Last week, Rep. Thomas Massie (R–Ky.) became the most-hated man in Washington when he unsuccessfully tried to force a recorded vote in the House of Representatives on the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. House Speaker Nancy Pelosi (D–Calif.) and House Minority Leader Kevin McCarthy (R–Calif.) denounced him while President Donald Trump called him “a third rate Grandstander.” Seconding Trump’s characterization on Twitter, former secretary of state and Democratic presidential candidate John Kerry averred, “Congressman Massie has tested positive for being an asshole.”
In an exclusive interview with Reason, Massie, a libertarian-leaning Republican who entered Congress in 2012 with the backing of the Tea Party movement, explains his insistence that House members should have cast on-the-record votes on the single-biggest spending bill in U.S. history and calls out his critics. Referring “to John Kerry’s tweet that I tested positive for being an a-hole,” Massie tells Nick Gillespie, “I would just say at least I haven’t been symptomatic since birth.”
Brushing aside health concerns for his House colleagues, Massie notes that the Senate, whose members are on average much older than those in the House, voted in person for the spending bill. “You’re telling me that a congressman who makes $174,000 a year and has a really good healthcare plan paid for by the taxpayer can’t come to work when the Constitution compels them,” asks Massie rhetorically.
The CARES Act passed on a voice vote, meaning that there is no record of who voted in favor of or against the legislation (Massie adds bitterly that officials claim it passed unanimously). It was quickly signed into law by President Trump. Massie says that he knows several members besides himself who would have voted against it and name-checks Justin Amash (I–Mich.), Ken Buck (R–Colo.), Alex Mooney (R–W. Va.), and Andy Biggs (R–Ariz.) as others he says were solid no votes. He adds that several “Bernie bro” members recognize that the CARES Act is “cronyism on steroids” but isn’t sure they would have voted the bill down given the opportunity.
In a wide-ranging discussion about the public health and economic responses to COVID-19, Massie says that the federal government, especially the Centers for Disease Control and Prevention and the Food and Drug Administration first failed to anticipate and contain the pandemic and now continue to get in the way of allowing local and state governments and the private sector to respond effectively. “When we were attacked at Pearl Harbor, did we come up with a $2 trillion stimulus package,” he asks while criticizing the CARES Act. “Or did we declare a war on our enemies? We declared war on our enemies. Why have we not declared war on this virus? Why is our first instinct to make sure that the rich people is to keep all their riches? We need to be fighting the virus. So let’s do a Manhattan project against this virus. Let’s do a Manhattan project that comes up with a 3D-printed a ventilator, right? Let’s do a Manhattan project that figures out how to get everybody a week supply of masks.”
Despite the passage of a $2 trillion spending bill and his belief that another massive spending bill will almost certainly be introduced over the coming months, Massie still believes that the anti-spending energy that propelled the Tea Party movement and helped bring him to Congress in the first place is still alive. He notes that after he first announced his dissent to the CARES Act and his insistence that regular order be observed in voting for the legislation, he started receiving support from people around the country who respected what he was doing.
“You’ve got government telling you when to go to work and how long to work and what things you can buy and what you can’t buy. That’s central planning on steroids,” observes Massie. “When this is over… [I hope we will see] the aspects of this that saved us were free market and innovation and individuals and not the government. Maybe when this is over with, people will have less confidence in the government. A realistic view of what government’s role is.”
Edited by John Osterhoudt
Photo Credit: Bill Clark/CQ Roll Call/Newscom; Pool/TNS/Newscom; Michael Brochstein/ZUMA Press/Newscom; Jeremy Hogan/Polaris/Newscom; Tom Williams/CQ Roll Call/Newscom; Gage Skidmore (CC 2.0)
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Last week, Rep. Thomas Massie (R–Ky.) became the most-hated man in Washington when he unsuccessfully tried to force a recorded vote in the House of Representatives on the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. House Speaker Nancy Pelosi (D–Calif.) and House Minority Leader Kevin McCarthy (R–Calif.) denounced him while President Donald Trump called him “a third rate Grandstander.” Seconding Trump’s characterization on Twitter, former secretary of state and Democratic presidential candidate John Kerry averred, “Congressman Massie has tested positive for being an asshole.”
In an exclusive interview with Reason, Massie, a libertarian-leaning Republican who entered Congress in 2012 with the backing of the Tea Party movement, explains his insistence that House members should have cast on-the-record votes on the single-biggest spending bill in U.S. history and calls out his critics. Referring “to John Kerry’s tweet that I tested positive for being an a-hole,” Massie tells Nick Gillespie, “I would just say at least I haven’t been symptomatic since birth.”
