Tag: news

Authored by Michael Snyder via TheMostImportantNews.com,

People have been asking me to do an article like this for quite some time.  In all the years that I have been writing, I have never seen so many of my readers so alarmed about our immediate future.  Over and over again, I have been getting emails from people asking for advice about how to prepare for what is ahead, and so many of them are using the word “urgency” to describe what they are feeling.  And I can definitely identify with that, because around the middle of last year that is a word that I started using constantly.  I felt an urgency about 2020 that I had never felt about any other upcoming year, and there were certain things that I knew that I had to get done.  One of those things that I had to get done was my new book, and it is now finished.  The plan is to release it this month, and after reading it there will be no doubt about why I have been feeling such a sense of urgency in recent months.

I want to warn you in advance that the list below is not an exhaustive list.

Instead, it is meant to be a very basic starting guide.  There are many other things that could (and probably should) be added to this list, and I very much encourage readers to leave comments after this article with their own suggestions and recommendations.  We should always be willing to learn from one another, because nobody is an expert on everything.

To me, the four primary priorities for preparing for an emergency scenario are food, water, energy and shelter.  Once you have got those four basic areas covered, you can certainly build on that foundation by addressing other considerations.

In the title of this article I use the phrase “the next 12 months”, but I do not mean to imply that everything will be fine after those 12 months are over.  In fact, I am convinced that our problems are only going to intensify as time rolls along.

And I certainly hope that you will not need everything on this list during the next 12 months.  Hopefully, you will not need to use some of these items for a few years.  But this is definitely a great opportunity to purchase many of these things, because a lot of them are only going to become more expensive and more difficult to acquire the worse conditions get.

In putting this list together, I was envisioning a scenario in which most of you will be sheltering at home rather than “bugging out” to an alternative location.  In a “bugging out” scenario, this list would look quite a bit different.

Also, I didn’t address self-defense in this list, but without a doubt it is very important.  In fact, if you live in or near a major city, it is imperative to have a plan for defending yourself and your family.  For years, I have been encouraging readers to move away from the major cities, but for a lot of people that simply isn’t possible at this moment.  More than 51 million Americans have filed new claims for unemployment so far this year, and so a good stable job is an extremely valuable thing to have at this moment.  If your job is keeping you in a potentially dangerous area right now, you will also want to have a plan for “bugging out” to a more remote location if the need arises.

With all of that being said, the following are 50 things that I am encouraging everyone to stock up on in order to prepare for the chaotic times that are coming…

#1 A Generator

#2 A Berkey Water Filter

#3 A Rainwater Collection System If You Do Not Have A Natural Supply Of Water Near Your Home

#4 An Emergency Medical Kit

#5 Rice

#6 Pasta

#7 Canned Soup

#8 Canned Vegetables

#9 Canned Fruit

#10 Canned Chicken

#11 Jars Of Peanut Butter

#12 Salt

#13 Sugar

#14 Powdered Milk

#15 Bags Of Flour

#16 Yeast

#17 Lots Of Extra Coffee (If You Drink It)

#18 Buckets Of Long-Term Storable Food

#19 Extra Vitamins

#20 Lighters Or Matches

#21 Candles

#22 Flashlights Or Lanterns

#23 Plenty Of Wood To Burn

#24 Extra Blankets

#25 Extra Sleeping Bags

#26 A Sun Oven

#27 An Extra Fan If You Live In A Hot Climate

#28 Hand Sanitizer

#29 Toilet Paper

#30 Extra Soap And Shampoo

#31 Extra Toothpaste

#32 Extra Razors

#33 Bottles Of Bleach

#34 A Battery-Powered Radio

#35 Extra Batteries

#36 Solar Chargers

#37 Trash Bags

#38 Tarps

#39 A Pocket Knife

#40 A Hammer

#41 An Axe

#42 A Shovel

#43 Work Gloves

#44 N95 Masks

#45 Seeds For A Garden

#46 Canning Jars

#47 Extra Supplies For Your Pets

#48 An Emergency Supply Of Cash

#49 Bibles For Every Member Of Your Family

#50 A “Bug Out Bag” For Every Member Of Your Family

Are there certain key items that you would add to this list?  If so, please feel free to leave a comment with your thoughts below.

