Tag: finance

As the debate about when, where and how to reopen the American economy rages on, here’s where all 50 states stand on reopening their economies, now that the White House has released its ‘guidelines’ and delegated ultimate authority to the governors of each state.

Here’s an (alphabetical) roundup of states’ plans:

Alabama

Alabama Gov. Kay Ivey’s stay at home order is set to expire on April 30. The state’s Lt. Gov. Will Ainsworth is in charge of a task force to decide when to reopen the state’s economy. The task force is expected to deliver a report on its findings later this week.

Ivey said April 14 she intends to work with other states and the Trump administration, but that “what works in Alabama works in Alabama.”

When the economy starts to reopen, Ivey said during a press briefing it will be a slow process over time, “segment by segment or region by region.”

Alaska

Gov. Mike Dunleavy has ordered residents to stay at home until at least April 21. Dunleavy has said that Alaskans will be allowed to schedule elective surgeries on or after May 4; that also applies to doctors visits for non-urgent needs.

Arkansas

Arkansas is one of a handful of states that never faced a stay at home order. Gov. Asa Hutchinson has closed schools for the rest of the academic term, while fitness centers, bars, restaurants and other public spaces have been closed (though the media likes to treat these states as virtually free of any constraints).

Hutchinson told reporters on April 16 that he wants to bring back elective surgeries. “We want to get (hospitals) back to doing the important health-care delivery that is important in our communities,” he said.

California

Gov. Gavin Newsom was the first governor in the nation to issue a stay-at-home order, which he did more than a month ago, on March 19. It had no set expiration date.

Last week, Newsom announced during a joint briefing with Western States that Cali had formed a pact with Oregon Governor Kate Brown and Washington Governor Jay Inslee, promising that “health outcomes and science – not politics – will guide these decisions” to reopen the states.

Moving ahead to this week, Newsom outlined a framework for reopening the economy in California that he said was predicated on the state’s ability to do six things: expand testing to identify and isolate the infected, maintain vigilance to protect seniors and high risk individuals, meet future surges in hospital demand and continuing work on therapies and treatments, redrawing regulations to continue social distancing at businesses and schools and develop new enforcement mechanisms. How long that might take is anybodies’ guess.

Colorado

Gov. Jared Polis extended the state’s stay-at-home order to April 26 (it ends Sunday night).

Polis added on April 15 that the key information state officials needed to determine when parts of the economy can be reopened is likely to come within the next five days.

The governor warned that restrictions won’t all be lifted at the same time, and life will be different for some time. “The virus will be with us,” Polis said. “We have to find a sustainable way that will be adapted in real time to how we live with it.”

Connecticut

During an interview on “Squawk Box” Tuesday morning, Gov. Lamont said that May 20 is a line in the sand: He has promised that schools and businesses likely won’t start to reopen before then. “The presidential guidelines were pretty responsible,” Lamont said, adding that they gave the state “a yellow light” to start opening things up. “My instinct is we’re going to first focus on big manufacturing and outside construction – which Connecticut never closed down by the way – before we move on to retail, and opening them up on a limited basis.”

“The things that come later are the things that Georgia opened up first…those things that have close personal contact…bars, barber shops…there I think we’re going to have to wait until we have a little more testing, and more masks,” he said.

Delaware

Gov. John Carney issued a statewide stay-at-home order that will remain until May 15 or until the “public health threat is eliminated.”
Delaware has joined a coalition of six Northeastern states to coordinate the reopening of the regional economy.

The governor said April 17 that even after the state reopens, social distancing, face coverings in public, washing hands, limited gatherings and vulnerable populations sheltering in place will remain.

Washington DC

Mayor Muriel Bowser has extended the state’s lockdown until May 15.

Florida

Florida Gov. Ron DeSantis issued a stay-at-home order for Floridians until April 30 and plans to announce plans for reopening next week. He has already allowed some beaches in the state to reopen, a controversial move that was widely criticized by the NYT and MSNBC, among others.

Southeast Florida, the epicenter of the state’s outbreak, might reopen more slowly than the rest of the state.

Georgia

As we noted last night, Gov. Brian Kemp, who issued a statewide shelter-in-place order until April 30 and set a public emergency for schools in the state until May 13, announced plans for reopening the state by this time next week.

Hawaii

Gov. David Ige issued a stay-at-home order until at least April 30. He said last week that the state isn’t close to meeting the reopening criteria, and it’s not clear when that will happen.

