparing to drop its “maximalist” approach to negotiations on fisheries with Britain in the next round of negotiations. Furthermore, BoE’s Haldane said the UK economy likely contracted by over 20% in Q2, “just a shade” better than BoE’s scenario of around 25%. The MPC member said the BoE has not reached remotely yet a view on NIRP. Elsewhere Aussie and Kiwi extended on APAC gains and surpassed 0.6600 and 0.6150 against the USD respectively vs. lows of 0.6535 and 0.6092 apiece. CAD meanwhile lags its high-beta peers but remains underpinned on favourable oil prices. USD/CAD gave up 1.3900 to the downside with support seen around the 1.3860 mark for the pair – whilst BoC’s outgoing Governor Poloz and Deputy Governor Wilkins are slated for a text release at 2200BST.
  • CHF, JPY – Mixed trade among the safe-haven FX – the Yen fails to benefit from the Dollar descend as risk appetite prompts haven outflows, whilst BoJ Governor Kuroda sung from the same hymn sheet regarding readiness to further loosen policy. USD/JPY failed to breach its 50 DMA (107.91) overnight but remains underpinned by the risk-on tone as focus remains on reopening economies and vaccine hopes in the absence of fundamental developments. The Franc ekes modest gains in a consolidation of yesterday’s weakness, USD/CHF dipped below 0.9700 and eyes its 55 DMA (0.9684) to the downside.

In commodities, WTI and Brent front month futures continue to post gains, albeit the benchmarks have waned off highs in recent trade. Eyes remain on the wider implications on global trade and sentiment from the fallout of the US-Sino trade spat threatening a cold war, whilst investors must not be distraction from the prospects of reinstated lockdowns should COVID-19 cases rise again. On the supply front- Russian Energy Minister Novak is to reportedly meet with Russian oil majors to discuss an extension of current cuts past the end of June – the checkpoint for OPEC to reduce output curbs. Aside from that, news flow for the complex remained light in early EU hours. On the data front, the weekly Private inventories will be watched tomorrow – particularly in regards to Cushing storage. WTI and Brent July remain north of USD 34/bbl and USD 36/bbl respectively having printed bases at USD 32.50/bbl and USD 35.50/bbl apiece. Spot gold succumbs to the risk appetite and see modest outflows, with losses cushioned by the weaker Buck as the yellow metal straddles USD 1725/oz. Copper prices post decent gains amid the risk tone and softer Dollar – with prices eyeing USD 2.45/lb to the upside.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, prior -4.2
  • 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.3%, prior 0.45%; S&P CoreLogic CS 20-City YoY NSA, est. 3.4%, prior 3.47%
  • 9am: House Price Purchase Index QoQ, prior 1.3%
  • 10am: New Home Sales, est. 480,000, prior 627,000; New Home Sales MoM, est. -23.44%, prior -15.4%
  • 10am: Conf. Board Consumer Confidence, est. 87, prior 86.9; Expectations, prior 93.8; Present Situation, prior 76.4
  • 10:30am: Dallas Fed Manf. Activity, est. -62, prior -73.7

DB’s Jim Reid concludes the overnight wrap

There was a remarkable press conference yesterday here in the U.K. by PM Boris Johnson over his top aide Dominic Cummings. Lockdown has meant different things to different people but this story has whipped the U.K. up into a frenzy the likes of which I can’t remember witnessing for a very long time. Our lockdown has had its dramas but not quite on this scale. One such drama was that my wife decided that she’d spend any spare time she had during it planting all sorts of new plants and shrubs around the garden. A massive effort. However she didn’t count on only having one day of rain in 10 weeks and now has to spend 60-90 minutes each day watering the plants or risk them dying in the extreme unseasonal heat. We’ve even trained the kids to do it although this invariably ends up in a water fight and tears.