Brushing aside health concerns for his House colleagues, Massie notes that the Senate, whose members are on average much older than those in the House, voted in person for the spending bill. “You’re telling me that a congressman who makes $174,000 a year and has a really good healthcare plan paid for by the taxpayer can’t come to work when the Constitution compels them,” asks Massie rhetorically.
The CARES Act passed on a voice vote, meaning that there is no record of who voted in favor of or against the legislation (Massie adds bitterly that officials claim it passed unanimously). It was quickly signed into law by President Trump. Massie says that he knows several members besides himself who would have voted against it and name-checks Justin Amash (I–Mich.), Ken Buck (R–Colo.), Alex Mooney (R–W. Va.), and Andy Biggs (R–Ariz.) as others he says were solid no votes. He adds that several “Bernie bro” members recognize that the CARES Act is “cronyism on steroids” but isn’t sure they would have voted the bill down given the opportunity.
In a wide-ranging discussion about the public health and economic responses to COVID-19, Massie says that the federal government, especially the Centers for Disease Control and Prevention and the Food and Drug Administration first failed to anticipate and contain the pandemic and now continue to get in the way of allowing local and state governments and the private sector to respond effectively. “When we were attacked at Pearl Harbor, did we come up with a $2 trillion stimulus package,” he asks while criticizing the CARES Act. “Or did we declare a war on our enemies? We declared war on our enemies. Why have we not declared war on this virus? Why is our first instinct to make sure that the rich people is to keep all their riches? We need to be fighting the virus. So let’s do a Manhattan project against this virus. Let’s do a Manhattan project that comes up with a 3D-printed a ventilator, right? Let’s do a Manhattan project that figures out how to get everybody a week supply of masks.”
Despite the passage of a $2 trillion spending bill and his belief that another massive spending bill will almost certainly be introduced over the coming months, Massie still believes that the anti-spending energy that propelled the Tea Party movement and helped bring him to Congress in the first place is still alive. He notes that after he first announced his dissent to the CARES Act and his insistence that regular order be observed in voting for the legislation, he started receiving support from people around the country who respected what he was doing.
“You’ve got government telling you when to go to work and how long to work and what things you can buy and what you can’t buy. That’s central planning on steroids,” observes Massie. “When this is over… [I hope we will see] the aspects of this that saved us were free market and innovation and individuals and not the government. Maybe when this is over with, people will have less confidence in the government. A realistic view of what government’s role is.”
Edited by John Osterhoudt
Photo Credit: Bill Clark/CQ Roll Call/Newscom; Pool/TNS/Newscom; Michael Brochstein/ZUMA Press/Newscom; Jeremy Hogan/Polaris/Newscom; Tom Williams/CQ Roll Call/Newscom; Gage Skidmore (CC 2.0)
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Another Busted M&A Arb As Xerox Abandons Hostile Bid For HP, Blames Virus
So it appears David will not be slaying Goliath this time (in what is likely to come as no surprise to anyone who has actually been paying attention).
Having started this debacle on Nov 5th 2019, Xerox has decided to end its hostile takeover bid for HP Inc. because of uncertainty stemming from the COVID-19 pandemic, a person familiar with the matter said, marking a blow to the photocopier company’s efforts to stimulate future growth.
The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc. (NYSE: HPQ) (“HP”). Accordingly, we are withdrawing our tender offer to acquire HP and will no longer seek to nominate our slate of highly qualified candidates to HP’s Board of Directors.
While it is disappointing to take this step, we are prioritizing the health, safety and well-being of our employees, customers, partners and other stakeholders, and our broader response to the pandemic, over and above all other considerations.
There remain compelling long-term financial and strategic benefits from combining Xerox and HP. The refusal of HP’s Board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction.
Xerox’s Board of Directors and management team are grateful for the significant backing we received from both Xerox and HP stockholders throughout this process. We thank the talented individuals who agreed to stand for election to the HP Board, making time in their busy schedules to take on this responsibility when HP’s existing Board did not. And finally, we thank the banks who agreed to finance this acquisition, who never wavered in their commitments, even during the market turmoil caused by COVID-19.
It’s been an ugly ride since Xerox announced, with it stock down 48% (and HPQ’s stock down just 5%)…
Just add it to the list of busted M&R arb deals…
Oddly, often times, when markets see volatility and prices move sharply lower, dealmaking can be a tailwind. Interested buyers with cash on the sidelines scoop up assets on the cheap and companies in financial distress start to look for synergies and ways to survive the current downturn.
But in the case of the coronavirus pandemic that has shut down most of the world, dealmaking has simply ground to a halt.
