Will New York Ever Recover From COVID-19?

Is COVID-19 the “end of New York” as we know it?

That’s what urbanist Joel Kotkin argued in a recent piece for Tablet magazine.

“This is happening at a time when the demographics of cities like New York, L.A., Chicago, [and] San Francisco are all going in the wrong direction. Young people leaving, and population growth is very low,” says Kotkin. “I think the pandemic is just one more factor that is going to influence migration in general. I think the idea of being in a dense urban place is probably not going to be that attractive.”

With lockdowns and extreme social distancing bringing urban life to a halt, and New York City emerging as the epicenter of the national crisis, a debate among urban studies scholars is breaking out over what this will mean for the future of American cities.

On one side are density skeptics like Kotkin, a Chapman University professor who believes the pandemic will only accelerate an already present decline in urban living, while pro-density urbanists like University of Toronto Professor Richard Florida say that New York will do what New York has always done: bounce back.

“I am 100 percent convinced New York will be fine,” says Florida. “The biggest mistake people ever make is counting New York out.”

Thomas Campanella, a Cornell professor who co-edited a book after 9/11 called The Resilient City: How Modern Cities Recover from Disaster, agrees with Florida. Campanella and his co-editor found that disasters that damage critical infrastructure, such as the volcanic eruption that buried Pompeii, or make land literally uninhabitable, such as the nuclear meltdown in Chernobyl, are most likely to do irreparable harm. Cities have recovered from pandemics fairly quickly, including New York after the 1918 Spanish flu.

“To suggest that this is going to mark the end of the cities…it’s ridiculous actually,” says Campanella. “It traffics in a long tradition of anti-urbanist posturing and predicting that goes all the way back to the founding generation in this country.” 

Campanella points to Thomas Jefferson’s Notes on the State of Virginia, in which he states that “The mobs of great cities add just so much to the support of pure government, as sores do to the strength of the human body.” John Adams similarly wrote in his Defence of the Constitutions of Government of the United States that Americans living “in small numbers, sprinkled over large tracts of land … are not subject to those panics and transports, those contagions of madness and folly, which are seen in countries where large numbers live in small places.”

“De-densifying the city is not going to happen,” says Campanella. “We still have London and Florence and Venice and all these cities that they underwent terrible pandemic diseases.

Campanella recalls his own grandmother recounting the horrors of the 1918 Spanish flu pandemic in New York City.

“She remembered seeing the hearses every day,” he says. “So, we have gone through these things.”

But Kotkin argues that what’s changed is that ever-improving communications technology has made all kinds of remote work possible.

“If you take a look at where people are moving. They’re moving to, generally speaking, less expensive, very often smaller cities,” he says.

In terms of broad historical trends, urbanization has increased over the last 200 years, with the percentage of the world population living in urban areas rising from 2 percent to 50 percent. But more recently, megacities like New York have experienced significantly slower growth than small and mid-sized urban areas. The total world population of small urban areas with populations of fewer than 500,000 people is three times that of megacities, with the median urban resident living in an urban area with a population of 650,000.

And according to the U.S. Census Bureau, almost 92 percent of population growth within metropolitan areas has been in the suburbs and exurbs from 2010 to 2018. Only New York has bucked that trend, with rising density over that period.

But Kotkin says New York isn’t immune.

“[The pandemic] may just accelerate some of this,” says Kotkin. ” People are going to have that memory of, ‘God, I was living in the studio apartment in Manhattan when this happened. I was essentially in lockdown.'”

Between 2005 and 2017, remote working increased by about 159 percent according to one study, with about 5 percent of Americans working from home according to census data.  Kotkin predicts remote working trends will continue to push more and more Americans out of big city centers.

But Florida points out that venture capital is still concentrated in the Bay Area and New York. He predicts that the coronavirus pandemic will lead to more geographic concentration.

“At the same time that you’re having people leave [dense urban centers], you’re having… the Bay Area’s share of the tech industry increasing, New York’s share of finance increasing. L.A. is still a center of movie making and the creative industry broadly,” says Florida. “With restrictions on air travel, the fact that it [has become] harder to drop in and out of those places will cause a further concentration.” 

But Florida agrees with Kotkin that the growth of remote work will also continue to drive the growth of smaller cities in the American heartland. He points to a Kaiser Family Foundation project called Tulsa Remote, which pays tech workers a $10,000 stipend to move to Tulsa and work from home.

“So [small cities like Tulsa will] literally say we’re going to be … a connected hub of remote workers to an incumbent economic center. And I think that can work,” says Florida.

Despite his provocative headline, even Kotkin isn’t predicting New York’s total demise. Rather, he foresees a continued hollowing out of its middle class, with future population growth coming from young, single workers, immigrants, and the ultra-wealthy.

“It’s probably at this stage almost impossible to see a return of middle-class families to cities,” he says, “Not necessarily because of housing stock or even prices [but rather] the kind of governments that are being elected.”

He says the inability of these big cities’ mayors to deal with homelessness, crime, schools, and other quality-of-life issues has and will continue to drive out middle-class families.

“And the problem is, as the middle class has declined in these cities, the politics have gotten crazier and crazier,” says Kotkin.  

Florida, who places himself in the “99th percentile” of the political left says that he agrees with Kotkin that too many mayors have lost sight of these basic quality-of-life issues in their cities.

“I think there’s going to be a premium now on no bullshit, no ideology, ‘Can you make my city safe or suburb safe and secure?'” says Florida. “[New York] is going to have time to really think about how to become a more affordable city, a more holistic city, a better city.”

Produced by Zach Weissmueller, graphics by Isaac Reese, opening animation by Lex Villena

Music: “Curtains are Always Drawn,” by Kai Engel licensed under a Creative Commons Attribution License

Photos: Gloved hand in subway, Marcus Santos/ZUMA Press/Newscom; Empty subway tunnel, William Volcov/ZUMA Press/Newscom; Empty subway, William Volcov/ZUMA Press/Newscom; Zoom call, Chloe Sharrock/ZUMA Press/Newscom; Empty New York street, Alcir N. de Silva/Polaris/Newscom; Masked airline attendant, Kike Calvo/Universal Image Group/Newscom; Empty airport terminal, Joe Burbank/TNS/Newscom; Empty Times Square, Alison Wright/ZUMA Press/Newscom

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Morgan Stanley’s Oracle Turns Bearish Again: “Stocks Are Now Overbought… A Correction Will Begin Soon”

Morgan Stanley’s Oracle Turns Bearish Again: “Stocks Are Now Overbought… A Correction Will Begin Soon”

For much of 2019, Morgan Stanley’s chief equity strategist Michael Wilson issued a weekly sermon of fire and brimstone in his Monday Morning market takes, which contrasted with the generally euphoric pronouncements by his peers at other banks – most notably Goldman, which in December hilariously declared that the US economy is “structurally less recession-prone today” (oops) earning him the moniker of Wall Street’s biggest bear (a few permabearish exceptions such as Albert Edwards were excluded from the tally), not to mention quite a few angry clients.

