A Child’s Loss Fuels Mysterious, Riveting The Drowning


thedrowning_1161x653

The Drowning. Available Thursday, May 6, on Sundance Now and Acorn TV.

The Drowning opens with a quick series of scenes from a multi-generational family picnic at the lake, a sunny collage that quickly turns dark, and not from the weather. Four-year-old Tom is playing with a boat in the water, and then—after a series of artily discordant shots that show little but imply much—he’s not. The lake waters have seemingly claimed the boy, and, in a way, his family, too.

This spellbinding new series that aired on British television this spring and is now available from the streaming services Acorn TV and Sundance Now has plenty of victims, drowning not only in water but grief and guilt, too.

But—could it all be needless? Almost exactly a decade later, Tom’s mother Jodie sees a teenager walking along a downtown street with a stunning resemblance to her son, right down to the little half-moon scar underneath an eye. Trailing him first to his school and then his home, Jodie is increasingly certain that she’s found Tom. Is this a simple case of mistaken identity? Or something far more sinister?

Jodie (played by Jill Halfpenny, like most of the cast a Brit TV veteran little-known to American audiences) is the axis upon which The Drowning spins. Certain she’s found her son, who she’s always regarded as missing and not dead—his body was never found—she gets no sympathy from either police or her family. The reticence of the cops is perhaps understandable; she’s got little evidence beyond a mother’s conviction of physical likeness. And a none-too-stable mother at that: Besieged by bill collectors, her landscaping business swirling the drain, Jodie is visibly crumbling under the pressure.

But her family’s reluctance to get involved smacks more of inertia, a sense that Jodie’s quixotic quest will only destroy the fragile peace they’ve made with Tom’s death. “I don’t think I could go through it again,” confesses her ex-husband who, after the boy’s drowning, left Jodie for her best friend.

Infuriated but undeterred, Jodie declares herself a one-woman truth squad. Using forged credentials, she gets herself hired as music teacher at the look-alike boy’s school, then even wangles her way into a gig as his guitar tutor. Her seemingly casual conversations with Mark (a stony-faced Rupert Penry-Jones), the kid’s purported single dad, arouse suspicions; he’s oddly reluctant to share recollections of the boy’s early childhood.

But there’s also something unsettling about the ease with which Jodie sheds her identity as a hedge-clipper and pot-waterer to turn undercover operative. And her tactics—buying faked documents with embezzled money—set off a tumbling line of criminal dominoes that seem likely to crush everyone around her even if she’s right about the boy’s identity.

The Drowning may sound like a been-there-done-that detective yarn of no particular distinction. But, tightly shot and edited, it’s a marvel of efficient story-telling. And Halfpenny gives an absolutely riveting performance, adroitly peeling away the skins of lives unknown as she pursues her phantom (or not) child. Her glare could freeze a mouse in the middle of the Sahara; her smile, light a ballroom. She gives Jodie a laser intensity that defies restraint, even when it’s warranted. At a memorial service for her father, whose weakened heart did not survive Tom’s death, one of his golfing buddies is asked if he ever cheated. “Only when you took your eyes off him,” the man replies. Like father, like daughter.

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JPM Does Not Expect Big Month-End Pension Selling Today

JPM Does Not Expect Big Month-End Pension Selling Today

Unlike last quarter, when JPMorgan warned of up to $316BN in forced, month and quarter-end pension rebalance selling (which incidentally never materialized), this time around – now that we are at April month-end and some traders are worried that we may see a similar (if scaled down as it is just month, not quarter end) forced rebalance out of stocks and into bonds – JPMorgan sees no such threats.

In a month discussing the month-end rebalance, JPM writes that unlike March (and Q) equities have outperformed bonds by just 4% MTD, so based on the bank’s calculations there is just 50-75bps of equity underperformance into month-end due to pension rebalances, all else equak. So, according to JPM, “the rebalance flows are not expected to be big, they can be easily enough offset by fundamental buyers on reopening/earnings, and part of the rebalance is likely already out of the way (e.g. they may have contributed to the market weakness on Thursday morning).”

