Goldman Warns Of A "Significant" Adverse Impact On Stocks As 2020 Buybacks Are Cut In Half

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Goldman Warns Of A "Significant" Adverse Impact On Stocks As 2020 Buybacks Are Cut In Half

One week ago, following the fastest bear market on record...

... which was followed by one of the fastest bear market rallies in history (which briefly became a bull market from the March 20 lows), Goldman's clients - together with everyone else - had just one question: was this the bottom?

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One week later, with the market below last Friday's lows, it appears that nobody knows what the correct answer is. So, to narrow down the confusion, Goldman's clients have shifted their attention to a just a more easily answerable question: will the buybacks that helped push the market to all time highs on increasingly less volume, still be there in the coming months?

The reason for the angst is the fact that, as we wrote last Sunday, Goldman's buyback desk warned that nearly 50 US companies have suspended existing share repurchase authorizations in the past two weeks, representing $190 billion of buybacks or nearly 25% of the 2019 total.There's more: as Goldman's chief equity strategist David Kostin wrote,  reduced cash flows and select restrictions mandated as part of the Phase 3 fiscal legislation "suggest more suspensions are likely." And since buybacks have represented the single largest source of US equity demand in each of the last several years...

... the strategist concludes that "higher volatility and lower equity valuations are among the likely consequences of reduced buybacks."

Which brings us to the latest weekly note from the Goldman strategist, in which he writes that in the latest week, "many of our investor discussions gravitated towards the topic of dividends and share repurchases. The intensifying economic crisis, collapse in company revenues, flurry of suspension announcements, and restrictions in the recently-passed $2 trillion fiscal package have raised questions regarding future corporate cash spending priorities."

His answer will hardly appeal to Goldman's client base, or anyone else for that matter, so used to corporation repurchasing their stocks when times get rough: in 2020, Goldman forecasts that S&P 500 dividends will fall by 25% and buybacks will plummet by 50% compared with 2019 levels.

Here are the details behind Goldman's dour assessment, first dividends:

We estimate S&P 500 dividends will decline by 25% in 2020. Dividends actually rose by 9% during 1Q. However, dividend suspensions, cuts, and eliminations will result in DPS falling by 38% during the next nine months so on a full-year basis dividends will be 25% below the level of last year.

And then buybacks:

In total, we expect S&P 500 share repurchases will decline by 50% to $371 billion during 2020. Despite elevated market volatility, a review of sell-side analyst estimates published since the market’s peak suggests buybacks likely fell by 21% during the first quarter. However, Goldman Sachs buyback desk executions actually rose by 25% year/year. Averaging these two approaches, we assume buybacks were flat year/year during 1Q. We forecast buybacks will fall by 75% year/year in 2Q, by 70% in 3Q, and by 65% in 4Q. An additional 40% year/year slide during 1Q 2021 will result in 12-month repurchase volume that is 65% below the 2018 peak.

The irony, of course, is that company should not have been repurchasing their stock at the all time S&P500 highs, yet that's precisely what they were doing. In fact, as we explained in late 2019, the main reason why stocks were at all time highs at a time when virtually every investor class was selling, was because of stock buybacks!

To be sure, our insistence ever since 2012 that it was only buybacks behind the market's relentless grind higher, was met with stern opposition and mockery from some of the more imbecilic financial commentators, most of whom were either tweeting from their parents' basement or the AQR trading floor, although suddenly their vocal "explanations" how buybacks had nothing to do with the stock market - even though it was painfully obvious why speculators would always frontrun and buy ahead of price indiscriminate CFOs and treasurers who had billions in freshly minted dollar burning a hole in their pockets thanks to a record amount of debt issuance and who were buying up their stock to make sure their equity-linked comp was deep in the money - have gone very mute.

So for the benefit of all those "financial expert" idiots who did not have a grasp of the simplest concept in capital markets, namely supply and demand (and likely still don't now), here is not some fringe blog but Goldman Sachs setting the record straight once and for all:

"The decline in share repurchases will have a significant impact on the equity market."

Got that fintwit echo chamber? We doubt it, so here is Kostin's fuller explanation: "Corporate buybacks have far exceeded demand from all other investor categories combined since 2010."

As an aside, this is something we have been saying... since 2012!  Starting in 2012, among countless other pieces on the topic, we wrote "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement" and "Where The Levered Corporate "Cash On The Sidelines" Is Truly Going", i.e., buybacks", then in 2013 with "$500 Billion In 2013 Corporate Buybacks: Half Of QE", then again in 2014 in "Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter" then in 2015 "It's Not The Record High Debt That Is The Biggest Risk, It's [the dropping cash flows]", and on, and on, and on, we have constantly explained that the primary source of stock buying over the past several years have been corporate management teams repurchasing their own shares using ever greater amounts of debt as a source of funds, in the process boosting not only their stock price but their equity-linked compensation and bonus pools.

It only took nearly a decade for what we said - which was year after year mocked and ridiculed by the so-called "experts" - to become Wall Street gospel. With that we give the floor back to Kostin: "The removal of the principal buyer of shares will widen trading ranges and increase volatility."

And the punchline: "Reduced buyback spending means less downside support for equity prices since fewer firms will step in to repurchase shares if their stock prices fall. During the past 25 years, the 20th percentile return for stocks within the S&P 500 has averaged -27% annualized during buyback blackout periods compared with -16% when companies can freely repurchase their shares. Fewer buybacks also means slower EPS growth. Since 2008, the gap between EPS growth and earnings growth for the aggregate S&P 500 index averaged 1-2 pp annually. "

And just like that the debate whether stock buybacks propped up stock prices is over, and anyone who has ever told you otherwise should be ignored.

A few more points before we close the chapter on this formerly controversial topic forever, here is Goldman's explanation why buybacks are about to fall off a cliff:

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act prohibits buybacks and dividends among companies that accept assistance from the Treasury. The bill stipulates that any company that borrows money from the Treasury may not repurchase stock or pay a dividend until 12 months after the loan is repaid. The bill explicitly provisions assistance for airlines, air cargo, and aerospace companies, but our economists believe any company receiving assistance under the Treasury’s $454 billion credit facility could also be subject to these restrictions. More guidance from the Treasury is expected soon.

Since the start of March, 51 S&P 500 companies accounting for 27% of 2019 aggregate buybacks have suspended their repurchase programs. While United Airlines, Delta Airlines, Southwest Airlines, and Alaska Air have suspended buybacks, not all repurchase suspensions have come from companies expected to receive government assistance. Eight of the largest US banks recently announced that they would suspend buybacks through at least the second quarter and allocate that capital toward supporting the global economy. Prominent retailers, hoteliers, and cruise operators have also suspended their buyback programs.

What about the sectors that have mattered the most in recent years, namely tech?

Yep, them too.

Semiconductor and Pharmaceutical buybacks are also likely to decline. Intel recently announced that it was suspending its buyback program, which totaled $13.5 billion last year (nearly 2% of S&P 500 total). Broadcom reiterated that buybacks are on hold. Our semiconductors analysts expect other chipmakers will follow suit and noted that many investors have indicated they would prefer firms focus on shoring up the balance sheet rather than repurchasing stock. Our biopharma analysts believe that the current political spotlight on repurchases may result in firms reducing repurchase spending in 2020 despite significant outstanding authorizations.

And while we already know that such a plunge in buybacks which was last observed during the financial crisis will have a "significant" and not positive "impact on the equity market", what does it mean quantitatively?

The historical relationship between EPS growth and buyback growth would suggest a roughly 30% decline in buybacks during 2020.

However, we believe the decline in share repurchases will be worse than this relationship implies. Our quarterly review of S&P 500 earnings transcripts consistently reveals that management teams view buybacks as the lowest priority use of cash. A spate of recent suspensions, escalating employee layoffs, and increasing political and social pressure will curtail buyback spending, which remains historically elevated following the passage of corporate tax reform

In historical context, a 50% decline in buybacks would be consistent with the 8-quarter, 67% peak-to-trough decline during the Global Financial Crisis.

Repurchases also declined by 56% peak-to-trough over a period of 11 quarters during the early 1990s. Following each of these sharp declines, equity issuance actually exceeded share repurchases: so are we about to see a flood stock buybacks in reverse as cash-strapped companies flood the market with their shares a la what Carnival did last week? Back in 2008/2009 S&P 500 firms issued $453 billion of equity during the 12-month period ended September 2009, more than double the $208 billion of aggregate share repurchases. Will the number this time be above $1 trillion?

Finally, with everyone fleeing away from companies that have historically returned most capital to investors due to fears such shareholder friendly activity is now over, Goldman is too, and as Kostin concludes, "we rebalance our baskets of stocks with the largest spending on buybacks and dividends. Our sector-neutral Buyback basket (GSTHREPO) consists of the 50 S&P 500 stocks with the largest trailing 12-month buyback spending as a share of market cap. Our Total Cash Return basket (GSTHCASH), also sector-neutral, consists of the stocks with the highest combined buyback and dividend spending over the same period. Both of these baskets have underperformed sharply YTD...

... as investors skeptical of the sustainability of buybacks and dividends have instead rewarded firms with safe balance sheets and those paying down debt" as well as those companies that generate cash flow instead of "pie in the sky" growth narratives that only a Tesla lemming could believe.

In other words, the Fed may well be on its way to nationalizing the entire market, but in its last gasps of normalcy, the market is finally exhibiting the kind of lucid efficiency, at least briefly, that was missing for much of the past decade, and for once is actually doing the right thing in rewarding prudent corporate behavior and debt repayment while punishing all those companies that hit all time highs only because their management teams knew nothing more than "wave it in."

We doubt the Fed will allow this kind of rational behavior to last too long before it goes "full USSR" and completely takes over the stock market as well, at which point capitalism will officially be dead.

Tyler Durden

Sat, 04/04/2020 - 22:00

Cuomo Warns "More People Are Going To Die" As New York Case Total Tops 100k: Live Updates

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Cuomo Warns "More People Are Going To Die" As New York Case Total Tops 100k: Live Updates


  • US nonfarm payrolls was an unmitigated disaster.

  • Russia reports drop in cases after extending quarantine

  • NY COVID-19 cases top 100k

  • Bolsonaro urges country to "go back to work" as Brazil's governors say opposite

  • Brazil says first COVID-19 case and death in Sout
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    h American happened 1 month earlier

  • Beijing says more than half of foreign diplomats identified as close contacts of COVID-19 patients

  • NJ reports jump in new cases, deaths

  • Number of recovered patients tops 250k globally

  • Japan sees resurgence of cases continue

  • Navy hospital ship in NY only treating 20 patients

  • UK reports biggest daily jump in deaths

  • Thousands of small business owners excluded from 'Paycheck Protection Program'

  • Spain, Germany report encouraging deceleration in new cases

  • Singapore launches strict 14-day lockdown to fight virus resurgence

  • Trump slams 3M on twitter

  • 400M in loans doled out

  • Bank of America becomes first big bank to issue loans via the plan

  • Mnuchin confirms 'Paycheck Protection Plan' is a go

  • Tokyo mayor warns about resurgence of cases on CNN

*    *    *

Update (12:10ET): New Jersey Gov. Phil Murphy has started his latest daily press conference.