But then, in November, just as the melt up phase of the post “Not QE” market was kicking in sending stocks to all time highs every single day, Wilson got the proverbial tap on the shoulder and threw in the towel raising his S&P “bull case” price target to 3,250, however not without a slew of warnings that the most likely outcome was another retest in stocks lower.

In retrospect, Wilson should have held fast to his bearish conviction as the unprecedented March market crisis confirmed he was spot on (even if for different reasons).

Yet even then Wilson made it clear he had been on the fence, and was only forced into the bullish camp due to the the aggressive central bank intervention launched in late 2019. Little did he know what was coming, and that’s also why when most of his formerly uber-bullish colleagues were issuing one downgrade after another, Wilson threw all caution to the wind and officially became the biggest Wall Street bull shortly after the March 23 lows, when just a few days later he said that “we are buyers of dips” and recommending that – because most stocks have been in a bear market for two years or longer (most stocks except for the Top 5 that techs that matter) investors should “start buying stocks now because we cannot be sure if the next pull back will lead to lowers lows or not given we already experienced forced liquidation. Bottom line, we believe 2400-2600 on the S&P 500 will prove to be very good entry points for those with a time horizon of 6-12 months.

This time Wilson timed his call almost perfectly, with the S&P surging since his bullish reversal, with his declaration that 2400-2600 in the S&P will be a market floor so far proving correct.

But with stocks having soared to just shy of 2,900 last week, is Wilson still bullish?  According to his latest note, the answer is “not any more” and in fact he is now expecting a sharp pullback, to wit “with risk assets now overbought, the chance for a correction has increased.” In S&P 500 terms, Wilson sees stocks as continuing to trade in a range between 2,600 and 300, noting that the S&P “will find strong support at the 200 week moving average, or 2650″ and should markets continue to look through the near term bad news on earning, “it should face resistance at the 50 week moving average, or 2995.”

Here are some more details that justify Wilson’s latest U-turn:

Our over arching view continues to be that the equity market bottomed in March on what amounted to a forced liquidation. The monetary policy response has been effective in stabilizing credit spreads and equity risk premiums which reached the same level observed at the lows of the Great Financial Crisis in March, 2009 (Exhibit 1). Therefore, it is unlikely we will approach such levels again any time soon. Meanwhile, fiscal programs appear to be getting the money to their desired destinations after a slow start which should support both consumers and small businesses until the economy can get reopened. In fact, the PPP program has already run out of money with increases now being debated in Washington.

And so, with many risk assets now overbought, Wilson says he would “not be surprised if a correction in US equities begins soon.” The reasons for this are that in addition to what is likely to be a partisan debate on more fiscal stimulus, the MS strategist expects more bad news from companies on earnings results as well as their outlooks for 2020.

As previously stated, the market is looking past this year as a write off and is trying to calculate what 2021 will look like, in some cases pricing earnings off of 2022 forecasts which, as we have said previously, will be dead wrong. Wilson agrees with our skepticism, saying that while 2021 will likely be better than 2020 (unless a depression has begun in which case it won’t “it’s also hard to have much precision or confidence about the magnitude of the snap back we should expect.”

Wilson also suspects that company guidance will portray similar uncertainty which could weigh on asset prices over the next few weeks. Furthermore, that uncertainty should weigh greatest on those stocks which are still under-discounting the magnitude of the declines in 2020. In short, ‘high expectation’ stocks are the most vulnerable to a near term correction. And, as noted above, Wilson expects the index to find very strong support at the 200 week moving average, or 2650. Likewise, should markets continue to look through the near term bad news, it should face resistance at the 50 week moving average, or 2995.


Tyler Durden

Tue, 04/21/2020 – 13:36

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First, Do No Harm! The Unseen Death Toll Of COVID-19 Measures

First, Do No Harm! The Unseen Death Toll Of COVID-19 Measures

Authored by California Congressman Tom McClintock,

The accumulating death toll from Covid-19 can be seen minute-by-minute on cable news channels.  But there’s another death toll few seem to care much about: the number of poverty-related deaths being set in motion by deliberately plunging millions of Americans into poverty and despair. 

In the first three weeks since governors began shutting down commerce in their states, 17 million Americans filed for unemployment, and according to one survey, one quarter of Americans have lost their jobs or watched their paychecks cut.    Goldman Sachs predicts that the economy will shrink 34 percent in the second quarter, with unemployment leaping to 15 percent. 

Until the Covid-19 economic shut-down, the poverty rate in the United States had dropped to its lowest in 17 years.  What does that mean for public health?  A 2011 Columbia University study funded by the National Institutes of Health estimated that 4.5 percent of all deaths in the United States are related to poverty.  Over the last four years, 2.47 million Americans had been lifted out of that condition, meaning 7,700 fewer poverty-related deaths each year.

It’s a good bet these gains have been completely wiped out, and it’s anyone’s guess how many tens of millions of Americans will have been pushed below the poverty line as governments destroy their livelihoods.  It’s also a good bet the resulting deaths won’t get the same attention. 

And that doesn’t count an unknown number of Americans whose medical appointments have been postponed indefinitely while hospitals keep beds open for Covid-19 patients. 

How many of the 1.8 million new cancers each year in the United States will go undetected for months because routine screenings and appointments have been postponed?  How many heart, kidney, liver, and pulmonary illnesses will fester while people’s lives are on hold?  How many suicides or domestic homicides will occur as families watch their livelihoods evaporate before their eyes?  How many drug and alcohol deaths can we expect as Americans stew in their homes under police-enforced indefinite home detention orders?  How many new cases of obesity-related diabetes and heart disease will emerge as Americans are banished from outdoor recreation and instead spend their idle days within a few steps of the refrigerator?

