Baltic Dry Index. 534 -41 Brent Crude 29.93
Spot Gold 1692
Coronavirus Cases 07/5/20
World 3,823,013
Deaths 265,084
"There
is no means of avoiding the final collapse of a boom brought about by credit
expansion. The alternative is only whether the crisis should come sooner as the
result of voluntary abandonment of further credit expansion, or later as a
final and total catastrophe of the currency system involved."
Ludwig
von Mises
Today we focus on
the new reality in the global economy, there is no reality anymore, just
central banks propping up anything and everything.
How sustainable
this new Magic Money Tree business model is, nobody knows. But since we’re all
in this giant financial experiment together, we’re all going to find out sooner
or later ahead.
Already the UK
Treasury is debating cutting furloughed worker wages from 80 percent down to 60
percent. That suggests to me that the MMT experiment has a shorter lifespan
than most currently expect.
The big problem
with false markets is that eventually they always collapse. Does anyone even
know of the tin market crash of 1985?
Sumitomo’s “Mr. Copper” crash of 1996?
LTCM crash of 1998? “The Stock Market for the next hundred years,” dot-con
crash of 2000?
Yes, none of them
involved central banksters electronically printing up unlimited trillions of
new cash to support the total economy. But supporting the total economy requires
virtually unlimited cash.
I suspect that MMT
ends badly in the not to distant future.
A wave of bankruptcies, surging taxes, and Americans harboring lasting scars from coronavirus lockdowns — the head of world’s largest asset manager warns of grim outlook
Published: May 6, 2020 at 11:56 p.m. ET
The era of coronavirus has already been hard on the
American psyche, but the CEO of the world’s largest asset manager cautions that
everyone should brace for even rougher days ahead, as the U.S. attempts to
emerge from the worst public-health crisis in more than a century. BlackRock’s Chief Executive Larry Fink forecast a dour near-term outlook for the economy as states and businesses grapple with reopening from COVID-19 lockdowns that have likely driven the U.S., and the rest of the world, into a deep recession, according to a report from Bloomberg News.
The news organization reported that Fink, speaking privately with clients of a wealth advisory firm, outlined an unattractive future in which the economy continues to weaken, bankruptcies soar and American consumers — the lifeblood of economic vitality in America — remain psychologically scarred from the impact of the deadly pathogen that has infected more than 3.7 million people (1.2 million in the U.S. alone) and claimed more than 260,000 lives globally, according to data compiled by Johns Hopkins University.
Adding insult to injury, Fink warned that even as that brutal scenario plays out, taxes on corporations and individuals would eventually need to be raised to finance the trillions of dollars in economic aid that has been doled out by the government and the Federal Reserve to dampen the immediate financial harm wrought by efforts to mitigate the viral outbreak.
----The economy already has suffered historic weakness, and at an unprecedented clip, with the outbreak leading to the biggest drop in gross domestic product in the first quarter since 2008. Indeed, the first reading of GDP for the first three months of 2020, the official scorecard for economic growth, shrank at a 4.8% annualized pace.
Economists predict that the economy is likely to contract by 25% or more in the second quarter, with some forecasts putting the decline at a record 40%.
On Wednesday, a report on private-sector employment in America showed that 20.2 million jobs were lost in April, according to payrolls-processor Automatic Data Processing Inc. ADP, -0.86%.
That awful data point comes as more than 30 million people have applied for jobless benefits in the past six weeks, and another 3 million are likely to show up as looking for work in a Thursday report, reflecting activity in the past week.
More
Billionaire Sam Zell Sees Economy Permanently Scarred by Pandemic
Erik Schatzker May 5, 2020
(Bloomberg) -- Sam Zell, the billionaire known for buying up troubled
real estate, said the coronavirus pandemic will leave the same kind of impact
on the economy and society as the Great Depression 80 years ago, with
long-lasting changes in human behavior that imperil many business models.
“Too many people are anticipating a kind of V-like recovery,” Zell said
in an interview with Bloomberg Television. “We’re all going to be permanently
scarred by having lived through this.”
Just as the depression left behind a generation that couldn’t shake the
experience of mass unemployment, hunger and desperation, the burdens this
crisis has forced on society may be similarly hard to forget. Zell, 78, said it
won’t be easy for people to live as they did before the “extraordinary shock”
of the pandemic.
He expects some amount of social distancing and working from home to
persist long after the acute phase of the outbreak is over, possibly for years.
