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Stock Buyback Monster Apple Commits To Invest $430BN In The US Over Five Years

The company that has repurchased more stock than any other corporation in the history of the world, Apple, buying back a whopping $67BN in 2019 alone, appears to be preparing to unleash another tidal wave of stock buybacks which explains why it is busy engaging in virtue signaling diversions this morning, when three years after its initial pledge to invest in the US, it recommitted this morning to plunking billions more into the US over the next five years, and now expects to spend $430BN by 2026, a 20% increase compared to its initial estimate.

The iPhone maker - which was quick to note that it is the largest taxpayer in the US and has paid almost $45 billion in domestic corporate income taxes over the past five years alone, or about 20% of how much stocks it repurchased - will create 20,000 new jobs in innovative fields like silicon engineering and 5G technology across the country - or roughly how many part-time jobs each new Amazon warehouse creates - and fund a new campus in North Carolina, the company said in a statement Monday.

“At this moment of recovery and rebuilding, Apple is doubling down on our commitment to U.S. innovation and manufacturing with a generational investment reaching communities across all 50 states,” said Chief Executive Officer Tim Cook.

"Apple today announced an acceleration of its US investments, with plans to make new contributions of more than $430 billion and add 20,000 new jobs across the country over the next five years. Over the past three years, Apple’s contributions in the US have significantly outpaced the company’s original five-year goal of $350 billion set in 2018. Apple is now raising its level of commitment by 20 percent over the next five years, supporting American innovation and driving economic benefits in every state. This includes tens of billions of dollars for next-generation silicon development and 5G innovation across nine US states."

Apple plans to make new contributions of more than $430 billion in the US and add 20,000 jobs across the country over the next five years.

In the past three years, Apple’s investments have outpaced its original five-year goal of $350 billion in investments set in 2018 although it wasn't clear just how much it has actually invested, with the bulk of this capital likely spent on the company's new UFO-like headquarters.

As part of its expansion, Apple plans to invest more than $1 billion in North Carolina to build a new campus and engineering hub in the Research Triangle area. The investment will create at least 3,000 new jobs in machine learning, artificial intelligence, software engineering, and other advanced fields.

According to the release, Apple supports more than 2.7 million jobs across the country through direct employment, spending with US suppliers and manufacturers, and developer jobs in the thriving iOS app economy.

Tyler Durden Mon, 04/26/2021 - 08:10

S&P Futures Flat Ahead Of Earnings Deluge; Nasdaq Drops As Tesla Looms

S&P futures were flat, Nasdaq futures dipped ahead of FAAMG earnings while European stocks clawed their way higher on Monday and Asia rose as world markets began the week in a relatively upbeat - if quiet - mood following further signs last week that economies are recovering rapidly. There were no major moves, however, as investors refrained from taking on large positions ahead of this week's Federal Reserve meeting, US GDP print and corporate earnings barrage.

At 7:30 a.m. ET, Dow e-minis were up 30 points, or 0.09%, S&P 500 e-minis were down 3.75points, or 0.08%, and Nasdaq 100 e-minis were down 48.75 points, or 0.37%.

Nasdaq 100 futures dropped to as much as 0.4%, reversing earlier gain of as much as 0.1%, as big technology stocks retreated ahead of first-quarter results later this week, while Treasury yields rose. Nasdaq was also weaker following a weekend report that investors had pulled a whopping $6BN from the QQQ ETF in the past five days, the most since the dot com bubble burst.

High-flying firms, including Amazon, Facebook, Alphabet and Microsoft slipped between 0.2% and 0.4% in premarket trading. Tesla edged higher as analysts expect the electric automaker to report a rise in first-quarter revenue when it reports after markets close following record deliveries for the period.

Of the 123 companies in the S&P 500 that have published results so far, 85.4% have reported earnings above analysts’ estimates, with Refinitiv IBES data now predicting a 33.9% jump in profit growth.

With risk bid, safe havens including the dollar and government bonds were under pressure while copper, seen as a barometer of growth, surged to the highest in a decade. The U.S. 10-year rate bounced back from its 50-day moving average, underscoring the reflation trade is still alive, but remained below the 1.60% level, sustaining a risk-on bid for global assets including emerging markets.

Global stocks have been basking in a massive rally - the MSCI world index has suffered only three down months in the past 12 and is up nearly 5% this month and 9% for the year as investors bet on a rapid post-pandemic economic rebound turbocharged by vast government and central bank stimulus. General sentiment remained bullish to start the week, with Wall Street hitting another intraday record-high on Friday and European shares not far off record highs in early Monday trading.

However, as we noted over the weekend, sellside analysts are turning increasingly bearish and say stocks look a little too confident and that the rally will run into hurdles after setting such a lightning pace and with so much of the recovery and fiscal stimulus splurge already priced in. Analysts at Goldman Sachs, Morgan Stanley, Deutsche Bank and now, JPMorgan, have warned of some turbulence ahead, after a rally that has taken the S&P 500 and Dow to fresh records this year

“The real crux of the issue, however, is what’s in the price. The year-to-date rally has increasingly eliminated upside to our targets,” noted Morgan Stanley strategist Andrew Sheets. “Across four major global equity markets (the U.S., Europe, Japan and emerging markets), only Japan is currently below our end-2021 strategy forecast.”

That did not prevent investors from bidding risk up, however, and the broader Euro STOXX 600 was just barely in the green while Germany’s DAX rose 0.22%. Britain’s FTSE 100 climbed 0.21%. European stocks were little changed Monday, as gains for banks and travel companies offset losses for carmakers and technology companies. Here are some of the biggest European movers today:

• IMI shares gain as much as 7.9% to the highest since July 2014 after the company raised guidance for FY21 and announced a GBP200m buyback in first-quarter update.
• Hensoldt shares rise as much as 18% in Frankfurt after Italy’s Leonardo agreed to buy a 25% stake in the German defense company for EU606m, or about 23 euros a share.
• Tate & Lyle shares climb as much as 7%, the most since early November, as the company explores selling a controlling stake in its primary products business.
• Kuehne + Nagel shares rise as much as 3.2%, extending its record high, after reporting first-quarter results that were “stunning,” according to Vontobel.
• AMS shares fall as much as 5.1% to the lowest since Aug. 2020 after Credit Suisse double downgrades to underperform from outperform, citing concern over the chipmaker potentially losing two out of three sources of business with Apple.
• Philips shares drop as much as 3.4% following the company’s first-quarter results. Analysts say investor responses to the beat and guidance raise are tempered by a reported quality issue in a component used in some sleep and respiratory products.