Deal activity last week was down to just $12.5 billion, the lowest weekly total since April 2009, and the overall value of deals in Q1 fell 28% from a year ago to $698 billion. It’s the weakest year opening period since 2016, according to the Financial Times.
There was a “sudden reduction” in U.S. activity and the number of transactions greater than $10 billion also dropped sharply around the globe.
Leon Kalvaria, chairman of the institutional clients group at Citigroup, was not optimistic for the near term. He told FT: “Everyone is thinking about their employees and customers first. Few companies will be doing cash deals in this environment and private equity players will focus more on managing their portfolio companies before starting to do deals.”
U.S. dealmaking plunged 51% to $253 billion in the first quarter, even inclusive of Morgan Stanley’s takeover of E-Trade and Thermo Fisher’s takeover of Qiagen.
European volumes for the quarter were up due to a pick-up in private equity acquisitions and the takeover of Willis Towers Watson by Aon. European volumes rose 51% to $232 billion in the period.
Dietrich Becker, Perella Weinberg Partners’ head of European advisory, said:
“In the first week of a crisis, everyone looks at their balance sheet and says everything looks OK. And then as time goes on, they look at the cash burn rate amid declining revenue and become focused on their liquidity, credit profile and ratings.”
He continued:
“Activist defence and general corporate defence remain a theme that our clients are focused on given the sharp share price falls. I suspect there will be some good, old-fashioned defensive mergers as companies will need to accelerate consolidation.”
Cross-border transactions also plunged, down 17% from a year ago to $204 billion. As individual counties batten down their respective hatches, cross-border dealmaking will likely continue to suffer into the back end of 2020.
Ros L’Esperance, global co-head of banking at UBS, concluded:
“M&A activity has slowed down as clients are trying to assess where the market is moving, the impact on individual sectors and businesses, and are waiting for valuations to stabilise, but dialogues remain robust.”
Likely high off a hit of fresh Central Bank cash, L’Esperance continued: “Certainly there will be a delay in activity but once things reset they will probably bounce back and accelerate much faster than it did after the financial crisis in certain sectors.”
Steve Cohen Doubts This Is The Bottom: “Markets Don’t Come Back In A Straight Line”
Over the weekend, we reported that the only question Goldman’s client are asking is “are we past the bottom” and “has a new bull markets started.” Not surprisingly, today we also learned from Michael Wilson that the main question Morgan Stanley clients were asking was almost identical: “will US equity markets make fresh lows in this bear market.”
And while Wilson’s answer was yes, a far more iconic investor – and one whose massively levered hedge fund that has substantial exposure to the blown up Treasury cash/swap basis trade was recently bailed out by the Fed’s mega repos – had a different take.
In an internal memo sent out on Friday and seen by Reuters, billionaire trader Steven A. Cohen cautioned his traders at Point72 Asset Management, to remain cautious as “markets don’t come back in a straight line; after an earthquake there are tremors.”
“We need to continue to be disciplined. We are seeing plenty of opportunities to generate returns, but I don’t want us taking undue risks” he added.
Cohen also wrote that his $16 billion firm’s returns are “essentially flat for the year,” a result that “speaks to how well our investment professionals have managed risk in such a challenging environment.”
Cohen’s opinion is so sought out he was among the hedge fund managers that spoke directly to the president last week as we previously reported, when he participated in a conference call with President Trump and Vice President Mike Pence. Others on the call included Dan Loeb of Third Point LLC, Stephen Schwarzman of Blackstone Group, Robert Smith of Vista Equity Partners, Paul Tudor Jones of Tudor Investment Corp and Ken Griffin of Citadel.
What specifically the Republican donor told Trump and Pence was unclear. Reuters previously reported that the call was to discuss the U.S. economy, the Federal Reserve and other issues, according a Reuters source, although something tells us that letting true price discovery return without constant Fed manipulation and intervention, was very low on the list of priorities.
As we also reported previously, other massively levered multi-strategy macro hedge funds posted strong performance in the second half of March after getting crushed early in the month on the basis trade. They include the Millennium fund, which is up 0.17% for the year through Friday, and Citadel’s Wellington fund, which is also slightly positive for the year.
As a reminder, the trio of funds was the same as those we said last December were effectively rescued by the Fed’s restart of repo ops in September….
… which however turned out insufficient after this month’s turmoil, and they were forced to unwind failing bases trades, explaining why the Fed had to expand its repo to $1 trillion per day.
A few Los Angeles restaurants struggling to maintain footing amid the COVID-19 outbreak identified a clever way to generate revenue while still serving the community: Start selling groceries.