Idaho

Gov. Brad Little amended his order April 15 to allow for some businesses and facilities to reopen for curbside pickup, drive-in and drive-thru service and for mailed or delivery services. It is now effective through the end of the month. As of now, the state’s “order to self-isolate” will expire on April 30, unless extended.

Little says the measures are working and Idaho is “truly seeing a flattening of the curve.”

Illinois

Illinois Gov. J.B. Pritzker issued a stay-at-home order in effect through the end of the month unless extended.

Pritzker said during a media briefing Monday that he believes the current state in Illinois has been enough to slowly start lifting shelter-in-place orders so that some industry workers can go back to work, although he hasn’t laid out a clear timeline.

Indiana

Gov. Eric Holcomb extended his state’s stay-at-home order through May 1 to give it more time to look into what “the best way is to reopen sectors of the economy.”

He said he would work with the state hospital association to see when elective surgeries could resume. The state is also part of that “midwestern coalition” we have mentioned.

Iowa

Gov. Kim Reynolds has not declared a stay-at-home order, though she did issue a  “State of Public Health Disaster Emergency” on March 17, which was tantamount to a closure order, forcing ‘nonessential’ businesses to close until the end of the month. She also formed a task force to look into how to reopen schools and the economy. Reynolds on April 16 announced that residents of the state’s hottest hot spot won’t be allowed to congregate at least until next month.

Kansas

Gov. Laura Kelly has extended the closure order until May 3, with the state’s “peak” expected by the end of April.

Kentucky

Gov. Andy Beshear issued a “Healthy at Home” order March 25 with no end date. Oddly, Kentucky is actually part of the coalition of midwestern states working to reopen their economies together.

Louisiana

Gov. John Bel Edwards extended the state’s stay-at-home order through April 30. Residents will soon be able to start getting non-emergency surgeries.

Maine

Gov. Janet Mills issued a “Stay Healthy at Home” executive order through at least April 30, and has extended a civil state of emergency until May 15.

“We are in the midst of one of the greatest public health crises this world has seen in more than a century,” Mills said in a news release. “This virus will continue to sicken people across our state; our cases will only grow, and more people will die. I say this to be direct, to be as honest with you as I can. Because saving lives will depend on us.”

Maryland

Gov. Larry Hogan issued a statewide stay-at-home order on March 30. There is no current potential end date.
The governor said during his appearance on CNN Newsroom on April 13 that the state is discussing ways to safely reopen the state with health officials.

Massachusetts

Governor Charlie Baker has issued an emergency order requiring all nonessential businesses to remain closed until May 4. Mass is also part of the northeastern coalition.

Michigan

Gov. Gretchen Whitmer has said she “hopes” to start reopening May 1 despite her state being one of the hardest hit outside New York.

Minnesota

Gov. Tim Walz extended the state’s stay-at-home order through May 3, while extending a peacetime emergency for an additional 30 days until May 13.

Mississippi

Gov. Tate Reeves has extended a shelter-in-place order to April 27, but said some non-essential businesses could reopen by offering services via drive-thru, delivery or ‘outside’ shopping.

Missouri

Gov. Mike Parson on April 16 extended the stay-at-home order through May 3 and pledged to work with businesses and health-care providers on the reopening plan.

“Our reopening efforts will be careful, deliberate, and done in phases,” he said.

Montana

Bullock’s stay at home order for the state will expire on Friday, and the governor has said that the federal guidelines will allow it to reopen “sooner rather than later.”

Nebraska

Gov. Pete Ricketts issued the “21 Days to Stay Home and Stay Healthy” campaign on April 10, ordering all hair salons, tattoo parlors and strip clubs be closed through April 30. Nebraska is one of the states that has not issued a stay-at-home order.

Nevada

Gov. Steve Sisolak issued a stay-at-home order that expires April 30.

When asked about how he’d make his decision to reopen the economy, Sisolak said “positive testing is important but it’s not my number one parameter,” adding that “basis hospitalizations” are seen as an important metric for him.

New Hampshire

Gov. Chris Sununu issued a stay-at-home order until May 4, and told reporters that he’ll decide whether to extend it before it expires.

New Jersey

Gov. Phil Murphy issued a stay-at-home order on March 21 that has no specific end date. His state is part of the northeastern alliance.