I understand that there are a lot of people out there that are feeling extreme financial stress during this severe economic downturn, and acquiring all of the items on this list may not be possible.

And that is okay.  Our job is to do the very best that we can with what we have, and we shall trust God with the rest.

I know that a lot of people out there don’t like it when I write such “negative” articles.  But I wouldn’t be doing my duty if I didn’t warn people about what was coming, and I actually believe that articles like this give people a lot of hope.

There is hope in understanding what is coming, there is hope in getting prepared, and there is hope in connecting with others that are also preparing.

Just like we witnessed during the early stages of this COVID-19 pandemic, the people that will be freaking out when things get really crazy will be those that do not understand what is happening and haven’t made any preparations in advance.

Millions upon millions of Americans will not be able to handle the times that are coming, but we prepare because we believe that with God’s help we can make it through all of the storms that are ahead.

If you wish to mock us for being preppers, please feel free to do so, but you also need to be prepared to issue one whopper of an apology when you are forced to turn to one of us for help one day.

President Trump is expected to lead tonight’s press briefing of the COVID-19 White House Task Force – the first time Trump will lead one of the task force’s briefings since he abandoned the daily briefing schedule back in late April. 

But Trump’s presence isn’t the only notable personnel decision. Dr. Fauci and a handful of other task force members have confirmed to CNN that they had not been invited to the briefing, meaning that what we’re about to see is very likely to be 100% Trump.

That’s not super surprising. The president’s advisers have urged him to take a more high-profile approach in leading the virus response against Democratic rival Joe Biden.

“I think it’s a great way to get information out to the public,” Trump told reporters during a scrum in the Oval Office on Monday, saying he hopes to discuss progress on vaccines and therapies like remdesivir.

Trump has been tweaking his approach lately, even going so far as to belatedly tweet a photo of himself in a face mask Monday, calling wearing one an act of patriotism, after months of resistance to being publicly seen in the coverings.

Dr.Fauci told CNN’s Jake Tapper in a Tuesday interview that he is “assuming” he will not appear at President Trump’s briefing, since it’s due to start in less than an hour.

“I was not invited up to this point,” he told Tapper moments ago. “I’m assuming I’m not going to be there.”

The briefing begins at 1700ET.

Back before the days of “social justice” and the pandemic, when you had a tenant that didn’t pay the rent, the consequences were simple: you would evict them. But nowadays – where everybody is criticized for being insensitive about everything and feelings matter more than facts (and certainly more than our economy) – one landlord felt so sufficiently confused about what to do with his deadbeat tenant, he had to write to MarketWatch’s Moneyist column for advice.

“I have rented a house behind my own home to someone in the service industry who is out of a job because of COVID-19, and now he can’t pay the full rent,” the letter says.

Then, he talks about how he is slaving away, hustling to handle his own personal financial situation while handing a pass to his tenant, ostensibly because he feels guilty: “I am fortunate enough to still have a job, but I am heavily in debt with student loans, my mortgage, and other bills. I work very hard, including early and late hours and weekends. I have referred my tenant to companies hiring during COVID-19, but he isn’t interested or says it pays too low.”

The landlord then notes that no matter what type of help he has offered his tenant, he is just “always smoking weed”: “Instead, he is hanging out with friends or his girlfriend, and always smoking weed. He tells me I should forgive or discount the rent. It should be noted that he is already getting a discount since the rent is well below market price.”

Finally, he offers up an impotent and castrated sounding solution, stuck somewhere between doing the actual right thing and kicking the tenant out on his ass and the perceived right thing, which is to let the tenant live there for free and hope the Fed’s money printer will pay everybody’s bills going forward. 

