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[Markets] The Dow has surged over 61,000% as it marks its 124th year — Here’s a brief history of the most popular stock-market barometer amid the coronavirus crisis The Dow has become one of the most widely tracked stock gauges in the U.S., if not the world, since its was created in 1896. Published:5/26/2020 12:06:16 PM
[Politics] Trump Touts Rising Stocks, Calls on States to Open Up ASAP President Donald Trump touted gains as the New York Stock Exchange opened its session significantly higher on Tuesday. "Stock Market up BIG, DOW crosses 25,000. S&P 500 over 3000," the president wrote on Twitter. He stressed that "States should open up ASAP. The Transition to... Published:5/26/2020 11:05:31 AM
[Markets] Trump urges states to open ‘ASAP’ as Dow surges Trump urges states to open ‘ASAP’ as Dow surges Published:5/26/2020 10:35:33 AM
[Markets] Dow industrials surge nearly 600 points in first half-hour of Tuesday trades Dow industrials surge nearly 600 points in first half-hour of Tuesday trades Published:5/26/2020 9:35:09 AM
[Markets] European stocks open higher on recovery hopes as TUI surges over 30% European stocks opened higher on Tuesday on economic recovery hopes. The FTSE 100 rallied 1.9% after a three-day break in the U.K., while the German DAX added 0.7%. Travel group Tui surged 32% after its CEO said the company will resume flights at the end of June, while Wirecard slipped 4% after delaying its 2019 results for a third time. Futures on the Dow Jones Industrial Average surged 491 points. Published:5/26/2020 2:33:17 AM
[Markets] Dow Jones Futures Jump; Five Titans Near Buy Points In Coronavirus Stock Market Rally Dow Jones futures surged, signaled strong gains for the coronavirus stock market rally. Apple, Tesla and AMD are near buy points. Published:5/26/2020 12:03:08 AM
[Markets] Dow Jones Futures: Breakouts Slowing In Coronavirus Stock Market Rally, But These Five Titans Are Near Buy Points Dow Jones futures: The coronavirust stock market rally is roaring on, but breakouts are slowing. Apple, Tesla, Microsoft, Google and AMD are near buy points though. Published:5/24/2020 5:54:20 PM
[Markets] Central Banks Are Destroying What Was Left Of Free Markets Central Banks Are Destroying What Was Left Of Free Markets Tyler Durden Sun, 05/24/2020 - 16:15

Authored by Alasdair Macleod via The Mises Institute,

President Reagan memorably said that the nine words you don’t want to hear are “I’m from the government, and I’m here to help.” Governments in all the major jurisdictions are now making good on that unwanted promise and are taking responsibility for everything from our shoulders.

Those receiving subsidies and loan guarantees are no doubt grateful, though they probably see it as the government’s duty and their right. But someone has to pay for it. In the past, the redistribution of wealth through taxes meant that the haves were taxed to give financial support to the have-nots, at least that was the story. Today, through monetary debasement nearly everyone benefits from monetary redistribution.

This is not a costless exercise. Governments are no longer robbing Peter to pay Paul. They are robbing Peter to pay Peter as well. You would think this is widely understood, but the Peters are so distracted by the apparent benefits they might or might not get that they don’t see the cost. They fail to appreciate that printing money is not just the marginal source of financing for excess government spending, but that it has now become mainstream.

There is almost a total absence in the established media of any commentary on the consequences of monetary inflation, and in a cry for more we even have financial experts warning us of a deflationary collapse and the need for the Fed to introduce negative interest rates to stave off deflation. Yes, there are deflationary forces, because banks wish to reduce their loan exposure at a time of increasing risk. But we can be sure that central banks and their political masters will do everything they can to counter the trend of contracting bank credit by increasing base money. There can only be one outcome: the debasement and eventual destruction of fiat currencies.

There is an aspect of the destruction brought about by monetary policy which is almost never considered by policymakers, and that is how it distorts the allocation of capital and leads to its misallocation. In free markets, capital is scarce and must be used to greatest effect if the consumer is to be properly served and the entrepreneur is to maximize his profits.

Capital comes in several forms and encompasses every aspect of production: principally an establishment, machinery, labor, semimanufactured goods and commodities to be processed, and money. An establishment, such as a factory or offices, and the availability of labor are relatively fixed in their capacity. Depending on their deployment and capacity they produce a limited amount of goods. It is just one form of capital, money and credit, which central banks and the banking system now provide, and which in its unbacked form is infinitely flexible. Consequently, attempts to stimulate production by monetary means still run into the capacity constraints of the other forms of capital.

Monetary policy has been increasingly used to manipulate capital allocation since the early days of the Great Depression. The effect has varied, but it has generally come up against the constraints of the other forms of capital. Where there is excess labour, it takes time to retrain it with the specialized skills required, a process hampered by trade unions ostensibly protecting their members but in reality resisting the reallocation of labor resources. Government control over planning and increasingly stifling regulations, again putting a brake on change, mean that changes and additions to the use of establishments have lengthened the time before entrepreneurial investment is rewarded with profits. Government intervention has also discouraged the withdrawal of monetary capital from unprofitable deployment, or malinvestments, lengthening recessions needlessly.

When the advanced nations had strong industrial cores, the periodic expansions of credit and their subsequent sudden contractions led to observable booms and busts in the classical sense, since production of labor-intensive consumer goods dominated production overall.

There have been two further developments.

The first was the abandonment of the Bretton Woods agreement in 1971, which led to a substantial rise in prices for commodities. The broad-based UN index of commodities rose from 33 to 157 during the decade, a rise of 376 percent. This input category of production capital compared unfavorably with US consumer price increases of 112 percent  over the decade, the mismatch between these and other categories of capital allocation making economic calculation a fruitless exercise.

The second development was the liberation of financial controls in the mid-eighties, London’s Big Bang and the repeal of America’s Glass-Steagall Act of 1933, allowing commercial banks to fully embrace and exploit investment banking activities.

The banking cartel increasingly directed its ability to create credit toward purely financial activities mainly for their own books, thereby financing financial speculation while deemphasising bank credit expansion for production purposes for all but the larger corporations. Partly in response, the nineties saw businesses move production to low-cost centers in Southeast Asia, where all forms of production capital, with the exception of monetary capital, were significantly cheaper and more flexible.

There then commenced a quarter-century of expansion of international trade replacing much of the domestic production of goods in the US, the UK, and Europe. It was these events that denuded America of its manufacturing, not unfair competition as President Trump has alleged, and Germany’s retention of manufactures proves this. But the effect has been to radically alter how we should interpret the effects of monetary expansion on the US economy and others, compared with Hayekian triangles and the like.

Business cycle research had assumed a capitalistic structure of savers saving and thereby making monetary capital available to entrepreneurs. Changes in the propensity to save sent contrary signals to businesses about the propensity to consume, which caused them to alter their production plans. Based on the ratio between consumer spending and savings, this analytic model has been corrupted by the state and its licensed banks by replacing savers with former savers now no longer saving, and even borrowing to consume.

Today, the inflationary origins of investment funds for business development are hidden through financial intermediation by venture capital funds, quasi-government funds, and others. Being mandatory, pension funds continue to invest savings, but their beneficiaries have abandoned voluntary saving and run up debts, so even pension funds are not entirely free of monetary inflation. Insurance funds alone appear to be comprised of genuine savings within an inflationary system.

Other than pension funds and insurance companies, Keynes’s wish for the euthanasia of the saver has been achieved. He went on to suggest there would be a time “when we might aim in practice…at an increase in the volume of capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus.”

Now that everywhere bank deposits pay no interest, his wish has been granted, but Keynes did not foresee the unintended consequences of his inflationist policies which are now being visited upon us. Among other errors, he failed to adequately account for the limitation of nonmonetary forms of capital, which leads to bottlenecks and rising prices as monetary expansion proceeds.

The unintended consequences of neo-Keynesian policy failures are shortly to be exposed. The checks and balances on the formation and deployment of monetary capital in the free market system have been completely destroyed and replaced by inflation. So, where do you take us from here, Mr. Powell, Mr. Bailey, Ms. Lagarde, Mr. Kuroda?

Taking Stock

We can now say that America, the nation responsible for the world’s reserve currency, has encouraged policies which have turned its economy from being a producer of goods with supporting services as the source of its citizens’ wealth into little more than a financial casino. The virtues of saving and thrift have been replaced by profligate spending funded by debt. Unprofitable businesses are being supported until the hoped-for return of easier times, which are now gone.

Cash and bank deposits (checking accounts and savings deposits) are created almost entirely by inflation and currently total $15.2 trillion in the US, while total commercial bank capital is a little under $2 trillion. This tells us crudely that the $13 trillion sitting in customer accounts can be attributed to bank credit inflation. Increasing proportions of those customers are financial corporations and foreign entities, and not consumers maintaining cash and savings balances.

On the other side of bank balance sheets is consumer debt, mostly off balance sheet, but ultimately funded on balance sheet. Excluding mortgages, the total consumer debt, comprising credit card, auto, and student debt, was $3.86 trillion in mid-2019, amounting to an average debt of $27,571 per household, confirming the extent to which consumer debt has replaced savings.3

At $20.5 trillion, bank balance sheets are far larger than just the sum of cash and bank deposits, giving them a leverage of over ten times their equity. Bankers will be very nervous of the current economic situation, aware that loan and other losses of only 10 percent wipe out their capital. Meanwhile, their corporate customers are either shut down, which means that most of their expenses continue while they have no income, or they are suffering payment disruptions in their supply chains. In short, bank loan books are staring at disaster. Effectively, the whole banking system is underwater at the same time that the Fed is extolling them to join with it in rescuing the economy by expanding their balance sheets even more.

The sums involved in supply chains are considerably larger than the US’s GDP. Onshore, it is a substantial part of the nation’s gross output, which captures supply chain payments at roughly $38 trillion. Overseas, there is a further mammoth figure feeding into the dollar supply chain, taking the total for America to perhaps $50 trillion. The Fed is backstopping the foreign element through currency swaps and the domestic element mainly through the commercial banking system. And it is indirectly funding government attempts to support consumers who are in the hole for that $27,571 on average per household.

In short, the Fed is committed to rescuing all business from the greatest economic collapse since the Great Depression and, probably greater than that, to funding the US government’s rocketing budget deficits and funding the maintenance of domestic consumption directly or indirectly through the US Treasury, while pumping financial markets to achieve these objectives and preserve the illusion of national wealth.

Clearly, we stand on the threshold of an unprecedented monetary expansion. Part of it will be, John Law–style, to ensure that inflated prices for US Treasurys are maintained. At current interest rates, debt servicing was already costing the US government 40 percent of what was expected to be this year’s government deficit. That bill will now rise beyond control even without bond yields rising. Assistance is also being provided to the corporate debt market. Blackrock has been deputed to channel the Fed’s money-printed investment through ETFs (exchange-traded funds) specializing in this market. So not only is the Fed underwriting the rapidly expanding US Treasury market, but it is underwriting commercial dollar debt as well.

In late 1929, a rally in the stock market was prolonged by a similar stimulus, with banks committed to buying stocks and the Fed injecting $100 million in liquidity into markets by buying government securities. Interest rates were cut. And when these attempts at maintaining asset prices failed, the Dow declined, losing 89 percent of its value from September 1929.

Today, similar attempts to rescue economies and financial markets by monetary expansion are common to all major central banks, with the possible exception of the European Central Bank (ECB), which faces the unexpected obstacle of a challenge by the German Federal Constitutional Court claiming primacy in these matters. There is therefore an added risk that the global inflation scheme will unravel in Europe, which would rapidly lead to funding and banking crises for the spendthrift member states. Doubtless, any financial contagion will require yet more money printing by the other major central banks to ensure that there are no bank failures in their domains.

Whither the Exit?

So far, few commentators have grasped the implications of what amounts to the total nationalization of the American economy by monetary means. They have only witnessed the start of it, with the Fed’s balance sheet reflecting the earliest stages of the new inflation which has seen its balance sheet increase by 61 percent so far this year. Not only will the Fed battle to fund everything, but it will also have to compensate for contracting bank credit, which we know stands at about $18 trillion.

The Fed must be assuming that the banks will cooperate and pass on the required liquidity to save the economy. Besides the monetary and operational hurdles such a policy faces, it cannot expect the banks to want responsibility for the management of businesses that without this funding would not exist. The Fed, or some other government agency, then has to decide on one of three broad options: further support, withdrawing support, or taking responsibility for business activities. This last option involves full nationalization.

We must not be seduced into thinking that this is an outcome that can work. The nationalization of failing banks and their eventual privatization is not a good precedent for wider nationalization, because a bank does not require the entrepreneurial flair to estimate future consumer demand and to undertake the economic calculations to provide for it. The state taking over business activities fails for this reason, as demonstrated by the collapse of totalitarian states such as the USSR and the China of Mao Zedong.

That leaves a stark choice between indefinite monetary support or pulling the rug from under failing businesses. There are no prizes for guessing that pulling rugs will be strongly resisted. Therefore, government support for failing businesses is set to continue indefinitely.

At some stage, the dawning realization that central banks and their governments are steering into this economic cul-de-sac will undermine government bond yields, despite attempts by central banks to stop it, even if the deteriorating outlook for fiat currencies’ purchasing power does not destroy government finances first.

Earlier in the descent into the socialization of money, nations had opportunities to change course. Unfortunately, they had neither the knowledge nor the guts to divine and implement a return to free markets and sound money. Those opportunities no longer exist, and there can be only one outcome: the total destruction of fiat currencies, accompanied by all the hardships that go with it.

Published:5/24/2020 3:26:42 PM
[Markets] Dow Average Showing Its Age Getting Crushed in Recovery Trade (Bloomberg) -- This week marks a milestone for the Dow Jones Industrial Average: its 124th birthday. Not that anyone watching markets needs a reminder it’s getting old.Wrinkles show in the gaping divide between the venerable gauge and its younger brethren. Like many grandparents, it’s struggling to keep up with tech. Plunges in Boeing Co. -- its biggest member at the start of February -- were very costly, and some wonder if the benchmark represents the 21st century economy at all, especially in the coronavirus age.“The Dow has been on its way out for years,” said John Ham, associate adviser at New England Investment and Retirement Group. “Obviously it’s going to stick around just because so many people are familiar with it. But as far as relevancy goes, it’s your grandfather’s index.”Rarely have differences among indexes been more stark than they are now, in a market where the outbreak has made heroes of New Economy firms. Deprived of their benefits, the Dow remains down 14% in 2020 and was off 35% at its worst point. Meanwhile, the Nasdaq 100 has gained more than 7% this year, and the S&P 500 is 9% away from a positive return.Of course, the Dow has been consigned to history before, and survived. While it might be showing its age now, brief divergences among broad indexes are extremely common, and over long enough intervals they tend to even out.“Yes it is old,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “If you constructed something today, you would probably do it differently. But it’s worked for 124 years. Even currently. And it is a much smaller portfolio yet it does track over time to the broader S&P 500.”Judging an index by whether it rises more than another misconstrues the purpose of stock benchmarks, which is to measure the progress of a market. The S&P 500’s edge over the Dow in 2020 doesn’t make it a better or more useful tool. It does, however, shine a light on what in the economy is calling the shots during the lockdown -- online and automated companies like Amazon.com Inc. and Netflix Inc.Divergences among the gauges also matter to the masses of investors who invest in funds that track them. Roughly $11.2 trillion is indexed or benchmarked to the S&P 500, according to S&P Dow Jones Indices, and $4.6 trillion in passively managed assets are tied to it. About $31.5 billion is benchmarked to the Dow, with $28.2 billion of passively managed funds linked.Thanks to tech’s dominance, those divisions are getting especially pronounced. Less than halfway through the year, the Nasdaq has already outperformed the Dow by a full percentage point on 17 different days. That’s more than in any full year since 2009, data compiled by Bloomberg show.A lot of the discrepancy boils down to which companies don’t make the Dow’s cut. Take Amazon.com, for example, whose 35% gain this year has accounted for almost half of the Nasdaq’s advance and 10% of the S&P 500’s. Because of the stock’s $2,500 price tag, the Dow’s old-fashioned price-weighting system makes it impossible to let Amazon in.Other high-fliers that have proved themselves in a stay-at-home world also don’t appear in the Dow. Nvidia Corp., Netflix Inc. and PayPal Holdings Inc. -- all winners in the coronavirus age -- are each up at least 30% this year. The venerable Dow has gotten none of that boost.“If all you’re following is the Dow, you’re missing some big components,” said Ryan Detrick, senior market strategist for LPL Financial. “I hate to say it’s old, but there’s no question that it’s behind the times if you look at the way it’s broken down.”The Dow Jones Industrial Average, created on May 26, 1896, is different from other indexes. It’s weighted by share price rather than market cap, which is more commonly used today. Such methodology essentially rules out inclusion of several of the largest companies in the world, among them Google parent Alphabet Inc., whose shares trade above $1,000 and would likely take up too much of the index.A committee chooses members, not an objective, rules-based process. According to Dow Jones Averages methodology papers found on its website, the Dow seeks to maintain “adequate sector representation” and favors a company that “has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”As a result, a company like jet-maker Boeing Co., down 60% this year, is more influential on the Dow’s performance than even the fourth largest American company, Alphabet, is on the S&P 500’s returns. Industrial firms, as the name of the index suggests, make up a notable 13% of the Dow -- 5 percentage points more than the sector’s weight in the S&P 500 and 11 percentage points more than the Nasdaq.Such focus has hurt in a pandemic-arranged stock market, where closed factories and shuttered economies have left industrials as one of the worst performing groups. The emphasis on the old-age economy is all the more striking in a world where companies that can operate with little face-to-face contact excel and a technological shift is accelerated.“That’s the unique nature of this particular recession, and it’s coming from the virus,” said Luke Tilley, chief economist at Wilmington Trust Corp. “If you take those contours of both big companies tend to have a buffer because of their access to capital markets and then you compound what is expected to be a dramatic change to the economy, you can get that bifurcated performance.”That leaves another way to view the index gap: the Dow is perhaps the stock gauge that is most representative of the broad economy precisely because it’s not dominated by these megacap firms. Surging shares of Amazon or Netflix certainly don’t reflect an America with over 20 million people unemployed and a collapse in spending.While the S&P 500 and Nasdaq may be methodologically optimized for a stay-at-home world, the Dow is certainly not.“Covid is actually amplifying all types of inequalities in the economy but the inequality in the market in terms of market concentration is also being amplified,” said Nela Richardson, an investment strategist at Edward Jones. “That rally is highly concentrated in a handful of firms. Most firms are still in bear territory.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:5/24/2020 7:20:42 AM
[Markets] Master Of Puppets: Bitcoin Cuts The Strings Master Of Puppets: Bitcoin Cuts The Strings Tyler Durden Sat, 05/23/2020 - 19:00

Authored by J.D.Salbego via CoinTelegraph.com,

The centralized financial system has compromised itself several times during the last two decades alone, and now it’s time for a serious change!

image courtesy of CoinTelegraph

Did you notice the song that Christian Bale’s character was jamming out to in his office when his partner came in to pull the money in The Big Short? Well, it happens to be my favorite metal band of all time: Metallica. And that song is called “Master of Puppets.” It’s almost ironic that as I was writing this article on the real truth behind what’s currently happening with the collapse of our financial and economic markets and calling it “Master of Puppets” — well, this movie scene popped in my mind. 

Yes, The Big Short is about the big 2008 financial crisis caused mainly by none other than the United States Federal Reserve. Spoiler alert! This will be one of the last times you read about any type of “correlation” here in this article.

Master of Puppets is Metallica’s third album, released in 1986, and it is probably the greatest metal album of all time. I still listen to it almost weekly. It’s great for working out or getting pumped up before a business meeting.

Anyways, back to the master. The curtain has been removed and the truth revealed: money is created out of thin air, and the banks and Wall Street are bathing in it.

To be very clear, there was a major and historical financial crisis by orders of magnitude already about to explode, and the COVID-19 pandemic just brought the economy to its knees a tiny bit quicker.

At a crucial intersection of events in time that couldn't have been more bluntly shoved in your face, 16 million people in the U.S. lost their jobs (and it's almost 36.5 million now.) And like a drunk driver recklessly running a red light at an intersection, the Dow Jones Industrial Average had the highest gains since 1938. All while the Fed was printing 4 trillion U.S. dollars out of thin air.

Where's the correlation? Whoever can find it will prove reincarnation exists, as they must be J. P. Morgan himself, reincarnated in the flesh — only 100 years even more crafty and conniving. And the government and the Federal Reserve say Bitcoin (BTC) is backed by thin air?

Our economy and the Federal Reserve is built on sticks (debt), and remember what happened to that little piggy that didn’t use bricks? Let’s hope the strings become severed from the puppet master and like a bungee cord slap back into its face with the inertia and momentum of more than 150 years of control, lies and manipulation.

The amount of truth that’s starting to become available and acknowledged by the general public about our governments and financial institutions is alarming, and hopefully this will be a stepping point into a new paradigm or, what I like to say, a “new world order.”

The Fed and the government’s economic strategy is just putting an already used Band-Aid (quantitative easing and debt monetization) on a gunshot wound. It’s not fixing the real problem. And for obvious reasons.

The U.S. has for years substantially spent trillions of dollars more than it brings in. To date, the debt owed by the federal government is over $25 trillion. Even more unfathomable to see, with some very complicated calculations, is that it’s looking like an estimated, or near, amount of $100 trillion will need to be printed (out of thin air), or what the Fed likes to call "increase the monetary base,” in order to bail out and keep institutions afloat.

This would then create the ripple effect of causing global economies to reach hyperinflation such as has been never seen before. That's called a lose-lose (or no-win) situation caused by none other than our government, the banking system, Wall Street and their combined mismanagement of our economies.

Understanding economics and monetary policies can be complicated for many, even myself, but it’s not complicated enough where I will not speak up and just sit here as the blind sheep being led by the wolf in sheep’s clothing to my bitter end.

To clarify, as it's important: Bitcoin will never be a replacement for a nation’s central bank currency or new digital currency that's in development now. It’s more the digital gold of the 21st century and onward.

But most importantly, and much like the U.S. fighting for its freedom and control from an unfair controlling centralized system such as England, it was the first to step in thousands of years of oppression to launch a revolution.

Like Joan of Arc or Che Guevara, who became martyrs for the better of society, Bitcoin itself has taken the beating from its first inception — including being declared a national security issue — but it was so powerful in igniting a revolution that it withstood all the hardships and persecution that the governments and central banks cast upon it. So, what it serves to be is the Medal of Honor for this new paradigm shift of the people’s money, leading the future of money with a more transparent, fair and peer-to-peer monetary system.

The more we talk about this, the more people may eventually get it — I hope. The general public should really try to understand this. It’s all credits and debts and leveraged positions and margins.

Remember that incredible luncheon scene in The Wolf of Wall Street where Matthew McConaughey’s super Wall Street broker character educates a young and hungry rookie broker, played by Leonardo DiCaprio, breaking down how the real system works? Matthew McConaughey, with a straight face and twist of sarcasm, says, “Fugayzi, fugazi. It's a wazzy, it's a woozy. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart. It’s not f------ real.”

Just so you know: This system doesn’t just apply to brokering trades on the stock market. It applies to all the banking, monetary and financial systems around the world. 

Fairy dust old money is just a hierarchically controlled propaganda belief system.

Blockchain-based new money is the P2P, fair and transparent people’s-money.

That's exactly right. Thank you, Martin Scorsese and your screenwriters, for this brilliantly creative scene. Yet it’s fair to say that this part of the scene was definitely outshined by the more memorable “rookie numbers” part.

But as history has continuously proven to us, unfortunately, much of the population takes comfort in the machine (the “master”), no matter the consequences. As some say, “Ignorance is bliss.” 

Maybe they were so caught up in the genius writing and humor from Scorsese and these two brilliant actors that they missed it. I know I almost fell out of my chair laughing.

So, as the banker artistically creates his leveraged position out of thin air, like abstract images flow out of the tip of Dali’s paintbrush — or Scorsese's brain to film — I ask you: Does art imitate life, or does life imitate art?

Finally, the cat is out of the bag, though unfortunately only hindsight is 20/20, and time will tell what changes actually occur after this mess. Hopefully it’s different this time. 

As says the famous "possible quote" of Henry Ford (most people don’t know the real facts behind that quote) that was paraphrased by congressperson Charles Binderup on March 19, 1937, in the House of Representatives:

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

Want to know how the banking system really works? Here it goes:

You don't deposit cash at a bank. You actually just lend it to the bank, and when you go to draw on that account, you are just creating a transaction inputted on a digital ledger. You are not actually drawing out your original money. The banks then charge you fees to actually lend them money as well in the form of monthly account fees, overdraft fees and all the other small print fees that sneak in.

When the bank deposits money in your account in the form of a credit — for instance, if you buy a house — it's not an actual credit, it's really a debt that it repackages and calls a mortgage by leveraging its position and creating a profit margin for the services of lending you part of your own money back that you originally gave it, as well as all its other customers’ money. There is only one form of real money in this transaction, and that is the money that you originally gave the bank. It’s basically holding a lien over you and on your new house with the money you and its other customers let it borrow, which it turned around and let you borrow again and charged fees on it. All it did was “artistically” create a leveraged position and profit margin by creating a credit and debt out of thin air.

The stark reality is that there really is no money. This centralized system is just conjured up credit, debt and margin entries on a centralized ledger that’s agreed upon (consensus) by a centralized group of participants.

Published:5/23/2020 6:16:42 PM
[Markets] Dow Jones Futures: Coronavirus Stock Market Rally Breakouts Slowing, But Apple, Microsoft, Google, Tesla, AMD Near Buy Points Dow Jones futures: The coronavirust stock market rally is roaring on, but breakouts are slowing. Apple, Tesla, Microsoft, Google and AMD are near buy points though. Published:5/23/2020 2:16:35 PM
[Markets] Is This Controlled Demolition All Over Again? Is This Controlled Demolition All Over Again? Tyler Durden Fri, 05/22/2020 - 19:05

Authored by Gilad Atzmon,

For years Eco-Enthusiasts, both activists and scientists, have been telling us that the ‘party’ will come to an end. The planet we are stuck on can’t take it for much longer, it is getting too crowded and unbearably warm. Most people didn’t take any real notice of the situation and for a reason. This planet, we tend to think, isn’t really ‘ours,’ we were thrown onto it and for a limited time. Once we grasp the true meaning of our temporality, we begin to acknowledge our terminality. ‘Being in the world’ as such is often the attempt to make our ‘life-time’ into a meaningful event.

Most of us who haven’t been overly concerned with the ecological activists and their plans to slow us down knew that as long as Big Money runs the world, nothing of a dramatic nature would really happen. In the eyes of Big Money, we tended to think, we, the people, are mere consumers. We understood ourselves as the means that make the rich richer.

Rather unexpectedly, life has undergone a dramatic change. In the present age of Corona, Big Money ‘let’ the world lock itself down. Economies have been sentenced to imminent death. Our significance as consumers somehow evaporated. The emerging alliance we have been detecting between the new leaders of the world economy (knowledge companies) and those who carry the flag of ‘progress’ ‘justice’ and ‘equality’ has evolved into an authoritarian dystopian condition in which robots and algorithms police our speech and elementary freedoms.

How is it that the Left, that had been devoted to opposition to the rich, has so changed its tune? In fact, nothing has happened suddenly. The Left and the Progressive universe have, for some time, been sustained financially by the rich. The Guardian is an illustrative case of the above. Once a left -leaning paper with a progressive orientation, the Guardian is now openly funded by Bill & Melinda Gates. It shamelessly operates as a mouthpiece for George Soros: it even allowed Soros to disseminate his apocalyptic pre-Brexit view at the time he himself gambled on Brits’ anti- Brexit vote. By now it is close to impossible to regard the Guardian as a news outlet – a propaganda outlet for the rich is a more suitable description. But the Guardian is far from alone. Our networks of progressive activists fall into the same trap. Not many of us were surprised to see Momentum, Jeremy Corbyn’s campaign support group within the Labour Party, rallying for the ‘Holocaust Survivor’ and ‘philanthropist’ George Soros. When Corbyn led the Labour Party, I learned to accept that ‘socialists’  putting themselves on the line of fire defending oligarchs, bankers and Wall Street brokers must be the new ‘Left’ reality.

We are now inured to the fact that in the name of ‘progress’ Google has demoted itself from a great search engine into a hasbara outlet. We are accustomed to Facebook and Twitter dictating their worldview in the name of community standards. The only question is what community they have in mind. Certainty not a tolerant and pluralist western one.

One may wonder what drives this new alliance that divides nearly every Western society? The left’s betrayal is hardly a surprise, yet, the crucial question is why, and out of the blue, did those who had been so successful in locating their filthy hands in our pockets go along with the current destruction of the economy? Surely, suicidal they aren’t.

It occurs to me that what we may be seeing is a controlled demolition all over again. This time it isn’t a building in NYC. It isn’t the destruction of a single industry or even a single class as we have seen before. This time, our understanding of Being as a productive and meaningful adventure is embattled. As things stand, our entire sense of livelihood is at risk.

It doesn’t take a financial expert to realise that in the last few years the world economy in general and western economies in particular have become a fat bubble ready to burst. When economic bubbles burst the outcome is unexpected even though often the culprit or trigger for the crash can be identified. What is unique in the current controlled demolition is the willingness of our compromised political class, the media and in particular Left/Progressive networks to participate in the destruction.

The alliance is wide and inclusive. The WHO, greatly funded by Bill Gates, sets the measures by which we are locked down, the Left and the Progressives fuel the apocalyptic phantasies to keep us hiding in our global attics, Dershowitz tries to rewrite the constitution , big Pharma’s agenda shapes our future and we also hear that Moderna and its leading Israeli doctor is ready to “fix” our genes. Meanwhile we learn that our governments are gearing up to stick a needle in our arms. Throughout this time, the Dow Jones has continued to rise. Maybe in this final stage of capitalism, we the people aren’t needed even as consumers. We can be left to rot at home, our governments seemingly willing to fund this new form of detention.