New Mexico

Gov. Michelle Lujan Grisham extended the state’s emergency order to April 30, and said Thursday that her state is evaluating the federal guidelines but couldn’t risk putting “the cart before the horse” and are still working on developing a plan.

New York

Gov Cuomo’s “PAUSE” order is currently set to keep schools and businesses closed until at least May 15.

North Carolina

Gov. Roy Cooper issued a stay-at-home order for the state effective until April 29.

North Dakota

Gov. Doug Burgum is one of the governors who never issued a stay at home order, and has said he would like to reopen by May 1.

Ohio

Mike DeWine has said he hopes to start reopening on May 1.

Oklahoma

Gov. Kevin Stitt said April 15 that he is working on a plan to reopen the state’s economy, possibly as early as April 30.

Oregon

Gov. Kate Brown issued an executive order directing Oregonians to stay at home that “remains in effect until ended by the governor.”

Pennsylvania

Gov. Tom Wolf issued stay-at-home orders across the state until April 30. It is part of the coalition of northeastern states.

Rhode Island

Gov. Gina Raimondo’s emergency order to keep the state closed is set to expire May 8.

South Carolina

The state’s governor said earlier he would push to start reopening by next Tuesday.

South Dakota

Gov. Kirsti Noem hasn’t issued a stay at home order.

Tennessee

Gov Bill Lee has said he plans to start reopening businesses as soon as Monday.

Texas

Gov. Greg Abbott ordered all Texans to stay home through April 30.

Utah

Gov. Gary Herbert extended the state’s “Stay Safe, Stay Home” directive through May 1. Schools will be closed for the remainder of the year.

Vermont

Gov. Phil Scott issued a “Stay Home, Stay Safe” order that has been extended until May 15.

Scott on April 17 outlined a five-point plan to reopen the state while continuing to fight the spread of the coronavirus during a news conference.

Virginia

Gov. Ralph Northam issued a stay-at-home order effective until June 10.

Washington

Gov. Jay Inslee extended Washignton’s stay-at-home order until May 4, saying “We are yet to see the full toll of this virus in our state and the modeling we’ve seen could be much worse if we don’t continue what we’re doing to slow the spread.”

West Virginia

Gov. Jim Justice issued a stay-at-home order until further notice.

“That curve is the curve we’re looking for to be able to look at the possibility of backing things off and going forward. We’re not there yet,” Justice said on April 13.

Wisconsin

Gov. Tony Evers’ stay at home order will expire May 26, making his one of the latest dates in the country, along with Connecticut and the states that haven’t set a date.

Wyoming

Wyoming doesn’t have a stay at home order, and has been relatively unscathed by the outbreak. It was the last state to receive a federal disaster declaration.

*      *      *

Sources: CNN, Twitter

Authored by Charles Hugh Smith via OfTwoMinds blog,

Sadly, as markets stall and crash, participants will still be in their seats thinking all is well.

The tragic 2009 crash of Air France Flight 447 offers an apt analogy for the global economy and central bank-driven false signals. Flight 447 entered an area of frigid turbulence over the Atlantic which caused the air-speed sensors (pitot tubes) to ice up. A few minutes later, the autopilot disengaged, and the co-pilot flying the aircraft over-corrected in the turbulence.

Deprived of accurate airspeed readings, the co-pilot misjudged the situation and attempted to climb, causing the aircraft to stall. Unable to recover, it crashed into the Atlantic, killing all on board.

The co-pilot’s last recorded words are haunting: “We’re going to crash! This can’t be true. But what’s happening?”

The Federal Reserve’s massive pimping of the stock market has frozen free-market feedback, generating wildly inaccurate readings which are leading participants to their doom. Stripped of price discovery and accurate readings of risk, participants are attempting to recover recent highs, a misreading of reality that will cause the stock market to stall and crash.

In effect, the Fed is jamming the equities market light on”green” when it should be flashing red and a stall alarm should be sounding. Participants in the current manic rally are looking at the indicator light–a steady green, indicating A-OK–when in reality the global economy has stalled out and is crashing.

Thanks to the Fed’s pimping, the indicators no longer reflect the realities of price discovery or risk, and so participants are making a fatal error: they are assuming that the indicator light is accurate and that the stock market is “safe” and “stable,” when in fact it is unstable and stalling.