Earlier in the session, Asia stocks rose as investors continued to keep a close eye on the ongoing earnings season globally and U.S. data for clues on economic recovery. The MSCI Asia Pacific Index rose 0.6% led by tech and material shares.

India shares were among the biggest gainers with the S&P BSE Sensex Index up about 1%. As the index on Friday capped its third consecutive weekly decline amid a surge in Covid-19 infections, funds such as Fidelity International and Invesco were seeking opportunities to add stocks, seeing India’s vaccination campaign and less-disruptive lockdown measures as offering some support.

Meanwhile, China’s CSI 300 Index closed down 1.1% after rising as much as 0.9%, as investors await a key gathering of the country’s top leaders expected to take place this week for signals on liquidity policies. Consumer staples and financial stocks led the loss, with Kweichow Moutai and China Merchants Bank among the biggest drags on the gauge. The gauge’s decline came after a bumpy rebound in recent weeks that has set April up for the first monthly rise since January. The rebound may have some lasting power, according to CSC Financial, which recommends investors hold onto shares rather than cash ahead of a five-day May holiday that starts this weekend. The recent strength in stocks was partly due to lower borrowing costs after China’s first-quarter economic growth slightly missed analysts’ estimates, the brokerage’s analysts including Zhang Yulong wrote in a Monday note. Chinese authorities are stepping up effort to support the country’s small firms, with the banking regulator urging five large lenders to boost loans to the sector by more than 30% this year. Traders are also closely watching the Politburo meeting expected to be held this week for clues on liquidity conditions and broader economic policies in the months ahead. Foreign investors bought a net 3.2 billion yuan of A shares via the trading link with Hong Kong, less than half of their purchases on Friday. However, total trading volume in Shanghai and Shenzhen jumped to the highest since March 9 at 868 billion yuan. The Shanghai Composite also slid in the afternoon to close 1% lower. Hong Kong’s Hang Seng Index lost 0.4%.

Japanese shares eked out gains with the Topix rising 0.2%, rising for the second day in three, despite Tokyo and other prefectures imposing a state of emergency. SoftBank Group and Fast Retailing provided the biggest boosts to the Nikkei 225 Stock Average. Railway operators and machinery makers gave the most support to the Topix. Both gauges completed a weekly drop of more than 2% on Friday. “From a global perspective, we’re in a risk-on market,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. in Tokyo. “With easy monetary policies sustained, the upward trend in global equities is the main scenario.” Despite today’s advance, Japanese shares may fall behind globally due to the nation’s slow pace of vaccinations and the impact of restrictions on the economy, Seshimo said. A new state of emergency started Sunday for Tokyo, Osaka and two other prefectures due to rising infections. Mitsushige Akino, a senior executive officer at Ichiyoshi Asset Management, said further gains may face headwinds as coronavirus-driven sentiment causes Japan’s equity market to fall behind the U.S. and Europe. “Japanese equities will likely rebound, but apart from solid U.S. data, the market is devoid of fresh leads and the upside will remain tough,” Akino said.

In Vietnam, the stock benchmark fell 2.6% after the country’s Health Minister Nguyen Thanh Long said the risk of Covid-19 spreading in the country is “very high and worrying.” New Zealand’s stock market was closed for a local holiday.

“While positive surprises have supported the stock market, the trend on earnings is even more important,” David Kelly, chief global market strategist at JPMorgan Asset Management, wrote in a note. “Investors will continue to watch the earnings season with 181 of the S&P 500 companies set to announce their first-quarter results this week.”

In bond markets, government debt yields rose as investors dumped safer assets. The U.S. 10-year Treasury yield rose 3 basis points to 1.59% trading near highs of the day, cheaper by more than 3bp at long-end, ahead of this week’s front-loaded auction cycle which includes 2- and 5-year note sales Monday. FOMC rate decision on Wednesday is week’s main event after the auction cycle. 10-year yields around 1.59%, higher by 3.6bp vs Friday’s close, are ~1bp cheaper vs bunds and gilts; S&P 500 futures are down 0.1% after cash gained 1.1% Friday. Peripheral spreads widen with 30y Italian yields rising to 1.83%, highest since Sept. 2020.

In currencies, the dollar extended a two-month low, heading for the biggest monthly loss since November. The euro was steady after touching a two-month high of $1.2117 while European government bonds were lower, with the periphery underperforming bunds The Bloomberg Dollar Spot Index is at a crossroads and chances are the euro’s performance will define the outcome. The pound advanced; the U.K. economy will see “very rapid growth at least over the next couple of quarters,” Bank of England Deputy Governor Ben Broadbent told the Telegraph in an interview. The Australian dollar was the top performer among G-10 currencies amid strong gains in stocks and iron ore. Norway’s krone fell against most G-10 peers as oil declined ahead of a key OPEC+ meeting later this week

In commodities, oil retreated amid concern demand from India may fall after the nation reported a million new coronavirus cases in three days. WTI fell 57 cents to $61.57 per barrel and Brent eased 57 cents to $65.64. Gold climbed 0.1% to $1,779 an ounce. Copper surged to the highest in a decade on expectations supply will tighten as the global economic recovery gains traction. Prices have climbed amid a broad rally across industrial commodities from iron ore to aluminum.

Bitcoin reversed a weekend loss, and soared back to $54,000 after dropping as low as $48,000 late on Sunday.

First-quarter U.S. gross domestic product data due later in the week is likely to show activity probably returned to pre-pandemic levels, analysts said. “We estimate that the economy will close the output gap and rise above potential in the second half of this year,” ANZ economists wrote in a morning note, suggesting more upside for shares. “(Europe) cannot match this, but as 2021 progresses into 2022, the growth differential to the U.S. will narrow,” they added.

Market participants are also watching out for any fresh developments on Biden’s tax plan after reports last week said he would seek to nearly double the capital gains tax to 39.6% for wealthy individuals. Investors will also be looking forward to the two-day Federal Reserve meeting beginning on Tuesday and the first-quarter gross domestic product numbers later this week to gauge the pace of economic recovery.