I have participated in many discussions among top policymakers in Congress and the Administration over the last few weeks.  Such considerations are rarely raised and always ignored.  Instead, policymakers fixate on   epidemiological models that have already been dramatically disproven by actual data.

On March 30, Drs. Deborah Birx and Anthony Fauci gave their best-case projection that between 100,000 and 200,000 Americans will perish of Covid-19 “if we do things almost perfectly.”  As appalling as their prediction seems, it is a far cry from the 200,000 to 1.7 million deaths the CDC projected in the United States just a few weeks before.  And even their down-sized predictions look increasingly exaggerated as we see actual data. 

Sometimes the experts are just wrong.  In 2014, the CDC projected up to 1.4 million infections from African Ebola.  There were 28,000.

Life is precious and every death is a tragedy.  Yet last year, 38,800 Americans died in automobile accidents and no one has suggested saving all those lives by forbidding people from driving – though surely we could.

In 1957, the Asian flu pandemic killed 116,000 Americans, the equivalent of 220,000 in today’s population.  The Eisenhower generation didn’t strip grocery shelves of toilet paper, confine the entire population to their homes or lay waste to the economy.  They coped and got through. Today we remember Sputnik – but not the Asian flu. 

It’s fair to ask how many of those lives might have been saved then by the extreme measures taken today.  The fact that the Covid-19 mortality curves show little difference between the governments that have ravaged their economies and those that haven’t, suggests not many.    

The medical experts who are advising us are doing their jobs – to warn us of possible dangers and what actions we can take to mitigate and manage them.  The job of policymakers is to weigh those recommendations against the costs and benefits they impose.  Medicine’s highest maxim offers good advice to policymakers: Primum non nocere first, do no harm. 


Tyler Durden

Tue, 04/21/2020 – 13:16

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June WTI Futures Crash 45% To $10 Handle In Repeat Of Monday Massacre

June WTI Futures Crash 45% To $10 Handle In Repeat Of Monday Massacre

Forget Turnaround Tuesday, paper oil markets are collapsing once again with USO halted numerous times, OIL liquidated, and June futures puking hard in a repeat of yesterday’s May contract bloodbath…

May is rallying here as June crashes… (we suspect more ETF rolls)…

Sending the prompt spread soaring back…

But June is now down a shocking 45% to a $10 handle… and there is still 90 minutes until settlement.

Yesterday, the break of $10 was what sparked the waterfall in the May contract.

USO is down 30%…

Here are five analysts’ views on what’s happening in the world’s largest oil ETF…

Dave Lutz, macro strategist at JonesTrading:

“Retail investors should have a way to trade the price of oil, but USO has such problems with the roll effect that I’m not sure that’s the best vehicle. Problem is, it’s really the only one,” he said. In addition, “the fact that creations are suspended means that this is no longer going to track properly.”

Joseph Saluzzi, Themis Trading LLC partner and co-head of equity trading:

Some ETFs are not exactly what you think they are — the rule for any investor is to know what you own. Some folks may have thought that USO was simply a proxy for the current oil price, and they didn’t really understand the mechanics of the oil futures market.

Matt Maley, equity strategist at Miller Tabak + Co.:

“There is no question that this is a tool for investors of all sizes to bet on the price of oil. Many of these investors — again, of all sizes — have tried to pick the bottom in oil several times over the past week or two and they’ve all gotten burned. This has caused these buyers on weakness to become forced sellers. When the dust settles, it’s going to create an unbelievable opportunity for buyers. Until we get a better feeling of when the demand side of the supply/demand equation is going to improve, it tells me that the risks are still much too high compared to the potential rewards,” said Maley.

“I worry that it’s going to have a negative impact on liquidity in the oil markets, and thus have a negative impact on confidence in that market.”

Jeremy Senderowicz, a partner at law firm Dechert:

“Once creations are suspended then the arbitrage process cannot work as normal, as new shares cannot be created to meet increased demand,” he said.

“The 8-K says they are suspending creations because they’ve used up all the shares they’ve registered (they filed yesterday to register more shares but the SEC needs to declare it effective and they haven’t done so yet). That indicates that demand for the shares was quite high. If that demand continues, then until new shares can be created you can fill in the blank as to what might happen in trading…(which may be why they had the trading halt). That seems like the big takeaway to me.

Dan Genter, CEO of RNC Genter Capital Management:

“The ETFs that are dealing with the contracts in the commodities are never going to take physical delivery, they can’t take it. There’s not a doubt the oil ETFs distorted the market. It was across the board but the ETFs, in our opinion, were the biggest problem,” he said. “The panic is because there are people invested in that commodity and in the contracts that not only have no intention of taking delivery, they have no capacity for taking delivery. All of a sudden, you’re up against a wall. They call it a contract for a reason.”

But, don;t worry, because President Trump will take the pain way… right?


Tyler Durden

Tue, 04/21/2020 – 12:58

via ZeroHedge News https://ift.tt/3atn2ra Tyler Durden

Estimating The Earnings Crash

Estimating The Earnings Crash

Authored by Lance Roberts via RealInvestmentAdvice.com,

In early March, before the impact of the COVID-19 was fully understood, I penned an article suggesting that both corporate profits and S&P 500 earnings were suggesting the “bear market wasn’t over.”  To wit:

Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.” – Jeremy Grantham

At that time, the impending recession, and consumption freeze, was only starting and we had no data to suggest just how bad it was going to get. Since then, we have had epic declines in manufacturing, surging unemployment, and plunging retail sales. To wit:

“From the decline of 8.7% in retail sales, 40% of PCE, we can extrapolate the decline into expectations for PCE growth. Again, since PCE comprises almost 70% of the economy, this is why expectations are for a drop of 10%, or more, in GDP in the second quarter.”

But it isn’t just retail sales. It is also exports which account for about 40% of corporate profits overall, which are seen sliding dramatically in March.

This all suggests dramatically lower corporate profits and earnings per share for the S&P 500 index.

Earnings Estimates Still Too High

In “Reward Doesn’t Justify The Risk,” I noted that while estimates have indeed been lowered by Standard & Poors (latest update was April 19th), the earnings revisions are a long way from reflecting what earnings will look like over the next couple of quarters.

“To analyze the reality of current expectations, we need to review the history of the estimates for the S&P 500 from when 2021 estimates were first published by Standard & Poors in April 2019. The chart shows the progression in estimates April to September 2019, and March and April of 2020. (The dotted blue line is my original, unrevised estimate of the impact to earnings in February of this year.)”