I believe that it was me who ten years ago coined the popular adage “We Are all Palestinians” – like the Palestinians, I thought at the time, we aren’t even allowed to name our oppressor…

Published:5/22/2020 6:10:29 PM
[Markets] Stocks, Silver, Black Gold & Bond Yields Jump This Week As Dollar & Yuan Dump Stocks, Silver, Black Gold & Bond Yields Jump This Week As Dollar & Yuan Dump Tyler Durden Fri, 05/22/2020 - 16:02

Millions more job losses, thousands more deaths, hundreds more earnings outlooks cut or dismissed, dozens of rancorous threats and promises exchanged between US and China... and still a handful of key US stocks sent the major indices soaring on the week led by Trannies and Small Caps...

A panic bid at the close to get the indices green for the day...

Almost as if it never happened...

Source: Bloomberg

Or put another way...

Notably, after the European close on Monday, The Dow and S&P went nowhere!

But hey "vaccines" and shit means it's a good week!!

Source: Bloomberg

Or it could be something else?

Source: Bloomberg

Seriously though, it's Mission Accomplished...

Source: Bloomberg

The big banks are higher on the week but notice that from the opening spike on Monday, they are all lower...

Source: Bloomberg

FANG Stocks were up on the week but sold off after The Fed...

Source: Bloomberg

Treasury yields ended the week higher across the curve, but only modestly with the long-end up 4bps...

Source: Bloomberg

Bonds and stocks decoupled...

Source: Bloomberg

The Dollar slipped again this week (selling ahead of The Fed and rallying after)...

Source: Bloomberg

But on a longer-term context, the dollar is coiling...

Source: Bloomberg

Offshore Yuan dumped this week as US-China tensions rose...

Source: Bloomberg

And Hong Kong Dollar Fwds puked amid Beijing's new "security" law...

Source: Bloomberg

Bitcoin was flat on the week, erasing most of the post-halving gains, but Ethereum had a strong week...

Source: Bloomberg

The dollar continues rangebound against its fiat friends but is weaker and weaker against sound money...

Source: Bloomberg

Oil was the week's big winner (again) but silver surged as gold slipped...

Source: Bloomberg

Gold/Silver just got too juicy after The Fed went all-in...

Source: Bloomberg

July WTI is back at around the $34 level and stalling again...

Finally, we appear to still be following the 1930s analog for now... which means we lift to around 26k on The Dow... Bear market rallies in 1929, 1938, 1974 saw an average 61% rebound from lows (after an average 49% drop)...which would take SPX to 3180...

Source: Bloomberg

As Johnny Depp said, COVID deaths tell no tales of economic collapse...

Published:5/22/2020 3:09:18 PM
[Markets] Von Greyerz: The Global Forest Fire Is Here Von Greyerz: The Global Forest Fire Is Here Tyler Durden Fri, 05/22/2020 - 05:00

Authored by Egon von Greyerz via GoldSwitzerland.com,

It drives you absolutely mad to see a whole world living a lie. How can anyone believe that the fake world the Fed and their fellow central bankers have created has anything to do with reality.

We have fake money, fake markets, fake companies, fake banks, fake interest rates, fake income, fake pensions, fake social security, fake wealth, fake bail outs, fake buildings, fake holidays, fake cars etc which create false lives for most of us especially in the West.

All these fake material values have also created false moral and ethical values. 

IT IS ALL AN ILLUSION 

So you might ask how can it all be fake when we can touch it, use it, or experience it. For people who don’t understand that it is all fake, let me say that we will all soon realise how fake it was. Because many of these things that we perceived as real were all an illusion. 

An illusion is defined as “an act of deception” or “something that produces a false or misleading idea of reality.  And that is exactly what we have been exposed to. The world had been deceived but we have all believed that it was real. 

DEEP STATE WILL LOSE CONTROL

There is a perception in the world that things will continue as they are and that the Deep State is going to control us all in a totalitarian world. What few realise is that the Deep State or Powers That Be are going to lose control totally. They are totally dependent on the world in which they can control everything through debt and the fake monetary system they have created. But let me make it clear that this fake system is about to implode.

$QUADRILLIONS WILL GO UP IN SMOKE 

Before the crisis which has just started is over, global debt, derivatives and unfunded liabilities (medicare, pensions) will virtually all disappear. We are looking at sums in the quadrillions of dollars. How much depends on how much extra debt is created before it all implodes. As the debt goes to zero, most of the assets that were financed by the debt will also lose 90-100% of their real value. This is when the world will discover that all these things we thought had a real worth are actually worthless. 

In this scenario, the ones in control of the money will have lost their power since the printing press has stopped functioning, and money has died. Also, after the collapse of the present monetary system, leverage will disappear and any financial institution will only lend what they have in actual deposits as was the case when banking started 4000 years ago. 

This dystopian system is difficult for most of us to imagine since it would lead to a very different world. It is possible that instead of the whole system coming down in one fell swoop that it happens in stages over an extended period. But I fear that things could go very quickly. What is clear is that the world is now starting a secular decline that’s never been seen before and this on a global basis. The first stage of this decline has now begun and will be totally devastating for the world. However incredible this scenario appears, it is the only possible outcome. 

NOTHING WILL BE THE SAME

The falsity of the current system will soon become apparent. Let’s take some obvious examples of what this false or misleading idea of reality means.

  1. Jobs – the unemployment rates we are now seeing of 15-39% depending on how you measure, will become permanent. Many employed and self-employed will not get their job back. The government has no money to pay these people. Printed money is an illusion and has zero value. Take the UK where now 50% of the adults are being paid by the government in subsidies, unemployment benefits, state employees, and state pensioners. That situation can of course never last. Paying non-productive people with worthless money does not create a sustainable society. 

  2. Pensions – Pension funds will not survive. They have three principal asset classes – Stocks, Bonds, and Property. All three will lose most of their value in real terms. All unfunded pension schemes will remain unfunded since there will be no money to pay the pensioners. 

  3. Airlines – Many airlines will go under. Any remaining ones will be extremely costly to operate leading to fares increasing substantially. Fewer people will fly due to high costs. Business travel will go down significantly both for cost reasons and because people have recently discovered that meetings and conferences can be conducted on Zoom or Skype.

  4. Hotels, Tourism – Tourism will decline dramatically due to high unemployment and high costs. Mass tourism will totally die. The conference business which is a vital income for hotels will also dwindle. Much of it will become Video conferencing. Most of the luxury hotel market will die. 

  5. Offices – Big offices in city centres will disappear. The world has discovered, during the Corona quarantine, that working from home is extremely efficient and convenient. It is also better for family life. Big offices will disappear, instead there will be small offices which don’t have to be in city centres. So there will be less commuting, less pollution and a better quality of life. 

  6. Big Cities – The need for big cites will diminish dramatically. As people work from home or small regional offices, big cites will shrink and many will become ghost towns. Retail in big cities will die.

  7. Big Companies – Many will be broken up. Globalism with big dominant global businesses will disappear. Countries will become more self-sufficient with most production becoming domestic. 

  8. Banking & Finance – Most big banks will disappear as the financial system implodes. Without massive debt, derivatives and leverage, banks will go back to where they started – financing trade, commerce, and industry. There will be no investment banks or proprietary trading. Central banks will disappear or have a very much diminished role. There will be virtually no money printing. There will be no manipulation of money or interest rates. Market swings will be based on supply and demand and not central bank interference. I do realise that some of this sounds like wishful thinking. But it is a natural reaction to the current false and diseased financial system. 

  9. Hedge Funds & Private Equity – These players will disappear as they are totally dependent on massive leverage and debt. They have no place in a system based on sound money. Most hedge funds will go under in the coming collapse as  counterparties fail and derivatives become worthless. Private equity has destroyed many good companies by lumbering them with heavy debt and taking all the equity out.

The list above could be much longer but this is just a taste of all the changes that will take place over the next few years and decades. It will clearly be a gradual process but the first stages could happen quickly if a major part of the financial system doesn’t survive the imminent shocks.

THE WORLD NEEDS A FOREST FIRE 

The transition from a world based on the golden calf and false values will be devastating. But there is no other way to end an era based on fake money and fallacious premises. The world could never continue to grow and prosper with a mountain of debt and liabilities that can never be repaid or even serviced. We need a proper forest fire that burns it all down to the ground and prepares the way for a sounder world with new green shoots. 

Going from a sick system to a soundly based system will clearly involve a lot of suffering. But this is the punishment that the world must go through. Many will suffer and many will die prematurely as a result of poverty, famine, disease, and wars. The scale of this devastation will be multiples of the Coronavirus. 

THIS TOO SHALL PASS

The world economy has always gone in cycles. If the laws of nature and supply and demand were allowed to determine the length and amplitude of the cycles, they wouldn’t reach the extremes we are now experiencing. But when mankind interferes in the shape of governments and central banks, these cycles reach extremes which can have disastrous consequences as the world will soon encounter. 

But remember that “This too shall pass” and when the world comes out on the other side, it will be a better world. Many things will improve, like family values as well as moral and ethical values. A close group of family and friends will be essential during the coming hard times. And remember that so many things in life are free like friendship, discussions, nature, music, and books. Buying gadgets and traveling to the other side of the world only give us ephemeral joy. 

MARKETS

Stocks

Stocks will soon give the world another shock. We saw the all-time bubble top in the Dow  on February 12th, followed by a 38% fall of over 11,000 points. The investment world is assuming we will have a V or U recovery. Sadly, it will be neither. Instead another major fall is around the corner. It is likely to be greater than the first one before it pauses. What is clear is that stocks, like the economy, have started a secular downtrend which will be devastating. The fall will not stop until stocks are down more than 95% in real terms.

Metals

As I have been writing and tweeting about lately, the world is starting to discover that paper money cannot survive when central banks are printing it to death. Gold and silver have for the last twenty years told us this. We are now getting the signal that the uptrend in the metals will accelerate rapidly. 

If you want your savings to survive the coming crisis, hold physical gold and some silver. Don’t store it in a banking system that is unlikely to survive. Silver is leading the current surge in the metals which is a good sign since silver is the leading indicator for big moves in the metals. Silver will move up many times faster than gold but remember that it is extremely volatile. So if you want to sleep well at night, hold more gold than silver. 

Forget about what price the metals will reach. Even in today’s money, whatever figure you think of will not be enoughAnd in hyperinflationary money, the price move will be exponential measured in worthless paper money. So don’t think about the value of gold and silver in dollars or euros. Just remember that gold is the only money that has survived in history. It is therefore the best form of wealth preservation and insurance against a bankrupt financial system.

*  *  *

The title of this article “The Forest Fire is Here” alludes to a previous article I wrote  back in 2009 and again in 2018 called the “The Dark Years Are Here”.   It makes some interesting reading, especially since it now seems that they really are here.

Contact GoldSwitzerland here.

Published:5/22/2020 4:07:04 AM
[Markets] Dow futures inch lower Thursday night as investors start to position for Memorial Day weekend amid coronavirus U.S. stock-index futures edged lower in thin trade Thursday night as investors looked ahead to the final trading session of the week before a three-day weekend in the U.S. Futures for the Dow Jones Industrial Average were down 46 points, or 0.4%, at 24,474, those for the S&P 500 index declined 0.3%, at 2,928.75, while Nasdaq-100 future gave up 0.3% at 9,331.50. Markets in the U.S. will be closed on Monday for Memorial Day and the bond market will close an hour early at 2 p.m. Eastern Time on Friday and remain closed until Tuesday. The week has been fraught with worries about U.S.-China relations which have deteriorated in recent weeks as the Trump administration blames Beijing for mishandling the COVID-19 pandemic that was first identified in Wuhan back in December. Legislators in Washington also approved a bill aimed at censuring China's move to impose new national-security laws on Hong Kong. On Wednesday, the Senate, separately, passed legislation that could have the effect of banning Chinese companies from listing on U.S. exchanges. All of these actions have been mostly dismissed by investors but could renew Sino-American animosities. Still, the main equity benchmarks have gained for the week with returns pegged to optimism surrounding state reopenings. Indeed, Universal Orlando executive John Sprouls asked Orange County Mayor Jerry Demings for approval to open the company's theme parks as early as June 5, the Orlando Sentinel reported. Expectations that a remedy for the illness, which has infected more than 5 million people and claimed 330,000 lives, according to data compiled by Johns Hopkins University, also have buoyed assets perceived as risky. For the week, the Dow has climbed 3.3%, the S&P 500 has returned 3% and the Nasdaq Composite Index has risen 3%, as of Thursday's regular close of trade. The big question may be whether investors are willing to buy assets into an extended holiday weekend. Published:5/21/2020 10:37:20 PM
[Markets] Dow futures rise 100 points Thursday evening, ahead of Memorial Day weekend Dow futures rise 100 points Thursday evening, ahead of Memorial Day weekend Published:5/21/2020 7:49:30 PM
[Markets] Dow futures rise 100 points Thursday evening as investors start to position for Memorial Day weekend amid coronavirus U.S. stock-index futures rose in thin trade Thursday evening as investors looked ahead to the final trading session of the week before a three-day weekend in the U.S. Futures for the Dow Jones Industrial Average were up nearly 104 points, or 0.4%, at 24,480, those for the S&P 500 index climbed less than 0.4%, at 2,948.75, while Nasdaq-100 future advanced 0.5% at 9,400.25. Markets in the U.S. will be closed on Monday for Memorial Day and the bond market will close an hour early at 2 p.m. Eastern Time on Friday and remain closed until Tuesday. The week has been fraught with worries about U.S.-China relations which have deteriorated in recent weeks as the Trump administration blames Beijing for mishandling the COVID-19 pandemic that was first identified in Wuhan back in December. Legislators in Washington also approved a bill aimed at censuring China's move to impose new national-security laws on Hong Kong. On Wednesday, the Senate, separately, passed legislation that could have the effect of banning Chinese companies from listing on U.S. exchanges. All of these actions have been mostly dismissed by investors but could renew Sino-American animosities. Still, the main equity benchmarks have gained for the week with returns pegged to optimism surrounding state reopenings. Indeed, Universal Orlando executive John Sprouls asked Orange County Mayor Jerry Demings for approval to open the company's theme parks as early as June 5, the Orlando Sentinel reported. Expectations that a remedy for the illness, which has infected more than 5 million people and claimed 330,000 lives, according to data compiled by Johns Hopkins University, also have buoyed assets perceived as risky. For the week, the Dow has climbed 3.3%, the S&P 500 has returned 3% and the Nasdaq Composite Index has risen 3%, as of Thursday's regular close of trade. The big question may be whether investors are willing to buy assets into an extended holiday weekend. Published:5/21/2020 7:06:36 PM
[Markets] Dow industrials end down 100 points on escalating U.S.-China tensions Dow industrials end down 100 points on escalating U.S.-China tensions Published:5/21/2020 3:33:54 PM
[Markets] Exxon Mobil, IBM share losses contribute to Dow's 75-point drop DOW UPDATE The Dow Jones Industrial Average is trading down Thursday afternoon with shares of Exxon Mobil and IBM seeing the biggest losses for the blue-chip average. Shares of Exxon Mobil (XOM) and IBM (IBM) have contributed to the index's intraday decline, as the Dow (DJIA) was most recently trading 75 points lower (-0. Published:5/21/2020 3:03:56 PM
[Markets] Dow Jones Still Up Nearly 800 Points In 4 Days; Will The Alibaba Stock Breakout Fail? A quiet decline by the Dow Jones Industrial Average bodes well for the recent rebound in stocks. Alibaba has broken out; will the new move succeed? Published:5/21/2020 2:32:41 PM
[Markets] Barron's Daily: Trump tweets have been a drag on the Dow early Thursday Barron's Daily: Trump tweets have been a drag on the Dow early Thursday Published:5/21/2020 8:31:16 AM
[Markets] Dow futures pare loss after weekly jobless-claims report shows adjusted gain of 2.4 million job losses, indicating that 1 out of every 5 Americans are out of work U.S. stock-index futures on Friday hold losses after a report on those seeking unemployment benefits rise to 2.438 million for the week ended May 16, on an adjusted basis, according to the Labor Department. On an unadjusted basis the figure of those unemployed for the week is 4.4 million. Futures for the Dow Jones Industrial Average 66 points, or 0.3%, at 24,455, those for the S&P 500 index were off 0.3% at 2,960, while Nasdaq-100 futures retreated 0.3% at 9,471. The labor market data for the week likely brings the total job losses since the beginning of the COVID-19 crisis to nearly 40 million. Published:5/21/2020 8:00:39 AM
[Markets] Dow futures fall 175 points Wednesday night ahead of report that may indicate 1 out of 5 Americans are out of work U.S. stock-index futures were trading lower Wednesday night after stocks closed out the regular session with sharp gains, making up some lost ground after a late-session pullback Tuesday. A weekly report on Thursday is expected to show that some 2.35 million people sought unemployment benefits in the week ended May 16, likely bringing the total number of Americans out of work during the COVID-19 pandemic to nearly 40 million on a seasonally adjusted basis. That's about one out of every five workers in the labor force. To be sure, the weekly figure represents a deceleration of the recent unsightly trend of job losses, but may still be a sobering reminder of the toll the viral pandemic has exerted on the U.S. economy over the past few months. Futures for the Dow Jones Industrial Average were off 178 points, or 0.7%, at 24,344, those for the S&P 500 index were trading 0.7% lower at 2,948, while Nasdaq-100 futures declined by about 0.5% at 9,439. During the regular session Wednesday, the Dow advanced 369.04 points, or 1.5%, to finish at 24,575.90. The S&P 500 climbed 48.67 points, or 1.7%, to end at 2,971.61, its highest close since March 6, according to Dow Jones Market Data, while the Nasdaq Composite rose 190.67 points, or 2.1%, closing at 9,375.78, representing its highest finish since Feb. 21. In corporate news after-hours, Macy's Inc. said it has appointed Felicia Williams as its interim chief financial officer, effective June 1. Retailer L Brands Inc. reported a wider-than-expected loss in the first quarter and said it remained "committed" to spinning off its Bath & Body Works business. Meanwhile, Aurora Cannabis Inc. it was acquiring U.S. company Reliva LLC for roughly $40 million in an all-stock deal. Published:5/20/2020 9:57:58 PM
[Markets] The Market May Be Stronger Than It Looks. Here’s Why. The Dow bounced back from Tuesday’s loss. More strength is starting to be seen in individual stocks, as well. Published:5/20/2020 7:31:32 PM
[Markets] Dow futures see muted action Wednesday evening ahead of report that may indicate 1 out of 5 Americans are out of work U.S. stock-index futures were trading on either side of unchanged Wednesday evening after stocks closed out the regular session with sharp gains, making up some lost ground after a late-session pullback Tuesday. A weekly report on Thursday is expected to show that some 2.35 million people sought unemployment benefits in the week ended May 16, likely bringing the total number of Americans out of work during the COVID-19 pandemic to nearly 40 million on a seasonally adjusted basis. That's about one out of every five workers in the labor force. To be sure, the weekly figure represents a deceleration of the recent unsightly trend of job losses, but may still be a sobering reminder of the toll the viral pandemic has exerted on the U.S. economy over the past few months. Futures for the Dow Jones Industrial Average were up less than 0.1% at 24,527, those for the S&P 500 index were trading very nearly flat at 2,969, while Nasdaq-100 futures edged up by about 0.1% at 9,494.25. During the regular session Wednesday, the Dow advanced 369.04 points, or 1.5%, to finish at 24,575.90. The S&P 500 climbed 48.67 points, or 1.7%, to end at 2,971.61, its highest close since March 6, according to Dow Jones Market Data, while the Nasdaq Composite rose 190.67 points, or 2.1%, closing at 9,375.78, representing its highest finish since Feb. 21. In corporate news after-hours, Macy's Inc. said it has appointed Felicia Williams as its interim chief financial officer, effective June 1. Retailer L Brands Inc. reported a wider-than-expected loss in the first quarter and said it remained "committed" to spinning off its Bath & Body Works business. Meanwhile, Aurora Cannabis Inc. it was acquiring U.S. company Reliva LLC for roughly $40 million in an all-stock deal. Published:5/20/2020 6:30:16 PM
[Markets] "Trust Is Being Undermined" - Harvard Medical School Prof Questions Fauci's "Shading" Vaccine Results "Trust Is Being Undermined" - Harvard Medical School Prof Questions Fauci's "Shading" Vaccine Results Tyler Durden Wed, 05/20/2020 - 16:45

At a moment in time when narrative-following "scientists" are lauded like unquestionably omniscient supreme beings enabling dumb-as-a-rock-partisan-politicians to play omnipotent overlords without fear of blowback, the world needs more people like William Haseltine.

The last two weeks have seen markets and politicians jump exuberantly at the hope of every press release from a biotech firm that proclaims one of their pet rabbits didn't die when they fed it their latest DNA-reshaping test material (oh that is except if anyone dares say anything positive about hydroxychloroquine but that is a topic for another discussion).

Barstool Sports' Dave Portnoy said it right - when did we shift from "flatten the curve, flatten the curve, flatten the curve" to "we have to fund a cure or everyone's going to die."

And that is where we find ourselves. Every talking head proclaiming the same malarkey - we will re-open carefully, with PPE, and social distancing, and whetever else is mandated from on-high "until we find a vaccine in 12-18 months" at which point the world will be made whole again and Kumbaya...

All of which brings us back to the man of the day in our humble opinion.

Former Harvard Medical School professor and founder of the university's cancer and HIV/AIDS research departments, William Haseltine dared to speak out today about the high level of bullshit and damage that is being done to "trust" in "scientists" and even dared to break the one holy writ that shall go un-mentioned, throwing some shade a Dr.Fauci.

Reflecting on Moderna's press release this week (which was immediately followed by massive equity raises across numerous biotech firms and upgrades from the underwriters, surprise), Haseltine said:

"If a CFO had tried to get away with such an opaque and data-less statement it would have bee treated with derision and possibly an investigation."

The CNBC anchor desperately tried to guilt him into the official narrative of clinging to any hope as long as it lifts stocks - no matter its utter bullshittiness - but Haseltine destroyed her naive party line:

"we all know its an emergency, and in an emergency it's even more important to be clear on what you know and what you do not know."

Moderna did not follow the process:

"you don't know what happened, we don't know what happened, there is no data."

But, but, but... the CNBC anchorette blubbered, "are you questioning Dr. Fauci who also said that this was encouraging news?"

"Whether [Fauci] shaded what should should have been done, I think is an important question. He's obviously under enormous pressure for positive results but it was not the right thing to do if you can't see the data."

The full interview below is a must-watch by all who care about their freedom being controlled by a narrative directed by fearmongering elites in the name of "science" when the "science" is a) being ignored, b) being bastardized to meet a political need, c) being treated as if handed down on high from the man himself, or d) being manipulated explicitly.

Why this former Harvard Med School prof says Moderna's vaccine trial 'publication by press release' from CNBC.

Haseltine's interview is perfect lead into his opinion piece in todays' Washington Post:

Faith in medicine and science is based on trust. But today, in the rush to share scientific progress in combating covid-19, that trust is being undermined.

Private companies, governments and research institutes are holding news conferences to report potential breakthroughs that cannot be verified. The results are always favorable, but the full data on which the announcements are based are not immediately available for critical review. This is "publication by press release,” and it’s damaging trust in the fundamental methods of science and medicine at a time when we need it most.

The most recent example is Moderna’s claim Monday of favorable results in its vaccine trial, which it announced without revealing any of the underlying data. The announcement added billions of dollars to the value of the company, with its shares jumping almost 20 percent. Many analysts believe it contributed to a 900-point gain in the Dow Jones industrial average.

The Moderna announcement described a safety trial of its vaccine based on eight healthy participants. The claim was that in all eight people, the vaccine raised the levels of neutralizing antibodies equivalent to those found in convalescent serum of those who recovered from covid-19. What to make of that claim? Hard to say, because we have no sense of what those levels were. This is the equivalent of a chief executive of a public company announcing a favorable earnings report without supplying supporting financial data, which the Securities and Exchange Commission would never allow.

There is a legitimate question regarding what Moderna’s unsupported assertion means. The scientific and medical literature reports that some people who have recovered have little to no detectable neutralizing antibodies. There is even existing scientific literature that suggests it is possible neutralizing antibodies may not protect animals or humans from infection or reinfection by coronaviruses.

Such “publication by press release” seems to be a standard practice lately.

The National Institutes of Health announced last month that the drug remdesivir offered a clear benefit to covid-19 patients with moderate disease, shortening the length of their hospital stay by several days. But did it really? Twenty days after the announcement, the supporting data has still not been published. Without the data, no doctor treating a patient can be sure they are doing the right thing.

Another paper, published the same day, found that remdesivir had no measurable effect on patient survival or the amount of virus detectable in nasopharynx and lung secretions. What then should a practicing physician do? Follow the unsupported advice of a news announcement or a medical report published in a leading scientific journal? This is not an idle question: The NIH announcement triggered a global stampede for limited supplies of the drug.

The case is more nuanced for the vaccine developed by the Jenner Institute at Oxford University, though the mileposts remain the same: It started with a public pronouncement of favorable results from an early study, this time in monkeys, well before any data was publicly released. An NIH scientist working on a trial of the Oxford vaccine gave an interview to the New York Times, claiming the drug was a success.

But the data, released as a prepublication version more than two weeks after the story ran, didn’t quite live up to the early claim. All of the vaccinated monkeys became infected when introduced to the virus. Though there was some reduction in the amount of viral RNA detected in the lungs, there was no reduction in the nasal secretions in the vaccinated monkeys. So the positive result reported by the Oxford group turned out not to be protection from infection at all, something most would agree is what a successful vaccine would do. Instead, it lowered only the amount of virus recoverable from the vaccinated monkey’s lung.

To the Jenner Institute’s credit, it does warn visitors to its website that there have been many false reports about the progress of its vaccine trial. Still, having a scientist working on the trial paint preliminary results in such a positive manner without having yet released the full data is cause for concern.

We all understand the need to share scientific and medical data as rapidly as possible in this time of crisis. But a media announcement alone is not enough. There are ways to share the data quickly and transparently: posting manuscripts before review or acceptance on publicly available websites or working with journals to allow an early view. Publishing in this manner allows doctors and scientists to reach their own conclusion, based on the evidence available.

The media also bears responsibility. Asking experts to opine on unsubstantiated claims is not useful. Medicine and science are not matters of majority opinion; they are matters of fact supported by transparent data. This is the backbone of scientific progress and our only hope to end this pandemic. We can’t give up on our standards now.

*  *  *

So, by all means, trust in "science" but choose your "scientist" well...

Published:5/20/2020 3:59:05 PM
[Markets] Dow Soars 1,860 Points From May 14 Low; Can These 5 Stocks Crush Blue Chips In 2020? While the Dow Jones Industrial Average is doing well in May, it remains a market laggard. Watch these chip, software and consumer spending leaders. Published:5/20/2020 2:28:09 PM
[Markets] Dow's 265-point rally highlighted by gains for shares of American Express, Intel DOW UPDATE Powered by strong returns for shares of American Express and Intel, the Dow Jones Industrial Average is rallying Wednesday afternoon. The Dow (DJIA) is trading 265 points, or 1.1%, higher, as shares of American Express (AXP) and Intel (INTC) have contributed to the index's intraday rally. Published:5/20/2020 1:28:23 PM
[Markets] China ETFs stumble lower midday Wednesday as Senate passes bill that could bar listings of Chinese companies Exchange-traded funds that allow investors to bet on Chinese companies were knocked lower midday Wednesday after the U.S. Senate approved sweeping new legislation that could ultimately bar many Chinese companies from listing shares on U.S. exchanges. The Invesco China Technology ETF , which offers exposure to a basket of popular Chinese technology firms that are listed in the U.S., including the American Depositary Receipts of Baidu Inc., , was down 0.7%; those for KraneShares CSI China Internet ETF , which offers exposure to Alibaba Group Holding Ltd. and JD.com , was trading 1.4% lower, at last check, according to MarketWatch's website. The Global X MSCI China Consumer Discretionary ETF was down 1% on Wednesday, with that ETF also tracking Alibaba and JD.com. The Senate bill, if it is written into law, would The bill would require Chinese companies to establish that they aren't owned or controlled by a foreign government. Furthermore, they would be required to submit to an audit that can be reviewed by the Public Company Accounting Oversight Board, the nonprofit body that oversees audits of all U.S. companies that seek to raise money in public markets. U.S. stocks came off their highs of the session Wednesday afternoon following the passage of the bill, which comes amid increasing tensions between the U.S. and China, with representatives from the world's biggest economies fighting over Beijing's handling of the COVID-19 pandemic, which was first identified in Wuhan, China. Still, markets were holding onto solid gains, with the Dow Jones Industrial Average up 1.2%, the S&P 500 index climbing 1.4% and the technology-heavy Nasdaq Composite Index rising 1.7% Wednesday. Published:5/20/2020 12:55:07 PM
[Markets] Intel, Caterpillar share gains lead Dow's 333-point rally DOW UPDATE Buoyed by strong returns for shares of Intel and Caterpillar, the Dow Jones Industrial Average is rallying Wednesday afternoon. The Dow (DJIA) was most recently trading 333 points, or 1.4%, higher, as shares of Intel (INTC) and Caterpillar (CAT) are contributing to the index's intraday rally. Published:5/20/2020 11:25:31 AM
[Markets] Dow Michigan HQ Threatened With "Nine Feet Of Water" Flood After Two Dams Break Dow Michigan HQ Threatened With "Nine Feet Of Water" Flood After Two Dams Break Tyler Durden Wed, 05/20/2020 - 11:20

The headquarters of chemical giant Dow, which was spun off from DowDuPont last April, are threatened by flooding, prompting the company to activate its local emergency center in Michigan and implement "flood preparedness plan which includes the safe shutdown of operating units on site,” the company said on Facebook after two dams failed upstream of its Midland, Michigan, headquarters.