The city’s public health department promptly shut them down. The reason? The small businesses don’t have a “grocery permit.”
“It’s not really possible for a restaurant to become a grocery store,” Dr. Barbara Ferrer, director of Los Angeles County Public Health, said in a briefing yesterday. “You cannot just decide you want to sell groceries.”
Why anyone can’t do exactly that—exchange goods with those who want to purchase them—remains a mystery. Such licensing laws are typically put in place in the name of public safety, but one wonders how this decision could possibly help protect the public.
The restaurants-turned-grocery stores actually provide a rather obvious public health benefit. They are significantly less packed with people than traditional grocery stores, which is convenient when considering that every major health organization has advised individuals to maintain a six-foot distance from surrounding passersby.
“Elderly people in the neighborhood really enjoy coming to Bacari PDR,” says Robert Kronfli, the co-owner of one such restaurant-turned-grocery store. For one, “it was a super chill shopping environment,” he says, with “only one or two people in there at once.” Contrast that with the major chains, which have been overwhelmed with an onslaught of patrons. “They’re afraid to go to large supermarkets right now because of the lines and because of the social distancing thing.”
A local health inspector shuttered Bacari on Friday morning, citing the establishment’s lack of a license.
Kronfli’s store offered another advantage to the local area: “We have inventory,” he notes, including toilet paper, paper towels, cleaning supplies—the very items that notoriously disappeared from shelves weeks ago when fears started to spread around COVID-19. Many patrons flocked to his business for those goods, he says, and they also appreciated that they could touch and feel the produce without worrying as heavily about how many hands had touched it first.
Though Kronfli says that his conversation with the county health inspector “hit a brick wall,” he is appealing his case to the California Restaurant Association, to Councilman Mike Bonin (D–11), and to the L.A. Department of Public Health. He’s hopeful that the city will grant him the right to run his fledgling grocery business again.
A few Los Angeles restaurants struggling to maintain footing amid the COVID-19 outbreak identified a clever way to generate revenue while still serving the community: Start selling groceries.
The city’s public health department promptly shut them down. The reason? The small businesses don’t have a “grocery permit.”
“It’s not really possible for a restaurant to become a grocery store,” Dr. Barbara Ferrer, director of Los Angeles County Public Health, said in a briefing yesterday. “You cannot just decide you want to sell groceries.”
Why anyone can’t do exactly that—exchange goods with those who want to purchase them—remains a mystery. Such licensing laws are typically put in place in the name of public safety, but one wonders how this decision could possibly help protect the public.
The restaurants-turned-grocery stores actually provide a rather obvious public health benefit. They are significantly less packed with people than traditional grocery stores, which is convenient when considering that every major health organization has advised individuals to maintain a six-foot distance from surrounding passersby.
“Elderly people in the neighborhood really enjoy coming to Bacari PDR,” says Robert Kronfli, the co-owner of one such restaurant-turned-grocery store. For one, “it was a super chill shopping environment,” he says, with “only one or two people in there at once.” Contrast that with the major chains, which have been overwhelmed with an onslaught of patrons. “They’re afraid to go to large supermarkets right now because of the lines and because of the social distancing thing.”
A local health inspector shuttered Bacari on Friday morning, citing the establishment’s lack of a license.
Kronfli’s store offered another benefit to the local area: “We have inventory,” he notes, including toilet paper, paper towels, paper goods, cleaning supplies—the very goods that notoriously disappeared from shelves weeks ago when fears started to spread around COVID-19. Many patrons flocked to his business for those goods, he says, and they also appreciated that they could touch and feel the produce without worrying as heavily about how many hands had touched it first.
Though Kronfli says that his conversation with the county health inspector “hit a brick wall,” he is appealing his case to the California Restaurant Association, to Councilman Mike Bonin (D–11), and to the L.A. Department of Public Health. He’s hopeful that the city will grant him the right to run his fledgling grocery business again.
Despite spending the past few weeks assuring Americans that wearing a face mask in public is not necessary to stop the spread of COVID-19, the Centers for Disease Control (CDC) is reportedly reconsidering that stance.
According to The New York Times, the CDC is mulling changes to its guidelines for who should be wearing face masks due to evidence that the COVID-19 outbreak is being spread largely by people lacking symptoms of the disease. There is also mounting circumstantial evidence that countries where mask-wearing is more of a cultural norm have had greater success in containing the disease’s spread.
But there’s one big problem with all of that: a shortage of medical-grade N95 face masks.
