Mar 092020
 


 

‘Fake Wealth’ Set To Pop (ABR)
Global Markets Plunge 7-8%, Oil Falls 30% To $30 (G.)
Goldman Cuts Brent Forecasts To $30 On Price War, Virus (R.)
Gig Economy Workers Can’t Afford To Be Ill (G.)
Plummeting Oil Prices And Mortgage Rates Could Boost Consumers (CNBC)
More Countries Will Adopt Italy’s Measures – Austria PM (G.)
Leaked Italy Quarantine Plans Create Chaos, Threaten To Spread Virus (ZH)
Charities Preparing To Feed Children If Schools Shut Over Coronavirus (G.)
NYC Asks Commuters to Stay Off Public Transit ‘If You Can’ (NBC)
A Perfect Storm Of Nationalism And Financial Speculation (Varoufakis)
Tyre Wear Produces 1,000 Times More Harmful Pollution Than Car Exhausts (BW)
Putin Saves Erdogan From Himself (Escobar)
Fiona Hill Says Putin Has America ‘Exactly Where He Wants Us’ (CNN)

 

 

As I wrote yesterday in The Virus is a Time Machine, it’s not about the number of deaths or cases, it’s about the disruption. Today, stock markets are down 7-8%, and oil plummeted 30% to $30. At your service. “Fake Wealth” is popping, say some.

Italy has an oversized role today so far, but there are a number of countries that could take off at any time now. As I said in that article, US, Germany, France, Spain appear to be in a phase where for instance Italy was about a week ago.

Something odd about the numbers today is that COVID2019.app puts South Korea at 8,100 cases, while the other two have it at around 7,400. It must be hard getting the numbers right, and on time.

 

Cases 110,607 (+ 4,120 from yesterday’s 106,487)

Deaths 3,831 (+ 231 from yesterday’s 3,600)

 

From Worldometer yesterday evening (before their day’s close)

 

 

 

From SCMP:

 

 

From Worldometer:

 

 

From COVID2019.app:

 

 

 

 

Smart cookie.

‘Fake Wealth’ Set To Pop (ABR)

Sharemarket and property investors are about to experience a reckoning that sweeps away the pretence of “fake wealth and artificial economy”, Lucerne Investment Partners portfolio manager Jerome Lander says. In a note to clients issued on Monday, Mr Lander said investors were “reacting in horror to the reality of the coronavirus as it begins its exponential growth around the world”. His note came as the Australian sharemarket was experiencing its biggest one-day fall since the global financial crisis, with the S&P/ASX 200 plunging 6 per cent to a 14-month low of 5840.90 amid a collapse in oil prices. “This is a truly frightening pandemic with significant ramifications which much of the developed world is unlikely to cope with well,” Mr Lander said.

“The reality is ICUs [intensive care units] are likely to be overrun around the world and people will increasingly seek to avoid social contact and hide at home in order to avoid contracting the deadly virus.” Mr Lander said a 10 per cent ICU admission rate for Italy’s 1492 cases of coronavirus was a “truly horrifying statistic”. Underlying economic weaknesses was being expose, he said. “One bubble after another is at risk of popping, as the fake wealth and artificial economy of the last few years explodes in the face of a devastating global recession.” With sharemarkets now “crashing, with delusional housing prices likely to follow”, he predicted central banks would shortly attempt to restore order to financial markets through so-called quantitative easing.

“Unlimited QE is likely but won’t help alter the destruction from the pandemic,” Mr Lander said. “These are truly dangerous times for all investors, but particularly for those holding large amounts of overvalued equity and property assets at fake economy prices.”

Read more …

Trillions upon trillions in fake wealth are going POOF. And the central banks that created the fake wealth will throw more fake money at the walls.

Global Markets Plunge 7-8%, Oil Falls 30% To $30 (G.)

Global stock markets have suffered their biggest falls since the 2008 financial crisis while the oil price crashed amid panic selling because of the double threat of a coronavirus-driven global recession and an oil price war. The FTSE 100 index in London plunged 8.5% to 5,911 points, losing 550 points, when trading began on Monday morning. Germany’s Dax tumbled 7.5% and Spain’s Ibex lost 7%. Asian markets also recorded huge losses as fears over the world economy were exacerbated by the shock decision by Saudi Arabia over the weekend to ramp up oil production in an attempt to drive rivals such as Russia and the US out of the market.

The price of Brent crude oil fell almost 30% to $31.14 on Monday, its biggest decline since the start of the Gulf war in 1991. Some experts expect it to fall further unless the Saudis and Russians return to the bargaining table. Turmoil spread on international markets as the coronavirus epidemic deepened around the world. Italy, the worst-hit country in Europe, was plunged into chaos as government plans to quarantine more than 16m people – more than a quarter of its population – were leaked to the media. Italian bond yields jumped on Monday. The number of people infected by coronavirus worldwide has passed 110,000.

Stock markets in Asia Pacific experienced the worst wave of selling since the collapse of Lehman Brothers in 2008 heralded the onset of the global financial crisis. With fears growing of a recession in Australia because of the virus, the Australian share market closed down 7.4%. The Nikkei in Japan fell more than 5%, while Hong Kong’s Hang Sen lost 3.9% and the Shanghai stock exchange dropped just over 3%. US 10-year government bond yields fell to fresh record lows and the Japanese yen and gold soared as investors rushed into safe haven investments.

Read more …

Putin stopped supporting MbS. Isn’t that a good thing? How much do we like MbS?

Goldman Cuts Brent Forecasts To $30 On Price War, Virus (R.)

