Baltic Dry Index. 433 -41 Brent Crude 29.44
Spot Gold 1706
Coronavirus Cases 13/5/20
World 4,342,847
Deaths 282,899
How
the Fed (Lou Costello) looks after the public.
Yesterday was a
bad day for President Trump’s top re-election team, the Fedsters. Will Chairman
Powell redeem the Fed later today with his latest fire up the stocks, speech?
Can Chairman Powell
get the stock market casinos back on the band waggon of buying the dips? Or at
least get the gamblers back on buy and hold?
President Trump
foolishly tied his re-election campaign to the great bubble in the US casinos, but
lucked out in spades with the Democrats seeming all too likely to pick another
snake bit candidate. Then came the coronavirus crisis, and the world was
stunned as to just how unprepared and chaotic Uncle Sam’s response became.
Though every
sitting President seeking re-election has a considerable “home ground”
advantage, a second wave of Covid-19 cases starting in the Autumn could easily dissipate
that advantage.
Below, the wobbles
return to the stock market casinos. Drum roll, over to Chairman Powell later
today and the Trump re-election campaign at the Fed.
Stocks fall on renewed virus fears, Powell speech in focus
May 13, 2020 /
1:00 AM
TOKYO/NEW YORK (Reuters) - Stocks and oil
prices fell on Wednesday as fears about a second wave of coronavirus infections
gripped financial markets.
Leading U.S. infectious disease expert Anthony Fauci on Tuesday warned lawmakers that a premature lifting of lockdowns could lead to additional outbreaks of the deadly coronavirus, which has killed 80,000 Americans and brought the economy to its knees.
Fauci’s comments hammered Wall Street stocks overnight, underlining fragile investor sentiment which has in recent sessions swung between optimism over some easing in lockdowns globally and anxiety about a fresh spike in virus cases.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.4%. Shares in China .CSI300, where the coronavirus first emerged late last year, fell 0.5%.
The South Korean market .KS11 was down for a third session. New coronavirus infections have
appeared in Seoul after the country eased restrictions last week.
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, lost further ground in Asia.
Treasury yields also inched lower amid caution before a speech by U.S. Federal Reserve Chairman Jerome Powell and rising speculation the United States could one day adopt negative interest rates.
---- The Dow Jones Industrial Average .DJI fell 1.89% on Tuesday, the S&P 500 .SPX lost 2.05% and the Nasdaq Composite .IXIC dropped 2.06%.
The mood was further soured by proposed legislation by a leading U.S. Republican senator that would authorize President Donald Trump to impose sanctions on China if it fails to give a full account of events leading to the outbreak of the novel coronavirus.
More
https://uk.reuters.com/article/uk-global-markets/stocks-fall-on-renewed-virus-fears-powell-speech-in-focus-idUKKBN22O3GN?il=0
Back in the reality, horror show, aka, the real global economy, each horror just seemingly gets worse. Where, I wonder will we be come mid-August if the global economy isn’t showing signs of a meaningful pickup, but instead undergoing a massive wave of bankruptcies, foreclosures, landlord winding-up petitions, rising unemployment, and whipsaw sideways casino stock markets?
China's April passenger numbers down 68.5% year-on-year - aviation regulator
May 13, 2020 / 3:58
AM
BEIJING (Reuters) - China’s passenger numbers fell 68.5% in April from a
year ago, for a drop smaller than in March, the aviation regulator said on
Wednesday, pointing to a fragile industry recovery from the coronavirus
pandemic as other nations reopen economies.
The global tourism industry is closely watching trends in China for
clues to travel patterns in other major markets as countries race to lift
travel curbs.
Air passengers numbered 16.72 million in April, Xiong Jie, a spokesman
of the Civil Aviation Administration of China, told an online news conference.
That compared with a decline of 71.7% on the year in March, when passengers
numbered 15.13 million.
China’s tourism sector showed encouraging signs of recovery over the May
Day holiday with 115 million trips made, many by car and by younger people
emerging from weeks of virus lockdown measures.
More than 30% of capacity has returned in the Chinese domestic market in
the last two months, aviation data provider Cirium said on Tuesday.
