There seems to be growing optimism that we’re nearing the end of the coronavirus lockdown. Stocks have rallied despite dismal economic numbers. But Peter Schiff says there are some important questions nobody is asking, especially when it comes to the insane Federal Reserve monetary policy.
The US stock market ended last week on an upswing and gold was down as optimism and risk-on sentiment returned. The optimism was due to a possible treatment for coronavirus along with some movement toward reopening the US economy. There seems to be some sentiment that the market has found its bottom.
Peter doesn’t think so.
I still am doubting this rally. I don’t think the bear market is over. I don’t think the bear market ends with stocks like Netflix and Amazon making new all-time record highs. I still think those stocks have to have some kind of comeuppance. I think they have to take those out and shoot them. So, I am looking for another sell-off in the broad markets.”
Peter said there is one thing the market has going for it — the Federal Reserve. In fact, a lot of people seem to think that’s all you need.
As long as you’ve got the Fed on your side and they’re going to keep on printing money, which they’re going to do and they’re going to print more and more of it, people are going to make a bet. And they’re going to bet on the Fed by buying stocks. What they should be doing is buying gold.”
Gold stocks have been strong in recent weeks, but some of the bigwigs on Wall Street are already talking like the gold rally is over. Peter said it’s barely begun.
For people to say, ‘Hey, it’s time to get out, the gold rally is over,’ I mean, these are people who really have no clue what’s going on in the gold market trying to convince people the gold rally is over when the fundamentals have never been better. I mean, it’s not like the Fed is about to stop printing money. No! They’re going to print more than ever before. In fact, because they have printed so much money so quickly, because the balance sheet has exploded, and because of all these new programs that are on the deck, not only the ones that have been enacted, but the programs that are on the deck, they’re going to be printing money like crazy. So, you have the most bullish environment you can imagine for the mining sector yet they’re saying we should sell these stocks.”
The Federal Reserve balance sheet grew by another $284.7 billion. To put that into some perspective, during QE3, the balance sheet was growing by $80 per month. The balance sheet now stands at just under $6.4 trillion. That raises a question: how is the Fed ever going to shrink the balance sheet?
Maybe people have decided they’re never going to shrink it. But then what does that mean? Because, the Fed has to shrink the balance sheet at some point, which is going to be very, very disruptive to the economy, much more disruptive than when they tried to shrink the balance sheet before, which eventually blew up.”
Remember, the Fed had to call off quantitative tightening long before coronavirus. The Fed cut interest rates three times last year.
So, it’s not like the Fed was able to keep shrinking the balance sheet and keep raising interest rates and it had to abort that process because of the coronavirus. They had to abort the process before anybody heard of the coronavirus. So, it was already imploding. The bubble was already deflating before this pin, this other pin came and put another hole in it. So, if we couldn’t unwind the four-and-a-half trillion-dollar balance sheet, if we couldn’t normalize the debt levels that existed before the coronavirus, think about how much more difficult, if not completely impossible that process is going to be after the coronavirus. So, nobody is asking: what is the implication of a balance sheet that is so enormous that it would be so disruptive to shrink, or because it’s so enormous and can’t be shrunk? What does that mean about future inflation and the value of the dollar?”
There is still this persistent myth that everything is going to be fine once we solve coronavirus. In the meantime, we’re piling on trillions of dollars in new debt. That debt doesn’t just go away after the coronavirus lockdown is over.
We still have to deal with that problem long after the coronavirus problem is over. … It’s not like all of a sudden we’re going to go back to this booming economy. We’re going to go back to a busted bubble.”
WTI Maintains Losses As Crude Inventories Rise For 13th Straight Week
Oil’s collapse is deepening and spreading across the entire complex as a massive supply glut brought on by the pandemic (and not helped yet by OPEC+ production cuts) and a worldwide shortage of storage space have touched off relentless rout that has shifted the entire forward curve for oil.
As we detailed earlier, with settlement now come and gone, the May contract soared back higher today…
…and adjustments to the USO allocation (to June, July, and August) prompted a bid in each ahead of the settle which all then plunged back after…
The collapse is reverberating across the oil industry, with prices trading below zero across America on Monday. WTI Midland in Texas – a flagship marker for the U.S. shale industry – was at -$13.13 a barrel, while crude in Alaska was at -$46.63.
Oil is a “dangerous market to trade in right now,” said Pierre Andurand, founder of Andurand Capital Management LLP, in a Bloomberg TV interview. The market needs oil production to fall immediately for prices to recover, he said.