“Part of me doesn’t want to give him a discount since I work so hard and long hours, and he just hangs around being picky about work. Is that wrong of me? What should I do?”

To which the Moneyist replied: “Your tenant’s situation reminds me of a cartoon I once saw featuring a fellow smoking marijuana and watching TV in his boxer shorts and a T-shirt in his parent’s basement. The caption went something like ‘Smoking weed has never done me any harm!’ The next box was the exact same image, except it was 20 years later, and the caption read: ‘Smoking weed has never done me any harm!'”

But the columnist then reminds the landlord that “several major cities across the U.S. have either issued temporary bans on evictions or are considering them as the coronavirus outbreak unfolded,” essentially reminding him that his hands could be tied and that, in addition to bearing the brunt of the virus and his own debt-load, he now has to bear the economic burden for his deadbeat tenant. 

“For millions of Americans who work for hourly wages below $15 an hour, and do not have paid sick leave or the option to work from home, the economic impact has depleted their savings and put them in a precarious position,” the columnist concluded.

But in the chance the landlord is reading this article, let us offer up the advice you should have gotten already, but didn’t. Tell your tenant to get a job and pay the rent or prepare to pack his sh*t and leave. Call the cops if your city doesn’t let you evict him and report the drug use – the police will then likely do the evicting for you. Little do you know anyways, your tenant is probably sitting at home not only pissing away his money on weed, but probably actively trading penny stocks from his Robinhood account as well, while the government doles him out and extra $600 per month in unemployment. 

Now get out there and make us proud.

Wall Street was eagerly looking toward today’s results from commercial airline giant United Airlines to get a real-time sense whether the covid pandemic is starting to thaw when it comes to one of the worst-hit sectors from the economic shutdowns.

Alas, the answer appears to be no, because moments ago UAL reported a worse than expected Q2 loss per share of $9.31, more than the $9.18 loss expected, and down from a profit of $4.21 a year ago. This translated to a record quarterly loss of $2.6 billion, as the collapse of passenger demand in the “Covid quarter” played out for a full three months.

Revenue was even uglier, plunging by a record 87% to just $1.48 BN from $11.4BN a year ago, if fractionally better than the $1.27BN expected.

Some more details from the report, courtesy of Bloomberg:

• Available seat miles 8.96 billion, estimate 9.14 billion
• Rev. passenger miles $2.97 billion, estimate $3.12 billion
• Passenger revenue $681 million, estimate $530.1 million
• Cargo revenue $402 million, estimate $188.2 million
• Other revenue $392 million, estimate $450.2 million
• Expects July Load Factor of 45%

Reflecting the dismal conditions, the company said that more than 6,000 employees had agreed to leave voluntarily, and many more will likely leave involuntarily as with mass layoffs are a rising risk after federal payroll aid expires at the end of September.

With costs still far above revenue, United Q2 cash burn averaged a whopping $40 million a day, although it said that it expects that to fall to $25 million a day in the third quarter.  The good news is that total liquidity was $15.2 billion at the end of Q2 and is expected to increase to more than $18 billion by the end of the third quarter, so a default is not immediately in the cards.

As Bloomberg notes, United stood out in March and April for its dire outlook on the coronavirus crisis. CEO Scott Kirby says that served the company well by enabling it to take speedy action such as cutting costs and raising capital. He says in the release:

“We believe this quick and aggressive action has positioned United to both survive the COVID crisis and capitalize on consumer demand when it sustainably returns.”

He is right… assuming a vaccine is not only discovered by implemented by early 2021. Otherwise, burning even a reduced $25MM per day for a full year will have dire consequences on the company.

 

Authored by Mark Jeftovic via outofthecave.io,

On Cantillionaires, Sycophants and Losers

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”

— Henry Ford

“The ultimate crisis will occur when the situation is so thoroughly perverted that the defenders of the status quo can no longer resurrect confidence in the system”

— Vincent LoCascio, Special Privilege: How the Monetary Elite Benefit at Your Expense

Over several previous blog incarnations I’ve been writing about a couple of core themes for over decade. When I started writing about artificially low interest rates and the bad outcomes they would produce, I didn’t even know the economic terms for some of the things I was writing about.