Gov. Murphy reported 4,372 new COVID-19 cases and 113 new deaths, bringing statewide total to 29,895 cases and 646 deaths. He also announced he would be signing an Executive Order directing that all flags across NJ be lowered to half-staff indefinitely in honor of those who have died from the virus around the world.

"This is one of the greatest tragedies to ever hit our state. We must have a constant and visible memorial," he said.

If these latest data make you depressed, here's one reason not to despair: the number of patients who have recovered from COVID-19 around the world has passed 250,000, many multiples of the 55,781 deaths recorded so far by Johns Hopkins.

*    *    *

Update (12:10ET): Italy's Civil Protection agency just released the latest coronavirus numbers for Friday, and while there were some bright spots, the 766 deaths recorded across Italy over the last day is the biggest jump since the outbreak started.

But more encouragingly, the 4,585 new cases amounted to about a 4% rise, bringing the nationwide total to 119,827, up from 115,242 a day earlier. The death toll, meanwhile, climbed to 14,681, up from 13,915, still the highest death toll in the world. The mortality rate climbed slightly to 12.2%, as the number of deaths continue to climb, while new cases reported continued to drop.


Meanwhile, back in NY, CNN just reported that the USNS Comfort, the Navy hospital ship deployed to NYC to help with the hospital overflow, is only holding about 20 patients so far.


*    *    *

Update (11:50ET): As thousands of small and medium sized business owners find out that they aren't eligible for the 'Paycheck Protection Program' bailouts, Mnuchin has opted to continue tweeting dollar amount updates to show that loans are indeed being processed.

The market is paying close attention now, so let's keep those bullish headlines coming, Steve.

*    *    *

Update (1110ET): NY Gov. Andrew Cuomo kicked off Friday morning's press conference with some somber news: the number of positive coronavirus cases confirmed in the state of New York has surpassed 100k. He went on to explain that NY has been so badly impacted because so many foreign visitors travel there, meaning that before Trump finally barred all foreign travelers, many little outbreaks were likely started by travelers from Europe and elsewhere.

Meanwhile, Cuomo reported another 562 deaths over the last 24 hours, bringing the statewide total to 2,935. That's the largest jump in deaths yet.

Watch Cuomo live below:

As NYC hospitals reach maximum capacity on both ICU and regular hospital beds, forcing Cuomo to move COVID-19 patients to the Javits Center, which had initially been designated as an 'overflow' facility, Cuomo reiterated gripes about the inability of states to purchase vital medical equipment from China (though China has selectively allowed some orders to leave through the red tape they've suddenly thrown up). Though Cuomo said he is working with Alibaba to procure supplies for the state.

Using some of his most strident language yet, Cuomo warned that "people are going to die" if New York State doesn't get the ventilators and other vital medical equipment that it needs, and that the state is willing to pay up for this equipment. As for the federal stockpile, Cuomo reiterated that the doesn't believe there's enough to help all the states.

That said, Cuomo acknowledged that there are private businesses in the state that have ventilators that they still haven't turned over to the public effort. Cuomo promised that either the equipment would be returned, or the lenders would be reimbursed.

“I’m not going to be in a position where people are dying and we have several hundred ventilators in our own state somewhere else,” Cuomo said.

*    *    *

Update (1053ET): As PM Johnson tries to guide his government through an unprecedented crisis while struggling with the brutal flu-on-steroids symptoms of COVID-19, UK Health Secretary Matt Hancock, who has also tested positive for COVID, has confirmed that UK saw its biggest jump in deaths over the last day.

As the latest data throw cold water on the hopes for a "flattening" in the UK curve, Hancock suggested to a terrified public that deaths could peak on April 12 - Easter Sunday - as some models have shown, according to the FT. 

Meanwhile, here are the latest numbers.

Downing Street has said it will next review the UK's lockdown conditions after Easter. In the meantime, Hancock and Johnson have their hands full trying to get tests to frontline workers, while trying to stave out an all-out collapse of the NHS.

*    *    *

Update (1038ET): Just as yet another reputable scientist declares that the theory that COVID-19 may have leaked out of a Chinese biolab shouldn't be dismissed, Beijing is cranking up its propaganda machine and doubling down on its blaming of "foreign visitors" for igniting a second wave of COVID-19 infections.

The Global Times just reported that out of 84 foreign diplomats who recently returned to China, 66% were traced as close contacts of confirmed patients.

This statement, if accurate, offers a glimpse into the depth and complexity of China's surveillance network, which it has marshaled to help trace the contacts of confirmed COVID-19 patients. It also sets up the foreign ministry to propagate another round of conspiracies that blame the US and the West for the outbreak.

*   *   *

Update (0944ET): Is Mnuchin going to keep a running ticker of loan figures? It's starting to look that way:

*    *    *

Update (0920ET): Bank of America just confirmed that it has started issuing loans through the program. Now, will we see the rest of the big banks turn on the taps in the next few hours?

*    *    *

Update (0912ET): Thousands of small and medium-sized business owners just breathed a huge sigh of relief.

After reassuring the public during last night's press conference that the bailout bill's "Paycheck Protection Program" would be up and running "tomorrow" (i.e. Friday), Mnuchin tweeted Friday morning that the first loans had been issued via the program, and that small business owners are now welcome to apply.

So far, community banks have issued 700 loans...

...and big banks are expected to come online shortly.

Last night, Mnuchin revealed that the administration had agreed to pay Wall Street a 50 bp 'tribute' on all loans (ie billions of additional dollars in risk-free profits) issued via the program.

All of this comes after the BLS released a surprisingly discouraging jobs report, showing that more than 700k jobs have been destroyed in the last month, ending a more than 110-month streak of job creation that began after the end of the financial crisis.

*    *    *

As we arrive at the end of another week, In NYC, subway trains are still crowded with commuters as the MTA is forced to reduce trains and cars as more of its workforce falls ill or simply refuses to show up. As the number of hospitalized patients surges, the city's hospital system has already run out of ICU beds, forcing Gov. Cuomo to move coronavirus patients to the Javits Center, which was initially intended for hospital overflow patients. Amid all of this, the state's unemployment fund is in worrisome shape, meaning New Yorkers will soon need to depend solely on federal benefits if the state well runs dry.

After the global number of confirmed coronavirus cases topped 1 million on Thursday, several Asian territories and countries, including Singapore and Hong Kong, are struggling with a second wave of COVID-19 cases that health officials claim is mostly travel-related. As we reported a few days back, China has reimposed lockdowns as begins to disclose "asymptomatic" cases that government functionaries explained were left out of China's initial case totals.

One month ago, on March 3, there were 92,000 coronavirus cases, most of them in mainland China. As of Friday, the US and Europe account for the bulk of the world's more than 1 million confirmed cases.

Professor Gabriel Leung, an epidemiologist at the University of Hong Kong, warned on Friday that the pandemic would likely last a few more months, even if heavy-handed prevention strategies are adopted. He also said the warmer weather would give the world no respite from the virus: "Is warmer weather going to give us some respite? The answer is maybe, but probably not,” Leung said during a live-streamed forum, pushing back against prognostications made by the mainland's leading respiratory disease expert, who assured the public that this would all be over by late April, even as Beijing continues to impose a near-moratorium on international and domestic flights.

In Singapore, Prime Minister Lee Hsien Loon on Friday announced a major shift as Singapore shutters workplaces and schools for a month, beginning next week, with the government calling the more aggressive containment measures a "circuit breaker" to avoid using the word "lockdown.'

As Nikkei explains, Lee's decision marks a major shift in strategy for the city-state. Until now, Singapore had focused on strict border controls, thorough contact tracing of patients as well as extensive "social distancing" campaigns. While it encouraged telecommuting, it tried to keep life for businesses as normal as possible.

One major change that could foreshadow a similar move by the White House: The Singaporean government is now advising citizens to wear facemasks in public.

Lee also addressed the "psychological toll" of the "circuit-breaker" (don't call it a lockdown), in what one reporter described as a surprisingly thoughtful and forward-thinking change.

Despite the new measures, Singaporeans will need to continue sharing all their cell phone location data with the government as part of a sweeping program of monitoring and contract tracing that has alarmed privacy advocates.

Singaporean Manpower Minister Josephine Teo told reporters that "all of the workplace activities will have to come to a stop, meaning that everyone will have to work from home and at the work premises, there will be no one." Unless a business has special permission or is deemed an essential service, "it will be an offense to still have operations at the workplace" and any violators will be punished.

Singapore's decision comes after more local transmission and new clusters have been identified in recent days, including cases of undetermined origin. As of Friday morning, Singapore had reported 1,049 infections with five deaths. Additionally, China, Hong Kong, Singapore and Taiwan have barred foreigners from entering in recent days. Early Friday morning, the Communist Party boss for the city of Wuhan warned that the risk of a full-on "resurgence" of the virus in the city was "still high." Meanwhile, Japan has barred visitors from dozens of countries, including South Korea and the US. South Korea is mandating that foreign visitors spend 14-days in a government lockdown facility, though it hasn't outright banned travelers from any country, though individuals from Hubei Province are banned.

Tokyo's governor even appeared on CNN last night to warn that the situation in her city is rapidly worsening, as the number of new cases skyrockets.

By comparison, in US, over 75% of individuals, and 90% of GDP, are under mandatory lockdown, including 38 state-wide orders.

Additionally, in other US news, President Trump bashed 3M, one of America's largest manufacturers, in a late-night tweet, where he claimed he used DPA authority so speed up manufacturing of ventilators.

In other international news, a British-made invention that can reduce the spread of coronavirus is being bought up by governments around the world, but not by the NHS, the FT reported Friday. In Germany, health officials recorded more than 6,174 new coronavirus cases over the past 24 hours, the latest sign that the growth rate of the virus is slowing. Spain also reported an encouraging slowdown in new cases.


Russia reported 601 new cases of coronavirus on Friday, a 17% jump in total cases that marks a slight slowing in the spread of the outbreak in the country. So far, Russia has reported 4,149 cases and 34 deaths from the virus, a much lower per-capita rate than many of its European peers.

Meanwhile, in Brazil, where President Jair Bolsonaro has continued to dismiss the risks of the virus. During a recent visit to a gas station in Sao Paolo covered by WSJ, Bolsonaro empathized with a worker to whom he spoke in the crowd.

"Sometimes, the cure is worse than the disease,” he told him, according to the report. “People should go back to work.” But 25 of 27 of Brazil's governors feel differently, and have been pushing Bolsonaro to endorse their safety guidelines. After Brazil's case total ballooned to nearly 8,000 cases and 299 deaths, officials confirmed that a woman who died on Jan. 23 had been infected, more than a month before South America's first confirmed case. It's just the latest sign that the virus may have spread more widely across Latin America than many had previously believed.

Tyler Durden

Fri, 04/03/2020 - 13:16

In Surprise Tweet, Trump Warns 'Iran Sneak Attack' Coming - Tehran To Pay "Very Heavy Price"

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In Surprise Tweet, Trump Warns 'Iran Sneak Attack' Coming - Tehran To Pay "Very Heavy Price"

For the US administration it appears now is as good a time as any to start a major proxy war with Iran inside Iraq.