And all eyes will be on the inventory data to see just how fast this glut is building. Crude stockpiles at Cushing – America’s key storage hub and delivery point of the WTI contract – have jumped 48% to almost 55 million barrels since the end of February. U.S. nationwide inventories are estimated to have increased another 14 million barrels last week, according to a Bloomberg survey.
API
Crude +13.226mm (+13.8mm exp)
Cushing +4.913mm (+14mm exp)
Gasoline +3.435mm (+4.4mm exp)
Distillates +7.369mm (+3.9mm exp)
This is the 13th weekly crude build in a row, 7th weekly build at Cushing
Source: Bloomberg
The June contract traded around $13.00 ahead of the API data and lifted very modestly after the print…
“If you start to look at the actual supply-demand situation for oil, it’s not so obvious that by the time those contracts expire, the storage situation around Cushing will be very different than what it is in May,” said Martijn Rats, Global Oil Strategist at Morgan Stanley, in a Bloomberg Radio interview.
“The prices of these futures will need to connect to the physical reality, and they are likely to crack lower.”
As Bloomberg’s Javier Blas concluded: ” Yesterday was scary. Today is a lot more scary. The whole oil market is screaming oversupply simultaneously.”
Netflix Adds Record 15.77MM Paid Subs, Crushing Estimates But Offers Disappointing Outlook
While recent earnings reports from streaming giant Netflix have been a mixed bag, missing badly three quarters ago when US subs declined and forecasting the first annual drop this decade, then smashing expectations two quarters ago, and finally last quarter when it beat on new subs but disappointing in its guidance, none of that mattered today when the company reported earnings for its first “post Corona” quarter, when the only thing investors cared about was not whether the company would beat or miss expectations, but rather if Netflix, whose stock price has soared in the past month, is really a pandemic-proof company?
As Bloomberg notes, the company is riding a wave of optimism, its stock soaring 50% in the past month, with investors pushing the shares to new highs and analysts seeing people download its app in record numbers. And while there’s no doubt that viewership has surged during the Covid-19 lockdowns in the U.S. and much of the world, there are complications: the virus has brought TV and film production to a halt, a situation that may only get more dire for Netflix as the months wear on.
The world’s largest paid streaming service is also facing more intense and cutthroat (or rather cut-price) competition than ever. Comcast’s Peacock platform began its rollout this month, along with the short-form video service Quibi. And AT&T Inc.’s big bet on streaming, HBO Max, debuts in May, while Disney+ has already reportedly hit 50 million subs.
So was this that unleashes a new growth trajectory for Netflix? Judging by the company’s blockbuster report, the answer – and the reason why stocks are surging after hours – is a resounding yes.
Here is what the company reported:
Q1 revenue $5.768BN; beating the estimate of $5.74 billion (range $5.36 billion to $5.89 billion)
Q1 GAAP EPS of $1.57, missing the estimate $1.64 (range $1.20 to $1.74)
In short, bit of a mixed bag, but the number everyone is focusing on after hours and the reason why the stock is soaring is the company’s blockbuster addition in net subs:
Q1 streaming paid net change 15.77MM, smashing the estimate +8.47 million new adds and more than double the company’s own forecast of 7.00 million.
The corona-quarter hardly needs to be highlighted in the chart below:
“With lockdown orders in many countries starting in March, many more households joined Netflix to enjoy entertainment,” Netflix said, adding that Netflix subscriber growth in the first two months of the year was “similar to the prior two years.”
Then things took off in March with the global virus lockdown. Netflix doesn’t expect this kind of growth to continue with Q3 and Q4 net additions lower than last year, in part because there won’t be new seasons of “Stranger Things” and “Money Heist.”
And summarized:
Or maybe just call it the Tiger King quarter. As Bloomberg points out, it should surprise no one that’s spent any time online in recent weeks that Netflix’s “Tiger King” was a smash hit. The weird docuseries about a zookeeper that is now in prison for attempted murder attracted 64 million viewers. That’s still far behind the Mark Wahlberg film “Spenser Confidential,” which garnered 85 million viewers.
In any event, the forced lockdowns were all that matters, and Netflix admitted as much saying it was seeing “temporarily higher viewing and increased membership growth” during the lockdown, but that’s being “offset by a sharply stronger U.S. dollar, depressing our international revenue, resulting in revenue-as-forecast.”
But how is it possible to blow out your own subscriber forecast yet revenue barely beats? The company explains that despite paid net additions that were higher than forecast, “revenue was in-line with our guidance due to the appreciation in the US dollar vs. other currencies. Excluding a -$115m impact from F/X, streaming ARPU grew 8% year over year.”