Dow said that "only essential Dow staff needed to monitor the situation and manage any issues as a result of the flooding remain on site." Other companies with operations at Dow’s Midland complex include DuPont and Corteva Agriscience, according to Bloomberg which adds that the companies are working together on their response.

Michigan Governor Gretchen Whitmer, who is already managing a public health crisis in one of the states that has been hard hit by Covid-19, announced an emergency declaration in response to the dam collapse. She told people to evacuate the area around Midland, urging those in the flooding zones to get to a shelter.

"In the next 12 to 15 hours, downtown Midland could be under nine feet of water,” Whitmer said. “To go through this in the midst of a global pandemic is almost unthinkable."

The Edenville Dam, at the base of nearby Wixom Lake, failed amid high floodwaters in the area, sending water gushing through a now-gaping hole near its spillway. A second one, the Sanford Dam at the base of Sanford Lake, had also failed, according to the National Weather Service, which issued an alert advising of “extremely dangerous flash flooding” in the area.

The Tittabawassee River that flows below those lakes, through Midland, crested at nearly 34 feet in a 1986 flood that saw Dow Chemical shutter nearly all of its local operations. Floodwaters in Midland are expected to reach nearly 4 feet higher than that on Wednesday, the Midland Daily News said.

Published:5/20/2020 10:30:08 AM
[Markets] Dow up nearly 400 points on gains for Caterpillar, Intel stocks DOW UPDATE Buoyed by positive momentum for shares of Caterpillar and Intel, the Dow Jones Industrial Average is rallying Wednesday morning. Shares of Caterpillar (CAT) and Intel (INTC) are contributing to the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 396 points (1. Published:5/20/2020 10:00:04 AM
[Markets] Dow rallies 311 points on gains in JPMorgan Chase, Dow Inc. shares DOW UPDATE Shares of JPMorgan Chase and Dow Inc. are posting positive momentum Wednesday morning, propelling the Dow Jones Industrial Average rally. Shares of JPMorgan Chase (JPM) and Dow Inc. (DOW) have contributed to the index's intraday rally, as the Dow (DJIA) is trading 311 points (1. Published:5/20/2020 8:54:10 AM
[Markets] Dow Jones Futures Jump Amid Earnings; Alibaba, Facebook, Netflix Above New Buy Points In Stock Market Rally The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/20/2020 6:53:53 AM
[Markets] Dow Jones Futures Hit Overnight Highs; Alibaba, Facebook, Netflix Above New Buy Points In Stock Market Rally The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/19/2020 11:52:26 PM
[Markets] Dow Jones Futures Hit Session Highs; Alibaba, Facebook, Netflix Above New Buy Points In Stock Market Rally The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/19/2020 7:51:18 PM
[Markets] Dow Jones Futures Extend Gains; Alibaba, Facebook, Netflix Above New Buy Points In Stock Market Rally The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/19/2020 7:20:48 PM
[Markets] Dow Jones Futures Turn Higher; Alibaba, Facebook, Netflix Headline 6 Stocks In Or Near Buy Zones After Stock Market Losses The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/19/2020 6:21:31 PM
[Markets] Dow Jones Futures Fall; Alibaba, Facebook, Netflix Headline 6 Stocks In Or Near Buy Zones After Stock Market Losses The Dow Jones futures were in focus late Tuesday. Six top stocks near buy points include Alibaba and Facebook. Published:5/19/2020 5:54:39 PM
[Markets] Stock market news live updates: Stock futures fall, extending declines Stock futures opened lower Tuesday evening, adding to earlier losses that sent each of the Dow and S&P 500 off more than 1% by the closing bell. Published:5/19/2020 5:23:22 PM
[Markets] Dow stumbles 390 points lower to end down sharply as report throws cold water on Moderna's coronavirus vaccine candidate The Dow Jones Industrial Average ended sharply lower Tuesday, with losses gathering steam within the final minutes of trading, as investors pointed to a report on Moderna Inc., as one possible catalyst for the dip for the blue-chip index. Stat News in a Tuesday afternoon report attempted to throw some cold water on an upbeat study released by Moderna about its coronavirus vaccine candidate. The Stat News article said that the Moderna report on its experimental remedy for COVID-19 lacked sufficient data. The report of early success from the Moderna vaccine candidate was one of the key catalysts for markets soaring a day ago. The Dow closed down by about 391 points, or 1.6%, at 24,207, the S&P 500 index closed down 1.1% at about 2,923 and the Nasdaq Composite Index ended 0.5% lower at 9,185, giving up its gains for the day in the final half-hour of trading. Moderna shares, meanwhile, finished down by 10.4% in late Tuesday action after a 13% surge on Monday which brought it to a record close. Meanwhile, Boston Federal Reserve President Eric Rosengren during a CNBC interview cautioned that businesses reopening may be "premature" as Americans continue to contend psychologically with the COVID-19 pandemic. Rosengren suggested that demand from consumers may still be an issue as the economy attempts to restart from coronavirus-induced closures. The Fed officials comments come after Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin Tuesday morning were grilled by the Senate Banking Committee about why funding from the $2 trillion economic-relief package approved by Congress legislation remains unspent. Published:5/19/2020 3:49:32 PM
[Markets] Dow finishes down 390 points as Moderna vaccine doubts surface Dow finishes down 390 points as Moderna vaccine doubts surface Published:5/19/2020 3:22:08 PM
[Markets] Dow's down over 250 points in final half-hour of trading Dow's down over 250 points in final half-hour of trading Published:5/19/2020 2:54:45 PM
[Markets] Dow stumbles 300 points lower in final half-hour of trade as report throws cold water on Moderna vaccine candidate The Dow Jones Industrial Average on Tuesday took a leg lower within the final hour of trading, with investors pointing to a report on Moderna Inc. as one possible catalyst for the dip for the blue-chip index. Stat News in a Tuesday report attempted to throw some cold water on an upbeat study released by Moderna about one of its coronavirus vaccine candidates. The Stat News article said that the Moderna report on its experimental vaccine for COVID-19 lacked sufficient data. The report of early success from the Moderna vaccine candidate was one of the key catalysts for markets soaring a day ago. Late Tuesday, the Dow was down 312 points, or 1.3%, at 24,283, those for the S&P 500 index were off 0.8% at 2,930 and the Nasdaq Composite Index was trading 0.2% lower at 9,216. Moderna shares, meanwhile, were down by about 10% in late Tuesday action after a 13% surge on Monday which brought it to a record close. Published:5/19/2020 2:54:45 PM
[Markets] Dow Jones Lags Nasdaq, But Intel Nears Buy Point; Facebook Breakout Leads Nasdaq 100 The Dow Jones couldn't keep up with the Nasdaq Tuesday, but the blue-chip index served up some nice gainers, including Intel stock. Published:5/19/2020 2:18:37 PM
[Markets] Morgan Stanley: Monday's Huge Stock Buying Was One Giant Hedge Fund Short Squeeze Morgan Stanley: Monday's Huge Stock Buying Was One Giant Hedge Fund Short Squeeze Tyler Durden Tue, 05/19/2020 - 14:41

Yesterday morning, ahead of the torrid rally that sent the Dow Jones more than 1,000 points higher at one point, we warned that the "bulk of Wall Street institutions is once again positioned on the wrong side of today's rally."

As we showed last Friday using the latest Deutsche Bank flow data...

... both consolidated and systematic positioning was just off decade lows, while discretionary positioning - namely hedge funds and various other levered investors - continued to take down exposure going even further net short, and selling to retail investors all the way on the way up, assuming of course that Robin Hood is up on any given day.

In retrospect, it turns out that the surge higher was just too much for institutions, and as Morgan Stanley's prime brokerage desk writes today, "Monday was one of the largest days of buying we have seen in recent months, as HFs covered short positions as the market rallied higher. Equity L/S funds were the largest net buyer, with ~60% of the net activity coming from covers, and the remainder coming from long additions."

Yet while hedge funds scrambled to minimize the pain having been caught offside, the majority of the buying can be attributed to ETFs, which saw large amounts of covering as the S&P 500 closed over 3% higher DoD. Notably, HFs had added a sizable amount of ETF shorts last week as equities slid at the start of the week, but a good portion of this has now been undone when taking into account yesterday’s activity. Meanwhile, aAcross single-names, while flows were still positive, activity was slightly more divergent at the industry level.

As a result of yesterday's panicked HF activity, Equity L/S net leverage in the US increased by 3% to 45% (40th %-tile over last 12M; 14th %-tile since 2010), in line with the positive net activity / strong market performance but still relatively low considering where the market is. At the same time, weighted Equity L/S gross leverage also increased by ~2% to 189% (53rd %-tile over last 12M; 81st %-tile since 2010), and tracking the SPX tick for tick, though most of this can be attributed to MTM increases in the  underlying positions.

Finally, and has been the case for much of the artificial Fed-driven rally of the past decade, hedge funds failed to capitalized on yesterday's rally, and while the broader S&P jumped over 3%, HF performance was not nearly as strong – for L/S funds in the Americas, with one-day returns up just ~70-75bps vs. the S&P 500 +3.2%. A main driver of
this was due to the Cyclical rally, in which HFs continue to have fairly light exposure to.

And in another echo from the sins of the past decade, crowding performance was particularly painful yesterday as the longs lagged the market by ~1% and the shorts rallied 80bps more than the market, resulting in a long vs. short spread of -1.8%.

In fact, yesterday was the worst 1D spread for the crowded stocks since Mar 16th. MTD and YTD crowding spread still remains positive, aided by the crowded longs.

Published:5/19/2020 1:50:48 PM
[Markets] Dow falls nearly 100 points on losses for shares of Merck, Home Depot DOW UPDATE The Dow Jones Industrial Average is declining Tuesday afternoon with shares of Merck and Home Depot delivering the stiffest headwinds for the price-weighted average. The Dow (DJIA) was most recently trading 99 points lower (-0. Published:5/19/2020 12:19:08 PM
[Markets] Dow off 50 points at midday; P&G, Merck, Exxon, Chevron, Home Depot pace retreat Dow off 50 points at midday; P&G, Merck, Exxon, Chevron, Home Depot pace retreat Published:5/19/2020 11:23:09 AM
[Markets] Dow Jones Lags But Apple, Intel, Microsoft Lead Tech Stock Rally; Which Is In Buy Range? Stocks were mixed midday as the Dow Jones Industrial Average remained slightly underwater but the Nasdaq extended its recent rally. Published:5/19/2020 11:23:08 AM
[Markets] Dow under pressure as stock-market investors await testimony from Powell, Mnuchin U.S. stocks trade on either side of unchanged, following the best day for the S&P 500 index and the Dow since early April. Wall Street will be watching for congressional testimony from Federal Reserve chair Jerome Powell and Treasury Secretary Steven Mnuchin. Published:5/19/2020 8:48:12 AM
[Markets] Dow futures waver as stock-market investors await testimony from Powell, Mnuchin U.S. stock-index futures indicated a lackluster start to trade on Tuesday, following the best day for the S&P 500 index and the Dow since early April. Wall Street will be watching for congressional testimony from Federal Reserve chair Jerome Powell and Treasury Secretary Steven Mnuchin. Published:5/19/2020 8:20:34 AM
[Markets] Dow Jones Futures Pare Losses As Walmart Earnings Offset Home Depot After Vaccine-Led Coronavirus Stock Market Rally Dow Jones futures pared losses as Walmart earnings offset mixed Home Depot earnings. The coronavirus stock market rally surged Monday on vaccine hopes. Published:5/19/2020 7:18:08 AM
[Markets] Dow Jones Futures Fall On Home Depot Earnings After Coronavirus Stock Market Rally Soars On Vaccine Hopes Dow Jones futures extended losses on Home Depot earnings. The coronavirus stock market rally surged Monday as vaccine progress raised hopes for a rapid economic recovery. Published:5/19/2020 5:47:44 AM
[Markets] Dow futures retreat as stock-market investors await testimony from Powell, Mnuchin U.S. stock-index futures indicated a lackluster start of trade on Tuesday, following the best day for the S&P 500 and the Dow since early April. Wall Street will be watching for congressional testimony from Federal Reserve boss Jerome Powell and Treasury Secretary Steven Mnuchin. Published:5/18/2020 10:45:00 PM
[Markets] Market Snapshot: Dow futures retreat as stock-market investors await testimony from Powell, Mnuchin U.S. stock-index futures indicated a lackluster start of trade on Tuesday, following the best day for the S&P 500 and the Dow since early April. Wall Street will be watching for congressional testimony from Federal Reserve boss Jerome Powell and Treasury Secretary Steven Mnuchin.
Published:5/18/2020 10:45:00 PM
[Markets] "This Is Not A Costless Exercise" - The Unintended Consequences Of Monetary Inflation "This Is Not A Costless Exercise" - The Unintended Consequences Of Monetary Inflation Tyler Durden Mon, 05/18/2020 - 21:25

Authored by Alasdair Macleod via GoldMoney.com,

“In short, the Fed is committed to rescue businesses from the greatest economic catastrophe since the great depression and probably even greater than that, to fund the US Government’s rocketing budget deficits, fund the maintenance of domestic consumption directly or indirectly through the US Treasury, while pumping up financial markets to achieve these objectives and preserve the illusion of national wealth.

Clearly, we stand on the threshold of an unprecedented monetary expansion.”

Introduction

President Reagan memorably said that the nine words you don’t want to hear are “I’m from the government and I’m here to help.” Governments in all the major jurisdictions are now making good on that unwanted promise and are taking responsibility for everything from our shoulders.

Those receiving subsidies and loan guarantees are no doubt grateful, though they probably see it as the government’s duty and their right. But someone has to pay for it. In the past, by the redistribution of wealth through taxes it meant that the haves were taxed to give financial support to the have-nots, at least that was the story. Today, through monetary debasement nearly everyone benefits from monetary redistribution.

This is not a costless exercise. Governments are no longer robbing Peter to pay Paul, they are robbing Peter to pay Peter as well. You would think this is widely understood, but the Peters are so distracted by the apparent benefits they might or might not get that they don’t see the cost. They fail to appreciate that printing money is not just the marginal source of finance for excess government spending, but it has now become mainstream.

There is almost a total absence in the established media of any commentary on the consequences of monetary inflation, and in a cry for more we even have financial experts warning us of a deflationary collapse and the need for the Fed to introduce negative interest rates to stave off deflation. Yes, there are deflationary forces, because banks wish to reduce their loan exposure at a time of increasing risk. But we can be sure central banks and their political masters will do everything they can to counter the trend of contracting bank credit by increasing base money. There can only be one outcome: the debasement and eventual destruction of fiat currencies.

It was the nineteenth century French economist, Frederic Bastiat, who pointed out there were unseen consequences from violating property. He took the biblical approach of a parable, famous as the broken window fallacy. It is not what is seen, but what is unseen. He told of a boy breaking a window, its destruction giving business to the glazier which he would not otherwise have had. That is seen; unseen is the constructive spending that otherwise would have occurred if the cost of the broken window had not been incurred.

We see the helicoptered money, the furlough support, and the businesses helped not to go bust. But we do not see the cost. We don’t see how the resources taken up might otherwise be constructively deployed. We are told that the government is paying for it all, but taxes are not being raised.

Was Reagan’s aphorism wrong after all? If so, the government employee on our doorstep with his offer of help is to be welcomed. He comes bearing gifts. And without an increase in taxes what is not to like?

Bastiat gave us the answer. Unfortunately, the unseen consequences of apparently costless inflationary financing are myriad, as we will painfully discover.

The Cantillon effect

Over a century before Bastiat, an Irish banker in France, Richard Cantillon, observed that new money drove up prices as it was spent. He had experienced John Law’s Mississippi bubble, which was fueled by printed money and the issuance of bank credit, so Cantillon had observed the effect. It made well-connected speculators their fortunes, whose profligate spending drove up prices for everyone else. The effect at that time was that in real terms insiders became rich and the poor got poorer. To this day the process by which this happens is known as the Cantillon effect.

Now that it is official policy, the lesson for today is that a rapid increase in monetary inflation will, as the effects trickle through the economy, further impoverish the poor. It will do this by driving up prices of their essentials and reducing the purchasing power of their salaries, if they are lucky enough to still be employed. But as Cantillon pointed out in his Essai, reflecting the increased quantity of circulating money prices rise unevenly. Never has it been truer than today, when we face the combination of an unprecedented slump in economic activity combined with a sharp escalation in monetary inflation: the rich whose stocks are rising can buy their expensive toys at knockdown prices, while the poor, increasing numbers of which are newly unemployed, struggle to make ends meet with rising prices for life’s essentials.

It gets worse. Just as in Cantillon’s day, modern monetary policy is aimed at maintaining and increasing financial asset values. John Law’s puffery attempted to inflate the combination of his Banque Royale and his Mississippi ventures. Today it is all government bond markets, corporate debt, and stocks and shares. The intention is to maintain and further a wealth effect to replace the true wealth that has been lost, originally accumulated by entrepreneurs and businessman serving the consumer successfully. All we have now is John Law-style puffery.

The enrichment of the few at the expense of the many is a finite process. The outcome will inevitably be the same: Law’s scheme began to run into headwinds in December 1719, and by the following September his unbacked currency had failed. It was dead, worthless, an ex-currency. The empirical evidence is clear. Central banks emulating Law’s scheme today will destroy their currencies and everything that floats on their seas of paper credit and debt. The rapidity of the collapse of the Mississippi scheme strongly suggests that once control over bond prices is lost the contemporary financial and monetary collapse will be similarly swift.

For this reason, understanding the consequences of monetary inflation spiralling out of control has never been more important. We should know what they are from a study of sound economic theory and empirical evidence. The poor will starve and many of those who became rich through financial asset inflation will eventually join them. For the latter class, there will come a point where they abandon a failing dollar-based inflation scheme to save what they can from the financial wreckage.

Distortions and misallocations of capital

There is an aspect of the destruction brought about by monetary policy, which is almost never considered by policy makers, and that is how it distorts the allocation of capital and leads to its misallocation. In free markets, capital is scarce and must be used to greatest effect if the consumer is to be properly served and the entrepreneur is to maximise his profits.

Capital comes in several forms and encompasses every aspect of production; principally an establishment, machinery, labour, semi-manufactured goods and commodities to be processed, and money. An establishment, such as a factory or offices, and the availability of labour are relatively fixed in their capacity. Depending on their deployment and capacity they produce a limited amount of goods. It is just the one form of capital, that is money and credit, which central banks and the banking system now provide, and which in its unbacked form is infinitely flexible. Consequently, attempts to stimulate production by monetary means run into the capacity constraints of the other forms of capital.

Monetary policy has been increasingly used to manipulate capital allocation since the early days of the great depression in the 1930s. The effect has varied but it has generally come up against the constraints of the other forms of capital. Where there is excess labour, it takes time to retrain it with the specialist skills required, a process hampered by trade unions ostensibly protecting their members, but in reality, resisting reallocation of labour resources. Government control over planning and increasingly stifling regulations, again putting a brake on change, meant that changes and additions to the use of establishments lengthen the time before entrepreneurial investment was rewarded with profits. Government intervention has also discouraged the withdrawal of monetary capital from unprofitable deployment, or malinvestments, lengthening recessions needlessly.

When the advanced nations had strong industrial cores, the periodic expansions of credit and their subsequent sudden contractions led to observable booms and busts in the classical sense, since production of labour-intensive consumer goods dominated production overall.

There were then two further developments. The first was the abandonment of the Bretton Woods agreement in 1971, which led to a substantial rise in prices for commodities. According to the broad-based UN index of commodities rose from 33 to 157 during the decade, a rise of 376%. This input category of production capital compared unfavourably with US consumer price increases over the decade of 112%, the mismatch between these and other categories of capital allocation making economic calculation a fruitless exercise. The second development was the liberation of financial controls in the mid-eighties, London’s big-bang and the repeal of America’s Glass Steagall Act of 1933, allowing commercial banks to fully embrace and exploit investment banking activities.

The banking cartel increasingly directed its ability to create credit towards purely financial activities mainly for their own books, thereby financing financial speculation, while de-emphasising bank credit expansion for production purposes for all but the larger corporations. Partly in response, the nineties saw businesses move production to low-cost centres in South-East Asia where all forms of production capital, with the exception of monetary capital, were significantly cheaper and more flexible.

There then commenced a quarter-century of expansion of international trade replacing much of the domestic production of goods in the US, the UK, and Europe. It was these events that denuded America of its manufacturing, not unfair competition as President Trump has alleged and Germany’s retention of manufactures proves. But the effect has been to radically alter how we should interpret the effects of monetary expansion on the US economy and others, compared with Hayekian triangles and the like.

Business cycle research had assumed a capitalistic structure of savers saving and thereby making monetary capital available to entrepreneurs. Changes in the propensity to save sent contrary signals to businesses about the propensity to consume, which caused them to alter their production plans. Based on the ratio between consumer spending and savings, this analytic model has been corrupted by the state and its licensed banks by replacing savers with former savers now no longer saving, and even borrowing to consume.

Today, the inflationary origins of investment funds for business development are hidden through financial intermediation by venture capital funds, quasi-government funds and others. Being mandatory, pension funds continue to invest savings, but their beneficiaries have abandoned voluntary saving and run up debts, so even pension funds are not entirely free of monetary inflation. Insurance funds alone appear to be comprised of genuine savings within an inflationary system.

Other than pension funds and insurance companies, Keynes’s wish for the euthanasia of the saver has been achieved. He went on to suggest there would be a time “when we might aim in practice… at an increase in the volume of capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus…”

Now that everywhere bank deposits pay no interest, his wish has been granted, but Keynes did not foresee the unintended consequences of his inflationist policies which are now being visited upon us. Among other errors, he failed to adequately account for the limitation of non-monetary forms of capital, which leads to bottlenecks and rising prices as monetary expansion proceeds.

The unintended consequences of neo-Keynesian policy failures are shortly to be exposed. The checks and balances on the formation and deployment of monetary capital in the free market system based on the division of labour have been completely destroyed and replaced by inflation. So, where do you take us from here, Mr Powell, Mr Bailey, Ms Lagarde, Mr Kuroda?

Taking stock

We can now say that America, the nation responsible for the world’s reserve currency, has encouraged policies which have turned its economy from being a producer of goods with supporting services as the source of its citizens’ wealth into little more than a financial casino. The virtues of saving and thrift have been replaced by profligate spending funded by debt. Unprofitable businesses are being supported until the hoped-for return of easier times, which are now gone.

Cash and bank deposits (checking accounts and savings deposits) are created almost entirely by inflation, and currently total $15.2 trillion in the US, while total commercial bank capital is a little under $2 trillion. This tells us crudely that $13 trillion sitting in customer accounts can be attributed to bank credit inflation. Increasing proportions of those customers are financial corporations and foreign entities, and not consumers maintaining cash and savings balances.

On the other side of bank balance sheets is consumer debt, mostly off-balance sheet, but ultimately funded on-balance sheet. Excluding mortgages, the total comprised of credit cards, autos and student debt was $3.86 trillion in mid-2019, amounting to an average debt of $27,571 per household, confirming the extent to which consumer debt has replaced savings.

At $20.5 trillion, bank balance sheets are far larger than just the sum of cash and bank deposits, giving them a leverage of over ten times their equity. Bankers will be very nervous of the current economic situation, aware that loan and other losses of only ten per cent wipes out their capital. Meanwhile, their corporate customers are either shut down, which means most of their expenses continue while they have no income, or they are suffering payment disruptions in their supply chains. In short, bank loan books are staring at disaster. Effectively, the whole banking system is underwater at the same time as the Fed is extolling them to join with it in rescuing the economy by expanding their balance sheets even more.

The sums involved in supply chains are considerably larger than the US’s GDP. Onshore, it is a substantial part of the nation’s gross output, which captures supply chain payments at roughly $38 trillion. Overseas, there is a further mammoth figure feeding into the dollar supply chain, taking the total for America to perhaps $50 trillion. The Fed is backstopping the foreign element through currency swaps and the domestic element mainly through the commercial banking system. And it is indirectly funding government attempts to support consumers who are in the hole for that $27,571 on average per household.

In short, the Fed is committed to rescue all business from the greatest economic collapse since the great depression, and probably greater than that, to fund the US Government’s rocketing budget deficits, fund the maintenance of domestic consumption directly or indirectly through the US Treasury, while pumping financial markets to achieve these objectives and preserve the illusion of national wealth.

Clearly, we stand on the threshold of an unprecedented monetary expansion. Part of it will be, John Law style, to ensure inflated prices for US Treasuries are maintained. At current interest rates debt servicing was already costing the US Government 40% of what was expected to be this year’s government deficit. That bill will now rise beyond control even without bond yields rising. Assistance is also being provided to the corporate debt market. Blackrock has been deputed to channel the Fed’s money-printed investment through ETFs specialising in this market. So not only is the Fed underwriting the rapidly expanding US Treasury market, but it is underwriting commercial dollar debt as well.

In late-1929, a rally in the stock market was prolonged by a similar stimulus, with banks committed to buying stocks and the Fed injecting $100m liquidity into markets by buying government securities. Interest rates were cut. And when these attempts at maintaining asset prices failed, the Dow declined, losing 89% of its value from September 1929.

Today, similar attempts to rescue economies and financial markets by monetary expansion are common to all major central banks, with the possible exception of the ECB, which faces the unexpected obstacle of a challenge by the German Constitutional Court claiming primacy in these matters. There is therefore an added risk that the global inflation scheme will unravel in Europe, which if it does will rapidly lead to funding and banking crises for the spendthrift member states. Doubtless, any financial contagion will require yet more money-printing by the other major central banks to ensure there are no bank failures in their domains.

Whither the exit?

So far, few commentators have grasped the implications of what amounts to the total nationalisation of the American economy by monetary means. They have only witnessed the start of it, with the Fed’s balance sheet reflecting the earliest stages of the new inflation which has seen its balance sheet increase by 61% so far this year. Not only will the Fed battle to fund everything, but it will also have to compensate for contracting bank credit, which we know stands at about $18 trillion.

The Fed must be assuming the banks will cooperate and pass on the required liquidity to save the economy. Besides the monetary and operational hurdles such a policy faces, it cannot expect the banks will want responsibility for the management of businesses that without this funding would not exist. The Fed, or some other government agency has to then decide one of three broad options: further support, withdrawing support, or taking responsibility for business activities. This last option involves full nationalisation.

We must not be seduced into thinking this is an outcome that can work. The nationalisation of failing banks and their eventual privatisation is not a good precedent for wider nationalisation, because a bank does not require the entrepreneurial flair to estimate future consumer demand and to undertake the economic calculations to provide for it. The state taking over business activities fails for this reason, demonstrated by the collapse of totalitarian states such as the USSR and the China of Mao Zedong.

That leaves a stark choice between indefinite monetary support or pulling the rug from under failing businesses. There are no prizes for guessing that pulling rugs will be strongly resisted. Therefore, government support for failing businesses is set to continue indefinitely.

At some stage, the dawning realisation that central banks and their governments are steering into this economic cul-de-sac will undermine government bond yields, despite attempts by central banks to stop it, even if the deteriorating outlook for fiat currencies’ purchasing power does not destroy government finances first.

Earlier in the descent into the socialisation of money, nations had opportunities to change course. Unfortunately, they had neither the knowledge nor the guts to divine and implement a return to free markets and sound money. Those opportunities no longer exist and there can be only one outcome: the total destruction of fiat currencies accompanied by all the hardships that go with it.

Published:5/18/2020 8:43:16 PM
[Markets] Asian Stocks Advance After U.S. Rally; Oil Gains: Markets Wrap (Bloomberg) -- Asian stocks rose Tuesday, spurred by a surge on Wall Street, after early results for an experimental vaccine sparked speculation economies could snap back quickly. Oil extended gains and Treasury yields held near five-week highs.Equities rose in Tokyo, Sydney and Seoul, though the magnitude of the advance was less than in the U.S. Contracts on the S&P 500 reversed modest gains on a report that Nasdaq would tighten IPO rules, affecting some Chinese companies. The U.S. benchmark jumped the most in almost six weeks after Moderna Inc. said its vaccine tests yielded signs it can create an immune-system response in the body. Oil consolidated above $30 a barrel.The risk-on rally comes as more economies around the world and within the U.S. ease restrictions that created one of the steepest downturns since the Depression. Federal Reserve Chairman Jerome Powell is scheduled to speak on the state of the recovery Tuesday, amid expectations he’ll press for further fiscal support.“Short-lived bounces in stock prices even while markets establish new lows are not unheard of,” Ashwin Alankar, head of global asset allocation at Janus Henderson, said in a note. “Forward-looking metrics such as earnings revisions and options prices, on the other hand, sound a more cautious tone both for the economy and stock prices.”Among the headwinds for stocks is a deteriorating U.S.-China relationship. In a further sign of tightening scrutiny on capital flows to China, Reuters reported that Nasdaq is set to to unveil new rules on initial public offerings that will make it more difficult for some Chinese companies to list on the exchange. That follows moves in Washington to halt investments by a retirement plan into the stocks of Chinese firms.These are some of the main moves in markets:StocksS&P 500 futures were down 0.1% as of 9:37 a.m. in Tokyo. The S&P 500 Index surged 3.2%. The Dow Jones Industrial Average climbed 3.9% and the Nasdaq Composite Index rose 2.4%.Topix index gained 1.7%.Australia’s S&P/ASX 200 Index rose 2%.South Korea’s Kospi index rose 1.9%.Hong Kong’s Hang Seng Index futures advanced 1.8% earlier.CurrenciesThe Japanese yen was at 107.41 per dollar, little changed.The offshore yuan traded at 7.1163 per dollar.The Bloomberg Dollar Spot Index was little changed after sinking 0.7%.The euro was at $1.0920.The British pound was at $1.2214, up 0.2%.BondsThe yield on 10-year Treasuries fell one basis point to 0.71% after jumping eight basis points in the previous session.Australia’s 10-year bond yield climbed six basis points to 0.97%.CommoditiesWest Texas Intermediate crude climbed 4.1% to $33.12 a barrel.Gold rose 0.1% to $1,734.75 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:5/18/2020 8:14:24 PM
[Markets] The Oil Rally Is Running On Fumes The Oil Rally Is Running On Fumes Tyler Durden Mon, 05/18/2020 - 20:38

Submitted by Nick Cunningham at Oilprice.com

Oil prices have surged to two-month highs on growing signs of a rebound in oil demand, as the easing of lockdowns spread worldwide. At its peak in April, global lockdown measures affected around 3.9 billion people. But an estimated 3.7 billion people are now living in areas that are experiencing some version of a “reopening,” according to an estimate from Raymond James. 