Or perhaps the distraction of yet another Middle East war is just what the doctor neocons ordered at a moment the United States and the world for that matter faces its biggest crisis since World War II in the form of the expanding de

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adly pandemic.

Wednesday afternoon the president tweeted out this stunner: "Upon information and belief, Iran or its proxies are planning a sneak attack on U.S. troops and/or assets in Iraq. If this happens, Iran will pay a very heavy price, indeed!"

For most, the events of January which almost took the US to war with Iran after the assassination of IRGC Quds Forces General Qassim Soleimani, likely feels light-years away into the distant past. 

But here we are again, with Trump suddenly threatening "Iran will pay a very heavy price" — clearly a threat of military strike. This after Pompeo and his gang of neocons and the State Department and Treasury have already ratcheted up sanctions further on the corona virus-ravaged Islamic Republic.

This also comes after last Friday the Pentagon was been ordered by Secretary of State Pompeo to begin planning to wipe out certain Iraqi militias which they believe are Iranian proxies, especially the large Kataib Hezbollah Shia militia.

US Patriot missiles in Iraq, via AFP.

However, the administration reportedly remains divided, given it would require an influx of thousands more American troops in Iraq, at a moment the Department of Defense is barely able to get a handle on containing the coronavirus outbreak in its ranks, which it should be noted has lately taken out a whole nuclear aircraft carrier. 

The dollar extended gains to session highs immediately following the provocative tweet, with the Bloomberg dollar index climbing up as much as 0.9% on the day, reports Bloomberg.

Tyler Durden

Wed, 04/01/2020 - 13:45

Peter Schiff Warns "Americans Are In For A Rude Awakening"

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Peter Schiff Warns "Americans Are In For A Rude Awakening"

Via SchiffGold.com,

All eyes have been on the stock market in recent weeks as it has reflected the fears about the coronavirus-induced economic shutdown and the hopes of massive stimulus. It’s been quite a rollercoaster ride. But in his podcast on March 27, Peter Schiff said there’s an even bigger problem looming on the horizon that people aren’t paying any attention to

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– the potential destruction of the dollar. He said Americans are in for a rude awakening.

The Dow Jones finished its best week since the Great Depression with a 915.39 point drop. But even with that big plunge, the Dow was up about 13% on the week, all on the strength of the spectacular rally on Tuesday, Wednesday and Thursday. In fact, the Dow had a bull market condensed into three days. But Peter said it was not really a bull market. He called it a “vicious correction in a horrific bear market.” And he said that bear market is “a long way from over.”

But while most eyes are on the stock market, Peter said we’re missing a more significant looming bear market — the bear market we’re going to have in the US dollar.

Peter has already explained how the actions of the Federal Reserve and the US government has set the stage to devalue the dollar, saying the dollar is cooked. He said that with the central bank and government response to the coronavirus, hyperinflation has gone from being the worst-case scenario to the most likely scenario.

A bear market in the dollar can mask some of the other problems in the economy. Consider in the 1970s, the dollar fell by nearly 70%. That means that while nominal stock market losses in the decade weren’t terrible, the real losses were significantly larger.  It was a destruction of the value of US stocks and Peter said it’s going to happen again.

A plunge in the dollar means losses on all dollar-denominated assets — stocks, bonds, real estate. It also means price inflation and rising interest rates, which pushes down the value of bonds even lower. Peter said he thinks the dollar is going to be a lot weaker in this decade than it was in the 1970s.

I think the US is certainly starting off the decade in a much worse financial position.”

The main reason the dollar fell in the 1970s was because the US went off the gold standard. But the dollar remained the reserve currency, even though it was backed by nothing.

It got marked down, but it didn’t get knocked out.”

During the 80s, the US enjoyed the privilege of being able to issue the world’s currency without having to back it by gold.

That basically gave us a license to print and we’ve been abusing that ever since.”

Peter said this time he thinks the world is going to kick out the dollar as the reserve currency. If that happens, the dollar will just be another currency.

And that means Americans are going to have to have to abide by the same economic rules that govern everybody else. That means if we want to consume, we’ve got to produce. If we want to borrow, we’ve got to save. And Americans are going to be in for a rude awakening.”

Peter said this may well crush the retirement dreams of many Americans. With the erosion of the dollar’s purchasing power, retiring simply won’t be an option for many people.

Most Americans who are already retired, well, they’re going to have to go back to work. And the people who were planning on stopping working, well, they’re just going to have to keep working until they’re dead, basically. Unless you can do something now to protect yourself.”

Peter also talked about the passage of the massive stimulus bill. He said it’s possibly the most socialist bill ever passed. Basically, America is already a socialist nation.

Tyler Durden

Mon, 03/30/2020 - 14:52

Jim Grant Warns Fed's 'All-In' Actions Are A "Clear-And-Present-Danger" To US Creditors

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Jim Grant Warns Fed's 'All-In' Actions Are A "Clear-And-Present-Danger" To US Creditors

In a veritable treatise on all that was wrong with The Fed's actions, Jim Grant - founder and editor of Grant's Interest Rate Observer - was somehow allowed nine minutes on CNBC's Squawk Box to put America straight on what we are facing and the consequences of these unelected and unaccountable officials terrifying experiments.

Grant began b

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y slamming Jay Powell's seemingly blinkered proclamation that "he sees no prospective consequences with regard the purchasing power of the dollar" as "very concerning" adding more pertinently that he thinks "that wilful ignorance is a clear-and-present-danger for creditors of The United States."

It appears his fears are starting to be warranted as USA Sovereign credit risk is rising...

"I am in favor of life going on," says Grant when asked by the anchor, "shouldn't The Fed do something amid this massive global shutdown?"

The alternative, the venerable bond guru exclaims is the direction we are heading - "shutting everything down and putting the government in charge."

Bernie Sanders may (or may not) be out of the presidential race but, as Grant highlights, "his programs are being implemented in fact daily."

"One can die of despair as well as disease," warned Grant, reminding viewers of the consequences of mass self-incarceration.

"There are health consequences to isolation, and health consequences to unemployment.. and life as it must go on is is a precious thing too and we ought to at least consider what we are condemning ourselves to if we choose to shut everything down for another month or two or three."

"I think it would be a fatal error."

Once again, the CNBC anchor urged Grant to support massive intervention but exclaiming "desperate times call for desperate measures."

His retort shut down her argument quickly:

"experts are not expert in a dis-positive way, there is no certainty about this, just as there is no certainty in finance or indeed life," and Grant adds ominously that "the cure is prospectively worse than the disease."

"The delegation of political and economic authority to the US government to suppress this crisis is a clear and present danger."

Finally, Grant, whose wife is a physician, reminded the anchors that the current actions (and consequences) have a direct analogy with the opioid crisis, as "in the early 2000s, the medical profession got it into its head that pain was the vital sign, and that no one ought to be in pain... this led to the deadly over-prescription of opioids."

By the same token, Grant analogizes, "The Fed has intervened at ever-closer intervals to suppress the symptoms of misallocation of resources and the mis-pricing of credit. These radical interventions have become ever-more drastic and the 'doctor-feel-goods' of our central banks have worked to destroy the pricing mechanism in credit."

Simply put, credit and equity markets "have become administered government-set indicators, rather than sensitive- and information-rich prices... and we are paying the price for that through the misallocation of resources."

Grant ends on a hanging chad of a rhetorical question "what do corrections correct? Is there no salutary role for recessions and bear markets?"

Of course there is, he answers, "they separate the sound from the unsound, they separate the well-financed from the over-leveraged and if we never have these episodes of economic pain, we will be much the worse for it."

Watch the full interview below:

Tyler Durden

Mon, 03/30/2020 - 14:05

Google warns against disabling websites during Coronavirus pandemic

logicfish Business google warns against disabling websites during coronavirus pandemic All https://go.theregister.co.uk   Discuss    Share
Your search ranking will suffer less if you just make it a bit rubbish instead

As companies shut their doors against the coronavirus outbreak, Google has released a set of guidelines to website owners on how to minimise the long-terms effects on their business's search ranking.…


Trump Warns Suicides From The Coming Economic Depression Will Far Surpass Those From The Virus

zerohedge News trump warns suicides from coming economic depression will surpass those virus All https://www.zerohedge.com   Discuss    Share
Trump Warns Suicides From The Coming Economic Depression Will Far Surpass Those From The Virus

Authored by Mac Slavo via SHTFplan.com,

Social distancing rules may be relaxed sometime soon to prevent “tremendous death” from the economic depression that could end up worse than the coronavirus itself, President Donald Trump said.  But even a few more weeks of closures will almost certainly usher in an economic depression a

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nd the suicides that come with it.

The 2008 Great Recession resulted in more than 10,000 suicides.  If the economy is “closed for business” much longer, that number could be dwarfed by the number of people who can no longer survive without a livelihood.

People get tremendous anxiety and depression and you have suicide over things like this, when you have a terrible economy, you have death,” President Donald Trump said Monday at the White House daily press briefing according to a report by RT. 

Trump added that those suicides would “definitely be in far greater numbers than we’re talking about with regard to the virus.”

At this point, we are simply swapping some deaths or others.  The bottom line is that people don’t have lives if they don’t have livelihoods and the chance to live out their dreams in freedom. Trump did say that all of the lockdowns will “end very soon.”  Some reports show, however, that it could be Easter before the government allows us to have our illusion of freedom back.

Meanwhile, a record 3.3 million people filed for initial jobless claims last week...

“This was a medical problem, we’re not going to let it turn into a long-lasting financial problem,” he added, urging Congress to pass the $2 trillion stimulus bill urgently and without partisan politicking, as workers and employees across the U.S. were hurting from lockdowns and quarantines.  Although this is already a financial problem for many, as many of the businesses that closed during the lockdown will never reopen, their owners and employees losing their livelihoods for the foreseeable future.  That’s hardly a solution. The U.S. economy was not meant to shut down, and the longer it is, the greater the impact will be.

Trump said the administration’s thinking had evolved due to receiving better numbers on the mortality rate from COVID-19, which was initially thought to be at five percent, but now seems to be much lower, below one percent.

Trump added that he was not considering further travel bans, whether on entry into the U.S. or on moving between the states. He also noted that even when things get back to a semblance of normalcy, there would be tradeoffs in behavior after “the invisible scourge of the virus is gone.

Tyler Durden

Thu, 03/26/2020 - 08:55

"Greatest Depression Has Already Started", Celente Warns

zerohedge News greatest depression already started celente warns All https://www.zerohedge.com   Discuss    Share
"Greatest Depression Has Already Started", Celente Warns

Via Greg Hunter’s USAWatchdog.com,

Gerald Celente, a top trends researcher and Publisher of The Trends Journal, says the world is already in an economic depression.

Celente explains, “Never in the history of the world has the whole world, or most of the world, been shut down by politicians destroying people’s lives and thei

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r businesses..."