Meanwhile, operating margin of 16.6% (vs. 10.2% in the prior year quarter) was lower than its 18.0% forecast as the company incurred $218m in incremental content costs due to paused productions and hardship fund commitments (a 3.8 percentage point impact to operating margin).
Q1 UCAN streaming paid net change +2.31 million vs. +550,000 q/q
Q1 EMEA streaming paid net change +6.96 million, +57% q/q
Q1 LATAM streaming paid net change +2.90 million, +42% q/q
Q1 APAC streaming paid net change +3.60 million vs. +1.75 million q/q
Q1 operating margin 16.6% vs. 8.40% q/q
Looking ahead the company expected a drop in the coronavirus surge, and expected 7.5MM subs in Q2, a roughly 50% decline from the current quarter. Specifically, Netflix expects viewing to decline and subscriber growth to decelerate as home confinement ends, “which we hope is soon.”
Additionally, Netflix expected the following:
Q2 revenue of $6.05BN, above the estimate $5.96 billion
Q2 GAAP EPS of $1.81, above the estimate of $1.55
The company hired 2,000 agents to boost customer support levels
Summarized:
To summarize the coronavirus impact on the company (via BBG):
Subscriber growth accelerated due to home confinement.
International revenue will be less than forecast due to the dollar rising sharply.
Due to the production shutdown, some cash spending on content will be delayed, improving free cash flow.
As Bloomberg Intelligence Senior Tech Analyst Geetha Ranganathan notes: “a strong 2Q outlook lends credence to our view that Covid-19 will create tailwinds for Netflix, accelerating the shift away from linear TV. The record 15.77 million additions in 1Q blew past guidance and came in almost 85% higher than consensus estimates.”
Commenting on the quarter, Reed Hastings said that “in our 20+ year history, we have never seen a future more uncertain or unsettling. The coronavirus has reached every corner of the world and, in the absence of a widespread treatment or vaccine, no one knows how or when this terrible crisis will end. What’s clear is the escalating human cost in terms of lost lives and lost jobs, with tens of millions of people now out of work.”
With cinemas closed, Netflix said it was taking the opportunity to acquire titles that might not have otherwise gone straight to streaming. It said it recently bought Paramount Pictures’s “The Lovebirds” and Legendary Pictures’s “Enola Holmes.”
While Netflix has tried to focus more on original content in recent years, making sure there’s enough on the platform to fulfill demand will be important to retain its subscribers, according to Bloomberg. A tricky thing to do when most Hollywood productions are shut down because of the virus.
In terms of its content organization, Netflix said its daily top-10 most-watched films and series lists will be a regular feature, available in almost 100 countries. Some more content notes from the letter to shareholders:
As people shelter at home, our hope is that we can help make that experience more bearable by providing a diverse range of high quality content for our members. While our productions are largely paused around the world, we benefit from a large pipeline of content that was either complete and ready for launch or in post-production when filming stopped.
For Q2, we’re looking forward to releasing all of our originally planned shows and films (with some language dubbing impacts on a few titles). We’re also finding ways to bolster our programming this year – including the recent acquisition of Paramount’s and Media Rights Capital’s The Lovebirds, a comedy starring Issa Rae and Kumail Nanjiani, for Q2’20 and Legendary Pictures’ Enola Holmes starring Millie Bobby Brown, Helena Bonham Carter, Henry Cavill, and Sam Claflin, for Q3 ‘20. So, while we’re certainly impacted by the global production pause, we expect to continue to be able to provide a terrific variety of new titles throughout 2020 and 2021.
Our Q1 slate highlighted the variety of content that people enjoy en masse all over the world on Netflix: scripted English language series like Ozark season 3 (a projected 29m member households will have chosen to watch this season in its first four weeks), the riveting docu-series Tiger King: Murder, Mayhem and Madness (64m), our breakthrough unscripted dating show Love is Blind (30m), original film Spenser Confidential (85m), and season four of the Spanish language hit La Casa de Papel, aka Money Heist (a projected 65m), which debuted in early April.
In Q2, we are looking forward to the launch of Space Force, our new original comedy series created by Greg Daniels (The Office) and Steve Carell, starring Carell, John Malkovich and Lisa Kudrow. We just launched our latest buzzy unscripted series Too Hot to Handle, #BlackAF from Kenya Barris and, outside the US, the Michael Jordan documentary The Last Dance, which we co-produced with ESPN (launching on Netflix in the US on July 19). We will also premiere Hollywood from Ryan Murphy, and, later this week, Extraction, a large scale action film starring Chris Hemsworth and directed by Sam Hargrave, who was the stunt coordinator and choreographer on films like Avengers: Endgame, Avengers: Infinity War, Deadpool 2, and Captain America: Civil War.