Market Snapshot

• S&P 500 futures little changed at 4,169.75
• STOXX Europe 600 little changed at 439.41
• MXAP up 0.5% to 209.21
• MXAPJ up 0.5% to 702.13
• Nikkei up 0.4% to 29,126.23
• Topix up 0.2% to 1,918.15
• Hang Seng Index down 0.4% to 28,952.83
• Shanghai Composite down 0.9% to 3,441.17
• Sensex up 1.2% to 48,474.08
• Australia S&P/ASX 200 down 0.2% to 7,045.56
• Kospi up 1.0% to 3,217.53
• German 10Y yield rose 0.8bps to -0.251%
• Euro little changed at $1.2097
• Brent Futures down 1.2% to $65.31/bbl
• Gold spot up 0.2% to $1,780.59
• U.S. Dollar Index down 0.10% to 90.77

Top Overnight News

• The Federal Reserve is expected to begin trimming its $120 billion in monthly asset purchases before the end of the year as the U.S. economy recovers strongly from Covid-19, according to economists surveyed by Bloomberg. That’s a bit earlier than forecast in the March survey
• Italy’s Prime Minister Mario Draghi goes to Parliament on Monday to present details of his 235 billion-euro ($284 billion) plan to re-engineer Italy’s economy that will be a test of the European Union’s post-pandemic recovery fund
• China’s economy continued to boom in April from the record growth in the first quarter, with strong exports and rising business confidence supporting the recovery. That’s the outlook of an aggregate index combining eight early indicators tracked by Bloomberg, which remained unchanged from March in strong expansionary territory
• JPMorgan Asset Management and BlackRock Inc. are betting that a strong economic recovery in the U.S. and elsewhere may start hurting parts of the bond market despite the recent slide in benchmark Treasury yields
• Life insurers in Japan, some of the world’s biggest debt investors, say they will hold off on aggressive purchases of U.S. sovereign bonds due to the risk of another rout and more currency volatility
• Bitcoin is on track for its biggest gain since Feb. 8 as it rose by more than 10% after earlier dropping

A quick look at global markets courtesy of Newsquawk

Asia-Pac equity markets traded tentatively albeit with a positive tilt as the major bourses in the region and US equity futures lacked firm commitment heading into month-end, as well as this week’s key events including the BoJ and FOMC meetings, as well as US GDP and Chinese PMI data. ASX 200 (-0.2%) was rangebound as strength in mining names and the top-weighted financials sector helped offset the headwinds from a snap 3-day lockdown in Perth and neighbouring Peel region, while Nikkei 225 (+0.4%) shrugged off early jitters from the reinstatement of the state of emergency for four areas including Tokyo and following the ruling LDP’s failure to win in three by-elections which is seen as a blow to PM Suga ahead of the general election later this year. Hang Seng (-0.4%) and Shanghai Comp. (-0.9%) traded with mild gains initially as participants digested earnings and with China to begin a month-long campaign promoting consumption in May, with the initial advances led by outperformance in health care and strength in mining stocks as mainland commodity prices hit fresh record levels; however, as the session progressed and European participants entered the fray the indices came under pressure. Finally, 10yr JGBs were subdued and broke beneath Friday’s tight ranges to test the 151.50 levels amid a similar subdued trade in T-note futures and with demand sapped as participants await the BoJ which kick started their 2-day policy meeting today.

Top Asian News

• Blackstone Offers $1.1 Billion to Buy 26% of India’s Mphasis (2)
• Hedging Trades Push Yuan-Forward Sales to 2015 High in March
• Chinese Firms Are Listing in the U.S. at a Record-Breaking Pace
• China’s Biggest IPO This Year Looks to Be in Renewable Power

Major bourses kicked the week off in another lacklustre fashion and the region remains choppy within a narrow band (Euro Stoxx 50 Unch). US equity futures meanwhile reflect the indecisive tone across the market, with the ES and YM flat whilst the tech-laden NQ (-0.2%) and cyclically-led RTY (+0.5%) see a mild divergence as participants gear up for a risk-packed week - which entails the FOMC and BOJ decisions, President Biden’s American Jobs plan speech to Congress, US Q1 GDP, Chinese official PMIs, the JMMC/OPEC+ meetings, and the peak of US earnings season with some 180 S&P 500 companies reporting. Back to Europe, the below-forecast April Ifo German Survey failed to immediately spur price action with desks suggesting that the data reflects a combination of delayed lockdown impact and reopening hopes – although a strong H2 rebound does remain valid. Sectors in Europe are mixed but it is difficult to discern a particular risk profile or an overall theme. Travel & Leisure sees a firm performance as the vaccination drive in the west remains robust whilst NYT also suggested that the EU is reportedly set to allow vaccinated US tourists to visit this summer – in turn lifting the Spanish IBEX (+0.7%) amidst its heavy exposure to the sector – with its top-performing stocks including IAG (+3.6%), Merlin Properties (+2.5%) and Aena (+2.2%). Banks and Basic Resources also see a solid performance thus far amid the higher intraday yield environment and the surge in base metals, namely copper. The downside meanwhile sees Autos (-0.7%) bearing the brunt of the chip shortages – with Volkswagen (-1.3%) suggesting its Q2 productions are poised to be more affected than in Q1. In terms of individual movers, Tate & Lyle (+6.4%) resides as one of the top Stoxx 600 performers as the Co. has started preparations for a break-up or spin-off of its primary products unit which generated over GBP 1.8bln in revenue last year. Analysts believe the unit could be valued north of GBP 1.2bln. On the flip side, Leonardo (-3%) sits on the other side of the spectrum after purchasing a 25.1% stake in Hensoldt (+4.4%) for EUR 606mln.