Having inflated a high-risk, unsustainable bubble from September 2019 to February 2020, the Fed’s response to the stock market stall in March has been to create false readings of stability, risk and altitude. While punters and money managers are acting on the panel of green lights (“The Fed has our backs, stocks will rise, there’s no risk”), the market is actually stalling out so severely that the warning sensors have shut down.

Sadly, as markets stall and crash, participants will still be in their seats thinking all is well because the Fed has jury-rigged all the readings to be bright green and disabled the stall alarm.

*  *  *

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With scores of small businesses in dire straits due to the coronavirus lockdown, the $349 billion bailout designed to help them was raided by public companies and hedge funds.

According to the Financial Times, over 80 publicly listed companies tapped the Paycheck Protection Program (PPP), which ran out of funds last week. The most prominent public company to take the funds was Shake Shack, which sparked backlash after receiving $10 million in PPP funds through JPMorgan. Perhaps sensing pitchforks, the company announced on Monday that it would be returning the funds.

A list of public companies that have reported receiving #PPPloan assistance

(via Morgan Stanley) pic.twitter.com/25Le6RnRqi

— Carl Quintanilla (@carlquintanilla) April 21, 2020

JPMorgan separately announced that it’s working with the Treasury department to adjust the distribution qualifications for the next round of PPP stimulus in order to ‘end loopholes allowing major restaurant chains and hedge funds’ to access the next virus aid package.

Another company which tapped into the PPP was Ohio-based biotech Athersys, which received $1 million through the program despite raising nearly $60 million in a Monday stock offering after its shares have nearly doubled YTD. Meanwhile Nikola Motor – backed by Fidelity and hedge fund ValueAct, announced a $4 billion valuation in early March when it announced a merger with VectoIQ. The company borrowed $4 million from the PPP according to a disclosure.

Ruth’s Chris steakhouse made $42 million in profit on $468 million in revenue last year, yet tapped $20 million from the PPP.

Some companies have already shown an ability to raise money in the public markets despite the coronavirus lockdowns. One recipient, the electric truck start-up Nikola Motor, is in the throes of a merger with a public company that values it at $4bn.

The disclosures, which included more than a dozen filed on Monday alone, will sharpen discussion in Washington about the design of the bailout scheme, known as the Paycheck Protection Program, which was intended to help ordinary businesses keep employees on payroll and to meet basic operating expenses. –Financial Times

Lawmakers are expected to add hundreds of billions of dollars to the fund this week – however there have been calls for greater oversight and clear rules defining who can access the loans, which carry an interest rate of just 1% and turn into grants if businesses retain a certain percentage of employees.

“Public companies that have access to other sources of money should not be using this,” said University of Delaware corporate governance expert Charles Elson. “Small businesses need this pot to survive.”

According to FT, 83 public companies have borrowed over $330 million from the PPP – averaging $4 million each while the Small Business Association (SBA) which oversees the program said that the average loan was $200,000.

Indiana-based coal miner Hallador Energy took $10m after it had sacked 60 employees in March. Also taking $10m was the data storage company Quantum. Emmis Communications, the dotcom boom star which operates the Hot 97 radio station in New York, borrowed almost $5m, according to a securities filing.

Large restaurant groups including Potbelly and the owner of Ruth’s Chris Steak House disclosed last week that they had each drawn $10m or more, taking advantage of an exemption for restaurant and hotel chains to the rule that otherwise limited PPP funding to businesses with fewer than 500 employees. –Financial Times

“We have been able to maintain limited US operations in our lab and manufacturing facility in Massachusetts without reducing our workforce thus far,” according to Boston-based biotech company Wave Life Sciences, which was able to secure $7 million through the PPP. “We are doing everything we can to protect their jobs through this period of uncertainty, which includes applying for the PPP loan that will be used exclusively to support US operations, including payroll.“

Submitted by Michael Every of Rabobank

So much for the Monday on “pause” that I flagged might just happen. Instead, we got amazing action in the energy market. If the initial Saudi flood of oil into a demand collapse deserved the headline “Oil Vey” then yesterday’s development deserves the full “Oil Gevalt” and the question “WTI just happened?” Specifically, WTI for May delivery collapsed to MINUS USD37.63 a barrel. Yes, if you have been on holiday for a few months and just got back, not USD37.63 but MINUS USD37.63. Somebody was PAID USD37.63 to take away a barrel of oil.

