Month: June 2021

Across the US, Americans are starting to think about COVID-19 as a memory. Many are no longer wearing masks in convenience stores and gyms after President Biden’s confusing mask guidance, which was interpreted as many as a curtain call on the hated practice. Credible physicians, including Johns Hopkins’ surgeon Dr. Marty Makary, have posited that the US might already have reached herd immunity, as the number of new cases continues to slow following the most recent peak in mid-April. Since January, the number of daily cases has slowed dramatically, falling from 300K cases per day on Jan. 2.

To try and entice more patients to accept the vaccine, some governors have offered lotteries with million-dollar payoffs, along with guns, beer and other cash prizes. These efforts have had mixed results (though the governor of Ohio insists that his state’s “Vax-a-Million” lottery campaign has helped encourage more adults to seek out the vaccine).

But survey data suggests that the US likely won’t see another surge in vaccine uptake, with 78% of respondents to a recent Gallup Poll saying they’re not planning on getting vaccinated and nothing will change their minds, which means President Biden’s latest goal of reaching 70% vaccination rates by the July 4th holiday – less than a month away – is looking increasingly unlikely.

Only 19% said they are somewhat likely to change their minds and 2% are very likely to decide to get vaccinated.

Presently in the US, fewer than 500K adults are being vaccinated each day, down from a peak of 3.4MM. As of Monday, 51.5% of the US population – or 170.8 million – have received an initial dose, which includes adult and children between ages 12 and 17.

In order to reach Biden’s goal, another 16MM more adults will need to have their first shot in the next 28 days.

Speaking again on CNBC Tuesday morning, Dr. Makary discussed the risks that COVID-19 poses to healthy individuals. He reiterated that while healthy people have gotten very sick, there haven’t been any cases of healthy, young people with zero documented co-morbidities actually dying.

“I think the concept of herd immunity is one that got misinterpreted as eradication…we will likely keep seeing COVID for decades,” Dr. Makary said.

Asked if he doesn’t believe young healthy people should get the vaccine, he  clarified that the case to get the vaccine “is there…it’s just not as compelling.” For example, even if healthy people might not die from COVID-19, they can still get really sick, potentially causing them to miss a week or two of work, or even spread the virus on to somebody else. As anybody with “long-haul” COVID-19 can attest, the virus can be devastating, even if it’s not fatal.

Only 2.4MM Americans got vaccinated last week, roughly half the 4.2MM weekly level that the country needs to meet Biden’s goal.

Southern states are seeing the lowest demand, and there is a political dimension to the situation: survey data shows that healthy adults who vote Republican are less likely to seek the vaccine than healthy adults who vote Democrat. In Alabama, for instance, only given 45.9% of adult residents their first dose of the vaccine, and last week the state had “just four people per 10K residents get vaccinated,” according to the newspaper.

So far, just 13 states – California, Connecticut, Hawaii, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, Vermont and Washington – have already vaccinated 70% of adults.

In total, 597,952 Americans have died from COVID-19 so far, while 33.38MM have been infected. But at this point, the US is reporting fewer than 350 deaths per day now.

Authored by Ivan Pentchoukov via The Epoch Times,

Attorneys for Chicago Mayor Lori Lightfoot on June 7 told a judge that they will file a sworn declaration clarifying the mayor’s policy on allowing interviews only to “people of color,” according to The Daily Caller.

Lightfoot’s office denied interview requests from at least two white reporters explaining that the mayor would only grant requests from black or brown journalists. There was no mention of the office’s policy for Asian reporters. Lightfoot went on to explicitly state and defend the discriminatory policy on Twitter last month.

“Diversity and inclusion is imperative across all institutions including media. In order to progress, we must change. This is exactly why I’m being intentional about prioritizing media requests from POC reporters on the occasion of the two-year anniversary of my inauguration as mayor of this great city,” Lightfoot said, using the acronym for “people of color.”