While we were watering the plants, yesterday was a quiet day for markets with the US and the U.K. on holiday. However the mood was good as more global progress was made towards reopenings and no notable new escalations between the US and China have emerged over the last few days. On these types of days the market gladly sucks up the liquidity that central banks and governments have injected. The Stoxx 600 closed +1.47% led by the DAX (+2.87%) which saw Bayer (+7.77%) outperform as they were said to have settled a substantial amount of legal claims hanging over the company. Lufthansa (+7.57%) was also up after reports that the German government is proposing taking a €9bn stake in the company – albeit one that has to go through EU approval. US equity futures remained up during the afternoon session and are +1.62% this morning.

Asian bourses are also trading up this morning with the Nikkei (+2.27%), Hang Seng (+1.83%), Shanghai Comp (+0.71%) and Kospi (+1.57%) all advancing. Elsewhere, the USD is a shade weaker while yields on 10y USTs are up +1bps. WTI oil prices are also up +2.83% to $34.18.

In terms of newsflow, Hong Kong’s Carrie Lam has voiced support of China’s moves to impose sweeping national security laws in the territory saying it was untrue that the new security law would ban street protests or calls for her dismissal, and pledged that Hong Kong’s freedoms would be preserved. China has also said that the new legislation “will not change the one country, two systems policy, Hong Kong’s capitalist system, high degree of autonomy, nor will it change the legal system in Hong Kong SAR, or affect the independent judicial power, including the right of final adjudication exercised by the judiciary in Hong Kong.”

There’s not a lot of top tier data over the remainder of the week (see the day by day calendar at the end) but highlights will include continued discussions on a European recovery fund, remarks from Fed Chair Powell (Friday), alongside with a few remaining earnings releases. Furthermore, the Fed will be releasing their Beige Book on Wednesday, which provides information on current economic conditions in the different Federal Reserve districts.

Tomorrow we’ll hear from European Commission President von der Leyen, who’ll be presenting the revised Multiannual Financial Framework and recovery plan proposals to the European Parliament. This follows the Franco-German proposal announced last Monday by Chancellor Merkel and President Macron for a €500bn recovery fund for the EU. However, these are still early days, since unanimity among the 27 member states is required, and a number of countries have voiced their opposition to the idea of joint debt issuance. The news flow over the last few days hasn’t been great. As DB’s Mark Wall outlines in a blog over the weekend, on Saturday the Frugal Four (FF) member states (Netherlands, Austria, Denmark and Sweden) issued a counter-proposal to the Merkel-Macron (MM) plan. If the intention of the MM proposal was to force some concessions from the FF, it failed according to Mark. In summary there is no additional envelop of resources, no grants and a fair amount of ambiguity on conditionality to access the fund As Mark suggests, with no concessions from the Frugal Four, it may be all the more difficult for the European Commission to issue a credible proposal tomorrow. There appears to be no common ground between the MM and FF proposals, no basis for consensus. The risk of not having an agreement at the 18/19 June EU leaders’ meeting could be rising. However Mark continues to believe there will be a Recovery Fund but that it’ll just take longer to agree. See his weekend blog here.

Yesterday we also heard from the Bank of France Governor Villeroy and he signalled that the ECB is very likely to boost its emergency bond-buying program to fight the coronavirus pandemic. He also said that he would like to see limits on the EUR 750bn PEPP plan to be loosened even more while adding that, “it is in the name of our mandate that we will very probably need to go even further. It is its very flexibility that should make the pandemic emergency purchase program our preferred marginal instrument for dealing with the consequences of the crisis.”

