Tag: finance

In the fast escalating tit-for-tat Washington blitz on China, the Trump administration Friday announced sanctions on top Chinese Communist officials which bar them and even their family members from entering the United States.

It’s a severe punitive move for Beijing’s recent crackdown on Hong Kong’s autonomy. Secretary of State Mike Pompeo in announcing the measure – a major shot across the bow no doubt – as part of “carrying out the President’s orders” further consistent with a congressional law. 

The new visa restriction measures will apply to current and former top Chinese Communist Party officials “who are believed to be responsible for, or complicit in, undermining Hong Kong’s high degree of autonomy.”

“The United States calls on China to honor its commitments and obligations in the Sino-British Joint Declaration – namely that Hong Kong will ‘enjoy a high degree of autonomy’ and that human rights and fundamental freedoms, including the freedoms of expression and peaceful assembly, will be protected by law and respected by governing authorities in Hong Kong,” Pompeo’s statement said.

Congress last year passed the Hong Kong Human Rights and Democracy Act, requiring the administration to review whether mainland China was respecting and upholding Hong Kong sovereignty, and if not, impose sanctions. 

Earlier Chinese officials warned of “red lines” if the White House carries through with its promised punitive measures. 

President @realDonaldTrump promised to punish the CCP officials responsible for eviscerating Hong Kong’s freedoms. Today, we are taking action to do just that– we’ve announced visa restrictions on CCP officials responsible for undermining Hong Kong’s autonomy and human rights.

— Secretary Pompeo (@SecPompeo) June 26, 2020

As we reported earlier, the US bill imposing mandatory sanctions on Chinese individuals and entities who “materially contribute to the contravention of China’s obligations” to Hong Kong’s autonomy – and banks that do “significant transactions” with them – was passed unanimously by the Senate on Thursday, with the House of Representatives working on its own version; the final bill gets passed to President Trump, who either signs it or vetoes it – in which case it has a veto-proof majority anyway. This, as Rabobank’s Michael Every wrote, is the constitutional dynamic that has been described several times in the last 12 months for China-focused bills with serious consequences for not just international relations, but international business and finance.

“So far the results have not hit markets: but this bill cuts out the middleman and takes us straight to the biting sanctions”, Every concluded.

But while we await the sanctions to kick in, moments ago we learned once again that China is hardly impressed by the latest developments, and in “quietly delivering a message” to Washington, Chinese leaders have “accused Washington of meddling in areas such as Hong Kong, where China is imposing a sweeping national-security law, and Taiwan.”

According to a report in the journal, during a meeting between Mike Pompeo and China’s top diplomat last week in Hawaii, Yang Jiechi listed these actions as well as China’s “strong dissatisfaction” with a bill President Trump signed last week mandating sanctions against Chinese officials and entities deemed responsible for mass detention of Uighur Muslim in China’s northwestern Xinjiang region.

While Yang reiterated Beijing’s commitment to carrying out the trade deal, he stressed that both sides had to “work together,” said people familiar with the conversations. A Chinese official said that meant “the U.S. side should refrain from going too far with meddling” and that “Red lines shouldn’t be crossed.”

The report then notes that shortly after the meeting concluded, Vice Premier Liu He said that Beijing’s ability to carry out the trade deal required the U.S. to “ease off” pressure on other fronts.

“The two countries should create conditions and atmosphere, and eliminate interference, to jointly implement the Phase One agreement,” Liu said in written remarks to a high-profile financial forum held in Shanghai on June 18.

“You can’t keep asking us to buy your stuff and at the same time keep beating up on us,” said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry. “That’s not how it works.”

In short, while Peter Navarro may have fumbled his message earlier this week when he said that the trade deal was off, only to immediately reverse himself when futures plunged and even Trump scrambled to tweet that the deal is still in place, the ball is now in Beijing’s court which – in order to project strength following the just passed sanctions – may decide that it is in Beijing’s best interest to kill the Phase 1 trade deal (especially if that helps get the pro-China Biden elected). And after all, it’s not like China is actually complying with the terms of the deal -as we noted last week, China is currently lagging its import pledges made as part of the “Phase One” deal by some 87%.