But the number of passenger flights in China has not yet recovered to
60% of the levels seen in past years, Jin Junhao, another CAAC official, sadi
during Wednesday’s conference.
China faces a growing risk of second-wave
infections as the health authority reported a few clusters in the central city
of Wuhan and the northeast, spurring reimposition of tough movement curbs in
some parts of affected cities.
NJ Transit Seeking $1.2 Billion as Train Ridership Falls to Near Zero
By Elise Young May 12, 2020, 11:49 PM GMT+1 New Jersey Transit is asking the state’s congressional delegation for $1.2 billion in federal aid as train ridership has dropped 98% and coronavirus-related expenses are costing $10 million a month.Kevin Corbett, chief executive officer of the nation’s largest statewide transportation provider, said in a letter that the agency was thankful for $1.5 billion pledged from the Coronavirus Aid, Relief and Economic Security Act. But NJ Transit needs more because it expects a $2.6 billion budget hole through June 2021, he wrote, and doesn’t see a swift return to pre-virus ridership levels.
NJ Transit is among several U.S. mass-transit agencies that requested
$32 billion in aid, double the amount that House Democrats proposed on Tuesday
for transportation networks in a $3 trillion stimulus bill. The New York
Metropolitan Transportation Authority is seeking $3.9 billion as it faces $10.4
billion in losses for 2020 and 2021.
Most of NJ Transit’s revenue loss is from fares, as train ridership is
down 98% and bus-passenger numbers are down 93%. The agency is losing $110
million more in advertising and lease revenue, and spending $10 million a month
to sanitize vehicles and stations and supply employees and riders with personal
protective equipment.
More
https://www.bloomberg.com/news/articles/2020-05-12/nj-transit-seeking-1-2b-as-train-ridership-falls-to-near-zero?srnd=coronavirus
UK retail sales plunge 19% in April as COVID lockdown hits - BRC
May 13, 2020 /
12:07 AM
LONDON (Reuters) -
British retail spending plunged by nearly a fifth in April as the government’s
coronavirus lockdown hammered the sector, and a broader measure of consumer
spending tumbled by more than a third, surveys showed on Wednesday.
The British Retail Consortium said its members reported a 19.1% drop in total sales last month compared with April last year, the biggest fall since it began its monthly index in 1995.
Barclaycard, part of Barclays Bank (BARC.L), said credit and debit card spending plunged by 36.5% compared with a year earlier as spending on travel, pubs and restaurants collapsed.
British Prime Minister Boris Johnson shut down much of the economy and ordered people to stay largely at home in late March in an attempts to slow the spread of COVID-19.
Last week the Bank of England said it was plausible that both consumer spending and broader economic output would fall by around a quarter during the three months to June, and that output for 2020 could suffer its biggest hit in over 300 years.
Over the three months to April, in-store sales of non-food items plunged by 36.0% while food sales over the period rose by 6.0% as consumers stocked up on essentials for the government’s coronavirus shutdown, the BRC said.
By contrast, online non-food sales leapt by nearly 60% in April to account for more than two thirds of non-food spending.
“As the lockdown wears on, these new shopping habits – such as the trend towards online purchases - will become more entrenched for many consumers,” BRC chief executive Helen Dickinson said.
More
California cancels fall university classes as Fauci warns of reopening too soon
May 12, 2020 /
2:25 PM
LOS ANGELES
(Reuters) - California’s state university system, the largest in the United
States, canceled classes on Tuesday for the fall semester because of the
coronavirus, while Los Angeles County said its stay-at-home order was likely to
be extended by three months.
The announcements on the West Coast came after the nation’s top
infectious disease expert, Dr. Anthony Fauci, told Congress that lifting the
sweeping lockdowns could touch off new outbreaks of the illness, which has
killed nearly 81,000 Americans and devastated the economy.
In one of the first indications the pandemic will continue to have a
significant impact into autumn, the chancellor of California State University
said classes at its 23 campuses would be canceled for the semester that begins
in September, with instruction moved online.