(NOTE: Chart has been updated to include the last update to estimates.)

Importantly, note that Standard & Poors finally caught up with our original estimate from February for the second and third quarters. However, as I stated at that time, “my estimates are likely overly optimistic” as the virus was still a relatively unknown and unaccounted for threat.

More importantly, the chart below shows the comparison of the original, and latest estimates for April. In our first analysis, earnings were expected to decline from Q4-2019 levels of $139.47 to $136.18 and $131.09, respectively in Q1 and Q2 of 2020. That is a decline of -2.3% in Q1 and a total decline of -6% in Q2.

Those numbers have now been revised for a decline of -4.4% in Q1, and a total decline of 10.2% in Q2.

So, with the entire U.S. economy shut down, 15-20% unemployment, and -20% GDP, earnings are only expected to decline by 10%?

History suggests this is not likely to be the case.

First, let’s review GAAP Earnings (actual real earnings) as compared to GDP. Not surprisingly, since “stocks are not the economy,” there is a higher correlation between economic growth and corporate earnings. This is because, without economic growth, consumers don’t have paychecks with which to consume, which is where corporate earnings are derived from.

Assuming a 15% decline in GDP (some estimates run as high as 30%), the suggestion of only a 10% decline in earnings seems laughable. The chart below looks at S&P’s estimates (as reported) going back to 2008, versus the S&P 500, and expectations for a “V-sharped” market recovery.

In 2008, during the “Financial crisis,” which did NOT shut down the economy, the annual change in earnings fell by 89%. Even during the Brexit/Manufacturing recession of 2015-2016, earnings fell by 15%.

Again I ask you, “Does it seem realistic that with a decline in economic growth not seen since the “Depression,” earnings would only decline by 10%?”

But if you are chasing the market currently, this is what you are “buying into.”

Valuations Are An Issue

“I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes. We just want to get through the typhoon, and we’d rather come out of it with a whole lot of liquidity. We’re not playing, ‘Oh goody, goody, everything’s going to hell, let’s plunge 100% of the reserves [into buying businesses].’

Nobody in America’s ever seen anything else like this. This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.” – Charlie Munger.

I quoted Charlie in this past weekend’s newsletter as it is the basis of our views on capital preservation and risk management.

While it may seem silly, we believe the process of investing is not about ‘guessing,’ but rather ‘knowing,’ what you are buying.”

Currently, the “race to chase the bottom” has gotten investors to once again vastly overpay for assets which portends poor future returns. More importantly, they have jumped into “buying risk,” at a point where that “risk,” or rather the opportunity to lose capital, can not be calculated.

But if you think I am overly bearish on my estimates, I assure you I am not.

“Credit Suisse, JPMorgan and Goldman all point out the schizophrenia in being bullish in a time when corporate profits are set for the biggest – and longest – drop since the Great Depression, late last week two more banks joined the bandwagon with Citi warning that ‘equities fall the same as EPS in a recession… and reflect that equity markets are currently not reflecting the expected decline of 50% in global EPS in 2020.” – Zerohedge

If any of these numbers come to fruition, which there is more than a decent probability they will, then investors are currently paying higher valuations now than they were at the peak of the market in February.

“Bank of America’s Savita Subramanian has also done the math and concludes that as ‘stocks have rallied, bottom-up consensus estimates for 2020 have fallen’, which in turn has pushed the S&P 500’s forward  P/E ratio from March’s low of 13.0x to 19.5x, higher than mid-Feb’s peak P/E of 18.9x.” – Zerohedge

Using BofA’s valuation table of 20 different metrics, it is hard to suggest that buying stocks today will have a positive outcome over the next few years, much less the next few months.

Importantly, this isn’t “bullish” or “bearish,” this is just math.

The Bear Market Isn’t Over

“The smoothed CAPE multiple at 25.9x in April — expanding from 24.9x in March! — which compares with 24.0x in January 2008, the first month of the Great Recession twelve years ago. We had a 26.0x multiple on our hands, as an example, back at the end of 2015. You see, that is a multiple you can pay if you are assured that the economy will be expanding, as it did then and the next year at a 2% pace. But that is not the case today. And you can’t simply say ignore 2020 earnings so conveniently when the hole future profits trajectory has been semi-permanently impaired. 

We are into an epic 40% down quarter on GDP and with no visibility, which is why a growing list of firms are pulling their guidance. The CAPE multiple peaked in January at 31.0x, shrunk to 24.9x in March, and is back to 25.9x. Let me just say, for the record, that we have never seen a bear market end with a smoothed P/E multiple as rich as 24.9x — the highest trough multiple was 21.2x back in that 2000-2003 tech wreck bear market. The average trough in the 8-recessionary bear markets back to 1960 is 12.8x and the median is 13.5x.” – David Rosenberg

Throughout history, earnings are very predictable. Using the analysis above, we can “guesstimate” the decline in earnings, as well as the potential decline in stock prices to align valuations. The chart below is the long-term log trend of earnings versus its exponential growth trend.

In early March, as the viral impact was just setting in, we made an early assumption of the impact on earnings. Needless to say, we were overly optimistic. To wit:

“Using that historical context, we can project a recession will reduce earnings to roughly 100/share. The resulting decline asset prices to revert valuations to a level of 18x (still high) trailing earnings would suggest a level of $1800 for the S&P 500 index.”

Again, I am not “overly dramatic” or “super bearish.”  I am also not saying the index is going to 1800.

What I am saying is there is a good bit of data to support the thesis that a much larger earnings decline is in process, and markets will have to adjust to bring valuations in line with earnings.

That is just how markets work both with, and without, the Fed.

However, given the horrific data we now have coming in, we already know our previous estimates of $100/share were too high. A more realistic, and still overly optimistic of a 50-60% decline in earnings, makes current valuations even more difficult to support. (Using the chart and table below, you can pick your price and valuation level.)

Whether its corporate profits, earnings, or GDP, no matter how you analyze the data, it suggests the outlook for stocks going into the summer is not favorable.

While it certainly seems to be a simple formula that as long as the Fed remains active in supporting asset prices, the deviation between fundamentals and fantasy doesn’t matter. It has been a hard point to argue as of late..

However, what has started, and has yet to complete, is the historical “mean reversion” process which has always followed bull markets. This should not be a surprise to anyone, as asset prices eventually reflect the underlying reality of corporate profitability and earnings.