Weekly average air freight prices on major global routes have plunged, signaling the demand-driven boom for personal protective equipment (PPE), which started in late February, has peaked and is now over. 

As Reuters notes, declining Air freight prices could be a significant headwind to “carriers that are scrambling to move cargo to offset weak passenger revenues as they rebuild networks by flying reopened routes with half-empty cabins.” 

Phil Seymour, president of aviation consulting firm IBA, said, “rates are coming down” as the market is “becoming flooded with belly freight capacity.”

Collapsing travel demand and global flight restrictions squeezed carriers at a time PPE demand was surging, leading some airlines to convert passenger jets into temporary cargo aircraft.  

Global Air freight capacity declined 27% in the week starting May 31 compared with a year ago, according to Accenture data. The data showed passenger capacity was slowly rising as flight routes return.

This year, air freight will contribute about 26% of airline industry revenue, up from 12% in 2019. 

David Goldberg, chief executive of DHL Global Forwarding USA, said, “PPE via air freight has drastically slowed down in the last couple of couple weeks, and it’s probably because the second round can afford to go ocean freight.” 

“We’ve seen more rationalization of the air freight rates. They’re still at high levels,” said Goldberg. 

Global air freight (weekly) cargo prices via TAC Index for major routes 

Air freight prices for Hong Kong to Europe and Hong Kong to North America peaked mid-May, and have plunged in the first half of June. 

Air freight prices for Frankfurt to North America remain elevated, while Frankfurt to South East Asia have round-tripped pre-corona prices.

Air freight prices for Shanghai to Europe have quickly faded. 

Air freight prices across the world’s top routes have all faded into June. 

Year to date price performance for top routes is still elevated. 

While soaring demand for air freight was seen around March 20 when world stocks bottomed – and it was at that time the revival narrative of the global economy went into full swing – the slump in air freight prices could suggest the global recovery is starting to fade. 

The air freight industry might be in luck, BMO Capital Markets has recently suggested the second coronavirus wave has arrived, which could result in increased demand for PPE via air cargo. 

Authored by Michael Snyder via TheMostImportantNews.com,

We were supposed to be well into a “recovery” by now, but instead more bad economic news just keeps pouring in.  In fact, the numbers that I am going to share with you in this article are absolutely eye-popping.  Initially, many of the economic optimists had been trying to convince us that we would experience a “short, sharp recession” followed by a “V-shaped recovery”.  Well, at this point it has become quite clear that we can forget all about that scenario.  The mainstream media is increasingly starting to use the word “depression” to describe what is happening to the U.S. economy, and the raw numbers definitely support the use of that label. 

For example, the Atlanta Fed’s GDPNow model is now projecting that U.S. GDP will decline by 46.6 percent on an annualized basis during the second quarter of 2020…

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -46.6 percent on June 25, down from -45.5 percent on June 17. After this week’s data releases from the U.S. Census Bureau, the U.S. Bureau of Economic Analysis, and the National Association of Realtors, a decrease in the nowcast of second-quarter real residential investment growth from -25.9 percent to -35.9 percent was offset by an increase in the nowcast of real business fixed investment growth from -31.1 percent to -28.2 percent, while the nowcast of the contribution of the change in net exports to second-quarter real GDP growth decreased from 0.30 percentage points to -1.27 percentage points.

If that figure is anywhere close to accurate, this quarter will be remembered as the most disastrous economic quarter that we have ever seen in all of U.S. history up to the point.

Meanwhile, the number of Americans filing new claims for unemployment benefits each week continues to surprise most analysts…

Jobless claims totaled 1.48 million last week as unemployment related to the coronavirus pandemic remained stubbornly high, though those receiving benefits fell below 20 million for the first time in two months, the government reported Thursday.

Economists surveyed by Dow Jones had been expecting 1.35 million claims.

As I keep reminding my readers, the all-time record for a single week prior to this year was just 695,000, and that record had stood since 1982.

But now we have more than doubled that old record for 14 weeks in a row.

Just think about that.  After laying off tens of millions of workers, you would think that companies would be running out of people to fire, but we continue to see vast hordes of Americans file new claims for unemployment benefits each week.