“Our university, when open without restrictions and fully in person, as
is the traditional norm of the past, is a place where over 500,000 people come
together in close and vibrant proximity with each other on a daily basis,” the
chancellor, Timothy White, said in a statement.
“That approach, sadly, just isn’t in the cards now.”
More
Exclusive: Neiman Marcus creditor calls for deal with Saks Fifth Avenue - letter
May 13, 2020 /
1:53 AM
(Reuters) - Hedge
fund Mudrick Capital Management LP asked Neiman Marcus Group’s independent
directors on Tuesday to explore a combination with rival department store chain
Saks Fifth Avenue, challenging the company’s plan to reorganize under
bankruptcy protection.
A lawyer for Mudrick, which holds portions of Neiman Marcus’s roughly $5
billion of debt, wrote in a letter to the directors that a sale or merger with
Saks would result in better financial recoveries for creditors than the
company’s current plan to restructure and hand control to senior lenders.
Neiman Marcus [NMRCUS.UL] filed for bankruptcy last week after prolonged
store closures in response to the COVID-19 pandemic resulted in plunging sales.
The letter, reviewed by Reuters, suggests that combining the two luxury
retailers would create between $2.8 billion and $4.7 billion of value. That
could ultimately be achieved by Neiman Marcus using bankruptcy proceedings to
permanently close at least 22 stores in nearby or overlapping locations to its
rival. That and other cost savings could boost the combined retailer’s
earnings, the letter said.
Saks owner Hudson’s Bay Co in 2017 explored a Neiman Marcus takeover but
did not ultimately pursue it, Reuters previously reported. Hudson’s Bay has
remained interested in Neiman Marcus, according to sources familiar with the
matter, but has not yet made a formal bid for the company.
Representatives for Mudrick, Neiman Marcus and HBC declined to comment.
Hudson’s Bay was taken private in March by shareholders that include
Chief Executive Richard Baker, and it is also grappling with financial fallout
from the coronavirus outbreak.
More
‘First bonds, then stocks’ — Fund manager warns investors could get hit with two crashes before end of the year
Published: May 12, 2020 at 10:23
a.m. ET
On Feb. 27, Michael Gayed called for a double-digit drop on the S&P 500. He followed that
timely prediction in March with a forecast for a melt-up in stocks at the end of the month.
He backed up that outlook in an interview with Bloomberg radio. Clearly, he’s had his finger on the pulse of this volatile market since the coronavirus began spreading in the United States — just look at the 34% rally in his ATAC Rotation Fund ATACX, -1.34% for proof that his methods, in this climate at least, are paying off nicely.
If he’s got it right again, the pain is far from over for investors.
“Risk-off is about to return in two waves — first bonds, then stocks. Two crashes,” Gayed, who also publishes the Lead-Lag Report, told MarketWatch over the weekend.
“Reflation bets are increasing everywhere, and oil printing a negative
price in the face of that suggests there is a very real feeling that global
central banks and governments will stop at nothing to counter the deflationary
forces of staying at home,” Gayed said. “Factually, inflation expectations have
been rising alongside food prices due to supply-chain issues. Combined with
unlimited QE, which in the past has caused yields to rise, it looks like bonds
collapse first before stocks.”
He also touched on a theme that has many investors, especially the
mom-and-pop types, scratching their heads. How can stocks continue to rally
against what’s shaping up to be a depression in the economy? “The greatest
disconnect in history,” as Gayed describes it.
Ultimately, Gayed expects to see yields spike as they did prior to the 1987 crash.
“Should that occur, as I think is likely,” he said, “the conditions then would set up for another stock market crash afterwards as the overreaction to the reflation narrative comes to grips with the facts on the ground that life, at least for now, is going to look and feel very different for some time.”
Read:Beware, the market’s being supported by ‘nothing more than an ideological dream’
As for the timeline, Gayed said it could all take place before year’s end.
More
Next, questions
arise over the accuracy or inaccuracy of last Friday’s USA jobs report. Even
the producer of the report the BLS thought it was understated by about 5
percent. That would take the unemployment rate up to19.7 percent.
