Tag: finance

Summary:

• US reports 30k new cases
• India now 4th largest outbreak with ~400k cases
• India reports another record jump
• Florida reports 3rd straight record jump
• Russia reports fewer than 8k new cases
• South Korea reports 67 new cases, largest jump since May
• China reports just 27 new cases

* * *

For the first time since May 1, the US reported more than 30,000 coronavirus cases in a single day as Texas, Florida, Arizona and a handful of other states reported their latest record totals for the 2nd or 3rd day in a row, for some cases. While NY, NJ and a handful of surrounding states see cases continue to decline to negligible levels, following a pattern seen in Europe, roughly 20 states have seen numbers continue to rise, and about half of those are seeing new cases hit record levels well above where they were during the US’s ‘peak’ back in April.

Even stocks are beginning to notice as the market sold off last week in recognition of the fact that even if states don’t go the shutdown route, as the White House has insisted won’t happen, the spike in infections, and the inevitable jump in deaths to follow, will ensure that the V-shaped recovery doesn’t happen.

The US tallied 31,630 new confirmed cases on Friday, according to data from the Washington Post. The last time new daily cases in the United States topped 30,000 was on May 1, when 33,263 new infections were reported. That was right as the US ‘peak’ was beginning to pass. Around the world, 177k new cases were reported yesterday. Ironically, the number of new cases reported in the city of Tulsa hit a new high on Friday, one day before Trump’s big campaign rally.

Thanks to the flurry of red states like Arizona, Florida, Texas etc. that lowered their guard too quickly, the US just can’t seem to bend that curve.

More than 2.1 million cases of the virus have been confirmed across the US as of Saturday morning. With 119,158 confirmed deaths, the US is on the cusp of passing 120k fatalities, while closely watched projections suggest that number could hit 200k by October.

As Brazil passed the 1 million-case mark, a major milestone in what has become Latin America’s biggest and most threatening outbreak, the WHO’s Dr. Tedros warned yesterday that the pandemic “was accelerating”.

In other US news, Florida on Saturday reported yet another record jump in new cases, its third in a row and fourth in the last 8 days. Florida health officials reported 4,049 new cases as well as 40 deaths across the state. Saturday’s numbers bring the total number of cases in the state to 93,797 and the death toll to 3,144.

ANOTHER RECORD: #COVID19 update from @HealthyFla this morning reports 4,049 new positive cases of #coronavirus in #Florida. Total # of cases now at 93,797

CONTEXT: Started off the week reporting over 2,000 cases… Experts expect us to see 6,000 a day in just 2 weeks @10TampaBay pic.twitter.com/0E7E5ixfAG

— Angelina Salcedo (@AngelinaWTSP) June 20, 2020

US State Department said Saturday that COVID-19 infections have been reported at its embassy in the Afghan capital and the staff who are affected include diplomats, contractors and locally employed staff.

It didn’t say how many were impacted, though another source told AJ that as many as 20 could be impacted.

“The embassy is implementing all appropriate measures to mitigate the spread of COVID-19,” the US State department said. The infected staff are in isolation in the embassy while the remainder on the compound are being tested, said the embassy official, who also said the embassy staff have been told they can expect tighter isolation orders.

Russia reported 7,889 new cases of the virus, pushing its nationwide tally to 576,952 since the crisis began. The national coronavirus response center said 161 people had died in the last 24 hours, bringing the official death toll to 8,002.

India, meanwhile, recorded its highest single-day jump yet with 14,516, bringing its total to 395,048, according to health officials. Another 375 deaths brought the death toll to 12,948 as India registered over 10,000 cases for the ninth day in a row. This latest batch of cases put India over the top on Saturday, making it the world’s fourth largest outbreak behind the US, Brazil and Russia. Several countries and Hong Kong continued with plans to evacuate their citizens from India, amid concerns hospitals in major cities such as Delhi and Mumbai may be overwhelmed.

In its biggest daily increase in weeks, South Korea reported 67 new cases of coronavirus, 16 of which health authorities said were from Pakistan. And as Beijing continues to bring its latest flare up under control, China reported 27 new coronavirus cases in the last 24 hours, including 22 new cases in Beijing.

Authored by Bruce Wilds via Advancing Time blog,

The Federal Reserve continues to destroy true price discovery in this market by executing short squeeze after short squeeze. Moral hazard be damned, the Fed’s desire to support the market has overruled common sense. We have seen this time after time with well-timed announcements being made simply to fire up bullish enthusiasm and spark a rally. We recently observed this when a Fed announcement resulted in a dramatic intraday reversal causing the S&P500 to surge more than 100 points from session lows and closing above its 200-day moving average.

Fed’s Action Obliterates True Price Discovery

This time it was because the Fed announced it would start to buy corporate bonds the next day. A late Bloomberg report that Trump was seeking a $1 trillion infrastructure proposal to stimulate the economy also added fuel to the fire. Trump’s proposal focused on 5G and rural broadband. The report added it was still under discussion and would need the backing of Congress to move forward. Still, this is an indication the false economy continues to ramp up. Government stimulus has been a key feature of the global equities rally even as unemployment has soared and signs that a second wave of the virus has started to emerge.