But I knew keeping interest rates artificially low, or even negative would act like a type of event horizon that would be impossible to normalize from. I knew keeping interest rates too low for too long would force fiduciaries and capital allocators out the risk curve in search of yield, and that the most vulnerable among us, such as senior citizens, were the least able to absorb the inevitable drawdowns that would entail.

I also realized early on that hot money and credit expansion would spur an explosion of money losing unicorns, who would suck up all the oxygen in all the markets cannibalizing entire markets at a loss in order to get that Series E or F up-round. That one became apparent to me when I started seeing billboards for one of my largest competitors every 1/4 mile across the entire city of Toronto on my daily commute, and every other place else I ever travelled to in North America. I knew that they were losing about $300,000,000 a year at the time. They also had some pretty kick-ass Super Bowl commercials.

I only learned about Richard Cantillon and his early economic treatise a couple years ago and since then I’ve never been able to shut up about The Cantillon Effect, which is what all this describes and what I think is the single most divisive, corrupting and toxic dynamic shaping our world today.

Max Keiser recently coined the phrase “Cantillionaires”, and that’s an accurate demarcation line between the elites and everybody else. It isn’t “the 1%”, it isn’t white privilege, it isn’t capitalism or managers vs labour.

This helps the trend of ‘taking America private’ in a multi-trillion LBO by a few PE firms.

Before neo-feudalism can begin, the S&P must be delisted and controlled by a few cantillionaires.

Cloaking these PE firms in darkness will speed up the process of neo-feudalism https://t.co/xaIDsUQF4Y

— Max Keiser (@maxkeiser) July 17, 2020

It’s this:

When the Fed, or the ECB or the JCB or any other central bank prints money out of thin air, and then deploys that “liquidity” into the market, are you, or the firm you work for, among the first, second or third order recipients of that fresh injection of money? If so, then you’re a Cantillionaire.

And the rest of us? We’re losers. Remember this old Hugh McLeod ditty? It was priceless….

Let me correct it to depict the capital structure of the world.

An odd kind of reverse alchemy occurs as the newly created “money” flows downward toward the masses.

At the top we have the capstone class, the Cantillionaires, the superrich politicians and the Uber-rich financiers and conglomerators.

After this is the “The Sycophant Class”. In this layer are the spin doctors and support apparatus of the überclass of the Cantillionaires. In his book “The Coming Neo-Feudalism”, Joel Kotkin called them The Clerisy and described them as “the New Legitimizers”. Their job it is to hone the narratives that rationalize why this cap table makes sense for the losers below, as well run the actual infrastructure that perpetuates it.

As the newly created “money” flows down The Global Cap Table, it undergoes that inverse alchemy and the nature of the newly created money undergoes a state transition.

The nature of the change is this: After it gets a few iterations out from the money spigot at the top, it stops boosting asset prices and starts raising the cost of living. At the top end of the funnel it makes everybody in proximity wealthier, and then down at ass end of the funnel, where the rabble resides, it makes it more expensive to stay alive.

That’s The Cantillon Effect and I’ve been searching for ways to explain it so more people would understand it for quite some time now. But lately, I came across a pretty stark manifestation of it that should, I hope, finally make this clear.

The epiphany occurred as I was reviewing the Federal Reserve disclosures listing the recipients of the SCCMF Program. The SCCMF is the Secondary Market Corporate Credit Facility to buy up corporate bonds in an effort to shore up the credit markets:

“The Federal Reserve established the Secondary Market Corporate Credit Facility (SMCCF) on March 23, 2020, to support credit to employers by providing liquidity to the market for outstanding corporate bonds.”

It later expanded the program to add junk bonds.