"People are going to go bankrupt. You are going to see suicide rates increase. You are going to see crime escalate and people OD’ing on drugs because of depression...

Our leaders are totally closing down the economy. Again, this has never been done before. It’s not only Wall Street going down, Main Street went down simultaneously. That is unprecedented. Usually, the markets go down and then the ripple effects start hitting Main Street. This time–boom, they are both down...

It’s going to be worse than the Great Depression. It’s going to be the Greatest Depression.”

What’s the biggest problem the economy faces? Celente says,

The debt levels are phenomenal. We have more than $250 trillion of global debt and all the personal debt. How are you going to pay the credit card debt? How about paying the student debt, car loans and the mortgages? What about the electric bill, phone bill and people are out of work because my governor said I should stay home?”

The next play by global governments is to get rid of cash because it carries germs like the coronavirus. Celente says,

“We are going to go from ‘Dirty Cash to Digital Trash,’ which is also the title of the current Trends Journal. They’ve got people freaked out. They are going to give us digital trash. That’s what they are doing. They are going to get rid of the currencies that you have.”

After talk of trillions of dollars in new stimulus from Congress this week, what about gold prices? Celente says,

“You saw how much the markets went up. How about gold prices? It bounced back $200 per ounce since Friday... The smart money is seeing the fake money being printed, and they are going into gold.

Now hear this. Just like the crummy, slimy politicians going after your Constitutional rights and Bill of Rights, they are going to go after your gold. They did it in the last Great Depression, and they are going to do it in the Greatest Depression. You mark my words.”

In closing, Celente says, “I agree with Trump 100% because I have been saying this since the beginning that the cure is going to be worse than the disease..."

"They are destroying the global economy. They are destroying people’s lives. We are going to see crime levels that are unimaginable. Why do you think people are going out and getting guns? Then you are going to see these liberals talking about gun confiscation. Crime is going to escalate, and deaths are going to go through the roof. When people lose everything and have nothing left to lose, they lose it. You are going to see gangs like never before. On the other end, the open borders issue, that is a closed story. They are closing borders all over the world. So, you are not going to hear people say let them in, let them in–that’s over. I agree with Trump. We should go back to business as usual.”

On Trump winning a second term this November, Celente, who calls himself a “political atheist,” says, “It’s a wild card, but I would still go with Trump at this point.”

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Gerald Celente, Publisher of The Trends Journal, as he gives his top trends and predictions for the virus crisis, the Greatest Depression, gold and silver prices and his pick to win the White House in November.

*  *  *

To Donate to USAWatchdog.com Click Here

Tyler Durden

Wed, 03/25/2020 - 14:05

Tupperware-dot-com has a live credit card skimmer on its payment page, warns Malwarebytes

logicfish Security tupperware-dot-com live credit card skimmer payment page warns malwarebytes All https://go.theregister.co.uk   Discuss    Share
Branded lunchbox biz didn't answer for 5 days, alleges infosec firm

Tupperware, maker of the plastic food containers beloved of the Western middle classes, has an active and ongoing malware infection on its website that steals credit card data and passes it to criminals.…


China Coronavirus Official Warns Of Resurgence; Blames Foreigners

zerohedge News china coronavirus official warns resurgence blames foreigners All https://www.zerohedge.com   Discuss    Share
China Coronavirus Official Warns Of Resurgence; Blames Foreigners

China is facing a new outbreak of COVID-19, and is blaming foreigners for an increasing number of infections detected among those entering the country.

According to one of Beijing's leading experts handling the crisis, Professor Li Lanjuan, she is "very worried that imported cases could trigger another large-scale epidemic in our country," repor

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ts the Daily Mail.

Her comment came after health officials reported the country's first case of someone who is believed to have contracted the disease, known as COVID-19, from another person returning from abroad.

It also came as life in former epicentre Wuhan is slowly returning to normal following a two-month draconian lockdown. -Daily Mail

The 73-year-old Prof Li - who led the effort in Wuhan - told China News on Tuesday that controlling and preventing imported cases is an "arduous" task for medical workers, adding "This requires us to continue to intensify our efforts and work tirelessly to prevent the coronavirus pneumonia epidemic from spreading in other cities."

Of note, Wuhan officials have been accused of lying and manipulating data so that it would appear that they have a handle on the situation, according to a local doctor.

Li also old the CCP-owned People's Daily in Wuhan "The mission in Wuhan has not been accomplished, and there are still many critical patients. Furthermore, I think the current situation in our country is very tough," she said, adding "Can we make every effort to guard our country and prevent another epidemic from happening? This is a tough challenge."

She also demanded officials identify those who were struck down by the virus but have not been officially diagnosed. She warned that they could re-ignite the epidemic.

Doctors in Guangzhou, the provincial capital of Guangdong, have diagnosed a coronavirus patient who fell ill after having close contact with a person entering China from Turkey.

This is the first coronavirus case in the country with a direct link to an imported case. The Guangzhou Municipal Health Commission called it 'a case related to an imported case' in a statement yesterday.

The 54-year-old man, known by his surname Jin, experienced muscle pain and a lack of strength on March 17. He was hospitalised on March 20 with a slight fever and tested positive the next day.

Mr Jin was a close contact with another confirmed case, 34-year-old Ms Lin, who stayed in Istanbul from January 22 to March 8 on a business trip.

Ms Lin flew back to Guangzhou on March 9 via Bangkok. She did not show any symptoms upon entering the country and stayed at home most of the time afterwards.

She was diagnosed on March 21 after the city's infectious disease authority gave her a test. -Daily Mail

"Cases related to imported cases are the second-generation cases brought in from abroad. It means the close contacts of [the imported cases] have been transmitted and fallen ill," said Li.

According to Chinese health officials, there were no new local cases of COVID-19, but 39 infections brought from overseas.

Can you believe it?

Tyler Durden

Tue, 03/24/2020 - 15:10

Russian state-sponsored hackers have been sniffing Middle East defence firms, warns Trend Micro

logicfish Security russian state-sponsored hackers have been sniffing middle east defence firms warns trend micro All https://go.theregister.co.uk   Discuss    Share
Artists variously known as Pawn Storm and APT28 are still at it

The Russian hacking crew known variously as APT28, Fancy Bear and Pawn Storm has been targeting defence companies with Middle Eastern outposts, according to Trend Micro.…


"The 'D' Word": El-Erian Warns 'Twin Deleveraging' Could Spark A Global Depression

zerohedge News word el-erian warns twin deleveraging could spark global depression All https://www.zerohedge.com   Discuss    Share
"The 'D' Word": El-Erian Warns 'Twin Deleveraging' Could Spark A Global Depression

Some readers might accuse us of being alarmist and rattling the cages unnecessarily at a time of public panic, but we've always felt that investors should hear a range of perspectives, especially if some of it is uncomfortable. Those who don't like having their assumptions questions - like, for example the 'assumption' that economic growth will come 'roaring back' after this is all

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over, like Mnuchin promised on Wednesday - should probably turn back now.

As many analysts have argued, a recession is looking virtually inevitable at this point as the global economy shuts down to fight the novel coronavirus.

Only a handful have dared to invoke "the 'D' word" in their projections. But their ranks include Allianz Chief Economist Mohammad El-Erian, who has warned that a depression could swiftly ensue due to the twin "economic deleveraging" and "financial deleveraging" caused by the crisis.

That is, not only is economic activity falling off a cliff, forcing many businesses around the world to temporarily close or dramatically cut back their hours, risking a string of destabilizing main street bankruptcies. But the pressure on financial markets risks creating a 'cascading' selloff in the corporate debt market as America's seriously overlevered companies finally face their reckoning.

During an interview on CNBC early Wednesday morning, El-Erian - who has correctly called the moves in the market so far - said that "when economic deleveraging and financial delveraging" happen in unison, the possibilities are endless, and almost hopelessly dire.

For more on what a financial deleveraging might look like, read this.

"It makes its own dynamics," he said.

Looking ahead, El-Erian believes the market will lead the real economy (as zero interest rates appear to be a permanent fixture of monetary policy now) down, but he predicted that stocks would likely bounce back before the market does.

"Once again, financial markets will turn before the real economy...when that turn happens, it will be very sharp...you will get a 'v' like tendencies in stocks...while the economy will be a 'u' that feels more like an 'l'."

"Yes the financial markets will turn first, but will do so in a violent

Watch the clip below:

As El-Erian has been saying for weeks, "investors should be careful what happens when you get a global economic sudden stop." Looking ahead, El-Erian said, not only might be face a "very sharp" recession, but things could get so bad that a full-blown depression might ensue.

"Not only are we looking at a very sharp recession...we may have a depression...it's very important to understand what happens when economic and financial deleveraging come together," El-Erian said.

Of course, El-Erian isn't alone in cautioning about the risk of a depression the likes of which haven't been in nearly a century. He's joined by Joachim Fels, PIMCO's global economic advisor (PIMCO is majority owned by Allianz).

And even more notoriously, hedge fund investor Bill Ackman warned about 'hell to come' (also during a conversation with CNBC) that the risk of a depression, adding that "the US Treasury doesn't have enough money to bailout every company...you can't borrow your way out of this...you have to kill the virus."

Circling back to Fels, PIMCO’s global economic advisor, said in a written commentary that central banks and governments must step up to the task of making sure this recession “stays relatively short-lived and doesn’t morph into an economic depression."

Fels loosely defined a depression as “a combination of a prolonged slump of activity that last longer than just a few quarters, a very significantly rise in unemployment, and mass business bankruptcies and bank failures."

How would we define a 'Depression'? Well, Mnuchin's description was clearly enough to light a fire under the asses of intransigent GOP senators.

If Mnuchin's warnings eventually do come to pass, here's a glimpse of what we suspect a full-blown recession would look like in the US.

First, without government action, the unemployment rate would likely soar above 20%.

As history shows, things can get pretty scary during a depression.

Tyler Durden

Thu, 03/19/2020 - 07:11

IBM puts 1,248 frontline techies at risk of redundo, warns of data centre closures

logicfish Business puts frontline techies risk redundo warns data centre closures All https://go.theregister.co.uk   Discuss    Share
The axe prepares to fall on Global Tech Services staffers, including former Lloyds and Vodafone peeps that TUPED across

Exclusive  IBM has put 1,248 heads in its UK Global Technology Services (GTS) division at risk of redundancy with a little over one fifth of those ultimately facing the long walk down the company corridors to collect their P45s.…

0 View

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New Zealand Unexpectedly Slashes Rates by 75bps To Record Low 0.25%; Warns Kiwi QE Coming

zerohedge News zealand unexpectedly slashes rates 75bps record warns kiwi coming All https://www.zerohedge.com   Discuss    Share
New Zealand Unexpectedly Slashes Rates by 75bps To Record Low 0.25%; Warns Kiwi QE Coming

Following in the footsteps of the Bank of Canada which on Friday was the latest bank to announce an "unexpected" rate cut, following a barrage of central bank easing on Friday morning, moments ago New Zealand became the latest bank to join the "emergency" rate cut fray when the RBNZ announced an unexpected, whopping 75bps rate cut bringing the policy rate to just 0.2

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5%, the lowest on record.