Until now, the size and pace of Fed balance sheet expansion have put a floor under global equity markets and driven equities higher. Yet Powell is going out of his way to signal that more economic support is on the way. The problem with market manipulation is that once it starts, where does it end? This is an area of moral hazard that once breached is difficult to turn back. Another issue is that the Fed is not alone in playing this game, the Trump administration also has invested a great deal in keeping markets moving higher. In recent years we have witnessed more central banks and government intervention in markets. This supports the argument that true price discovery has been massively distorted.

The BOJ Buying ETFs Is Distorting Markets

In many ways, government entities investing in or buying stock, are transferring part of industry or commerce from the private-sector to state ownership or control. While the state may not choose to exercise control over various decisions a company makes the entity that owns the stocks can control perceived valuations by being the market maker that sets prices. True price discovery and properly pricing assets are the bedrock of free markets. The feedback loops between asset prices and input signals are critical in determining value, this is especially true when we focus on assets such as stocks, bonds, currencies, or paper promises that carry no utility value and can perform no useful task.

The Federal Reserve was intended to act as the “lender of last resort” but as Nomi Prins says, “As if the Fed hasn’t done enough to destroy honest markets, now it plans to start buying individual corporate bonds. It’s just another step closer to the Fed deciding the winners and losers in the market.” This has forced even the most bearish of us to finally concede that, for whatever reason you want to claim, the Fed under the leadership of its Chairman J. Powell has crossed the Rubicon and the point of no return. 

Crossing the Rubicon means the point of no return. This high-level idiom comes from an event in ancient Roman history. In 49 BC Julius Caesar’s army crossed the Rubicon River, this was forbidden. It was an event from which he knew  there is no way back. When Julius Caesar crossed the Rubicon, he started a five-year Roman civil war. At the war’s end, Julius Caesar was declared dictator for life. Putting the Fed’s recent actions into context and what it means for investors, the miserable policies adopted by the Fed, which has allowed other central banks to do the same, has created a new environment redefining risk and value. This highlights the fact there is nothing normal about what is happening, this is far from normal.

Savers, investors, and a new wave of speculators as a result of Central banks expanding balance sheets while reducing interest rates are now embracing any investment that promises yield. This combined with rising government spending has disaster written all over it, not just in America but across the globe. This and a slew of other horrible moves have created a bubble in bond and equities. Only the claim that no inflation exists and this is the only way to halt deflation allows this reckless policy to continue, however, when people realize the fallacy of this assertion it will be to late too stop the economic and financial carnage it will create.

The Shrinking Private Sector

Unfortunately, the money flowing from the Government-Financial complex is not reaching the parts of the economy where it is most needed. For a small business, the economy remains a disaster. Investors should remember the true unemployment picture has yet to reveal itself. As the government grew larger it seems to have become oblivious to the importance and fragility of many small businesses or how much it cost a community when they close. Small business has been the big loser over the last several months and hundreds of thousands will soon have to close.  With so many tenants looking at foregoing rent small landlords that don’t have deep pockets also face huge problems.

The idea we are about to experience a “V-shaped recovery” is rubbish. Many people are afraid to fly, travel, or eat out at a restaurant. The government’s solution to give the masses just enough to silence their outrage is a bizarre extension of crony capitalism. It feeds large businesses with access to cheap capital are the winners and the big losers are the middle-class, small businesses, and social mobility. All those people that want a higher minimum wage can forget that ever happening as tens of millions remain out of work. It is difficult to argue true price discovery exists and risk is not being discounted when prices fail to reflect unemployment at around 20% and ignore news of a sharp escalation in Korean tensions or the deadly clashes between Indian and Chinese border troops.

Bubbles always pop, this time is not different. Exacerbating the current situation, many of those invested in paper promises have become over-leveraged putting themselves at great risk if a sudden decline in the value of these assets occurs. The disconnect that has taken place between Wall Street and the economy is not logical. We are in uncharted waters and should consider the possibility the destruction of true price discovery will only add to the demise of fiat currencies across the world. I contend this will fuel the desire of people to once again hold tangible assets rather than trusting the promises now being made. To say things are messed up is an understatement.

Clearly we’ve reached the level of an advancing tit-for-tat ‘intercept war’ over waters near Alaska as well as off Russia’s far east, now that we’re now approaching a dozen intercept incidents (8 off Alaska alone) in the remote region this year alone.

This week’s tensions began Tuesday night when NORAD F-22 Raptors were scrambled in order to chase off a pair of long-range Tu-95 nuclear-capable bombers along with their Russian fighter jet escorts, which came within about 30 miles of US territory. 

And now on Friday, Russia has announced its armed forces answered the prior US intercept with its own aerial intervention against two US Air Force B-52H bombers flying over the Sea of Okhotsk off Russia’s coast, according to a defense ministry statement.