Data from China has stoked some bullishness in oil markets, although there are some mixed signals. Traffic is back in many Chinese cities, and there are early signs that China’s oil demand is rising back close to pre-pandemic levels around 13 million barrels per day (mb/d). 

At the same time, a new coronavirus cluster in China suddenly sparked another lockdown measure. While Wuhan and other regions may be opening up, roughly 108 million people in Jilin province just went into lockdown. It’s a sign that the fight against COVID-19 will likely be frustrated by repeated flare ups in new cases, which may ultimately lead to renewed lockdowns. 

But for now, the markets apparently want to focus on the positive. On the global vaccine front, there appears to be some progress. Moderna said on Monday that its vaccine has shown to be safe in humans and has also demonstrated promising results in stopping COVID-19. Meanwhile, AstraZeneca said it could have 30 million doses of its vaccine ready by September.

Financial equities rejoiced, with the Dow Jones up roughly 3.5 percent during midday trading. WTI surged past $30 per barrel, up at one point on Monday by more than 10 percent. 

Massive supply cuts go even further in explaining the recent jump in prices. Oil traders view the implementation of the OPEC+ cuts favorably, with the 9.7 mb/d cuts phasing in swiftly. Part of the reason is that some oil producers, including Saudi Arabia, began having difficulty finding a home for its oil, so a portion of the cuts arguably became involuntary. 

Meanwhile, weeks of catastrophically low oil prices ravaged North American oil producers over the past two months. Shut ins could reach 2 mb/d in the U.S. by June, and Canada could lose 1 mb/d. 

But a reality check is in order. WTI at $30 per barrel is suddenly seen as “bullish,” but that price level is financially unsustainable for a vast swathe of global oil supply, including most of the U.S. shale complex. 

Moreover, the physical oil market is not “out of the woods” just yet, according to Rystad Energy. “We still see a 13.7 million bpd implied liquids (crude, condensate, NGLs, others) stock builds in May-20,” the firm said in a statement. That is down by half from the peak of the glut (-26.7 mb/d in inventory builds in April), but a significant overhang remains. 

Separately, Commerzbank argued that the oil market optimism may be running a little too far. “Despite all the euphoria, however, we believe that caution is still advisable: it will probably take some years before demand recovers to its pre-crisis level,” Commerzbank wrote on Monday.

U.S. Federal Reserve Chairman Jerome Powell warned that the American economy recovery could take until the end of 2021. “It could stretch through the end of next year. We really don’t know,” Powell said over the weekend. He noted that the economy might not return to normal simply because stay-at-home-orders are in the process of going away. “For the economy to fully recover people will have to be fully confident, and that may have to await the arrival of a vaccine,” Powell added.

In addition, the price rally may also be the result of speculative positioning – the physical market is trending towards rebalancing, but the rally can also be explained by overly exuberant speculative positioning. “Retail and institutional investors are also likely to have played a key part in the latest price rise. According to the CFTC, the latter expanded their net long positions in WTI on the NYMEX to around 352,000 contracts in the week to 12 May, putting them at their highest level since September 2018,” Commerzbank added. “Thus the positive trends (for the oil price) are largely expected and already priced in.”

The lockdowns are lifting, but there is nothing to suggest that the end of the pandemic is near, or that oil supply will remain shut in. “[T]here is significant downside risk related to two events, the resurgence in COVID-19 outbreaks, and deteriorating compliance to OPEC+ cuts as demand comes back,” Rystad warned. 

Published:5/18/2020 7:42:55 PM
[Markets] Dow Jones Futures: Coronavirus Stock Market Rally Soars On Vaccine Hopes; Alibaba Clears Buy Point, Apple Near Dow Jones futures: The coronavirus stock market rally surged as vaccine progress raised hopes for a rapid economic recovery. Will real economy stocks lead? Published:5/18/2020 5:16:18 PM
[Markets] Deep Dive: Here are Monday’s best stock-market performers as airlines and cruise lines shine Only one Dow Jones Industrial Average component declined.
Published:5/18/2020 4:07:36 PM
[Markets] Dow surges over 1,000 points, on track for best day since April 6 Dow surges over 1,000 points, on track for best day since April 6 Published:5/18/2020 3:12:18 PM
[Volokh Conspiracy] [Michael Abramowicz] The Value of a Vaccine The stock market this morning offers a useful event study on how much of the social value of a vaccine the producer of the vaccine may expect to be able to capture. The good news from Moderna's early-stage coronavirus vaccine trials lifted the Dow about 3 percent and Moderna itself around 30 percent, according to… Published:5/18/2020 1:41:18 PM
[] Moderna's vaccine candidate looking good per preliminary results from phase one trials Published:5/18/2020 10:43:14 AM
[Markets] Dow Jones Soars 700 Points, Led By Walt Disney Stock; Top Chip Stock Shoots Higher On Upgrade The Dow Jones opened sharply higher with the Nasdaq composite and S&P; 500 Monday. An upgrade lifted shares of Nvidia ahead of Thursday's earnings report. Published:5/18/2020 9:42:12 AM
[Markets] Dow surges nearly 700 points at Monday's open amid hopeful report on Moderna's experimental coronavirus vaccine U.S. stock benchmarks surged at Monday's open after a report of early success in a vaccine for the COVID=19 pandemic helped to stir optimism on Wall Street. Meanwhile, Federal Reserve Chairman Jerome Powell said that Americans need to prepare for a tough road ahead in the aftermath of the COVID-19 pandemic but that he wouldn't bet against the domestic economy's ability to persevere through the most significant public-health crisis in more than a century. The Dow Jones Industrial Average rose 685 points, or 2.9%, at 24,361, the S&P 500 index gained 2.4% at 2,932, while the Nasdaq Composite Index advanced 1.7% at 9,165. The rally for the benchmark futures accelerated after a report on a phase-one human trial for a coronavirus vaccine produced by Moderna Inc. showed the production of antibodies to the virus in all of its 45 participants involved in the study.CNBC reported that participants in the trial received two doses of the potential vaccine via intramuscular injection in the upper arm approximately 28 days apart. "These interim Phase 1 data, while early, demonstrate that vaccination with mRNA-1273 elicits an immune response of the magnitude caused by natural infection starting with a dose as low as 25 µg," Tal Zaks, Moderna's chief medical officer, said in s statement. Bloomberg reported that the study is being conducted with the U.S. government, noting that Moderna will expand its trial. Markets had already looked set to kick off the week on a high note after the worst weekly decline in almost two months, as U.S. central bank chief Powell said the Fed would continue to support the economy and financial markets through the viral outbreak. Published:5/18/2020 8:39:45 AM
[Markets] Moderna Spikes 20%, Dow Futs Soar On Promising Early COVID Vaccine Trial Data Moderna Spikes 20%, Dow Futs Soar On Promising Early COVID Vaccine Trial Data Tyler Durden Mon, 05/18/2020 - 07:52

In what appear to be the first data from a human vaccine trial, Modern has reported promising early signs that its vaccine "can create an immune-system response in the body that could help fend off the new coronavirus" according to sampling data from a small group of humans who participated in the phase 1 study.

Signs that one of the most hyped vaccines out of the 130+ projects underway around the world have helped Moderna's shares soar 20%+ in premarket trade.

According to BBG, citing data released by Moderna, the study was primarily designed to look at the safety of the shot, and showed no major warning signs in a small phase 1 trial, the company said in a statement Monday. The trial is being run in partnership of the US government under the watchful eye of Dr. Fauci and the NIH. Moderna plans to continue advancing it to wider testing.

More importantly than the safety-related findings, researchers found that at two lower dose levels, antibodies could be detected, a sign that the vaccine could help those who receive it fend off infection by the virus.

The researchers found that at two lower dose levels used in the study, levels of antibodies found after getting a second booster shot of the vaccine either equaled or exceeded the levels of antibodies found in patients who had recovered from the virus.

Moderna's CEO - who later appeared on CNBC Monday morning for an interview - praised the results as "a very good sign."

"This is a very good sign that we make an antibody that can stop the virus from replicating,” Moderna Chief Executive Officer Stephane Bancel said in an interview. The data “couldn’t have been better,” he said.

Bancel said that safety profile appeared to be good, and the reactions were typical of vaccines. They included injection site pain and redness, as well as temporary fever or chills that quickly go away on their own, he said.

Bancel added that the safety profile of the vaccine appeared to be good, and the reactions were mostly typical, including soreness and pain at the injection site. Some patients experienced temporary fever and chills in reaction to the shot. Though Bancel clarified that this only emerged in a few cases during the second round of dose administration. The symptoms mostly went away on their own, according to the company.

The company felt it needed to release these interim data from the trial due to the "high level of interest" in the vaccine (helped by CNBC's Jim Cramer, who often mentions the company on air).

A phase 2 trial is expected to begin shortly, and a final-stage trial will begin in July, Moderna said. Dow futures are soaring on the news, with the Dow up 560 points in recent trade, building on earlier gains.

Published:5/18/2020 7:12:35 AM
[Markets] Dow Jones Futures Signal Coronavirus Market Rally On Vaccine Hopes; Apple, Tesla Lead Tech Giants Near Buy Points Dow Jones futures signaled a strong coronavirus stock market rally on coronavirus vaccine and treatment news. Apple, Facebook, Google, AMD and Tesla are near buys points. Published:5/18/2020 7:12:35 AM
[Markets] The S&P 500 Was Stopped in Its Tracks Last Week. Here’s Why Another Drop Could Be in the Offing. The Dow Jones Industrial Average dropped 645.90 points, or 2.7%, to 23,685.42, while the S&P 500 index fell 2.3%, to 2863.70, and the Nasdaq Composite declined 1.2%, to 9014.56. It was the Dow’s and the Nasdaq’s worst week since the week ended April 3, and the S&P 500’s worst since the week ended March 20. Thanks to Covid-19, the economic data continue to be terrifying—nearly 3 million additional people filed for jobless claims, retail sales suffered the largest plunge on record, and industrial production cratered. Published:5/15/2020 7:52:14 PM
[Markets] Dow Jones Fights To Close Higher Amid Rising China Trade War Tension The Dow Jones fought to close higher on the stock market today, as investors turned their attention to potential renewed trade tensions with China. Published:5/15/2020 4:23:36 PM
[Markets] 'Asset prices remain vulnerable to significant price declines should the pandemic take an unexpected course,' says Fed The markets are vulnerable to a pullback, said the Federal Reserve in the central bank's most recent account of the health of the financial markets in the aftermath of coronavirus. "Asset prices have been volatile across many markets," the central bank wrote in its latest semi-annual report on the financial sector published at 4 p.m. Eastern Time on May 15. "Since their lows in late March and early April, risky asset prices have risen and spreads have narrowed in key markets, the Fed wrote. "Asset prices remain vulnerable to significant price declines should the pandemic take an unexpected course, the economic fallout prove more adverse, or financial system strains reemerge," policy makers explained. Fed Chairman Jerome Powell said earlier this week that a lengthy downturn could turn liquidity problems into solvency issues. The Dow Jones Industrial Average , the S&P 500 index and the Nasdaq Composite Index have all surged by more than 20% since hitting a bear-market low on March 23, with a number of high-profile investors warning that valuations may have gotten lofty amid the worst viral outbreak in more than a century. The COVID-19 pandemic has killed nearly 300,000 people globally and infected more than 4 million people, according to data compiled by Johns Hopkins University. The Fed was forced to unleash a series of unprecedented actions to limit the economic damage from forced shutdowns and closures intended to curtail the spread of the deadly pathogen. Those lockdowns, however, have likely pushed the domestic economy into one of its worst recessions since the Great Depression, with some 36.5 million people out of work over the past two months. "Uncertainty remains high and markets remain volatile relative to historical norms, suggesting the possibility of further price declines should developments prove more adverse than expected," wrote the Fed. Published:5/15/2020 3:52:24 PM
[Markets] Raytheon Technologies Corp., American Express share losses contribute to Dow's 25-point drop DOW UPDATE Behind negative returns for shares of Raytheon Technologies Corp. and American Express, the Dow Jones Industrial Average is falling Friday afternoon. Shares of Raytheon Technologies Corp. (RTX) and American Express (AXP) have contributed to the blue-chip gauge's intraday decline, as the Dow (DJIA) was most recently trading 24 points lower (-0. Published:5/15/2020 2:50:07 PM
[Markets] Dow jumps nearly 50 points on gains in Walt Disney, Home Depot stocks DOW UPDATE Led by strong returns for shares of Walt Disney and Home Depot, the Dow Jones Industrial Average is climbing Friday afternoon. Shares of Walt Disney (DIS) and Home Depot (HD) are contributing around a quarter of the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 48 points (0. Published:5/15/2020 1:20:14 PM
[Markets] Dow Jones Stumbles As Retail Sales Plunge; Stock Soars 130% On Coronavirus Drug The Dow Jones Industrial Average tumbled nearly 300 points early Friday before paring losses, amid grim economic data and U.S.-China trade concerns. Published:5/15/2020 11:19:07 AM
[Markets] Stocks Are Shrugging Off a Double Dose of Bad News The Dow staged a comeback despite a report that the U.S. is taking steps to block semiconductor shipments to Huawei, and news that retail sales fell even more than expected in April. Published:5/15/2020 10:19:15 AM
[Markets] Dow under pressure Friday amid worst retail sales report in more than 50 years; J.C. Penney's stock halted for news U.S. stock benchmarks opened lower on as investors parsed economic reports that further underscored the economic harm from the COVID-19 pandemic. The Dow Jones Industrial Average was trading 70 points, or 0.3%, lower at 23,555, the S&P 500 index declined 0.4% at 2,841, while the Nasdaq Composite Index retreated 0.5% at 8,897. Data on U.S. retail sales fell 16.4% in April as the economy remained all but shut down, exceeding the 12.5% drop expected, on average, by economists polled by MarketWatch. Excluding autos, sales still dropped 16.2%. Meanwhile, the New York Fed's Empire State business conditions index rose 29.7 points to -48.5 in May. Economists had expected a reading of -65, according to a survey by Econoday. A figure below 100 indicates a contraction in demand. In corporate news, J.C. Penney Co.'s shares were halted for news with many expecting that the beleaguered retailer may file for bankruptcy protection. Published:5/15/2020 9:18:57 AM
[Markets] Dow down triple digits Friday in wake of weakest retail-sales report in 50 years Dow down triple digits Friday in wake of weakest retail-sales report in 50 years Published:5/15/2020 8:52:52 AM
[Markets] Dow Jones Futures Fall On China Tensions After Coronavirus Stock Market Rally; JD.com, Chip Giant, Covid Test-Maker Are Earnings Movers Dow Jones futures fell on revived China tensions after Thursday's coronavirus stock market rally. Covid-19 test-maker Co-Diagnostics led earnings movers. Published:5/15/2020 6:47:50 AM
[Markets] How Bad Is It? How Bad Is It? Tyler Durden Fri, 05/15/2020 - 05:00

Authored by Jeff Deist via The Mises Institute,

How bad is it?

That is the question on everyone's mind as we come to grips with the economic carnage caused by global economic shutdowns, supply chain disruptions, and ongoing quarantines of million of people. Do we face another Great Depression, or simply a deep recession more like 2008? And equally important, are soft Americans prepared for either? Have we started to process all of this psychologically? Have we really come to terms with the enormity of the situation, with the unprecedented risk posed by business shutdowns? Are Americans so accustomed to a certain material standard of living that they do not understand how fragile it is?

Here is what we know. 

Since February, 30 to 40 million of Americans have been thrown out of work. Four or 5 million file new unemployment claims each week. The real unemployment rate is probably over 20 percent, while the labor force participation rate drops like a stone. In states like Hawaii unemployment may approach 35 percent. Deutsche Bank economists predict an absolutely staggering 40 percent reduction in US GDP for the second quarter of 2020. Meanwhile, millions of American households and businesses simply stopped paying rent or mortgages on March 1, and bankruptcies spread across major American retailers like wildfire. Countless small local businesses, many left out of the running for the new SBA (Small Business Administration) loans recently created by Congress, simply will not reopen regardless of what happens over the next few months.    

So although we have a sense of how deep the economic damage runs, we can only guess how long it may last.

Will the virus remain a threat, real or perceived, for months or years? And if so, how long will state governments maintain at least partial business lockdowns? Will the US economy enjoy a vaunted V-shaped bounce-back recovery, as promised by Trump administration cheerleader Larry Kudlow? Will it look more like a U, with months or years of stagnation at the bottom? Or worse still, like an L with no rebound in sight? 

Looking back at the 2008 crisis provides a sober argument against a quick recovery later this year.

Consider this analogy:

Most roller coasters feature what is known as a "lift hill," a chain-driven steep ascent at the beginning which takes nervous riders to the top of of a sharp drop-off. Going over this first hill not only creates the most thrilling moments, but also generates energy to propel the coaster cars farther along the path of the ride. How much farther and faster the ride goes depends on the height of the hill and the mass of the coaster train. Bigger and higher make for a more precipitous fall. 

Absent some kind of additional mechanical intervention, the coaster never again reaches the height of the initial hill due to simple friction. Congress and the Fed are busy attempting to overcome this friction using government stimulus and central bank "liquidity."  But per our analogy, the coaster's potential energy is highest during the pregnant pause at the peak of the lift hill; its kinetic energy is highest at the bottom of the first drop. No subsequent hill, twist, or turn quite matches the feeling of that first free fall. 

Recall, from those terrible days of 2008, how a crash gathers speed. At first a few cars on the coaster crest the hill, well before the rest of the train plummets. In mid-September of that year, Lehman Brothers was the first car in the coaster to go over the hill into the abyss. It took a few weeks, until September 29, for investors to fully grasp what was happening and send the Dow plummeting in the largest single-day loss in history.

But the Dow did not reach its ultimate low until March 2009. Nine million lost jobs were not recovered until well into the next decade. And US housing prices didn't bottom out until 2012. 

Crashes are fast, like that first hill on a coaster. Recoveries are not, for the simple reason that production is more difficult than destruction.

Although the Great Recession of 2008 "lasted" eighteen months in official terms, its effects lasted far longer and are still felt today. Its scars remain particularly visible on two bookend generations, Millennials and Baby Boomers. In stark terms, many of the former failed to launch and many of the latter found comfortable retirement out of their grasp. Millions of Millennials sought more education and degrees (with resulting debt) to ride out the soft job market; millions of older workers simply gave up and limped along until they were eligible for Social Security. Now both face another crisis just a decade later. 

How bad will the Great Crash of 2020 be? Even more unsettling is the question of whether it represents a self-inflicted wound, caused by state-mandated business shutdowns which increasingly appear wildly disproportionate to the actual threat posed by the COVID virus. Economist Daniel Lacalle and I will attempt to answer both during a live webinar later this week, particularly in the context of what governments and central banks have done in recent months. 

The first step in addressing a crisis is understanding how severe it really is.

Published:5/15/2020 4:18:58 AM
[Markets] European stocks open higher after strong Wall Street finish, Chinese data European stocks opened higher Friday, buoyed by a strong Wall Street finish as well as data showing rising Chinese industrial production. The Stoxx Europe 600 ] rose 1.1% and the U.K. FTSE 100 added 1.3%. Cruise operator Carnival surged 9% and easyJet climbed 5%. Futures on the Dow Jones Industrial Average edged up 86 points. Published:5/15/2020 2:47:44 AM
[Markets] Dow marks sharpest intraday comeback in 2 months, partly powered by a rally in battered banks The Dow staged the biggest turnaround in about two months on Thursday, as investors overlooked data that showed 2.9 million Americans lost jobs last week, bringing the total unemployed to about 36.5 million since COVID-19 pandemic began. Published:5/14/2020 3:46:56 PM
[Markets] American Express, UnitedHealth share gains lead Dow's nearly 300-point rally DOW UPDATE Shares of American Express and UnitedHealth are trading higher Thursday afternoon, leading the Dow Jones Industrial Average rally. Shares of American Express (AXP) and UnitedHealth (UNH) have contributed to the blue-chip gauge's intraday rally, as the Dow (DJIA) is trading 296 points, or 1. Published:5/14/2020 3:14:00 PM
[Markets] Banks, Bonds, Black Gold, Bitcoin, & Bullion Bounce Despite Jobspocalypse Banks, Bonds, Black Gold, Bitcoin, & Bullion Bounce Despite Jobspocalypse Tyler Durden Thu, 05/14/2020 - 16:01

Over 36 million newly jobless Americans in the last 8 weeks... and the Nasdaq is up over 30% in the same period...

Mixed bag in US stocks today (more below) with Dow best, Small Caps and Trannies lagged...

This is the 7th week of the last 8 with massive job losses and gains for The Dow...

  • 3/26 - 3.31mm jobless, S&P +6.24%, Dow +6.38%

  • 4/02 - 6.87mm jobless, S&P +2.28%, Dow +2.24%

  • 4/09 - 6.62mm jobless, S&P +1.45%, Dow +1.21%

  • 4/16 - 5.24mm jobless, S&P +0.58%, Dow +0.12%

  • 4/23 - 4.43mm jobless, S&P -0.04%, Dow +0.18%

  • 4/30 - 3.84mm jobless, S&P -0.92%, Dow -1.17%

  • 5/07 - 3.17mm jobless, S&P +1.15%, Dow +0.89%

  • 5/14 - 2.98mm jobless, S&P +1.15%, Dow +1.62%

Major sell program at the open today (almost historic)...

But, the NASDAQ Composite is red year to date (8972)...

Source: Bloomberg

Banks were panic bid today...

Source: Bloomberg

US equity markets rebounded almost perfectly off critical technical levels today...

Dow futures soared over 800 points off the lows

Some claimed the bounce was due to positive comments from Nelson Peltz on CNBC - who mention that he was optimistic that "a vaccine is going to come sooner than later," suggesting that the Pfizer CEO had said something positive (but Pfizer has not even started its trials and has only one vaccine in Phase 1). In fact Peltz poured cold water on the broad market, saying he had two new positions, was not buying the market:

"I'm not buying the market: I’m buying specific companies. In this case, two companies that I like very much."

Peltz comments hit around 1230ET and as the chart shows, there was no reaction at the time... but what what retail heard on their apparently delayed feeds: buy all the things!

After two ugly days, shorts were squeezed once again today (and banks and energy gains - worst performers YTD - suggest this was nothing but a squeeze bounce)...

Source: Bloomberg

The Dow and Small Caps bounced off their 50DMA...

The Fibs held...

At 1345ET The Fed's Kashkari said he had "more confidence in the signal from the bond market than the stock market..." Equity bulls better hope he is wrong...

Source: Bloomberg

It's pretty clear the market wants negative-rates no matter what Powell et al. say...

Source: Bloomberg

Bonds were bid today...

Source: Bloomberg

Bitcoin was bid today...

Source: Bloomberg

Gold Bullion was bid today...

Source: Bloomberg

Silver had even bigger day, back above $16...

Source: Bloomberg

Oil prices surged today, extending the week's gains...

WTI June topped $27,50

The Dollar dropped today...

Source: Bloomberg

As the peso soared after Mexico cut rates by 50bps (yes!?)...

Source: Bloomberg

Finally, American consumers ain't buying what American stocks are selling...

Source: Bloomberg

Published:5/14/2020 3:14:00 PM
[Markets] Dow snaps losing streak with 377-point gain as financial sector rallies Dow snaps losing streak with 377-point gain as financial sector rallies Published:5/14/2020 3:14:00 PM
[Markets] The Dow is staging a nearly 800-point U-turn that has the index in the midst of a sharp reversal from its opening tumble The Dow Jones Industrial Average Thursday midday was trading firmly higher, reversing a sharp drop that served as a gut-check to bullish investors amid the COVID-19 pandemic. The Dow was up 308 points, or 1.3%, at 23,562, following a skid that saw it lose as many as 458 points at its intraday nadir at 22,789.62. Gains were being driven by an advance in American Express Co. and UnitedHealth Group Inc., which were helping to lead the charge. The S&P 500 index was up 0.8% at 2,843, powered by a gain in the financials sector and a rally in the energy sector . The technology laden Nasdaq Composite Index was trading up 0.4% , or 37 points, at 8,900--well off its lows at 8,705.25. Published:5/14/2020 2:45:22 PM
[Markets] Dow, S&P 500 Bounce Hard Off Lows; Take Profits In Zynex, Co-Diagnostics? The Dow Jones Industrial Average is demonstrating resilience, erasing an early 2% loss, unfazed by news of another big surge in weekly jobless claims. Published:5/14/2020 1:46:56 PM
[Markets] The Dow is now up 200 points as stocks stage a major U-turn from early lows The Dow is now up 200 points as stocks stage a major U-turn from early lows Published:5/14/2020 12:47:43 PM
[Markets] Dow Jones, S&P 500 Bounce Hard Off Lows; Is It Time To Take Profits In Zynex? The Dow Jones Industrial Average is demonstrating resilience, erasing an early 2% loss, unfazed by news of another big surge in weekly jobless claims. Published:5/14/2020 12:47:42 PM
[Markets] The Dow is staging a 600-point U-turn that has the index in the midst of a sharp reversal from its opening tumble The Dow Jones Industrial Average Thursday midday was trading firmly higher, reversing a sharp drop that served as a gut-check to bullish investors amid the COVID-19 pandemic. The Dow was up 140 points, or 0.6%, at 23,392, following a skid that saw it lose as many as 458 points at its intraday nadir. Gains were being driven by an advance in American Express Co. and UnitedHealth Group Inc., which were helping to lead the charge. The S&P 500 index was up 0.3% at 2,828, powered by a 1.9% gain in the financials sector and a 1% rally in the energy sector . The technology laden Nasdaq Composite Index was off 0.2% but well off its lows at 8,705.25. Published:5/14/2020 12:13:45 PM
[Markets] After a sharp early decline, the Dow is now up slightly as stocks rebound After a sharp early decline, the Dow is now up slightly as stocks rebound Published:5/14/2020 11:43:53 AM
[Markets] Dow Jones News: Cisco Stock Surges; 3M Suffers Double-Digit Sales Decline The stock market was volatile on Thursday, declining early, recovering, then declining again. The Dow Jones Industrial Average (DJINDICES: ^DJI) was down around 0.3% at 11:30 a.m. EDT. Cisco Systems (NASDAQ: CSCO) was the Dow's top performer on Thursday, boosted by a quarterly report that wasn't as bad as expected. Published:5/14/2020 11:43:53 AM
[Markets] Dow's Move Higher Fizzles Amid Grim Employment Data Stocks declined Thursday after another 3 million Americans filed for unemployment benefits in the latest week and as tensions were rising between the United States and China. The Dow Jones Industrial Average fell 81 points, or 0.35%, to 23,166, the S&P 500 declined 0.63% and the Nasdaq dropped 0.97%. The Dow made a brief move into positive territory earlier as bank stocks led by JPMorgan Chase moved higher. Published:5/14/2020 11:13:26 AM
[Markets] 26 of 30 Dow components in the red; Nasdaq absorbs 150-point loss 26 of 30 Dow components in the red; Nasdaq absorbs 150-point loss Published:5/14/2020 9:13:52 AM
[Markets] Dow Jones Futures Signal Another Coronavirus Stock Market Rally Sick Day Amid Heavy Jobless Claims Dow Jones futures: After the coronavirus stock market rally retreated again Wednesday, Cisco earnings beat views and Mastercard the start of "normalization." Published:5/14/2020 7:56:16 AM
[Markets] Dow Jones Futures: Another Coronavirus Stock Market Rally Sick Day? Cisco Earnings Top, Mastercard Sees 'Normalization' Dow Jones futures: After the coronavirus stock market rally retreated again Wednesday, Cisco earnings beat views and Mastercard the start of "normalization." Published:5/14/2020 5:55:53 AM
[Markets] European stocks slide at the open European stocks slumped at the open Thursday, with the Stoxx Europe 600 falling 1%, after a rough Wall Street session following the grim outlook from Federal Reserve Chairman Jerome Powell. Geopolitical tensions were apparent as the U.S. accused China of trying to steal vaccine information while France objected to one of its drugmakers, Sanofi, saying it would give U.S. priority to a coronavirus vaccine. Futures on the Dow Jones Industrial Average fell 67 points. Published:5/14/2020 2:16:14 AM
[Markets] The Last Hour of the Day Hasn’t Been Good for U.S. Stocks Lately (Bloomberg) -- U.S. stocks have been dropping toward the end of their regular session in the past couple of weeks.“Yesterday, a late day S&P sell-off continued a trend over the last two weeks of weakness in the last hour of the day,” Susquehanna Financial Group LLP’s Chris Murphy wrote in a note Wednesday. The gauge was negative over the 3 p.m. to 4 p.m. time period in New York in eight of the 11 days through Tuesday, with a daily average performance of minus 0.34%, he said, compared with a 0.07% average gain from 9:30 a.m. to 3 p.m.Read more: Noise for Sale in Giant U.S. Auctions Used to End Stock SessionsThe Smart Money Flow Index, which measures the Dow Jones Industrial Average 30 minutes into a session versus the end of the day, has been decreasing in the past few weeks, Murphy said. A trading maxim is that the action early in a session features “dumb money,” which reacts emotionally to news, while “smart money” like institutions wait until the end of the day.With the growth of passive investments and other changes in dynamics that may be less true, but the decline in the SMF Index could be a sign “smart money” is selling.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:5/14/2020 1:48:42 AM
[Markets] Dow Jones Futures: After Coronavirus Stock Market Rally Sick Day, Cisco Earnings Top, Mastercard Sees 'Normalization' Dow Jones futures: After the coronavirus stock market rally retreated again Wednesday, Cisco earnings beat views and Mastercard the start of "normalization." Published:5/13/2020 7:38:45 PM
[Markets] Stock Market Wrap-Up: These 2 Stocks Hit New All-Time Record Highs Wednesday reminded investors about the potential downside of the stock market. Market participants got a dose of economic reality from the chair of the Federal Reserve, as Jerome Powell emphasized the need for further fiscal stimulus in order to prevent what could otherwise be a prolonged period of deep economic retrenchment. After having opened near the unchanged mark, the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) finished the dow with losses of as much as 2%. Published:5/13/2020 4:13:15 PM
[Markets] Stocks & Bond Yields Tumble On Beijing Blowback, A Fearful Fed, & Billionaire Alarm Bells Stocks & Bond Yields Tumble On Beijing Blowback, A Fearful Fed, & Billionaire Alarm Bells

For the second day in a row, it was not pretty in equity market land...