While month-end selling may not be an issue this time, another more troubling dynamic has emerged, one which we previewed two weeks ago when we wrote that “Q1 Earnings Will Be Stellar, But Are Fully Priced-In.” Confirming this, JPMorgan writes that companies which beat their EPS estimates – with 55% of companies reporting Q2 numbers, 85% have beat earnings and 78% beat revenue estimates – are seeing their stocks fall, on average, 30bps while companies that miss EPS estimates are seeing their stocks tumble 2%!

One can see that very clearly in AAPL’s recent earnings report which beat every metric and whisper number by a consider margin and increases its buyback by $90BN; yet the stock finished Thursday flat in a positive Tech tape and trhen slumped more on Friday.

As JPM observes, the strong, and improving, macro environment is filtering into earnings “and companies are not being rewarded”, which is hardly a surprise since all of the upside was already priced in heading into earnings. If we see NFP next Friday, JPM asks, does that give markets the boost that they are looking for?

Probably not, but the real question is with buybacks accelerating  – something else we discussed earlier this week now that 2021 is on pace to be a record breaking quarter for sotck buybacks…

… can corporate demand act as the incremental buyer if institutional investors pullback on their activity into the summer?

If 2018 and 2019 are any indication, the answer is a resounding yes.

Tyler Durden
Fri, 04/30/2021 – 12:10

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A Child’s Loss Fuels Mysterious, Riveting The Drowning


thedrowning_1161x653

The Drowning. Available Thursday, May 6, on Sundance Now and Acorn TV.

The Drowning opens with a quick series of scenes from a multi-generational family picnic at the lake, a sunny collage that quickly turns dark, and not from the weather. Four-year-old Tom is playing with a boat in the water, and then—after a series of artily discordant shots that show little but imply much—he’s not. The lake waters have seemingly claimed the boy, and, in a way, his family, too.

This spellbinding new series that aired on British television this spring and is now available from the streaming services Acorn TV and Sundance Now has plenty of victims, drowning not only in water but grief and guilt, too.

But—could it all be needless? Almost exactly a decade later, Tom’s mother Jodie sees a teenager walking along a downtown street with a stunning resemblance to her son, right down to the little half-moon scar underneath an eye. Trailing him first to his school and then his home, Jodie is increasingly certain that she’s found Tom. Is this a simple case of mistaken identity? Or something far more sinister?

Jodie (played by Jill Halfpenny, like most of the cast a Brit TV veteran little-known to American audiences) is the axis upon which The Drowning spins. Certain she’s found her son, who she’s always regarded as missing and not dead—his body was never found—she gets no sympathy from either police or her family. The reticence of the cops is perhaps understandable; she’s got little evidence beyond a mother’s conviction of physical likeness. And a none-too-stable mother at that: Besieged by bill collectors, her landscaping business swirling the drain, Jodie is visibly crumbling under the pressure.

But her family’s reluctance to get involved smacks more of inertia, a sense that Jodie’s quixotic quest will only destroy the fragile peace they’ve made with Tom’s death. “I don’t think I could go through it again,” confesses her ex-husband who, after the boy’s drowning, left Jodie for her best friend.

Infuriated but undeterred, Jodie declares herself a one-woman truth squad. Using forged credentials, she gets herself hired as music teacher at the look-alike boy’s school, then even wangles her way into a gig as his guitar tutor. Her seemingly casual conversations with Mark (a stony-faced Rupert Penry-Jones), the kid’s purported single dad, arouse suspicions; he’s oddly reluctant to share recollections of the boy’s early childhood.

But there’s also something unsettling about the ease with which Jodie sheds her identity as a hedge-clipper and pot-waterer to turn undercover operative. And her tactics—buying faked documents with embezzled money—set off a tumbling line of criminal dominoes that seem likely to crush everyone around her even if she’s right about the boy’s identity.

The Drowning may sound like a been-there-done-that detective yarn of no particular distinction. But, tightly shot and edited, it’s a marvel of efficient story-telling. And Halfpenny gives an absolutely riveting performance, adroitly peeling away the skins of lives unknown as she pursues her phantom (or not) child. Her glare could freeze a mouse in the middle of the Sahara; her smile, light a ballroom. She gives Jodie a laser intensity that defies restraint, even when it’s warranted. At a memorial service for her father, whose weakened heart did not survive Tom’s death, one of his golfing buddies is asked if he ever cheated. “Only when you took your eyes off him,” the man replies. Like father, like daughter.