Top European News

• Nestle Eyes Nature’s Bounty Acquisition to Boost Vitamin Sales
• Philips Raises Sales Forecast as Focus Narrows to Health
• EQT’s Software Firm SUSE to Seek $500 Million in Frankfurt IPO
• EU May Allow Vaccinated U.S. Tourists This Summer, NYT Says

In FX, the Aussie is forming a stronger base around 0.7750 vs its US counterpart and has bounced firmly against the Kiwi in the absence of many NZ participants due to the ANZAC market holiday. Indeed, Aud/Nzd is back in the high 1.0700 area after a few forays under 1.0750 last week amidst a sharp rally in copper prices to decade highs on the LME and strength in iron ore alongside other Chinese metals overnight. Nevertheless, Nzd/Usd is back on the 0.7200 handle as the Greenback continues to flounder in broad terms, with the DXY unable to reclaim 91.000+ status where 2 MA levels lie in very close proximity (100 day and week at 91.024 and 91.056 respectively) between 90.894-679 extremes ahead of notoriously volatile US durable goods and a double dose of T-note supply (Usd 60 bn 2 year and Usd 61 bn 5 year sales). Hence, Cable has rebounded from sub-1.3900 again, albeit with assistance via the Eur/Gbp cross that is back down around 0.8700 after eclipsing last Friday’s peak by a pip, but effectively forming a near triple top having reached 0.8719 on April 16 as well.

• JPY - No clear breach of 107.50 for the Yen has not really altered the overall bearish trend in Usd/Jpy as the subsequent high fell a few pips shy of 108.00 compared to 108.15 on April 23 and 108.84 this time last week. Thus, the headline pair remains offered and a sell into upturns as the clock ticks down to the BoJ and Fed.
• CAD/EUR/CHF - A downturn in oil prices awaiting OPEC+ has taken some sapped some of the Loonie’s post-BoC momentum, but Usd/Cad has also bounced following a probe through 1.2450 and a lack of impetus the break beyond the half round number convincingly. Similarly, the Euro popped above 1.2100, though without enough conviction to stay there or build much on the March 3 apex at 1.2113 that prefaced a fall to circa 1.1704 by the end of last month, with a somewhat mixed German Ifo survey hardly helping (business climate, current conditions and expectations all missed consensus, but former 2 readings above previous prints). Elsewhere, the Franc marginally softer between 0.9146-22 and 1.1063-49 parameters vs the Dollar and Euro respectively as sight deposits at Swiss banks held fairly steady in the latest week.
• EM - The Lira did not glean much encouragement from an uptick in Turkish manufacturing sentiment, but Usd/Try has recoiled from 8.4840+ to test 8.3000 amidst the aforementioned pull-back in crude and what looks like a correction perhaps aided by official intervention in defence of 8.5000. Meanwhile, the Rand may be deriving support over 14.2500 from the SA Health Ministry pledging rigorous pre-vaccine assessments and monitoring after jabs once it restarts the J and J study.

In commodities, WTI and Brent front-month futures are pressured in early European trade with the former testing USD 61/bbl to the downside at the time of writing (vs high 62.31/bbl) and the latter hovering around USD 65/bbl (vs high 66.26/bbl). The crude complex continues to adjust to the fluid supply/demand dynamics, with India’s dire COVID situation raising demand concerns, both on a domestic front and internationally as the so-called “double-mutant” (B.1.617) is cited as the fuel behind the latest surge in cases and deaths – with some also expressing concerns over its resilience to vaccines, although no official studies nor announcements have yet been made on this front. Meanwhile, eyes remain on geopolitics as Iranian JCPOA talks are reportedly going the right way, although Tehran sticks to its guns for economy-crippling sanctions to be removed before any meaningful progress can occur. Turning to OPEC, both the JMMC and OPEC+ meetings are seemingly going ahead this week, with the latter suggesting a non-zero chance of a tweak to the quotas set through to July – and although expectations are currently skewed towards no change in policy, it is worth being cognizant of the fact that OPEC+ has surprised at almost every meeting this year thus far. Elsewhere, spot gold and silver trade uneventfully moving in tandem with the Dollar, with the former in a tight band around USD 1,780/oz whilst spot silver trades on either side of USD 26/oz. Turning to base metals, copper prices have been tearing higher once again with LME copper extending gains above USD 9,500/t and hitting 10yr highs amid a weaker Buck alongside some supply-side concerns as Chilean port workers called a strike today, with miners also threatening strike action amid the government’s move to block a pension bill; for reference, Chile accounts for around 25% of the global copper supply.

US Event Calendar

• 8:30am: March Durable Goods Orders, est. 2.5%, prior -1.2%; -Less Transportation, est. 1.6%, prior -0.9%
• 8:30am: March Cap Goods Orders Nondef Ex Air, est. 1.8%, prior -0.9%; Cap Goods Ship Nondef Ex Air, est. 1.5%, prior -1.1%
• 10:30am: April Dallas Fed Manf. Activity, est. 30.0, prior 28.9

DB's Jim Reid concludes the overnight wrap

I’ll be honest with you I’m a little down this morning. I reached a big golf final last year at my club and 2 lockdowns and 2 weather cancellations later I lost the final on Saturday. Since lockdown ended I’d been playing really well and thought I finally had the game cracked. In 35 years of playing the sport I should have realised that this is never the case. I slumped home and managed to catch the end of the Liverpool game. Desperate for a win, they conceded and drew in the 95th minute. I must admit that this nearly tipped me over the edge and I could have quite easily sobbed. Then I was in charge of the kids for the rest of the day. Did that make me feel much better? No! They were the opposite of therapeutic.

To take my mind off a golf swing that collapsed in the wind and under pressure, It’s a busy week ahead for markets. The Federal Reserve (Weds) and the Bank of Japan (Thurs) are both making their latest policy announcements with the former the obvious focal point for the week. On top of that, there are an array of earnings releases, including 180 companies in the S&P 500. Tesla today might be one of the more headline grabbing ones but to be honest there are plenty of them. Meanwhile President Biden will give his first speech to a joint session of Congress (Weds) and finally, there are some important data releases, including the first look at Q1 GDP for the US (Thurs) and the Euro Area (Fri).

Outside of this the Covid pandemic will remain in the spotlight as the number of global cases rose at their fastest weekly pace yet last week. India has seen fresh record cases over the weekend with around 350k new daily positive tests and a million over 3 days. There have been reports that’s various models are predicting this could hit over 500k per day this week which will gain huge headlines. While Indian case loads are so high there will be concerns about the unevenness of the global recovery and the ability of variants to escape. So this is undoubtedly a big story.