Goldman Sachs cut its second- and third-quarter Brent price forecasts to $30 per barrel, citing the oil price war between Russia and Saudi Arabia and a significant collapse in oil demand due to the coronavirus that has killed more than 3,500 globally. Oil fell by the most since 1991 on Monday after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the virus outbreak. “The aggressive cut to Saudi’s Official Selling Prices and Russia’s reluctance to be pushed into a deal on Friday point to a low probability of an immediate (OPEC+) agreement,” Goldman said in a note dated March 8.

A three-year pact between OPEC and Russia ended in acrimony on Friday after Moscow refused to support deeper oil cuts and OPEC responded by removing all limits on its own production. “While we can’t rule out an OPEC+ deal in coming months, we also believe that this agreement was inherently imbalanced and its production cuts economically unfounded,” the bank said. Goldman’s base case is now for no such deal, it said. Goldman’s base case is now for no such deal, it said. Lower oil prices will start creating acute financial stress and declining production from shale as well as other high cost producer, the bank said.

There will be a negligible response from U.S. shale producers in the second quarter, but output will fall in the third quarter by 75,000 barrels per day (bpd) and a further 250,000 bpd in the fourth quarter of 2020, the bank said. This will not prevent, however, a third-quarter supply surplus of 1.2 million bpd. “At that point, the fundamental rebalancing could require oil prices falling to operational stress levels for high-cost producers with well-head cash costs near $20/bbl,” it said.

Read more …

Home deliveries are set to double, but the people working the field don’t get paid anything. The future’s so bright…

Gig Economy Workers Can’t Afford To Be Ill (G.)

Shane Stephen, a Deliveroo rider, pulls a snood over his mouth and nose as he manoeuvres his mountain bike down a narrow side-street in central London. It is his makeshift defence against coronavirus. “If I catch something I’m screwed,” explains the 23-year-old. “Gig economy workers can’t afford to be ill. My bank balance is literally £4 something right now.” Stephen – like tens of thousands of other couriers and drivers in the UK – is classed as self-employed and therefore not entitled to any sick pay. He stands to gain nothing from Boris Johnson’s pledge last Wednesday to give coronavirus-hit workers statutory sick pay from the first day off work rather than the fourth. Yet Stephen and other gig economy couriers could be called on to deliver food and other essentials to self-isolating households when the virus reaches its peak.

Some industry analysts foresee the number of home deliveries doubling if people are told to work from home and avoid large gatherings under the government’s so-called social-distancing strategy, which will kick in if the virus continues to spread across the country. Unions representing gig economy workers, such as the GMB and Independent Workers Union of Great Britain (IWGB), fear couriers with coronavirus symptoms may keep working. “Many will carry on because they need to put food on the table and pay the rent. They will then come into contact with other people and spread the virus,” says Mick Rix from the GMB, which represents thousands of couriers. “This would be going against everything the government is trying to achieve at the moment.”

[..] Josh Lane (not his real name) jumps into his DPD Local van after making a delivery in Tottenham. He cleans his hands with hand sanitiser. “I’m in a rush, but I’m doing my bit,” he says through the rolled-down window. However, the 30-year-old cannot afford to stop work if he contracts the virus. “It’s like a flu and I’ve worked through flu before. If you’re self-employed you have to continue working,” he says. “It’s not about me. I’ve got three children. I’m not about to make them starve because of coronavirus. If I’m physically able to work, then isolation is not happening for me.”

Read more …

The kind of stuff that stumps me: “This resiliency of the consumer will once again support equities and most likely show that this current market reaction is a ‘blip’..

These people have zero connection to reality.

Plummeting Oil Prices And Mortgage Rates Could Boost Consumers (CNBC)

As the deadly coronavirus spreads across the globe, oil prices are down 30% for the year and the average rate on the popular 30-year fixed mortgage has fallen to an eight-year low. It’s positive news for consumers in the short term, even as some economists warn that the virus could tip the U.S economy into recession as the outbreak escalates. The drop in mortgage rates and oil prices could boost consumer confidence, which rose less than expected in February just one day after the stock market had one of its worst days amid virus concerns. A boost in consumer confidence, in turn, could ease those recession fears. “The U.S. economy is 70% consumer driven,” said John Kilduff, founding partner of Again Capital.

“A drop in gasoline prices acts like a tax cut, freeing up money to spend in other sectors of the economy, especially discretionary sectors, such as travel and leisure and dining.” The relentless pace of headlines related to the coronavirus, however, could ultimately act as a psychological break on any boost in confidence that low oil prices and mortgage rates might deliver to the consumer. “The question is whether the fear factor attributable to the virus will overwhelm any positive impact from lower gasoline prices and lower mortgage rates,” said Edward Yardeni, president of Yardeni Research. “That’s hard to answer, but it seems to me that fear is winning the tug of war currently as evidenced by the drop in stock prices and the panicky responses of governments, the media … and the public,” he added.

[..] Jeff Kilburg, founder and CEO of KKM Financial, said that the short-term reaction to lower oil prices will translate into lower prices at the pump for Americans, and that in combination with historically low mortgage rates will provide substantial strength for consumers in the second quarter. “This resiliency of the consumer will once again support equities and most likely show that this current market reaction is a ‘blip,’ not the end of this bull market … and certainly not the beginning of a recession,” Kilburg said.

Read more …

Absolutely right. Will I be able to get to Greece in time?

More Countries Will Adopt Italy’s Measures – Austria PM (G.)