On one level this is an indication of fat fingers and of fat heads. It’s also as clear as sign as one will get that in the near term (as the June contract is USD20.43 – for now) there is simply too much oil and nowhere to put it. I don’t know if you have ever seen the classic Laurel and Hardy film “Bogus Bandits” (released in Europe as “The Devil’s Brother”), but it has one scene at the end where Ollie has to pass down endless jugs of wine for Stan to pour into a larger vat that they are to carry upstairs for a party. When the vat is full, Ollie keeps passing the wine down…and Stan has no idea what to do with the stuff except drink it because it has nowhere else to go. Of course, he gets smashed (or “spiffed”, as Olly calls it) leading to a hilarious drunken laughter scene. And that’s just what happened to the oil market yesterday – except it’s no laughing matter when Stan and Ollie are our best analogy for a global commodity market of vast strategic importance.

If you don’t like that view, there are others. Some of the best commentary I have seen on this includes: “If things continue like this, US oil firms are going to have to lay off some members of Congress” and “Perhaps we can store all the oil in WeWork offices.”

While we had too much stuff glooping around in oil, we also had signs that the flood of fiscal liquidity in the US is doing pretty much the same thing – except in this case we know that ‘Stan’ has a bottomless stomach. Congress and the White House are apparently close to agreeing another USD500bn top up for small business lending and virus testing after USD349bn was swallowed in days. That’s what was half of a record annual fiscal deficit in the blink of an eye and not even a leading headline. We also had Trump promising that Phase Four discussions will start soon: will this be USD1 trillion or USD2 trillion? Does it even matter? Just keep drinking!

One can say the same given that markets wobbled this morning on Asia on reports that North Korea’s leader Kim Jong Un, who hasn’t been seen for days, was apparently critical after heart surgery (and he always looks so healthy…); is the absence of Kim bad for capitalist markets? Sorry wrong question – we don’t have capitalist markets: is the absence of Kim bad for “markets”? Anyway, it is for KRW. Luckily, sentiment turned around when South Korean media reported Kim was fine. What a relief!

Yet even that wasn’t it for a drunken Monday. US President Trump has just used an executive order to temporarily suspend all immigration – how long for is still unclear. This will serve several purposes. First, media unfriendly to Trump will stop talking about the virus and will report on the immigration step instead. Second, it will fire up his base. According to his tweet, this action is “in light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American citizens.” This implies it will help reduce virus spread, even as lockdowns are being removed, egged on by Trump, and will also boost job creation, even as 22 million positions have been suspended in the last four weeks. If this is a harbinger of what the run-up to 2020 is going to look like then markets should be taking a stiff drink when thinking about Q3 and Q4.

Meanwhile, there was bad news for the real economy. South Korea’s first 20-day trade data, a key Asian leading indicator, showed exports -26.9% y/y and imports -18.6% despite China claiming to be back to normal. Elsewhere, Virgin Australia went into voluntary administration, showing how a credit crunch will emerge unless everyone gets a central-bank backstop – deserving or not. Either ‘Ollie’ keeps the wine flowing or there will be an almighty hangover. (of course, who gets “spiffed” is not always immediately clear: Virgin Australia’s main owners are China’s HNA Group, China’s Nanshan Group, Singapore Airlines, and Etihad Airlines. Sir Richard only has 10%). Virgin Atlantic is meanwhile asking for a GBP500m loan and The Guardian reports Mr Branson is willing to mortgage his private Caribbean island to achieve it given his existing British tax-free fortune of GBP4.7bn is apparently not sufficient. Perhaps if he offered to store oil on the island this might help?

Understandably RBA Governor Lowe has stressed that the government can’t spend too much money right now; the RBA’s latest minutes show concern GDP will be flat through to September; and the Governor is reportedly concerned that SMEs in particular and business investment in general are both likely to still suffer even when we eventually get out of lockdown. AUD was down from nearly 0.64 to 0.63 on the day. NZD also fell from 0.6080 to 0.5980 after RBNZ Governor Orr said he will consider further stimulus in May too just as Kiwi lockdowns start to be lifted from next week.

“What about the priced-in V-shaped recovery when lockdowns are gone?”

“Shut up and drink!”

And cheer yourself up with Ollie and Stan after too much wine: after all, we could use a good laugh.