Overnight, Asian markets have started the week on the front foot with the Nikkei (+0.66%), Hang Seng (+0.08%), Shanghai Comp (+0.19%) and Kospi (+0.62%) all up. Futures on the S&P 500 are also up +0.08% while yields on 10y USTs are up +1.3bps to 1.573%. In Fx, the US dollar is trading down -0.17% this morning. Later today we will hear from Italian PM Mario Draghi on details of his plans to utilise EUR 222bn in EU grants and loans. From what we know so far 40% of the plan’s resources are destined for the impoverished southern region and a large chunk of spending is also slated for infrastructure, modernising and expanding Italy’s rail system.

Turning to the latest on the pandemic, overnight, the US has said that it will be sending raw materials for the AZ vaccine to India and will step up financing aid for Covid-19 shot production. The US is also said to be considering sending India its stockpiled doses of the AZ vaccine, currently unapproved for use in the US. The US has around 20mn doses of the AZ vaccine in stock. This comes as the vaccine uptake is slowing in the US with the 7-day average of vaccine doses administered falling to 2.8mn compared to a record 3.4 million on April 13. Meanwhile, the EU has said that it will allow US tourists who have been fully vaccinated to travel to the continent this summer. Singapore and Hong Kong have also reported that they will open their highly anticipated two way travel bubble on May 26.

Back to week ahead and going through some of the main highlights in more detail now. The biggest scheduled event on this week’s calendar for markets will be Wednesday’s Federal Reserve meeting and Chair Powell’s subsequent press conference. In their preview (link here), our US economists write that this meeting should largely serve as a status check of the economic recovery relative to the substantial forecast upgrades that the FOMC unveiled at their March meeting. And in the press conference, they expect Powell will likely continue his subtle shift in tone in a more optimistic direction. Nevertheless, given the remaining gaps in the labour market and the focus on seeing actual rather than forecasted progress, April is too soon for the return of taper talk, and they expect those discussions to heat up during the summer instead.

The other major central bank deciding on rates is the Bank of Japan (tomorrow), when it will also be releasing its quarterly Outlook Report. According to our economist (link here), the BoJ will retain its current policy stance next week, having only just fine-tuned their framework after the policy assessment last month. For the Outlook Report, the expectation is that it will raise the overseas growth projections, but the main focus will be on the new figures for FY2023, where our economist is looking for a real GDP growth forecast of 1.2% and core CPI inflation forecast of 1.1%.

In the political sphere, this week will see President Biden give his first speech to a joint session of Congress on Wednesday. We’re expecting a number of measures to be discussed, including the American Families Plan, which is expected to include fresh proposals on childcare and education. This sits alongside the American Jobs Plan, that Biden has already unveiled, where he proposed investing over $2tn in infrastructure and other priorities, to be financed through higher corporate taxes.

The current earnings season moves into full flow this week, as 180 companies in the S&P 500 report, along with a further 113 from the STOXX 600. Among the highlights include Tesla today, then tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Novartis, Eli Lilly, Texas Instruments, UPS, Amgen, Starbucks, Raytheon Technologies, General Electric, HSBC, 3M and UBS. Wednesday then brings Apple, Facebook, Qualcomm, Boeing, Sanofi, GlaxoSmithKline, Santander, Ford, Lloyds Banking Group and Sony. On Thursday, releases include Amazon, Mastercard, Comcast, Merck, Thermo Fisher Scientific, McDonald’s, Bristol Myers Squibb, Royal Dutch Shell, Caterpillar, Total, American Tower, Twitter, NatWest Group and Samsung Electronics. Finally on Friday, there’s Exxon Mobil, Chevron, AbbVie, Charter Communications, AstraZeneca, BNP Paribas and Barclays.

Finally, there are also a few highlights among this week’s data releases, with the initial estimates of Q1 GDP coming out for numerous countries, including the US, the Euro Area, Germany, France and Italy. It’ll also be worth watching out for the weekly initial jobless claims data from the US, as that’s one of the most timely indicators we get, and has fallen to a post-pandemic low this last week, so it’ll be interesting to see if that decline is sustained.

To recap last week, markets in Europe and the US fell back from their record highs as a mix of geopolitical risk, accelerating global Covid-19 cases and generally long investor-positioning weighed on risk assets. The S&P 500 fell back a marginal -0.13% on the week, despite a strong rally on Friday (+1.09%). It was the first weekly loss for the index after four straight weekly gains. Cyclicals sectors continue to underperform their growth counterparts as banks (-0.81%) and energy (-1.78%) stocks trailed the NASDAQ’s -0.25% weekly loss. However the mega-cap NYFANG index (-2.04% on the week) saw greater losses following poor earnings numbers from Netflix (down -7.50% on the week). The VIX volatility index rose +1.1pts to 17.3, which is only the second weekly rise in the implied volatility index since the start of March. European stocks fell back from their own record highs as the STOXX 600 lost -0.78% over the week, with the FTSE MIB (-1.45%) and DAX (-1.17%) underperforming other bourses.

US 10yr yields finished the week -2.2bps lower (+2.0bps Friday) at 1.558% - the fourth weekly drop in yields over the last five weeks. The global benchmark is now -18.3bps lower than the March 31 closing highs of 1.74%. The week’s move was driven by the drop in inflation expectations (-3.1bps) which overcame the smaller rise in real yields (+1.0bps). European rates were more mixed with 10yr bund yields gaining +0.5bps last week and UK gilt yields falling -2.0bps, while yields on OATs rose +9.0bps. In FX, the dollar index fell back -0.76% on the week – the third weekly loss in a row and it now sits at its lowest levels since March 2.

In terms of economic data from Friday, global flash PMIs showed continued momentum as the composite PMI for the euro area rose to 53.7 from 53.2 last month. Euro area services PMI returned to expansionary status with a 50.3 reading from a 49.6 level last month. Germany’s composite figure edged back slightly to 56 from 57.3 with marginal drops in both the services and manufacturing readings, while the composite PMI in France rose to 51.7 from 50 in March. The US Markit PMI composite rose to 62.2, the highest reading since the series began in 2009, fueled by new orders and output prices.

 

 

 

 

 

 

Tyler Durden Mon, 04/26/2021 - 07:57

Indian Vaccine Makers Jack Up Prices As Outbreak Worsens; 1st COVID "Triple Mutant" Identified

India's surge in COVID-19 infections and deaths, potentially driven by a convergence of nasty mutant strains, has in the pace of barely a week eclipsed Brazil to account for roughly half of all new COVID-19 cases being reported worldwide, with large numbers likely going uncounted. After being blamed for helping spark the outbreak with large-scale political rallies during an election year, Indian PM Narendra Modi has ordered western social media firms to censor critical posts from rival politicians while hundreds die due to lack of hospital oxygen, including a group of more than 20 victims in western Maharashtra who died due to a preventable oxygen leak.