The SMCCF is supposed to be some mechanism to preserve jobs in the wake of the economic meltdown, but when you look at the companies whose bonds are being purchased, they don’t exactly look like they were in danger of going under throughout the course of 2020:

Berkshire Hathaway (three seperate entities), Cisco Systems, Exxon Mobile, Fox Corp, Halliburton, Intel, IBM.

All companies that are worth billions, Billions. With “B”s.  You can see a full list is here. 

Then what really got me was seeing Amazon, a company worth over One Trillion Dollars, a company whose business is up so much over 2020 that they had to hire 100,000 more people to keep up with demand, and the Fed is out there using a program justified as a job saver by buying Amazon bonds (some of which actually trade at a lower interest rate than US treasury debt) under the SMCCF?

AMAZON.COM INC Consumer Cyclical 023135BP0 0.400 06/03/2023 4,000,000 $3,994,878

The thing about Amazon that hit home for me, is that among other things, Amazon is also a domain registrar, and Amazon is a DNS provider, which means that Amazon is a direct competitor to my own business, easyDNS.

So not only am I competing, head-to-head, with literally the world’s biggest company, the Fed has to put their thumb on the scale by buying their fucking bonds?

But wait, there’s still more, as I perused the list I found other companies I have to compete with, directly, head to head:

MICROSOFT CORP Technology 594918BA1 2.375 02/12/2022 5,500,000 $5,678,039

MICROSOFT CORP Technology 594918BP8 1.550 08/08/2021 3,000,000 $3,040,837

MICROSOFT CORP Technology 594918BQ6 2.000 08/08/2023 5,000,000 $5,228,349

MICROSOFT CORP Technology 594918BW3 2.400 02/06/2022 3,000,000 $3,098,973

MICROSOFT CORP Technology 594918BX1 2.875 02/06/2024 2,000,000 $2,157,622

easyDNS competes with Microsoft’s Azure. The Fed is buying Microsoft’s bonds.

ORACLE CORP Technology 68389XBB0 2.500 05/15/2022 2,000,000 $2,066,967

ORACLE CORP Technology 68389XBK0 1.900 09/15/2021 8,000,000 $8,133,006

ORACLE CORP Technology 68389XBT1 2.500 04/01/2025 4,000,000 $4,275,958

Oracle owns Dynect, who easyDNS competes with directly again. The Fed is buying Oracle’s bonds.

And from the June 29th disclosure I saw that the Fed was buying Google’s bonds, and Google is also in the DNS and domain registration business, yet another head-to-head competitor.

It’s tough enough running a small business when you have to compete with an 800 lb gorilla in your space. Especially when there’s a half dozen of them now and since everybody else who has to compete with these companies (not a single one with a market cap under 100 billion dollars) doesn’t get propped up by a central bank, printing up money out of thin air.

Isn’t this a little bit like picking winners and losers?

One might point out that small businesses were eligible for Federal funds as well. They sure were, they were eligible for loans and although loans and bond issues live on the same side of the balance sheet, the resemblance ends there.

In the US, any PPP loan over 25K is full recourse, and anything over 200K requires a personal guarantee. It’s similar up here in Canada. It means the business owner has to collateralize the loans, most often with his or her principle residence, and they have to be able to demonstrate that their business has been materially impacted by the pandemic.

I doubt Jeff Bezos has to personally guarantee those Amazon bonds, and if the Fed had a similar requirement to demonstrate business impairment to qualify I don’t know how Amazon would be able to make that claim with a straight face having just hired those 100,000 additional workers just to keep up with increased demand.

This is another example of that inverse alchemy we see as the new money trickles down the Global Cap Table:

At the top, it props up non-recourse bond issues and buoys the corporations who issue them. And when those bonds come due they can probably just do what every corporate behemoth does and roll them over.

At the bottom, the small business owner has to pledge his house and his personal assets as collateral and then those loan payments get added straight onto the monthly nut.