“On June 19, 2020, the air defense quick reaction alert forces of the Eastern Military District spotted and started tracking a pair of US Air Force B-52H bombers over the Sea of Okhotsk,” Russia’s defense ministry said.

Multiple reports say, however, that the incident occurred Thursday night. The US aircraft stayed over neutral waters the whole time while moving near Russian territory.

The Sea of Okhotsk is the northwestern section of the Pacific Ocean off Russia’s eastern coast, surrounded on three sides by Russian coastline, with Japanese islands to the south – and next to the Bering Sea which separates North America from the vast land mass of the Russian Federation.

Russia’s military published cockpit video of the US-52 mission while making the intercept:

“At a considerable distance from the state border of the Russian Federation, the US Air Force planes were continuously tracked by Russian monitoring capabilities,” the MoD statement added. “Su-30, Su-35 and MiG-31 fighters from the air defense quick reaction alert forces of the Eastern Military District were scrambled to intercept the targets.”

Like with the Bering Sea area incident from earlier in the week, Russia released cockpit video of a Russian fighter tracking one of the US bombers off Russia’s coast. 

Significantly, this particular US bomber route is said to be a “first”. The Drive reports:

This the first time B-52Hs have flown into this body water, which is surrounded on three sides by Russian territory and where American combat aircraft typically have not ventured in the past, in recent memory. This flight also comes nearly a month after a B-1B conducted a long-range training mission along a similar route as part of the implementation of a new concept of operations for U.S. heavy bomber sorties earlier this year.

The tense encounters are becoming more frequent of late, not only over the Bering Sea, but over the Mediterranean, Baltic, and Black Sea regions as well.

Authored by Scott Galloway via ProfGalloway.com,

Addiction is the inability to stop consuming a chemical or pursuing an activity although it’s causing harm.

I engage with almost every substance or behavior associated with addiction: alcohol, drugs, coffee, porn, sex, gambling, work, spending, devices, and social media. I’ve abused all of them, but don’t think I’m addicted. On a balanced scorecard, these substances and behaviors, abuse and all, have been a net positive in my life, even @twitter.

Most disease and hardship for our species has been a function of scarcity — too little salt, sugar, fat, approval, safety, opportunities to mate. As a result, when we find these things, our brain produces the ultimate reward, the pleasure hormone dopamine. And it makes sense. Nature rewards behaviors that ensure the propagation of the species.

The assembly line, processing power, and Amazon Prime have not only met the minimum thresholds for survival but created a new threat to our species: superabundance. Diabetes, income inequality, and fake news — all are a function of our belief that more is better. Jeff Bezos capturing and hoarding the GDP of Norway doesn’t make sense for the species, but his instincts (fear of starvation, wielding power) reign supreme.

Survival, propagation, and consumption should result in a next generation that’s smarter, faster, and stronger. Where things have come off the rails is a function of our innovation economy moving faster than our instincts. Historically, humans have engaged in activities that have natural stopping cues — the end of a chapter, the end credits. Platforms like Facebook, Instagram, and Netflix have systematically eradicated stopping cues. Even casinos are deliberately laid out without hard angles, so it’s all one continuous space and you keep moving through it, on to the next game.

Technological progress lapping the calibration of our instincts culminates in endless scroll. We’re unable to find the off switch. Unlike our parents and grandparents, for us dopamine release no longer depends on sacrifice, engagement, or grit, but on sitting still, as in 15, 14, 13 seconds episode 5 of Killing Eve will begin. There are more filtered photos, more porn, more equities, more margin, more dopa … more time without the nuisance of needing to engage in … life.

The most recent crack dealers are online trading platforms (OTPs). What does endless scroll look like on a trading platform?

• Confetti falls to celebrate transactions

• Colorful candy crush interface

• Gamification: users can tap up to 1000x per day to improve their position on the waitlist for Robinhood’s cash management feature (essentially a high-yield checking account on the app)

The Ratio

Our institutions (courts, Congress, the SEC) are supposed to slow our thinking so our reflexive instincts are checked and we can decide not to discriminate, not to pour mercury into the rivers, and not to let a bankrupt car rental firm (Hertz) issue shares bound to be worthless. You lose, they win.

Technological change is vastly outpacing our species’ ability to adapt to an endless barrage of stimuli. This discrepancy in modulation has exploded our levels of teen depression and social chaos. We are in a Supermarine Spitfire, accelerating every day, hoping the fuselage holds together as we approach the sound barrier — streaming 31 seasons of The Simpsons, lifelike video games, ubiquitous porn of increasing extremes, high-def documentation in real time of the party your 15-year-old daughter wasn’t invited to, social media algorithms fueled on emotion vs. veracity, and immediate approval of margin for a “bull put spread.”

A Mess

I was a fu**ing mess yesterday after learning of the suicide of Alexander Kearns, a 20-year-old from Naperville, IL, who was interested in the markets and began trading stocks. Alex mistakenly believed he was down $730,000 after trading options on the Robinhood app and took his own life. We don’t know what other factors were at play here, and young men taking their own lives after losing money in the market is not a new phenomenon.