Small Caps are worst on the week, followed by Trannies with Nasdaq best but still down hard...

The mega-techs begin to catch down to the "median" stock...

Source: Bloomberg

Three main themes stood out that spoiled the promise of a v-shaped recovery!...

Billionaires are ringing alarm bells - Druck, Tepper, & Lasry - the market's way overvalued and hopes of (and pricing in) a v-shaped recovery are a fallacy.

Stocks are decoupled from reality...

Source: Bloomberg

Valuation is extreme to say the least (despite the plunge)...

Source: Bloomberg

Trump didn't like their view...

A Fearful Fed Chair - Powell warned of a prolonged recession but said no negative rates... we promise! No really, we really really mean it this time... but the economy is really in a bad way and unless we get more fiscal we are cornered... into maybe cutting rates negative..

The market refuses to give up hope for negative rates...

Source: Bloomberg

Which is concurrently crushing bank stocks..

Source: Bloomberg

Beijing blowback is building - China banned Aussie beef imports after questioning COVID source and now has indirectly threatened "punishment measures" after US pension fund pulls China investment and GOP pushes 'Sue China' bill over COVID reparations.

For now, it appears vol is striking US more than China... for now!

Source: Bloomberg

The 'Virus Fear'-Trade has been soaring despite the broad indices recent gains...

Source: Bloomberg

And the most directly affected sectors from the virus were a bloodbath today as hope for "normal" fade...

Source: Bloomberg

Of course the answer from the talking heads, asset-gatherers, and commission-takers...

FANG Stocks fell for the 2nd day in a row...

Source: Bloomberg

Riding The Fed's largesse on long-momo has suddenly failed - the last two days have been the biggest drop in long-momentum since mid-March...

Source: Bloomberg

And other cyclically-positive quant factors faded notably...

Source: Bloomberg

The Dow is back below its 50% crash retracement level...

Dow and Small Caps pushed down towards key technical levels...

VIX surged back above 35...

And the VIX term structure notably inverted...

Source: Bloomberg

It would seem that The Fed can't save HY bonds everyday (HYG tumbled today and LQD rolled over from a pop open)..

Source: Bloomberg

The yield curve was lower on the day with the long-end outperforming...

Source: Bloomberg

The yield curve notably flattened...

Source: Bloomberg

Another v-shaped recovery in the dollar today...

Source: Bloomberg

Cryptos limped higher once again today...

Source: Bloomberg

Gold jumped notably today as Powell spoke...

Gold in yuan rallied...

Source: Bloomberg

Oil prices were volatile once again with OPEC demand cuts and EIA inventory draws...

 

Finally, where's the beef?

Source: Bloomberg

Tyler Durden Wed, 05/13/2020 - 16:00
Published:5/13/2020 3:10:09 PM
[Markets] Dow ends with more than 500-point loss after Powell strikes cautious tone Dow ends with more than 500-point loss after Powell strikes cautious tone Published:5/13/2020 3:10:09 PM
[Markets] American Express, Exxon Mobil share losses contribute to Dow's 585-point drop DOW UPDATE The Dow Jones Industrial Average is slumping Wednesday afternoon with shares of American Express and Exxon Mobil seeing the biggest losses for the blue-chip average. Shares of American Express (AXP) and Exxon Mobil (XOM) have contributed to the blue-chip gauge's intraday decline, as the Dow (DJIA) was most recently trading 585 points lower (-2. Published:5/13/2020 2:39:19 PM
[Markets] The Dow is down nearly 700 points as stocks reach their lows of the day The Dow is down nearly 700 points as stocks reach their lows of the day Published:5/13/2020 2:39:19 PM
[Markets] American Express, Exxon Mobil share losses lead Dow's 450-point drop DOW UPDATE Dragged down by declines for shares of American Express and Exxon Mobil, the Dow Jones Industrial Average is in a selloff Wednesday afternoon. The Dow (DJIA) was most recently trading 459 points (1. Published:5/13/2020 1:24:02 PM
[Markets] Stocks Tumble As Tepper Says Market "Most Overvalued Since The Bubble Of 1999" Stocks Tumble As Tepper Says Market "Most Overvalued Since The Bubble Of 1999"

On a day when the market commentary of "big rich guy" investors has earned a public rebuke from the president himself, we suspect more than the usual number of viewers tuned in to hear David Tepper, the founder of hedge fund Appaloosa Management and owner of the Carolina Panthers, during a noontime interview on CNBC Wednesday.

Offering a wary market outlook, Tepper said that while he suspects the bottom might already be in, there are simply too many areas in this market that are way too overvalued, and the legendary trader predicted more chaotic trading ahead. And speaking specifically about the Nasdaq, which has been on a surprising tear as just a handful of tech stocks carry the entire market, Tepper said the overvaluations were some of the worst he's seen since 1999, the heyday of the dotcom bubble.

Tepper even acknowledged that many of the tech stocks which he still holds - stocks with arguably the best earnings prospects post-crisis - are "fully valued".

Stocks tumbled on Tepper's comments as traders ignored the president's advice to ignore rich Wall Street traders.


We imagine a Trump tweet is in the works.

 

 

 

 

 

 

Tyler Durden Wed, 05/13/2020 - 12:31
Published:5/13/2020 11:35:52 AM
[Markets] Raytheon Technologies Corp., Exxon Mobil share losses contribute to Dow's nearly 150-point drop DOW UPDATE The Dow Jones Industrial Average is falling Wednesday morning with shares of Raytheon Technologies Corp. and Exxon Mobil facing the biggest losses for the price-weighted average. The Dow (DJIA) was most recently trading 149 points lower (-0. Published:5/13/2020 10:06:38 AM
[Markets] Dow logs 200-point stumble as Fed chief says crisis has no modern precedent Dow logs 200-point stumble as Fed chief says crisis has no modern precedent Published:5/13/2020 9:36:11 AM
[Markets] Dow Jones Falls On Fed Chief Powell; Is The Coronavirus Stock Market Rally Disconnected From Economic Reality? The Dow Jones futures fell as Fed chief Jerome Powell gave a cautious outlook: Is the coronavirus stock market rally divorced from economic reality? Published:5/13/2020 9:06:42 AM
[Markets] Dow Jones Futures Fall On Fed Chief Powell; Is The Coronavirus Stock Market Rally Disconnected From Economic Reality? Dow Jones futures fell as Fed chief Jerome Powell gave a cautious outlook: Is the coronavirus stock market rally divorced from economic reality? Published:5/13/2020 8:36:14 AM
[Markets] U.S. stock futures rise coming off last week's rally After starting slowly, U.S. stock index futures were shooting higher late Sunday. As of 8:30 p.m. Eastern, Dow Jones Industrial Average futures were up 126 points, or 0.5%, while S&P 500 futures and Nasdaq-100 futures were also up around the same percentages. Stocks rose Friday, and for the week the Dow advanced 2.6%, the S&P 500 ended 3.5% higher while the Nasdaq advanced 6%, as expectations for an economic bounce-back as businesses gradually reopen outweighed new data showing more than 20 million Americans lost their jobs in April amid coronavirus-related shutdowns. Published:5/10/2020 7:50:06 PM
[Markets] Stock Market Wrap-Up: Friday's Big Stock Winner Looks Like a No-Brainer Right Now The stock market has been extremely optimistic lately, even in the face of heightened uncertainty related to the global COVID-19 outbreak. The Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were all higher by about 1% to 2% on Friday. PRA Group (NASDAQ: PRAA) specializes in debt collection, and it stands to see rising demand as business clients struggle to get the customers who owe them money to pay them back. Published:5/8/2020 5:02:40 PM
[Markets] Dow Jones Runs 455 Points Higher As Stock Market Shrugs Off Dismal Jobs Report The Dow Jones industrials rallied late to close near session highs Friday, as investors focused on positive news instead of dreary jobs data. Published:5/8/2020 3:40:25 PM
[Markets] Dow's up over 400 points as stocks extend gains in final hour of trade Dow's up over 400 points as stocks extend gains in final hour of trade Published:5/8/2020 3:04:30 PM
[Markets] Dow Jones Vaults 6,025 Points From March 23 Bottom; This Hot Stock Triggers 8-Week Hold Rule The Dow Jones Industrial Average has now lifted more than 6,000 points from its March low. AudioCodes has triggered a special holding rule. Published:5/8/2020 1:01:43 PM
[Markets] Stocks Soar In Response To Record Rise In Unemployment Stocks Soar In Response To Record Rise In Unemployment

Nothing says BTFD like the worst jobs data in US history...

Dow futures spiked over 150 points on the terrible data...

Are we seriously f**king rallying because "only" 20.5mm people lost their jobs (less than the 22mm expectation)?

WTF!

Tyler Durden Fri, 05/08/2020 - 08:54
Published:5/8/2020 8:00:41 AM
[Markets] Dow Jones Futures Signal Strong Gains For Post-Coronavirus Market Rally Ahead Of Jobs Report; Will Tesla Plant Reopen Today? Dow Jones futures signal more gains in the post coronavirus stock market rally. Several stocks moved on earnings just after breaking out. Will Tesla Fremont open? Published:5/8/2020 5:29:34 AM
[Markets] U.S. Stock Futures Gain as Negotiators Vow Effort on Trade Deal (Bloomberg) -- U.S. stock index futures rose as positive developments around a U.S.-China trade deal added to optimism spurred by news on major economies moving toward reopening.Contracts on the S&P 500 rose as much as 1.5% before trading 0.9% higher as of 9:08 a.m. in London. Futures on the Nasdaq 100 Index and Dow Jones Industrial Average were also up 0.9%. China’s Vice Premier Liu He talked with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone on Friday Beijing time, according to the Xinhua News Agency. The two sides pledged to cooperate on the economy and public health, the report said.“Given the recent rising tensions between the U.S. and China surrounding Covid-19, investors are likely comforted to see that both sides are still working toward implementing the phase-one deal,” said Takeo Kamai, head of execution services at CLSA Securities Japan. “Disruption in the trade front would’ve added another level of anxiety and put us right back to the central issue for the markets in 2019.”The gains in equity futures added to bullish sentiment that drove shares higher on Wall Street on Thursday. The underlying S&P 500 rallied 1.2% with speculation mounting that the worst of the economic damage from the virus has passed as more of the country reopens.The focus later Friday will be on the U.S. jobs report, which is forecast to show employers slashed about 22 million jobs in April, nearly erasing a decade of job gains in a single month.On Thursday, data showed filings for unemployment remained at historically high levels, but fell from the prior week. The tech-heavy Nasdaq Composite turned positive for the year, wiping out losses that reached as much as 24% at the depths of the pandemic-fueled sell-off.(Updates prices throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:5/8/2020 3:28:24 AM
[Markets] Dow futures rise 270 points Thursday evening as stock-market bulls brace for final test of week from Friday jobs report U.S. stock-index futures climbed higher Thursday evening in light trading as investors readied for another test of the bullish momentum that has produced gains in two of the past three sessions for the S&P 500 and the Dow, powered by rallies in energy and technology-related firms. However, the market will have to overcome Friday's jobs report, which will underscore the depth of the impact of the COVID-19 pandemic on the American economy. Thus far, the market has blown past Thursday's weekly jobless claims report, which showed that 3.2 million jobs were lost in April, bringing the total seeking jobless benefits in the U.S. over the past six weeks to 33 million, or approximately one out of every five eligible workers. Friday's nonfarm-payrolls report is expected to show that unemployment hit double-digits, with levels likely to exceed those of the 2008-09 financial crisis. Futures for the Dow Jones Industrial Average were up 273 points, or 1.2% at 24,116, those for the S&P 500 index gained 1.1% at 2,896.75, while Nasdaq-100 futures picked up 1.1% at 9,156. During Thursday's regular session, the Dow ended 211.25 points, or 0.9%, higher, at 23,875.89, off its intraday high at 24,094.62, while the S&P 500 added 32.77 points, or 1.2%, to close at 2,881.19, led by a 2.5% rally in the energy sector [s:XX: SP500.10] and a 2.2% climb in financials [s:XX: SP500.40]. The Nasdaq Composite Index wrapped up at 8,979.66, up 125.27 points, or 1.4%, notching a 0.08% year-to-date advance, erasing its losses for 2020. In corporate news, Dropbox Inc. notched its first quarterly profit since its debut as a publicly traded company in 2018, and Uber Technologies reported first-quarter results that revealed weakness in its ride-hailing business but a surge in its food-delivery segment. Published:5/7/2020 10:02:34 PM
[Markets] Boeing, Walt Disney share gains contribute to Dow's nearly 250-point rally DOW UPDATE Led by positive momentum for shares of Boeing and Walt Disney, the Dow Jones Industrial Average is rallying Thursday afternoon. Shares of Boeing (BA) and Walt Disney (DIS) are contributing about a quarter of the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 243 points higher (1. Published:5/7/2020 2:26:06 PM
[Markets] Boeing, Dow Inc. share gains contribute to Dow's 310-point rally DOW UPDATE Shares of Boeing and Dow Inc. are trading higher Thursday afternoon, propelling the Dow Jones Industrial Average rally. Shares of Boeing (BA) and Dow Inc. (DOW) have contributed about 25% of the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 310 points higher (1. Published:5/7/2020 1:27:29 PM
[Markets] 3 Reasons the Dow Is Climbing After 3 Million Americans Lost Their Jobs More than three million Americans filed for jobless insurance for the week ended May 3, and yet the Dow Jones Industrial Average had gained more than 300 points. Published:5/7/2020 11:28:03 AM
[Markets] Dow Jones Jumps 400 Points, As Jobless Surge Continues; Coronavirus Vaccine Gets Phase 2 FDA Approval The Dow Jones Industrial Average jumped 400 points midday Thursday amid climbing jobless claims, as the coronavirus stock market rally continues. Dow Jones stocks Apple and Microsoft are above new buy points, while biotech Moderna surged as much as 14% on coronavirus vaccine news. Published:5/7/2020 10:54:18 AM
[Markets] Dow Jones Jumps 350 Points, As Jobless Surge Continues; Coronavirus Vaccine Gets Phase 2 FDA Approval The Dow Jones Industrial Average jumped 350 points early Thursday amid climbing jobless claims, as the coronavirus stock market rally continues. Dow Jones stocks Apple and Microsoft are above new buy points, while biotech Moderna surged 10% on coronavirus vaccine news. Published:5/7/2020 9:26:00 AM
[Markets] Dow futures climb slightly Wednesday evening ahead of jobless claims and parade of Fed speakers U.S. stock-index futures were trading slightly higher Wednesday evening, but have been choppy, as investors prepare for a report on weekly jobless claims and a host of speakers on the Federal Reserve that might offer more insights about the state of a rapidly deteriorating economy due to national procedures in place to avert a deeper crisis from the COVID-19 pandemic. Futures for the Dow Jones Industrial Average were trading up 52 points, or 0.2%, at 23,569, at last check Wednesday at 8:15 p.m. Eastern Time. Those for the S&P 500 index were trading 0.3% higher at 2,841.25, while Nasdaq-100 futures were gaining 0.4% at 8,987.75. During Wednesday's regular session, the Dow fell 218.45 points, or 0.9%, to finish at 23,664.64. The S&P 500 shed 20.02 points, or 0.7%, to end at 2,848.42, with declines for those benchmarks coming in the last hour of trade. The Nasdaq Composite , meanwhile, climbed 45.27 points, or 0.5%, to close at 8,854.39, only 1.3% off for the year to date, as investors continue to buy technology-related betting that they will fare the best in the aftermath of the deadly epidemic. Markets have struggled during the homestretch of regular trade on Wall Street lately as investors fight to identify a catalyst to drive stocks to further gains against a backdrop of history-setting economic pain playing out and that which also lies ahead. Thursday's report on those seeking unemployment benefits is likely to show that another 3 million Americans are out of work, adding to the already 30 million figure that has been racked up over the past two months. In corporate news, shares of Peloton are likely to surge in Thursday regular trade after the exercise-equipment maker reported that quarterly sales hit $524.6 million, up 66% from the year before, thanks to a surge in sales for folks under stay-at-home policies. However, shares of Grubhub Inc. fell more than 4% in the extended session Wednesday after the company missed earnings expectations and did not issue revenue guidance amid the COVID-19 pandemic. And Costco Wholesale Corp. said late Wednesday that its April sales fell 1.8% as skyrocketing e-commerce sales didn't make up for a drop in foot traffic at its stores. In Fed speakers, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker. Published:5/6/2020 7:50:31 PM
[Markets] Dow ends down over 200 points as stocks lose steam into close Dow ends down over 200 points as stocks lose steam into close Published:5/6/2020 3:18:44 PM
[Markets] Dow drops nearly 150 points on losses for shares of Dow Inc., Travelers DOW UPDATE Shares of Dow Inc. and Travelers are seeing declines Wednesday afternoon, sending the Dow Jones Industrial Average into negative territory. Shares of Dow Inc. (DOW) and Travelers (TRV) have contributed to the blue-chip gauge's intraday decline, as the Dow (DJIA) was most recently trading 143 points (0. Published:5/6/2020 2:49:11 PM
[Markets] Dow's down more than 100 points in final half-hour of session Dow's down more than 100 points in final half-hour of session Published:5/6/2020 2:49:11 PM
[Markets] Dow Jones Lower As Payroll Drop Weighs; Are Apple, Microsoft Still In Buy Zone? The Dow Jones industrials reversed lower after giving up early gains as a biggest-ever drop in payrolls overshadowed a gradual reopening of some states. Published:5/6/2020 2:18:19 PM
[Markets] The Dow Is Going Nowhere. So Why Is the Nasdaq Flying? It’s a tale of two markets, as the Dow Jones Industrial Average and S&P 500go nowhere, while the Nasdaq Composite just keeps on rising. The Dow has dipped 10.10 points, while the S&P 500 has ticked up 0.1%. The Nasdaq Composite, however, has gained 1.2%. Published:5/6/2020 1:18:38 PM
[Markets] Dow Eyes 24,000, MercadoLibre Leads Gainers; Why Beyond Meat Hit An Early Buy Point The Dow Jones Industrial Average has been holding to most of its big gains since the March bottom. Are Beyond Meat and MercadoLibre a buy? Published:5/6/2020 12:48:20 PM
[Markets] Dow Jones Fades Early Gain, But Microsoft, Apple Strong; Biotech Leader Breaks Out On Earnings The Dow Jones Industrial Average lagged Wednesday, but Walt Disney, Intel, Apple and Microsoft outperformed in the blue-chip index. Published:5/6/2020 11:57:08 AM
[Markets] Dow's 75-point jump highlighted by gains for shares of Intel, Apple Inc. DOW UPDATE Buoyed by strong returns for shares of Intel and Apple Inc., the Dow Jones Industrial Average is up Wednesday morning. Shares of Intel (INTC) and Apple Inc. (AAPL) have contributed to the blue-chip gauge's intraday rally, as the Dow (DJIA) is trading 74 points higher (0. Published:5/6/2020 8:53:14 AM
[Markets] Dow futures fall nearly 300 points as states attempt to reopen Dow futures fall nearly 300 points as states attempt to reopen Published:5/3/2020 5:59:25 PM
[Markets] Investing Legend Sees A Second Great Depression For Stocks By 2023 Investing Legend Sees A Second Great Depression For Stocks By 2023

The name of Kiril Sokoloff, author of the weekly WILTW (What I Learned This Week) newsletter through his advisory firm 13D Global Strategy & Research, needs no introduction on this website for the simple reason that over the past few years we have often published his highly insightful excerpts (most recently one month ago with "A Corporate-Debt Reckoning Is Coming").

Which is why the latest "Lunch with the FT" feature by the FT's Rana Foroohar may be of interest to readers curious about Sokoloff's background and how over the past four decades he became one of the most closely sought after independent thinkers and strategists on Wall Street (he works out of St. Thomas in the US Virgin Islands, unaffiliated with any bank), and why his clients - which include Mukesh Ambani, Sam Zell and Raymond Kwok - are quite happy to pay thousands of dollars for a subscription.

We find 13D fascinating, and one of the world's best newsletters for many reasons by the main one is that Sokoloff's overarching philosophy - fiscally conservative, rational, measured - is congruent with ours: as the FT notes, Sokoloff "has been trying to make the financial elite see the dangers of seeking to solve the problems of debt with more debt",  something we too have been doing since 2009 but obviously to absolutely no success.

As the FT continues, "the topic is timelier than ever, given that central-bank balance sheets — already huge before Covid-19 — are headed into the stratosphere, as policymakers struggle to cope with the crisis, not to mention the popping of a debt bubble that grew for years before it."

Sokoloff is, of course, referring to this.

In any event, we'll let readers catch up on the FT's profile of the WILTW author at their leisure, but we did want to highlight one particular aspect of his interview: namely what he believes may be in store.

As Foroohar writes, in preparation for her interview "I’ve been... reading Depression-era journalist Garet Garrett’s 1932 book A Bubble That Broke the World, recommended to me by Sokoloff as a primer for our age, since it covers how central-bank actions contributed to the debt-driven run-up to the stock market crash of 1929 and the Great Depression."

More apropos, Sokoloff also sent the author a chart which compares the Dow Jones between 1918 and 1932 to the current period, a chart which we have also shown repeatedly on this website in recent weeks, months and years. Why that particular chart? Because as the FT explains, it shows that "the rise and the fall are frighteningly similar to the period from 2009 onwards."

If history is a guide, stocks have further to go before they hit bottom. That’s Sokoloff’s view, anyway. Then as now, he says, “central bankers were pushing on a string”, trying in vain to whip up a real economic recovery with monetary policy.

And here is what Sokoloff believes will what happens when, again, "central banks push on a string":

How does Sokoloff - who has traditionally been upbeat, optimistic and generally bullish - justify his outlook so apocalyptic it could be taken from a post on that tinfoil conspiracy theory website Zero Hedge? Here's how:

"The more debt you add [via monetary and even some fiscal policy], the more unproductive the debt becomes,” says Sokoloff, who is now positioned at the dining table in front of his screen. It’s not a popular view these days. Austerity is out, and MMT — the notion that a country that controls its own currency can print it freely to fund deficit spending without worry — is in. (MMT stands for “modern monetary theory” or magic money tree”, depending on your viewpoint.) But Sokoloff believes the stimulus programmes being launched in the US, Europe and many other parts of the world will very likely end in tears.

“I think we’re at the beginning of a long-term period of deflation, falling prices and the loss of pricing power. The only way out of it will be to have a long period of austerity, and to get the US savings rate up dramatically.” He points as an example to the US in the period during the second world war, when federal budget deficits were high, well over 20 per cent of GDP in some years (compared to what may be some 20 per cent-plus by the end of this year) but the personal savings rates of Americans were positively Chinese — as high as 25 per cent including income gains from the war and net exports, as opposed to 8 per cent or so before the Covid-19 crisis — boosted by wartime rationing.

One-upping Sokoloff, we have created a better chart that more clearly lays out what happens if one tacks on the Great Depression outcome to the current Dow Jones. In short, we should see the Dow dropping to the Great Depression-equivalent low of roughly 10,000.

There is good news: after its plunged to all time lows, the Dow traded in a tight range for several years before eventually blasting off to unprecedented highs. What triggered it? Why World War II of course.

Which is why any true comparisons to the Great Depression era should also consider the cataclysmic event that ended it, and look forward to a similar outcome over the next few years. 

Tyler Durden Sun, 05/03/2020 - 15:15
Published:5/3/2020 2:30:27 PM
[Markets] Mark Hulbert: ‘Sell in May and go away’ is a warning to stock investors now more than ever Dow’s weakness since last Halloween is a bad omen for the next six months, writes Mark Hulbert.
Published:5/2/2020 1:24:05 PM
[Markets] "Sell In May" Might Be A Good Risk Strategy This Year "Sell In May" Might Be A Good Risk Strategy This Year

Authored by Lance Roberts via RealInvestmentAdvice.com,

Biggest Rally Since 1974

Could “Sell In May” be a good risk strategy this year? Maybe, considering we asked a simple question last week: “Is the bear market rally over?” 

“That’s the question we have been discussing over the last few weeks. So far, most of it has played out much as expected by turning previous ‘selling panic’ into a ‘buying rush,’ and convincing a vast majority of investors the ‘bull market is back.'” 

Just as we have seen in previous “bear market” bounces, the gains for April were quite stunning with stocks putting in the best one-month advance since 1974.

These exceedingly large bounces usually occur during bear markets. Unfortunately, in many cases, the majority of those big one-month advances are followed by negative returns.

Timing, as they say, is everything.

Sell In May

My colleague, Jeffrey Hirsch from Stocktraders Almanac, recently penned:

“Despite the sell-off on the last day of April, the Best Six Months has ended on a positive note, registering the best month in decades and the best April since the Great Depression.”

Currently, the primary signal has not crossed into negative territory yet but seems to be heading in that direction. It won’t take but a couple of more days of falling, or stagnating markets, to trigger that signal.

While not every “summer period” is negative, the long-term history of investing during the summer months is not stellar.

However, the adage “Sell in May” may be more appropriate this year given the state of the actual economy, earnings risk, and a potential revaluation of markets, the odds of a weak summer period has risen markedly. (This is particularly the case as we head into the Presidential election and trade tensions with China are heating up.)

Managing The Risk

Jeff continues:

“The massive rally has surely been impressive and a welcome change from the carnage we experienced in February and March. April 2020 has been the best month since January 1987 for DJIA and S&P 500, and the best April since 1938.

But April’s huge move was not enough to put the Best Six Months (November-April) in the black, and that concerns us. The DJIA was down 10.0% for this Best Six Months period, which ended today, and the S&P 500 lost 4.1%.

When the market is down during the “Best Six Months,” it’s an indication that there are more powerful forces than seasonality at work, and when the bullish season is over, those forces may really have their say.”

Following the first back-to-back down Best Six Months since 1973-1974, the market hit a secular bear market low in March 2009. The market made a similar secular bear market bottom in August 1982, which began in 1966. Of course, that bottom came after the infamous 1980s double-dip recession.

Our concern here is that this time around, we’ve only just begun.”

The Risk Starts In May

We can’t disagree with that statement. While there are many hoping that the worst of the economic data is now behind us, I highly suspect it isn’t. As noted in this week’s #MacroView:

“The negative 4.8% decline in GDP in the first quarter was stunning. Importantly, that reading only encapsulated the impact of the economic “shutdown” in that last two weeks of the quarter. Such suggests, considering the entire month of April (1/3rd of the quarter) was a wash, the numbers will worse next quarter.”

There is a negative feedback loop between employment and consumption. As unemployment rises, consumption falls due to a lack of income. Since businesses operate based on demand for goods and services, the correlation between PCE, fixed investment, and employment is high.”

“Despite the reopening of the economy, businesses will not immediately return to full operational activity, until consumption returns to more normal levels. Such a recovery is likely going to frustrate policy-makers and the Fed.”

It isn’t just the economic data that is going to be horrid over the next few months, but earnings will likely be just as bad.

Earnings can not live in isolation from the economy.

So goes earnings, so goes the market.

“Sell In May” Starts With Overbought Risk

In the short-term, the markets remain incredibly overbought and extended after the run from the lows.

Previously, I discussed that markets had gone from extremely oversold, to extremely overbought during April. This sharp advance pushed the S&P 500 back to its 61.8% retracement level, where it failed on Friday.

While the sell-off on Friday did trigger an initial sell-signal, a further decline on Monday will trigger the primary sell-signal in the lower panel. Such would coincide with a break below 2800, and signal the start of a deeper corrective process.

There is currently a lot of “bullishness” built up in the markets, so investors will likely buy dips for now. However, it won’t take long for investors to remember March and head for the exits much sooner this time. So, be careful.

Reversions happen fast.

A Risky Game Of Hope

As we discussed with our RIAPro Subscribers (30-day Risk-Free Trial) last week, our colleague Jeffrey Marcus made some salient comments about investor’s “risky game of hope.”

“The table shows EPS growth for U.S. companies that have so far reported the 1st quarter. 20% of U.S. companies have reported so far.”

“There is only one-month of Covid-19 effect in the 1st quarter. Earnings growth from all 993 companies is -12%, but the price reaction to bad EPS has been stellar. The one-day price reaction to EPS on the day of release is in the lower right quadrant of the table.

As TPA has discussed in previous World Snapshots, the positive price action to negative news is a good sign. The problem is that EPS growth is down 12% with only one-month of the Covid-19 effect. Importantly, this is only 20% of stocks having weighed in; one has to wonder why?

The answer has to be that investors have an awful lot of hope in the power of the FED to keep the tire with a large hole inflated and as the man who taught me how to trade told me, ‘Hope is a bad investment strategy.’”