Austria’s chancellor has said other European countries will be forced to adopt containment measures as drastic as Italy’s, after Rome placed a quarter of the population in lockdown in an effort to halt the rapid spread of the coronavirus. As the head of the World Health Organization praised Italy’s “genuine sacrifices”, Sebastian Kurz said the situation in Austria, which has reported 99 Covid-19 cases, was under control and the measures it had adopted were appropriate for the time being. He said EU leaders and health ministers were in close contact over their countries’ handling of the epidemic [..] “It will be important to decide which steps to take when,” Kurz said. “You can close schools for one or two weeks and this is urgently necessary in Italy. It will happen in other European countries. The decisive question is when to do it.”

The difficulty will be in balancing the need to head off a peak in infections that could paralyse public health systems against excessive economic damage, he said. “You have to consider carefully when to adopt these measures, because a national economy cannot handle this over too long a period.” Speaking to French radio, the EU commissioner for the single market, Thierry Breton, said European countries were “each acting according to the latest available data in their countries. The virus has spread faster in some places than in others, so naturally the measures in each differ”. In the US, Anthony Fauci, the head of the infectious diseases unit at the National Institutes of Health, said Americans , and particularly those who are vulnerable, may have to stop attending big gatherings. Nor could large-scale quarantines be ruled out, he said.

The WHO director general, Tedros Adhanom Ghebreyesus, tweeted his appreciation for Rome’s efforts after the government published a decree barring people from entering or leaving vast areas of northern Italy without good reason until 3 April. The quarantine zones are home to about 16 million people and include the regions around Venice and the financial capital, Milan. Cinemas, theatres and museums will be closed nationwide and leave has been cancelled for health workers as the prime minister, Giuseppe Conte, said the country was facing a national emergency.

Read more …

You announce an upcoming travel ban, so what do people do? Travel.

Leaked Italy Quarantine Plans Create Chaos, Threaten To Spread Virus (ZH)

Italians have become inured to alarming news over the past month as the outbreak has spiraled out of control in Lombardy. But following a flurry of uncontrolled leaks warning about an imminent lockdown as part of the government’s planned emergency decree, restaurants and bars started emptying out and many fled to the train station, where they hopped trains to get out of the region, especially those who had plans to travel elsewhere that were being interrupted by the lockdown. According to an SCMP reporter in Padua, packed bars and restaurants quickly emptied out as news of a coming lockdown hit, as many people rushed to the railway station. Travellers with suitcases, wearing face masks, gloves and carrying bottles of sanitising gel shoved their way on to the local train.

This appears to have been a phenomenon across the North. The video shows passengers with large bags packed heading toward a cross-country train to take them out of the quarantine zone and into the Italian south, where the virus has penetrated, but infection numbers and deaths remain much lower than in the north. This could be terrible news for the impoverished south: experts have repeatedly warned that southern Italy – best known as an agricultural and fishing center rife with organized crime – doesn’t possess the medical infrastructure to handle a surge in life-threatening cases of pneumonia. While Andrew Cuomo has repeatedly insisted during his seemingly never-ending series of press conferences that the panic is worse than the virus itself, in Italy, the situation is rapidly deteriorating on both fronts.

One epidemiologist described the series of panic-provoking leaks as “pure madness.” Fortunately, Italian markets were closed during the panic, and now people have more or less accepted the new rules. But at this point, the horse is already out of the barn. Panicked Italians are now traveling around the country, potentially bringing the virus with them. “The draft of a very harsh decree is leaked, sparking panic and prompting people to try and flee the [then] theoretical red zone, carrying the virus with them,” wrote Italian virologist Roberto Burioni on Twitter. “In the end, the only effect is to help the virus to spread. I’m lost for words.”

Read more …

Even before the virus, Britain’s reality is devastating: ““or so many families now, schools are the first line of defence against hunger..“

Charities Preparing To Feed Children If Schools Shut Over Coronavirus (G.)

A charity led by the archbishop of Canterbury is preparing to help feed children if schools are closed by coronavirus, amid fears the withdrawal of free school dinners could leave up to 3 million children at risk of hunger. Feeding Britain, which runs food poverty schemes in 12 areas of England including Cornwall, Leicester, Barnsley and South Shields, is exploring how to set up emergency programmes similar to those used to feed the poorest children during the summer holidays. The Akshaya Patra Foundation, which serves thousands of hot meals to children every summer in London boroughs, is also “prepared to enter crisis mode”, while food projects in Bristol and Huddersfield said they were exploring how their schemes to feed hundreds of children in school holidays could be adapted to help cope with emergency closures.

“For so many families now, schools are the first line of defence against hunger,” said Andrew Forsey, the national director of Feeding Britain, whose president is the Most Rev Justin Welby. “In many cases it is breakfast as well as lunch, so if the schools close it’s two meals we have to find. There is early-stage planning going on around ensuring supplies of food and the extent of voluntary support that could be drawn upon if some schools do need to close.” Downing Street said on Tuesday that school closures would be among “distancing strategies” used if the virus became established in the UK. On Thursday, Italy closed all of its schools and colleges for a month.

[..] An immediate challenge is likely to be finding a way to deliver meals in a way that maintains the distance between people that school closures are meant to achieve. The Bristol project said it could involve delivering food parcels door-to-door. Forsey also said panic-buying that cleared supermarket shelves could hinder efforts as many free meal programmes relied on retailers’ donations.

Read more …

“106 people in New York have confirmed cases of Coronavirus. But- “As of Saturday only about 120 people in New York City had been tested..”

The dumbest advice ever. “Take the next train”.