Facebook and Twitter do what CNN and Fox have been doing for decades, but better. I’m afraid Robinhood might become an addictive platform — Instagram for trading. Robinhood users skew young (32% of visitors are between 25-34). The firm reported 3 million new accounts in Q1 2020. Half were first-time traders. In addition, with Vegas and sports wagering all but shut down, OTPs have become the place where emerging gambling addiction can take root and/or a rehab facility where your sponsor is a dealer.

Learning to invest and understanding the markets are good things, as is connecting with friends online … to a point. Social media and gambling have the same addictive psychological mechanism: variable rewards — when you keep performing an action in hopes of getting a possible but unlikely reward. This is the type of behavior that’s the “most addictive and hardest to stop.” Robinhood management and investors have taken cues from big tech, and made a conscious decision to disregard the well-being of our youth for personal enrichment.

Some additional data on the surge in online trading:

• Excessive trading may be triggered by an addictive process.

• 12% of all trading activity is from day-traders, yet day-traders are only 1.6% of all profitable traders. 

• Men trade more than women, and unmarried men trade more than married men.

• Stock market crashes have been linked to upticks in suicide. 

• Investors with a large differential between their existing economic conditions and their aspiration levels hold riskier stocks in their portfolios.

Most articles will focus on what we, Americans, view as the profound risk with the surge in rookie online traders … that the markets might go down. Most market tops coincide with retail investors entering. We haven’t, to my knowledge, seen the scale of a market crash driven by twentysomethings investing government rescue funds, levered up via preapproval on their smartphones.

Our elected officials and gross idolatry of money and innovators have overrun the institutions charged with slowing our thinking and keeping our kids safe. Joe Scarborough put it well: “Mark, Sheryl, and Jack, you have revealed yourselves to be vapid vulgarians who put at risk Americans’ health, racial justice, fair elections, and basic truths.”

Where do we turn? The bulk of the pressure to protect kids from device addiction falls on parents — limiting use (severely) and getting other parents at school to limit use as well, so kids don’t feel they are an exception. It’s difficult, and it needs to be done. An “electronics fast,” perhaps for the whole family, can allow the nervous system to reset. Lowering your dopamine threshold allows a smaller amount of pleasure to be satisfying.

The threat of addiction has been slowing our household down. One of our sons demonstrates behavior consistent with device addiction. It’s terrifying. Everything he does, says, and works toward, is in pursuit of the dopa hit waiting on his iPad. His mom and I are doing what most parents would do — reading, seeking outside help, limiting use. But more than anything, we’re trying to slow things down. Time with him, especially outdoors or with books. Time in bed with him telling him stories about his grandfather becoming a frogman in the Royal Navy. Slowing everything down. It appears to be working.

I see Alex Kearns, and I see my oldest son. A nerd, with a big smile, fascinated by the markets and seeking dopa hits. I can’t imagine the pain of that family. I can’t imagine how we’ve lost the script, letting the meaningful, innovation and money, trump the profound, our kids. The youth suicide rate has increased 56% in a decade. Girls between 10 and 14 had a tripling of self-harm episodes between 2009 and 2015. Teens who are on social media for 5+ hrs a day are twice more likely to be depressed than those who are on for less than an hour.

Is it any wonder Tim Cook doesn’t want his nephew on social media? If he wasn’t Tim Cook, would he also say, I don’t want him to have an iPad either?

The weapons are our phones and tablets, and the bullets are social media firms headed by sociopathic oligarchs. And now, we may have a new menace preying on young men: online trading platforms.

We are a virus-ravaged nation where curfew alerts are sent to our phones. Innovation has become synonymous with exploitation. We find solace in the market being high, but the market is not a reflection of the economy or progress, but increasingly of a few firms’ ability to arbitrage the gap between the pace of technology and regulation.

It’s depressing. What to do? I’ll check my likes, mentions, and stocks.

While massive protests continue to rage across the country (and beyond) in the name of George Floyd, Black Lives Matter co-founder Patrisse Cullors admitted during a Friday night interview with CNN that “our goal is to get Trump out.”

Cullors, who described BLM organizers in 2015 as “trained Marxists,” compared Trump to Hitler after refusing to meet with him, and referred to Immigration and Customs Enforcement (ICE) as the Gestapo, told CNN‘s Jake Tapper (via Breitbart‘s Josh Caplan):

JAKE TAPPER: I’ve heard a lot of criticism of former Vice President Joe Biden from civil rights activists. The election, obviously, will be a choice. How do you think Biden matches up compared to President Trump when it comes to these issues that are important to you?

PATRISSE CULLORS: Trump not only needs to not be in office in November but he should resign now. Trump needs to be out of office. He is not fit for office. And so what we are going to push for is a move to get Trump out. While we’re also going to continue to push and pressure vice president Joe Biden around his policies and relationship to policing and criminalization. That’s going to be important. But our goal is to get Trump out.