And one of the reasons why America is facing a face mask shortage is the CDC itself. Hospitals are only allowed to purchase masks from suppliers certified by both the CDC and the Food and Drug Administration (FDA)—though they can accept donations from any source (more on that in a moment). Many foreign companies that make face masks lack those certifications, which limits the imported supply available to meet America’s rising demand.
Even suppliers who are certified to sell masks to Americans have to navigate a weeks-long bureaucratic process before orders can be fulfilled. Suppliers who aren’t certified by those federal agencies can’t legally bring their products into the United States. That means supplies of KN95 masks—a Chinese certification for face masks that 3M Corporation’s personal safety division says are “reasonable to consider….as equivalent” to N95 masks—can’t be imported legally.
Thankfully, markets are finding a way. As Vox reports, mask importers are “navigating a newly formed unofficial gray market” to get NK95 masks into the United States, where demand for protective medical gear is spiking—and will climb further if the federal government tells all Americans to start wearing masks in public at all times.
The FDA and CDC should get out of the way so those ad hoc markets can operate legally.
“Due to the worldwide shortage of N95 masks, the operative question for FDA regulators is not whether a Chinese KN95 mask is preferable to an American N95 mask,” write Alec Stapp, director of technology policy at the Progressive Policy Institute, and Caleb Watney, a tech policy fellow with the free-market R Street Institute, in a forthcoming paper on the regulatory challenges facing face mask suppliers.
“The question is,” they continue, “whether it’s better than the CDC’s recommendation that healthcare professionals ‘might use homemade masks (e.g., bandana, scarf) for care of patients with COVID-19 as a last resort.'”
According to the CDC’s own data, it takes an average of 95 days to approve new certifications for face mask suppliers. That’s far too long, even at the best of times.
Stapp and Watney compare the FDA’s and CDC’s role in the ongoing face mask shortage to how the same federal agencies initially restricted the number of labs that could work to develop COVID-19 testing kits. The federal government should learn from that experience and act quickly to address the shortage of masks by freeing up markets and allowing additional imports, they argue.
Specifically, that means granting immediate exemptions for all domestic manufacturers to by-pass regulatory hurdles and allowing imports from any foreign producer that has a track record of selling products to “peer countries” like Japan and nations in Europe. Purchasers and hospitals should be trusted to conduct quality control testing and spot checks.
That may not be an ideal solution, but these are not ideal times. The global supply chain is ramping up to meet the need created by coronavirus outbreak—but until federal regulators step aside to let markets work, the bureaucracy will only be making a bad situation worse.
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After Worst Quarter Ever, WTI Extends Losses On Massive Crude & Gasoline Build
After its worst quarter ever, as COVID-19 lockdowns crushed demand, raising fears about overflowing storage tanks amid a price war that has flooded the market with extra supply, all eyes are glued to new inventory data as Standard Chartered analysts, including Emily Ashford warned in a report, oil tanks around the world could fill in six weeks, a move that will likely force significant production shut-downs,
“Huge inventory builds, potentially exhausting spare storage capacity, will mean that market balance requires an unprecedented output shutdown by producers,” they wrote.
So, eyes down…
“There is the very real possibility that this week’s storage reports could be the energy patch version of last Thursday’s Weekly Jobless Claims,” Robert Yawger, Mizuho Securities USA’s director of energy said in a note.
“I would expect the numbers to be supersized and challenge multi-year highs/lows on multiple data points. Of course, I have been expecting big numbers for the past couple week, but the fireworks have not happened. That leads me to believe that the data explosion will likely happen this week … Exports will likely be down big, and refinery utilization will likely pull back dramatically. That will leave a lot of crude oil on the sidelines … EIA crude oil storage has been higher for nine weeks in a row. Storage will likely double up and increase at the rate of around 10 million for another nine weeks…at least.”
API
Crude +10.485mm (+4.6mm exp) – biggest build since Feb 2017
Cushing +2.926mm – biggest build since Feb 2019
Gasoline +6.058mm (+3.6mm exp) – biggest build since Jan 2020
Distillates -4.458mm (-600k exp)
While analysts expected the trend of crude builds to continues they unexpectedly saw a gasoline inventory build last week – bucking the 8-week trend of draws… and it with a huge crude and gasoline build last week
Source: Bloomberg
WTI was trading just above $20.20 ahead of the API data and extended losses after…
Goldman Sachs’s Jeff Currie said on Bloomberg TV that even Russia is “extremely vulnerable” to oil storage and infrastructure limits because its fields require thousands of miles of pipelines to get to buyers.
“The prices of the physical barrels are showing a lot more distress than the paper benchmarks,” said Roger Diwan, oil analyst at IHS Markit Ltd.
Finally, we note that Brent futures are signaling a historic glut is emerging.