NYC Asks Commuters to Stay Off Public Transit ‘If You Can’ (NBC)

City and state officials issued new travel suggestions amid growing novel coronavirus cases in the tri-state area. New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio asked sick people to stay off public transit, especially subways and buses. Their warnings included a suggestion to avoid dense crowds on buses, subways and trains, or take alternate travel if possible. “If you take the subway and you are able to wait for a less packed train, please do. If you have the option of walking or biking, please do. Buses can be crowded too, but less than subways, so please use these if you can,” de Blasio said. “Move to a train car that is not as dense. If you see a packed train car, let it go by. Wait for the next train. Same if you’re taking a bus,” Cuomo said.


Avoiding public transit is not an option for most New Yorkers and they’re not afraid to let the mayor know. “Happy to ride a bike to work. Can you make it so people don’t die in Queens while biking? Vehicular deaths are a public health crisis too,” one Twitter user said in response to de Blasio’s announcement. In the city’s other effort to stop the spread of COVID-19, transit workers started to disinfect subway turnstiles, station handrails, MetroCard and ticket vending machines daily and other frequently used parts of the system, according to a statement from Transport Workers Union President Tony Utano. The deep clean extends to Long Island Rail Road, Metro-North and Access-A-Ride services as well. In addition to the daily cleaning, the MTA says its full fleet of subway trains and buses will undergo sanitization every 72 hours.

Read more …

I think Yanis is getting ahead of himself. What the situation will be once the pandemic is over is so murky right now we must all be very cautious about predicting anythig.

A Perfect Storm Of Nationalism And Financial Speculation (Varoufakis)

Nationalism and speculation have seldom had a better opportunity to combine forces as the one riding today on the coattails of Covid-19, known as the coronavirus. When Covid-19 leapfrogged from China to Italy, even ardent Europeanists normally appreciative of open borders joined the deafening calls to end freedom of movement across Europe’s national borders – a longstanding demand of nationalists. Meanwhile, the money men speculating on government debt are performing a classic flight from Italian to German government bonds, seeking the financial safety that only the continent’s hegemon can offer during any crisis. As if in a bid to remind us of the great contradiction of our times, Covid-19 is illuminating gloriously the freedom of money to transcend a borderless financial universe while humans remain as fenced in as ever.

Meanwhile in the United States, President Trump is combining his standard call for taller walls with a fresh instruction to moneymen to “buy the dip” in Wall Street, rather than to follow their natural instinct to seek refuge in the boring but safe bond markets. A great deal will depend on whether financiers believe Mr Trump or not, and not just because this is an election year. If speculators do believe the American president, Wall Street will recover swiftly even before the epidemic subsides. The forces of xenophobic financialisation will then have triumphed and America’s progressives will face an uphill struggle on every political front. As for the European Union, ruling elites will breathe a sigh of relief that a new depression was avoided and return to managing as best as they can the economic stagnation of recent times, tinged this time with a large dose of additional, coronavirus-reinforced, xenophobia.

Will Wall Street follow Mr Trump’s advice to “buy the dip”? For now, the large players are in two minds. The drop in the stock market does not worry them as such. Their concern is that the recent bull market was running on increasingly suspect debt and that Covid-19 may have pricked a bubble that was going to burst anyway. Similarly in Europe, the worst spectre hovering over investors’ heads is that large corporations, relying for too long on free money from the European Central Bank, may be downgraded from investment to junk-grade – especially so at a time of stagnant domestic demand and a collapsed Chinese import market.

Read more …

Maybe electric cars should run on electric tires?

Tyre Wear Produces 1,000 Times More Harmful Pollution Than Car Exhausts (BW)

Car tyres could be doing more damage to our health than the fumes from exhaust pipes, according to the results from a new test. Measurements found that 5.8 grams per kilometre of harmful particles are emitted by tyres as they wear when a car is being driven. That compares to 4.5 milligrams per kilometer produced from exhaust pipes of the latest vehicles on sale today – meaning harmful tyre outputs are higher by a factor of over 1,000. Assessments were conducted by UK-based experts Emissions Analytics, which specialises in calculating the pollution produced by cars in real-world driving.


The type of emissions tyres have been found to produce is harmful particulate matter that is almost impossible to see with the naked eye. It’s made up of microscopic solids or liquid droplets that are so small that they can be inhaled and cause serious health problems. Particles less than 2.5 micrometers in diameter – also known as PM2.5 – pose the greatest risk to our health. Exposure can affect both the lungs and heart, with numerous scientific studies linking them to a variety of problems. This includes premature death in people with heart or lung disease, nonfatal heart attacks, irregular heartbeat, aggravated asthma, decreased lung function and wider respiratory symptoms.

Read more …

But there are videos of Turkish troops destroying Greek fences to let migants pass. Erdogan is in Brussels today.

Putin Saves Erdogan From Himself (Escobar)

At the start of their discussion marathon in Moscow on Thursday, Russian President Vladimir Putin addressed Turkish President Recep Tayyip Erdogan with arguably the most extraordinary diplomatic gambit of the young 21st century. Putin said: “At the beginning of our meeting, I would like to once again express my sincere condolences over the death of your servicemen in Syria. Unfortunately, as I have already told you during our phone call, nobody, including Syrian troops, had known their whereabouts.” This is how a true world leader tells a regional leader, to his face, to please refrain from positioning his forces as jihadi supporters – incognito, in the middle of an explosive theater of war. The Putin-Erdogan face-to-face discussion, with only interpreters allowed in the room, lasted three hours, before another hour with the respective delegations.