Dipping into armageddon calendar guidance, in its statement, the RBNZ said the rate will remain at this level for at least the next 12 months, suggesting it may well go lower.

The central bank also said the negative economic implications of the COVID-19 virus continue to rise, warranting further monetary stimulus, noting that "since the outbreak of the virus, global trade, travel, and business and consumer spending have been curtailed significantly. Increasingly, governments internationally have imposed a variety of restraints on people movement within and across national borders in order to mitigate the virus transmission."

And since "financial market pricing has responded to these events with declining global equity prices and increased interest rate spreads on traditionally riskier asset classes", the "negative impact on the New Zealand economy is, and will continue to be, significant. Demand for New Zealand’s goods and services will be constrained, as will domestic production. Spending and investment will be subdued for an extended period while the responses to the COVID-19 virus evolve."

Of course, that's the same identical script followed by every major central banks which has been quick to blame the coming economic Armageddon on the viral pandemic.

And since the rate cut will do nothing to stabilize the economy, which is crippled as a result of the pandemic, the Monetary Policy Committee also "agreed that should further stimulus be required, a Large Scale Asset Purchase program of New Zealand government bonds would be preferable to further OCR reductions."

Translation: Kiwi QE coming (say that fast 5 times), and the currency has reacted appropriately, with the NZD plunging as low as 0.5944 after closing 0.6134 on Friday, the lowest level since May 2009.


Tyler Durden

Sun, 03/15/2020 - 15:49

Washington State Warns Mail-In Ballot Voters Not To Lick Envelopes

zerohedge News washington state warns mail-in ballot voters lick envelopes All https://www.zerohedge.com   Discuss    Share
Washington State Warns Mail-In Ballot Voters Not To Lick Envelopes

While Federal officials are investigating a Seattle-area nursing home for a Covid-19 outbreak, local officials have started building several "quarantine villages" in the Seattle–Tacoma metropolitan area. 

Seattle appears to be the epicenter of the virus outbreak in the US, with 39 confirmed cases and ten deaths. Many of the deaths have been situated at a nursing home in Kirkland,

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a suburb east of Seattle.

Virus fears prompted Washington's Secretary of State and Department of Health on Tuesday to inform the public that everyone who votes during the presidential primary by mail-in ballot to use "alternative methods" in sealing the envelope that holds the ballot instead of using their tongue. 

The tweet said: "As recommended by @WADeptHealth, please use alternative methods to seal your ballot return envelopes, such as a wet sponge or cloth."

A catchy slogan was attached to the tweet that reads: "Whether healthy or sick, please don't lick!

And here is how Twitter responded: 

Tyler Durden

Sun, 03/08/2020 - 08:10

Former British Supermarket Boss Warns Of Potential Covid-19 "Food Riots", Army Patrols

zerohedge News former british supermarket boss warns potential covid-19 food riots army patrols All https://www.zerohedge.com   Discuss    Share
Former British Supermarket Boss Warns Of Potential Covid-19 "Food Riots", Army Patrols

Authored by Paul Joseph Watson via Summit News,

Former Tesco supply chain director Bruno Monteyne warns that a large scale outbreak of coronavirus in the UK could lead to “food riots,” requiring the army to be used to guard supermarkets.

Monteyne said that supermarkets would have to resort

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to drastic measures and revert to “feed the nation status” under a worse case scenario.

He also cautioned that grocery stores would have trouble stocking shelves and delivering goods if their employees decided to self-isolate.

“Yes, it will be chaotic (and expect pictures of empty shelves),” wrote Mr Monteyne, “but the industry will reduce complexity to keep the country fed.”

He said that the army may need to be drafted in to guard stores and prevent disorder.

UK Health Secretary Matt Hancock said he was “confident” food supplies would not run out and that there was “absolutely no need” to panic-buy.

Hancock also claimed that supermarkets could deliver food to coronavirus patients who had self-isolated, although this claim was immediately put in doubt by one supermarket executive, who said he was “baffled” by the suggestion.

“Matt Hancock has totally made up what he said about working with supermarkets. We haven’t heard anything from government directly,” the executive said, adding, “I’m not sure the government can guarantee all food supply in all instances.”

A source at another supermarket told the BBC that there had been no detailed planning involving government departments about “ensuring uninterrupted food supplies.”

Panic buying continued across the UK today, with supermarket shelves of goods like hand sanitizer, toilet paper and medicine.

The number of coronavirus cases in the UK has now reached 163, with two deaths.

*  *  *

My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Emergency Survival Foods – delicious dishes & a 25 year shelf life!

Tyler Durden

Sat, 03/07/2020 - 09:20

"Gold Is Going A Lot Higher" - DoubleLine's Gundlach Warns Of "Seizure In The Corporate Bond Market"

zerohedge News gold going higher doublelines gundlach warns seizure corporate bond market All https://www.zerohedge.com   Discuss    Share
"Gold Is Going A Lot Higher" - DoubleLine's Gundlach Warns Of "Seizure In The Corporate Bond Market"

"The bond market is rallying because The Fed has reacted the seizure in the corporate bond market - which is not getting enough attention."

That was the sentence that sparked a chin hitting the table moment for anyone watching DoubleLine CEO's Jeff Gundlach being interviewed on CNBC t

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oday. Until now, amid all this equity market carnage, various talking heads - who clearly are not 'in' the bond market - have confidently claimed 'yeah, but it's different this time, there's loads of liquidity and credit markets are not showing any signs of pain'... Well that all changed today as the world was told the truth.

Credit spreads have exploded wider in recent days... "the junk bond market is widening out massively..."

Gundlach noted that Powell's background in the private equity world - rather than academic economist land - has meant that his reaction function is driven by problems in the corporate bond market as "this will be problematic for the buyback aspect of the stock market."

The Fed cut rates, he added, "in reaction to even the investment being shutdown for 7 business days."

So the DoubleLine CEO said that Powell "cutting rates was justified" but didn't like the way it was done as it signaled "panic."

The reason for his disdain is clear:

"The Fed in their most recent press conference, took a victory lap, talking about how they had finally reached a stable place in policy and that they could be on hold for the foreseeable future, maybe even the entire world. That we are in a good place. That policy rates were appropriate. And I don't know, I thought it was a little bit of hubris at this time."

And reminds watchers that historically, "when The Fed has cut 50bps in an emergency intra-meeting such as this, they typically cut pretty quickly after once again."

And sure enough the market is already pricing in another 50bps cut at the March meeting...

However, unlike Guggeheim's Scott Minerd - who sees 10Y yields at 25bps - Gundlach believes "we are pretty near the low right now...maybe we get to 80 basis points on the ten year."

Well we are at 85bps now...

However, while his view is that long-rates are starting to floor, he notes that "short rates are definitely going lower. There is absolutely no upward pressure on short rates."

Gundlach agrees with Jim Bianco that short-rates are going back to zero, but stopped short of expectations for negative rates:

"I think Jay Powell understands that negative rates are fatal to global financial system. If we go to negative rates, there will be capital destruction en masse."

But more easing is coming, as Gundlach reflects on those calling for v-shaped recoveries:

"I think it is foolhardy to think anything other than this [pandemic] is going to take a major hit to short-term economic growth."

His perspective on the financial and societal impact of the Covid-19 pandemic is refreshingly honest on CNBC:

"...obviously, the airlines are in free fall for good reason. And small business activity is going to contract. Maybe grocery store sales will go up on a short-term spike. But all other kind of social activity is grinding to a standstill."

Warning that "the two sectors that are just falling knives are financials and transports. And I don't see anything that's going the reverse that until we get through the other side this valley of this sort of travel shutdown."

Finally, Gundlach ends on an even more ominous note:

"...the President and the physicians, on top of this coronavirus situation, and they are saying that they might have a vaccine in like a year, year and a half.

So, nobody knows what is happening here. And so, caution is appropriate."

So no more buy the dip?

As former Dallas Fed President Richard Fisher noted, that means a generation of money-managers are about to losae their security blankets!

And that's why Gundlach is long gold:

"I turned bullish on gold in the summer of 2018 on my Total Return webcast when it was at 1190. And it just seems to me, as I talked about my Just Markets webcast, which is up on DoubleLine.com on a replay, that the dollar is going to get weaker.

And the dollar getting weaker seems to be a policy. And the Fed cutting rates, slashing rates is clearly going to be dollar negative. And that means that gold is going to go higher."

Watch the full interview below:

Tyler Durden

Thu, 03/05/2020 - 21:45

MSCI Warns US Stocks Could Fall Another 11% As Coronavirus Outbreak Worsens

zerohedge News msci warns stocks could fall another coronavirus outbreak worsens All https://www.zerohedge.com   Discuss    Share
MSCI Warns US Stocks Could Fall Another 11% As Coronavirus Outbreak Worsens

Shortly before US stocks suffered another triple-digit point drop at the open - dampening the cheers of traders and pundits who gleefully celebrated stocks going positive for the week on Wednesday - MSCI warned on Thursday that another double-digit drop could be in store for US stocks, Reuters reports.

Like most other analysts, Thomas

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Verbraken, the executive director for risk management at the research and indices giant, said his risk models suggest that a short-term drop in growth of 2 percentage points, and an attendant drop in corporate earnings, could hammer stocks even lower, erasing much (but not nearly all) of the gains since President Trump's inauguration.

"We’ve conducted a what-if scenario analysis that assumes a short-term drop in growth of 2 percentage points and a risk-premium increase of 2 percentage points," Thomas Verbraken, executive director at MSCI’s risk management solutions research told clients.

"Our model indicates that, in such a scenario, there’s room for further short-term losses: U.S. equities — already down 11% from Feb. 19 through March 3 - could drop a further 11%."

Earlier this week, the OECD became the first major NGO to warn that the virus could seriously restrain global growth if the outbreak doesn't fade with the warm spring weather, like President Trump hopes it will. The OECD said that global growth could shrink "by half" thanks to the outbreak, as the twin supply- and demand-side disruptions wreak havoc on consumption and manufacturing.

All told, two consecutive 11% drops would be equivalent to a more than 20% decline from the all-time highs, which would put the US market solidly into bear-market territory.

Most Wall Street banks have been slower to lower their equity year-end forecasts, but suffice it to say, a 20% drop would leave stocks well below where most of the big banks expect they will be at year's end.

Tyler Durden

Thu, 03/05/2020 - 15:50

"Imagine The Worst Case Scenario, Protect Yourself" - Ray Dalio Warns Virus Will "Annihilate" Some Markets

zerohedge News imagine worst case scenario protect yourself dalio warns virus will annihilate some markets All https://www.zerohedge.com   Discuss    Share
"Imagine The Worst Case Scenario, Protect Yourself" - Ray Dalio Warns Virus Will "Annihilate" Some Markets

The coronavirus is a once-in-a-lifetime epidemic that will crush those who don't defend for a worst-case scenario, Bridgewater co-founder Ray Dalio wrote in a Tuesday LinkedIn post.