Referring back to the Global Cap Table, above The Loser Line megacorps can externalize their bad outcomes and in many cases, literally lose money for a living. Everybody up there makes their money on financial events

Below the loser line reside all the small businesses. The ones every politician says “are the backbone of the economy!” yet they enact policies that make it harder for them to remain open and as we’re exploring here, cultivate policies that make it near impossible to compete.

If all this wasn’t bad enough, everybody knows where this is headed next, once this economic depression asserts itself over the current blow-off top in stocks: eventually the Fed will probably step into the equities markets and prop those up too. So not only is the Fed buying my largest direct competitors bonds now, down the road they’ll be buying up their shares.

…with money they pulled out of their ass.

Does it make a mockery so-called free markets when the smallest businesses have to deal with the vagaries competition while the largest ones get propped up with the full faith and credit of the central banks?

This isn’t capitalism. I used to call it “crapitalism” or you sometimes hear it called “crony capitalism”, but extending Max Keisers’ label of “Cantillionaires”, I finally know what this is and what to call it. What we have here folks, is your good ole fashioned, centrally planned Cantillionism.

For much of the day, the dominant theme was one of dollar weakness which saw the Bloomberg dollar index tumble below 1,200 and also take out the June 10 lows…

… the direct result of not just cable strength, as the sterling hit its 5-week highs, but mostly due to the ongoing surge in the EURUSD which continued its recent ascent, catalyzed by today’s successful conclusion of the EU summit where the stimulus package was finally approved after five days of discussions.

And as the dollar tumbled, gold has continued its impressive surge, rising to $1,840 and now less than $100 away from its all time highs hit in September 2011. Even more remarkable, perhaps is that silver has also finally caught a bid, surging by more than $1 today, to trade at $21.20, surpassing the highs set in 2016, and now trading at a level not seen since 2014.

A zoomed in version of the chart above just covering the YTD period shows the impressive acceleration in silver in recent days…

… and if one goes by the long-term gold/silver ratio chart, silver still has a ways to go before catching up to its average of 60x. All else equal, if one assumes a gold price of $1,840, silver has about $10 of upside to go just to catch up to its historical “fair value”.

So what about stocks? Well Europe was happy, with the Stoxx 600 rising to a new 5 month high, if still having a ways to go until it is unchanged for the year, a feat which Germany’s DAX has almost achieved already.

In the US, things were more dramatic, with the Dow Jones blasting off out of the gate, while the Nasdaq slumped erasing some of its massive Monday gains as traders took profit in the FAAMGs even as IBM jumped after sales topped forecasts.

The Nasdaq 100 edged lower after closing at an all-time high on Monday, up 25% YTD, with investors awaiting a barrage of megacap tech earnings later this week. And while the S&P and the Dow were trading notably higher for much of the day, they gave up all most gains shortly after 3pm when Senate GOP leader Mitch McConnell was quoted as saying he does not expect the next stimulus bill to pass by next week, in effect ending the massive benefits that US consumer have gotten used to in the past three months, and hammering consumer shares.

It only got worse toward the close, when a sizable $1.8BN Market on Close sell imbalance hammered stocks, and sent the S&P cash into the red, and less than 1% up on the year.

Oil’s surge lifted Exxon Mobil and Chevron in the Dow Jones Industrial Average. Brent jumped more than $1, rising just shy of $45, while WTI traded at $41.76, both hitting the highest levels since March on hopes reflation will bloom thanks to Europe’s €750BN stimulus fund.

Meanwhile, with bonds no longer reflecting anything besides the Fed’s liquidity and YCC intentions, the 10Y went nowhere – and has gone nowhere in the past week – keeping the curve trading in a painfully narrow range.

Finally, with the VIX sliding to its lowest level since March, the “fear index” ramped higher all day, and closed just shy of session highs in what may be an ominous reversal which kept the VIX just above 25.

President Trump on Tuesday signed an order which will bar immigrants living in the United States illegally from being included in the 2020 census for purposes of apportioning members of Congress to states.