* * *
What is perhaps most remarkable was the dramatic reversal in Netflix cashflow: net cash used in Q1 operating activities was +$260 million vs. -$380 million in the prior year period. Free cash flow totaled +$162 million compared with -$460 million in the year ago quarter.
As the company stated last quarter, our FCF profile is beginning to improve due to growing operating margin and profits and “as it digests its big move into the production of Netflix originals (which requires more cash upfront vs. later-window content) that started five years ago.”
Or perhaps there is less here than meets the eye: as Netflix admits, with its productions currently paused, this will shift out some cash spending on content to future years. As a result, the company now expecting 2020 FCF of -$1 billion or better (compared with our prior 2020 expectation of -$2.5 billion and -$3.3 billion actual in 2019). This dynamic may result in more lumpiness in its path to sustained FCF profitability. However, there has been no material change to its overall time table to reach consistent annual positive FCF and we believe that 2019 will still represent the peak in our annual FCF deficit.
The company ended the quarter with cash of $5.2 billion, while its $750m unsecured credit facility remains undrawn. Combined with improved FCF outlook for 2020, the company has more than 12 months of liquidity and “substantial financial flexibility.”
And while the company’s surge in Q1 subs was enough to initially send the stock sharply higher, perhaps as a result of the company’s cautious Q2 guidance where it sees a drop of 50% in new subs, the stock is virtually unchanged after hours.
Now that the Fed has opened the pandora’s box of moral hazard by purchasing select junk bonds, every other central bank would like a piece of the action. And sure enough, as Bloomberg reports, on Wednesday evening the ECB will hold a call where they may discuss whether to accept junk-rated debt as collateral from lenders.
Translation: the ECB is about to announce it will accept junk bonds as eligible collateral, and why not: the Fed is doing so, so it makes sense for everyone else to pile on.
According to Bloomberg, in a step similar to the Fed’s backstopping of fallen angel high yield paper, the ECB’s conference could be “intended to head off concerns that some sovereign and corporate bonds will soon be downgraded to non-investment grade because of the cost of fighting the coronavirus pandemic.”
Already a storm is brewing: on Friday S&P is set to review credit rating, which it currently ranks two notches above investment grade with a negative outlook. A downgrade would be a step toward potentially excluding the euro zone’s third-largest economy from the ECB’s refinancing and asset-purchase programs, precipitating a crisis.
Yields on Italian debt have risen in recent days. The premium investors demand to hold 10-year Italian debt over Germany’s soared 25 basis points on Tuesday to 263 basis points, despite the country managing a successful bond sale. In raising more than 110 billion euros ($119 billion), it reminded investors just how much it needs the cash. Barclays Plc sees outflows of as much as 200 billion euros if the nation’s rating is cut below investment grade.
As we discussed over the weekend, ratings have become a pressing concern in markets as lockdowns spark the biggest recession in decades. Moody’s Investors Service, which will review Italy in May, rates the nation at its lowest investment grade. While the ECB’s current rules mean Italy would have to be cut to junk by each of S&P, Moody’s Investors Service, Fitch Ratings and DBRS to be excluded from its operations, the prospect of downgrades is unnerving investors. A cut in the sovereign would flow through to the corporate bonds and commercial paper that the ECB also buys and takes as collateral.
Last week, Moodys reported that its “B3 Negative and lower list” soared to its highest tally ever — 311 companies. That tops a former peak of 291 companies, reached during the credit crisis of 2009 and the commodity-related downturn in April 2016. At 20.7% of the total rated spec-grade population, the list also shot up above its long-term average of 14.8%, and closing in on its all-time high of 26.1%. This spike is the result of the confluence of a coronavirus outbreak, plunging oil prices, and mounting recessionary conditions, which created severe and extensive credit shocks across many sectors, regions and markets, the effects of which are unprecedented.
Another Million Homeowners Just Applied For COVID-19 Forbearance In The Past Week
Last week we reported that the number of Americans applying for the government’s mortgage forbearance program had spiked to 3.74%, up from 2.73% the week before.