Retail, hospitality, travel, live entertainment and professional sports are
some of the industries he sees continuing to struggle.
“How soon will anybody get on an airplane? How soon will anybody stay in
a hotel? How soon will anybody go to a mall?” he asked. “The fact that these
places may be open doesn’t necessarily mean that they’ll be doing business.”
---- For now, the raspy-voiced investor who earned
his nickname, the Grave Dancer, buying distressed real estate in the 1970s, is
watching from the sidelines. Like Warren Buffett, Zell hasn’t found anything to
buy since the onset of the pandemic. Part of the problem is a lack of deals.
“Those sellers that wanted to sell still remember the prices that were
available seven or eight weeks ago. The buyers are looking at a very different
world and expecting to see significant discounts,” he said. “When you’ve got
that big a spread, nothing happens.”
Zell’s own investments -- concentrated in real estate and ranging from
U.S. mobile-home parks to shopping centers in Latin America -- have been a
mixed bag. At one project, a bridge called the Cross Border Xpress that connects
California with Tijuana International Airport in Mexico, business is down 90%.
Yet at U.S. hospital chain Ardent Health Services, “the impact is almost
unfelt,” other than government bans on elective surgery, he said.
Every weekday morning, Zell confers with his managers on a Zoom call
from his office overlooking the Chicago River. Recently, he’s been briefed on
the situation at Equity Residential, his largest publicly traded company.
Shares of the real estate investment trust, one of the biggest apartment
owners in the U.S., are down almost 30% since late February. Rents, however,
are holding up well enough that Zell said he doesn’t expect any significant
changes in monthly collections.
Oversupply Warnings
For years, Zell has been warning that the U.S. construction boom would
result in oversupply and lower prices, and the current shutdown “is going to
dramatically make things much worse.”
“Just like we won’t see a lot of retailers reopen,” he said, “I think
we’ll see a lot of hotels that basically can’t reopen.”
More
Fed Is Propping Up Companies It Had Warned Banks Not to Touch
Lisa Lee May 5, 2020
(Bloomberg) -- For years, the Federal Reserve warned that too many
highly risky companies were engaging in fuzzy accounting that bumped up their
earnings -- making it easier for them to obtain loans. The practice was driving
up corporate debt to excessive and worrisome levels, regulators chastised.
But now, in its latest effort to keep credit flowing, the Fed has done a
remarkable about-face. It essentially endorsed the dubious practice with a
program that may serve to bail out some of America’s most leveraged companies.
The Fed move “rewards the worst abusers,” said Mark Carey, a former Fed
official and co-president of GARP Risk Institute, the research arm of an
association of risk managers. “People will see this as a backstop and in the
future they will be encouraged to take on really high leverage.”
The reversal came in the Fed’s announcement last week to expand its Main
Street Lending Program to allow more small and medium-sized businesses to
qualify for as much as $600 billion in loans. That was widely applauded. But
less noticed was a provision that allows companies that had used the
widely-abused accounting techniques in the past to seek the loans.
At issue is the trend among many leveraged companies to “adjust” a key
measure of their results -- known as earnings before interest, taxes,
depreciation and amortization, or Ebitda -- to make them appear more
creditworthy. After intense lobbying by business groups, the Fed has now said
those adjusted earnings can be used for the Main Street lending program, rather
than those under generally accepted accounting standards.
More
Opinion: Why COVID-19’s impact on the job market is far worse for older workers
Published: May 6, 2020 at 9:24 a.m. ET
Stunning, staggering, mind-numbing, call it what you will,
the COVID-19 pandemic’s crushing impact on the job market is inescapable. Over 30 million Americans have now filed for unemployment benefits, according to the Labor Department. Not surprisingly, the unemployment rate for workers age 55 and older is climbing, according to the AARP Public Policy Institute.
“Preretirees (approximately 50-65) are getting the wind kicked out of them right now,” said Ken Dychtwald, founder and chief executive of Age Wave, a consulting and research company, and author of “What Retirees Want: A Holistic View of Life’s Third Age,” in his presentation on the American Society of Aging broadcast, “Aging in the Time of COVID-19: Reflections on Life, Health, Family, Community and Purpose.”
The stressful smackdown is not just job losses, though, “it is also compounded by fear of job losses, having to fire and furlough people, kids at home, elder parents in distress, and market volatility,” he told me in a follow-up conversation.
Read: Why millions of older workers will pay a big price — forever — because of the coronavirus
“Remember, too, that folks in this stage of life are often managers and bosses,” Dychtwald said.