According to the memo, it will be the “policy of the United States to exclude from the apportionment base aliens who are not in a lawful immigration status under the Immigration and Nationality Act.“

It directs Commerce Secretary Wilbur Ross to provide Trump with data on the number of undocumented residents in order to exclude them from population totals which determine how many seats each state receives in Congress, according to NBC News.

“We will collect all of the information we need to conduct an accurate census and to make responsible decisions about public policy, voting rights, and representation in Congress,” said Trump in a Tuesday statement.

The administration argues that the U.S. Constitution does not specifically define which “persons” must be included in the apportionment base, noting that documented immigrants who are in the country temporarily and certain foreign diplomatic personnel are “persons” who have been excluded from the apportionment base in past censuses.

It was not immediately clear how undocumented immigrants would be identified in order to omit them from the census count.The census questionnaire, which was distributed in March, did not require respondents to indicate whether they or others in their household are citizens. –NBC News

Last year the Trump administration attempted to add a citizenship question to the 2020 census for the first time in six-decades, a bid which was struck down by the Supreme Court, which prevented the Department of Commerce from including the question thanks to Chief Justice John Roberts – a Bush II appointee, joining the four-member liberal wing of the court.

The ACLU has vowed to take the Trump administration to court over the new census memo.

BREAKING: Trump tried to add a citizenship question to the census and lost in the Supreme Court.

His latest attempt to weaponize the census for an attack on immigrant communities WILL be found unconstitutional.

We’ll see him in court — and win — again.

— ACLU (@ACLU) July 21, 2020

“he Constitution requires that everyone in the U.S. be counted in the census. President Trump can’t pick and choose,” said ACLU Voting Rights Project director Dale Ho, who knocked the Trump administration.

“He tried to add a citizenship question to the census and lost in the Supreme Court. His latest attempt to weaponize the census for an attack on immigrant communities will be found unconstitutional. We’ll see him in court, and win, again,” said Ho.

According to NBC News, the Constitution requires that the census count “persons” living in the United States, and does not mention citizenship status. While lower courts have ruled that illegal immigrants should be counted, the Supreme Court has yet to weigh in. 

“The resident population counts include all people (citizens and non-citizens) who are living in the United States at the time of the census,” reads the Census Bureau’s website. “People are counted at their usual residence, which is the place where they live and sleep most of the time.“

With every passing day, the bizarre Stalinist freakshow that was once known as the “market” gets even more bizarre. And we use the term “market” in its loosest, legacy sense, one where it represented more than just the centrally-planned intentions of a few central banking academic and politicians. Why? Because as BofA’s CIO Michael Hartnett reminded us in in a recent Flow Show report, the disconnect between macro and markets has never been greater – i.e., they have never been more broken – but that is to be expected for the following three reasons:

1. Markets rationally being “irrational”: government and corporate bonds have been fixed (“nationalized”) by central banks, so why would anyone expect markets to connect with macro, why should credit & stocks price rationally.
2. Markets leading macro: policy makers (see China this week) know higher asset prices necessary condition for macro recovery (Wall St assets are 5.6x size of US GDP)…
   

   …V-shape recovery on Wall St leading V-shape recovery on Main St (see PMI’s & housing activity); gasoline demand good US mobility signal, up sharply to 9mn barrel/day from spring lows, watch to see if virus again negatively impacts economy.

3. Markets rationally pricing-in Max Liquidity, Minimal Growth backdrop, as they have done for 10 years; of 3042 stocks in MSCI ACWI currently 2141 >20% below their all-time highs, i.e. in a bear market.

So in this artificial, centrally-planned world where neither fundamentals, nor newsflow, nor data have an impact on “irrational” markets, does anything matter?