Overall, more than 47 million Americans have now filed a claim for unemployment benefits since this pandemic began.

If this isn’t an “economic depression”, then how bad would things have to get for us to be in one?

Of course Congress certainly didn’t help matters by giving out such generous unemployment bonuses.  Millions of unemployed workers are now bringing home more money than they did while they were actually working, and this is discouraging many from returning to work.

But that will change very abruptly in just a few weeks…

Many out-of-work Americans counting on receiving an extra $600 a week through the end of July may be surprised to discover that benefit will disappear nearly a week earlier than they expected.

The additional $600 in weekly jobless benefits provided by the federal government is officially set to end July 31. But states will pay it only through the week ending July 25 or July 26, a significant blow to unemployed workers counting on that money to bolster state benefits that average just $370 a week.

Starting around the beginning of August, all of a sudden a whole lot of people will be very interested in finding new jobs, but there won’t be many jobs available.

Thousands upon thousands of businesses have already shut down permanently, and more are closing their doors with each passing day.

This new economic downturn has been particularly brutal for small businesses.  Just consider the following numbers from the Wall Street Journal…

Roughly 140,000 Yelp-listed businesses that had closed since March 1 remained closed on June 15. A large minority of that set, 41%, has shut for good, according to Yelp.

The figures have improved by about 20% compared with April data, when 175,000 businesses were closed. But the large share of persistent closures, which were spread nationwide, showed the pandemic’s stubborn hindrance to life as normal even as all 50 states have taken steps to reopen.

This isn’t what a “recovery” looks like.

And it isn’t just the private sector that will be shedding jobs like crazy in the months ahead.  As tax revenues collapse, state and local governments all over the nation will be forced to let workers go.  In fact, it is being projected that more than 5 million of them will be laid off…

Right now, sales taxes, real-estate-transfer taxes, income taxes, fines and fees—they are all collapsing, leaving local governments with a budget gap expected to total $1 trillion next year. Without help from Washington, this will necessarily mean massive service cuts and job losses: namely, an estimated 5.3 million job losses.

Those are not jobs that have already been lost.

Those are future job losses that haven’t shown up in the numbers yet.

And those job losses will be particularly painful, because government jobs tend to pay higher than average wages and they tend to come with better than average benefits.

As the job loss tsunami continues to roll on, the number of Americans forced to move back home with their parents or grandparents will continue to soar.  Of course what we have been witnessing already is deeply alarming…

A record 32 million American adults were living with their parents or grandparents in April, according to the latest American Community Survey from the U.S. Census Bureau, an increase of 9.7 percent over a year ago. The data, analyzed by Zillow researchers, showed that 2.7 million adults moved back home in March and April, and that about 2.2 million of them were aged 18 to 25 — also known as Generation Z.

One domino after another is tumbling, and obviously economic conditions are not going to return to the way they were previously.

But this wasn’t supposed to happen.

Once the coronavirus lockdowns ended, we were told that the U.S. economy was supposed to snap back very rapidly.

Unfortunately, the truth is that our economic pain is just beginning.  We have entered an extended economic downturn, and our society is not equipped to handle such a downturn at all.

As I have warned so many times, what we are facing is going to make the last recession look like a Sunday picnic, but most Americans continue to hold out hope that some sort of a “recovery” is still on the horizon.

In the task force’s first public briefing since suspending its daily acrimonious press briefings, VP Pence is leading a team that, without President Trump (though he did just cancel a weekend trip to NJ) is expected to discuss the recent upsurge in cases, and a new potential strategy leaked to the press called “pool testing”. We have more on that here.

Watch live below:

The growing number of companies that are pausing ads on Facebook in response to the social media giant’s handling of hate speech and violence is starting to have a notable effect on the company’s share price.

Today’s addition is perhaps a straw to break the camel’s back as consumer-good giant Unilever joins Verizon as two major companies pausing ads on the social network in a grand virtue-signaling show.

“Based on the current polarization and the election that we are having in the U.S., there needs to be much more enforcement in the area of hate speech,” said Luis Di Como, Unilever’s executive vice president of global media, in an interview.

“Continuing to advertise on these platforms at this time would not add value to people and society,” the company said in a statement. Its Facebook ban also will cover Instagram.