In the end, it all came down to Putin selling an elegant way for Erdogan to save face – in the form of, what else, yet another ceasefire in Idlib, which started at midnight on Thursday, signed in Turkish, Russian and English – “all texts having equal legal force.” Additionally, on March 15, joint Turkish-Russian patrolling will start along the M4 highway – implying endless mutating strands of al-Qaeda in Syria won’t be allowed to retake it. If this all looks like déjà vu, that’s because it is. Quite a few official photos of the Moscow meeting prominently feature Russian Foreign Minister Sergey Lavrov and Defense Minister Sergey Shoigu – the other two heavyweights in the room apart from both Presidents. In the wake of Putin, Lavrov and Shoigu must have read the riot act to Erdogan in no uncertain terms.

That’s enough: now behave, please – or else face dire consequences. A predictable feature of the new ceasefire is that both Moscow and Ankara – part of the Astana peace process, alongside Tehran – remain committed to maintaining the “territorial integrity and sovereignty” of Syria. Once again, there’s no guarantee that Erdogan will abide. It’s crucial to recap the basics. Turkey is deep in financial crisis. Ankara needs cash – badly. The lira is collapsing. The Justice and Development Party (AKP) is losing elections. Former prime minister and party leader Ahmet Davutoglu – who conceptualized neo-Ottomanism – has left the party and is carving his own political niche. The AKP is mired in an internal crisis.

Erdogan’s response has been to go on the offensive. That’s how he re-establishes his aura. Combine Idlib with his maritime pretensions around Cyprus and blackmail pressure on the EU via the inundation of Lesbos in Greece with refugees, and we have Erdogan’s trademark modus operandi in full swing. In theory, the new ceasefire will force Erdogan to finally abandon all those myriad al Nusra/ISIS metastases – what the West calls “moderate rebels,” duly weaponized by Ankara. This is an absolute red line for Moscow – and also for Damascus. There will be no territory left behind for jihadis. Iraq is another story: ISIS is still lurking around Kirkuk and Mosul.

[..] No NATO fanatic will ever admit it, but once again it was Russia that just prevented the threatened “Muslim invasion” of Europe advertised by Erdogan. Yet there was never any invasion in the first place, only a few thousand economic migrants from Afghanistan, Pakistan and the Sahel, not Syrians. There are no “one million” Syrian refugees on the verge of entering the EU. The EU, proverbially, will keep blabbering. Brussels and most capitals still have not understood that Bashar al-Assad has been fighting al Nusra/ISIS all along. They simply don’t understand the correlation of forces on the ground. Their fallback position is always the scratched CD of “European values.” No wonder the EU is a secondary actor in the whole Syrian tragedy.

Read more …

To think there were scores of people who said Hill made so much sense. Very simple questions that remain unanswered: what exactly do the Russians do according to her, and how exactly does that divide Americans? Never an answer, other than “US intelligence believes that…”

Fiona Hill Says Putin Has America ‘Exactly Where He Wants Us’ (CNN)

President Donald Trump’s former top Russia adviser is warning that President Vladimir Putin has America “exactly where he wants us.” “Putin, sadly, has got all of our political class, every single one of us, including the media, exactly where he wants us. He’s got us feeling vulnerable…on edge, and he’s got us questioning the legitimacy of our own systems,” Fiona Hill told CBS’ Lesley Stahl in an interview set to air on “60 Minutes” Sunday. The interview marks the former top White House official’s first since testifying in the impeachment inquiry into Trump. During congressional hearings in the inquiry, Hill warned that the Republican defense of the President — by peddling Ukraine conspiracy theories — was in danger of extending Russia’s meddling in the 2016 US presidential election.

Hill, who left the Trump administration last summer, has studied Russia for decades and is a critical biographer of Putin, authoring or co-authoring a number of books on Russia, including two editions of a book titled “Mr. Putin: Operative in the Kremlin. In the interview, Hill said Russia understands how to exploit American divisions. “The Russians didn’t invent partisan divides. The Russians haven’t invented racism in the United States,” Hill said. “But the Russians understand a lot of those divisions, and they understand how to exploit them.” Russian interference in the last presidential election — which the US intelligence community believes was aimed at boosting Trump’s candidacy and hurting his opponent, Hillary Clinton — led to special counsel Robert Mueller’s investigation.

Part of the election interference included a Russian government-linked troll operation that sought to help Trump’s candidacy and undercut that of Clinton in part by posting messages in support of Sanders. Concerns over the Kremlin’s role in US politics have continued. The US intelligence community has assessed that Russia is interfering in the 2020 election and has separately assessed that Russia views Trump as a leader they can work with. In February, Democratic presidential candidate Sen. Bernie Sanders also said his campaign was briefed about Russian efforts to help his operation. It was unclear how Russia was attempting to help the Vermont senator.

Read more …

 

 

 

 

Today is International Women’s Day. So of course the DNC changes its rules yet again, this time to bar its only remaining female candidate from participating in the next debate.

 


 

 

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Jul 312018
 
 July 31, 2018  Posted by at 8:46 am Finance Tagged with: , , , , , , , , , ,  4 Responses »


René Magritte The son of man 1946

 

‘Prophet Of Doom’ Predicts Stock Market Will Plunge More Than 50% (MW)
Prepare For Biggest Stock-Market Selloff In Months – Morgan Stanley (MW)
US Treasury Raises 2018 Borrowing Need To $1.33 Trillion (ZH)
QE Turns Ten (Stephen Roach)
Fruits of the Great 2017 GOP Tax Cut Scam (Lendman)
Britain’s Borrowing Binge Continues As Brexit Looms (Ind.)
Brexit: UK Warns EU Of Tit-For-Tat Measures Over Financial Services (G.)
Trump Offer To Meet Iran President Rouhani Dismissed By Both Sides (G.)
The Ubiquity of Evil (Craig Murray)
World’s Largest King Penguin Colony Has Declined By 90% (G.)
Charities Damned For ‘Abject Failure’ In Tackling Sexual Abuse (G.)