As of Monday morning, India's outbreak showed no signs of abating. The number of confirmed cases has surged to 17,313,163, the second-largest tally in the world after the 32M+ in the US (though experts caution millions more cases have likely gone undiagnosed). On Monday, India reported more than 354K new cases over the past 24 hours, marking the latest in a six-day series of global records for most cases reported in a single day.

Meanwhile, India has reported more than 2K deaths per day for the last 5 days, with a record 2,812 deaths reported Monday, bringing total deaths to 195,123, the fourth-highest official total in the world after the US, Brazil and Mexico.

Health experts warn about the pernicious rise of mutant strains in the country as strains first isolated in the UK, South Africa and Brazil have all been identified in India. These strains are all believed to be more infectious than the original strain of SARS-CoV-2, the virus that causes COVID-19.

Hospitals in the Indian Capital of New Delhi have been turning away patients due to a lack of oxygen supplies and open beds. Families lucky enough to score a bed for a sick relative often must then find their own supplies of oxygen or medications like remdesivir that are in short supply at hospitals.

Despite its prestigious Serum Institute's critical role in the global vaccine rollout, Indians have secured precious few doses of the vaccine as PM Modi's government initially favored exports over domestic distribution. On Monday morning, as India prepares to expand legal access to any adult over 18, the FT reported that Modi's government is facing a backlash over its vaccine framework, which will require states to purchase jabs directly from domestic manufacturers. Meanwhile, India's vaccination campaign has slowed, with the number of jabs falling to fewer than 3M per day, down from more than 4M.

India will expand its vaccination programme to anyone aged over 18 on Saturday but vaccine manufacturers have been given permission to raise prices significantly.

...

India is the world’s largest vaccine manufacturer. But, after limited uptake in the early weeks of its inoculation campaign, demand has surged and the country is facing shortages. The pace of vaccination has slowed from as many as 4m jabs a day this month to fewer than 3m.

From May 1, the government will continue buying half of India’s monthly vaccine production of about 65m jabs to supply to over-45s. But states and private entities have to procure shots for younger adults at higher prices set by the manufacturers, the Serum Institute of India and Bharat Biotech.

Experts warn that breaking with the centralised Covid-19 vaccine campaigns used elsewhere gives the companies too much power, risks setting off chaotic competition and exacerbating inequities as many citizens are unable to secure vaccines.

"In a pandemic vaccines are a public good...Public goods should be paid through pooled resources by the government. That’s what’s happening around the world," said Chandrakant Lahariya, a public health policy expert in New Delhi.

"By giving a free hand to manufacturers to determine the price...It’s a situation which puts everybody at a disadvantage."

The Serum Institute, which produces the Oxford/AstraZeneca vaccine, said state governments would pay Rs400 ($5.35) and private hospitals Rs600, compared with about Rs150 for the central government. Bharat Biotech, which makes an indigenous jab, will charge Rs600 for states and Rs1,200 for private buyers.

The Serum Institute, which produces the Oxford/AstraZeneca vaccine, said state governments would pay Rs400 ($5.35) and private hospitals Rs600, compared with about Rs150 for the central government. Bharat Biotech, which makes an indigenous jab, will charge Rs600 for states and Rs1,200 for private buyers.

At least one rival politician has written to PM Modi asking him to reconsider this new policy, arguing that vaccine campaigns in the country have seen the most success when the government is the sole buyer of vaccines.

Maximum vaccination is required to crush 2nd wave of #COVID19. Requested @PMOIndia to reconsider new policy on vaccine distribution so that availability is assured & no additional financial burden is incurred, enabling States to perform constitutional obligation in health sector. pic.twitter.com/sEE6dpGzpE

— Pinarayi Vijayan (@vijayanpinarayi) April 20, 2021

The worsening disaster has prompted the US, UK, Germany and other EU members to pledge to provide emergency supplies including oxygen, ventilators, medical aid and raw materials for vaccine production. Germany, in particular, has classified India as a coronavirus high incidence area and also put the country on a separate warning list for coronavirus variants.

Finally, as the western media latches on to the advent of "double mutant" strains in India (something we reported on weeks ago), a third mutation in the B.1.167 strain first identified in India has now been documented, leading to more calls for faster sequencing of viral genomes. Here's more from India.com.

A report in the Indian Express said that since both the mutations, E484Q and L425R, were located in the virus’s critical spike protein — that binds it to the receptor cells in the body. The mutation should have been studied on an urgent basis, however, the genome sequencing exercise got stalled between November and January due to lack of funds, and disinterest because of the falling Covid curve.

However, now a third mutation in the B.1.167 has been identified now and experts believe that this time, it will be taken seriously.

Experts chided the Indian government for not doing enough to scout for dangerous new mutants: "The whole point of gene sequencing is to remain ahead of the curve, anticipate what new variants of the virus are likely to emerge, how they are likely to behave, and what can be done to contain their spread in the population. More the sequences, greater is our information about them, and more effective our response can be," a scientist associated with the sequencing effort reportedly said.

"Unfortunately, India has been well behind the curve on this front. We have been reacting to the developments, instead of anticipating it," he added.

Tyler Durden Mon, 04/26/2021 - 07:30

EU Opens Doors To Vaccinated American Tourists In Landmark Policy Shift

Dow Transports have rallied hard so far this year as hopes of a post-COVID-19 rebound in global travel have been stoked by the advent of the first generation of vaccines (even though they haven't done much to prevent a potentially mutant-driven rebound in India that is eclipsed anything seen before in terms of mortality). But as we have pointed out, new travel advisories in the US have prompted some analysts to reconsider the odds of a rapid recovery in international travel, envisioning a world of "vaccine passports" that puts even more pressure on global tourism.

But pretty soon, the US might be forced to reconsider these warnings, even if COVID-19 numbers keep climbing, as the EU moves toward a policy of unabashed embrace of "vaccine passports".