I will repeat my overarching perspective, which is that I don’t like to take bets on things that I don’t feel I have

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a big edge on, I don’t like to make any one bet really big, and I’d rather seek how to neutralize myself against big unknowns than how to bet on them. 

That applies to the coronavirus.  Still, there’s no getting around having to figure out what this situation is likely to mean and how we should deal with it, so here are my thoughts for you to take or leave. In reading them please realize that I’m a “dumb shit” when it comes to viruses, though I do get to triangulate with some of the world’s best experts. So, for the little that they’re worth, here are my thoughts. 

Three Perspectives

As I see it there are three different things going on that are related yet are very different and shouldn’t be confused: 

1) the virus,

2) the economic impact of reactions to the virus, and

3) the market action.  

They all will be affected by highly emotional reactions. Individually and together they lend themselves to a giant whipsaw with big mispricings, with the off chance that it will trigger the downturn that I have been worried would happen with both the big wealth/political gap and the end of the big debt cycle (when debts are high and central banks are impotent in trying to stimulate).

1) The Virus

The virus itself will almost certainly a) come and go and b) have a big emotional impact, which will most likely produce a big whipsaw. 

It will most likely lead to an uncontained global health crisis that could have high human and economic costs, though how it is handled and what the consequences will be will vary a lot by location (which will also affect how their markets behave). Containing the virus (i.e., minimizing its spreading) will occur best where there are:

1) capable leaders who are able to make executive decisions well and quickly,

2) a population that follows orders,

3) a capable bureaucracy to enforce and administer the plans, and

4) a capable health system to identify and treat the virus well and quickly. 

It will require the leaders to turn on “social distancing” quickly and effectively ahead of the virus accelerating and to withdraw it quickly as it declines.  I believe that China will excel at this, major developed economies will be less good but OK, and those who are weaker than them in these respects will be dangerously worse. 

For this reason, I am told that it’s likely that it will spread fast in these other countries and roughly in proportion to those four factors I just mentioned, and likely as a function of the weather (e.g., the hot weather in the Southern Hemisphere is thought to be an inhibitor). Because it is spreading fast to many countries and the reported cases and deaths are likely to increase rapidly, the news is likely to rapidly increase panicky reactions. 

Also, in the US there will be much more testing happening over the next couple of weeks, which will dramatically increase the numbers of reported infected people, which will also probably lead to more severe reactions and greater social distancing controls.  I am told that the stresses on hospitals could become very large, which will make handling the cases of all patients more difficult. In short, I am told that we should expect much more serious problems ahead. 

2) The Economic Impact

Reactions to the virus (e.g., “social distancing”) will probably cause a big short-term economic decline followed by a rebound, which probably will not leave a big sustained economic impact. The fact of the matter is that history has shown that even big death tolls have been much bigger emotional affairs than sustained economic and market affairs. My look into the Spanish flu case, which I’m treating as our worst-case scenario, conveys this view; so do the other cases.

While I don’t think this will have a longer-term economic impact, I can’t say for sure that it won’t because, as you know, I believe that history has shown us that when

a) there is a large wealth/political gap and there is a battle against populists of the left and populists of the right and

b) there is an economic downturn, there are likely to be greater and more dysfunctional conflicts between the sides that undermine the effectiveness of decision making, and this is made worse when

c) there are large debts and ineffective monetary policies and

d) there are rising powers challenging the existing world powers.

The last time that happened was during the 1930s leading up to World War II, and the time before that was in the period leading up to World War I. Certainly, the wealth gap and political conflict leading to possible policy changes will be top of mind along with the coronavirus on this Super Tuesday. 

3) The Market Impact

The world is now leveraged long with a lot of cash still on the sidelines—i.e., most investors are long equities and other risky assets and the amount of leveraging that has taken place to support these positions has been large because low interest rates relative to expected returns on equities and the need to leverage up low returns to make them larger have led to this. The actions taken to curtail business activities will certainly cut revenues until the virus and business activity reverse which will lead to a rebound in revenue. That should (but won’t certainly) lead to V- or U-shaped financials for most companies.  However, during the drop, the market impact on leveraged companies in the most severely affected economies will probably be significant. We will show you what that looks like shortly. My guess is that the markets will probably not distinguish well between those which can and cannot withstand well the temporary shock and will focus more on their temporary hit to revenues than they should and underweight the credit impact—e.g., a company with plenty of cash and a big temporary economic hit will probably be exaggeratedly hit relative to one that is less economically hit but has a lot of short-term debt. 

Additionally, it seems to me that this is one of those once in 100 years catastrophic events that annihilates those who provide insurance against it and those who don’t take insurance to protect themselves against it because they treat it as the exposed bet that they can take because it virtually never happens.  These folks come in all sorts of forms, such as insurance companies who insured against the consequences that we are about to experience, those who sold deep-out-of-the-money options planning to earn the premiums and cover their exposures through dynamic hedging if and when the prices get near in the money, etc. The markets are being, and will continue to be, affected by these sorts of market players getting squeezed and forced to make market moves because of cash-flow issues rather than because of thoughtful fundamental analysis.  We are seeing this in very unusual and fundamentally unwarranted market action. Also, what’s interesting is how attractive some companies with good cash yields have become, especially as many market players have been shaken out. 

As far as central bank policies are concerned, interest-rate cuts and increased liquidity won’t lead to any material pickup in buying and activity from people who don’t want to go out and buy, though they can goose risky asset prices a bit at the cost of bringing rates closer to hitting ground zero. That’s true in the US. In Europe and Japan, monetary policy is virtually out of gas so it’s difficult to imagine how pure monetary policy will work. In Europe, it will be interesting to see if fiscal policy stimulations can pick up in this political environment.  Also, in all countries, don’t expect much more stimulation coming from rate cuts because most of the rate cuts have already happened via the declines in bond and note yields which is what equities and most other assets are priced off of. So, it seems to me that containing the economic damage requires coordinated monetary and fiscal policy targeted more at specific cases of debt/liquidity-constrained entities rather than more blanket cuts in rates and broad increases in liquidity.

The most important assets that you need to take good care of are you and your family. As with investing, I hope that you will imagine the worst-case scenario and protect yourself against it.

Tyler Durden

Wed, 03/04/2020 - 11:05

"Ground Zero For Trade" – Port Of Long Beach Warns Of Shipping Slump From China

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"Ground Zero For Trade" – Port Of Long Beach Warns Of Shipping Slump From China

Investors are grossly underestimating the potential economic impact of Covid-19 as the first signs of China's supply chain meltdown are now washing ashore on US West Coast ports. 

The Port of Long Beach, the second-largest containerized port in the US, has had two top officials warn in the last several weeks of chilling effects of supply chain disruptions from China.

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Last week, the Deputy Executive Director of Administration and Operations for the Port of Long Beach Noel Hacegaba warned China's economic paralysis led to the increase of blank sails between China and the US. He said port activity plunged in January and February, with expected weakness to continue through March.  

Hacegaba said the slowdown at Long Beach is starting to hit the local economy around the port. He said it could only be a matter of time before it triggers a broader slowdown in the region, and even maybe in the overall US economy. 

As we've noted in many pieces of creaking global supply chains fast emerging in China and spreading outwards, Deutsche Bank's senior European economist Clemente Delucia last month pointed out in a report titled "The impact of the coronavirus: A supply-chain analysis" that the US is overly exposed to a crashing China economy.

As for the second Long Beach official, Bloomberg quoted Mario Cordero, executive director of the port, who said cargo volumes are expected to slump 9% YoY in February due to declining shipments from China.

Cordero said February's YoY loss is nearly double of 2019's decline of 5.4%, which has already resulted in a 50% reduction in labor at the port. He said the East Asia shipping route accounts for 90% of shipments through the port. 

"The port of Long Beach is ground zero for trade," warns Cordero. "There was uncertainty with the trade war, but the coronavirus has taken it to chaotic."

Downward pressure from supply chain disruptions in China has now spilled over into the rest of the world. The transmission mechanism to the US is West Coast ports. The port Long Beach handles $200 billion in trade annually and supports 2.6 million trade-related jobs across the country, including almost 600,000 in Southern California.

As for other West Coast ports, reports of a containerized volume declines from China are inevitable. These ports are a critical artery of the US economy's transportation infrastructure and essential for the flow of imports and exports, representing about 12.5% of US GDP. 

A slowdown of containerized volume at Long Beach and other West Coast ports could suggest a broader economic downturn is ahead for the US economy. 

Tyler Durden

Tue, 03/03/2020 - 21:05

Gov. Cuomo Confirms 2nd Coronavirus Case In New York, Warns Virus Likely "Spreading In Communities": Live Updates

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Gov. Cuomo Confirms 2nd Coronavirus Case In New York, Warns Virus Likely "Spreading In Communities": Live Updates


  • 2nd case confirmed in NYC

  • Pope tests negative for coronavirus

  • NYC high school closes over 'suspected case of coronavirus'

  • Global case total passes 91,000

  • UK case total hits 51

  • US case total tops 100 across 15 states (incl
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    uding evacuees)

  • South Korea case total passes 5,000; death toll hits 34

  • Iran confirmed cases pass 2,000, 70+ dead

  • Head of European football says Euro 2020 will go on

  • 9 new cases confirmed in Japan

* * *

Update (0855ET): During this morning's press conference, Gov. Cuomo announced that New York public health officials have confirmed the second case of the coronavirus in the state, this time in a man in his 50s from Westchester County.

Per the NYT, the patient was confirmed overnight via a state lab in Albany. Cuomo added that the two cases, which have no obvious connection to cases abroad, suggest that the virus may be "spreading in communities with no known connection to hot spots for the disease."

Gov. Andrew M. Cuomo announced on Tuesday morning a second confirmed case of coronavirus in New York, a man in his 50s in Westchester County, just outside of New York City, suggesting that it was spreading in communities with no known connection to hot spots for the disease.

The patient, whose test was confirmed overnight by a state lab in Albany, had no direct connection with any known center of the contagion, which was first identified in China in late December.

On Sunday, officials announced the state’s first case, a 39-year-old woman in Manhattan, a health care worker who had been visiting Iran, one of the epicenters of the virus’s rapid worldwide spread.

Governor Cuomo said the news of the second New York patient should not be a cause for alarm, reiterating that health officials had expected that the disease would be found in multiple locations around the state and would be likely to spread.

"We don’t see any direct connection," Mr. Cuomo said, noting that the patient is hospitalized.

So that's one case in Manhattan (a woman who visited Iran) and one case in Westchester (with no obvious link to anyone) plus a school in Riverdale (right on the border of Westchester) closing because some may have been exposed to the virus.

Also, more details on the school closing, per Reuters: The SAR Academy and SAR High School in Riverdale, in the Bronx ,is the school that will close to Tuesday.

"At this time it important to remain calm," according to the statement, which didn’t provide any more details.

Readers who are too young to remember the 2003 SARS outbreak might not remember, but NYC narrowly avoided an outbreak when a doctor from Singapore who had been infected by a patient flew to NYC for a conference. He grew increasingly ill while in New York, eventually cutting short his trip and boarding a flight for home, as the NYT reminds us.

Fortunately, the city already has MTA workers out in force disinfecting the subway.