President “Trump not only needs to not be in office in November but he should resign now,” says co-founder of the Black Lives Matter Global Network Patrisse Cullors. “Trump needs to be out of office. He is not fit for office.” pic.twitter.com/T6mLZ11cEv

— The Lead CNN (@TheLeadCNN) June 19, 2020

In 2015, Cullors said that BLM would take “any opportunity we have to shut down a Republican convention.”

Was Tucker Carlson right when he said (and was punished with an advertiser walkout from the ‘cancel’ crew at Sleeping Giants) that Black Lives Matter is now a political party?

“Black [Lives] Matter is more popular by double digits than both the Democratic and Republican parties.

It is almost as popular as the U.S. military. It is much more popular than the pope.”@TuckerCarlson warns that the Black Lives Matter movement wields significant influence. pic.twitter.com/1AhsGqHBzo

— Washington Examiner (@dcexaminer) June 16, 2020

Authored by Michael Snyder via TheMostImportantNews.com,

Those that have been hoping for some sort of a “V-shaped recovery” have had their hopes completely dashed.  U.S. workers continue to lose jobs at a staggering rate, and economic activity continues to remain at deeply suppressed levels all over the nation.  Of course this wasn’t supposed to happen now that states have been “reopening” their economies. 

We were told that things would soon be getting back to normal and that the economic numbers would rebound dramatically.  But that is not happening.  In fact, the number of Americans that filed new claims for unemployment benefits last week was much higher than expected…

Weekly jobless claims stayed above 1 million for the 13th consecutive week as the coronavirus pandemic continued to hammer the U.S. economy.

First-time claims totaled 1.5 million last week, higher than the 1.3 million that economists surveyed by Dow Jones had been expecting. The government report’s total was 58,000 lower than the previous week’s 1.566 million, which was revised up by 24,000.

To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000.  So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.

That is just astounding.  We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.

With the addition of this latest number, a grand total of nearly 46 million Americans have now filed initial claims for unemployment benefits since the COVID-19 pandemic began.

If you can read that statement and still believe that the U.S. economy is not imploding, I would like to know what you are smoking, because it must be pretty powerful.

Some of the things that we are seeing happen around the country right now are absolutely nuts.  For example, earlier this week in Kentucky it was being reported that people were waiting in line for up to 8 hours to talk with a state official face to face about their unprocessed unemployment claims…

The state police said it will be an 8 hour wait from the back of the line to speak to a state employee about unemployment. pic.twitter.com/plGONcpS6n

— Daniel Desrochers (@drdesrochers) June 17, 2020

This wasn’t supposed to happen.

By now, the U.S. economy was supposed to be roaring back to life and we were supposed to be entering a new golden age of American prosperity.

Unfortunately, the truth is that more bad economic news is hitting us on a continual basis, and that isn’t going to change any time soon.

Over the past few days, we have learned that Hilton is laying off 22 percent of its corporate staff, and AT&T has announced that it will be eliminating 3,400 jobs and closing 250 stores…

The wireless carrier AT&T is cutting 3,400 jobs and shutting down 250 stores over the next few weeks, according to a statement from the Communications Workers of America, a union representing AT&T workers.

The AT&T Mobility and Cricket Wireless retail closures will affect 1,300 jobs, while the other layoffs are said to be affecting technical and clerical workers.

Needless to say, all of these job losses are having a tremendous ripple effect throughout the economy.

Without paychecks coming in, a lot of Americans are having a really tough time paying their bills, and the Wall Street Journal is reporting that payments have already been skipped on more than 100 million loans…

Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S., the latest sign of the toll the pandemic is taking on people’s finances.

The number of accounts that enrolled in deferment, forbearance or some other type of relief since March 1 and remain in such a state rose to 106 million at the end of May, triple the number at the end of April, according to credit-reporting firm TransUnion.

Wow.

To me, that is an almost unimaginable number, and it has become clear that a tremendous amount of pain is ahead for the financial institutions that are holding these loans.

A lot of people out there are going to keep hoping that there will be some sort of an economic rebound, but the cold, hard reality of the matter is that fear of COVID-19 is going to keep a large segment of the population from resuming normal economic activities for the foreseeable future.  And it certainly doesn’t help that the number of confirmed cases in the U.S. has been steadily rising over the past couple of weeks and that the mainstream media has been endlessly warning that a “second wave” is coming.

If you doubt what I am saying, just look at what is happening to the restaurant industry.  We had started to see a small bit of improvement in the numbers, but now fear of a “second wave” has caused restaurant traffic to start cratering again…

After three months of slow but consistent improvement in restaurant dining data in the US and across the globe, in its latest update on “the state of the restaurant industry”, OpenTable today reported the biggest drop in seated restaurant diners (from online, phone and walk-in reservations) since the depth of the global shutdown in March.

As shown in the OpenTable graphic below, on Sunday, June 14, restaurant traffic suddenly tumbled, sliding from a -66.5% y/y decline as of June 13 to -78.8% globally.

This was mostly due to a sharp drop in US restaurant diners, which plunged by 13% – from -65% to -78% – the biggest one day drop since the start of the shutdown in the US, and the second biggest one day drop on record.