“Sell In May” Risk Outweighs Reward

What this all suggests is that “risk” still outweighs the potential “reward” of being aggressively invested in the markets.

With Friday’s sell-off, the risk/reward ranges remain unfavorable for the “Sell In May” period.

  • -3.0% to 50-dma vs. 4% to the 61.8% retracement.  Risk/reward equally balanced.

  • -5.4% to the 38.2% retracement vs. 6% to the 200-dma. Risk/reward equally balanced.

  • -13.4% to the April 1st lows vs. 4-6% higher. Risk/reward out of favor.

  • -21.0% to the March 23rd low: Risk/reward extremely out of favor.

The risk of a downside retracement as we head into summer months outweighs the upside currently. Importantly, this does NOT mean the markets can’t rally to all-time highs. It is possible, just not probable, and as investors, we must weigh our outcomes.

While we are discussing “Selling in May,” such doesn’t mean we are sitting in cash. We continue to remain long our reduced equity exposure and have been buying undervalued opportunities over the last few weeks. However, we are also balancing that equity exposure with offsetting hedges and a larger than average level of cash. We also continue to increase our duration in our bond portfolios as we expect interest rates will head toward ZERO this summer.

As my friend Victor Adair reminded me this week:

“Investors tend to buy the most at the top and the least at the bottom.” – Bob Farrell.

While it’s no guarantee, “Sell In May” just might be a good “risk strategy” to employ this year in particular.

Tyler Durden Sat, 05/02/2020 - 13:50
Published:5/2/2020 12:52:02 PM
[Markets] ‘Don’t be fooled!’ A 40% drop could hit by next year after this bear-market rally fades, veteran economist warns ‘Don’t be fooled by the recent rebound in stocks; the investment scene is beginning to resemble the 1929 market crash and the early 1930s Great Depression.’ To me, it's like 1929 when stocks first fell, then rallied before plunging anew as the Great Depression set in. In his Bloomberg piece, Shilling pointed to the 48% plunge in the Dow Jones Industrial Average from Sept. 3 to Nov. 13 back in 1929, a pullback which may have “seemed like a reasonable correction” at the time, since the blue chips had rallied 500% in the eight years leading up to it. Published:5/2/2020 10:55:19 AM
[Markets] ‘Bond King’ warns the stock market could hit new lows amid ‘social unease’ “People don’t understand the magnitude of ... the social unease ... that’s going to happen,” Gundlach explained. At last check, the S&P 500 index (SPX) ended nearly 42 points, or 1.5%, higher on Monday, while the Dow Jones Industrial Average (DJIA) and the tech-heavy Nasdaq Composite (COMP) also finished the session firmly in green territory. Published:5/2/2020 9:16:16 AM
[Markets] Buffett's Berkshire spent the coronavirus-induced stock-market rout growing cash to a record $137 billion Warren Buffett's Berkshire Hathaway spent the first quarter, a period of historic turmoil fueled by COVID-19, stockpiling cash to record proportions, public filings show. Berkshire Hathaway Inc. apparently saw its holdings of cash and equivalents balloon to a record $137.2 billion at the end of the first quarter, up from about $128 billion at year-end, suggesting that the legendary investor, viewed as a white knight of sorts on Wall Street, has stayed on the sidelines amid one of the most turbulent periods in financial markets in decades. The Dow Jones Industrial Average , the S&P 500 index and the Nasdaq Composite all tumbled into a bear-market in March, typically defined as a drop of at least 20% from a recent high, hit the lows of that rout on March 23. Since that point, however, stocks have climbed by more than 20% as the market attempted to recover from the effects of the worst pandemic in more than a 100 years--one that caused economies to fall into a recessionary state as businesses across the globe were forced to shut down to slow the spread of the deadly pathogen. Berkshire also has been hit by the epidemic that has infected more than 3.3 million people and claimed about 240,000 lives globally since the illness was first identified in December in Wuhan, China. The conglomerate reported a huge first quarter loss of $49.7 billion, or $30,653 per class A share. However, Berkshire's first-quarter operating earnings were $5.9 billion or about $3,619 per class A share. Buffett is scheduled to host a annual shareholder meeting later today at 4:45 p.m. Eastern Time, where he may offer more clues on his strategy during this public-health crisis. Published:5/2/2020 8:20:20 AM
[Markets] Here are Friday’s biggest stock-market losers, driven lower by disappointing earnings and a shrinking manufacturing sector DEEP DIVE U.S. stocks posted broad declines to start the new month, as disappointing earnings reports and a set of economic numbers soured investors’ mood. • The Dow Jones Industrial Average (DJIA) sank 622 points, or 2. Published:5/2/2020 6:50:13 AM
[Markets] Dow ends down over 600 points as coronavirus, trade-war fears linger Dow ends down over 600 points as coronavirus, trade-war fears linger Published:5/1/2020 3:16:52 PM
[Markets] The 600 point fall in the Dow has wiped out the index's hard-fought weekly gain The 600 point fall in the Dow has wiped out the index's hard-fought weekly gain Published:5/1/2020 12:46:05 PM
[Markets] Dow Jones Dives 600 Points As Stock Market Sells Off On Trump's New Threat The Dow Jones industrials plunged more than 600 points after President Trump threatened to slap tariffs on China over the coronavirus pandemic. Published:5/1/2020 12:46:05 PM
[Markets] "They're All High On Fed Fairy Dust..." "They're All High On Fed Fairy Dust..."

Authored by Michael Maharrey via SchiffGold.com,

Everybody realizes the US economy is in a bad spot. But most people still seem to believe it will bounce right back once we deal with the coronavirus.

They’re all high on Federal Reserve fairy dust.

US GDP contracted by 4.8% in the first quarter. It was the first negative GDP reading since a 1.1% decline in the first quarter of 2014 and it was the lowest level since the 8.4% plunge in Q4 of 2008.

And the worst is yet to come.

The Q1 GDP number only captures the first couple of weeks of coronavirus-inspired government lockdowns of the economy. In fact, in January Donald Trump and others were telling us that it was the best economy in the history of the world. That was also in the first quarter.

The first-quarter GDP print came in even worse than expected. Economists were projecting a contraction of 3.5 to 4%. The precipitous and rapid plunge in economic activity not only reflects the impacts of turning off the economy in the midst of coronavirus; it also reveals just how fragile the economy was before the pandemic.

Back in January, President Trump called it the greatest economy in history. Trump continued to talk up the economy during the State of the Union address, taking credit for the “strong” economic growth. At the time, Peter Schiff said nobody should be taking credit for the condition of the US economy. In fact, economic growth wasn’t much different than it was when Obama was president.

"The only difference is we had to borrow even more money to achieve the same level of fake GDP growth that we did under Obama. The reality is nobody should be taking credit for the current US economy. The question is who deserves the blame?”

Despite the hyperbolic cheerleading, the economy was riddled with debt and was already being propped up by extraordinary Federal Reserve monetary policy. We had three rate cuts in 2019. The Fed was running repo operations to stabilizing the financial markets and the central bank had already launched quantitative easing before COVID-19, even though Jerome Powell and Company refused to call it that.

The US economy was a big, fat, ugly bubble and coronavirus was the pin that popped it.

And judging by the Q1 GDP number, the air is coming out even faster than most analysts expected. In fact, recent economic data reveals a veritable house of horrors.

And yet on the same day we get this awful GDP print, stock markets rallied. The Dow Jones was up 532 points. The S&P 500 enjoyed a 2,66% gain.

That’s because the mainstream has been led into an economic fantasyland by a trail of Federal Reserve fairy dust.

According to media reports, the primary impetus behind the stock market gains was a promising new coronavirus drug. The vas majority of people out there still seem to believe that once we “solve” coronavirus, the economy will open right back up and everything will be fine. They still believe things will just snap back to normal. As I have said multiple times, things aren’t going back to normal. They weren’t normal to begin with. As Schiff put it, the best we can hope for is recovering from a depression to a recession.

The Federal Reserve was propping up the economy in January and it continues to prop up the economy today. The only difference is it’s had to add a lot more props over the last several weeks.

Trillions of them in fact.

The Federal Reserve has pumped trillions of dollars of new money into the economy. Its balance sheet has swelled to nearly $6.6trillion. And during its meeting yesterday, Fed Chair Jerome Powell promised to press on with as much as necessary.

At least give Powell credit for at least realizing things are really bad right now.

We’re going to see economic data for the second quarter that’s worse than any data we’ve ever seen.”

And yet he remains clueless about how the very policies he is pushing have brought us to this place to begin with. Like most everybody else, he still thinks it’s all about the virus and that if we can just pump in enough stimulus, the central bank can see us through.

In its statement, the Fed promised it would continue to throw the kitchen sink at the US economy with no holds barred.

The Federal Reserve is committed to using its full range of tools to support the US economy in this challenging time.”

It also committed to leaving interest rates at zero percent as long as it takes.

The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

During the post-FOMC meeting press conference, Powell refused to speculate on just how long rates might have to stay at zero. But if the great recession gives us any indication, forever might not be a bad guess. It seems incomprehensible that the Fed could ever raise rates given the levels of debt in the economy. Remember, the central bank was already cutting rates before coronavirus.

Of course, inflating the money supply by trillions of dollars has consequences of its own. Nobody seems concerned about that either. In fact, one reporter asked Powell how he would prevent a deflationary spiral even as the Fed chair directs the most inflationary monetary policy in history. In a tweet, Schiff said the question is will the Fed be able to admit its mistakes and reverse policy in time to prevent hyperinflation?

Powell also said the US government shouldn’t worry about the national debt. In fact, he encouraged more borrowing and spending to stimulate the economy.  Schiff hit the nail on the head again, tweeting, “The problem is Powell never worried about the debt.”

By-and-large, almost everybody is wandering around in this economic fantasyland high on Fed fairy dust. They’re convinced that this is a tiny economic speed bump. They don’t realize they’ve actually driven off a cliff. But at some point, the high will wear off. People will realize that the economy isn’t going to snap back to normal when Donald Trump snaps his fingers. And they’ll start to realize the fairy dust is what’s killing them.

Tyler Durden Fri, 05/01/2020 - 12:10
Published:5/1/2020 11:15:13 AM
[Markets] Dow falls 500 points near session lows Friday amid signs of China-U.S. tension and hazy outlooks from Amazon and Apple U.S. stock benchmarks on Friday were trading sharply lower to start the first day of trading in May as uncertainty from the outlooks from Amazon.com Inc. and Apple Inc. eroded some of the optimism that helped the Dow and S&P ring up their best April gains in 82 years. The Dow Jones Industrial Average was off 490 points, or 2%, at 23,859; the S&P 500 index fell 68 points, or 2.3%, at 2,845, while the technology-laden Nasdaq Composite Index declined 2.6% at 8,659. Late Thursday, Amazon said coronavirus-related costs such as employee testing and higher wages added to expenses and would likely in the future. Meanwhile, Apple declined to provide guidance for the current quarter. Adding to the bearish tone, President Trump indicated he may consider imposing tariffs on China, for their role in handling the novel coronavirus outbreak, which was first identified in Wuhan, China. Separately, shares of Tesla were under pressure after the CEO of the electric-vehicle maker, Elon Musk, tweeted that the company's share price was too high. Published:5/1/2020 10:44:49 AM
[Markets] Boeing is lone Dow component in the black as index falls 450 points early Friday Boeing is lone Dow component in the black as index falls 450 points early Friday Published:5/1/2020 8:45:13 AM
[Markets] Futures Tumble, Dollar Surges After Trump Threatens To Restart China Trade War Futures Tumble, Dollar Surges After Trump Threatens To Restart China Trade War

With most global markets shutdown for May 1 celebration, US equity futures sank after President Donald Trump threatened to block a government retirement fund from investing in Chinese stocks and to slap new tariffs on China over the coronavirus crisis, while Apple and Amazon became the latest companies to warn of more pain in the future. As a result, the Emini wiped out virtually all of the weekly gains in one session.

Late on Thursday, Trump said his trade deal with China was now of secondary importance to the pandemic, as his administration crafted retaliatory measures over the outbreak. The threat confirmed that the global pandemic was now a top political issue for Trump who will seek to bash China as the US heads for the November election, and pulled attention back to the trade war between the world’s two largest economies that has kept global financial markets on tenterhooks for nearly two years.

Also weighing on sentiment was a 2.6% fall in Apple shares in premarket trading after the company said it was impossible to forecast overall results for the current quarter, even as it reported upbeat quarterly results. Amazon tumbled 5% after it warned it could post its first quarterly loss in five years as it was spending at least $4 billion in response to the coronavirus pandemic.

With European markets closed, equities dropped in the U.K., one of the few open markets, and the pound gave back some of this week’s gains as Prime Minister Boris Johnson pledged a “comprehensive plan” to lift the country’s lockdown, with details due next week. Stocks slumped in Tokyo and Sydney while most other Asian markets didn’t trade. While China was closed, China FTSE A50 Index futures, which trade in Singapore, were down over 4% as traders didn’t much like that a new trade war between the US and China may be imminent.

Wall Street fell on Thursday as grim economic data and mixed earnings prompted investors to take profits at the end of the S&P 500’s best month in 33 years, a remarkable run driven by hopes of reopening the economy from crushing virus-induced restrictions.

With global stocks posting their best month since 2011 in April spurred by a slowdown in coronavirus infections and $8 trillion promised in stimulus initiatives, earnings reports and economic data are serving a reminder of lasting pain. In addition to the disappointing earning reports from Amazon and Apple, data Friday showed South Korea’s exports plunged the most since the 2009, while a gauge of Japanese manufacturing did the same.

In FX, the Bloomberg Dollar Spot Index climbed for the first time in six days on the prospect of a renewed trade war, while the yen and Treasuries also gained on haven demand.  The offshore yuan was among the biggest decliners in emerging markets, weakening by the most in a month.

Yuan derivatives - the Australian and New Zealand dollars - led losses among Group-of-10 currencies following poor local economic data. The euro rose a third day to a two-week high, extending Thursday’s rally that was fueled by month-end demand.

In rates, Treasuries gained in a bull- flattening move, with 10- and 30-year yields falling by 4 basis points.

Crude dipped on Friday but heading for its first weekly gain in about a month as global production cuts began to take effect; gold rebounded from an earlier slump.

Looking at the day ahead, the calendar is a slightly lighter one thanks to the Labor Day public holiday in numerous countries. Data highlights include April’s manufacturing PMIs from the UK, Canada and the US, as well as April’s ISM manufacturing reading for the US as well. In addition to this, we’ll get the UK’s consumer credit and mortgage approvals for March, along with US construction spending for March too. Earnings releases include ExxonMobil, Chevron, Charter Communications, AbbVie and Honeywell International. Meanwhile, Exxon Mobil reported its first loss in 32 years.

Market Snapshot

  • S&P 500 futures down 2% to 2,845.50
  • STOXX Europe 600 down 0.6% to 338.02
  • MXAP down 1.6% to 145.64
  • MXAPJ down 1.1% to 473.45
  • Nikkei down 2.8% to 19,619.35
  • Topix down 2.2% to 1,431.26
  • Hang Seng Index up 0.3% to 24,643.59
  • Shanghai Composite up 1.3% to 2,860.08
  • Sensex up 3.1% to 33,717.62
  • Australia S&P/ASX 200 down 5% to 5,245.89
  • Kospi up 0.7% to 1,947.56
  • Brent Futures down 1.5% to $26.08/bbl
  • Gold spot down 0.6% to $1,675.82
  • U.S. Dollar Index down 0.02% to 99.00
  • German 10Y yield fell 9.1 bps to -0.586%
  • Euro up 0.1% to $1.0970
  • Brent Futures down 1.5% to $26.08/bbl
  • Italian 10Y yield rose 0.6 bps to 1.589%
  • Spanish 10Y yield fell 7.6 bps to 0.723%

Top Overnight News from Bloomberg

  • The euro-area economy could shrink as much as 12% this year and fail to return to its pre-coronavirus size until the end of 2022, according to the European Central Bank
  • President Donald Trump is exploring blocking a government retirement fund from investing in Chinese equities considered a national security risk, a person familiar with the internal deliberations said
  • U.K. Prime Minister Boris Johnson pledged a “comprehensive plan” to lift the lockdown that has crippled the economy, as he declared the U.K. has now passed the peak of the coronavirus outbreak. In his first press conference since recovering from Covid-19, Johnson promised to set out details next week on how businesses can get back to work
  • The European Central Bank’s surprise tweaks to monetary policy amount to an effective interest-rate cut that puts banks on the front line of the euro-area economic recovery
  • U.K. house prices rose last month before the full extent of the impact of the coronavirus pandemic hit the market, according to Nationwide Building Society
  • The best month for global equities in almost a decade may be enough to convince investors the light at the end of the coronavirus tunnel isn’t a train, but the debate on what comes next is only just beginning as they adjust their focus to a financial landscape utterly changed by the pandemic

The tone in Asia was subdued owing to the mass closures in the region for Labor Day and following the negative handover from Wall St due to month-end rebalancing and with futures pressured after hours following mega-cap earnings from Amazon and Apple. Amazon shares declined around 5% in extended trade after mixed results in which the Co. missed on EPS but topped revenue forecasts and noted it expects to spend its entire USD 4bln of operating profit on COVID-related expenses, while Apple initially gained after it beat on top and bottom lines, boosted its share buyback by USD 50bln and raised its dividend, although the gains were only brief as the results were clouded by weaker than expected iPhone and iPad sales and after the tech giant refrained from providing a Q3 outlook. ASX 200 (-5.1%) was the laggard with downside led by heavy losses in the commodity related sectors and a slump in the top-weighted financials with selling exacerbated by profit taking after the index had rallied to its highest level in 6 weeks and notched its best month on record for April. Nikkei 225 (-2.8%) also suffered firm losses amid a slew of earnings and after Tokyo Core CPI data turned negative to trigger fears of a return to deflation, while reports also noted that PM Abe is to formally decide to extend the state of emergency due to coronavirus on Monday. As a reminder, markets in mainland China and Hong Kong were shut alongside most of the regional bourses, although China’s tensions with US remained in the spotlight after comments from US President who suggested he has seen evidence the virus had originated from the Wuhan Institute of Virology and that he can do tariffs to respond to China, with sources also later noting the US is considering blocking government retirement savings funds from investing in Chinese equities deemed a national security risk. Finally, 10yr JGBs were weaker amid spillover selling from T-notes which had reversed intraday gains and briefly fell below 139.00 amid heavy supply including Boeing’s USD 25bln 7-tranche offering, while JGB prices were also hampered by weaker demand at the enhanced liquidity auction for 2yr, 5yr, 10yr & 20yr JGBs.

Top Asian News

  • Macau Casinos See Worst Month Yet as Gaming Revenue Plunges 97%
  • SUVs Get Parked in the Sea and Reveal Scope of Auto Glut
  • Stampede to Buy Euros at End-of-Month Fix Rattles FX Trading
  • Biggest India Carmaker Clocks Zero Local Sales in April

Europe sees tumbleweeds amid mass closures in observance of Labor Day Holiday, as the UK’s FTSE 100 (-2.1%) remains the sole trading major index ahead of its market holiday next Friday. Sentiment remains on the backfoot, Nasdaq and Dow futures relinquished the 8800 and 24000 levels respectively before extending losses, as markets price in an escalation in US-Sino tensions after US President Trump threatened tariffs, whilst negatively perceived earnings from Apple (-3% pre-mkt) and Amazon (-4.5% pre-mkt) add further pressure to US equity futures. Apple beat on top and bottom line, but iPhone, iPad, and Mac sales fell short of forecasts. Amazon missed on EPS but topped revenue forecasts, albeit subscription services disappointed and the group expects to spend the entire USD 4bln of operating profit on virus-related expenses. Back to London, FTSE 100 sees most of its stocks in the red, with heavyweight Shell (-6%) continuing to be weighed on by its dividend cut alongside a broker downgrade and the pullback in the energy complex, BP (-4%) moves lower in tandem. Large-cap miners also reside towards the foot of the UK index as base metals take a hit from sentiment amid the prospect of escalating trade tensions between the world’s two largest economies: with Rio Tinto -3.7%, Glencore -5.3%, BHP -4%. On the flip side, RBS (+3.4%) is among one of the few gainers post-earnings after topping earnings and operating profit forecasts and despite Q1 impairments rising almost ten-fold YY to GBP 802mln from GBP 88mln.

Top European News

  • Ryanair Cuts 3,000 Jobs, Challenges $33 Billion in State Aid
  • Boris Johnson Pledges Lockdown Exit Plan With U.K. Past Peak
  • Intu Drafts in Restructuring Chief as Talks With Creditors Loom
  • ECB Says Economy Could Stay Below 2019 Level Through 2022

In FX, there was little respite for the Dollar in holiday-thinned volumes at the start of the new month due to Labour Day, but the DXY is clinging to or at least staying within sight of 99.000 by virtue of even more weakness in rival currencies amidst broad risk-off sentiment following US President Trump’s latest accusatory comments regarding COVID-19 and threat of reprisals against China, including more trade tariffs.

  • GBP - Not the biggest G10 mover by a long chalk, but volatile given that the UK is one of the only European centres open on May 1st. Moreover, some payback after hefty month end gains has ensued, with Cable backing off further from 1.2600+ highs after failing to sustain momentum to test mid-April peaks and a key technical level in the form of the 200 DMA (1.2648 and 1.2654 respectively). Meanwhile, the Pound is also unwinding more upside vs the Euro as the cross rebounds further from sub-0.8700 levels towards 0.8750 and back above the 200 DMA yet again (now around 0.8722) on the usual RHS for fixing dynamic. For the record, an even weaker than prelim manufacturing PMI, collapse in consumer credit and miss in mortgage approvals were all largely brushed aside, along with significantly stronger than forecast Nationwide house prices.
  • AUD/NZD/CAD/NOK/SEK - The major laggards, and in the case of the Aussie and Kiwi also the notable underperformers as overall aversion is compounded by a bearish research note from Westpac overnight. In short, the bank based its bleak outlook for the Antipodeans on prospects of ‘brutal’ earnings and data in coming weeks, and on that note AIG manufacturing PMI plunged deep below 50, while ANZ consumer confidence dropped to sub-100. Aud/Usd has duly retreated from 0.6500+ to under 0.6450 and Nzd/Usd has lost grip of the 0.6100 handle with Aud/Nzd pivoting 1.0600. Elsewhere, the Loonie has detached further from its close crude correlation, albeit with oil prices recoiling this is also keeping Usd/Cad afloat near 1.4050 vs 1.3850 at one stage on Thursday, pending the possible appointment of a new BoC Governor later today and Canada’s manufacturing PMI. Similarly, the Scandinavian Crowns have been scuppered by the downturn in crude and risk appetite, with Eur/Nok and Eur/Sek both nudging the tops of ranges near 11.3300 and 10.7500 respectively.
  • JPY/CHF/EUR - All benefiting from the aforementioned ongoing Buck weakness, as the Yen bounces from circa 107.40, Franc eyes 0.9600 and Euro grinds closer to 1.1000 having breached the 55 DMA (1.0949) and yesterday’s best (1.0972) to expose resistance at 1.0991 before the 200 DMA (1.1035).
  • EM - The ramp up in US vs China vitriol over the coronavirus has obviously taken its toll on the Yuan, as Usd/Cnh extends beyond 7.1300, but the contagion is spreading through the region like the global pandemic itself with Usd/Try up around 7.0400, Usd/Rub back over 75.0000 to name and highlight just a few.

In commodities, WTI and Brent futures gave up earlier mild gains as the positive sentiment seen earlier in the week peters out, whilst a lion’s share of market closures in Asia and Europe keep volumes subdued. Today marks the official inauguration of the OPEC+ output curtailment pact, albeit markets have already priced in the event. “The output cuts while significant may not be enough to fully offset demand destruction in the global market in the short term and the inventory build-up could continue for the rest of 2Q20, though at a slower pace”, ING reaffirms. That being said, reports noted that Iraq could face difficulties in adhering to its obligations under the deal. WTI June trades on either side of USD 19/bbl for a large part of the session before dipping below the psychological USD 18.50/bbl (high USD 20.50/bbl), whilst Brent July also resides closer to the bottom of its current USD 27.67-29.67/bbl intraday band.  Spot gold remains on the backfoot sub USD 1700/oz, with some attributing a correction amid a lack of fresh buyers. Copper continues its deterioration throughout the session on the risk-averse tone and absence of regional participants including its largest buyer China – prices eye the 24th Apr low at USD 2.30/lb.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 36.7, prior 36.9
  • 10am: Construction Spending MoM, est. -3.5%, prior -1.3%
  • 10am: ISM Manufacturing, est. 36, prior 49.1
  • Wards Total Vehicle Sales, est. 7m, prior 11.4m

DB's Jim Reid concludes the overnight wrap

Happy 1st of May to you all. We’ve already published our monthly performance review in what was the best month for the S&P 500 since January 1987. It was on track to be the best since October 1974 until the mild sell off yesterday. See the note in your inboxes for more on an incredibly strong month for asset returns in a period where the world economy practically ground to a standstill. Impressive stuff. Try explaining that to a new graduate. You’d probably want to send them towards a chart of the Fed balance sheet to help try to rationalise it.

Talking of central banks, yesterday’s main news came from the ECB, who in many ways reverted to type. They always pull out the heavy artillery in the heat of the battle but tend to retreat a bit when hostilities calm down. Although they announced that the interest rate on TLTRO III operations from June 2020 to June 2021 would be reduced to 50bps below the refi rate they didn’t increase PEPP (not expected at this stage) and most importantly downplayed the chances of OMT being used. Before we discuss the OMT we should note that for those banks whose net lending is above the lending performance threshold, the interest rate falls to 50bps below the average deposit facility rate, which is itself 50bps below the main refinancing rate. Furthermore, the ECB announced a new series of non-targeted pandemic emergency longer-term refinancing operations, which will start in May 2020.

The conclusion is that its lots of free money for banks, especially if they can lend it out. However the net impact was disappointment for European equities (including banks) as Lagarde downplayed the imminent use of the OMT and argued that the PEPP is the weapon of choice. The main issue with this is that OMT can be used more efficiently to divert from capital keys and help the likes of Italy. They may end up having to do more now with PEPP than they would have with a combination of OMT and PEPP. See Mark Wall’s piece on the meeting here. As a result of the meeting, the main European equity bourses were -2 to -2.25% lower with banks -5.5%.

Core sovereign debt rallied with yields on 10yr bunds falling by -9.1bps to a 7-week low of -0.586%. 10yr spreads widened somewhat in southern Europe however, particularly for Italy, where the spread over bunds was up +9.8bps, while Greece (+7.2bps) and Spain (+1.5pbs) also saw moves wider. The 2yr BTP/Bund spread was actually tighter which perhaps highlights not too much market concern over the ECB message. Over in the US, 10yr Treasury yields were down as much as 4.6bps to 0.58%, less than 5bps away from their all-time record closing low, before spiking higher in the US afternoon session to finish +1.2 bps higher at 0.639%.

Poor economic data along with negative earnings news saw equities give up their gains as we reached month-end, with the S&P 500 falling by -0.92% yesterday, while the VIX index of volatility, which had been trending downward from its highs in mid-March, saw its biggest increase in over a week, up +2.92pts to 34.15pts. Roughly 80% of the stocks in the index were lower on the day. Interestingly the two best performing subsectors in the US were Retailing and Technology Hardware. Both were led higher by their largest respective components, Amazon and Apple, which both reported after the close.

In terms of those earnings yesterday, Apple was down -2.59% after the market closed. This was even after the company saw quarterly earnings rise 1%, as CEO Tim Cook cited a drop in demand in late March/early April before rebounding in recent weeks. Though sentiment shifted more negative as the company declined to offer guidance for the first time in over ten years. Amazon was down -5.09% in after-hours trading after announcing a profit drop of 29% in the first quarter. The company offered a very wide range for operating income in the second quarter of a $1.5 billion gain to a $1.5 billion loss. The company is expecting to spend nearly $4 billion on “Covid-related expenses getting products to customers and keeping employees safe,” according to CEO Jeff Bezos.

Futures on the S&P 500 and NASDAQ are down -1.41% and -1.91% this morning respectively post those results. Those markets that are open in Asia this morning haven’t fared much better with the Nikkei down -2.49% and ASX -3.50%. In FX the dollar index is up a modest +0.12% while 10y Treasuries are down 2.2bps. The only data of note to flag this morning were the April export numbers in South Korea which revealed a larger than expected decline of -24.3% yoy (vs. -23.0% expected). That’s the biggest decline since May 2009.

Back to central banks, the Fed separately announced yesterday that it was expanding the scope and eligibility for its Main Street Lending Program. Businesses with up to 15,000 employees or up to $5bn in annual revenue are now eligible, an increase from before when it was up to 10,000 employees and $2.5bn in revenue. Furthermore, the minimum loan size for certain loans would go down from $1m to $500,000, and there’d also be a new loan option for more leveraged companies where lenders would retain a 15% share on loans.

The central bank moves came against the backdrop of some of the worst GDP stats we’ve seen in many years yesterday. Starting with the overall Euro Area number, Q1 saw the economy contract by -3.8% compared with the previous quarter, in line with expectations and the largest quarterly contraction since the formation of the single currency back in 1999. However as we’ve been saying, given the lockdowns only started at the end of the quarter in March, this actually gives an incomplete picture of the extent to which the economy has shrunk, and we’re not likely to see the largest moves in the data until Q2. Indeed, ECB President Lagarde said in her press conference yesterday that in a severe scenario, their Q2 forecast pointed to a contraction as large as -15%.