With many EU member states desperate to revive tourism traffic, the New York Times last night published the latest in a series of reports sketching out European plans to use "vaccine passports" to try and bolster their tax base while taking enough precautions to assuage fears about another COVID-19 surge.

Citing an interview with European Commission head Ursula von der Leyen, the NYT reported that Europe plans to allow American tourists who have been fully vaccinated to visit the EU over the summer. The message was unmistakable: the interview was intended to read like a "welcome back" banner to antsy Americans, and travel stocks are rallying as a result. Von der Leyen cited the "advanced talks" between US and European regulators as one among many reasons why Europe feels justified launching "vaccine passports" (though the NYT report notably avoided that language).

Technical discussions have been going on for several weeks between European Union and United States officials on how to practically and technologically make vaccine certificates from each place broadly readable so that citizens can use them to travel without restrictions.

These discussions are continuing, officials in Brussels said, and it is possible that a low-tech solution would be used in the near future to enable people to travel freely on the basis of vaccination. For example, a traveler to Europe could get an E.U. vaccine-certificate equivalent on arrival after showing a bona fide certificate issued by his or her own government.

The hope, officials said, is that this step would soon be unnecessary as government-issued vaccine certificates issued by foreign governments would be acceptable and readable in the European Union, and vice versa.

The European Union itself has begun the process of furnishing its own citizens with “digital green certificates,” which will state whether the traveler has been vaccinated against Covid-19; has recovered from the disease in recent months; or has tested negative for the virus in the past few days. Europeans will be able to use those to travel without added restrictions, at least in principle, within the bloc of 27 nations.

The EU is moving to push this shift in policy despite the WHO's urging that "vaccine passports" would risk discriminating against poorer nations where vaccines aren't as accessible. Much of the world isn't expected to reach the mythical "herd immunity" threshold until 2024, if not later.

While Brussels took the liberty of unilaterally unveiling its planned policy switch, von der Leyen reluctantly advised readers that individual EU member states reserve the right to impose more restrictive limits on tourism...

Based on Ms. von der Leyen’s comments, the European Commission will recommend the change in travel policy, though individual member states may reserve the right to keep stricter limits. They might not permit citizens from outside the bloc to visit or might enforce restrictions like quarantines, even on visitors who have vaccination certificates.

...however unlikely that might be, from a financial standpoint.

But countries like Greece, Spain, Italy, Portugal and Croatia that welcome millions of American tourists each summer, and greatly depend on them for income and jobs, are set to jump at the opportunity to reopen to the American tourism market with the E.U.’s blessing.

Since the start of the pandemic, nonessential travel to the EU has been officially banned with the exception of visitors from a short list of countries with very low caseloads of the virus, including Australia, New Zealand and South Korea. However, as the halt in tourism has battered tax revenue just when it was most needed, some of the more financially-distressed EU members have already taken steps to accelerate the return of American tourists. Greece, for example, said last week that it would open its borders to travelers from the US starting Monday (provided they show proof of vaccination or a negative coronavirus test, of course).

Investors celebrated the news by bidding up the Stoxx 600 Travel & Leisure Index, which outperformed the broader market and reached a one-week intraday high after sinking last week on concerns about India's second wave, and the new US travel advisory. Shares of long-haul carriers like Lufthansa and British Airways parent IAG lead gainers, both of which were up more than 4%.

Tyler Durden Mon, 04/26/2021 - 07:00

Signs, Signs Everywhere...

Authored by Jim Quinn via The Burning Platform blog,

“Fools, as it has long been said, are indeed separated, soon or eventually, from their money. So, alas, are those who, responding to a general mood of optimism, are captured by a sense of their own financial acumen. Thus it has been for centuries; thus in the long future it will also be.”

- John Kenneth Galbraith, A Short History of Financial Euphoria

The signs of an epic bubble of historic proportions are everywhere.

The stock market is a bubble, with valuations exceeding 2001. Margin debt is at all-time highs. The bond market is a bubble, with the Fed artificially suppressing rates and pumping trillions of QE into Wall Street. Housing is experiencing another bubble, with prices now far exceeding the 2005 peak. Bitcoin and the rest of the crypto-currencies are a bubble, being driven by the excess liquidity sloshing around the system. A joke crypto currency like Dogecoin soars into the stratosphere because money has no meaning anymore.

Corporate, government and personal debt are at all-time highs and heading higher. Clueless millennial dolts are using their stimmy checks to day trade on Robinhood. Now the shysters have come up with a ridiculous concept called Non-fungible tokens (NFT), which has created a further frenzy of greed and fleecing. We are busy selling worthless electronic concepts to each other at higher and higher prices. The world has truly gone mad.

The herd will surely be separated from their money when this everything bubble bursts. The concept of risk has been bastardized and ignored, for now. Greed will surely turn to fear and no one sees it coming. The “experts” will continue to declare “buy now or miss out on the riches”. I’m sure these bubbles will burst, but I have no idea when. It could be next week or they could grow for another few years. I don’t pretend to know, but I will not participate in the madness. Becoming debt free and more anti-fragile is my sole focus as these bubbles grow.

Even Charles MacKay’s epic tome regarding mass delusion and madness of nations fails to capture what is happening today.

“In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.” ― Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds

Our nation has not just fixated upon one object, but every object that can be bought or sold for a profit. Average Americans have concluded it is a sucker’s game to work hard, build wealth through saving, delay gratification, live beneath your means and achieve happiness through non-material means. I can understand why they feel this way, as the Federal Reserve, Wall Street bankers, and corporate America have fleeced them through inflation, stagnant wages, and stealing of their wealth. When these simultaneous bubbles burst once again, for the fourth time since 2000, the citizenry will be crushed. What happens at that point is anyone’s guess. Revolution would not be out of the question.

I have two personal anecdotes which have convinced me these bubbles are all-encompassing and reaching their zenith.

I bought a condo in Wildwood back in 2004 with a friend, near the top of the housing market. The plan had been to flip it in a couple years for a nice profit. The best laid plans often go awry. We bought it for $325,000. We got plenty of use from it and were able to rent it out every summer, but it was a financial drain every year.