For those that were on holiday yesterday a quick recap of last week now. Global equities were mostly higher as hopes of a successful global reopening and of a near-term vaccine grew. The rise in risk assets was despite consistent escalation of US-China tensions and a continuous drumbeat of negative economic data, mostly backward looking but some forward looking as well. The S&P 500 rose +3.20% last week (+0.24% Friday), erasing the prior week’s loss and closing at its highest weekly close since the first week of March. The S&P 500 is now +32.09% off the March lows and just -8.52% down YTD, while actually up +3.47% over the last 52 weeks. The rally was more diversified last week as Energy stocks joined Technology in outperforming. With tech still leading, the NASDAQ rose +3.44% on the week (+0.43% Friday). European equities also rallied on the week, in a fairly correlated fashion with every major country’s index higher as the Stoxx 600 was up +3.63% (-0.03% Friday) over the five days. The DAX rallied +5.82% (+0.07% Friday), while the Italian FTSE MIB rose +2.75% (+1.34%), and the CAC gained +3.90% (-0.02% Friday). Asian indices were more mixed than their European and American counterparts. The Nikkei was up +1.75% over the week (-0.80% Friday) while the CSI 300 lost -2.27% (-2.29% Friday), and the Kospi rose +2.22% (-1.41% Friday). In other risk assets, oil continued its recovery, rallying for a fourth week in a row. WTI futures rose +13.46% (-1.98% Friday) to $33.25/barrel and Brent crude rose +8.34% on the week (-2.58% Friday) to $35.13/barrel.

The VIX fell -3.8pts to 28.1 last week (-1.4pts Friday), which is not as low as the index fell 2 weeks ago even with equity prices higher. With oil prices rallying and equities continuing to improve, credit spreads tightened on the week. US HY cash spreads were -72bps tighter (-2bps Friday), while IG tightened -24bps on the week (-1bp Friday). In Europe, HY cash spreads were -37bps tighter (-3bps Friday), while IG tightened -11bps (-1bp Friday).

With equities rallying core sovereign bonds yields rose slightly. US 10yr Treasury yields were up +1.6bps (-1.3bps Friday) to finish at 0.659%. Meanwhile, 10yr Bund yields rose +4.4bps over the course of the week (+0.8bps Friday) to -0.49%. Peripheral debt tightened as Chancellor Merkel and President Macron agreed to support a €500bn recovery fund, which Merkel said would have the ability to borrow money. Spanish 10yr yields tightened -18bps to Bunds over the 5 days, while Italian BTPs were -31bps tighter.

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Confirmed Coronavirus Infections Pass 5.5 Million Worldwide As UK Nears 50k Deaths: Live Updates

Confirmed Coronavirus Infections Pass 5.5 Million Worldwide As UK Nears 50k Deaths: Live Updates

Tyler Durden

Tue, 05/26/2020 – 07:16

US equity futures pointed to a sharp jump at the open on Tuesday, with the Nasdaq eying a return to the old highs, as traders celebrated the return of floor traders to the New York Stock Exchange as a symbol of the resilience of the capitalist system – or maybe it was the latest suspiciously preliminary vaccine news.

Two days after the NYT published the names of American coronavirus dead on the front page of its Memorial Day Weekend edition in solemn remembrance of the 100k milestone, the US still hasn’t actually crossed the threshold. Virginia became the latest state to report a one-day record jump in new cases over the weekend after the US saw a jump in cases and a slight uptick in hospitalizations last week.

Experts expected a jump in cases and hospitalizations as states adjusted to the first few weeks of ‘Phase 1’ reopening. Most hope that a ‘seasonal effect’ will help offset the increase in social interaction

An uptick in new cases was expected, due to the inevitable increase in interactions as restrictions are lifted. States have also expanded testing access as they’ve loosened restrictions.

With Brazil and Russia still accounting for ~1/5th of all new cases reported on Monday, the global total number of confirmed cases has broken above 5.5 million, though many experts believe the roughly 330k confirmed cases in Brazil represents just a quarter of the total infections in the country.

as we noted earlier, over the weekend, the CDC released its first official estimate of the overall infection fatality rate (IFR). The number? Just 0.26% – a full 3.2 percentage points below the WHO’s official estimate of 3.4%. The CDC also estimated the rate of “asymptomatic” infection (patients who showed few or no symptoms) at 35%.