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Kass: Beware Of “Pulling Forward” Sales & Profits

Kass: Beware Of “Pulling Forward” Sales & Profits

Authored by Doug Kass via Seabreeze Partners,

  • Also, beware of “first level thinking” and looking at the rear view mirror

  • eBay, Netflix, Twitter, Zoom, Microsoft and Apple all have something in common – the “stay at home theme” has likely been discounted and played out

  • Leading technology companies will prove to have far more difficult compares in the second half of 2021 and into 2022

  • With market caps large and share price elevated – stocks are vulnerable

  • I have aggressively shorted the Indices (with emphasis on the Nasdaq), purchased Index puts and initiated an Apple short

Several months ago I cautioned that market bulls should beware of ‘pulling forward‘ sales and profits: 

“Covid-19 and extraordinary bouts of fiscal stimulus have helped the large beat the small. But, a lot of that beat is the “pulling forward” of revenues and operating profits that will make compares difficult in the second half of 2021 and 2022.” 

Reflecting this concern I have two stocks on my Best Ideas List (short) – Peloton and Zoom. See: “Zoom Is Not the Next Amazon“. 

And, this week, based on the same concern I shorted Apple (AAPL) – a stock that was universally applauded in the financial media when the company reported a large top and bottom line beat on Wednesday evening.

Is Fleabay (err… eBay) and Netflix the Canaries in the Coal Mine? 

Lost in the noise is that Fleabay (eBay (EBAY) ), after recent massive growth offered tepid sequential guidance which shocked the street – meaningful evidence that the stay at home thing looks to be played out. One could have interpolated this from Netflix’s (NFLX) results. And, if you even look at Facebook (FB) , the stunning revenue growth was driven much more by price (advertising rates) than actual underlying unit growth. In fact, I think North American user growth was virtually flat again. I am not sure how sustainable it is to keep taking price up as well in this circumstance. My guess would be as people go back to work, the need for online impressions will be less pressing… and the comps start to get really difficult for all these “stay at home” companies. 

Apple, despite protestations is about to have the same challenges. The overnight European news will likely help my short in Apple.  

There is now large risk to the COVID winners. They not only have comp issues, but also the return to normalcy risk — all in the face of massive valuations both in terms of multiples and market capitalizations. For example, a lot of fanfare in the media about Apple’s new $100 billion buyback. But, with a $2.25 trillion market cap, the marginal impact on EPS is now relatively modest compared to when the company initiated an aggressive capital strategy years ago! 

The best example is uber popular Zoom (ZM) which I put on my Best Ideas List (short) in October, 2020 at $568/share. The shares are currently $321! The stock has been hammered over the last six months in the face of massive upward EPS revisions. But even with the large upside revisions the stock has collapsed. Its market cap, nonetheless, remains large. 

Markets smell this out well in advance, especially with multiples where they are. Mr. Market knows (though FIN TV remains lame) that things will get back to normal, people will go back to work and children will return back to school… And, Zoom’s business will collapse. 

After yesterday’s weak report and poor guidance, we can add Twitter (TWTR) to the list, a stock I recently suggested should have been sold in the high $60s. Same issue. I would be a buyer under $55. 

Amazon (AMZN) , by contrast, is in “beast mode” – but something tells me by the time the second half rolls around, results even at Amazon won’t be looking nearly as good (sequentially or year over year). Moreover, the magnitude of the company’s recent successes and market share gains, the more the cries of antitrust, here and over there, are likely. 

Come to think of it… Microsoft (MSFT) was not so hot, either. Same thing, a lot of demand has been pulled forward and sequential and year over year comps will grow tougher. 

Bottom Line 

Market conditions will likely change as the second half of 2021 for technology now looks far more challenging (helping to explain why my largest individual short is now (QQQ) ). 

This is happening at a time in which the most popular large cap tech stocks have elevated market caps and share prices. 

And, if sometime in the second half of this year there is some minor tapering or a further rate rise and slowing fiscal stimulus, Katie may be barring the doors.