Well, yes, and it’s perhaps the one things we have been focusing on in recent weeks, namely smart money flows, of the kind discussed in “Hedge Funds Flood Into Stocks, Take Net Leverage Highest In Over Two Years“:

Well, as it turns out, our frequent obsession with fast money flows is actually justified: according to a recent research paper titled “Which Investors Matter for Equity Valuations and Expected Returns?”, hedge funds exert far more power on equity prices than most other classes of investors, while the passive cohort are among the least influential. The paper’s conclusion, as per Bloomberg: “The fast money has more than three times the impact on equity valuations, per dollar under management, than long-term investors like pension funds.”

It was not immediately clear where central bank fund flows rank in order of market impact priority although we would tend to guess toward the top.

“The influence of hedge funds is remarkable given their relatively small size,” the authors wrote. Smaller  investment advisors had the second-greatest impact on price, and proved even more influential across a host of other characteristics, Koijen et al found.

“Small, active investment advisors are most important for the pricing of payout policy, cash flows, and the fraction of sales sold abroad,” they said.

The findings, as Bloomberg concludes, “provide ammo for stock allocators who front-run the buying and selling activity of their influential peers, in a world that can famously punish those trading on the basis of fundamentals.” It also suggests that contrary to growing speculation, passive investing vehicles such as ETFs have far less of an impact on market pricing. However, it’s only a matter of time before passive takes over the priority chain: having lured assets away from active vehicles for years, passive investing makes up an increasingly significant chunk of daily trading, “there are worries it could ultimately disrupt price discovery.” Oddly enough, there are no worries about central banks doing the same, even though the Fed and its peers have now made a total mockery of price discovery.

While the research didn’t speculate on the future, it did note that if hedge funds were to shift to a market index strategy, that would mean bigger price moves are needed to have any impact on a large passive portfolio.

“If these investors would hold a market-weighted strategy instead of their current strategy, the coefficient of valuation ratios on the fraction of sales that is exported would decline by more than 10%,” the trio wrote. “These investors therefore play an important role in determining the cost of capital of global firms.”

Senate Majority Leader Mitch McConnell (R-KY) told Politico on Tuesday that he doesn’t expect Congress to pass the next relief bill by next week, in stark contrast to a prediction by Treasury Secretary Steven Mnuchin.

McConnell said earlier that there are some ‘differences of opinion’ over a payroll tax cut wanted by the White House, and instead said that the GOP would introduce a bill over the next few days which would be a starting point for negotiations with Democrats.

McConnell did say that another round of direct payments to US citizens was in the cards. He did not elaborate on the size of the payments or income requirements, though he has previously said that payments would be made to those who make $40,000 per year or less.

Stocks began sliding following McConnell’s comments.

According to Forbes, the next stimulus package will likely extend the $600 weekly boost to unemployment insurance under the Pandemic Unemployment Assistance (PUA) included in the CARES act.

GOP lawmakers have discussed reducing PUA to only $200 per week, according to The Washington Post. McConnell didn’t mention extending the benefits during his Tuesday speech.

The lowered PUA comes after weeks of debate in Washington, D.C., about how helpful—or unhelpful—the unemployment boost has been for Americans. GOP lawmakers long argued that the boost “disincentivized” Americans to return to work, since many were making the same amount or more on unemployment with the boost than they did before losing their jobs. –Forbes

McConnell also indicated that the Paycheck Protection Program (PPP) may receive a top-off in order to help “hard-hit businesses.” The program provides loans to companies employing fewer than 500 workers, and was previously funded to the tune of $650 billion according to the report.

Meanwhile, the GOP proposal will also reportedly set aside $105 billion for schools and educators. “This majority is preparing legislation that will send $105 billion so that educators have the resources they need to safely reopen,” said McConnell. “That is more money than the House Democrats set aside for a similar fund, by the way. And that’s in addition to support for child care needs.”

The GOP plan will also include more funding for COVID-19 testing.

“Our proposal will dedicate even more resources to the fastest race for a new vaccine in human history, along with diagnostics and treatments … And the federal government will continue to support hospitals, providers and testing,” said McConnell.