Having seen its share of gratuitous use over the years, now may be the best time ever to pull up the infamous Martha Stewart tweet:

OiI

— Martha Stewart (@MarthaStewart) April 22, 2013

The reason is that while the largest crude oil ETF, the USO, which had just over $4.2 billion in assets as of yesterday has avoided liquidation for now, and instead converted itself into a close-end fund by suspending the sale of creation baskets, one of its biggest peers failed to avoid collapse after oil prices plunged to negative for the first time ever, and on Tuesday morning, Barclays announced that it would “exercise its issuer call option” and redeem in full the “OIL” Crude Oil ETN, which is the third largest oil-related ETF (second if one ignores the UCO which is a 2x levered USO).

Needless to say, the fund has seen better days…

… and now all those who lost about 80% of their investment in the past few weeks, well they are now getting a few pennies on their dollar.

So what happens next? Barclays – who suckered in thousands of retail investors and is now giving them a small portfion of their investment as it closes up OIL shop – explains.

Holders of the ETNs on the Redemption Date will receive a cash payment per ETN equal to the closing indicative value of the ETNs (as defined in the prospectus relating to the ETNs) on April 23, 2020 (the “Valuation Date”), the fifth business day prior to the Redemption Date.

Additionally, Barclays announces that it will suspend any further sales and issuance of the ETNs, effective today, April 20, 2020. This suspension may cause fluctuations in the trading value of such ETNs. Daily redemptions at the option of the holders of the ETNs will not be affected by this suspension. Barclays’ lending activities from the existing inventory with respect to the ETNs will also not be affected by this suspension.

And to think that all of this could have been avoided if only the Fed would purchase OIL, not the commodity but the ETN. Powell, are you listening, because if not soon every single investment will end like this:

 

Lockdown protests across the Western world have become more widespread. Economies have crashed, unemployment is soaring, and people are losing their minds in quarantine. 

France is the latest country to observe social unrest, more specifically in Paris, as the second night of riots unfolded across the capital. 

Riots broke out in the suburbs of Villeneuve-la-Garenne and Aulnay-sous-Bois, northern Paris, over the weekend, and continued through Monday, the Daily Mail reports. 

The spark that lit the powder keg was due to an incident involving an Arab Muslim male on a motorcycle who was critically injured in a collision with an unmarked police car on Saturday in Villeneuve-la-Garenne. 

Overnight riots in #Paris suburb after motorcycle incident involving police#France pic.twitter.com/2rrk8wxm5S

— Ruptly (@Ruptly) April 20, 2020

Residents claim this is the latest example of “racist” police and their “heavy-handed” treatment of ethnic minorities during the coronavirus lockdown. 

Heavily armed riot police used batons, rubber bullets, and tear gas to suppress protesters. 

However, protesters fought back with rocks and fireworks and transformed the streets into a warzone.

The Daily Mail quoted a local police spokesman who said: “Police and their reinforcements have been the target of rioters, who have thrown stones and fireworks.” 

“The violence started in Villeneuve-la-Garenne and has spread to other towns and estates nearby.”

French journalist Taha Bouhafs tweeted the destruction on Monday night. 

“Lots of fireworks fire this evening at #VilleneuveLaGarenne, tensions underway in several neighborhoods, notably in the northern suburbs,” he wrote. 

En direct depuis le quartier du Luth à #Gennevilliers une voiture de la bac prise pour cible par des tirs de feux d’artifices.#VilleuneuveLaGarenne #VilleneuveLaGarenne pic.twitter.com/cqdAwSvYi1

— Taha Bouhafs (@T_Bouhafs) April 20, 2020

Dispositif policier important à #asnières / #Gennevilliers c’est le jeu du chat et la souris. Plusieurs départs de feu.#VilleneuveLaGarenne pic.twitter.com/127THvoQGx

— Taha Bouhafs (@T_Bouhafs) April 20, 2020

Police claim they were “ambushed” by protesters in the nearby suburb of Aulnay-sous-Bois. 

Aulnay-sous-Bois et Saint-Denis ont été le théâtre de violences urbaines dans la nuit de lundi à mardi
➡ Des tirs de mortier et de projectiles ont visé des pompiers et policiers, sans faire ni blessé, ni interpellation > https://t.co/QGYhDJ1APV pic.twitter.com/dcf75XHd3F

— Le Parisien (@le_Parisien) April 21, 2020

❤️ #aulnaysousbois – Ambiance tendue pic.twitter.com/AxS99DwHDh

— Rouen dans la rue (@Rouendanslarue) April 20, 2020

French President Emmanuel Macron announced last week that he was extending lockdowns across the country through mid-May, saying the fight against the virus is progressing, but the battle is far from over. 