Looking at the country-by-country releases where we got them, the French economy saw a quarterly contraction of -5.8% (vs. -4.0% expected), the largest quarterly decline in the data series going back to 1949, and exceeding the -5.3% quarterly decline in Q2 1968 when the country was gripped by social unrest. Following the previous quarterly -0.1% decline, this means the French economy has now experienced two consecutive quarterly contractions, a measure which is often taken to be the definition of a recession. Over in Italy, the economy contracted by -4.7% (vs. -5.4% expected) and on a technical basis went into its 6th recession of the Euro era. This one will only be Germany’s 5th over the same period. Meanwhile the Spanish economy saw a -5.2% (vs. -4.3% expected) contraction.

The only one of the 4 largest Euro member states left to report GDP is Germany now, and given all three of the others above came in worse than the Euro Area average, this implies that Germany could well have done significantly better than the others when we get their data in a couple of weeks (our economists think maybe -1.5%). It’s also noticeable, if unsurprising given the virus struck Europe first, that the Euro Area did much worse than the US. The US number from the previous day of -4.8% was on an annualised basis, meaning that the comparable quarter-on-quarter contraction for the US was “only” -1.2%, much smaller than the -4.8% decline in the Euro Area.

Staying on the ECB and the Euro Area, the flash CPI estimate for April yesterday came in at +0.4%, which the lowest inflation print since September 2016, though still above the +0.1% reading expected. The main reason for the decline was energy prices, which fell by -9.6% compared with a year earlier thanks to the recent plunge in oil, and the core CPI component was at a higher +0.9%. And speaking of oil, yesterday saw yet another rebound in prices, with WTI up +25.10% at $18.84/barrel, bringing its gains over the last two sessions to +54.70%. Brent crude also advanced with a +12.11% increase to $25.27/barrel. There was also news that ConocoPhillips will cut output by over 400k barrels a day in June. Norway also said it will reduce production yesterday. With the Nordic country producing 250k less barrels a day in June and then cutting 134k barrels during the second half of the year.

Looking at yesterday’s other data, the weekly initial jobless claims from the US provided yet another sign of how the economy has continued to slide well into April. Initial claims were at 3.839m in the week to April 25, above the 3.5m consensus expectation, while the previous week’s reading was revised up by further 25k. While this is the 4th week in a row that the number has declined, down from a peak of 6.867m in late March, the total number of claims in the last 6 weeks now stands at over 30m. Given the pre-covid number of nonfarm payrolls in February stood at 152m, we’re looking at around 20% of the labour force having now sought unemployment benefits, so some shocking numbers, and all eyes will be on the jobs report for April coming out a week today, where it’s widely expected we could see the highest unemployment rate for the US since before WWII.

Concluding with the final data points now, and German retail sales in March fell by -5.6%, the biggest monthly decline since January 2007, while the number of jobless claims rose by 373k in April. In the US, personal spending fell by a record -7.5% in March, the largest in data going back to 1959, while personal income was down -2.0%. The MNI Chicago PMI fell further to 35.4, and French consumer spending in March saw a monthly decline of -17.9%, far exceeding the -5.8% reading expected.

To the day ahead now, and the calendar is a slightly lighter one thanks to the Labour Day public holiday in numerous countries. Data highlights include April’s manufacturing PMIs from the UK, Canada and the US, as well as April’s ISM manufacturing reading for the US as well. In addition to this, we’ll get the UK’s consumer credit and mortgage approvals for March, along with US construction spending for March too. Earnings releases include ExxonMobil, Chevron, Charter Communications, AbbVie and Honeywell International.

Tyler Durden Fri, 05/01/2020 - 08:02
Published:5/1/2020 7:14:00 AM
[Markets] Chevron profit rises but sales fall, amid COVID-19-related drop in demand for commodities Chevron Corp. reported Friday first-quarter earnings that rose but revenue that fell from a year ago, as commodity prices fell sharply in March primarily because of reduced demand amid the COVID-19 pandemic. "Financial results in future periods are expected to be depressed as long as current market conditions persist," the energy giant said in a statement. The stock was little changed in premarket trading. Net income rose to $3.60 billion, or $1.93 a share, from $2.65 billion, or $1.39 a share, in the year-ago period. Sales fell 13.1% to $29.71 billion, while total revenue, which includes income from equity affiliates and other income, declined 10.5% to $31.50 billion. The FactSet consensus for earnings per share was 65 cents and for sales was $29.1 billion. Chevron said it was further reducing its 2020 capital expenditure outlook by $2 billion to $14 billion, and expects operating costs to decrease by $1 billion. The company previously announced that it was suspending stock repurchases and has completed additional asset sales. "Together these actions are consistent with our longstanding financial priorities: to protect the dividend; to prioritize capital that drives long-term value; and to maintain a strong balance sheet," said Chief Executive Michael Wirth. The stock has dropped 14.1% over the past three months through Thursday, while crude oil futures have tumbled 64.4% and the Dow Jones Industrial Average has declined 13.8%. Published:5/1/2020 6:14:45 AM
[Markets] Dow Jones Futures: Apple, Amazon, Atlassian Test Buy Points On Earnings As Coronavirus Stock Market Rally, Tesla Hit Brakes; Amgen, Gilead Near Breakouts Dow Jones futures signal more pressure for the coronavirus stock market rally as Apple and Amazon undercut buy points on earnings. Tesla extended losses. Published:4/30/2020 5:41:55 PM
[Markets] Apple expects iPhone and wearables year-over-year revenue trends to weaken in June quarter Apple Inc. expects year-over-year revenue performance for the iPhone and wearables segments to worsen in the June quarter relative to the March quarter, according to Chief Financial Officer Luca Maestri on the company's Thursday earnings call. Revenue for the iPhone category fell by 6.7% in the March quarter and revenue for the wearables segment increased 22.5%. Apple also anticipates that year-over-year revenue performance will improve in the June quarter for Macs and iPads as more people work and study remotely. Mac revenue dropped 2.9% from a year earlier in the March quarter while iPad revenue fell 10.3%. Maestri said that Apple was seeing "two distinct trends" in services and he expects "very strong recent performance" for the App Store, video, Apple Music, and cloud services to continue through the June period while services like AppleCare may remain pressured. Apple also expects a negative impact of $1.5 billion from foreign exchange in the current quarter. Apple shares were off 2.4% in after-hours trading Thursday after the company's fiscal second-quarter earnings report. The shares have fallen 9% over the past three months as the Dow Jones Industrial Average has declined 16%. Published:4/30/2020 5:11:55 PM
[Markets] Dow ends lower as Washington Post reports U.S. 'crafting' retaliation against China for coronavirus handling U.S. stocks midday Thursday took a firm leg down midday but finished off the worst levels of the session after the Washington Post reported that U.S. officials were "crafting retaliatory actions against China' as the Trump administration criticizes the world's second-largest economy for its handling of the COVID-19 pandemic. The Dow Jones Industrial Average lost 288 points, or 1.2%, at 24,346, the S&P 500 index ended off 0.9% and the Nasdaq Composite Index dropped 0.3%, with all the benchmarks closing well off their worst levels of the day. The coronavirus was first identified in Wuhan, China in December and Trump has recently railed against what he has described as the country's lack of transparency around the severity of the outbreak. Meanwhile, the New York Times reported the Trump officials have "pushed American spy agencies to hunt for evidence to support" an unsubstantiated theory that the novel strain of coronavirus was derived from a laboratory in Wuhan. The pandemic has infected more than 3 million people world-wide and claimed more than 230,000 lives, according to data compiled by Johns Hopkins University. Published:4/30/2020 4:10:24 PM
[Markets] Apple stock options pricing in a tamer-than-usual earnings report While investors prep for the unknown from Apple Inc. , ahead of the technology behemoth's COVID-19-tainted fiscal second-quarter results after Thursday's closing bell, options traders are pricing in a less volatile than reaction. An options strategy known as a straddle, a pure volatility play that involves the simultaneous buying of bullish and bearish options with at-the-month stock prices, is pricing in a one-day, post-earnings move of 4.4% in either direction. That compares with a 5.1% move in either direction on the day after earnings over the past 8 quarters, and a average 4.6% move over the past 20 quarters. Based on current stock prices--the shares are up 1.2% at $291.03 in afternoon trading--that means the stock would have to close above $303.83 on Friday or below $278.23 for buyers of the straddle to make money. Apple's stock has lost 10% over the past 3 months, while the Dow Jones Industrial Average has declined 16%. Published:4/30/2020 2:09:34 PM
[Markets] American Express, Walt Disney share losses lead Dow's 388-point fall DOW UPDATE The Dow Jones Industrial Average is in selloff mode Thursday afternoon with shares of American Express and Walt Disney facing the biggest losses for the blue-chip average. The Dow (DJIA) was most recently trading 388 points (1. Published:4/30/2020 12:11:57 PM
[Markets] Germany Delays Reopening As Coronavirus Makes A Comeback: Live Updates Germany Delays Reopening As Coronavirus Makes A Comeback: Live Updates

Summary:

  • LA becomes first US city to offer county-wide testing
  • Lagarde warns eurozone economy could shrink up to 12% in 2020
  • Russia passes 100k cases
  • Sri Lanka reimposes lockdown measures
  • Italy retakes mantle of second-deadliest outbreak in Europe from UK
  • South Korea says 'zero' cases of infection stemming from April 15 election
  • Airbus reports massive loss, signals distress
  • New data suggests 1 in 6 US nursing homes suffered COVID-19 clusters
  • 500k coronavirus tests obtained by Maryland from SK haven't yet been used
  • NYT hammers Brazil's Bolsonaro for denying outbreak
  • UN warns about virus spreading in Syria, Yemen
  • Eurozone GDP contracts 3.8%
  • UK NHS allows hospitals to remove minority workers off the front lines

*         *         *

Update (1045ET): Germany has decided to postpone the next step of its economic reopening after data monitored by public health experts showed an uptake in the infection rate, bringing it dangerously close to a critical threshold.

As we reported yesterday, Germany's infection rate spike to 0.96 from 0.70 after some more businesses were allowed to reopen on April 24. Now, Germany will delay the reopening of schools and resuming futball matches, delays that will make it harder to reopen the rest of the country's economy.

  • GERMAN FEDERAL GOVT AND STATES POSTPONE DECISION ON REOPENING SCHOOLS, KNDERGARTENS AND RESUMING BUNDESLIGA SOCCER MATCHES - FOCUS ONLINE

Germany won plaudits for its early and broad-based testing, which allowed it to keep its case numbers relatively low, and its mortality rate among the best in the world. Chancellor Angela Merkel has insisted that Germany move with "caution" while reopening its economy.

*         *         *

Update (0945ET): ECB Chief Christine Lagarde was criticized for her lack of central-banking experience when she was first tapped to take over from Mario Draghi. And since pulling the ripcord on an unprecedented easing program from the central bank, she has spent the bulk of her time in the public eye urging the squabbling EU Council to get its shit together and agree on a concrete plan.

On Thursday, Lagarde warned that the European economy faces "an economic contraction of unprecedented size and speed" and warned that the Continental economy could contract by  up to 12% for the year 2020. Lagarde made her remarks during the press conference following Thursday's meeting of the ECB Governing Council, where the central bank affirmed that it would leave its easing program mostly as it was, while launching a new pandemic refinancing vehicle for eurozone banks.

In addition to the 5%-12% contraction for the year, Lagarde warned that YoY growth for Q2 could contract 15%. She added that the central bank is prepared to extend its rescue programs for as long as they are needed. She also took a few moments to castigate the European leaders over their failure to produce an acceptable fiscal rescue package.

In other news, Russia's outbreak has broken above 100k cases as it rapidly evolves into one of the worst outbreaks in the world.  It's only the eighth country to officially count more than 100k cases.

*         *         *

German public health officials announced yesterday that Germany's infection rate had ticked higher over last week since the German government started allowing some shops to reopen, raising the possibility that Germany - Europe's undisputed leader in tamping down the outbreak - might need to reimpose the lifted lockdown measures.

Meanwhile, in Japan, local press reported yesterday that PM Shinzo Abe would extend his nationwide 'state of emergency' order for a month as the health officials discover more evidence that the virus has deeply penetrated Japanese society, despite jokes about Japanese culture, which isn't big on inter-personal contact, is itself a form of social distancing.

But on Thursday morning, tiny Sri Lanka reimposed its 24-hour lockdown after officials detected a jump in infections.

After briefly taking the No. 2 spot from Italy yesterday, the UK is once again on track to clinch the mantle of "second-most deadly outbreak in Europe" following the latest revision to the UK death toll, announced yesterday, which added thousands of home deaths to the official tally.

Looking ahead on Thursday, the number of confirmed coronavirus cases has moved above 3.1 million, while the number of deaths is nearing 210k.

As far as the curve is concerned, both the pace of new deaths...

...and new cases...

Source: FT

...has begun to slow across the US and Europe.

With the number of domestically transmitted infections down to virtually zero, South Korean officials revealed Thursday morning that the country's April 15 elections had resulted in no new coronavirus infections. And now that two weeks - the typical incubation period - have passed since since the vote, it's become clear that none of the 29 million Koreans who cast ballots had been infected.

In the US, a new report has confirmed what many experts had suspected: the number of publicly reported coronavirus cases in US nursing homes has soared.

More than 1 in 6 facilities nationwide has detected infections among residents or staff, according to new data released by states such as Michigan, Maryland, Kentucky and South Carolina.

On Wednesday evening, LA Mayor Eric Garcetti said all Los Angeles County residents will be able to obtain free coronavirus testing, even if they are not displaying symptoms, as LA becomes the first city to offer county-wide testing.

As the battle to reopen America rages, a local Louisiana newspaper has uncovered a "secret plot" being organized by Republican state legislators to overturn Gov. John Bel Edwards' decision to extend his state's emergency order until May 15. Louisiana has been one of the hardest-hit states in the country, with 593 confirmed cases and 39 deaths for every 100,000 people, while also being ground-zero for the outbreak in the federal prison system that has killed dozens of prisoners already, including a female prisoner who gave birth by C-section.

A group of Republican legislators in Louisiana is quietly working to overturn the Democratic governor’s stay-at-home order, the Advocate newspaper reported.

Emails obtained by the Advocate revealed a plan to invoke an obscure provision that would allow a majority in either chamber of the Republican-controlled state to repeal Edwards' public-health emergency. Edwards' handling of the outbreak in his state has been widely praised, including by President Trump. But the devastating hit to the state's economy, which relies heavily on tourism, have put hundreds of thousands of jobs and businesses in the state at risk.

After reporting dismal Q1 earnings on Wednesday, the CEO of European aerospace giant Airbus - the "Jewel of the European economy" as the NYT called it - warned "we are now in the midst of the gravest crisis the aerospace industry has ever known."

The company reported a net loss of 481 million euros ($520 million) for Q1, a dramatic reversal from last year. In that period, it could not deliver 60 planes, partly because airlines are seeking to put off payment.

Following yesterday's historic contraction in US Q1 GDP, the EU followed suit on Thursday and reported its sharpest economic reversal since pan-European record keeping began in 1995.

Eurostat data showed a "seasonally-adjusted" contraction of 3.8% for eurozone countries, and a 3.5% contraction for all EU member states (including those - like Switzerland and Norway - who don't use the euro). 

European shares sloughed off the GDP reading, which was widely expected, as investors in Europe and Asia focused on the positive news from a study of remdesivir.

Early in April, UN workers raised the alarm about an outbreak in war-torn Syria as the coronavirus swept across the Middle East. Now, the UN is ringing the alarm once again, warning that the virus could be spreading more or less undetected across war-torn Yemen and Syria. Specifically, a new cluster has been discovered in Yemen, adding to the country's already sizable array of problems.

We’d like to reminder our American readers that while governors have largely led their states through the outbreak, there have been several notable instances of grandstanding and perhaps undeserved PR spin. One such example arrived on Thursday as the Washington Post reported that the ~500,000 coronavirus tests obtained by Maryland Gov. Larry Hogan - something he called an “exponential, game-changing step forward” - have yet to be used.

Finally, in the UK, evidence that the virus is disproportionately deadly for NHS workers from minority backgrounds (1/5th of nurses and half of doctors in London are from minority backgrounds) has led it to allow hospitals to move minority workers off the front line to try and tamp down the "disproportionate" deaths among them.

Minorities make up nearly 3/4ths of the health care workers known to have died from the virus.

As Brazil develops into the world's newest viral "hot spot", the NYT bashed Brazilian President Jair Bolsonaro for his continued refusal to acknowledge the crisis: Nearly 500 Covid-19 deaths were reported in Brazil on Tuesday, the highest single-day death toll yet. When asked about the milestone, President Jair Bolsonaro replied: "So what? I’m sorry. What do you want me to do?"

Bolsonaro's refusal to acknowledge the outbreak's severity has left Brazil with one of the lowest testing rates in the world. But fears that the outbreak is far more widespread than official numbers suggest haven't translated to the images of brutality and chaos seen in Wuhan earlier this year.

However, some hospitals have begun reporting familiar scenes of patients crammed into hallways, as the world waits to see if the outbreak will overwhelm Brazil's health-care system.

We've been closely following the outbreak in Russia in recent days as the confirmed case total has soared, alongside a jump in deaths. And as the outbreak worsens, Russian criminal gangs are increasingly trafficking in vital medical equipment. Russian police on Thursday exchanged gunfire with members of a mafia crew suspected of trafficking in illicit ventilators during a raid in a suburb of Moscow.

The interior ministry told Dow Jones that seven people had been detained, and five placed under house arrest, for allegedly selling the "unregistered" ventilators in the Moscow suburb of Gzhel.

A Russian digital media website reported that eight suspected gangsters had been arrested while trying to sell 100 ventilators for 70 million rubles (about $96,000). President Vladimir Putin has repeatedly warned criminals against exploiting the outbreak for profits.

Tyler Durden Thu, 04/30/2020 - 10:57
Published:4/30/2020 10:09:27 AM
[Markets] Dow saddled with early 390-point decline on earnings season's busiest day Dow saddled with early 390-point decline on earnings season's busiest day Published:4/30/2020 9:16:18 AM
[Markets] Dow falls 340 points as total jobless claims hit 30 million, likely bringing unemployment to Great Depression levels U.S. stock-index benchmarks on Thursday fell at the open after a report on those seeking unemployment benefits showed another big increase, as expected. Initial jobless claims rose 3.839 million in the week running from April 19 to April 25, with experts expecting 3.5 million, according to economists polled by MarketWatch. The unprecedented surge in layoffs has likely pushed the unemployment rate above 15% to the highest levels since the Great Depression, economists estimate. Total claims are around 30 million in the latest week. The Dow Jones Industrial Average fell 344 points, or 1.4%, at 24,300, those for the S&P 500 index slipped 1.1% at 2,906, while the Nasdaq Composite Index traded off 0.6% at 8,864. Published:4/30/2020 8:41:16 AM
[Markets] Dow futures fall 270 points after weekly jobless claims rise 3.8 million, likely bringing unemployment to highest since Great Depression U.S. stock-index futures on Thursday added to losses after a report on those seeking unemployment benefits showed another big increase, as expected. Initial jobless claims rose 3.839 million in the week running from April 19 to April 25, with experts expecting 3.5 million, according to economists polled by MarketWatch. The unprecedented surge in layoffs has likely pushed the unemployment rate above 15% to the highest levels since the Great Depression, economists estimate. Total claims are around 30 million in the latest week. Futures for the Dow Jones Industrial Average fell 275 points, or 1.2%, at 24,279, those for the S&P 500 index slipped 1.1% at 2,907.25, while Nasdaq-100 futures traded off 0.5% at 8,993. Published:4/30/2020 8:17:17 AM
[Markets] Dow Jones Futures: Coronavirus Stock Market Rally Set To Continue With These 5 Tech Titans Now In Buy Zones Dow Jones futures rose on strong earnings, signaling more gains for the coronavirus stock market rally. Microsoft, Tesla, Facebook and Vertex are in buy zones. Apple too. Published:4/30/2020 6:07:38 AM
[Markets] Dow's profit falls in line with expectations, sales beat Shares of Dow Inc. slipped 0.2% in premarket trading Thursday, after the materials science company matched profit expectations but topped sales forecasts, and said it was taking further measures to strengthen its financial position amid the COVID-19 pandemic. Net income rose to $258 million, or 32 cents a share, from $208 million, or 24 cents a share, in the year-ago period. Excluding special items, adjusted EPS fell to 59 cents from 98 cents but matched the FactSet consensus. Sales fell 11.3% to $9.77 billion, amid lower local prices due to a decline in energy prices, but topped expectations of $9.71 billion. Volume fell 2%, as growth in demand for food, health and hygiene packaging; surfactants and solvents for cleaning; and coatings was more than offset by declines in polyurethanes and silicones. Dow said it was beginning to see indications of recovery from COVID-19 in China. The company is further reducing its capital expenditure target to $1.25 billion, below the 2019 target of $2.0 billion, and trimming operating expenses by $350 million. The company is idling some manufacturing units. The stock has dropped 22.7% over the past three months through Wednesday, while the Dow Jones Industrial Average has declined 14.6%. Published:4/30/2020 5:45:21 AM
[Markets] Dow Jones Futures: Tesla Leads Tech Titans In Buy Zones As Coronavirus Stock Market Rally Roars Dow Jones futures rose on strong earnings, signaling more gains for the coronavirus stock market rally. Microsoft, Tesla, Facebook and Vertex are in buy zones. Apple too. Published:4/29/2020 6:06:17 PM
[Markets] Dow Jones Futures: These 5 Tech Titans Are In Buy Zones As Coronavirus Stock Market Rally Roars Dow Jones futures rose on strong earnings, signaling more gains for the coronavirus stock market rally. Microsoft, Tesla, Facebook and Vertex are in buy zones. Apple too. Published:4/29/2020 5:35:14 PM
[Markets] Dow finishes up over 500 points on hopes for coronavirus treatment Dow finishes up over 500 points on hopes for coronavirus treatment Published:4/29/2020 3:07:04 PM
[Markets] Dow holds on to a 500-point gain following Fed interest-rate decision Dow holds on to a 500-point gain following Fed interest-rate decision Published:4/29/2020 1:35:39 PM
[Markets] Dow holds strong gain after Fed vows to use full range of tools to help prevent prolonged damage from coronavirus U.S. stock markets Wednesday afternoon after the Federal Reserve kept rates unchanged, as expected, but vowed to do whatever it takes to help the economy bounce back from the public-health crisis created by COVID-19 pandemic. The Dow Jones Industrial Average gained 570 points, or 2.3%, at 24,662, the S&P 500 index rose 2.4% at 2,944, while the Nasdaq Composite Index climbed 3.5% at 8,913. In a statement following its two-day meeting of the policy-setting Federal Open Market Committee, the central bank said: "The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," the Fed said in a statement after two-day meeting. The Fed kept its benchmark rate close to zero and repeated it would hold policy steady until the economy has weathered recent events and "is on track" to achieve full employment and price stability. That is unchanged from the March forward guidance. The Fed has already reduced a key interest rate to a range between 0% and 0.25%, and increased its balance sheet to $6.6 trillion, adding $2.2 trillion over the course of the past few weeks, as it doled out funds to help prop up the U.S. economy during the coronavirus pandemic. Published:4/29/2020 1:08:02 PM
[Markets] Boeing, American Express share gains contribute to Dow's 618-point surge DOW UPDATE Shares of Boeing and American Express are posting strong returns Wednesday afternoon, sending the Dow Jones Industrial Average soaring. Shares of Boeing (BA) and American Express (AXP) are contributing about 50% of the blue-chip gauge's intraday rally, as the Dow (DJIA) is trading 618 points, or 2. Published:4/29/2020 12:08:51 PM
[Markets] Boeing’s stock, down 57% this year, is driving force of big Dow gain Wednesday Boeing’s stock, down 57% this year, is driving force of big Dow gain Wednesday Published:4/29/2020 11:02:25 AM
[Markets] Boeing, American Express share gains contribute to Dow's nearly 550-point surge DOW UPDATE Led by positive momentum for shares of Boeing and American Express, the Dow Jones Industrial Average is soaring Wednesday morning. The Dow (DJIA) was most recently trading 548 points, or 2. Published:4/29/2020 11:02:25 AM
[Markets] Dow cues up 300-point gain as investors react to economy data, earnings, Gilead Dow cues up 300-point gain as investors react to economy data, earnings, Gilead Published:4/29/2020 8:01:51 AM
[Markets] Dividend Massacre In This Crisis Is Already Breaking Records, And It's Only Just Starting Dividend Massacre In This Crisis Is Already Breaking Records, And It's Only Just Starting

Submitted by Wolf Richter of Wolf Street

Dividend yield can be an irresistible siren song in the era of central-bank interest-rate and bond-yield repression: Harley Davidson’s dividend yield was over 7% until this morning – when it announced that it would slash its dividend by 95%, from 38 cents to a symbolic 2 cents to conserve cash. Going forward, the dividend yield will be close to 0%.

GM, whose dividend yield was an alluring 6.5%, announced yesterday that it would eliminate its dividend altogether to save about $2 billion in cash; and going forward, its dividend yield will be 0%. Ford had a dividend yield of over 11% before it eliminated its dividend.

Mortgage REITS have reduced or eliminated their rich dividends – and dividends is the primary reason to hold REITs. This started in late March, when AG Mortgage Investment Trust announced that it would stop paying dividends. Investco Mortgage Capital and TPG RE Finance Trust both said they would “delay” paying their previously announced dividends to preserve liquidity. In April, AGNC announced that it would reduce its dividend by 25%.

All of them had theoretical dividend yields well into the double-digits. Investco’s theoretical dividend yield – which reflects the past annual dividend payments as a percent of current share price – is over 60%.

Mall REITs are under enormous pressure, with most of their tenants shut down and many of them not paying rent. For example, Macerich announced mid-March that it would reduce its dividend from 75 cents a share to 50 cents, of which it would pay only 20% in cash and the remaining 80% in stock.

The list of big names is getting longer by the day: Boeing, the airlines, the automakers, the cruise lines, cosmetics company Estee Lauder, hospital firm HCA Healthcare, hotel chains such as Hilton Worldwide and Marriott, casino operator Las Vegas Sands, retailers of all kinds including TJX, Kohl’s, and Macy’s….

This has been a persistent drumbeat over the past few weeks: Companies are struggling to preserve cash in order to survive this crisis, and dividends vanish with an announcement that the Board of Directors has decided to make them vanish.

Through Monday morning, 81 US companies and publicly traded investment funds, such as REITs and business development companies (BDCs), have announced that they would suspended or cancel their dividends, according to S&P Global Market Intelligence, cited by the Wall Street Journal.

It has only been a little over one month when this dance started, but those 81 suspensions or cancellations are already by far higher than the announcements of dividend suspensions and cancellations in any full calendar year going back to the beginning of the data in 2001. The prior record calendar year was 2009 with 63 announcements of dividends getting suspended or canceled.

Those 81 announcements so far are already higher than the combined total of the 10 years since 2010 (55).

And it doesn’t include those that will announce dividend cuts, including Oxford Square Capital [OXSQ], a publicly-traded BDC, which announced today that its dividend (or rather “distribution”) will mostly or totally vanish when it said “that no reliance should be placed on the prospect for any particular level of distribution for those months, or for any other periods.” Upon which its shares plunged 20%.

And 135 companies have announced in 2020 through Monday morning that they would reduce their dividends. This does not include companies like Harley Davidson that have chimed in since Monday morning. Those 135 announcements of dividend reductions so far this year is already the fourth highest number of any full calendar year in the data since 2001.

The number two and three calendar years for dividend reductions were 2015 (138) and 2008 (137). The year 2020 will take out those two in a couple of days, which will make 2020 the second highest year on record.

The number one calendar year on record for the highest number of dividend reductions was in 2009, with 316 such announcements. But 2020 is still young, and the crisis has just begun.

All dividend actions so far this year through Monday amount to a cut in payouts of about $22.8 billion, according to S&P Dow Jones Indices, cited by the Wall Street Journal.

Dividends look very attractive to income investors until the dividends disappear. That dreaded press release is all it takes. And income investors wonder where is there to go as the Fed systematically represses and destroys income from other sources such as investment grade bonds, government bonds, and savings products.

Well, for those investors, there are dividend stocks that still haven’t issued that infamous press release yet, such as energy giants Exxon and Chevron, which are caught up in the global collapse of the crude oil market, powered by the global collapse of demand for crude oil. Both have already announced large-scale cuts to their capital expenditure programs. Given the plunge in their shares, dividend yield has taken on juicy proportion: Exxon’s dividend yield is 7.8% and Chevron’s is 5.7%.

Will they, like the others that once had a juicy dividend yield, eliminate their dividends to preserve cash to get through this crisis?

That’s a thorny question, given the dividend massacre that has already happened so far this year. Chevron shares are down 26% year-to-date, despite the huge rally since March 23; Exxon shares are down 37% year-to-date. These share price declines show that investors have serious doubts about the dividends. And it shows how the old saw that dividend stocks are good for bear markets is actually a high-risk gamble.