Mr. Di Como said Unilever would like to see a reduction in the level of hate speech on the platforms and wants independent companies to measure and confirm that progress has been made. As Fortune reports, the movement was launched last week by advocacy groups including the Anti-Defamation League, the National Association for the Advancement of Colored People, and Common Sense Media.

They asked businesses to pause their advertising on Facebook in July to send a “powerful message”:

“Your profits will never be worth promoting hate, bigotry, racism, antisemitism, and violence.”

So far, more than 10 companies, including REI, Patagonia, North Face, Eddie Bauer, Verizon, Upwork, and Unilever’s Ben & Jerry’s, have joined the campaign.

“Facebook, Inc. must take the clear and unequivocal actions to stop its platform from being used to spread and amplify racism and hate,” Ben & Jerry’s tweeted on Tuesday after joining.

Analysts have claimed this virtue-signaling is a nothingburger from a financial perspective

“It’s not going to do anything to the company, financially,” said Brent Thill, an analyst at investment banking firm Jefferies.

“You have 8 million advertisers. If a handful leave, there’s a short-term air pocket, but it’s minor.”

But, Facebook shares are down over 6% on the headline:

The avalanche has started now and remember “silence is violence” is the new normal, so if you’re a CEO who advertises on Facebook, how do you not boycott now?

And finally, one can’t help but wonder whether these companies are using the riots as an excuse to cut marketing budgets at a time when that action would not be taken as symbolic of a problem for the company.

DraftKings Inc. filed several Form 4s with the Securities and Exchange Commission this week regarding insider selling by the president of the company, Paul Liberman, and others. 

Insider Transactions 

It turns out, as more than 100,000 Robinhood daytraders panic bought DraftKings since its Nasdaq debut in April, soaring 237% in months – Liberman and other insiders dumped a whopping $596 million worth of shares.

Robinhood Track 

On the pump, Liberman sold $31 million worth of stock, with about $15 million left. CEO Jason Robin sold $70 million worth of stock, while director Hany Nada liquidated $37 million. 

Clearly, by now, readers should understand the parabolic rise in DraftKings’ shares was nothing more than a spectacular pump – as what comes next is likely the dump. 

But wait, there are more insiders dumping stock: Director Steven Joseph Murray sold $40 million worth of shares, while directors Shalom Meckenzie and John Salter sold collectively around $125 million. 

Howard Lindzon, the co-founder of StockTwits, recently noted the meteoric rise in DraftKings share price happened at a time when most sporting events were canceled because of the virus pandemic:

 “The chart of the day is Draft Kings, which has quadrupled to $12 billion now since it reverses merged into a shell and then changed ticker to $DKNG…unbelievable outcome considering the long regulated road and the fact that NO SPORTS !? Face with tears of joy.”

What goes up must come down: Robinhood traders will soon learn a painful lesson on gravity. 

Authored by Patrick Buchanan via Buchanan.org,

Some polls now have Joe Biden running ahead of Donald Trump by 10 points and sweeping the battleground states of Michigan, Wisconsin and Pennsylvania. This vindicates the strategy Biden’s advisers have adopted:

Confine Joe to his basement, no press conferences. Trot him out to recite carefully scripted messages for the cameras. Then lead him back to his stall.

This enables Biden to avoid the blazing questions that are dividing not only Democrats and Republicans but liberals and leftists. And most of these issues touch on the explosive subject of race.

Consider. California’s legislature just voted to put to a statewide ballot in November a return to the racial preferences that were banned as discriminatory in a statewide referendum, 25 years ago.

The proposal would reverse the 1995 constitutional amendment, approved by 55% of voters, which outlawed “preferential treatment” based on “race, sex, color, ethnicity, or national origin.”

If the measure carries, California returns to a racial spoils system.

Race preferences are being pushed because they are needed to bring about greater representation of Blacks and Hispanics in the student bodies of elite schools of the state university system like UCLA and the University of California, Berkeley.

Asian students are today “overrepresented” in these prestigious schools, because of their superior test scores.

Where does Biden stand on anti-Asian discrimination?

Earlier this June, the California Assembly voted to establish a task force to make recommendations for reparations for slavery.