With millions of people in quarantine across the country and escalating riots in northern Paris, authorities fear widespread social unrest could be imminent. 

We warned three weeks ago that a “social bomb” was set to detonate over major Western cities. And here we are…

Sales of previously owned U.S. homes dropped in March by the most since November 2015, representing weaker demand that likely is going to get much worse in coming months as the pandemic bears down on the economy.

Contract closings declined 8.5% from the prior month to an annualized 5.27 million, the slowest since April 2019, from a downwardly revised 5.76 million in February,

The first half of the month “held up reasonably well, but it was the second half of March where we are seeing a measurable decline in activity,” Yun said.

Many potential home sellers are delaying listing their properties in the current economic environment, he noted.

This is the first of the housing data for March and does not bode well…

Business closures and stay-at-home orders that began taking effect mid-month have led to listing delays and caused buyers to postpone purchases, but median home price rose 8% from last year to $280,600 (but the low end is sliding)…

Remember, these are contract closing for sales that were signed late Jan, early Feb and so there could be significantly worse to come.

“Based on what we are seeing at the moment, don’t be surprised if the sales activity could be down as much as 30% or even 40% in the next couple of months,” Lawrence Yun, NAR’s chief economist, said on a call with reporters.

Housing inventory picked up a little in March but remains down 10.2% YoY and at the lowest level for March in history.

Via AdventuresInCapitalism.com,

I’m one of those guys who’s always believed that certain truths are sacrosanct.

• Interest rates would always stay positive…

• …commodities would always be worth something…

• …and the US government would pretend to care about the deficit.

Over the past few years, I feel like the hedgie who’s learned that the Easter Bunny doesn’t really exist.

Honestly, a lot of what I accepted as being immutable last decade has been proven false.

Incredibly, people will pay governments for the right to hold onto worthless bonds.

It doesn’t make any sense to me, but after trillions of dollars in transactions, I’m coming to believe that negative interest rates are a real thing.

And yesterday, we learned that people could spend years searching for oil, billions of Dollars in drilling for oil and then pay someone to take their oil – yes; oil is worth less than zero.

What’s next?

Which sacrosanct asset class will trade at a negative value tomorrow?

I know that we are in a brave new world of government manipulation. Prices move faster than bureaucrats and all, but what is the right price for anything in this world?

If the rules are made up and changing, how do you invest? Why is one price right? I am increasingly convinced that public markets are arbitrary; more opportunity and more stupidity. While we can always debate the opportunity, no one can debate the inherent stupidity of oil trading at a negative price.

In a world where valuation is arbitrary at best, how do you know the right price for anything? If you are running a 130:100 book, how do you adjust your VAR if equity valuations are also potentially trading negative? Oil going negative seems like the ultimate signal to de-gross and see what happens. If oil can print negative, anything is suddenly possible.

I suspect very strange things come from all the money printing and market manipulation. How can anyone possibly run 230 gross any longer? It’s time to de-gross, because it’s simply too strange out there. Are you listening to the markets?

Another industry in trouble, another government intervention, but this one will have serious negative consequences.

Amid a collapsing oil curve, and the beginning of bankruptcies across the energy states, President Trump has unveiled a new executive order to save them all:

“We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!”

What is perhaps misunderstood once again is the ‘unseen’ – the fact that enabling these zombie firms to live longer and produce more oil will merely exacerbate the oil glut and drive prices even lower, leaving Trump open to every increasing bailouts before the bullet has to be bitten.

Remember, the only cure for low oil prices are even lower oil prices which puts the highest cost producers out of business permanently (and not just restructuring their balance sheet), and recent rig counts and production drops suggest the low prices were starting to work:

As breakevens across US oil producers are massively higher from here and so supporting this ‘broken business model’ is irrational…

Quite the perspective, all things considered.

⁦@Quillintel⁩
⁦@SoberLook⁩ pic.twitter.com/fgnNXzKhfX

— Danielle DiMartino Booth (@DiMartinoBooth) April 21, 2020

Of course it could be argued – somewhat defensively – that this is President Trump’s way to fight back against Russian and Saudi efforts to curb-stomp US shale companies.

And since MbS and Putin will see this plan for what it is, both countries will be quite happy to violate the recent historic 9.7mmb/d production cut if all it achieved was to bolster US shale.