That takes its toll. But the job losses so far–and those to come–are particularly wrenching for this age cohort. “We are assuming that 20% of older workers (over 50) are going to lose their jobs,” said labor economist Teresa Ghilarducci, a professor at the New School for Social Research in New York, in her recent conversation with Mark Miller, editor of RetirementRevised.com.
They
“face very different risks than younger workers who are going to lose their
jobs,” she said. “One is that they risk losing their jobs and never getting
another job, so the scarring effects of the unemployment here are going to be
much worse than for younger workers. Though hard for younger workers, they at
least have time to catch up and switch industries, but older workers cannot and
this can mean premature retirement.”
More
In other news,
poor Italy, trapped in a one size fits all German euro. In Japan, the only
buyer for nearly everything is the Bank of Japan.
Italy service sector shrinks at steepest rate on record in April - PMI
May 6, 2020 / 8:54 AM
ROME (Reuters) - Italy’s service sector shrank at the fastest rate in
more than 22 years in April, a survey showed on Wednesday, as a lockdown
imposed to try to contain the coronavirus pandemic shuttered most businesses.
The IHS Markit Business Activity Index for services dropped to 10.8 from
17.4 in March, plunging even further below the 50-mark that separates growth
from contraction and posting easily the lowest reading since the survey began
in January 1998.
The index level was above the median forecast in a Reuters survey of 15
analysts, which had pointed to a reading of 9.0.
The sub-index for new business in the services sector dropped to 9.1
from 13.8, the lowest reading since the survey was launched.
IHS Markit’s sister survey for manufacturing, published on Monday, also
showed activity contracting at its fastest rate on record.
BOJ's commercial paper holdings jump nearly 30% as pandemic pain deepens
May 7, 2020 / 5:07
AM
TOKYO
(Reuters) - The Bank of Japan’s holdings of commercial paper jumped nearly 30%
in April, data showed on Thursday, a sign the central bank intervened heavily
in the market to help ease funding strains for companies hit by the coronavirus
pandemic.
The health crisis is heightening the chance Japan will suffer a deep
recession as the government extended a state of emergency on Monday through the
end of the month, pressuring companies to shut down factories and stores longer
than expected.
The BOJ eased monetary policy two months in a row in April, including by
expanding the amount of commercial paper and corporate bonds it can buy as it
seeks to keep borrowing costs low for cash-strapped firms.
Its holdings of commercial paper stood at 3.26 trillion yen ($30.7
billion) as of April 30, up 27.8% from a month ago, the bank’s data showed.
That was much faster than the 16.9% rise in March. The BOJ’s corporate bond
holdings rose 5.27% to 3.39 trillion yen.
Many Japanese companies traditionally rely heavily on bank lending, but
big firms also raise funds by issuing commercial paper and corporate bonds.
Issuance of such instruments, and the cost of doing so, have risen in
recent months as firms hoard cash as a precaution against the risk of a
prolonged slump in sales from the virus.
Analysts expect the BOJ to keep ramping up asset buying to prevent
credit markets from freezing up.
Mari Iwashita, chief market economist at Daiwa Securities, said the
BOJ’s programme will face a key test in coming months when big companies
readjust their production and sales plans for the second half of the year,
based on how the pandemic unfolds.
“If the pandemic takes longer than expected to contain, it would
heighten funding strains not just for small firms but big companies,” Iwashita
said.
“The steps the BOJ has taken so far are aimed at preventing a worsening
economy from triggering a financial crisis. We’ll know around late June through
July whether their plan will work.”
More
Covid-19 Corner
Though
hopefully, we are passing/have passed the peak of new cases, at least of the
first SARS-CoV-2 outbreak, this section will continue until it becomes
unneeded.
Today,
did Dr. Chris Martenson find the smoking Wuhan gun? If he did, that smoking gun
turns out to be American. Will the USA get assessed compensation to the rest of
the world?
Coronavirus: Are Our Scientists Lying To Us?
It's sad we even have to ask this question
by Adam Taggart Tuesday, May 5, 2020, 1:01 PM
Picking up on our last video about the Newsweek report that the US has been
funding bat coronavirus ‘gain of function’ research at the Wuhan Institute of
Virology, we dig further into the “Was covid-19 created in a lab?” debate.