Tyler Durden
Fri, 04/30/2021 – 12:00

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Tesla Just Paid Back $614 Million In Loans It Received For Its Shanghai Gigafactory

Tesla Just Paid Back $614 Million In Loans It Received For Its Shanghai Gigafactory

As the ongoing soap opera between China and Tesla continues – with the Chinese government looking as though it may be less-than-amused with boy wonder “visionary in chief” Elon Musk of late – it appears that Tesla may also be working to separate its ties from the Chinese government.

The company has paid back $614 million in loans that it took out for the Shanghai Gigafactory, according to Tesmanian, citing the company’s recently filed 10-Q.

Tesla’s 10-Q stated:

“In April 2021, we fully repaid the $614 million in aggregate principal of our secured term loan facility in connection with the construction of Gigafactory Shanghai (the“ Fixed Asset Facility ”) and the facility was terminated.”

The company also noted that it no longer had access to $758 from a fixed asset facility as a result:

“After the termination, the $758 million of unused commitment under the Fixed Asset Facility included in the debt and finance lease table as of March 31, 2021 above was no longer available.”

Recall, the loans was part of a whirlwind of variables that all mysteriously went Tesla’s way when the automaker sought to get up and running, extremely quickly, in the world’s largest auto market. Tesla was able to ascertain financing, land and staff to build the Gigafactory with blistering turnaround time when the company made the decision to build in China.

The quick turnarounds and China’s willingness to help finance the project raised numerous eyebrows at the time, including ours.

Recall, back in April 2020, we were one of the first to ask if Musk risked becoming a Chinese asset. We raised pointed questions about Musk’s cozy relationship with the Chinese government – before their relationship started to fall apart – more than a year ago. 

Recently we’ve covered the China risk to Tesla’s business in our piece suggesting that Elon Musk’s Chinese fairy tale could eventually come to an end. We noted how in late April 2021, Chinese state media is now suggesting that the automaker’s sales could be “doomed” in the country.

Funny how that works, isn’t it?

Tyler Durden
Fri, 04/30/2021 – 11:40

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Lawyer For Ashli Babbitt’s Family Says They Will Seek $10 Million From US Capitol Police In Lawsuit

Lawyer For Ashli Babbitt’s Family Says They Will Seek $10 Million From US Capitol Police In Lawsuit

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

The family of Ashli Babbitt, the only person shot during the Jan. 6 breach of the U.S. Capitol, plans to sue the police department and the officer who fired the gun for at least $10 million, their attorney said.

Melody Black, from Minnesota, visits a memorial setup near the Capitol Building for Ashli Babbitt in Washington, on Jan. 7, 2021. (Joe Raedle/Getty Images)

Terry Robert, the family’s attorney told Zenger News’ David Martosko in a report first by published Newsweek, that they plan to sue both the Capitol Police and the officer for wrongful death, and will be seeking $10 million in damages in federal court.

The lawsuit comes after the Department of Justice (DOJ) announced on April 14 that it would not file criminal charges against the officer who killed Babbitt.

The U.S. Attorney’s Office for the District of Columbia and the DOJ’s Civil Rights Division decided jointly not to pursue charges against the officer, who has not been publicly identified.

Babbitt, a decorated U.S. Air Force veteran, was unarmed when she joined others in storming the U.S. Capitol in Washington during a joint session of Congress in January.

An undated social media selfie photo shows Ashley Babbitt, also spelt Ashli. (Ashli Babbitt/Twitter)

The 35-year-old was shot while trying to climb through a broken window into the Speaker’s Lobby, adjacent to the House chamber.

She was transported to Washington Hospital Center, where she died, the DOJ said. She left behind a husband, Aaron, and four younger brothers.

Babbitt’s death was caused by the gunshot, which hit her left shoulder, the D.C. Office of the Chief Medical Examiner ruled earlier this month. The manner of death was homicide.

“A rookie police officer would not have shot this woman,” Roberts told the news outlet. “If she committed any crime by going through the window and into the Speaker’s Lobby, it would have been trespassing. Some misdemeanor crime. All a rookie cop would have done is arrest her.