The May contract traded at a discount of $13.66 a barrel to November, a more bearish super-contango than the market saw even in the depths of the 2008-09 global financial crisis.
In Part One of this article I detailed the criminal enterprise that constitutes the leadership of this country. The facts are clear. We’ve been screwed over by those who were supposed to represent us.
Now it is time to look in the mirror and decide whether we will continue to bow down before our keepers or step up and be accounted for in this coming fight.
Corporate executives who recklessly loaded their companies with debt, while utilizing the proceeds to buy back their own stock, in order to boost their stock price and outrageous compensation packages, left their companies vulnerable to an entirely predictable downturn. After frittering trillions away on their overvalued stock, they now demand bailouts from the taxpayer, and their spineless captured congress lapdogs have obeyed their corporate masters. The 96 – 0 vote in the Senate is truly a disgusting example of the corporate fascist One Party system that reigns in the swamp. Corporate socialism is alive and well.
As this incomprehensible national shutdown extends into April, tens of thousands of small businesses will be forced to close their doors for good. Local restaurants, hair salons, delis, hardware stores, and thousands of other small businesses will be involuntarily shuttered for good.
The national chains will collect their government largess, produce PR campaigns to pat themselves on the back, and abscond with the profits of the now deceased small businesses. The corporate fascists will become ever more powerful. Why are we letting this happen? As V described in his speech to London, there were a myriad of reasons, but we need to look in the mirror to find the true culprit.
“Because while the truncheon may be used in lieu of conversation, words will always retain their power. Words offer the means to meaning, and for those who will listen, the enunciation of truth. And the truth is, there is something terribly wrong with this country, isn’t there? Cruelty and injustice, intolerance and oppression. And where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission.
How did this happen? Who’s to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you’re looking for the guilty, you need only look into a mirror. I know why you did it. I know you were afraid. Who wouldn’t be? War, terror, disease. There were a myriad of problems which conspired to corrupt your reason and rob you of your common sense.”
– Alan Moore, V for Vendetta
War, terror and now disease. Sound familiar? As we remain trapped in our homes due to this invisible phantom menace and the mainstream media hysterically reports the running totals, interviewing self-proclaimed medical experts, and trying to boost ratings through creating fear and panic, the economy continues to implode, heading for the largest decrease in GDP in history, with unemployment headed to 20%. All perspective and context have been abandoned.
On an average day in America 8,000 people die, or 2.9 million per year. When that perspective is placed in context next to the 2,400 deaths in the month of March from the coronavirus, you have to question the necessity of shutting down the entire country. Now the panic and fear will be used as an excuse to further take away more liberties and freedoms. We’ve been playing their game and following their rules, and they remain in control of the game.
“They say that life’s a game, & then they take the board away.”
– vAlan Moore, V for Vendetta
I can’t help but ponder the parallels and messages from the film version of V for Vendetta versus what is happening now during the most perilous episode of this ongoing Fourth Turning. The 2005 film version was adapted from Alan Moore and David Lloyd’s graphic novel V for Vendetta, published between 1982 and 1985. Moore wrote it at the outset of the Third Turning Unraveling period, with a fascist versus anarchist theme.
The filmmakers had previously created the Matrix series and chose to change the plot and theme to match the post 9/11 mood, reflecting a more Fourth Turning view of our dystopian world. Moore disassociated himself from the film version. The story is set in a dystopian London in 2032. The country is ruled by a totalitarian fascist party where the people are surveilled, subjugated and oppressed by their government. We aren’t there yet, but unless we come to our senses quickly, that will be our fate.
I find it fascinating the plot of the movie centers around a secret bio-weapons program at Larkhill utilized by power hungry fascists (Sutler) to achieve their goal of convincing the masses to vote for their own enslavement. They released the virus into St. Mary’s school, the London tube and a water treatment plant, ultimately killing 100,000, blaming phantom terrorists, spreading panic and fear, and scaring the public into elevating Sutler to High Chancellor.
As a cherry on top, the conspirators reaped vast amounts of wealth by owning the company that developed the “cure” to the virus. It just so happens there is a bio-weapons lab in Wuhan. Canadian and Harvard scientists were arrested for doing something illegal with viruses. Only a mad conspiracy theorist would wonder whether this Chinese virus was released purposefully to achieve the goal of globalists for the ultimate power grab. Authoritarians only seek one thing.
“The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power. Not wealth or luxury or long life or happiness; only power, pure power. The object of power is power.”
– George Orwell – 1984
“Authority allows two roles: the torturer and the tortured. Twists people into joyless mannequins that fear and hate, while culture plunges into the abyss.”