* * *

Update (0840ET): With only one case confirmed in NYC, the hysteria is already descending, and it's not limited to the Brooklyn Costco.

An NYC high school said it will close Tuesday due to a "suspected case of coronavirus in its community."


Stocks aren't going to like that.

Gov. Cuomo said he would hold a press conference to update the public at 9 am in New York.

Last night, Cuomo tweeted that he would require NY health insurers to cover coronavirus-related costs for New Yorkers.

We suspect we'll know more soon.

* * *

Update (0800ET): UK Health Secretary Matt Hancock has confirmed 11 new cases in the UK, raising the total to 51.

* * *

Following the longest publicly-disclosed illness of Pope Francis's papacy, the Vatican has confirmed that the leader of 1 billion Catholics has tested negative for the coronavirus. After days of insisting that the pope didn't have the virus...somebody at the Vatican was clearly worried that the Pope might have been exposed.

Pretty soon, millions of Americans and Europeans will know that feeling, if they don't already.

Yesterday, the death toll in the US climbed to 6, while the death toll across Europe has moved closer to 100. Late last night, officials in Washington State confirmed what many probably already suspected: 4 of the six deceased were either patients or staff at a nursing home in Kirkland, suburban Seattle.

Yesterday, the Dow posted its biggest one-day rebound in points as an endless parade of strategists and talking heads on CNBC jawboned hopes of 'coordinated central-bank intervention' into reality, though in the hours since Monday's close, though hopes have dimmed somewhat, thanks in part to this Reuters report. As G7 finance minister and central bankers prepare for Tuesday morning's conference call, it seems traders around the world have suddenly remembered that there's not much central banks can do, even after the OECD called for a mix of monetary and fiscal stimulus to rescue global growth.

In the span of days, the number of confirmed coronavirus cases in the US has climbed to more than 100 across 15 states if we include the evacuees, along with six deaths so far. the White House, and other governments, are shifting their focus, according to the New York Times, to distributing tests and focusing on early identification and containment instead of trying to keep the virus out.

This comes as the number of cases worldwide surpassed 90,000 on Tuesday.

In China, Communist Party officials are luxuriating in their success, or at least a convincing image of success, in suppressing the outbreak: Now that the novel coronavirus appears to be on the decline, vindicating Beijing's heavy handed tactics (for weeks, 760 million were subjected to some form of restriction on their movements, while 100 million faced punishment for leaving their homes without permission).

On Tuesday, Shanghai and Beijing instituted 'travel bans' directed at travelers from hot zones including Italy, South Korea and - of course - the US, turning President Trump's 'racist' travel restrictions on their head. Here's more from the NYT:

Major cities across China have announced new travel restrictions on people who have recently visited countries where coronavirus infections are on the rise.

On Tuesday, the authorities in Shanghai said that all travelers entering the city who had visited countries with significant outbreaks within the last two weeks must undergo a 14-day quarantine at home or at an approved isolation center. Officials in Guangdong Province announced similar measures, the state news media reported on Tuesday.

And a city official in Beijing announced on Tuesday that all arrivals into the capital from countries struggling with outbreaks — including Iran, Italy, Japan and South Korea — would be subject to a 14-day quarantine.

At least 13 people in China were found to be infected with the coronavirus after returning from countries such as Iran and Italy, two places that have seen some of the most severe outbreaks outside of Asia in recent days, according to the authorities.

A 31-year-old Chinese woman had worked in a restaurant in the Italian city of Bergamo before returning home to Qingtian County, in the southeastern province of Zhejiang, where she tested positive for the virus. Seven more people who worked at the same restaurant in Bergamo were later found to be infected after they returned to Zhejiang, the local authorities said.

In recent days, county officials in Qingtian have urged overseas residents to reconsider any plans to return home, citing the challenges they could pose to China’s efforts to control the epidemic.

Minutes ago, South Korean health officials released their second coronavirus update for Tuesday: Another 974 confirmed cases raised the country's total to 5,186. Meanwhile, South Korea's death toll climbed to 34.

Public fury in SK so far has been directed at a strange, cult-like church called Shincheonji. Its leader issued an apology yesterday following reports that public prosecutors were being pressed to charge him and 11 other church leaders with murder. Now, investigators are looking into two church members who traveled to South Korea in January from Wuhan. One of them have tested positive, while the other tested negative, according to CNN.

In Japan, another case was reported in Tokyo Tuesday, along with two additional cases in Osaka, and six cases between Nagoya and Kyoto.

Over in Europe, UK Prime Minister Boris Johnson said "we are ready for potential economic downside" as the UK faces a "national challenge" in defeating the virus.

Johnson added: "I am very confident that Britain will get through it in good shape."

Asked about school closures, Johnson said "we don't think schools should be closing in principle - they should stay open," he said. But the public must follow the advice of Public Health England. However, given that children are actually considered "low risk" for COVID-19, Johnson said school closures might not fit into the government's strategy. On Tuesday, cases in the UK climbed to 40.

In France, the increasingly unpopular "President for the Rich" Emmanuel Macron has become the latest victim of coronavirus rumors, after the president reportedly caught a cold and tried to pull out of an event. He has now reportedly been cajoled into visiting a hospital ward in Paris to try and dispel rumors that he's dying of pneumonia.

In Iran, where the virus has killed at least 77 people (and more than 200 according to some reports), public health officials (at least those who haven't already succumbed to the virus) confirmed that 2,336 cases have been counted. As case totals in Qatar, Bahrain, Saudi Arabia, Jordan, Qatar, Oman, the UAE and Egypt climb, Iran's regional neighbors have shut their borders and severed travel and trade links with the Islamic Republic. The head of Iran's emergency medical services has become at least the fifth senior government official to be diagnosed with the virus after a senior advisor to the Ayatollah died yesterday. Additionally, 23 Iranian MPs were among the new cases on Tuesday.

As more companies restrict employee travel, Google on Tuesday told the bulk of staff at its European headquarters in Dublin have been asked to work from home after a staffer reportedly caught the flu.

As more countries cancelled cultural and sporting events across Europe, the head of European football's government body said Tuesday that the Euro 2020 soccer tournament would move ahead as planned.

"You don't know how many concerns we have when we organize a big competition […] We have security concerns, we have political instability concerns and one of those concerns is the virus. We are dealing with it and we are confident that we can deal with it," said UEFA President Aleksander Čeferin at a presser in Amsterdam.

As the total number of cases in Spain climbs to 129, a person in Gibraltar has tested positive, the first case identified in the British territory on the southern coast of Spain.

Thailand has imposed compulsory self-quarantine on travelers arriving from hot zones in Asia, the Middle East and Europe following a spate of deaths in the country.

But now that the G7 communique has dashed the market's hopes, get ready for another wild day.

Tyler Durden

Tue, 03/03/2020 - 09:01

OECD Sounds The Alarm, Warns Global Growth Could Shrink "By Half" Thanks To Coronavirus

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OECD Sounds The Alarm, Warns Global Growth Could Shrink "By Half" Thanks To Coronavirus

As the coronavirus spread across the world over the last six weeks, the IMF and WHO have in many ways played down the fallout from the outbreak. In the beginning, the WHO memorably hesitated to declare the outbreak a "Public Health Emergency of International Concern (PHEIC)".

More recently, Director-General Dr. Tedros has urged government officials to avoid u

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sing the "p-word" for fear of a default in the two tranches of "pandemic bonds" that the organization issued a few years ago, a move that could wipe out the nascent market for WHO debt at a time when the organization is trying to expand in scope.

Despite reports that the IMF and World Bank are consider holding their annual spring meetings, typically held in Washington DC in April via teleconference, the IMF's has said it expects the outbreak will shave only 0.1 percentage point off global GDP growth. Taking things a step further, American investment banks have been spreading rumors about "coordinated central bank easing" to try and convince their clients that the Fed will make everything okay and that this is just another dip to "BUYBUYBUY".

But on Monday, the OECD became the first major NGO to sound the alarm over the outbreak (thoug, claiming that the global economy is "at risk" and that the organization fears global growth could contract "by half" from its prior forecast, the FT reports.

According to the OECD, the fallout in China alone could shave 0.5 percentage points off this year's global rate of growth.

Here's more from the FT:

The OECD became the first international organisation to sound the alarm about coronavirus on Monday, saying the world economy was “at risk” and warning of the possibility that global growth will halve this year from its previous forecast. Just the effect of the widespread closure of factories and businesses in China was likely to cut 0.5 percentage points from the global growth forecast in 2020, the Paris-based international organisation said, lowering its forecast from an already weak 2.9 per cent to 2.4 per cent. That puts the global economy on the verge of a recession, which is traditionally defined as growth below 2.5 per cent. If there was a “longer lasting and more intensive coronavirus outbreak, spreading widely throughout the Asia-Pacific region, Europe and North America”, prospects would dim further and global growth “could drop to 1.5 per cent in 2020, half the rate projected prior to the virus outbreak,” the OECD added. Calling on governments to act “swiftly and forcefully” on health and economic effects, it called for supportive monetary and fiscal policies to restore confidence even though it recognised that economic policies cannot offset the immediate effects of shutdowns in business activity designed to slow the spread of the virus.

If Germany doesn't open up that pocket book, the global economy could really be in trouble.

Tyler Durden

Mon, 03/02/2020 - 06:37

Trump Warns Of Stock Market Crash "Like You Never Have Seen Before" If A Democrat Wins The White House 

zerohedge News trump warns stock market crash like never have seen before democrat wins white house All https://www.zerohedge.com   Discuss    Share
Trump Warns Of Stock Market Crash "Like You Never Have Seen Before" If A Democrat Wins The White House 

Every time the stock market has a sizeable downdraft, President Trump blames the Federal Reserve or the Democrats. And with Bernie Sanders' win in Nevada still looming large over the market, and futures struggling to shake off yesterday's brutal drop, the fact that Trump is back at it this morning is hardly a surprise.

In the past, Trump has w

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arned that a Democratic "Clown" president would lead to a "1929"-style crash, coined the slogan "If you want stocks to fall, vote Democrat" and blamed the Dems for market "disruptions".

And this morning, the president is at it again, warning if he loses the upcoming presidential election, there will be a stock market crash "like you have never seen before." 

E-Mini S&P500 has erased all gains made during Asia hours and moved into the red since Trump's comments.

With Sanders on track to secure the nomination in a nightmare for establishment Dems, we suspect we'll be hearing this from Trump more frequently as we head into the summer.

Tyler Durden

Tue, 02/25/2020 - 05:53

China's Tourism Ministry Warns Travelers To Avoid US Over 'Racist' Treatment Amid Outbreak

zerohedge News chinas tourism ministry warns travelers avoid over racist treatment amid outbreak All https://www.zerohedge.com   Discuss    Share
China's Tourism Ministry Warns Travelers To Avoid US Over 'Racist' Treatment Amid Outbreak

In retaliation for Washington's travel ban targeting Chinese citizens and recent visitors, not to mention the CDC and State Department travel advisories, Beijing is finally putting its foot down: China's Ministry of Culture & Tourism warned on Monday that Chinese citizens shouldn't travel to the US because of "excessive outbreak prevention measures."