Daily Caller reporter Thomas Catenacci filed a lawsuit against Lightfoot on May 27 alleging that Lightfoot discriminated against him because he is white and violated his First Amendment rights. According to the complaint (pdf), Catenacci requested and was not granted one-on-one interviews with Lightfoot on May 20, 21, and 24.

During a court hearing on June 7, attorneys for Lightfoot argued that Catenacci “has no evidence this policy is in effect,” according to The Daily Caller.

Attorneys for Catenacci countered that “there is no evidence that this policy is not in effect” and that Lightfoot’s office “hasn’t provided any non-racial reason as to why the interview has not been granted.”

Lightfoot’s policy sparked backlash after she came to defend it, including from fellow reporters. Gregory Pratt, a Latino reporter with the Chicago Tribune, said Wednesday his interview request with Lightfoot was granted.

“However, I asked the mayor’s office to lift its condition on others and when they said no, we respectfully canceled. Politicians don’t get to choose who covers them,” he said in a tweet.

According to a preliminary injunction (pdf) filed by Catenacci’s lawyers on June 2, Lightfoot had at the time still not granted any interviews to white reporters.

The injunction request cites Charles Whitaker, dean at the Medill School of Journalism at Northwestern University, who said, “We would never, ever in a million years allow that of a white politician. [I]t’s dangerous now to say we are going to allow that of a Black politician simply to make a point about the historic inequities in media.”

The injunction also cites The National Association of Hispanic Journalists, which said in a statement that it “does not condone restricting press access based on a journalist’s race/ethnicity. Any action that threatens the cornerstone of our democracy and First Amendment rights is unacceptable.”

Lightfoot’s office did not immediately respond to a request for comment.

With ultra-slim majorities in both the House and Senate, Democratic lawmakers are facing a completely stalled agenda thanks to centrist lawmakers who refuse to nuke the Senate’s legislative filibuster – preventing progressives from ramming legislation through without bipartisan cooperation to achieve the 60-vote hurdle.

Most prominent of among the centrists is Sen. Joe Manchin (D-WV), who most recently penned a Sunday Op-Ed explaining why he’s voting against the Democrats’ “For the People Act” – namely, because “congressional action on federal voting rights legislation must be the result of both Democrats and Republicans coming together to find a pathway forward or we risk further dividing and destroying the republic we swore to protect and defend as elected officials.“

“I will not vote to weaken or eliminate the filibuster,” he added.

Fellow Democrats aren’t taking Manchin’s principled approach well. As Politico puts it, “Joe Manchin is sparking outright fury from liberals — with some Black Democrats invoking Jim Crow laws and Mitch McConnell as they blast the West Virginian’s resistance to a sweeping elections bill. Manchin’s fellow Senate Democrats are being far more conciliatory.”

JUST NOW: whoa.

“Joe Manchin has become the new Mitch McConnell…Joe Manchin is doing everything in his power to stop democracy.”

Dem Rep @JamaalBowmanNY on @Sen_JoeManchin on voting rights and the fillibuster.@NewDaypic.twitter.com/PYBiMo8l0o

— John Berman (@JohnBerman) June 7, 2021

“Of course I’m frustrated. Who isn’t frustrated?” one anonymous Senate Democrat told Politico, adding “Do you want to see the patches where I pulled my hair out?”

The left-wing loggerheads mean that for now, a laundry list of high-profile priorities are effectively on the shelf. Meanwhile, the Senate parliamentarian has ruled that Democrats can’t simply end-run the 60-vote hurdle this year by eliminating the filibuster.

Sen. Dick Durbin (D-Ill.) acknowledged that many of the items at the top of the base’s policy wish list like raising the minimum wage, voting rights or immigration reform don’t have the support needed to pass under the Senate’s current rules.  

“Well, those are more challenging. I don’t know any of those that have 60 votes at this moment,” Durbin said.  

The limbo status of many of the party’s biggest priorities comes as the Senate is bracing for a three-week sprint that will only illustrate the limits of what Democrats can get passed. 