Recessions reverse excesses.


Tyler Durden

Tue, 04/21/2020 – 12:35

via ZeroHedge News https://ift.tt/2RYfRAZ Tyler Durden

“Fed Can’t Print Gold”: BofA Calls Gold “Ultimate Store Of Value”, Raises Price Target To $3,000

“Fed Can’t Print Gold”: BofA Calls Gold “Ultimate Store Of Value”, Raises Price Target To $3,000

Back in April 2011, just before gold exploded to a record above $1,900 following the US credit rating downgrade, we first said – and Kyle Bass echoed – that the main reason behind our long-running, bullish view on gold is that the Fed can’t print gold , unlike every other asset.

Today, with a 9 year delay, Bank of America has caught up with where we were at the start of the decade, and repeating virtually everything we have said – consistently each day for over 11 years – says that while “the size of major central bank balance sheets has been stable at 21 to 28% of GDP in the past decade just like the gold price” things are changing rapidly and “as central banks & governments double their balance sheets & fiscal deficits we up our 18m gold target from $2000 to $3000/oz.” And while it’s not all smooth sailing, with the bank warning that “a strong USD backdrop, falling equity market volatility, and weak jewelry demand in India & China may remain headwinds”, it is now clear that even Wall Street’s agenda is aligned with that of all those who have been calling that the biggest beneficiary of central bank lunacy will be the “barbarous relic”, one which according to the most clueless person of the 21st century only had value because it was “tradition.” And yet here we are, when one of the biggest US banks just said that gold is the “ultimate store of value.

Who to believe: a pathological liar (i.e., a central banker) or someone who finally sees the light?

Incidentally, the name of the BofA report was “The Fed can’t print gold”, which was a delightful flashback to what we said some nine years ago.

Here are the key highlights from the report:

Gold prices have performed well in the recent period

As the ultimate store of value, gold prices have performed well during the past 15 months, posting a rally of over 10% since the Federal Reserve did a monetary policy U-turn in January 2019. Gold has also delivered a strong performance against other asset classes YTD. Of course, it has not been a straight line up, and gold did sell off hard for a brief period in March. The swing in gold prices mirrored the down and then up move in real interest rates. Now our CTA models suggest gold positioning is light, likely because of the spike in volatility and the mechanical drop in the gold Sharpe ratio. But this constraint could change as volatility keeps falling quickly across financial markets.

Now, significant monetary, fiscal easing around the world…

Due to the Covid-19 lockdowns, US GDP could go down by 30% YoY in 2Q20, the steepest drop in modern history. Other countries like Japan will likely experience a 21.8% decline in output in 2Q20, while China just reported a contraction of 6.8% in 1Q20. As central banks rush to expand their balance sheets and backstop asset values and consumer prices, a lot of risks could end up being socialized. The size of major central bank balance sheets has been stable at around 25% of GDP for the last decade or so, just like the gold price. As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure. And investors will aim for gold. Hence, we mark-to-market our forecasts and now project an average gold price of $1,695/oz in 2020 and $2,063/oz in 2021.

…lifts our 18m gold target from $2000/oz to $3000/oz

True, a strong USD backdrop, reduced financial market volatility, and lower jewelry demand in India and China could remain headwinds for gold. But beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale. Rates in the US and most G-10 economies will likely be at or below zero for a very long period of time as central banks attempt to push inflation back above their targets. Beyond real rates, variables such as nominal GDP, central bank balance sheets, or official gold reserves will remain the key determinants of gold prices, in our view. As central banks and governments double their balance sheets and fiscal deficits respectively, we have also decided to up our 18m gold target from $2,000 to $3,000/oz.

And with that let’s dig deeper into “The Fed can’t print gold” and why BofA thinks that gold will have a 3-handle in 18 months time:

Gold prices have performed well during the recent period…

As the ultimate store of value, gold prices have performed well during the past 15 months, posting a rally of 12% since the Federal Reserve did a monetary policy U-turn in January 2019 (Chart 1). More recently, gold prices have continued to post a robust run, with returns broadly outpacing other major asset classes year-to-date (Chart 2). Only long duration bonds and high quality tech stocks have delivered comparable performance, with 30 year Treasury yields posting 16.9% and the S&P Tech Sector delivering flat returns YTD.

…except over a brief window where liquidation occurred

Of course, it has not been a straight line up for the yellow metal. In fact, gold prices sold off very hard with close to 5 million futures trading volume during the March 9th to March 19th window (Chart 3) on the back of a major liquidity crunch. The move was not unique to the gold market, with fixed income assets also experiencing a big spike in volatility around that time (Chart 4). The pre-March 19 peak to trough decline for gold was 12% compared to an 8% drop in the US Treasury Inflation Protected Securities (TIPS) ETF or a 22% decline in investment grade ETF values such as LQD.

The sell-off in gold prices mirrored the move in real rates

It is worth noting too that the drop in gold prices mirrored the move in real interest rates during the past two months (Chart 5). As investors feared the extension of the China lockdown to the US and the rest of the world economy, asset values and consumer price expectations collapsed faster than nominal interest rates, triggering fears of an economic depression. Having learned the lessons of the Global Financial Crisis (GFC), the Federal Reserve raced to expand its balance sheet to increase fixed income liquidity and reflate US asset values, ultimately supporting a sharp recovery in gold prices (Chart 6).

Gold is a function on real rates, USD, commodities and risk…

As explained above, the selloff and subsequent recovery in gold prices during March was somewhat mechanical in nature. As the ultimate store of value, gold is a reflection of market movements across all major financial and physical assets. In the past we have argued that gold volatility is a function of real interest rates, USD, commodities and risk (Chart 7). Swings in these four variables alone can help explain up to 80% of variation in weekly gold price changes (Chart 8), providing an important template to understand the direction of future gold prices.

…and gold volatility tends to follow moves in other markets

Another factor to think about in precious metals is volatility. Specifically, gold volatility increased with market turbulence, but it has broadly lagged the spike in other asset classes like equities or oil (Chart 9). On our estimates, gold volatility more or less tracked G10 currency vol in the past two months, particularly mirroring perceived safe haven currencies like JPY and CHF. Unlike other commodity markets, the term structure of gold volatility is more aligned with that of paper assets (Chart 10). In contrast to oil or natural gas, gold is not constrained by storage dynamics and its price is not necessarily mean-reverting to the marginal cost of production over the long run.