Now, California did not enter the Union until 1850, and slavery was outlawed in the state constitution, though several thousand slaves were brought there during the 1849 Gold Rush.

Where does Biden stand on reparations for slavery?

Many of the recent protests in the wake of George Floyd’s death have involved the desecration and destruction of monuments.

What does Biden think about tearing down statues of Christopher Columbus and Robert E. Lee? Where does Biden stand on destroying statues of Presidents Washington, Jefferson, Andrew Jackson, Lincoln, Grant and Theodore Roosevelt?

What did Biden think of the removal of the statue of Caesar Rodney, Delaware statesman and slave owner, who, despite a grave illness, rode to Philadelphia to sign Jefferson’s Declaration of Independence and cast his lot with the American Revolution?

Understandably, Biden would prefer not having to choose between Caesar Rodney and BLM.

Black men are arrested and incarcerated more often than whites because of the systemic racism of law enforcement officials, we are told.

Does Biden believe white cops are congenital racists?

In the great cities where the killing of Black men is today all too common, the regimes that have ruled them for decades have been almost wholly Democratic.

Does Biden believe there is systemic racism in the ruling circles of all these Democratic-run cities?

Over the last month, there has been an explosion of shootings and killings. In Chicago, over Memorial Day, 84 people were shot, 24 mortally.

Last weekend in Chicago, 106 people were shot and 14 killed. New York City is experiencing the worst shooting violence in a quarter century.

Is there systemic racism in the police departments of our great cities? Again, who has been running those cities, if not Democrats?

Is there inequality in wealth between Black and white America because of systemic racism? If so, why did that inequality persist through two terms of our first Black president, with Biden as his VP?

Does Biden believe, with Elizabeth Warren, in wealth taxes on the rich and wealth transfers to close the Black-white wealth gap?

Is there systemic racism in American media?

Our dominant media institutions include The Washington Post, New York Times, ABC, CBS and NBC. All are controlled by liberals.

Is there systemic racism in our great universities and colleges? Yet, Harvard, Yale, Princeton, Columbia, and the rest of the Ivy League have long been run by an entrenched liberal elite.

Is our huge federal workforce permeated by racism?

Though African Americans are 13% of the U.S. population, they occupy 18% of all federal jobs.

Is there systemic racism in our public schools? Who controls the teachers unions? Who fills almost all of the teaching positions?

Is there systemic racism in California? If so, who is at fault? The governor, both senators, both houses of the legislature, all statewide offices, and 46 of 53 U.S. House seats in California are held by Democrats.

If Biden emerges, then he will have to answer why all these institutions where his party and people are predominant — the media, Hollywood, the academic community, public schools, big-city governments, the big foundations, the federal bureaucracy — are apparently shot through with systemic racism after decades of Democratic dominance.

And, more precisely, what he intends to do about it.

Perhaps it’s better to shelter in place in the basement.

Amid Mexico’s spiraling cartel and drug war violence, and the police and military’s uphill battle to get a handle on surging crime especially in sprawling urban poor neighborhoods, a brazen and shocking assassination attempt has targeted Mexico’s City’s chief of police on Friday.

Mexico City’s public security chief, Omar Garcia Harfuch, survived the attack and his now considered “out of danger” according to Mexico City Mayor Claudia Sheinbaum. The top cop was wounded and is in the hospital, while at least two of his police bodyguards were killed.

Though details remain sparse, the attack appears to have been a major public street shootout scenario, akin to much of the cartel violence Mexican towns have been prone to, given the mayor also said an “undetermined number of people were killed” in the morning shootout.

“The police say that gunmen armed with .50 caliber sniper rifles and grenades exchanged fire with the chief’s security detail,” AP reports. A woman who happened to be driving by was also shot and killed.

Local media says the attack occurred at around 6:30am, shocking the wealthy neighborhood district of Lomas de Chapultepec. Interestingly, such a violent scene is said to be extremely rare in the that part of the city. Gunshots were reportedly heard ringing out for several minutes as the streets erupted in chaos.

It’s as yet unclear who the assassins or perpetrators were, however, Reuters described based on local officials that arrests have been made: 

Separately, Ernestina Godoy, attorney general of Mexico City, said 12 people had been arrested.