 

 

We take John Hussman seriously.

‘Prophet Of Doom’ Predicts Stock Market Will Plunge More Than 50% (MW)

John Hussman, president of Hussman Investment Trust, describes himself as an economist, a philanthropist, and a “realist optimist often viewed as a prophet of doom” on his Twitter profile. That last bit may be the one investors care about on Monday as the stock market shows signs of unraveling on the back of the tech sector’s stumble. Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008. Since then, however, he’s also become known as a permabear for his repeated calls for sharp stock market declines and his oft-repeated mantra of “overbought, overvalued, overbullish” as the bull market continues into its ninth year by some measures. Hussman says he’s learned from and addressed past errors.

In his most recent call, he argued that measured “from their highs of early-2018, we presently estimate that the completion of the current cycle will result in market losses on the order of -64% for the S&P 500 index, -57% for the Nasdaq-100 Index, -68% for the Russell 2000 index, and nearly -69% for the Dow Jones Industrial Average.” He admits the numbers seem extreme but says they are backed up what he refers to as the “Iron Law of Valuation.” “The higher the price investors pay for a given set of expected future cash flows, the lower the long-term investment returns they should expect. As a result, it’s precisely when past investment returns look most glorious that future investment returns are likely to be most dismal, and vice versa,” he writes.

Read more …

Tech.

Prepare For Biggest Stock-Market Selloff In Months – Morgan Stanley (MW)

The U.S. stock market has been partying all throughout July, and a hangover is coming. That is according to analysts at Morgan Stanley, who said that Wall Street’s rally is showing signs of “exhaustion,” and that with major positive catalysts for trading now in the rearview mirror, there’s little that could continue to propel equities higher. “With Amazon’s strong quarter out of the way, and a very strong 2Q GDP number on the tape, investors were finally faced with the proverbial question of ’what do I have to look forward to now?’ The selling started slowly, built steadily, and left the biggest winners of the year down the most. The bottom line for us is that we think the selling has just begun and this correction will be biggest since the one we experienced in February,” the investment bank wrote to clients.

The decline “could very well have a greater negative impact on the average portfolio if it’s centered on tech, consumer discretionary and small-caps, as we expect.” A correction is technically defined as a decline of at least 10% from a recent peak. Both the Dow Jones Industrial Average DJIA and the S&P 500 corrected in early February, on concerns that inflation was returning to markets. While the Dow remains in correction territory—meaning it hasn’t yet risen 10% from its low of the pullback—the S&P exited just last week, following its longest stint in correction territory since 1984. The Nasdaq Composite Index never fell into correction.

Read more …

Infinity and beyond.

US Treasury Raises 2018 Borrowing Need To $1.33 Trillion (ZH)

America’s funding needs are starting to grow at a dangerous pace. Even before the NYT reported of Trump’s startling suggestion of a further $100 billion tax cut in the form of an inflation-adjusted capital gains tax cost basis which mostly benefits the wealthy, earlier today the U.S. Treasury said it expects to borrow $56 billion more during the third quarter than previously estimated, while market participants expect shorter-dated Treasuries to absorb the brunt of the new supply as the Trump administration grapples with a mushrooming budget deficit.

In the Treasury’s latest quarterly Sources and Uses table, it revealed that it expects to issue $329 billion in net marketable debt from July through September, and $56 billion more than the $273 billion estimated three months ago, in April. assuming an end-of-September cash balance of $350 billion, matching its previous estimate. It also forecast $440 billion of borrowing in the final three months of the year, with a $390 billion cash balance on December 31. The borrowing estimate for the third quarter is the highest since the same period in 2010 and the fourth largest on record for the July-September quarter, according to Reuters. In the second quarter, net borrowing totaled $72 billion, slightly below the earlier prediction of $75 billion.

The US fiscal picture continues to darken as a result of rising social security costs, military spending and debt service expenses while corporate tax income is declining after last year’s tax reforms. As a result, the federal budget deficit is expected to reach $833 billion this year, up from $666 billion in the budget year ended last September, a number that is well below the net funding demands for the US Treasury. The new projections put total net borrowing at $769 billion for the second half of 2018 and a whopping $1.33 trillion for the whole year.

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The Fed has been granted far too much power. We’re going to regret that.

QE Turns Ten (Stephen Roach)

November 2018 will mark the tenth anniversary of quantitative easing (QE) — undoubtedly the boldest policy experiment in the modern history of central banking. The only thing comparable to QE was the US Federal Reserve’s anti-inflation campaign of 1979-1980, orchestrated by the Fed’s then-chair, Paul Volcker. But that earlier effort entailed a major adjustment in interest rates via conventional monetary policy. By contrast, the Fed’s QE balance-sheet adjustments were unconventional and, therefore, untested from the start.

[..] The most important lesson pertains to traction — the link between Fed policy and its congressionally mandated objectives of maximum employment and price stability. On this count, the verdict on QE is mixed: The first tranche (QE1) was very successful in arresting a wrenching financial crisis in 2009. But the subsequent rounds (QE2 and QE3) were far less effective. The Fed mistakenly believed that what worked during the crisis would work equally well afterwards. An unprecedentedly weak economic recovery – roughly 2% annual growth over the past nine-plus years, versus a 4% norm in earlier cycles – says otherwise. Whatever the reason for the anemic recovery – a Japanese-like post-crisis balance-sheet recession or a 1930s style liquidity trap – the QE payback was disappointing.