Covid-19 has also triggered physical market dislocations…

Still, the physical settlement of paper contracts means that gold has unique features compared to other perceived safe havens. In normal times, when the CME delivery mechanism functions smoothly, differences between gold futures and the physical gold market are usually quite small. Yet the margin between futures and physical prices has blown out as of late (Chart 11). In part, there have been concerns over disruptions of shipments to the US over recent travel restrictions, as the London market typically provides liquidity to New York. While futures contracts are relatively rarely held to expiry, Chart 12 shows that inventory levels in CME warehouses are well below open interest.

…leading to the launch of a new CME gold futures contract

Also, the CME contract trades in 100koz, while a London Good Delivery Bar is 400koz. This matters because around one-third of global refining capacity has been shuttered over Covid-19, which made the conversion of bars into shapes suitable for delivery into the CME challenging.  Tackling these issues, CME has since launched new futures, which also accept 400oz bars. This should ultimately help alleviate liquidity concerns, although it may take some time for open interest to switch to the new contract. Beyond that, and perhaps more importantly, the Swiss refineries have been resuming operations again, while insurers now also accept charter flights to ship gold to New York, rather than just commercial connections. Not surprisingly, the differential between futures and physical gold has been narrowing.

Gold interacts with all financial markets in different ways

Beyond the volatility, physical and price change drivers discussed above, gold interacts with various financial markets in different ways. For instance, we recently noted that the correlation between gold and equities has recently turned positive (Chart 13). The positive equity/gold correlations are a possible sign that equity markets may not have fully bottomed (Chart 14) and that the gold market has further room to run, in our view. The trigger here could be an extension of lockdown restrictions over the next few weeks.

Despite the rally, gold positioning has been surprisingly weak

Another reason to be particularly constructive on gold is that our CTA gold positioning signal suggests that momentum players are only slightly long gold (Chart 15). Having peaked at 56% of their maximum length in the month of January, our models suggest that momentum players are currently holding 5.7% of their maximum allocations, well below the historical 99th percentile in history of 48%. While gold momentum is in full force following a brief collapse mid-March (Chart 16), our CTA model has only slowly crept into a long position due to the prevailing high volatility regime, a feature that is also likely prevalent in the broader class of vol targeting funds.

Fundamentally, EM gold demand should continue to be soft…

Also, jewelry demand usually declines when prices rally (Chart 21), as buyers in emerging markets like India often purchase on a budget. With jewelry often referencing spot market prices, this means that fewer ounces can be bought as gold rallies. Indeed, gold imports from India have been quite low (Chart 22), although this has also been influenced by low foot traffic in stores due to the recent lockdown over Covid-19.

…as purchasing power in India and China is suffering

Similarly, sales of jewelry in China, the second largest physical market, have been subdued for a while, as Chart 23 suggests, on persistent headwinds to growth which have been exacerbated by the health emergency in the first quarter. Meanwhile, the scrap market correlates positively with gold quotations, with owners of old metal often incentivized to monetize the gold as prices increase (Chart 24). Of course, the dynamic in the jewelry and scrap markets highlight the importance of investors: as the yellow metal rallies, non-commercial market participants need to pick up more ounces just to keep further price upside intact.

…although we expect central banks to buy some gold bars

So physical demand in traditional gold markets like jewelry looks soft and could be a drag on precious metals prices. However, central banks across major emerging markets have been avid buyers of gold for their reserve portfolio (Chart 25). As central banks in developed markets have expanded their balance sheets to support domestic asset and consumer prices (Chart 26), some EM central banks have become more proactive buyers of precious metals. In particular, Russia, China and India have opted to increase gold holdings in the past 5 years to diversify away from G-10 sovereign bond positions.

Gold may take comfort on rising inflation expectations…

We have previously argued that inflation expectations embedded in US TIPS collapsed and then rose again as the Fed acted to backstop fixed income asset values (Chart 29) and consumer prices. Now, with the Fed committing to do whatever it takes to prevent widespread bankruptcies across the US, Congress injecting a $2tn fiscal stimulus plan, and economic growth on standstill until there is a cure or a vaccine, inflation could rise even if GDP does not. This backdrop should prove very positive for gold, in our view. Similarly, the sharp increase in the ECB balance sheet in recent years, coupled with the likely massive expansion ahead, should provide strong support to gold (Chart 30).

…driven by massive monetary easing plans around the world…

One of the most intriguing developments ahead is that US GDP could drop by 30% YoY in 2Q20, the steepest collapse ever in modern history. Other countries like Japan will likely experience a 21.8% decline in output, while China just reported a contraction of 6.8% in 1Q20. As central banks rush to expand their balance sheets and backstop the economy, a lot of risks could effectively be socialized, boosting the appeal of gold. In aggregate, major central bank balance sheets have been stable at around 25% of GDP for the last decade or so (Chart 31). But clearly Covid-19 has started a race to increase balance sheets and save domestic asset values (Chart 32).

…and also by unprecedented fiscal deficits and government borrowing

Another important point to remember is that, just as central banks are socializing risk in financial markets, governments are increasing their spending like never before during peacetime. Fiscal spending plans across developed economies are nothing short of breathtaking whether we look at them in dollar terms (Chart 34) or as a percentage of each nation’s GDP (Chart 33). Of course, emerging economies do not have the domestic savings base to attempt such an extraordinary feat, but their central banks may opt to reduce DM sovereign bonds in favor of gold.

Cross-asset portfolios should increase exposure to gold…

Our Dynamically Diversified Momentum portfolio allocation tool uses a combination of clustering and Sharpe ratio momentum indicators to either add or reduce exposure to a broad range of asset classes (Chart 35). This allocation technique is representative of what some systematic cross-asset portfolios would use. In DDM, gold has generally been classified in the haven cluster, but has recently switched to the equity cluster and our tool has held a long gold position since mid-March. Also, traditional equal risk contribution portfolios, whether balanced or fixed income geared, should keep adding exposure to the yellow metal over the coming months to increase efficiency (Chart 36).

…and on our estimates investors are still underweight gold

Investment demand has correlated strongly with gold prices in recent years, and we expect precisely this group of buyers to drive gold prices higher (Chart 37). In other words, different levels of non-commercial demand are required to sustain different average price levels. Indeed, for gold to average $2,000/oz next year, purchases need to rise by 73% YoY (Chart 38). Given the current macro-economic backdrop, we believe this figure is likely to be exceeded.