Majority Leader Charles Schumer (D-N.Y.) called the three-week June sprint a “busy and consequential work period.” 

But while the Senate will pass a bipartisan China competitiveness bill on Tuesday, that could be the final big piece of legislation that comes to the floor with enough support to overcome a filibuster for the foreseeable future. –The Hill

So, while Manchin sticks to his guns on the filibuster, Schumer and the Democrats will simply spin their wheels on upcoming votes this month, such as their paycheck fairness act, the For the People voting reform act, as well as votes on gun reforms and LGBTQ rights.

Meanwhile, centrist Sen. Kyrsten Sinema (D-AZ) is in lockstep with Manchin – defending the filibuster during an event last week in Arizona by saying that “the way to fix that is to fix your behavior, not to eliminate the rules or change the rules, but to change the behavior.”

Progressives vow to ‘fight’ virtue signal.

According to Sen. Amy Klobuchar (D-MN), and despite virtually no chance of forcing through a progressive agenda, the “fight is not over.”

“I will continue to work with my colleagues to get critical voting, ethics and campaign finance reforms passed in the Senate,” she said, while sitting atop the Senate Rules Committee.

Yet – even ‘centrist’ Democratic legislation such as the John Lewis Voting Rights Act – which would strengthen the 1965 Voting Rights Act following a 2013 Supreme Court decision which gutted it, was only able to gain the support of one GOP senator during the previous congress; Alaska Sen. Lisa Murkowski.

“If we’re not going to be able to pass Senate Bill 1 on voting rights or have commonsense gun measures or take action on infrastructure and push back against climate change, all of these major priorities, police reforms and others, then if that is going to be the impediment to making change, we’ve got to change the rule,” said a frustrated Sen. Bob Casey (D-PA) during a recent MSNBC interview.

Good luck with that.

Authored by Mike Shedlock via MishTalk.com,

The Fed has been so wrong, in so many ways, for so long, we need to ask some pointed questions.

Q&A on Fed Transitory Statements

Q: If inflation picks up will the Fed say I made a mistake or will they double down?

Q: If the Fed doubles down will they admit their mistake or will they say let’s overshoot to make up for past inflation?

Q: If the overshoot continues, will the Fed say dammit wrong again or will they say better 10% inflation than 10% unemployment

I believe we know the answers to those questions, paraphrased from the Eurointelligence post Should we worry about inflation? 

Eurointelligence authors wrote from the perspective of the ECB. 

They did not know if inflation will rise or by how much. Nor does anyone else given there are too many variables. 

Who predicted Covid-19 and the global response to it? 

From the point of view of the Euro, Eurointelligence listed a pair of alternatives.  

• “Inflation may rise in the US, and that this could affect the euro area indirectly. One scenario is for a rise in the price level in non-euro global supply chains, but without a compensating rise in the euro’s real trade-weighted exchange rate.”

• “It is also possible that counter-acting deflationary forces might neutralize or overcompensate. There exists no single indicator that tells us what will happen.”

Key Point 

“Those who are absolutely certain that inflation won’t rise are mostly the same people who couldn’t care less if it does.“

More accurately, we have no idea what the central bankers really believe, we just know what they say to the masses.

Things We Do Know

1. What the Fed says is not necessarily the same thing as what they believe.
2. The Fed’s track record on inflation predictions, housing predictions, bubbles, dot plots, and literally everything else has either been one big set of lies or one big set of misses. Perhaps it’s a combination.

Dot Plot of Fed Interest Rate Predictions December 2016

Dot Plot of Fed Interest Rate Predictions December 2017

Dot Plot of Fed Interest Rate Predictions September 2018

Dot Plot of Fed Interest Rate Predictions December 2018

Those plots are the interest rate projections of all the Fed participants on those dates along with snide remarks I made at the time.