From September 2008 to November 2014, successive QE programs added $3.6 trillion to the Fed’s balance sheet, nearly 25% more than the $2.9 trillion expansion of nominal GDP over the same period. A comparable assessment of disappointing interest-rate effects is reflected in recent “event studies” research that calls into question the link between QE and ten-year Treasury yields. A second lesson speaks to addiction – namely, a real economy that became overly reliant on QE’s support of asset markets. The excess liquidity spawned by the Fed’s balance-sheet expansion not only spilled over into equity markets, but also provided support for the bond market. As such, monetary policy, rather than market-based fundamentals, increasingly shaped asset prices.

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QE, tax cuts, it’s all just a great wealth transfer.

Fruits of the Great 2017 GOP Tax Cut Scam (Lendman)

David Stockman estimates the great GOP tax cut heist will increase the federal debt to around $35 trillion by 2028. Most discretionary US spending goes for militarism, war-making, corporate welfare, and police state harshness. According to Americans for Tax Fairness (ATF), the fruits of last year’s great GOP tax cut heist were as follows: 4.3% of workers got wage hikes or bonuses – 6.7 million out of 155 million. Only a handful of employers provided them so far – 407 out of 5.9 million. Corporate predators are getting 11-fold as much in tax breaks as they’re giving workers in extra pay and bonuses – $77 billion v. $7 billion.

Corporate predators are spending 88 times the amount on stock buybacks as on worker wage hikes and bonuses – $7 billion v. $617 billion. Trump’s highly touted “middle class miracle” was a colossal Big Lie. It’s been a bonanza for corporate predators, high net-worth households, and real estate tycoons like himself – a scam for ordinary Americans. It’s ballooning the deficit, social benefits being slashed to help pay for it, a clearly transparent wealth transfer scheme. Economists know tax cuts don’t create jobs and stimulate growth unless benefits help workers substantially. When money is in the pockets of ordinary people, they spend it, best accomplished through higher wages, at least keeping pace with inflation.

Post-9/11, America has been thirdworldized to benefit corporate predators and high net-worth individuals at the expense of working households. Ordinary Americans have been scammed to make privileged ones richer. Separately, according to Americans for Tax Fairness (ATF), healthcare insurers intend instituting huge premium increases in 2019. They’ll range from around 12% to a whopping 91% requested by a Maryland insurer.

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Credit Cards ‘R’ Us.

Britain’s Borrowing Binge Continues As Brexit Looms (Ind.)

Britain’s credit card fuelled spending binge continues apace, according to the latest figures from the Bank of England. Lending via plastic rose by an annualised 9.5 in June, outpacing other forms of unsecured credit (8.5 per cent). Mortgage lending, by contrast, ticked up by a more modest 3.2 per cent. The release of the figures followed a report by the Office for National Statistics that last week found UK consumers collectively spent more than they earned in 2017, the first time that has happened in almost 30 years. It looks like we’re due a repeat this year. How much of a worry is this? Regulators say most people can afford to repay what they have borrowed.

However, the Prudential Regulatory Authority, that oversees institutions’ financial soundness, last year undertook a review of consumer lending that resulted in what could be read as a shot across the industry’s bows. The Financial Conduct Authority, meanwhile, tweaked its rules in July, making it clear that it wanted lenders to asses not just whether consumers can repay what they have borrowed but whether they can do so “affordably and without this significantly affecting their wider financial situation”. It follows a speech in March by Jonathan Davidson, the watchdog’s director of supervision, in which he said that “a firm whose business model is predicated on selling products to customers who can’t afford to repay them is not acceptable, nor is it a sustainable long-term strategy”.

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Yeah, the UK is really in a position to utter threats.

Brexit: UK Warns EU Of Tit-For-Tat Measures Over Financial Services (G.)

UK negotiators have told their counterparts in Brussels that about 7,000 European-based investment funds that rely on British clients for their cash and profits will be hit by regulators unless the EU changes its position on the City of London after Brexit. As frustration grows within Whitehall at what is seen as a dogmatic position taken by the EU’s chief negotiator, Michel Barnier, the British side has upped the ante by making an implicit threat to EU interests. A section of a UK presentation made to the European commission’s negotiators last week, and seen by the Guardian, says that unless Brussels allows all UK sectors of the City of London to continue to operate after Brexit as they do today, at least initially, obstacles to European financial interests operating in the UK could also be put in place.

The British government says the EU’s “equivalence regime”, under which UK providers would have the right to offer financial services in the European economic area after Brexit, does not cover enough sectors or provide adequate assurances to UK-based banks and fund managers. The UK also wants equivalence decisions to be made collaboratively between Brussels and Whitehall on whether parts of the financial sector will be able to continue to operate across the Channel as regulations diverge after Brexit. As it stands, a declaration of equivalencecan be easily revoked with only 30 days’ notice under existing EU legislation. The EU is resisting, and insists it will not offer a bespoke deal on financial services. It says that what works for US financial services providers will have to work for the UK.

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Peace with Russia, peace with Iran, that’s not the playbook, Donald.

Trump Offer To Meet Iran President Rouhani Dismissed By Both Sides (G.)