Business travel is another area where we are seeing signs of big trouble ahead.  The following comes from Yves Smith…

Business travel is not coming back any time soon. People are getting accustomed to Zoom. And word may also get out that domestic flying is much worse than it used to be, which will be a deterrent to those who might be so bold as to want to get on a plane. That is a fundamental blow to airlines, airport vendors, hotels, restaurants, and convention centers. Hotel occupancy in April was 24.5% which if anything seems high based on my personal datapoints. The pricings I see say that hotel operators are not expecting much if any improvement through the summer.

Like many of you, I wish that economic conditions would go back to the way they used to be, but that simply is not going to happen.

Yes, we will see economic numbers go up and down over the coming months, but a return to “the good times” is not in the cards.

And what hardly anyone realizes is that this is just the beginning of our problems, and I am working on a new project right now which will explain why this is true in great detail.

So stay tuned, because things are about to get really, really “interesting”.

There are still several huge key unknown questions related to the coronavirus. For example, how many asymptomatic cases have already occurred worldwide? How long do antibodies last? 

And finally, when the hell did the virus actually start to make its rounds across the world?

That’s a question that today we may finally have a better answer to. In the latest example of scientists finding evidence of the virus weeks, or months, earlier than previously known, Covid-19 was found in sewage in Milan and Turin as early as December, according to a new study. This was two months before the first cases were officially detected in Italy, according to Bloomberg. 

Giuseppina La Rosa, who headed up a forthcoming study from Italy’s National Health Institute, said: “Traces of SARS-Cov-2 have been found in samples of waste water taken in Milan and Turin on Dec. 18 and in Bologna on Jan. 29. More traces were detected in other test samples through January and February.”

40 samples were tested and analyzes between October 2019 and February 2020 as part of the country’s regular wastewater testing.

Hospital tests from other parts of Italy, like the coastal region of Liguria, also indicate the virus was present late last year. Italy’s earliest “official” case was linked to a man who sought treatment in mid-February. 

La Rosa says the study “may contribute to shedding light on the first phase of the virus’s circulation in Italy.”

Stunningly, similar results were found in the waste water in Barcelona, which also showed traces of the virus in late 2019.

Meanwhile, China contends that there have only been 83,325 official cases of coronavirus in the country with just 4,634 deaths. 

Authored by Egon von Greyerz via GoldSwitzerland.com,

“Extraordinary Popular Delusions and the Madness of Crowds” happen with regular intervals as Charles Mackay wrote about. It seems that the world experiences more delusions and madness than truth and sanity. 

The pattern is always the same. The economy is never in equilibrium but moves in cycles of boom and bust. If these cycles were allowed to take their natural course, they would move up and down in a steady rhythm without reaching extremes at the top or bottom. 

GOVERNMENTS’ PRIME OBJECTIVE IS TO BE REELECTED BY BUYING VOTES

But human psychology and hunger for power prevent these natural cycles from taking place. Most leaders, whether they are kings or presidents, all have fear of failure combined with illusions of grandeur. As the economy peaks and the good times come to an end, they know that the best chance of not being ejected is for the good times to continue. Today’s leaders’ primary objective is to hang on to power by buying votes. 

And how can they buy votes when the economy is turning down and the coffers are empty? Easy! You just print money out of thin air, as I discussed in my article a couple of weeks ago. The Romans did it, and so did the French, the Brits, Germans, Argentinians, and everyone else. 

PRICES DON’T GO UP – VALUE OF MONEY GOES DOWN

Initially, when a country prints money to extend the prosperity, nobody notices that it is fake. After all, they are still called dollars or pounds. But gradually things become more expensive. The popular interpretation of increasing prices is calling it inflation. Nobody actually notices or understands that it is not prices going up but the value of the money going down as more and more which has zero value is issued.

THE LATEST PANIC STARTED IN AUGUST 2019

The current crisis started its acute phase back in August 2019. That’s when the Fed and the ECB started to panic.

Since then they have flooded markets with trillions of dollars and euros and still, the problems are not going away. But how can you solve a debt problem with more debt? I considered the Central Banks panic statements and actions back in August as an extremely critical moment and as important as Nixon closing the gold window in Aug 1971. I wrote back then that the “world is now standing before a seminal moment and virtually nobody can see it.”

THE END GAME IS STARTING

The US and the world are now entering the end of the end of 50 years’ destruction of the world economy and the financial system. So it has taken half a century to reach the end game but this is like a blink of an eyelid in the history of the world. 

The US is now leading the world economy into a total breakdown of not just the financial system but also of trade and social structures. And still nobody can see it. Stock markets are near the all-time highs and the high-end residential property market is booming in and around several capital cities. 

The US has all the ingredients that lead to the destruction of an empire: Deficits, debts, excessive military spending, debasement of the currency, breakdown of trade, plague, the collapse of law and order and riots. Two things are missing to complete the picture namely wars, and hyperinflation. Sadly both these factors are likely to occur in the coming years. 