Bernanke Flashbacks

Please recall my January 6, 2020 post Ben Bernanke Just Won’t Stop Making a Fool Out of Himself

Former Fed Chairman Ben Bernanke said the Fed has many tools to fight a recession. He also said that forwards guidance won’t work if the neutral rate is below 2%. Amusingly, his solution was to raise forward guidance.

Bernanke in His Own Words

• February 15, 2007: Chairman Bernanke said: “Overall economic prospects for households remain good. The labor market is expected to stay healthy. And real incomes should continue to rise. The business sector remains in excellent financial condition.”

• March 28, 2007: Chairman Bernanke said: “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”

• May 17, 2007: Chairman Bernanke said: “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”

• February 27, 2008: Chairman Bernanke said: “By later this year, housing will stop being such a big drag directly on GDP … I am satisfied with the general approach that we’re currently taking.”

• February 28, 2008: Chairman Bernanke said: “Among the largest banks, the capital ratios remain good and I don’t expect any serious problems … among the large, internationally active banks that make up a very substantial part of our banking system.”

• June 9, 2008: Chairman Bernanke said: “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

• July 16, 2008: Chairman Bernanke said that Fannie Mae and Freddie Mac are “adequately capitalized” and “in no danger of failing.” Since then, Fannie Mae and Freddie Mac have received a $200 billion bailout and have been taken over by the federal government.

Fed Misunderstands Inflation

The Fed remains on a foolish mission to achieve 2% inflation.

In reality, the Fed produced massive inflation but does not know how to measure it.

Key Questions Looking Ahead?

• Is the Fed a big group of liars or are they simply that incompetent?

• Regardless, is the Fed wrong again?

Overloaded Boat

The Fed’s track record suggests there is a very strong reason to believe it is wrong again except for one thing: The boat is overloaded in near universal belief the Fed is indeed wrong again. 

On May 7, I commented Add David Rosenberg to List of Those Who Believe Inflation is Transitory

Rosenberg recalled one of Bob Farrell’s classic market rules: When all the experts and forecasts agree, something else is going to happen. The consensus has never been more lopsided, he said, and that is reflected in asset allocations that heavily weight stocks relative to bonds.

What About Wage Inflation?

 Also consider Huge Upward Wage Pressures for Both Skilled and Unskilled Labor

Lacy Hunt at Hoisington Management had this key observation. 

Mish,

Excellent analysis. I would add one point as a result of your conclusion. Older populations with declining birth rates and slower population, depress household, business and public investment. The contracting effect on investment is highly deflationary and overwhelms the impact of inflation due to the smaller labor force. This condition is plainly evident in Japan and Europe. Moreover, this pattern will be increasingly apparent in the US.

Finally, central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Last Wednesday, in what could be our second most profitable post in our 12 year history, (the first of course being the post that sparked much of the meme stock insanity), we hinted (since we are not “advisors”) to our readers to look at all the other most shorted small cap companies in the Russell 2000 – specifically those with a short interest at 20% or more of float listed below…

…… and buy an equal-weighted basket of these, to wit:

If the performance of our previous most shorted index is any indication, going long a market cap-weighted basket of these names – and especially the smaller, less liquid ones – could turn out to be the trade of the year, if not a lifetime.

Less than a week later, this basket is up more than 15% in value. To all those who put it on, congratulations. 

But in a world where there is now over $100 trillion in central bank liquidity, and where no logic or fundamentals make sense, the short squeeze insanity appears to be accelerating with every passing day: and while AMC is positively dormant today, it is GME that has taken its spot and is surging as much as 25%…

… while another most shorted name we flagged previously, Clover Health, has exploded more than 100%.

But in a notable shift from previous days, it now appears that even the microcaps are starting to run. Case in point, German microcap Windln.de, a German online retailer for baby and toddler products, which soared as much as 104% on Tuesday, following a 133% jump on Monday, as the company’s massive short interest was the topic of discussion on various message boards.  The ramp was accelerated when German newspaper Bild also highlithed the gains in Monday’s edition.