Digging into the biochemistry of viruses, we are struck in particular by
a genetic string of RNA within covid-19 — specifically the polybasic furin
cleavage site PRRA — that has all the appearance of an “insert” (i.e.,
something that does NOT look like a natural mutation).
Chris walks through the science in today’s video. But as he does, he expresses
disappointment and anger at some of America’s most prominent virologists — who
seem to be more concerned with CYA tactics (perhaps because they were involved
in the gain of function research?) than embracing the truth:
Click on the link in the article for the incriminating video.
More
https://www.peakprosperity.com/coronavirus-are-our-scientists-lying-to-us/
Scientists say a now-dominant strain of the coronavirus could be more contagious than original
Ralph Vartabedian, •May
5, 2020
Scientists have identified a new strain of the coronavirus
that has become dominant worldwide and appears to be more contagious than the
versions that spread in the early days of the COVID-19 pandemic, according to a new study led by scientists at Los Alamos
National Laboratory.The new strain appeared in February in Europe, migrated quickly to the East Coast of the United States and has been the dominant strain across the world since mid-March, the scientists wrote.
In addition to spreading faster, it may make people vulnerable to a second infection after a first bout with the disease, the report warned.
The 33-page report was posted Thursday on BioRxiv, a website that researchers use to share their work before it is peer-reviewed, an effort to speed up collaborations with scientists working on COVID-19 vaccines or treatments. That research has been largely based on the genetic sequence of earlier strains and might not be effective against the new one.
Scientists with major organizations working on a vaccine or drugs to combat the coronavirus have told The Times that they are pinning their hopes on initial evidence that the virus is stable and not likely to mutate the way the influenza virus does, requiring a new vaccine every year. The Los Alamos report could upend that assumption.
The mutation identified in the new report affects the now-infamous spikes on the exterior of the coronavirus, which allow it to enter human respiratory cells. The report's authors said they felt an "urgent need for an early warning" so that vaccines and drugs under development around the world will be effective against the mutated strain.
In many places where the new strain appeared, it quickly infected far more people than the earlier strains that came out of Wuhan, China, and within weeks it was the only strain that was prevalent in some nations, according to the report.
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards.
"Artificial leaf" device turns water and sunlight into hydrogen fuel
Michael Irving May 05, 2020
Researchers
from Rice University have built a simple new solar-powered device that can create
hydrogen for fuel by splitting water. The system is very similar to other “artificial leaf”
designs, but the team says it’s self-sufficient and relatively cheap to
produce.
The system is made up of a perovskite solar cell, hooked up to
electrodes made of a catalyst that electrolyzes the water. When sunlight hits
the solar cell, it produces electricity that powers the catalyst, which then
splits the water into oxygen and hydrogen. These bubble up to the surface where
they can be collected for use.
The sunlight-to-hydrogen efficiency sits at around 6.7 percent, which is
relatively high for these types of systems. But the most useful feature, the
team says, is just how self-contained the new design is.
The solar cell and the
electrodes are all in one unit – the solar cell components are encased inside a
polymer shell that protects them from water damage while still letting sunlight
through. The electrodes sit on the outside where they can split the water.
The idea is that this device could basically be dropped into some water
with direct sunlight and left to run for long periods of time, producing
hydrogen as needed.
“With a clever system design, you can potentially make a self-sustaining
loop,” says Jun Lou, lead author of the study. “Even when there’s no sunlight,
you can use stored energy in the form of chemical fuel. You can put the
hydrogen and oxygen products in separate tanks and incorporate another module
like a fuel cell to turn those fuels back into electricity.”
The team says that the perovskite solar cell has also been tweaked so
that it doesn’t require expensive components like platinum. Instead, those have
been switched out for cheap elements like carbon. This should bring down the
cost to produce the devices and make them more viable for commercial
production.
Along with hydrogen fuel, artificial leaf designs are also being explored as ways to produce electricity, drugs, fertilizers, syngas and other useful chemical compounds.
The new study was published in the journal ACS Nano.
Source: Rice University
“But it [the boom] could not
last forever even if inflation and credit expansion were to go on endlessly. It
would then encounter the barriers which prevent the boundless expansion of circulation
credit. It would lead to the crack-up boom and the breakdown of the whole
monetary system.”
Ludwig
von Mises.
The Monthly Coppock Indicators finished April
DJIA: 24,346 +26 Down. NASDAQ: 8,890 +162 Up.
SP500: 2,912 +89 Down.
The NASDAQ has rebounded to
up. The S&P and the DJIA remain down.
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