Below, Standard
and Chartered delves deeper into Friday’s numbers. If they’re anywhere near
correct, Michael Gayed’s two crashes could happen far faster than
the end of the year.
So how did Standard Chartered arrive at those numbers? The following is how Zero Hedge explained it…
How does one get these numbers? As the bank’s chief FX strategist Steve Englander explains, start with the 23.1 million unemployed as published by BLS. To this add 8.1mn people who have dropped out of the labor force since February (previously the labor force had been growing steadily, so these are likely unemployed).
Add back 7.5MM workers classified as ‘employed but not at work for other reasons’ – BLS states that these workers are likely misclassified as employed, when they are in fact unemployed. Involuntary part-time work for economic reasons has gone up by 6.6MM and we treat these as half-unemployed (i.e., a contribution of 3.3MM).
This totals almost 42 Million effectively unemployed.
Finally, will
2008-2009 repeat in yet another US mortgage disaster? More crooked bailouts
needed.
The Bailout Miscalculation That Could Crash the Economy
A plan to help homeowners avoid foreclosure was good, in principle. In practice, it’s pushed the mortgage business toward yet another potential nightmare
|
May 8 2020
|
|
When Donald Trump signed the $2 trillion CARES Act rescue on March 27, there was immediate praise across the political spectrum for section 4022, concerning homeowners in distress. Under the rule, anyone with a federally-backed mortgage could now receive instant relief. Forbearance, the law said: …shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower. Essentially, anyone with a federally-backed mortgage was now eligible for a six-month break from home payments. Really it was a year, given that a 180-day extension could be granted “at the request of the borrower.” It made sense. The burden of having to continue to make home payments during the coronavirus crisis would be crushing for the millions of people put out of work. If anything, the measure didn’t go far enough, only covering homeowners with federally-backed (a.k.a. “agency”) mortgages. Still, six months or a year of relief from mortgage payments was arguably the most valuable up-front benefit of the entire bailout for ordinary people. Unfortunately, this portion of the CARES Act was conceived so badly that it birthed a potentially disastrous new issue that could have severe systemic ramifications. “Whoever wrote this bill didn’t have the faintest fucking clue how mortgages work,” is how one financial analyst put it to me. When homeowners take out mortgages, loans are bundled into pools and turned into securities, which are then sold off to investors, often big institutional players like pension funds. Once loans are pooled and sold off as securities, the job of collecting home payments from actual people and delivering them to investors in mortgage bonds goes to companies called mortgage servicers. Many of these firms are not banks, and have familiar names like Quicken Loans or Freedom Mortgage. The mortgage servicing business is relatively uncomplicated – companies are collecting money from one group of people and handing it to another, for a fee – but these quasi-infamous firms still regularly manage to screw it up. “An industry that is just… not very good,” is the generous description of Richard Cordray, former head of the Consumer Financial Protection Bureau. Because margins in the mortgage service business are relatively small, these firms try to automate as much as possible. Many use outdated computers and have threadbare staffing policies. Essentially, they make their money collecting in good economic times from the less complicated homeowner accounts, taking electronic payments and paying little personal attention to loan-holders with issues. They rely on lines of short-term financing from banks and tend to be cash-poor and almost incompetent by design. If you’ve ever tried to call your servicer (if you even know who it is) and failed to get someone on the phone, that’s no accident — unless you’re paying, these firms don’t much want to hear from you, and they certainly don’t want to pay extra to do it. Their cheapness helped provide some savings for customers, but there’s a downside to this approach. Last year, the Financial Stability Oversight Council (FSOC), which includes the heads of the Treasury, the Commodity Futures Trading Commission, the Fed, the aforementioned CFPB and others issued a report claiming mortgage service firms were a systemic threat, because they “rely heavily on short-term funding sources and generally have relatively limited resources to absorb financial shocks.” For Cordray, who has a book out called Watchdog that chronicles his time heading the CFPB, the worry about mortgage servicers was serious. “Nonbanks are very thinly capitalized,” he says. “They haven’t been very responsible in building up capital buffers.” Enter the coronavirus. Even if homeowners themselves weren’t required to make payments under the CARES Act, servicers like Quicken and Freedom still had to keep paying the bondholders every month. It might be reasonable to expect a big bank like Wells Fargo or JP Morgan Chase to front six months’ worth of principal and interest payments for millions of borrowers. But these fly-by-night servicer firms – overgrown collection agencies – don’t have that kind of cash. How did the worst of these firms react to being told they suddenly had to cover up to a year of home payments? About as you’d expect, by panicking and trying to pass the buck to homeowners.