While the company’s fundamentals are garbage – with Windeln.de’s market value falling about 95% since listing shares in 2015, as the company undertook a restructuring in 2018 and a reverse stock split in 2019 – that did not matter as th squeeze busters sniffed out its massive 200% SI and limited float, which according to Bloomberg is just 30% of the shares outstanding.

The move in WDL, whose market cap was about €10MM at the start of the surge, suggests that the shorthunters have again expanded their universe of squeeze candidates, which brings us back to our post from late January, when we looked at the most shorted microcap stocks, those which in many cases traded in the subpenny range and are lucky to have a $1 million market cap.

So in the name of market efficiency, we decided to recreate our screen of most shorted microcap/pennystock names, using Bloomberg data.

The screen, shown below, captures not only the popular meme/Reddit stocks such as Bed Bath, Workhorse and Clover Health which we first profiled last week, but also expands into those stocks that have a substantial short interest as a % of float – in some cases with a potentially large naked short overhang as their SI as % of float is above 100% – in the microcap space. The list includes such names as Solar Integrated (SIRC) with a 55% short interest; OPETC International (OPTI) with 153% of the float shorted, the strategically named Renewable Energy And Power (RBNW) which is 50% shorted and even includes such old favorites as Saddle Ranch Media (SRMX), which we first profiled in January, and which then went on to generate a 3,800% return in two weeks!

And so, without further ado, here is the latest and greatest list of most shorted US-listed companies, including both the mid/large caps such as NKLA, CLV, BBBY and WKHS, but also the pennystocks such as SIRC, OPTI, GVSI, VDRM, HRAL, ASKE, SRMX and others.

As usual, for those who believe that the best way to beat the prevailing market madness is to simply join it, the easiest way will be to create an equal-weighted basket of these names and to just wait until the short-squeeze brigade comes in hot. Because if the performance of our previous most shorted indexes is any indication, going long a market cap-weighted basket of these names – especially the smaller, least liquid microcaps – could turn out to be the trade of the year, if not a lifetime.

Two men have been arrested after a major security incident at a political event in southeast France on Tuesday. French President Emmanuel Macron was in La Drôme where he met with restaurant and local business owners just ahead of a national easing of COVID-19 restrictions set for Wednesday.

Thinking he was approaching a “fan” behind a metal barrier, Macron walked up to a man in the crowd and grasped his hand, only for the man to then shout in his face, “Down with Macronia” (à bas la Macronie) – according to France24 – while simultaneously delivering a hard slap.

Mon Dieu. President Macron gets slapped by a guy he mistook for a fan in Southern #France today.

2 have been arrested in connection with incident: pic.twitter.com/YN9YzvWYCj

— Joyce Karam (@Joyce_Karam) June 8, 2021

Macron is seen in the video immediately lurching back and being pulled away by his security also as his secret service entourage then tries to jump on the man. 

Two men were reportedly arrested in relation to the incident. “A man indeed tried to hit the President of the Republic,” the Elysee told CNN in a statement. “We have no further comments at this point. Exchanges with the crowd and handshakes resumed. The trip continues.”

According to a further description, “Two of Macron’s security detail tackled the man in the green T-shirt, while another ushered Macron away. But Macron remained in the vicinity of the crowd for a few more seconds, and appeared to be talking to someone on the other side of the barriers.”

Macron came with all that agility and stamina to receive Slap pic.twitter.com/GyVzfRDn6v

— Noble 🔴 (@Noble_Hassan) June 8, 2021

“The presidential administration said there had been an attempt to strike Macron, but declined further comment,” France24 added.

Within an hour of social media footage of the encounter hitting the internet, it immediately went viral given the extreme rarity of a head of state being assaulted in such a humiliating fashion.

While the attacker’s motives remain unclear, there are reports quoting him as also yelling “Montjoie Saint Denis”, recognized as a historic battle cry of military members under the old French monarchy.