One week later, total home loans in pandemic-induced forbearance stand at 5.95%, an increase of 60% on the week as roughly a million more homeowners applied for help – bringing the total number of distressed borrowers under the program to roughly 3 million, according to the new Forbearance and Call Volume Survey published by the Mortgage Bankers Association.
Of those, Ginnie Mae loans grew the most week-over-week, from 5.89% to 8.26%, while the share of Fannie Mae and Freddie Mac loans grew from 2.44% to 4.64%.
For reference, total loans in forbearance were just 0.25% the first week in March, according to HousingWire.
In terms of servicing portfolio volume, independent mortgage bank servicers reached 5.69% as of April 12, compared to 4.17% one week earlier, an increase of 36%. Depository servicers ended the week with 6.57% of forbearance shares, up from 3.63% one week earlier, an increase of 80%.
In terms of call volume, the MBA survey found the percentage of servicing portfolio volume calls dropped from 14.4% to 8.8% while hold times decreased from 10.3 minutes to 4.9 minutes and abandonment rates declined from 17.0% to 9.7%. The average call length inched up slightly from 7.5 minutes to 7.6 minutes. –HousingWire
“With over 22 million Americans filing for unemployment over the past month, homeowners are contacting their mortgage servicers seeking relief, leading to a sharp increase in the share of loans in forbearance across all loan types,” said MBA’s senior VP and chief economist, Mike Fratantoni. “Mortgage servicers continue to receive a very high level of forbearance requests, but volumes were down somewhat compared to the prior week.”
With no end in sight to the COVID-19 pandemic and the unprecedented economic fallout which has followed, Fratantoni thinks that forbearance requests “will likely rise again as we approach May payment due dates.”
He also advocated for a federal liquidity vehicle which would assist servicers dealing with the surge in forbearances.
“Mortgage servicers are performing an essential function of the housing finance system by continuing to advance funds to investors at a time when roughly 3 million homeowners are now in forbearance,” he said. “To ensure market stability during these challenging times for consumers and the entire industry, servicers need access to interim financing so that they can continue to play this critical role.”
Other key findings from the BA’s llatest Forbearance and Call Volume Survey (via MBA):
Forbearance requests as a percent of servicing portfolio volume (#) dropped relative to the prior week: from 2.43% to 1.79%.
Weekly servicer call center volume:
As a percent of servicing portfolio volume (#), calls dropped from 14.4% to 8.8%.
Hold times decreased from 10.3 minutes to 4.9 minutes.
Abandonment rates declined from 17.0% to 9.7%.
Average call length rose from 7.5 minutes to 7.6 minutes.
Loans in forbearance as a share of servicing portfolio volume (#) as of April 12, 2020:
Barr Says DoJ Might Join Lawsuits Against States That Don’t Reopen Fast Enough
During an interview with conservative radio host Hugh Hewitt, Attorney General William Barr, who has heretofore enjoyed a reputation as one of the cagiest members of the cabinet, has just made a massive political blunder. Whether he did it at the best of his boss remains unclear.
President Trump’s tweets about “liberating” Democratic-led states has enraged certain conservatives who recognize that Trump has just accepted blame for the handling of the coronavirus response. Delegating to the states was a brilliant move because it meant that no matter what, Trump would be praised for doing the ‘smart’ thing and handing the reins to the states, something that, in theory, also goes against the president’s “authoritarian” nature, which would earn him extra political cred.
By baiting the thousands of Americans willing to go out and join protests demanding an immediate reopening of the economy, Trump is inviting citizens to break the law during an unprecedented crisis when public resources are already strained. If nothing else, it will under mine moderates’ faith in Trump’s ability to make ‘responsible’ choices, likely costing him critical votes in the swing states.
Now, AG Barr has taken Trump’s embrace of the ‘reopen now’ movement to the next level by claiming the DoJ might join lawsuits filed by businesses and citizens against various states over the shutdown orders.
“We have to give businesses more freedom to operate in a way that’s reasonably safe,” Barr said. “To the extent that governors don’t and impinge on either civil rights or on the national commerce – our common market that we have here – then we’ll have to address that.”
The move comes as more conservative groups reportedly heap pressure on the administration to do more to stop governors like Gavin Newsom from keeping their states closed until the summer, according to BBG.
But the last thing states need right now is another reason to blame the White House for meddling in their reopening planning…
One way the Justice Department might act against state or local officials is by joining lawsuits brought by citizens or businesses over restrictions, Barr said. He acknowledged that state governments are at “a sensitive stage,” as they try to balance health and safety against pressure to reopen.But he said that “as lawsuits develop, as specific cases emerge in the states, we’ll take a look at them.”