We increase our average gold price forecasts from 2020 on…

We have been long-term gold bulls, maintaining our constructive forecast even through the recent volatility. That said, gold has now hit our average 4Q20 price forecast at $1,700/oz, Hence, we are marking-to-market expectations, while at the same time anticipating further upside, largely because central banks underwrite fiscal stimulus and financial markets through money printing, with fundamentals justifying a rally to $2,250/oz in 2021. Still, strong USD backdrop, reduced market volatility, and lower jewelry demand will likely remain headwinds to gold.

…and we also up our 18m gold target from $2000/oz to $3000/oz

Beyond the supply/demand fundamentals, financial repression is back at an extraordinary scale. Rates in the US and most G-10 economies will likely end up at or below zero for a very long period of time, just as central banks attempt to push inflation back above their targets. Beyond flow variables such as real rates, the USD or market risk, variables such as nominal GDP, central bank balance sheets, or official gold reserves will remain key determinants of gold prices. If central banks double their balance sheet as GDP contracts, gold prices will push higher (Chart 39). Thus, we increase our 18m gold target from $2,000 to $3,000/oz. When will gold start to catch steam? Our work shows that Google trends (Chart 40) could be an early real-time indicator that broader interest is picking up.

 


Tyler Durden

Tue, 04/21/2020 – 12:15

via ZeroHedge News https://ift.tt/3at8qbg Tyler Durden

Idaho Woman Threatened With Jail Time for Holding ‘Nonessential’ Yard Sale

Christa Thompson was trying to clean out her late father-in-law’s house when local police in Rathdrum, Idaho, charged her with a misdemeanor offense that carries a fine of up to $1,000 and the possibility of six months in jail.

The crime? Holding a yard sale.

“A garage sale/yard sale is not an essential business and should not be open for business,” Rathdrum Police Chief Tomi McLean explained in a post on the department’s official Facebook page. “This was a large non-essential yard sale that filled the entire front yard and spilled into the back yard as well.”

Peter Thompson, Christa’s husband, told the Coeur d’Alene Press that the family was sorting through his father’s belongings—including piles of stuff recovered from a storage facility—when the police stopped by the previous weekend to issue a warning.

“They told us we couldn’t have a yard sale, that it violated the governor’s order. I asked them if we could sort some things out on the lawn, and if it was OK to sell a few things to some people,” Thompson told the paper. “They said, ‘Sure, as long as there’s no signs or advertising or anything like that. So we didn’t.'”

That was on April 10. McLean says her officers found a post on Craigslist announcing a yard sale. They returned to the scene of the sale on April 13 to issue a written warning about violating Gov. Brad Little’s March 25 order telling all residents to stay home and closing nonessential businesses.

When officers returned again on April 17, McLean’s Facebook post says, they found “a large quantity of items were still out in the front yard and sales transactions were occurring while police were present.” That’s when Thompson was charged with a crime. Under the terms of the governor’s order, violations can be punished by $1,000 fines and up to six months in prison.

But the yard sale continued on Monday, according to the Bonner County Daily Bee. Christa Thompson told the newspaper she needed to finish selling her father-in-law’s property in order to pay bills and buy groceries for her six kids. With another truckload of stuff from a storage unit just getting delivered the to home on Monday, she speculated that the sale could continue throughout the week, and said she is advising prospective buyers to keep their distance from one another.

The ongoing standoff between the Thompsons and the local police department is a perfect illustration of the limitations of stay-at-home orders meant to combat the spread of COVID-19. Encouraging people to limit their interactions and stay home whenever possible makes sense—is necessary, even—to slow the spread. But it is impossible to stop everything. Bills must be paid, the difficult task of cleaning out a deceased family member’s home cannot be postponed indefinitely, and life (to some extent) must go on.

It’s also true that you can’t have a yard sale without willing buyers. Everyone involved was choosing to violate the governor’s order. This should be a signal to policy makers that the status quo cannot be maintained. As I wrote several weeks ago, total shutdowns cannot be expected to last for weeks or months. An equilibrium will be found—either purposefully and orderly by official policy, or haphazardly when people simply can’t take it anymore. We are now seeing that, in state capitals around the country and in Christa Thompson’s father-in-law’s front yard.

As for Thompson’s potential legal jeopardy, a Boise-based attorney has already volunteered to defend her. Edward Dindinger told the Idaho Freedom Foundation, a free market think tank, that he doesn’t believe the charges against Thompson will stand in court.

“The fact that officers of this department took the time to seek out and arbitrarily cite this individual,” Dindinger said, “indicates to me the Rathdrum Police Department has far too much time on its hands and is perhaps itself ‘non-essential.'”

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Idaho Woman Threatened With Jail Time for Holding ‘Nonessential’ Yard Sale

Christa Thompson was trying to clean out her late father-in-law’s house when local police in Rathdrum, Idaho, charged her with a misdemeanor offense that carries a fine of up to $1,000 and the possibility of six months in jail.

The crime? Holding a yard sale.

“A garage sale/yard sale is not an essential business and should not be open for business,” Rathdrum Police Chief Tomi McLean explained in a post on the department’s official Facebook page. “This was a large non-essential yard sale that filled the entire front yard and spilled into the back yard as well.”

Peter Thompson, Christa’s husband, told the Coeur d’Alene Press that the family was sorting through his father’s belongings—including piles of stuff recovered from a storage facility—when the police stopped by the previous weekend to issue a warning.

“They told us we couldn’t have a yard sale, that it violated the governor’s order. I asked them if we could sort some things out on the lawn, and if it was OK to sell a few things to some people,” Thompson told the paper. “They said, ‘Sure, as long as there’s no signs or advertising or anything like that. So we didn’t.'”

That was on April 10. McLean says her officers found a post on Craigslist announcing a yard sale. They returned to the scene of the sale on April 13 to issue a written warning about violating Gov. Brad Little’s March 25 order telling all residents to stay home and closing nonessential businesses.

When officers returned again on April 17, McLean’s Facebook post says, they found “a large quantity of items were still out in the front yard and sales transactions were occurring while police were present.” That’s when Thompson was charged with a crime. Under the terms of the governor’s order, violations can be punished by $1,000 fines and up to six months in prison.