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you read that right: China isn't contesting that the US has the outbreak under control. Rather, it believes the US has gone too far. After the WHO insisted that travel restrictions weren't necessary, the US and myriad other countries (most recently Israel) tightened their borders anyway.

Now, the People's Daily is accusing the US government of "unfair treatment of Chinese people". In other words, Beijing is playing the race card. Put another way: A government that has been accused of jailing millions of Muslims in de fact concentration camps is now arguing that the US's precautions to prevent a coronavirus outbreak were racist.

Beijing claimed on Monday that tourists had received "unfair treatment" in parts of the US, and China's tourism bureau also warned that the "domestic security" situation in the US is lacking - possibly referring to several viral videos of Asian-Americans being berated in public, the Daily Mail reports.

Keep in mind: The coronavirus outbreak, which started in Wuhan, a city of nearly 12 million in China's Hubei Province, has killed nearly 3,000 people since it started in December. Nearly 80,000 people have been infected around the world.

"The Ministry of Culture and Tourism reminds Chinese tourists to effectively raise safety awareness and be sure not to travel to the United States," the Ministry said in a statement.

The ministry neglected to offer any details or explanation of its reasoning. The Trump Administration has temporarily barred foreign nationals who have been to China in the last 14 days from entering the US, other than immediate family of US residents and those with permanent visas.

A video that surfaced online earlier this month showed a man attacking a Chinese woman and called her a "diseased b***h" on the subway.

While American SJWs have repeatedly warned that certain elements of the virus response have been 'racist', others have ridiculed their warnings as overt displays of hypersensitivity that could put people at risk.

Meanwhile in China, the government is ordering people to go back to work to prevent further economic declines, regardless of their risk of infection.

Then again, it's not like the US would accept them anyway.

Tyler Durden

Mon, 02/24/2020 - 12:40
0 View

zerohedge News Editorial   Discuss    Share

Google Says Apps No Longer Work On New Huawei Phones, Warns Users Not To "Sideload"

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Google Says Apps No Longer Work On New Huawei Phones, Warns Users Not To "Sideload"

Last year, the U.S. government banned companies in the U.S. from working with Huawei - with Google being one of the notable names that would have to cease and desist, given its popular Android operating system and Google Play app store.

At the time, Trump had signed "executive order declaring a national emergency banning sales and use of telecom

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equipment that poses 'unacceptable' risks to national security, including critical infrastructure and the online economy," according to Engadget. Huawei was obviously on that list. China was called the "primary target" of the order. 

But there's still confusion about what's going on and which products are subject to the services ban, according to The Verge. This is mainly due to the fact that there are still updates and services available for older Huawei devices, but that newer phones like the Mate 30 Pro (below), don't have access to its services. 

To clarify, Google published a note on its Android forums on Friday, explaining its stance with Huawei phones and reminding its users not to try and "sideload" apps onto a phone where they shouldn't be. The note from Google says that the company can only work with device models available to the public before May 16,2019:

"Our focus has been protecting the security of Google users on the millions of existing Huawei devices around the world.  We have continued to work with Huawei, in compliance with government regulations, to provide security updates and updates to Google’s apps and services on existing devices, and we will continue to do so as long as it is permitted. To be clear: US law currently allows Google to only work with Huawei on device models available to the public on or before May 16, 2019."

The note also makes it crystal clear that Google apps and services are simply not available "for preload or sideload" on Huawei's new devices:

We have continued to receive a number of questions about new Huawei devices (e.g., new models launching now, or earlier models launched after May 16, 2019 but now becoming available in new regions of the world) and whether Google’s apps and services can be used on these devices.  We wanted to provide clear guidance to those asking these important questions. 

Due to government restrictions, Google’s apps and services are not available for preload or sideload on new Huawei devices.

The note says that sideloaded apps on newer devices, despite the warning, "will not work reliably because [Google] does not allow these services to run on uncertified devices where security may be compromised."

"Sideloading Google’s apps also carries a high risk of installing an app that has been altered or tampered with in ways that can compromise user security," the note says. 

Google also offers users a way to check and verify whether or not their phone is certified for its apps: 

To check if your device is certified, open the Google Play Store app on your Android phone, tap “Menu” and look for “Settings.” You will see if your device is certified under “Play Protect certification.” You can learn more on android.com/certified.

While it seems as though Google is trying to sidestep the political implications of these rule changes, it is also stern in reminding its users from using backdoor access to load Google apps onto to Huawei phones. 

Meanwhile, China has much bigger problems than Huawei on their hands right now. And the U.S.? Perhaps they should consider quarantining not just Huawei, but anything that comes out of China at the moment.

Tyler Durden

Sat, 02/22/2020 - 21:00

'Weak Start To The Year' - Maersk Warns Paralyzed Chinese Factories To Damage Global Economy

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'Weak Start To The Year' - Maersk Warns Paralyzed Chinese Factories To Damage Global Economy

A.P. Moller-Maersk A/S, the world's largest container shipping company, warned Thursday that the Covid-19 outbreak in China, and quickly spreading across the world, would hit earnings this year. 

Maersk said factories in China are currently operating at 50-60% of capacity because the economy has ground to a halt. 

Maersk reported an une

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xpected loss in the fourth quarter of $72 million from a profit of $46 million a year earlier. The shipper is a barometer of global trade, said revenues declined 5.6% to $9.67 billion, missing expectations of $9.4 billion, due mostly to a decline in container shipping. 

Shipping volumes in both East to West and North to South routes were lower amid several years of front-loading by corporations ahead of President Trump's tariffs. Lower demand was seen across Europe, Latin America, the US, and across Asia Pacific countries last quarter. 

The shipper said 2020 guidance is filled with many uncertainties because the deadly virus can still spread outside of China and impact the global economy. 

"As factories in China are closed for longer than usual in connection with the Chinese New Year as a result of the COVID-19, we expect a weak start of the year," Maersk warned. 

Maersk's warning comes as China's economy remains completely paralyzed, expected to slow global trade in goods in the coming months and produce increased trade uncertainties, the World Trade Organization (WTO) said this week. 

"The slow start could be dampened further," the WTO said in the report, "by global health threats and other recent developments in the first few months of the year, which are not yet accounted for in the barometer's best-available historical data."

"The latest barometer reading does not indicate a sustained recovery," it said. "Indeed, year-on-year trade growth may fall again in the first quarter of 2020, though official statistics to confirm this will only become available in June."

The decline in global trade was seen in container shipping, agricultural commodities, and automotive products index, the WTO said.

Soren Skou, Maersk's chief executive, told the Financial Times that China could be operating at 90% capacity by March 2. Still, he noted that a lot of "things could go wrong," such as labor and part shortages to logistics transportation, had been a nightmare for many factories in preventing them from a complete factory restart. There's also the problem that manufacturers are running out of capital to cover labor expenses. All of this means the timelines of factory restarts in China will continue to be pushed out.

Maersk expects global container demand to be around 1% to 3% this year. This is below the rate seen before the 2008/09 financial crisis, as well as 3.8% seen in 2018, suggesting the global economy is rapidly slowing. 

The HARPEX (Harper Petersen Charter Rates Index) reflects the worldwide price development on the charter market for container ships. Companies pulling forward goods ahead of President Trump's tariffs boosted rates for much of 2018 and 2019. However, the signing of the Phase One trade agreement has calmed trade uncertainties and declined the need for corporations to pull forward. What could happen next is the HARPEX plunges as the demand for container ships sinks as China’s economy is paralyzed.

The breakdown in the global supply chain is becoming a bigger threat by the day…

Tyler Durden

Fri, 02/21/2020 - 04:15

Stuffing nonsense: Persistent cyberpunks are pummelling banks' public APIs, warns Akamai

logicfish Security stuffing nonsense persistent cyberpunks pummelling banks public apis warns akamai All https://go.theregister.co.uk   Discuss    Share
Security biz clocked 55 million malicious login attempts on a client

Financial services firms' public APIs are becoming the target du jour for internet ne'er-do-wells, reckons Akamai, which also said that one of its customers was firehosed with 55 million malicious login attempts last summer.…


"Negative Impact" - Top Apple Supplier Foxconn Warns Over Revenue Hit

zerohedge News negative impact apple supplier foxconn warns over revenue All https://www.zerohedge.com   Discuss    Share
"Negative Impact" - Top Apple Supplier Foxconn Warns Over Revenue Hit

Top Apple supplier, Foxconn Technology Group, warned Thursday that the Covid-19 outbreak in China would lead to lower full-year revenue. 

Foxconn said it would "cautiously" resume output at critical facilities in China that have been shut down because of the virus outbreak. 

"As we are moving ahead with the reopening of mainland China manufa

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cturing complexes in a relatively cautious manner, this will indeed have a negative impact on full-year revenues," Foxconn said in a statement on the Taipei Stock Exchange's website.

Foxconn is the largest electronics manufacturer in the world, and its ominous warning about supply chain disruptions affecting its full-year revenue guidance follows Apple's revenue guidance cut for the March quarter due to virus related issues. 

Supply chain disruptions for Apple and Foxconn could persist through April as labor and part shortages to logistics transportation is a significant challenge in restarting top iPhone manufacturing plants and or at least achieving full capacity.  

The central region of iPhone production is in Zhengzhou, Henan Province has delayed the return of workers this week. It could be weeks until full capacity is reached, but even then, there's no guarantee that full production could be seen next month. 

Reuters noted earlier this week that some semiconductor suppliers of Apple are currently experiencing production issues that could delay Foxconn's restart or at least shift full capacity timelines not just weeks out but months out. 

Taiwan's China Times published a report suggesting Foxconn could see revenue drop by 45% in the first quarter.

Apple and Foxconn's warnings of supply chain disruptions and revenue declines could be what starts the waterfall of negative earnings preannouncements for many technology companies with modest exposure to Chinese output.

Last week we showed several "alternative" economic indicators such as real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing) and traffic congestion levels (a proxy for commerce and mobility), before concluding that China's economy appears to have ground to a halt. Observations this week continue to show China's economy remains completely paralyzed:

Wall Street must be blind as a bat not to realize the most exposed sector to the continued crunch across Chinese factories is technology. 

But maybe Wall Street’s best and brightest aren't blind, but instead bidding stocks up to new highs on the hope policy support by major central banks would fix the difficulties emerging in China. And it could be this time that monetary policy is ineffective in stimulating demand while the global economy grinds to a halt. 

The virus outbreak that is spreading across the world could be the pin that pops the Fed-induced technology bubble. 

Tyler Durden

Thu, 02/20/2020 - 09:10

That'll take the spring out of your step: Apple warns of iPhone shortages, revenue miss due to coronavirus

logicfish Business thatll take spring your step apple warns iphone shortages revenue miss coronavirus All https://go.theregister.co.uk   Discuss    Share
Factories 'ramping more slowly than anticipated'

Apple said the COVID-19 epidemic in China has disrupted iPhone production to the point that it will lead to global shortages of the handset – and likely miss already widened revenue forecasts it set in January.…

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