“We’re looking carefully at a number of these rules that are being put into place,” Barr said. “And if we think one goes too far, we initially try to jawbone the governors into rolling them back or adjusting them. And if they’re not and people bring lawsuits, we file statement of interest and side with the plaintiffs.”
…and Barr just gave it to them on a silver platter.
Leftists are already attacking Barr on twitter.
Seeing the latest “threats” from the AG against the states reminds me of this oldie but goodie where Billy Barr, Esq. touts how “promising” hydroxychloroquine is and is mad that the media is so mean to Trump about it. https://t.co/GlwgkUUdvB
Missouri Sues China, Wuhan Lab Over COVID; Says ‘Deceit, Malfeasance, And Inaction Unleashed This Pandemic’
The state of Missouri became the first in the nation to file a lawsuit against China over their role in the coronavirus pandemic. Also named in the suit are the Communist Party of China, the government of Wuhan City, and the Wuhan Institute of Virology, along with the Chinese Academy of Sciences.
Filed on Tuesday in the Eastern District of Missouri, Missouri Attorney General Eric Schmitt accuses China of knowing that “COVID-19 was dangerous and capable of causing a pandemic, yet slowly acted, proverbially put their head in the sand, and/or covered it up in their own economic self-interest,” according to Fox News.
During the critical weeks of the initial outbreak, Chinese authorities deceived the public, suppressed crucial information, arrested whistleblowers, denied human-to-human transmission in the face of mounting evidence, destroyed critical medical research, permitted millions of people to be exposed to the virus, and even hoarded personal protective equipment—thus causing a global pandemic that was unnecessary and preventable. -State of Missouri v. The People’s Republic of China et al.
According to the complaint, the defendants are responsible “for the enormous death, suffering, and economic losses they inflicted on the world,” and “should be held accountable.”
“When their actions began to kill hundreds of thousands of people across the globe, Defendants sought to minimize the consequences, engaging in a coverup and misleading public relations campaign by censoring scientists, ordering the destruction and suppression of valuable research, and refusing cooperation with the global community, all in violation of international health standards,” the complaint continues.
Missouri cites a Fox News report that the US is currently conducting “a full-scale investigation into whether the novel coronavirus, which went on to morph into a global pandemic that has brought the global economy to its knees, escaped from” the Wuhan Institute of Virology (WIV). The complaint also notes that an emerging theory states that WIV was “studying the virus as part of a commercial activity.”
Fox News has reported that sourceshave increasing confidence that the coronavirus escaped from a Wuhan laboratory, not as a bioweapon but as part of China’s attempt to demonstrate that its efforts to identify and combat viruses are equal to or greater than the capabilities of the United States. The U.S. is conducting a full-scale investigation into whether that’s the case.
But U.S. officials and the intelligence community have confirmed to Fox News that they have taken the possibility of the coronavirus being man-made or engineered inside China as some sort of bioweapon off the table and have ruled it out at this point. –Fox News
It also states that “on or around Late December 2019, healthcare professionals in Wuhan were reporting infections indicating human-to-human transmission” of the disease.
According to Chinese sources cited in the National Review, on December 25, 2019, “Chinese medical staff in two hospitals in Wuhan [were] suspected of contracting viral pneumonia and [were] quarantined. This is additional strong evidence of human-to-human transmission.” This was corroborated by the Wall Street Journal.
According to the South China Morning Press, “On December 27, Zhang Jixian, a doctor from Hubei Provincial Hospital of Integrated Chinese and Western Medicine, told China’s health authorities that the disease was caused by a new coronavirus. By that date, more than 180 people had been infected, though doctors might not have been aware of all of them at the time.“
China is also accused of allowing the virus to spread by knowingly letting approximately 175,000 individuals leave Wuhan on January 1 to travel for the Lunar New Year. In mid-January, Wuhan leaders hosted a potluck dinner for 40,000 residents, “increasing the potential spread of the virus.”
The coverup
According to the suit, “On December 30, 2019, the Wuhan Municipal Health Commission released a notice to medical institutions that patients visiting the Wuhan Seafood Market had contracted a pneumonia-like illness.” The notice warned medical professionals that “Any organizations or individuals are not allowed to release treatment information to the public without authorization.”
Researchers at the University of Toronto observed China “censoring key words about the virus on Chinese social media platforms,” including WeChat, which “has become increasingly popular among [Chinese] doctors who use it to obtain professional knowledge from peers. Because of social media’s integral role in Chinese society and its uptake by the Chinese medical community, systematic blocking of general communication on social media related to disease information and prevention risks substantially harming the ability of the public to share information that may be essential to their health and safety.“
Meanwhile, authorities in China were physically cracking down against dissidents.