“And he has plenty of other officers there to assist with arrest,” he said of the shooter. “You had officers on Ashli’s side of the door in riot gear and holding submachine guns. And on the other side of the door you have another uniformed officer 6 or 8 feet away. Whose life is he saving by shooting her? … She’s not brandishing a weapon. She’s on the window ledge. And there’s no reason to think she’s armed.”

Roberts said the $10 million figure was a “good estimate” and noted that economic losses from Babbitt death would likely total $2 million.

Non-economic claims, such as punitive damages, would push the sum far higher, he added.

Roberts added that “within the next ten days” he will serve notice to U.S. Capitol Police that he intends to file suit in Federal District Court in Washington, D.C.

Unlike some other jurisdictions, the District of Columbia has no practical monetary limit on the damages a family can recover in a wrongful death lawsuit.

The U.S. Department of Justice said in an April 14 press release that it had closed its investigation without filing criminal charges against the officer involved in the fatal shooting of Babbitt.

The press release said the investigation “revealed no evidence to establish that, at the time the officer fired a single shot at Ms. Babbitt, the officer did not reasonably believe that it was necessary to do so in self-defense or in defense of the Members of Congress and others evacuating the House Chamber.”

On Jan. 6, a group of rioters and some protesters breached the U.S. Capitol while lawmakers were counting Electoral College votes. Thousands of other protesters peacefully protested outside the building, while one protester was fatally shot by Capitol Police, one—a lady was trampled—died from acute amphetamine intoxication, one died of a heart attack, and another from a stroke.

Capitol Police Officer Brian Sicknick died from a stroke on Jan. 7, and though Capitol Police originally linked his death to the Jan. 6 breach, Washington’s chief medical examiner declared his death was from natural causes.

The Capitol Police did not immediately respond to a request for comment.

Tyler Durden
Fri, 04/30/2021 – 11:20

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Dallas Fed President Spooks Stocks: “We’ve Got Real Excesses In The Housing Market”, Rate Hike Needed In 2022

Dallas Fed President Spooks Stocks: “We’ve Got Real Excesses In The Housing Market”, Rate Hike Needed In 2022

On Wednesday, Fed chair Jerome Powell raised some eyebrows – and launched some sell programs – when in the middle of a lengthy tirade about how there is no inflation, soaring prices notwithstanding, he admitted that some assets were “frothy”, yet paradoxically without acknowledging the Fed’s explicit (and dedicated) role in creating and nurturing said market froth. Or, as Rabo’s Michael Every put it, “the most surprising thing was Powell daring to use the word “froth” to describe the stock market he himself is boiling.”

Fast forward just two days later, when moments ago Dallas Fed’s non-voting president (and former Goldman partner), Robert Kaplan, doubled down on the “bad Fed cop” angle and says “we’re now observing excesses and imbalances in markets.”

Explaining that he is “very attentive to that and that’s why I do think at the earliest opportunity, I think will be appropriate for us to start talking about adjusting those purchases”, Kaplan said that “we’ve got real excesses in the housing market” which is why he had not changed his view that rates should start to rise in 2022, and that the Fed should start talking about tapering of bond buying soon; most ominously – and an indication of just how much confusion there is at the Fed right now – he said that he expects to see a surge in prices of more than 2.5-2.75% in the coming months.

According to Kaplan, getting less-educated workers back to the workforce and in jobs is a challenge during the recovery. The former Goldman employee also reiterated the upside risk to his 6.5% growth forecast for the US economy and said that while “it’s not yet the speculative situation that we had back in ‘07, ‘08 and ‘09″, he said that “it bears watching and keeping a close eye on.”

His hawkish comments, which came alongside a report that a UK study has determined that individuals who have had only the first does of the Pfizer COVID-19 vaccine remain at risk against dominant new variants (except in those who have already had COVID-19) spooked markets and promptly put a damper on a modest rally that tried to emerge shortly after the US open.

Tyler Durden
Fri, 04/30/2021 – 11:04

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Biden Bets The Farm… To “Change The World”

Biden Bets The Farm… To “Change The World”

Authored by Pat Buchanan,

Joe Biden may not be a radical socialist, but he is doing the best imitation of one this writer has lately seen.