– Alan Moore, V for Vendetta
The Party has created the fear and panic. The Party has shutdown the world economy. The Party has destroyed your 401ks, again. The Party is using propaganda techniques and scare tactics to bully you into subservience and conformity. The Party is using Orwellian doublespeak to mislead the masses. The Party will use all means to silence dissent. The Party will utilize their hold on the police forces and military to enforce their dictatorial decrees.
The Party is attempting to turn us against each other so we don’t turn on them. The truth is they are losing control. This debt drenched Ponzi financial system is collapsing and they have no way to escape the consequences of their crimes. The Party is in a weakened position and is lashing out in order to retain power. I feel like Finch in the scene which triggers the people to throw off their chains and fight back.
“I felt like I could see everything that happened, and everything that is going to happen. It was like a perfect pattern, laid out in front of me. And I realized we’re all part of it, and all trapped by it.”
– Finch – V for Vendetta
Here’s what I see happening now and what could happen if we knuckle under to the authoritarians:
Happening Now
The global economy will sink into a Depression with 2nd quarter GDP at -20% and unemployment rising to 20%.
Despite violent upswings, the stock market will drop another 30% in the next few months.
The annual deficit will top $4 trillion as the $2.2 trillion of pork hits the spending side and tax revenue evaporates due to the country being closed for business.
The unaccountable Fed will double its balance sheet to $9 trillion (up from $800 billion in 2008) as they pump the fiat directly into the veins of the Wall Street addicts.
The number of cases and deaths will continue to rise, but be no worse than the Swine flu numbers, and far less than the Spanish flu figures.
Left wing authoritarian governors will declare even more draconian lockdowns of their citizens, enforced by their police forces and national guard troops.
The initial fear and panic buying at grocery stores has subsided, but once the media begins to tout supply chain disruptions, a renewed panic will cause chaos across the country.
Police will monitor the license plates of those from infected areas, demanding the driver’s papers and forcing them to return to their states.
Silicon Valley Big Brother will report the movements of all citizens to the government through cell phone tracking of individuals.
Citizens will be encouraged by Big Brother to monitor the actions of their neighbors and report them to the authorities if they dare to disregard an order from their government keepers.
The media will continue to hype and create panic by exaggerating every aspect of this health crisis and cheer on every edict handed by government authorities.
As the lockdown nears a month, the natives will grow increasingly restless, as their $1,200 evaporates and they begin to question the Party’s narrative.
The vile politicians in D.C. will roll out another stimulus scheme, further indebting future generations in a pathetic attempt to prop up this carcass of a country.
Rioting and looting in the urban areas will lead to martial law being declared by Trump and the governors.
The legitimate scapegoating of China for creating this crisis will lead to increased tensions, as domestic discontent in both countries creates an atmosphere where military escapades are utilized to distract the masses, using patriotism as a rallying cry by the failing leaders.
Could Happen
The “authorities” will declare all coin and currency as unsafe due to the virus and force the digitalization of the entire country.
Gold will be outlawed once again, as its price rise will reveal the currency debasement and inflation created by the Fed’s monetary machinations.
Either at the convention or just before, Biden will “voluntarily” step aside due to his progressing Alzheimer’s to allow the media’s hero governor of NY to assume the nomination of the Democrat party.
With the economy in depression and the stock market down 50%, Trump would lose the presidency to Cuomo and the Democrats would take full control of Congress.
The left-wing fascist party would then begin implementing a government- controlled health care regime where all Americans will need to be microchipped for our own good.
Miraculously, a vaccine to eliminate the threat of coronavirus will be discovered and all Americans will be forced to receive it under threat of arrest. Shockingly, key congressmen will have invested heavily in the company that developed the cure.
The lunatic fringe will achieve their aim of a green new deal, passing legislation which will put the final nail in the coffin of a once great republic. The economy will spiral downward and the stock market will crash to levels not seen since the mid- 1990s.
As the global depression deepens, the one world government globalists will again utilize the fear and panic of the masses to try and install a global solution by offering financial relief (debt jubilee) in return for relinquishing our rights, liberties and freedom to a world run by billionaire oligarchs.
The authoritarians will pass legislation banning guns and demanding citizens to hand over their firearms under threat of imprisonment. The instantaneous blowback will rock the world.
This is where some hope enters the picture. We know every Fourth Turning results in the destruction of the existing social order. The toxic brew of debt, global disorder and civic decay are creating a perfect storm from which we cannot escape. We know globalists will attempt to take advantage of the pain, suffering and fear of the masses to further entrench themselves as our masters. This is where their hubris and arrogance will be their downfall. The dreadful course we are on is not set in stone. It is not certain, offering us one last opportunity.