I NYC alone, 0.3% of all city residents have died from the virus (more than 30k have died in the US alone). “According to some surveillance studies using antibody tests, roughly a quarter of NYC residents have been infected. This would suggest the mortality rate might be closer, or just above, 1%, but still well below the WHO number that unleashed a wave of panicked lockdowns across the world.

Source: WorldoMeter

To be sure, roughly 50% of deaths across the US have occurred in nursing homes. This alarmingly high rate is due in part to certain Democratic governors instituting obviously dangerous policies allowing COVID-19-positive patients to be returned to the managed-care facilities where they lived. Some have suggested that better protecting the most vulnerable patients might greatly mitigate the mortality rate. But we digress…

As the WHO warns that the world remains mired in the ‘first wave’ of the outbreak, the AP reported Tuesday that states are scrambling to spend billions of dollars on PPE and medical supplies to replenish depleted stockpiles. But more than 2 months into the supply scramble, few states are sharing information about what they’re buying and how much they’re paying (remember, reports about states and cities being swindled have proliferated during the crisis). While many states have obscured their spending, Illinois has released a detailed database that can be accessed by the public.

With the US inching ever-closer to the 100k fatality mark, the UK’s Department of Health and Social Care said the country had surpassed 47,000 deaths on Tuesday, coming ever-closer to the 50k mark which Boris Johnson’s government had once said would be a ‘worst-case’ scenario for the outbreak. Meanwhile, Tory Junior minister Douglas Ross resigned on Tuesday, saying Dominic Cummings’ interpretation of the lockdown guidelines weren’t shared by the majority of Britons.

The ONS said 42,173 people had died in England and Wales with suspected COVID-19 as of May 15, bringing the UK total to 47,343 – which includes earlier data from Scotland, Northern Ireland, plus recent hospital deaths in England, Reuters reports. Chatter about Johnson being “replaced” – not unlike his predecessor, Theresa May – as Tories begin to see him as a liability has intensified.

As scrutiny of the EU’s paycheck subsidies intensifies, the bloc’s global campaign to fund the development of vaccines and therapies against COVID-19 has so far raised $10.4 billion, according to European Commission President Ursula von der Leyen.

On Tuesday, as images of packed Ozark beaches lingered in the minds of Americans, the WHO warned of the risks of an “immediate second peak” as Europe, the US and others ease up on lockdown conditions, while urging countries to step up surveillance, testing and tracking.

In vaccine news, after a flurry of conflicting reports, Pharmaceutical giant Merck, which has “largely kept to the sidelines” of the vaccine race according to Reuters, has unveiled plans to buy privately-held Austrian vaccine maker Themis Bioscience. Merck also said it plans to collaborate with research nonprofit IAVI to develop two separate vaccines.

Merck also announced a partnership with privately-held Ridgeback Biotherapeutics to develop “an experimental oral antiviral drug” to help patients infected with the virus.

Maryland-based biotech firm Novovax announced early Tuesday that it had begun injecting its experimental coronavirus vaccine candidate into test subjects in Australia on Tuesday, CNBC reports. 

The company hopes to release a vaccine by the end of the year if its early studies find success. Novavax will inject 131 volunteers in the first phase of the trial testing the safety of the vaccine and looking for signs of its effectiveness, the company’s research chief Dr. Gregory Glenn said. At this point, roughly a dozen experimental vaccines are in early stages of testing, or are poised to start in the near future; most of these are based in China, the US and Europe.

“We are in parallel making doses, making vaccine in anticipation that we’ll be able to show it’s working and be able to start deploying it by the end of this year,” Glenn told a virtual news conference in Melbourne from Novavax’ headquarters in Maryland.

Finally, as Beijing scrambles to test millions of people in Wuhan and China’s northeaster Jilin Province, Taiwan on Tuesday announced plans to lift its coronavirus-related restrictions on mass gatherings and the sale of masks next month as China’s ‘wayward province’ has nearly stamped out the virus.