1971 marked the beginning of the end of the US Empire

Since 1971 the dollar has collapsed, deficits and debts exploded and social structures including law and order are breaking down. Like all empires, the US had the seeds of its own destruction within it. 

This is how they achieved it:

1. Spend more than you earn and PRINT, PRINT, PRINT

The US has skilfully done this since the early 1960s. Every single year since that time, US  Federal debt has increased. Few people realise that the surpluses in the Clinton years were fake since debt continued to go up. 

US federal debt in 1971 was $400B and today it is $26 trillion a 65x explosion. 

I produced the debt chart below the first time at the end of 2017 when Trump was elected president. I forecast then that US debt would reach $28 trillion by 2021 and double by 2025 to $40 trillion. These massive debt increases seemed incredible at the time. But very few people study history and learn from the past. 

Since 1981 US Federal debt has on average doubled every 8 years, without fail. Obama doubled debt during his reign from $10 to $20 trillion. Thus, it was totally in line with the history that the US debt would be $40 trillion 8 years later, in 2025. 

When I made this forecast I assumed that we would see a breakdown of the financial system starting in the 2020s. So history teaches us a lot more about the world than any economist or other forecaster ever understands. 

The US debt is now at $26T and is very likely to reach more than $28T by the end of the calendar year and $40T by 2025. The projections of the Congressional Budget Office (CRB) and the Committee for a Responsible Federal Budget (CRFB) also confirm that these debt levels are not unlikely. 

If we get a real crisis in the economy and the financial system, we could be looking at much higher figures. 

2. Import more than you export

Since 1974, the US has had a balance of trade deficit every year. As the graph below shows, the deficit has grown exponentially. In this century it has been running between $20B and $65B monthly and is currently running at $50B. 

Half a century of every year importing more than you export is only possible with the assistance of the printing press combined with constant credit expansion. 

3. Make the currency worthless 

No fiat currency has survived in history. There have been periods when various currencies were backed by gold or silver. This stops governments from spending what they haven’t got. That was the dilemma Nixon had. After many years of the costly Vietnam war in the 1960s, President de Gaulle saw where America was heading and asked the US for payment of their debts to France in gold.  

Gold backing of the currency prevents countries from spending money they haven’t got. Every time a nation has dropped the gold or silver standard, it has led to a destruction of the currency. 

With deficits and debts rising fast, the US would have run out of gold and Nixon had no intention to balance the budget by cutting expenses. Much easier than to close the gold window and open the printing press which he did on 15 August 1971. And that was the beginning of the end of the US empire and the global currency system. 

After Nixon’s fatal decision, The People’s Daily in China wrote:

“These unpopular measures reflect the seriousness of the US economic crisis and the decay and decline of the entire capitalist system.”

The paper went on:

“mark the collapse of the capitalist monetary system with the US dollar as its prop”…. “Nixon’s new economic policy cannot extricate the US from financial and economic crisis.”

The Chinese saw the consequences of the US actions already 50 years ago and the whilst the rest of the world is about to find out soon. 

Since 1971, the dollar and all major currencies have fallen 97-99% in real terms. 

Real terms means measured in gold which is the only stable currency in history. 

4. Manipulate all markets 

It is not possible to have chronic debts and deficits for half a century without total manipulation of all markets. The US government and the Fed have skilfully intervened in all financial markets be it stocks, bonds, interest rates currencies, derivatives or gold and silver. 

The result of this is that there are no real markets today and no real prices. It is a casino in which the government with the assistance of the Fed and their banker friends control virtually all trading and prices. 

If we just look at interest rates, it is a perfect example of false markets. 

In a market governed by supply and demand, the gap between interest and debt in the chart above would not exist. High demand for debt would automatically push the cost of debt up. But the laws of nature have temporarily been suspended by the Fed and the  US government. Since they can create an unlimited supply of fake money, they can simultaneously set the cost of this money at zero. And as the money is worth nothing, it is self-evident that it should cost nothing to borrow. 

But what most people don’t understand is that most assets they buy with the fake money has very little intrinsic value, whether it is stocks, bonds or property. In the coming collapse of the Everything Bubble investors will have a very rude awakening as all these bubble assets decline 90-100% in real terms. 

MARKETS

Stocks are showing the normal high volatility before the next crash which is imminent. The coming secular bear market will shock the world.

Gold & Silver

The LBMA (London Bullion Market Association) has just published an article in the Alchemist by my good friend Charlie Morris. Charlie makes a very credible case for $7,000 gold by 2030.

The only point I would raise regarding his forecast is if it will really take 10 years to reach that level. I doubt it myself. 

In the next few years, the world will learn that the printing of money can never create prosperity. That is the time when the masses will turn to gold and silver. At that point, there will be virtually no physical precious metals to buy at any price. 

History tells us that it is imperative to own gold when central banks run out of control. 

The few who will be lucky enough to find some gold and silver then will need to pay multiples of current prices.  

“The desire of gold is not for gold. It is for the means of freedom and benefit.”
– Ralph Waldo Emerson

UBS Global Wealth Management’s Charles Day warned wealthy clients to “avoid” chasing parts of the equity market pushed up into a speculative frenzy by day traders. 