“There’s no certainty – only opportunity.” – Alan Moore, V for Vendetta
There is a seething anger building in this country among the well-armed deplorables in flyover country and other rural communities across America. We are tired of being screwed over by the corrupt establishment and their lackeys. Government leadership has proven to be inept, immoral, idiotic, corrupt and incapable of doing the right thing. The financial leadership of this country has met Nassim Taleb’s description of IYI (intellectual yet idiot) perfectly.
In addition, the blatant corruption of these sleazy shysters has destroyed any trust in financial arrangements. And lastly, while the infrastructure of the country rots and decays, our political leaders spend $1 trillion per year policing the world and bombing 3rd world oil rich countries into submission. Trust in the system and leadership is dissipating rapidly.
The masses have not angrily voiced their displeasure with their government for decades, as they have been distracted by bread and circuses. The end of this empire is nearer than one might think, but its epitaph has already been written. Financial collapse is baked in the cake. The teetering edifice which took so long to build will be brought down by a snap of history’s fingers.
I’m unsure as to whether Trump is a pawn in this game of the globalists or a willing participant. If he isn’t the one destined to blow this thing sky high, then someone else will need to step into the breach and convince the masses to rise up, throw off their chains, and conquer their fears. We are approaching the climax phase of this Fourth Turning where things will turn nasty. If you haven’t noticed, your world has changed forever over the last few weeks and the future is in our hands. Are you ready to fight for truth, knowledge and a future for our children? The battle between good and evil has just begun.
“The Crisis climax is human history’s equivalent to nature’s raging typhoon, the kind that sucks all surrounding matter into a single swirl of ferocious energy. Anything not lashed down goes flying; anything standing in the way gets flattened. Normally occurring late in the Fourth Turning, the climax gathers energy from an accumulation of unmet needs, unpaid bills, and unresolved problems. It then spends that energy on an upheaval whose direction and dimension were beyond comprehension during the prior Unraveling era.
The climax shakes a society to its roots, transforms its institutions, redirects its purposes, and marks its people (and its generations) for life. The climax can end in triumph, or tragedy, or some combination of both. Whatever the event and whatever the outcome, a society passes through a great gate of history, fundamentally altering the course of civilization.”
– Strauss & Howe – Fourth Turning
This scene perfectly captures the essence of Fourth Turnings:
“With so much chaos, someone will do something stupid. And when they do, things will turn nasty.”
There is so much turmoil in markets that whatever Jeff Gundlach said on his last call with Doubleline investrs just two weeks ago is already outdated. Which is probably why, for the first time ever, the bond king is holding a second live webcast with DoubleLine investors and everyone else, which as he himself declared yesterday, “will be of the “Just Markets” variety. The title is “A Tale of Two Sinks” which, as always, contains many layers of meaning.”
I will doing a webcast tomorrow March 31, 2020 at 4:15 pm EDT. It will be of the “Just Markets” variety. The title is “A Tale of Two Sinks” which, as always, contains many layers of meaning.
As usual, readers can register for the free webcast at the following link or by clicking on the image below.
We hope to bring you the key highlights as the call goes on.
* * *
Gundlach starts with the big picture, showing the collapse in GDP forecasts for the rest of the year, a slide he has used recently on several occasions.
He next lays out the latest development in the coronavirus pandemic, which as most readers know is generally under control (allegedly) in Japan and South Korea, but rampant in Europe and the US.
Gundlach then mocked Bernanke’s take that the coronacrisis is “closer to a major snowstorm” than the Great Depression, saying that having grown up in Buffalo, snow storms last a week and are far less exciting.
The DoubleLine CEO then showed the impact of the pandemic on LA traffic and pollution, with congestion and smog both apparently gone thanks to the virus.
Gundlach then reveals the source of today’s presentation title: the two sinks are the i) Fed’s kitchen sink and ii) the Treasury’s kitchen sink, which so far are barely keeping risk assets in check, and already the Treasury is contemplating another kitchen sink in the form of Phase IV which Trump hinted today could be $2 trillion and geared at infrastructure.
Going back to the economy, Gundlach looks at one of his favorite charts, namely the surge in initial claims which he shows on a 4 week average basis to normalize the outlier of last week’s massive surge.
How bad could it get? Gundlach shows a chart of “low quality jobs” which will be the first to go, and could be as large as 35 million.
Going back to GDP forecasts (which exclude Goldman’s latest -34% GDP drop), Gundlach compiles the latest big bank predictions and shows that Q2 will be nothing short of a depression.