On seemingly every cable news channel, pundits are bemoaning the ‘politicization’ of the coronavirus pandemic. While their conclusion is typically to blame the president, we suspect there might be another reason why it sometimes seems like red states and blue states are experiencing different versions of the same reality.

Because they, effectively, are.

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EU “Green” Agenda Calls For Eating Bugs To Save The Planet

EU “Green” Agenda Calls For Eating Bugs To Save The Planet

Tyler Durden

Tue, 05/26/2020 – 05:00

Authored by Steve Watson via Summit News,

A new EU draft policy announced last week calls for “insect-based proteins” to be extensively promoted as a replacement for animal products, to save the environment.

The European Commission announced the Farm to Fork (F2F) Strategy, touting it as a “fair, healthy and environmentally-friendly” program that will focus on “increasing the availability and source of alternative proteins such as plant, microbial, marine, and insect-based proteins and meat substitutes.”

The draft noted that the program “will not happen without a shift in people’s diets”.

“Moving to a more plant-based diet with less red and processed meat and with more fruits and vegetables will reduce not only risks of life-threatening diseases, but also the environmental impact of the food system,” claims the strategy, revealed last Wednesday.

EU centric news site EURACTIV, noted that the policy is calling for eating bugs, and spoke to Constantin Muraru from the international platform of insects for food and feed (IPIFF), an EU non-profit organisation which represents the interests of the insect production sector.

Muraru lauded the idea of both humans and animals eating more bugs, saying that there is “enormous potential.”

“Currently, the EU is heavily reliant on the importation of feedstuffs, but the disruption in the past few months with the coronavirus outbreak has made it increasingly apparent that we must look to make our agriculture more self-sustainable,” he said.

“Insects can be produced locally and are a highly nutritious, protein-rich foodstuff that can be produced in high quantities in a small area,” he added.

The EU continues to push the idea of eating bugs, with its Food Safety Authority having approved the sale of bugs as “novel food” earlier this year, meaning that they are likely to be mass produced for human consumption throughout the continent by the end of the year.

“These have a good chance of being given the green light in the coming few weeks,” the secretary-general of the International Platform of Insects for Food and Feed, Christophe Derrien, told The Guardian.

The craze for eating insects stems from UN guidelines that “promote insects as a sustainable high-protein food.”

As we have previously highlighted, eating bugs has been heavily promoted by cultural institutions and the media in recent years because people are being readied to accept drastically lower standards of living under disastrous global ‘Green New Deal’ programs.

This will be exacerbated by the expected economic recession, or even depression, caused by the coronavirus outbreak.

This is why globalist publications like the Economist have been promoting the idea of eating bugs despite the fact that the kind of elitists who read it would never consider for a second munching on crickets or mealworms.

Unsurprisingly, restaurants are not seeing a big uptake for worm burgers, otherwise known as ‘bug macs’, or cricket based cuisine.

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Spaniards Return To Bars With Face Masks 

Spaniards Return To Bars With Face Masks 

Tyler Durden

Tue, 05/26/2020 – 04:15

Spain is attempting to revive its crashed economy as Madrid and Barcelona enter the early phases of a staged recovery on Monday, which permits social gatherings in limited numbers, restaurant and bar service (only outdoors), and some social and sports activities, reported Bloomberg

Oscar Fernandez, a restaurant operator in Madrid, said he served his first patrons in nearly two months on Monday afternoon amid virus lockdowns. 

“Since we’re a family business, every moment we’re shut is lost income,” said Fernandez, adding that customers were wearing masks and tables were spaced apart that met social distancing rules. He said, “our only employee is still off work with coronavirus.” 

Fernandez said strict social distancing rules had slashed his operating capacity by 50%. As a result, he must now serve customers from 6 am to 11 pm, a four extension to regular operating hours to make up for lost sales.   