Tyler Durden Wed, 04/29/2020 - 06:40
Published:4/29/2020 6:01:06 AM
[Markets] GE's stock drops after profit, FCF miss expectations but revenue beats Shares of General Electric Co. dropped 1.2% in premarket trading Wednesday, after the industrial conglomerate missed first-quarter adjusted profit and free cash flow expectation, as the COVID-19 pandemic had a "significant financial impact," but beat on revenue. Net income rose to $6.16 billion, or 70 cents a share, from $3.55 billion, or 41 cents a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share fell to 5 cents from 13 cents, missing the FactSet consensus of 8 cents. Total revenue fell 8% to $20.52 billion, above the FactSet consensus of $20.38 billion. Industrial free cash flow (FCF) was negative $2.21 billion, compared with guidance provided March of about negative $2 billion. GE said the COVID-19 pandemic reduced FCF by about $1 billion and hurt industrial profit by about $800 million. Within GE's business segments, revenue misses by Power and Aviation were offset by beats in Healthcare and Renewable Energy. GE Capital swung to a loss of $194 million from earnings of $171 million. GE's stock has dropped 47.5% over the past three months through Tuesday, while the Dow Jones Industrial Average has lost 16.1%. Published:4/29/2020 5:40:30 AM
[Markets] U.S. Index Futures Jump as Asia Stocks in Bull Zone Ahead of Fed (Bloomberg) -- U.S. equity-index futures advanced, helped by a late rally in Alphabet Inc. and Asian stocks heading for bull-market territory, ahead of a policy decision by the Federal Reserve.Contracts on the S&P 500 Index climbed 1% as of 11:32 a.m. in Tokyo, while futures advanced 1.2% on the Nasdaq 100 Index and 0.8% on the Dow Jones Industrial Average. Alphabet shares surged in after-hours trading after the company reported first-quarter revenue that beat analyst expectations.The MSCI Asia Pacific Index rose 0.7%, pushing its rebound from a March 23 low to more than 20% and set to enter a bull market.The U.S. central bank’s Federal Open Market Committee two-day meeting concludes Wednesday. Federal Reserve Chair Jerome Powell is seen facing a big decision about giving more guidance on the future path of interest rates.“Traders are expecting a significant rewrite in today’s FOMC policy statement when the Fed will, in unambiguous terms, send clear messaging that extraordinary policy settings will remain in place for as long as it takes,” Stephen Innes, chief global market strategist at AxiCorp, wrote in a note.The Nasdaq Composite Index snapped a two-day gain Tuesday, pulled down by Facebook Inc., Amazon.com Inc. and Netflix Inc. as data showed U.S. consumer confidence dropped in April to the lowest since 2014. The S&P 500 fell 0.5%, even as most stocks rose.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:4/28/2020 10:30:07 PM
[Markets] U.S. stocks end lower as investors weigh earnings reports and prospects for reopening economy Dow snaps a four-day win streak to close lower, as investors weighed easing of coronvirus-related economic restrictions with the risks of rising infections. Published:4/28/2020 4:00:46 PM
[Markets] American Express, Dow Inc. share gains lead the way, but Dow flat DOW UPDATE Shares of American Express and Dow Inc. are trading higher Tuesday afternoon, propelling the Dow Jones Industrial Average into positive territory. Shares of American Express (AXP) and Dow Inc. Published:4/28/2020 2:59:07 PM
[Markets] Dow Jones Pares Gains As Stock Indexes Remain Mixed In Late Trading The Dow Jones posted slight gains on the stock market today as more states arranged to relax coronavirus-quarantine measures. Published:4/28/2020 2:27:22 PM
[Markets] Merck Sees Coronavirus Impact Lasting Two Quarters — And Shares Tumble Merck stock tumbled Tuesday after the Dow Jones component said the impact from the coronavirus pandemic should last two fiscal quarters. But first-quarter earnings and sales topped views. Published:4/28/2020 1:29:42 PM
[Markets] Dow Inc., American Express share gains contribute to Dow's nearly 75-point climb DOW UPDATE Shares of Dow Inc. and American Express are trading higher Tuesday afternoon, sending the Dow Jones Industrial Average into positive territory. The Dow (DJIA) was most recently trading 74 points higher (0. Published:4/28/2020 12:27:53 PM
[Markets] Italy Becomes 3rd Country To Pass 200k Coronavirus Cases: Live Updates Italy Becomes 3rd Country To Pass 200k Coronavirus Cases: Live Updates

Summary:

  • Iran sees another drop in deaths
  • For 3rd time, Italy reports more recoveries than new cases in a day, but total tops 200k
  • Russia extends partial lockdown, reports another record batch of new cases, deaths
  • CDC models updated to reflect slightly more US deaths
  • US deaths pass 56k
  • Steny Hoyer says House will not return next week
  • Florida reports drop in COVID-19 cases
  • Spanish official apologizes for spraying beach with bleach
  • McConnell insists Senate will return next week
  • Vilnius launches novel 'outdoor cafe' concept
  • Portugal latest EU member to release plans to end lockdown
  • Netherlands reports lowest single-day death toll in more than a month
  • Surfers return to NZ beaches as the country officially reopens
  • France won't allow large gatherings until at least September
  • Australia reopens Sydney's Bondi Beach despite nearby 'hotspot'
  • NHS releases data showing COVID-19% could be 50% higher in England & Wales
  • Canada reports latest numbers
  • Texas announces plans to start reopening this week
  • Indians reportedly resist reopening push over fears of viral spread
  • Brazil emerging as new 'hot spot' as Bolsonaro continues to deny virus

*       *        *

Update (1300ET): The CDC has updated several models to reflect the quicker pace of reopening, and one model frequently cited by the Trump Administration during its press briefings is now calling for 70k US deaths, compared with....60k during its last update.

Seven coronavirus models show US coronavirus deaths will rise in coming weeks, but how sharply depends on how much "contact reduction" Americans practice, the Centers for Disease Control and Prevention said.

The models estimate the numbers of cases and deaths on the state and national levels, and one model from the University of Texas at Austin makes metro-area projections.

"State-level forecasts vary widely, reflecting differences in early epidemic phases, timing of interventions and model-specific assumptions," the CDC says.

Models that factor in strong contact reduction suggest deaths will continue to occur, but will "slow substantially over the next four weeks," the CDC said.

"Conversely, models that do not incorporate as strong contact reductions ... suggest that total deaths may continue to rise quickly."

One model frequently cited by the White House coronavirus task force has upped its predicted death toll again, this time projecting 74,000 Americans will lose their lives to the virus by August.

It's much of a revision...but it appears that CNN is finally paying attention to these CDC projections...we wonder why.

In other news, Italy reported a higher number of recoveries than new cases for only the third time since the outbreak began, two days after its PM promised to start loosening restrictions on Monday.

Still, as expected, the number of confirmed cases in the country topped 200k, as the Civil Protection Service reported 2,091 new infections and 383 new deaths, bringing its total to 27,385 and the case total to 201,505.

Texas, meanwhile, reported a 3.5% jump in new cases, bringing the state total to 26,171.

*       *        *

Update (1240ET): Gov. Cuomo is delivering Tuesday's daily press briefing in Syracuse, where he confirmed another 335 deaths (a rate roughly unchanged from the last few days) and supplied more information about the state's plan to reopen its economy.

The governor said the state would develop its own 'guidelines' for reopening...

  • CUOMO: CITES CDC GUIDE OF 14 DAYS OF LOWER HOSPITALIZATIONS
  • NEW YORK VIRUS DEATHS TO 17,638, UP FROM 17,303
  • CUOMO: N.Y. ADOPTING SET OF GUIDELINES FOR REOPENING

...which assured the public would be 'data driven'.

*       *        *

Update (1140ET): Following Hoyer's announcement that the House won't return to the Hill next week, Mitch McConnell told reporters that the Senate still plans a return on Monday.

*       *        *

Update (1135ET): More than 56k Americans have been killed by the coronavirus, according to JHU. There are at least 989,357 cases of coronavirus in the US (likely many more). 56,386 have died as of 11amET according to Johns Hopkins, which runs a tally of international coronavirus data.

*       *        *

Update (1110ET): Canada just reported 1,605 new cases of coronavirus and 147 new deaths, bringing its totals to 48,500 cases and 2,707 deaths.

*       *        *

Update (1100ET): Portugal just became the latest EU member state to release plans for lifting its coronavirus restriction, as the FT reports.

Portugal’s president has said that gradual steps will be taken to ease the country’s coronavirus lockdown from next week and that a state of emergency, which came into force on March 18, will end on May 3. Marcelo Rebelo de Sousa said on Tuesday that the economy would be reopened in small steps, but emphasised that life would not yet return to normal. The end of the state of emergency does not mean the virus has stopped spreading or that we no longer need confinement measures. “Every small step” towards relaxing restrictions would have to be evaluated by experts and politicians, he said.

With fewer than 25k cases reported, Portugal managed to stop the massive outbreak centered in Madrid from crossing over the Spanish border.

Over in Washington, Steny Hoyer, the House Majority leader and No. 2 Dem, just told reporters that the House won't return in person next week, despite Mitch McConnell's claim that lawmakers would be back at the capitol by Monday.

*       *        *

Update (1050ET): To ensure that nobody goes back to work between now and the end of Russia's upcoming stretch of holidays, Russian President Vladimir Putin has extended his country's partial lockdown until May 11, and left the door open to further extensions if the outbreak isn't brought under control before then.

"We have done so much, but it is still not yet enough," Putin said during a televised speech. "We have been able to slow down the spread of the virus... but the situation remains very complex."

As we noted earlier, Russia reported a record number of cases and deaths earlier.

Meanwhile, France and Spain are unveiling their plans to reopen their economies, as we noted earlier, despite the fact that Germany's mortality rate has ticked higher since it allowed some more shops to reopen last week.

*       *        *

Update (1040ET): An item published Tuesday morning in the Guardian has caught our eye.

An official in southern Spain has apologised for spraying the local beach with diluted bleach in an attempt to protect residents from Covid-19, writes Ashifa Kassam in Madrid.

The picturesque fishing village of Zahara de los Atunes sent tractors equipped with sprayers along part of its beach last week as officials readied for the release of the country’s children after six weeks of confinement.

An official in southern Spain has apologised for spraying the local beach with diluted bleach in an attempt to protect residents from Covid-19, writes Ashifa Kassam in Madrid.

The picturesque fishing village of Zahara de los Atunes sent tractors equipped with sprayers along part of its beach last week as officials readied for the release of the country’s children after six weeks of confinement.

Spain has been among the countries hardest hit by coronavirus, with more than 23,800 deaths. The government imposed lockdown measures in mid-March, and this week the measures were loosened to allow children under the age of 14 daily outings of up to an hour.

The decision to disinfect the beach has incensed environmentalists. "It’s totally absurd," said María Dolores Iglesias Benítez. "The beach is a living ecosystem. And when you spray it down with bleach, you’re killing everything you come across."

How long before this becomes Trump's fault?

*       *        *

Update (0940ET): As expected, France unveiled its plan for reopening its economy beginning on May 11, while cautioning that if the country sees a rebound in infections between now and then, that the lockdown would be extended.

One of the elements of France's plan calls for a ban on large gatherings to remain in place until September at the earliest, which means the French people will need to get used to a summer with no parties, concerts and other traditional summer activities.

As work on a purported fifth coronavirus aid bill continues, DC Mayor Muriel Bowser told CNN on Tuesday that members of Congress should be considered 'essential workers', something that Congressional leaders have resisted given the average age of lawmakers, especially after several GOP lawmakers tested positive for the virus.

She also notable broke with the president over the capitol city's virus response by claiming her city has yet to experience its "peak" infection rate. “We’re looking at all of the information coming in from our scientists and medical experts...and even looking to the guidelines put out by the White House corona task force would suggest that we have to have 14 days of declines in cases in our jurisdiction."

Senate Majority Leader Mitch McConnell announced that the Senate would reconvene on May 4. Nearly a third of senators are age 70 or older.

*       *        *

Update (0900ET): Here's a rundown of coronavirus updates from the past hours, as well as earlier this morning.

Iran has seen the number of new cases and deaths fall dramatically over the last week. But even after reporting its latest numbers on Tuesday, bringing total confirmed infections to 92,584, along with 5,877 confirmed deaths amid more evidence that the slowdown has continued, Iran retains the second-highest case total in the Muslim world (outside of Turkey).

Russia reported another 6k+ new cases on Tuesday, another record batch of new cases and deaths, as the Kremlin is increasingly alarmed by the new evidence of just how far the virus has spread. And as the outbreak worsens in Moscow - the regional Metropole - the president of Kyrgyzstan, a former Soviet State, has extended his coronavirus 'state of emergency' to May 10, following moves by other Central Asian neighbors as the outbreak in the region continues to intensify.

According to data released by Russia's Ministry of Health, the number of new coronavirus cases was 6,411 on Tuesday, bringing Russia's nationwide tally to 93,558. The number of deaths was 72, raising Russia's death toll to 867. Russia now ranks 8th worldwide in terms of the number of confirmed cases.

Russian President Vladimir Putin has been urging businesses to extend an upcoming holiday period to allow more Russians to stay in and avoid infection. Russia will begin two long public holidays beginning on Friday, and lasting until May 11, with only three working days in between which many usually prefer to take off as well, allowing them to spend 2 weeks outside the major cities.

According to Reuters, Russian search engine Yandex has created an "isolation index" that tracks Russians' activities based on app usage.

The index showed on Tuesday that many Russians were still out and on the streets in Moscow, the epicenter of Russia's outbreak, though these numbers have fallen since the beginning of the month.

Kyrgyzstan has confirmed 708 cases of the disease and used the state of emergency to lock down major cities and several provincial districts where outbreaks were registered.

In (sort of) nearby Lithuania, Vilnius, the country's capital city, has announced plans to create a massive open-air cafe to allow restaurant owners to serve the public in a setting that will allow for the enforcement of social distancing. The Baltic state has recorded 1,344 cases of the coronavirus and 44 deaths as of Tuesday morning. The country allowed cafes and restaurants with outdoor seating, hairdressers and almost all shops to begin reopening this week as it begins to exit its lockdown.

The Netherlands reported 48 more deaths from the virus on Tuesday, its lowest single-day total in more than a month, bringing its total death toll from the virus to 4,566 as the eighth-worst-hit outbreak in Europe continues to ease.

Luxembourg has announced an ambitious plan to test its entire population for the virus within the span of a month. Then again, the tiny European principality only has ~600,000 residents.

Following an FT report estimating that global COVID-19 deaths might be 60% higher than reported, the NHS has released new data on deaths in England and Wales which suggest that deaths in both constituent nations of the UK have exceeded the official number by 52%. England is the source of the vast majority of the UK's infections and deaths. On Tuesday, Downing Street played down reports the government could announce a lockdown exit strategy this week, claiming that the UK hasn't yet seen enough evidence that the outbreak has begun to recede.

In a show of defiance as it struggles with the worst outbreak in the Muslim world, Turkey has sent a planeload of scarce PPE to the US, including masks and disinfectants.

And finally: Spain’s coronavirus death toll has climbed to 23,822 according to data released by the Health Ministry on Tuesday. There were 301 deaths recorded over the past 24 hours, compared with 331 yesterday and 288 on Monday as the country continues to 'bend' the curve. The prime minister, Pedro Sánchez, is expected to outline Spain’s exit plan later today.

*       *        *

US stocks clinched their fourth straight positive close on Monday, with the main indexes logging their longest win streak since February - back when 'lockdowns' were still a foreign concept outside China - as April is on track to snap a three-month losing streak with the strongest monthly rally since 2011.

With the Dow back within spitting distance of 25k, many European and US states have released plans for reopening their economies that have given the people at least some indication of when the lockdown might end (unless it comes roaring back). In New Zealand, surfers hit the waves at dawn for the first time in weeks as the country became one of the first in the developed world to significantly roll back restrictions.

After being asked by NY Mag's Olivia Nuzzi whether he deserved to be reelected after more than 50k Americans succumbed to the virus in a matter of weeks, Trump calmly and coolly made his pitch to the public: Trump noted that the country was bracing for the possibility of millions of deaths just a few weeks ago. And despite all of the gaffes, recriminations and flat-out mistakes and errors in judgment, the US was still able to expand testing and muster a response that has been more effective than efforts undertaken in Italy and Spain (though Germany and South Korea remain in a league of their own when it comes to the efficacy of their respective responses). But despite the big numbers on the board, there's no question that the US response was effective, and big strides were made.

The only problem is that most of Trump's political opponents have now been brainwashed into believing that the economy should remained shuttered until we can ensure that not a single life will be taken unnecessarily by the virus. This standard just isn't possible, and even NY Gov Andrew Cuomo released plans for reopening his state on Monday to try and qualm the fears of millions of New Yorkers whose livelihoods are on the verge of being destroyed.

And as many business owners in Georgia are still reluctant to reopen right now, the New York Times has confirmed that they aren't alone. The paper reported on Tuesday that the biggest obstacle to India's reopening so far has been that business owners and citizens across the country have really bought in to the lockdown, and are now 'too afraid' to go back to work. Back in March, the Lt. Governor of Texas was thoroughly roasted by the MSM for suggesting that he would 'gladly' sacrifice his life for the sake of the economy. And in the NYT's story on Tuesday, a small business owner in northern India expressed an opposing sentiment: "It is better to stay hungry than to get the coronavirus...Why should I risk the lives of my family members for a few hundred rupees?"

It's a hilarious irony that some small business owners in Texas might identify more with the Indian small business owner than their own Lt. Governor as Texas late Monday unveiled its plans reopening its economy, a process that will formally begin on Thursday, followed by a "phased exit" of social distancing practices.

Abbott said Monday he will allow his stay-at-home order for the Lone Star State to expire on Thursday. He will also allow retail stores, malls, restaurants and theaters to reopen Friday, though the state will limit occupancy to 25% in an order that supersedes all municipal rules. Libraries and museums will also be allowed to open, according to CNN.

Readers can learn what other states are planning here.

Abbott says he wants barbershops, salons, gyms and bars to open "as soon as possible" and expects them to open no later than mid-May.

"Now it's time to set a new course, a course that responsibly opens up business in Texas," Abbott said. "We will open in a way that uses safe standards - safe standards for businesses, for their employees as well as for their customers. Standards based upon data and on doctors."

But as Australia and New Zealand start to reopen, and several of the worst-hit European countries prepare to allow more businesses to open, several other countries - notably Japan, Singapore, Russia and Brazil - have emerging as new potential hot spots.

Singapore, of course, is struggling as it discovers that many of the migrant workers in the city state have been infected with the virus. Day after day, Singapore tests as many migrants as it can, and day after day, tons of them test positive. Deaths have been climbing, but remain low, though they did just break above 1k to 1,095. Singapore, a city-state with just under 6 million citizens (and many more migrants), has roughly 15k cases.

The situation is similar in Japan, where the government essentially allowed the virus to penetrate deeply into its society undetected. The reason Japan's emergency rooms haven't been overwhelmed is perhaps a testament to the Japanese health care system, though it certainly has faced unprecedented stress.

Now, one top medical expert is questioning whether Japan will be in a position to hold the Olympic Games next year, according to the AP.

In Brazil, President Jair Bolsonaro continues to insist that COVID-19 is just a "little flu" and has opposed the lockdowns that have been adopted around the world. Brazil has reported 4,600 deaths and 67,000 confirmed infections. But the true numbers are believed to be vastly higher as hospitals in Sao Paolo claim they're being overwhelmed by severely ill patients.

However, the more we learn about the virus, the more it becomes clear that the number of people who become seriously ill only a tiny fraction of those infected. The latest 'surveillance' study carried out by New York State found that as many as 25% of NYC residents may have already been infected. One ER doctor said the infection rate in the Bronx might already be 40%.

As the pace of new infections and new deaths slows, the number of confirmed cases stands at just over 3 million as of Tuesday morning New York time, according to JHU.

Before we go, we spotted this 'critical news story' in China's Global Times. As many US states struggle to import PPE and other essential products, often paying huge markups to unscrupulous manufacturers, one factory in China is cranking out 'Dr. Fauci Bobbleheads'.

...Just in case you wanted to commemorate those weeks where you only showered 6 times and subsisted solely off of Ramen noodles with a fun collectible.

Tyler Durden Tue, 04/28/2020 - 13:16
Published:4/28/2020 12:27:53 PM
[Markets] Dow Jones 378-Point Intraday Gain Fades, But 3M A Bright Spot; Netflix, Tesla Weigh On Nasdaq Sellers were in the Nasdaq Tuesday, but the Dow Jones held a modest gain, helped by strength in 3M stock. Published:4/28/2020 11:29:27 AM
[Markets] Dow flat despite losses for shares of Merck, Intel DOW UPDATE Shares of Merck and Intel are retreating Tuesday morning, dragging the Dow Jones Industrial Average into negative territory. The Dow (DJIA) was most recently trading 5 points (0.0%) lower, as shares of Merck (MRK) and Intel (INTC) are contributing to the blue-chip gauge's intraday decline. Published:4/28/2020 11:02:32 AM
[Markets] Dow loses altitude as Tuesday tone shifts; S&P and Nasdaq turn negative Dow loses altitude as Tuesday tone shifts; S&P and Nasdaq turn negative Published:4/28/2020 10:29:00 AM
[Markets] Dow's 337-point rally highlighted by gains for Boeing, 3M stocks DOW UPDATE The Dow Jones Industrial Average is rallying Tuesday morning with shares of Boeing and 3M delivering the strongest returns for the price-weighted average. The Dow (DJIA) was most recently trading 337 points higher (1. Published:4/28/2020 8:56:43 AM
[Markets] Dow ends up over 250 points Friday, but posts weekly decline Dow ends up over 250 points Friday, but posts weekly decline Published:4/24/2020 3:32:57 PM
[Markets] Dow's up 300 points as stocks rally into the close Dow's up 300 points as stocks rally into the close Published:4/24/2020 3:04:12 PM
[Markets] Gold & Cryptos Surge, Stocks & Oil Purge As Global Economy Crashes Gold & Cryptos Surge, Stocks & Oil Purge As Global Economy Crashes

Global economic data disappointed/crashed by the most on record this week, plunging to its weakest since the great financial crisis...

Source: Bloomberg

But, but, but... stocks are up over the last few weeks right...

Source: Bloomberg

And then there's the ongoing increase in deaths from COVID...

Are you not entertained though?

However, on the week the mirage of gains in stocks faded - after two glorious weeks of "well the worst must be over" gains - and gold surged on the week...

Source: Bloomberg

Other safe-havens were also bid on the week with Bitcoin back above $7500... (NOTE this is the 6th weekly rise for Bitcoin in a row)...

Source: Bloomberg

And long-bond yields down 8bps on the week...

Source: Bloomberg

Small Cap stocks actually outperformed on the week as the Friday afternoon buying panic helped float all boats (ramping Nasdaq green on the week very briefly) but Dow Industrials and Transports were weakest...

As has become the norm, at 1550ET, there was an apparent sell imbalance and stocks suddenly reversed...

FANG stocks were higher on the week but were mostly rangebound...

Source: Bloomberg

Bank stocks tumbled on the week...

Source: Bloomberg

High yield bonds had an ugly week and IG bonds even dropped a little in price...

Source: Bloomberg

While the long-end of the yield curve was bid, the short-end was wider marginally on the week...

Source: Bloomberg

The Dollar was up on the week with rallies every day after Europe closed...

Source: Bloomberg

While Bitcoin was up on the week, Ethereum outperformed...

Source: Bloomberg

Oil was a shitshow this week (8th weekly drop in crude oil of the last 9, despite the rebound in the last two days)...

Gold was up for the 4th weekly rise in the last 5...

Finally, circling back to where we started, here’s a gloomy statistic from Bloomberg to close the week out: Friday’s U.S. durable goods report showed the inventory-to-sales ratio climbed to 1.82 months in March, the highest in almost 11 years.

Source: Bloomberg

Shipments dropped 4.5%, the most since early 2009, leaving producers with more in inventory and signaling production cutbacks in coming months. At the same time, orders for goods meant to last at least three months tumbled 14.4% -- the most since 2014 -- led by slumping demand for commercial aircraft, Commerce Department data show.

So buy stocks?

Tyler Durden Fri, 04/24/2020 - 16:01
Published:4/24/2020 3:04:12 PM
[Markets] S&P 500, Nasdaq cling to slight gains but head for weekly loss, as investors weigh earnings, coronavirus outlook The Dow is flitting between positive to negative Friday afternoon, as investors digested economic data, corporate results, and the latest economic aid package from Congress to combat the COVID-19 pandemic. Published:4/24/2020 1:02:12 PM
[Markets] Dow Jones In The Red As Two Key Blue Chips Weigh; Coronavirus Stocks Rally Key market indexes were narrowly mixed midday Friday, with the Dow Jones Industrial Average underwater after giving up an early 200-point gain. Published:4/24/2020 11:31:55 AM
[Markets] The Dow’s Gains Fade Away as More Grim Economic News Lands The major U.S. stock indexes slipped back to near the break-even line following the release of more downbeat economic data. In mid morning, the Dow Jones Industrial Average was up 27 points, or 0.2%, while the S&P 500 was up 0.3% and the Nasdaq Composite was 0.2% higher. Corporate earnings news, and the latest fallout from the coronavirus pandemic, continued to move individual stocks. Published:4/24/2020 9:31:35 AM
[Markets] Dow set to rise to within range of 50-day moving average, S&P 500 set to get back above it The Dow Jones Industrial Average is about 455 points away (1.9%) from its widely followed 50-day moving average, which it has closed below since the COVID-19-related selloff took shape in late February. Many chart watchers use the 50-day moving average (DMA) to gauge the short-term trend. The Dow has remained in range of the 50-DMA since April 17, the Dow closed at 24,242.49 versus and the 50-DMA came in at 24,558.42. The 50-DMA extends to about 23,970 on Friday, according to FactSet. Meanwhile, the S&P 500 is even closer to its 50-DMA, as it extends to about 2,807 on Friday, or 0.3% above Thursday's close. The S&P 500 had closed slightly above its 50-DMA on April 17, when it closed at 2,874.56 and the 50-DMA was at 2,863.09. Dow futures were up 184 points while S&P 500 futures were up 0.9%. Published:4/24/2020 8:31:54 AM
[Markets] Dow industrials set to move within range of 50-day moving average Dow industrials set to move within range of 50-day moving average Published:4/24/2020 8:31:54 AM
[Markets] Travelers' stock slips after Raymond James gets bearish in the wake of earnings miss Shares of Travelers Companies Inc. fell 0.4% in premarket trading Friday, after Raymond James analyst Gregory Peters turned bearish on the insurer, citing higher uncertainties in core lines related to the coronavirus pandemic. Peters cut his rating to underperform from neutral in the wake of first-quarter results out earlier in the week in which profit and revenue fell below expectations. Peters highlighted charges Travelers recorded for a negative impact to earned premiums, because of a reduction in audit premiums receivable; increased expenses from a bad debt provision for billing relief and modestly higher claims and claims adjustment expenses. "Management singled out several lines of business that could experience continued headwinds from COVID-19 including Workers' Comp. (WC), Management Liability/D&O, Surety, and Business Interruption," Peters wrote in a note to clients. The stock has lost 25.5% over the past three months through Thursday, while the SPDR S&P Insurance ETF has lost 31.1% and the Dow Jones Industrial Average has dropped 18.9%. Published:4/24/2020 8:01:36 AM
[Markets] Dow Jones Futures Turn Higher Despite Intel, Google News After Coronavirus Stock Market Rally Stalls On Gilead Drug Dow Jones futures rose despite Intel earnings and Google spending curbs. Gilead remdesivir news stalled Thursday's coronavirus stock market rally. Published:4/24/2020 6:31:51 AM
[Markets] Dow Jones Edges Higher As Pace Of Job Losses Slow; Oil Prices Recover The Dow Jones Industrial Average closed slightly higher Thursday. U.S. stocks rose across the board early, while awaiting a House vote on a federal stimulus bill. Published:4/23/2020 4:28:53 PM
[Markets] Dow jumps 200 points on gains for Exxon Mobil, UnitedHealth shares DOW UPDATE Behind strong returns for shares of Exxon Mobil and UnitedHealth, the Dow Jones Industrial Average is trading up Thursday afternoon. The Dow (DJIA) is trading 203 points, or 0.9%, higher, as shares of Exxon Mobil (XOM) and UnitedHealth (UNH) are contributing around one third of the blue-chip gauge's intraday rally. Published:4/23/2020 2:29:29 PM
[Markets] Dow Jones Lags Russell 2000, Gold Stocks And Oil Up Big; A New Entry For Zoom Video? The Dow Jones Industrial Average and other key indexes saw a brief stumble midday on news from Gilead's remdesivir treatment vs. Covid-19. Oil rocketed up. Published:4/23/2020 12:50:02 PM
[Markets] Boeing, Exxon Mobil share gains contribute to Dow's 112-point climb DOW UPDATE Shares of Boeing and Exxon Mobil are seeing strong returns Thursday afternoon, lifting the Dow Jones Industrial Average into positive territory. The Dow (DJIA) is trading 112 points, or 0.5%, higher, as shares of Boeing (BA) and Exxon Mobil (XOM) have contributed to the index's intraday rally. Published:4/23/2020 11:56:49 AM
[Markets] Dow jumps 370 points even as recent weeks’ unemployment tally tops 26 million Dow jumps 370 points even as recent weeks’ unemployment tally tops 26 million Published:4/23/2020 10:32:50 AM
[Markets] Dow Jones Futures: Coronavirus Stock Market Rally Powers Back; Apple Leads 5 Stocks Near Buy Points, But Watch Out For This Dow Jones futures: The coronavirus market rally had a strong session, pushing Apple, Tesla and Intel toward buy points. But this looms as a big risk. Published:4/22/2020 4:53:39 PM
[Markets] U.S. stocks end higher, snap two-day losing streak on crude market stability and stimulus hopes U.S. stocks advanced for the first time in three days Wednesday, with the Dow closing up 450 points, amid signs of oil market stability and expectations for Congress to roll out another stimulus package. Published:4/22/2020 3:52:05 PM
[Markets] Dow finishes up over 450 points as stocks snap 2-day skid Dow finishes up over 450 points as stocks snap 2-day skid Published:4/22/2020 3:22:20 PM
[Markets] Dow soars 461 points on gains in shares of Intel, McDonald's DOW UPDATE Shares of Intel and McDonald's are posting strong returns Wednesday afternoon, sending the Dow Jones Industrial Average soaring. The Dow (DJIA) is trading 461 points higher (2.0%), as shares of Intel (INTC) and McDonald's (MCD) have contributed around a third of the index's intraday rally. Published:4/22/2020 1:23:45 PM
[Markets] Dow Jones Rallies As Coronavirus Bill, Oil Price Surge Fuel Stock Market Gains The Dow Jones Industrial Average rallied more than 450 points midday, after the Senate approved another coronavirus relief bill and oil rebounded a bit. Published:4/22/2020 1:00:06 PM
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