On January 1 or 2, the Wuhan police stated that they had “taken legal measures” against eight people who “published and shared rumors online,” and one of them is believed to be Dr. Wenliang.
According to CNN, “The police announcement [against the eight people] was broadcast across the country on CCTV, China’s state broadcaster, making it clear how the Chinese government would treat such ‘rumormongers.’”
The message reportedly said, “The internet is not a land beyond the law … Any unlawful acts of fabricating, spreading rumors and disturbing the social order will be punished by police according to the law, with zero tolerance.
As described by the St. Louis Post-Dispatch, “The punishment of eight doctors for ‘rumor-mongering,’ broadcast on national television on Jan. 2, sent a chill through the city’s hospitals,” and suppressed information from reaching the rest of the world.
The suit also accuses China of misleading the World Health Organization (WHO) as part of a coverup – delaying reporting on COVID-19 to the organization for weeks after the outbreak was identified within the Chinese medical community. When the CCP finally did inform the WHO, they denied human-to-human transmission, “despite having significant evidence to the contrary.”
This “induced the WHO to also deny or downplay the risk of human-to-human transmission in the critical weeks while the virus was first spreading.”
Missouri’s complaint also alleges that China worked to hoard personal protective equipment (PPE) in dire need by healthcare workers around the world in the treatment and handling of coronavirus patients.
It’s Not Just Oil: Another Critical Index Turns Negative, Hinting Funding “Crisis” Has Returned
It’s not the WTI May contract that shocked investors when it traded as far negative as -$40 on the historic date of April 20: also dipping into negative territory was another benchmark indicator, arguably far more important than an oil future contract: General Collateral.
As Curvature’s Scott Skyrm writes, Repo GC rates began trading in the negatives in the morning [on Monday] and traded as low as -.25% [on Monday] afternoon. Unless there is a crisis or it’s quarter-end, it’s very rare for Repo rates to trade this negative.
So maybe there is a crisis but with equities now directly backstopped by the Fed, nobody told stock traders?
Anyway Skyrm continues:
RP operations are declining, so that means less Fed cash in the market, but with rates near zero, money funds are now giving their cash to the Fed again with $31 billion in RRP volume today. Private cash that was on the sidelines must have come back into the market over the past couple of days.
With all of the Cash Management Bill issuance, you would thing there’s plenty of short-term paper available for cash investors. However, maybe QE is starting to impact the market? Maybe the impact of QE combined with increased investor cash is what’s driving rates lower?
And visually:
While the underlying reasons for GC repo’s slide into negative remain unclear, we will remind readers that just a few days ago, repo guru Zoltan Pozsar warned that the surge in Bill issuance could become the next crisis, warning that the only way to control the short-end would be to launch yield curve control for the entire yield curve:
The Fed has done a lot and yield curve control where they peg three month Treasury bill yields at OIS rates and is the only thing the Fed has not done yet, but soon will have to. The target range for overnight rates and the OIS curve – the bottom layer of the money market cake – are the Fed’s monetary sanctum. Everything the Fed does is priced based on variables within that sanctum: the top of the band, IOR, IOR plus a spread and OIS plus a spread.
As we responded to this proposal, which we are confident will be implemented shortly, “the only thing that experts agree will avoid another crisis in the bond – and funding – markets is if the Fed effectively takes over the entire yield curve, ending capital markets as we know them, and launching “price discovery” by decree. While we have no doubt that the Fed will go the length, we can’t help but remember that such terminal central planning did not have a happy ending for the USSR.”
The drop in GC repo to negative just brought the US one step closer to attaching an SR to its name.
Based on how Americans are handling the COVID-19 lockdowns, it is hard to be optimistic about what will happen when a really severe crisis hits us.
Yes, this pandemic is definitely a great tragedy. There are more than 700,000 confirmed cases in the U.S. and more than 40,000 Americans have died. But it isn’t the end of the world. I am sorry to tell you this, but COVID-19 is not the worst thing that we are going to face. In fact, it is not even close to the worst thing that we are going to face. So it is a bit disheartening to see so many Americans responding to this pandemic so poorly.