After enacting a COVID-19 relief package of $1.9 trillion in March without a single Republican vote in Congress, Biden proposed a jobs and infrastructure program of $2.2 trillion. He has now added an “American Families Plan” of another $1.8 trillion.

In his speech to the joint session of Congress, Biden laid out its contents. The Washington Times relates:

“Mr. Biden’s latest spending package includes $225 billion for child care, $225 billion for a national paid family and medical leave program, $200 billion to extend bolstered Obamacare subsidies in his $1.9 trillion coronavirus relief package, $200 billion for universal pre-K, and $109 billion for two years of free community college for all Americans.”

While Biden’s $6 trillion in total spending is spread over several years, it represents a claim on the nation’s wealth equal to 30% of GDP — a figure comparable to FDR’s New Deal and LBJ’s Great Society.

One hundred days into his term, our oldest president is seeking to become a transformative progressive president in the FDR mold, and he is betting his presidency he can bring it off.

Where does Biden propose to get the money to pay for this great leap forward for government?

Biden proposes to raise the U.S. corporate tax by one-third to 28%, raise the personal income tax rate to 40%, double the tax on capital gains to 40%, and raise death and inheritance taxes to effect a greater equality of wealth in America.

To accomplish this, without Republican support in either house of Congress, Biden would need a solidly united party in the House and a party in lockstep in the Senate where the Democrats’ margin is the tie-breaking vote of Vice President Kamala Harris.

During the runoff races for the two Senate seats in Georgia last year, Sen. Chuck Schumer blurted, “Now we take Georgia, then we change the world.”

That is an apt description of what is going on. Biden, Schumer and Nancy Pelosi mean to use the window of opportunity their slimmest of margins on Capitol Hill have provided them — to “change the world.”

To enact his infrastructure and families plan, Biden will have to move swiftly. Yet, his timing may be auspicious.

For there is a sense of optimism in the land.

U.S. GDP rose 6.4% in the first quarter of 2021. We are coming out of the economic free fall of 2020 and the pandemic that produced it.

COVID-19 infections, hospitalizations and deaths are fractions of what they were at the height of the pandemic. Vaccinations, while tapering off, continue in the millions daily.

And all those billions of federal dollars sloshing through the economy are going to make tens of millions of Americans feel better.

While the TV audience for Biden’s address tilted Democratic, the 85% approval of his speech in one poll, along with the 75% who said it made them more optimistic about America, suggest that this is Biden’s moment.

And the Republicans?

While there are elements of Biden’s proposed infrastructure spending the GOP might support — funding for roads, bridges, airports, broadband — Democrats are not likely to agree to cuts in the social spending in Biden’s plans to win Republican votes.

And, even given the popularity of some of Biden’s proposals, it is difficult to see how a party that not so long ago preached the gospel of small government and balanced budgets could sign on to much of this.

Jimmy Carter said at Notre Dame in 1977 that we Americans had gotten over our “inordinate fear of Communism.”

Have Republicans of the party of Coolidge and Reagan gotten over their inordinate fear of deficits, debt and inflation?

Democrats have the votes to prevent Republicans from amending, in ways Democrats do not like, the infrastructure and social spending bills.

Republicans, however, would appear to have no choice but to do battle to cut the bills back, and, failing that, kill them.

Events seem to be pointing to an up-or-down vote on Biden’s plans in both houses, and, as of today, Democrats appear to be in the catbird seat.

Yet, one recalls: After LBJ ran up the largest electoral landslide since FDR and launched his Great Society in 1965, he lost 47 House seats in 1966. And, with Johnson’s presidency broken by Vietnam, crime and riots, Republicans won five of the next six presidential elections.

Plus, there is a real risk to the nation in these massive Biden bills.

Deficits exceeding $1 trillion. A national debt larger than the national economy and growing inexorably. A Federal Reserve running the printing press night and day to produce the dollars to push the nation back to full employment.

This is Biden’s hour. The question is how long does it last.