Speaking at a regular government news conference, President Andres Manuel Lopez Obrador attributed the outbreak of violence to the work of local officials to establish order in the city.

Residents said heavy gunfire rang out for several minutes during the attack in Lomas de Chapultepec, which is home to many wealthy residents and the location of ambassadorial residences.

Aftermath and massive police presence at the upscale Lomas de Chapultepec district:

And further police are now blaming a powerful cartel: 

Mexico City police chief Omar Garcia Harfuch blamed the powerful Jalisco New Generation Cartel (CJNG) for attempting to assassinate him early on Friday when he was shot and injured in an attack in a wealthy part of the capital.

“This morning we suffered a cowardly attack by the CJNG, two colleagues and friends of mine lost their lives,” Garcia said in a post on Twitter.

Some local reports described that high-power weapons used in the assault, including 50 caliber machine guns, account for the high casualty toll, including among innocent passersby.

Typically such scenes have only play out in poorer neighborhoods. 

It’s perhaps a sign that organized crime elements are becoming more daring in targeting high level law enforcement authorities that they would go after the country’s most visible city police chief and in broad daylight in an upscale neighborhood.

The US bill imposing mandatory sanctions on Chinese individuals and entities who “materially contribute to the contravention of China’s obligations” to Hong Kong’s autonomy – and banks that do “significant transactions” with them – was passed unanimously by the Senate on Thursday, with the House of Representatives working on its own version; the final bill gets passed to President Trump, who either signs it or vetoes it – in which case it has a veto-proof majority anyway. This, as Rabobank’s Michael Every wrote, is the constitutional dynamic that has been described several times in the last 12 months for China-focused bills with serious consequences for not just international relations, but international business and finance.

“So far the results have not hit markets: but this bill cuts out the middleman and takes us straight to the biting sanctions”, Every concluded.

But while we await the sanctions to kick in, moments ago we learned once again that China is hardly impressed by the latest developments, and in “quietly delivering a message” to Washington, Chinese leaders have “accused Washington of meddling in areas such as Hong Kong, where China is imposing a sweeping national-security law, and Taiwan.”

According to a report in the journal, during a meeting between Mike Pompeo and China’s top diplomat last week in Hawaii, Yang Jiechi listed these actions as well as China’s “strong dissatisfaction” with a bill President Trump signed last week mandating sanctions against Chinese officials and entities deemed responsible for mass detention of Uighur Muslim in China’s northwestern Xinjiang region.

While Yang reiterated Beijing’s commitment to carrying out the trade deal, he stressed that both sides had to “work together,” said people familiar with the conversations. A Chinese official said that meant “the U.S. side should refrain from going too far with meddling” and that “Red lines shouldn’t be crossed.”

The report then notes that shortly after the meeting concluded, Vice Premier Liu He said that Beijing’s ability to carry out the trade deal required the U.S. to “ease off” pressure on other fronts.

“The two countries should create conditions and atmosphere, and eliminate interference, to jointly implement the Phase One agreement,” Liu said in written remarks to a high-profile financial forum held in Shanghai on June 18.

“You can’t keep asking us to buy your stuff and at the same time keep beating up on us,” said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry. “That’s not how it works.”

In short, while Peter Navarro may have fumbled his message earlier this week when he said that the trade deal was off, only to immediately reverse himself when futures plunged and even Trump scrambled to tweet that the deal is still in place, the ball is now in Beijing’s court which – in order to project strength following the just passed sanctions – may decide that it is in Beijing’s best interest to kill the Phase 1 trade deal (especially if that helps get the pro-China Biden elected). And after all, it’s not like China is actually complying with the terms of the deal -as we noted last week, China is currently lagging its import pledges made as part of the “Phase One” deal by some 87%.

And with China’s economy on edge, it is virtually impossible that Beijing will force more companies to uproot existing supply chains and shift to US-sourced production just to appease a US president who is seen by a majority of China’s population as taking an increasingly aggressive stance toward China.

While the news helped push US stocks to session lows, the yuan was mostly unchanged, perhaps because China remains on holiday.