Let me give you some examples of what I am talking about. Polling firms have been extremely active lately, and even though nearly 40 percent of all U.S. adults are obese, one survey found that Americans are binging on snack foods during these lockdowns like never before…
About 40% of people say they’ve been eating more snack foods since the outbreak began, with 26% admitting they’re finding comfort in chocolate, specifically, according to a Harris Poll of 2,013 US adults conducted over the weekend.
If overeating was all that we had to worry about, I could live with that.
But it turns out that Americans are also indulging in a whole bunch of other self-destructive behaviors during this time. At a moment in our history when alcohol-related deaths in the U.S. are already at an all-time high, heavy drinkers have decided that this pandemic is a perfect opportunity to drink even more…
One in five said they are guzzling more alcohol, though that number was higher, at 30%, among those 18 to 35 — or millennials and Gen-Zers.
In areas that have been hit extremely hard by COVID-19, sales increases have been especially dramatic. In New York City, one liquor store owner says that it is “like New Year’s every day” during his city’s lockdown…
With the initial surge of panic buying over, wine and marijuana sales are still way up, presenting an opportunity — and a challenge — for the businesses scrambling to meet the demand spikes and shifts in consumer behavior.
“It’s like New Year’s every day,” said Mark Schwartz, the owner of Little Mo Wine and Spirits in the Crown Heights neighborhood of Brooklyn, New York, who has seen alcohol sales shoot up fourfold.
Of course while they are eating and drinking they need something to do, and so the average American is streaming approximately eight hours of shows and movies every single day…
The average American is passing the time amid the new coronavirus pandemic by streaming roughly eight hours of shows and movies every day, a recent survey shows.
OnePoll surveyed 2,000 Americans with access to at least one streaming service and found that not only was the average person watching eight hours’ worth of content but also likely went through three series in a week alone, StudyFinds reported.
This helps to explain why Netflix stock has been absolutely soaring recently.
Personally, I have never watched “Tiger King” and I have absolutely no desire to do so. In fact, I have not had a Netflix subscription for over a decade. Very few corporations have embraced pure evil to the extent that Netflix has, but most Americans don’t seem to care, and right now Netflix is absolutely rolling in revenue.
Online poker revenues were up more than 100 percent from February, and iGaming revenue reached a new record of $64.8 million according to the figures released Wednesday for New Jersey, one of two states that allow online gambling.
To me, this doesn’t make any sense at all.
One recent survey found that about half of all Americans will have run through all of their savings by the end of April. If you aren’t going to have enough money to pay your bills next month, why would you want to be gambling the little money that you do have away?
Sadly, it does not appear that our society is equipped to handle hard times. Even before this pandemic started, the suicide rate in the U.S. was at an all-time record high, and more Americans were overdosing on drugs than ever before in our history.
But everything that I have shared with you so far pales in comparison to what I am going to share with you now.
As this pandemic has sent a wave of fear sweeping across the country, it has also created a boom in business at abortion clinics all over America…
The Trust Women abortion clinic in Wichita, Kansas, reported performing 252 abortions in March, up from 90 in March, 2019. Julie Burkhart, the chief executive of Trust Women, told RT.com this week that between the Wichita, Kansas clinic and her other clinic in Oklahoma City (which was briefly closed but has since reopened), they have seen a “300 to 400 percent” increase in their patient load.
“The women who have been calling are uncertain about having a baby when the world is so unpredictable all of a sudden, and they’re worried about money due to the sharp rise in unemployment,” she said. “We’ve been seeing more women calling earlier than usual in their pregnancy, and there’s this urgent nature to it.”
Just like with individuals, great challenges tend to reveal who we truly are as a nation.
And right now the message that we are sending to the rest of the world with our behavior is not a good one.
Past generations of Americans were called to go to war, but we have been called to stay at home for a few weeks, and we can’t seem to even handle that very well.
Amazingly, the mainstream media has somehow convinced a majority of the American people that the lockdowns should continue. Just check out what a NBC News/Wall Street Journal poll just found…
Nearly 60 percent of American voters say they are more concerned that a relaxation of stay-at-home restrictions would lead to more COVID-19 deaths than they are that those restrictions will hurt the U.S. economy, according to a new national NBC News/Wall Street Journal poll.
But while strong majorities of Democrats and independents are more worried about the coronavirus than the economy, Republicans are divided on the question, with almost half of them more concerned about how the restrictions could affect the economy.
The longer these lockdowns persist, the more self-destructive Americans are likely to become.
But eventually they will end, and most people will attempt to resume their normal lives.
Of course it is just a matter of time before an even bigger crisis than this pandemic comes along, and if we are failing so badly this time around, how in the world will people be able to handle something even worse?