Tyler Durden
Fri, 04/30/2021 – 10:55

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“There Are No Stabilizers Left” – Cooperman Warns That Next Market Crash Will Make Traders “Heads Spin”

“There Are No Stabilizers Left” – Cooperman Warns That Next Market Crash Will Make Traders “Heads Spin”

During an appearance on CNBC Friday morning, hedge fund titan Leon Cooperman insisted that he believes staying long is the only option for equity investors so long as the Fed keeps interest rates on hold…but that once the market has “a reason” to sell, traders can expect a tumultuous wave of selling on par with the declines seen in March 2020.

Cooperman, who started speaking just as the latest personal income data revealed that one-third of income during the period came from the government, declared that “I don’t see the condition for a big market decline presently – however, and this is the big ‘however’ – we should recognize that we’re pulling demand forward and the long term outlook isn’t particularly favorable in my view.”

What does that mean, exactly? Cooperman explains:

If investors “spoke to 100 economists today and asked them what their view is of the potential real growth of the US economy, the response would be centered around 2% real, and they would get there by saying well I think productivity growth is at 1.5%, labor-force growth is .5% and that’s real growth – 2%. A bear might say 1.5% a bull might say 2.5% but it would be centered around 2%.”

“We’re growing this year 4-5x potential, yet the Fed is insisting on keeping interest rates near zero. That doesn’t make any sense to me. That’s just pushing people out on the risk curve.”

He added that he expects the market will be lower one year from today.

In summary, while Fed Chairman Jay Powell insisted yesterday that the Fed isn’t even thinking about raising interest rates yet, Cooperman, like Jeffrey Gundlach before him, remains skeptical. And while Cooperman understands that there’s nothing to be gained by ‘fighting the Fed’ – that stocks will likely continue to climb as confidence in the Fed’s backstop remains high – at some point, the market’s frothy valuations will – to borrow a phrase he once used to describe the GameStop trading frenzy – “end in tears”.

Ironically, however, Cooperman said that some of the most highly valued megacap stocks actually deserve their lofty prices. Asked specifically about his holdings in Amazon, Microsoft and Google parent Alphabet, Cooperman emphatically replied that he would be “staying pat” after this week’s blockbuster earnings. He added that “they’re real substantive companies generating substantial cash, I don’t look at them as overvalued…what’s overvalued is fixed income…I don’t understand why anybody would buy a bond.”

Shifting to a tangent about contemporary market structure, Cooperman lamented that while he doesn’t see the conditions for a major decline, “when the market has a reason to go down, it’s going to go down so fast that your head is going to spin…because there’s no stabilizers left. 50 years ago, commissions were 25 cents a share, and the Volcker Rule didn’t exist…brokerages had incentive to step in.”

Circling back to the start of the interview, Cooperman – asked to comment about Sen. Elizabeth Warren’s latest jab, delivered on CNBC earlier this week – commented that Warren “proved to me she was a politician in the worst sense of the word…I do believe in progressive income tax structure, I do believe rich people should pay more. The wealth tax makes no sense to me for lots of reasons…and all the countries where it has been introduced – I think 14 out of 17 – it has been eliminated. There are other ways to go about what she is trying to accomplish. Raise the marginal tax rate. Eliminate tax loopholes. Eliminate the tax code item 1031 which enables real-estate people to roll forward gains…there are all types of things we can do.

And in the end, it’s probably unconstitutional,” Cooperman added.

While Warren has accused Cooperman of not contributing his fair share, Cooperman responded by musing: “What is your fair share of what someone else has worked for? I’m willing to work 6 months a year for the government and 6 months for myself. That seems reasonable to me. Beyond that it becomes confiscatory.”

Shifting his attention to President Biden’s sweeping “infrastructure” package, Cooperman lamented that American is abandoning capitalism in favor of quasi-socialism.

With all this in mind, one would think Cooperman opposed the progressive Democrats’ economic vision. But to our surprise, Cooperman – who once praised President Trump and his economic plan including the historic tax cuts he signed into law – admitted that he voted for Biden last year. So if a national wealth tax does become a reality in the coming years, he will have nobody but himself to blame.

Tyler Durden
Fri, 04/30/2021 – 10:38

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A Keynesian Warmonger Gets What He Deserves in the Otherwise Awful Without Remorse


without-remorse-header

I don’t have much good to report about Without Remorse, but I will say this: It’s a movie where the Keynesian warmonger turns out to be the bad guy—and gets what he deserves. 