Besides mask-wearing, social distancing separated tables and an abundance of hand-sanitizer, he said the most disturbing thing is that some of his elderly customers died because of the virus. 

“We are also a little sad today, as we have lost two of our more elderly regular customers,” Fernandez said. “They used to come every day but now they have left us.”

Prime Minister Pedro Sanchez has implemented a phased reopening of the economy that will allow it to recover while potentially prevent future transmission of the virus. 

Madrid and Barcelona entered the second phase of the recovery on Monday, which allows for gatherings of up to ten people, smaller shops to reopen, religious services, and limited capacity at gyms. The third phase is already underway in Spain’s northern Atlantic coastline, the Canary Islands, and the Andalusia region, allowing shopping malls, beaches, and restaurants to reopen.

Spain’s Tourism Minister Reyes Maroto said Monday, foreign tourists could be allowed back as soon as July. Maroto’s comments come as the country is starting to ease restrictions, but fears of a second coronavirus wave are already materializing in other parts of Europe.

Dr. Hans Kluge, director for the WHO European region, told The Telegraph in an exclusive interview that the pandemic is not over and countries lifting lockdown restrictions is now the “time for preparation, not celebration”.

Several weeks ago a tit-for-tat border dispute between Spain and France unfolded as both countries could soon impose quarantines on travelers. We outlined how Europe would be rather difficult to reopen, despite Brussells calling for “free movement and cross-border travel” to restart the tourism industry on the continent.

Mask-wearing at bars and restaurants with limited capacity only suggests that there will be no V-shaped recovery in Europe’s economy this year. 

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How China Is Building and Bugging Government Offices In African Nations

How China Is Building and Bugging Government Offices In African Nations

Tyler Durden

Tue, 05/26/2020 – 03:30

Authored by Bonnie Evans via The Epoch Times,

China has been building key government offices and facilities in African countries for decades and fitting them with gear that likely allows the Chinese government to spy on everyone, from presidents and prime ministers to judges and generals and beyond, according to a recent Heritage Foundation report.

More than 186 buildings constructed by China in 40 of the 54 nations in Africa house the sort of sensitive data and activity that invites surveillance, Heritage researcher Joshua Meservey found.

The Palace of Justice in the Angolan capital of Luanda was built in 2012, while in the notorious kleptocracy of Equatorial Guinea, the Chinese erected the Ministry of Foreign Affairs building in 2015. And in Zimbabwe, where its former leader, the late Robert Mugabe, once called Chinese leader Xi Jinping “a God-sent person,” China has built the country’s National Defense College and is constructing its parliament, according to the report.

In all, “Chinese companies have built, expanded, or renovated at least 24 presidential or prime minister residences or offices; at least 26 parliaments or parliamentary offices; at least 32 military or police installations; and at least 19 ministries of foreign affairs buildings,” the report states.

That gives Beijing extraordinary access to gain insights into the most intimate workings of governments across Africa, and to the information that gives China clairvoyant-like powers to adjust its tactics to maximum advantage.

In conjunction with physical assets, China has also built 14 “intra-governmental telecommunication networks,” with Chinese-made systems such as those from Huawei. Meservey expects that those networks are all compromised in favor of China’s intelligence-gathering activities, giving the regime a significant advantage over not only its political and commercial competitors in Africa, but also over host-country officials who may themselves be liable for misdeeds.

The breadth and depth of intelligence coverage China has been able to achieve through its construction projects across Africa is a sign of the continent’s importance to Beijing’s geopolitical strategies, the report points out.

The Evidence

The suspicion that many of these facilities act as listening stations for Beijing is bolstered by two factors.

China has already been caught red-handed vacuuming up years of data from one of Africa’s most important public buildings. In 2018, first Le Monde and then the Financial Times ran stories exposing two systemic security breaches that China had hard-wired into the building it constructed and donated for the African Union’s headquarters in Addis Ababa, Ethiopia.