Donald Trump has said he would “certainly meet” Iranian president Hassan Rouhani without preconditions, a move that was later rejected by Trump’s own administration and one of Rouhani’s advisers. Speaking during a joint news conference with Italy’s prime minister, Giuseppe Conte, Trump said he would meet Iran “anytime they want to”. “I’ll meet with anybody,” he said. “There’s nothing wrong with meeting.” Asked whether he would set any preconditions, Trump was clear. “No preconditions, no. If they want to meet, I’ll meet any time they want,” he said. “Good for the country, good for them, good for us and good for the world. No preconditions. If they want to meet, I’ll meet.”

Trump’s apparently spontaneous overture marked a significant shift in tone and follows escalating rhetoric in the wake of his dumping in May of the landmark Iran nuclear accord. The administration is set next month to begin reimposing sanctions that had been lifted under the 2015 deal and has been ratcheting up a pressure campaign on the Islamic republic that many suspect is aimed at regime change. After the comment, secretary of state Mike Pompeo appeared to contradict Trump, listing preconditions that had to be met first. He told CNBC on Monday: “If the Iranians demonstrate a commitment to make fundamental changes in how they treat their own people, reduce their malign behaviour, can agree that it’s worthwhile to enter in a nuclear agreement that actually prevents proliferation, then the president said he’s prepared to sit down and have a conversation with him,” he said.

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Murray on his time as a UK diplomat.

The Ubiquity of Evil (Craig Murray)

I had served as First Secretary in the British Embassy in Poland, and bumped up startlingly against the history of the Holocaust in that time, including through involvement with organising the commemoration of the 50th anniversary of the liberation of Auschwitz. What had struck me most forcibly was the sheer scale of the Holocaust operation, the tens of thousands of people who had been complicit in administering it. I could never understand how that could happen – until I saw ordinary, decent people in the FCO facilitate extraordinary rendition and torture. Then I understood, for the first time, the banality of evil or, perhaps more precisely, the ubiquity of evil. Of course, I am not comparing the scale of what happened to the Holocaust – but evil can operate on different scales.

I believe I see it again today. I do not believe that the majority of journalists in the BBC, who pump out a continual stream of “Corbyn is an anti-semite” propaganda, believe in their hearts that Corbyn is a racist at all. They are just doing their job, which is to help the BBC avert the prospect of a radical government in the UK threatening the massive wealth share of the global elite. They would argue that they are just reporting what others say; but it is of course the selection of what they report and how they report it which reflect their agenda.

The truth, of which I am certain, is this. If there genuinely was the claimed existential threat to Jews in Britain, of the type which engulfed Europe’s Jews in the 1930’s, Jeremy Corbyn, Billy Bragg, Roger Waters and I may humbly add myself would be among the few who would die alongside them on the barricades, resisting. Yet these are today loudly called “anti-semites” for supporting the right to oppose the oppression of the Palestinians. The journalists currently promoting those accusations, if it came to the crunch, would be polishing state propaganda and the civil servants writing railway dockets. That is how it works. I have seen it. Close up.

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Bye my friends. I’m going to miss you. Something bad.

World’s Largest King Penguin Colony Has Declined By 90% (G.)

The planet’s largest colony of king penguins has declined by nearly 90% in three decades, researchers have warned. The last time scientists set foot on France’s remote Île aux Cochons – roughly half way between the tip of Africa and Antarctica – the island was blanketed by 2m of the penguins, which stand about a metre tall. But recent satellite images and photos taken from helicopters show the population has collapsed, with barely 200,000 remaining, according to a study published in Antarctic Science. Why the colony on Île aux Cochons has been so decimated remains a mystery.

“It is completely unexpected, and particularly significant since this colony represented nearly one third of the king penguins in the world,” said lead author Henri Weimerskirch, an ecologist at the Centre for Biological Studies in Chize, France, who first set eyes on the colony in 1982. Climate change may play a role. In 1997, a particularly strong El Niño weather event warmed the southern Indian Ocean, temporarily pushing the fish and squid on which king penguins depend south, beyond their foraging range. “This resulted in population decline and poor breeding success for all the king penguin colonies in the region,” Weimerskirch said.

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This goes back to 2002. Nothing has changed.

Charities Damned For ‘Abject Failure’ In Tackling Sexual Abuse (G.)

Charities have shown “complacency verging on complicity” in responding to sexual abuse that is endemic across the sector, according to a damning report by MPs. In the report, the international development committee (IDC) said the aid sector had a record of “abject failure” in dealing with longstanding concerns about exploitation by its own personnel and appeared more concerned for their reputations than for victims. The response to abuse claims has been reactionary and superficial, it added. MPs called for the establishment of an independent aid ombudsman to support survivors and for a global register of aid workers to prevent abusers moving through the system.

Stephen Twigg, the committee chairman, said the sector’s failure to deal with the issue had left victims at the mercy of those who sought to use power to abuse others. The report, published on Tuesday, also criticised the UN, which it said had failed to display sustained leadership in tackling abuse, and said the historical response of the UK’s Department for International Development (DfID) was disappointing. The committee launched its inquiry into sexual exploitation and abuse after revelations that Oxfam covered up claims that its staff had used sex workers while working in the aftermath of the 2010 Haiti earthquake. The sector has faced intense scrutiny, with further allegations of sexual misconduct emerging at Save the Children.

Twigg said the aid sector was first made aware of concerns in 2002, when a report by the UN agency for refugees (UNHCR) and Save the Children documented cases of abuse. Despite this, and a series of other warnings, little action was taken. “There are so many reports that go back over this period of 16 years and the system has failed to respond anything close to adequately over the period,” the Labour MP said. “This is 16 years of failure by the entire international system of governments, the UN and the aid sector.”

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