“The stocks that I hadn’t heard of three months ago all of a sudden are the most active — that’s not where investors go, that’s where traders might go, or hobbyists might go,” said Day. “If you’re a wealthy investor, you have to avoid thinking that you’re missing out on huge returns in these stocks.”

He told Bloomberg that parabolic stock moves over the last several months draw a comparison with the 2000 market crash “when obscure companies were doubling and tripling monthly.”

A basket of “retail favorite” stocks has outperformed not only the broader market this year but also the basket of most popular, “hedge fund VIP” index.

“Retail favorite” index vs. S&P500

“Retail favorite” index vs. “hedge fund VIP” index

We urge readers to catch up on the speculative bubble inflated by a flurry of retail day traders, starting with How Retail Investors Took Over The Stock Market, and concluding with Goldman’s Clients Are Getting Angry That Teenage Daytraders Are Crushing Them.

Some have put a face on the sizzling outperformance of retail stocks – that is, Barstool Sports’ Dave Portnoy the market’s crazy genius, able to whip up his frenzied 1.5 million twitter followers into a day trading army that panic bought airline and cruise ship stocks in the last several months – his focus also consists of shifting from one penny stock to the next. 

While Portnoy’s style of trading depends on the ‘greater fool’ – Day, whose firm oversees $2.3 trillion in assets, is likely warning clients not to buy the stocks the stocks below (many have doubled since late March): 

Incidentally, one of the most favorite retail stocks (above) is Penn National Gaming (PENN), which Portnoy owns a lot of as he reminds his followers with the following blurb in his twitter bio “I own a ton of Penn Stock” as a result of PENN buying his company Barstool Sports for $450 million in January.

Day warns that day traders are at risk of getting crushed by market volatility in some of these speculative stocks. 

“That’s what makes it extremely vulnerable to extreme volatility, is that people going into those trades don’t have a lot of experience, and now they’re going to start to think it’s easy, and that’s a dangerous place to be,” he said. “The Robinhood names, I think, are almost all froth.”

Top stocks held by Robinhood daytraders 

Day’s warning to wealthy clients comes at a time when the Fed’s balance sheet has finally posted its first weekly decline since the start of the corona crisis. 

As readers know, a shrinking Fed balance sheet could be bad news for the stock market. 

“If you’re very wealthy, what you want to have is some protection of your downside so you feel more comfortable with your risk assets,” Day said.

Via 21stCenturyWire.com,

One of the great impending disasters of the COVID crisis is that despite the fact that the Coronavirus is rapidly disappearing and its true Infection Fatality Rate is in the exact same range as the seasonal flu, politicians and government health officials seem determined to roll-out the globalist “New Normal” regime.

We’re continually told by health officials and the media that the primary reason for requiring face masks is to protect people from the COVID-19 airborne pathogen. There are numerous problems with this government belief system, not least of all because it assumes that every person is equally at risk of illness due to COVID-19, which is false.

The vast majority of the general population are not at risk at all, as it mainly only affects one specific demographic: over 70 years old with chronic long-term health conditions, and within that risk group the majority of complications and fatalities have been with nursing/care home residents (none of these people travel on public transport).

The other reason why this virus is not a threat to the wider population is because it is seasonal in nature; it has followed the exact same trajectory of decline in every country worldwide, and by now has all but extinguished itself in any significant form. But even beyond all of this, it has already been well-established by numerous scientific experts that masks are incapable of protecting people against this or any other respiratory virus.

This means that wearing them is more a psychological reinforcement rather than any real medical prophylactic.

The UK’s Daily Mail reports…

London Mayor Sadiq Khan said facemasks will be the ‘new normal’ for commuters in the capital for at least a year.

Protective face coverings are compulsory on public transport across England in a bid to keep coronavirus infection rates low and avoid a second wave of the deadly virus.

Free masks were handed out in their thousands on buses and trains in attempt to kick start the new laws on Monday as 3,000 more police took to the streets looking out for rule-breakers.

Those who don’t wear masks will face £100 penalty fines but confusion still reigned about how the regulations – followed by 90 per cent of Londoners on Monday – will be enforced, The Daily Telegraph reports.

Sadiq Khan told LBC: ‘This is part of the new normal. The reality is that for the foreseeable future – I predict for the next year or so – wearing face coverings is going to become the norm rather than the exception.’

Confederation of Passenger Transport Executive Graham Vidler told the BBC that those who are unable to wear masks due to a disability will be able to signal to a driver or conductor using a ‘journey assistance card’.

He said: ‘If passengers aren’t following the guidelines then other passengers might have difficulties with that and issues might arise.

‘That’s another reason we are encouraging people to use journey assistance cards to indicate that they have a valid reason for not wearing a face covering…

Continue this story at the Daily Mail…

Even America’s health tsar, Anthony Fauci, admitted as much in a 60 Minutes interview in March, where he stated, “There’s no reason to be walking around with a mask.”

And despite all of that, the New Normal agenda is still being pushed through.