The first was the discovery that the AU’s servers, also a Chinese gift, were uploading data to servers in Shanghai, nightly from midnight to 2 a.m.

The other breach at the AU was more tactile. A physical inspection of the AU building uncovered listening devices throughout the building.

Aside from the AU case, which offers direct evidence of China’s ability, and, more importantly, its willingness to spy on and compromise a friend, a second factor adds compelling circumstantial evidence to the likelihood that China is spying on Africa through the medium of its building infrastructure there.

That evidence is found in China, where for decades, apartment compounds and hotels were built that exclusively housed foreigners. In most if not all of those facilities, listening equipment was deployed to monitor conversations and movements of residents and guests, according to multiple Chinese Communist Party and foreign business and diplomatic sources. Those compounds include groups of diplomatic apartment buildings in Beijing, as well as hotels operating under major Western European and American brand names.

Indeed, even foreign students in China are known to have found microphones in their dormitories.

The Ramifications

The high probability that China is using infrastructure that it builds in Africa to spy on political and business leaders and events should give the United States pause, the report suggests. If the capability to spy in Africa is being used, then it means that China “has better surveillance access to Africa” than any other nation operating on the continent, Meservey writes.

Using that access and the inside knowledge it provides gives China an advantage in competitive commercial negotiations.

It also tips Beijing about who in Africa can be influenced to make decisions favorable to China’s goals, and how to exert and recruit that influence.

But the scope of surveillance isn’t limited to Africans, the report points out. Anyone in a room built or equipped by China can be the subject of Beijing’s listening capabilities, including U.S. and other foreign officials.

In addition, activities that take place in those physical locations between a host country and any other foreign nation also become vulnerable to Chinese spying, compromising “diplomatic strategies, military counterterrorism operations, [and] joint military exercises.”

Which is why, Meservey advises, “the U.S. should try to complicate Beijing’s surveillance … as part of a strategic response to the CCP’s [Chinese Communist Party] effort to reshape the global order.”

Beijing’s Reaction

In his May 22 press conference, Zhao Lijian, spokesperson for China’s Foreign Ministry, called the Heritage report’s claims “ridiculous” and “based on nothing but lies, illusions, and ideological bias,” in response to China Daily’s request to comment on the report.

In addition, “African leaders publicly refuted such rumors on multiple occasions,” Zhao said.

The Heritage report anticipated that response.

“Expect little help—and perhaps even resistance—from some African states. Given how adroitly the CCP has built influence in Africa and the many examples of African countries fearing to defy Beijing, the U.S. should not expect these governments to offer much assistance in ameliorating America’s counterintelligence problem in Africa,” the author writes.

In fact, “some, if asked, or in an attempt to curry CCP favor, may even actively collaborate with Beijing to hinder American efforts to protect its interests on the continent.”

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Remembering The Biggest Empires In Human History

Remembering The Biggest Empires In Human History

Tyler Durden

Tue, 05/26/2020 – 02:45

In 1913, 412 million people lived under the control of the British Empire, 23 percent of the world’s population at that time.

It remains the largest empire in human history and at the peak of its power in 1920, it covered an astonishing 13.71 million square miles – that’s close to a quarter of the world’s land area. Statista’s Niall McCarthy notes that at its height, it was described as “the empire on which the sun never sets” but of course the sun finally did set on it.

Today, Britannia no longer rules the waves and its remnants consist of 17 small dependent and unincorporated territories scattered across the world such as the Falkland Islands and Gibraltar.

Infographic: The Biggest Empires In  Human History | Statista

You will find more infographics at Statista

The Mongol Empire existed during the 13th and 14th centuries and it is recognized as being the largest contiguous land empire in history. It of course originated in Mongolia and once stretched from Eastern Europe to the Sea of Japan, extending into the Indian subcontinent and the Middle East, covering 9.27 million square miles.