More
Joseph
J. Cassano, a former A.I.G. executive, August 2007, on Credit Default Swaps
that wiped out A.I.G in 2008.
|
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.
China's Jilin city imposes travel restrictions after new coronavirus cases
May 13, 2020 /
5:23 AM
SHANGHAI (Reuters) - The northeast Chinese city of Jilin is imposing
fresh restrictions on travel in order to contain a new coronavirus outbreak,
with six new cases reported on Tuesday.
Jilin has emerged as the source of a potential new wave of infections
and the neighbouring city of Shulan was forced to adjust the risk level to
“high” from “medium” at the weekend.
“The current COVID-19 situation is quite complex and severe, and there
is huge risk that the virus will spread further,” said Gai Dongping, Jilin’s
vice mayor.
“In order to cut off the spread of the epidemic, we have decided to
implement control measures in the urban area of Jilin,” she told a press
briefing on Wednesday.
Five of the six new infections could be traced directly to one confirmed
case in Shulan, where a cluster infection was previously identified, the local
health commission said in a notice on Wednesday.
Jilin is the second largest city of Jilin province, which borders North
Korea and Russia. It will now temporarily suspend departing or transiting train
services for passengers.
China’s National Health Commission reported a total of seven new
confirmed coronavirus cases on May 12, including one imported infection in
Shanghai. It also confirmed eight new asymptomatic coronavirus cases on May 12,
down from 15 the day before.
Chinese health authorities have called for vigilance to be maintained
against the novel coronavirus as new clusters emerge, even though the peak of
the epidemic has passed in the country where it first appeared.
In the past two weeks, new cases have been reported in seven provinces,
including Hubei, the original epicentre of the outbreak late last year.
More
Spain orders two-week quarantine for incoming travellers from Friday
May 12, 2020 /
8:27 AM
MADRID (Reuters) -
Spain ordered a two-week quarantine for all travellers arriving from abroad from
this Friday in a bid to curb the coronavirus as the country emerges from a
national lockdown, a move that will further harm a tourist industry already
reeling from the epidemic.
Incoming travellers will have to remain locked in and will only be
allowed to go out for grocery shopping, to visit health centres, or in case of
“situation of need”, an official order published on Tuesday said.
The quarantine will be enforced for all travellers coming to Spain
between May 15 and at least May 24, when the state of emergency is due to end.
The order can be extended jointly with possible state of emergency
extensions. Spain, which is just emerging from one of Europe’s strictest
coronavirus lockdowns, has so far extended its restrictions four times since
mid-March.
An extension of the order would severely hurt Spain’s tourism industry
which represents about 12% of gross domestic product.
About 80 million tourists visit every year, enjoying a range of
attractions from beach holidays on coastal resorts to exploring historic cities
such as Toledo and Granada.
A quarantine maintained into the summer will have dire consequences on
Spanish tourism. Shares of companies related to the Spanish tourism industry
plummeted on Tuesday morning.
---- The measures applies to all travellers, including Spanish citizens returning to the country. Only truck drivers, airplane and ship crews, cross-border workers and health staff who are entering Spain to work are exempt from the quarantine.
The government had imposed restrictions on travelling from outside the
open-border Shengen Area which includes most of the European Union countries
and other European states such as Norway.
More
Reopening the Coronavirus-Era Office: One-Person Elevators, No Cafeterias
Companies, in adapting the workplace for Covid-19, are reversing a push to cram workers into tighter spaces
May 11, 2020 5:30 am ET
Welcome back to work. The corporate cafeteria is closed.
The coffee makers are unplugged. And the desks are separated by plastic. Every part of office life is being re-examined in the era of Covid-19. When employees file back into American workplaces—some wearing masks—many will find the office transformed, human-resources and real-estate executives say.