Before I spoil the end of this movie, an action thriller on Amazon Prime Video loosely adapted from a 1993 Tom Clancy novel, let me pre-spoil it with this: You don’t need to get to the end, because it’s a terrible movie, saved only occasionally by an all-in, relentlessly physical performance by Michael B. Jordan, as longtime Clancy hero John Clark. 

But if you do get the end (and again, spoiler alert) you’ll be treated to a monologue by Guy Pearce, playing the Secretary of Defense, who explains that he’s been trying to foment a war with Russia by—actually it doesn’t matter, but all the nefariously convoluted stuff that happens in the movie, including a hit that resulted in the death of the hero’s wife—in order to bring Americans together and pump up the economy. 

“You know who won World War II?” he seethes, in one of those explain-your-evil-plan monologues that villains in bad movies often give about eight minutes before the credits roll. “It wasn’t the generals or the admirals,” he says. “It was the economists.” 

During World War II, he tells Jordan, the government purchased tanks, planes, ships, trucks, and other industrial goods. “All that spending lifted this entire nation out of poverty.” There’s also a throwaway line or two about how an external threat can bring together a politically divided nation. Sure.

As if letting innocents die in hopes of starting a massive war wasn’t bad enough, Pearce proves his ultimate villainy by mansplaining macroeconomics and political polarization to the hero. He sounds less like a secretary of defense and more like a Twitter reply guy.

Not surprisingly, Jordan kills him rather violently pretty much immediately after that. It’s fairly satisfying, as these things go. 

It’s a popular myth, of course, that World War II government spending was primarily responsible for pulling America out of the Depression and kick-starting a midcentury economic boom; in fact, the war was incredibly costly (as war usually is) and diverted resources away from the productive economy. That some bureaucratic D.C. bigwig would both buy into that myth and cite it as inspiration for a cockamamie plan to bring Americans together and boost the economy is probably the most believable thing about the movie. 

The rest of it involves a series of often inscrutable moves and countermoves by both the military and intelligence community, as they attempt to rescue an American asset from Russian captivity, which then appears to spark a series of attacks on American soil—one of which results in the death of Clark’s wife. 

Following her death, Clark hunts down a Russian diplomat and murders him in the drop-off lane outside Dulles airport by setting his car on fire, then shooting him several times during an interrogation. It’s certainly harsh, but honestly it might not be worse than having to navigate the terminals at Dulles. 

Clark ends up in jail long enough to beat up some guards and be conveniently rescued by a U.S. marshal who then disappears for the rest of the movie. (The kludgy screenplay by Taylor Sheridan and Will Staples often saves Clark from certain doom through coincidence rather than through his own ingenuity.) 

After some dutiful exposition, the story takes a long detour to Russia for an apartment-bound action sequence featuring snipers, vest bombs, exploding police cars, and all sorts of other ordinance. Despite many, many explosions, the whole setpiece manages to be extraordinarily boring. 

The apartment shootout should be the movie’s highlight, but it’s just a dour, dull, slog. Director Stefano Sollima shoots the sequence (and the rest of the movie) in flat, visually indistinct compositions, and never musters any energy or urgency for the action. It has all the drive and tension of a weeknight trip to Harris Teeter.

Watch out for those snipers! Hmmm, a new flavor of Doritos?

This important character is wearing a bomb with a dead man’s switch! Do you think they’ll notice if I have 11 items in the 10 items or less lane? 

Anyway.

The only upside to the movie is Michael B. Jordan’s seething, intense performance. Watching him psych himself up to fight a flotilla of armored prison guards is one of the movie’s best moments, because it relies on his energy alone, not anything engineered by the director or screenwriters. 

Jordan deserves a big, exciting action franchise, but this disappointing dud isn’t it, even if there is a mid-credits sequence teasing a sequel.

Like so many bureaucrats and lawmakers in D.C., Without Remorse makes promises it can’t keep. Even the title is misleading; after two hours of indifferently staged buildup to a crappy speech by a nefarious D.C. politico, I’m pretty sure there will be a lot of remorse—yours. 

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