The Russian Empire comes third on the list with a peak land area of 8.8 million square miles.

The data for this infographic was published by website World Atlas.

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Italian Government Urges Unemployed To Become Social-Distancing Snitches

Italian Government Urges Unemployed To Become Social-Distancing Snitches

Tyler Durden

Tue, 05/26/2020 – 02:00

Authored by Steve Watson via Summit News,

The Italian government announced intentions Sunday to create an army of social distancing snitches, saying it will recruit 60,000 people to monitor their friends and neighbours’ activities and make sure they are adhering to social distancing policies.

Reports indicate that the government will reach out especially to the unemployed for the roles, in particular those who have applied for benefits recently.

It wants them to become “civic assistants”, who will report infractions on the use of face masks and other state ordered rules in the wake of the coronavirus lockdown.

The informants will not be given uniforms or badges, and will simply be embedded within the population, meaning anyone could be a government snitch.

It’s not unprecedented in Italy, given that Rome mayor Virginia Raggi has employed a website where Italians can inform on their neighbors if they see them breaking social distancing rules.

The announcement was made by the Minister for Regional Affairs and Autonomies Francesco Boccia and the Mayor of Bari (Puglia), Antonio Decaro, who serves as the President of the National Association of Italian Municipalities.

“We are gradually entering a new normal where there is a gradual recovery of productive activities and citizens are returning to populate cities day after day,” a statement reads.

Municipalities “will be able to take advantage of the contribution of ‘civic assistants’ to enforce all the measures put in place to counter and contain the spread of the virus, beginning with social distancing.” the statement adds.

“Now is the time to recruit all those citizens who want to help the country, demonstrating a great civic sense,” the statement concludes.

Social distancing snitches, reminiscent of party informants in Orwell’s 1984, have also been employed by authorities in other countries.

“The family had become in effect an extension of the Thought Police. It was a device by means of which everyone could be surrounded night and day by informers who knew him intimately.”

– George Orwell, 1984

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China Wants To Deploy Helicopter Drones Along Indian Border As Tensions Soar 

China Wants To Deploy Helicopter Drones Along Indian Border As Tensions Soar 

Tyler Durden

Tue, 05/26/2020 – 01:00

China’s first domestically built helicopter-drone made its maiden flight last week and could soon be deployed on the Sino-India border, reported Global Times

The AR500C unmanned helicopter, developed by the state-owned Aviation Industry Corporation of China (AVIC), is capable of conducting reconnaissance, communication relay, electronic disruption, and attack missions at heights above 15,000 feet. 

“The test flight of the AR500C came at a time when China-India border tensions have been flaring up, as Chinese border defense troops have bolstered border control measures,” the tabloid said. 

An AR500C was tested at an AVIC facility in Poyang, East China’s Jiangxi Province, in which it conducted several aerial maneuvers on Wednesday (May 20).

Chinese air defense expert Fu Qianshao told the tabloid that the helicopter drone does not need a traditional airstrip with long runways, allowing it to be easily deployed in more rugged areas: 

“The maiden flight of the AR500C marked a significant technological breakthrough in fields such as rotor and engine design,” Fu said, adding that, “thin air on plateaus usually makes it difficult for aircraft to fly.”

Global Times specifically notes the arrival of AR500C comes as tensions flare-up on the China-India border. Both sides have been massing troops and remain locked in stand-off positions at several points: 

India and China are preparing for more turbulence on the border. Several weeks ago, dozens of Indian and Chinese soldiers were injured in a cross-border clash involving fistfights and stone-throwing at a remote but strategically important mountain pass near Tibet. 

The violent clash is the first between the two countries since 2017, and it seems border disputes between the nuclear-armed neighbors are not going away anytime soon. 

* * * 

RT News is reporting Sunday that 800 to 1,000 Chinese troops have crossed into India — certainly, a move that will escalate tensions between both countries. 

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