Elevators may only take one person at a time. Desks, once tightly packed in open floor plans, will be spread apart, with some covered by plastic shields and chairs atop disposable pads to catch germs.
The beer taps, snack containers, coffee bars and elaborate gyms and showers that once set high-dollar, white-collar environments apart will likely remain closed to prevent the spread of coronavirus. Many changes won’t go away until the virus does.
The
office adaptations reverse a decadeslong push in American corporations to cram
workers into tighter spaces, with few separations between colleagues. Companies
once spent millions of dollars retrofitting spaces to create rows of open
desks, intimate conference rooms and elaborate communal gathering areas. Those
designs are now problematic, executives say.
----
Co-working giant WeWork once prized density, making corridors narrow on purpose
so that people were more likely to bump into each other and chat. It rented out
access to its “hot desks”—large, shared tables with no assigned seating—at many
of its more than 700 global locations for between $300 and more than $600 a
month in New York City. To socially distance hot desks, half the chairs are
being subtracted, and WeWork is removing 30,000 conference-room chairs around
the world to keep people from congregating, said Hamid Hashemi, WeWork’s chief
product and experience officer.
More
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.
Scientists create new recipe for single-atom transistors
Linking multiple copies of these devices may lay the foundation for quantum computing
Date:
May 11, 2020
Source:
National Institute of Standards and Technology (NIST)
Summary:
Researchers have developed a step-by-step recipe to produce single-atom
transistors.
Once unimaginable, transistors consisting only of several-atom clusters
or even single atoms promise to become the building blocks of a new generation
of computers with unparalleled memory and processing power. But to realize the
full potential of these tiny transistors -- miniature electrical on-off
switches -- researchers must find a way to make many copies of these
notoriously difficult-to-fabricate components.
Now, researchers at the National Institute of Standards and Technology
(NIST) and their colleagues at the University of Maryland have developed a
step-by-step recipe to produce the atomic-scale devices. Using these
instructions, the NIST-led team has become only the second in the world to
construct a single-atom transistor and the first to fabricate a series of
single electron transistors with atom-scale control over the devices' geometry.
The scientists demonstrated that they could precisely adjust the rate at
which individual electrons flow through a physical gap or electrical barrier in
their transistor -- even though classical physics would forbid the electrons
from doing so because they lack enough energy. That strictly quantum
phenomenon, known as quantum tunneling, only becomes important when gaps are
extremely tiny, such as in the miniature transistors. Precise control over
quantum tunneling is key because it enables the transistors to become
"entangled" or interlinked in a way only possible through quantum
mechanics and opens new possibilities for creating quantum bits (qubits) that
could be used in quantum computing.
To fabricate single-atom and few-atom transistors, the team relied on a
known technique in which a silicon chip is covered with a layer of hydrogen
atoms, which readily bind to silicon. The fine tip of a scanning tunneling
microscope then removed hydrogen atoms at selected sites. The remaining
hydrogen acted as a barrier so that when the team directed phosphine gas (PH3)
at the silicon surface, individual PH3 molecules attached only to
the locations where the hydrogen had been removed (see animation). The
researchers then heated the silicon surface. The heat ejected hydrogen atoms
from the PH3 and caused the phosphorus atom that was left behind to
embed itself in the surface. With additional processing, bound phosphorus atoms
created the foundation of a series of highly stable single- or few-atom devices
that have the potential to serve as qubits.
Two of the steps in the method devised by the NIST teams -- sealing the
phosphorus atoms with protective layers of silicon and then making electrical
contact with the embedded atoms -- appear to have been essential to reliably
fabricate many copies of atomically precise devices, NIST researcher Richard
Silver said.
More
Milton Friedman once put
it, if you’re spending your own money on yourself, you care about price and
quality. If you’re spending someone else’s money on yourself, you only care
about quality. If you’re spending your own money on someone else, you care only
about price. And if you’re spending someone else’s money on someone else, you
don’t care about either.
Whose money is Fed
Chairman Powell spending on whom? Why?
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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