But the yard sale continued on Monday, according to the Bonner County Daily Bee. Christa Thompson told the newspaper she needed to finish selling her father-in-law’s property in order to pay bills and buy groceries for her six kids. With another truckload of stuff from a storage unit just getting delivered the to home on Monday, she speculated that the sale could continue throughout the week, and said she is advising prospective buyers to keep their distance from one another.

The ongoing standoff between the Thompsons and the local police department is a perfect illustration of the limitations of stay-at-home orders meant to combat the spread of COVID-19. Encouraging people to limit their interactions and stay home whenever possible makes sense—is necessary, even—to slow the spread. But it is impossible to stop everything. Bills must be paid, the difficult task of cleaning out a deceased family member’s home cannot be postponed indefinitely, and life (to some extent) must go on.

It’s also true that you can’t have a yard sale without willing buyers. Everyone involved was choosing to violate the governor’s order. This should be a signal to policy makers that the status quo cannot be maintained. As I wrote several weeks ago, total shutdowns cannot be expected to last for weeks or months. An equilibrium will be found—either purposefully and orderly by official policy, or haphazardly when people simply can’t take it anymore. We are now seeing that, in state capitals around the country and in Christa Thompson’s father-in-law’s front yard.

As for Thompson’s potential legal jeopardy, a Boise-based attorney has already volunteered to defend her. Edward Dindinger told the Idaho Freedom Foundation, a free market think tank, that he doesn’t believe the charges against Thompson will stand in court.

“The fact that officers of this department took the time to seek out and arbitrarily cite this individual,” Dindinger said, “indicates to me the Rathdrum Police Department has far too much time on its hands and is perhaps itself ‘non-essential.'”

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Is This The Next Giant Industry In Need Of A Bailout?

Is This The Next Giant Industry In Need Of A Bailout?

Authored by Simon Black via SovereignMan.com,

Well this is starting to become a trend.

Over the past few weeks, state governments across the Land of the Free have been feverishly proposing new legislation that will virtually guarantee the entire insurance industry is wiped out.

The root of the issue has to do with something called business interruption insurance.

Business interruption is a pretty common type of insurance that’s designed to protect business owners against a number of risks.

For example, let’s say you own a restaurant and you have a bad kitchen fire that forces you to shut down for a month.

You’d most like have a fire insurance policy to cover the direct damage of the fire. And a lot of companies would also have a business interruption policy to help them stay afloat during that one-month period while the business is closed for repairs.

But business interruption insurance has certain exclusions. It’s just like any other policy, and the insurers are very clear about what risks they do/do not cover.

A typical homeowner’s insurance policy, for example, covers your home against risks like theft, fire, and vandalism.

But most homeowner’s policies specifically exclude flooding. So any homeowner who wants to protect their homes from the risk flood damage can purchase a separate flood insurance policy.

Many insurance plans, including business interruption policies, also tend to exclude things like damage caused by war, government action, and “acts of God”.

But again, any business that wants to insure against those risks is free to seek additional coverage.

That’s the whole idea of insurance: customers are able to pick and choose which risks they want to insure against, and which risks they’re willing to take.

It’s fair to say that most business interruption policies don’t cover a worldwide pandemic that shuttered the entire global economy.

But there’s a growing trend now where state governments are proposing new legislation that would RETROACTIVELY force insurance companies to protect their policyholders against Covid.

This is totally nuts. The state governments are the ones that forced businesses to shut down.

Now they expect the insurance companies to pay for the consequences, even though the policies specifically state that they don’t cover this type of risk.

They might as well demand pay for every other uninsured hazard. Did your house flood and you didn’t have flood insurance? Well let’s retroactively force the insurance companies to pay for that too.

Pennsylvania, New York, Illinois, New Jersey, and several other states have proposed similar legislation, or threatened regulatory action.

(This trend is also picking up steam overseas; in the UK, for example, lawsuits are already pending against insurance companies for not paying out Covid-related claims.)

And given that just about EVERY business would qualify for this retroactive Covid coverage, there’s simply no way that the insurance industry would be able to afford such an indemnity.

Think about it– the federal government made $350 billion worth of loans available to small businesses earlier this month, and that money was 100% used up in about 2 weeks. And they just agreed on another $300 billion this morning.

So most insurance companies would be wiped out if this legislation passes… i.e. CUE THE GOVERNMENT BAILOUT of the insurance industry.

Just like airlines, hotels, hospitals, etc., the insurance company would be standing in line to suckle on that sweet taxpayer bailout teet, probably to the tune of another half-trillion dollars.

Of course, it goes without saying that the government doesn’t have the money for any this.

We’ve explored the government balance sheet many times in the past: Uncle Sam is already in the hole by MINUS $23 trillion according to the Treasury Department’s most recent financial statements.

And, over the last few years, even when the economy was incredibly strong, the federal government still managed to lose more than a trillion dollars a year.

Now that they have a real crisis to contend with, the deficit is going to swell to an unimaginable figure.

Frankly it doesn’t matter whether or not the insurance companies end up footing the bill.

If the insurance companies re forced to pay up, the government will likely bail them out. Otherwise the government will bail out businesses directly.

Either way, it’s pretty obvious the government is going to spend an unbelievable amount of money they don’t have… which means the central bank (Federal Reserve) will keep printing more money.

That’s how the system works: whenever the government wants to bail someone out, the Federal Reserve first conjures the bailout money out of thin air, and then ‘loans’ it to the Treasury Department.

Crazy, right?

The Federal Reserve has already printed trillions of dollars since this crisis started, and that may only be the warm-up round.

The longer this lasts, the more money they’re going to print… and the more they’ll end up debasing the currency.

We are obviously living in extraordinary times, and it’s perfectly reasonable to hope for the best.

But it would be irresponsible to willfully ignore what the government and central bank are doing here.

Conjuring infinite amounts of money out of thin air could have incredibly destructive consequences on the currency.

And that’s why, as I’ve written before, it’s definitely time to consider owning some real assets.

*  *  *

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.


Tyler Durden

Tue, 04/21/2020 – 11:56

via ZeroHedge News https://ift.tt/3anHycZ Tyler Durden

Here’s Where All 50 States Stand On Reopening Their Economies

Here’s Where All 50 States Stand On Reopening Their Economies

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


Tyler Durden

Tue, 04/21/2020 – 11:35

via ZeroHedge News https://ift.tt/2XVBoOy Tyler Durden