We put it up for sale in 2015, asking $275,000. Not a drop of interest. We kept it for sale for three years and zero offers. We lowered the price to $250,000 and eventually got an offer of $240,000 in January 2018.  Fourteen years later we had sold it for a loss of $85,000. So much for real estate always appreciating. Fast forward to 2021 and the unit above ours just sold for $383,000. In just over two years the value of these condos in the eyes of current buyers rose by 60%, after sitting at $240,000 for over a decade. Nothing changed other than perception of value. Is the next stop $500,000 or $250,000? I have no idea.

Over the Christmas holiday I put together a To Do list designed to make my life more anti-fragile. Things I had put off for years now needed a sense of urgency. Tops on the list was turning TBP into an LLC, to try and shield my personal assets from the woke cancel culture crowd when they eventually try to destroy my website and my life. Also included on the list was looking into getting a stand alone back-up generator for my home, for when things go sideways. I had left my retirement funds at Wharton when I left in 2019. I finally transferred them to my IRA account where I could be in complete control of my investment choices.

The one item on the list I considered low priority and did not set in motion was selling some baseball cards I’ve had for almost 50 years. I collected cards from the age of 8 to 12 back in the early 1970s. I collected them because I loved baseball, the Phillies, and liked to trade them and pitch them in the schoolyard. I had no thoughts about them being worth something many years into the future. A couple decades ago when baseball cards were hot, I put the most valuable ones in plastic sleeves, put them in a plastic bag, and didn’t think about them for years.

For the last year I’ve sensed this financial madness might offer an opportunity to sell a few pieces of cardboard for prices that will never materialize again. I have hundreds of cards, mostly from 1975. Included in this set are 3 Robin Yount rookie cards and 2 George Brett rookie cards. There is a company called PSA that charges you to grade the cards. This then sets a selling price for the cards. I have no idea what constitutes a near perfect card with a 10 grade from a near mint card with a grade of 7, but the price difference is vast, as you can see here from their website.

A Robin Yount grade 10 card is worth $55,000 and a George Brett grade 10 cards is worth $97,500. I find this utterly ridiculous, but it is certainly worth exploring for that kind of money. Even getting a couple hundred for a grade 7 card would be fine. I don’t see any imperfections in my cards, but who am I to judge.

Back in December when I went to the site, it seemed like a pain in the ass to go through the grading process and I was confused by their pricing scheme. Life got busy, so I forgot about it until this week. I decided I was going to send the cards in and see what they concluded. I went to the PSA site and got this message from the CEO of PSA:

Hello PSA Customers,

Since my last update, the momentum behind the hobby has only accelerated. In fact, our Collectors Universe President and CEO, Joe Orlando, recently shared the reality of the surge of submissions to PSA.

I’ll try to further illustrate what has happened. The sheer volume of orders that PSA received in early March has fundamentally changed our ability to service the hobby. The reality is that we recently received more cards in three days than we did during the previous three months. Even after the surge, submissions continue at never-before-seen levels.

Given our growing backlog, it would be disingenuous for us to continue to accept submissions for cards that we will be unable to process in the foreseeable future. It’s an unpleasant conclusion, especially after the March 1 price increase, but it is necessary to properly serve the customers who have already submitted to PSA.

Effective immediately, PSA is temporarily suspending our Value, Regular and Express service levels. This will allow us to fully unbox and receive the recent surge of orders and focus on our most impacted service lines.

We will take a tiered approach to reintroducing these service levels. Our goal is to bring all suspended service levels back by July 1, 2021.

There is now a baseball card bubble frenzy, on par with stocks, bonds, real estate, crypto, art, used cars, lumber, NFTs, and just about anything not tied down. With my investing luck, the baseball card market will surely collapse before July 1. So anyone willing to take chance can contact me. I’ll sell you all three Robin Younts for $55,000 and the two George Bretts for $97,500. Sometimes the stupidity of the masses exceeds my lowest expectations.  

In my view, the signs are everywhere. Getting rich quick has engulfed the entire nation in a madness never seen before in human history. Effortless enrichment is a delusion. And all delusions end in tears. An entire nation was convinced, by those controlling the narrative, the annual flu was a pandemic by giving it a new name, marketing the hell out of it, using a faulty test to artificially inflate cases, and understanding they were dealing with compliant obedient sheep. If they can make you believe that, they can make you believe anything.

“The recurrent and sadly erroneous belief that effortless enrichment is an entitlement associated with what is thought to be exceptional financial perspicacity and wisdom is not something that yields to legislative remedy.” ― John Kenneth Galbraith, A Short History of Financial Euphoria

The signs are everywhere, but few will heed them.

-----------------------------------------------------
The corrupt establishment will do anything to suppress sites like the Burning Platform from revealing the truth. The corporate media does this by demonetizing sites like mine by blackballing the site from advertising revenue.

Tyler Durden Mon, 04/26/2021 - 06:30

"This Is Massive": Shadowy DARPA-Linked Company Took Over 'Chunk' Of Pentagon's Internet In Inauguration Day Mystery

A shadowy company set up last September linked to a DARPA / FBI contractor who peddled a 'lawful intercept' internet spy device to government agencies and law enforcement a decade ago, took over a massive portion of the Pentagon's idle internet addresses on the day of President Biden's inauguration, according to an in-depth investigation by the Associated Press.

The valuable internet real estate has since quadrupled to 175 million IP addresses which were previously owned by the US Department of Defense - about 1/25th the size of the current internet, and over twice the size of the internet space actually used by the Pentagon.

"It is massive. That is the biggest thing in the history of the internet," said Doug Madory, director of internet analysis at network operating company Kenntic.

The company, Global Resource Systems, was established by a Beverly Hills attorney, and now resides in a shared workspace above a Florida bank.

The company did not return phone calls or emails from The Associated Press. It has no web presence, though it has the domain grscorp.com. Its name doesn’t appear on the directory of its Plantation, Florida, domicile, and a receptionist drew a blank when an AP reporter asked for a company representative at the office earlier this month. She found its name on a tenant list and suggested trying email. Records show the company has not obtained a business license in Plantation.

Incorporated in Delaware and registered by a Beverly Hills lawyer, Global Resource Systems LLC now manages more internet space than China Telecom, AT&T or Comcast. -Associated Press

One name is linked to Global Resource Systems in the Florida business registry - that of Raymond Saulino - who as recently as 2018 was listed in Nevada corporate records as a managing director of a cybersecurity/internet surveillance company called Packet Forensics. According to the report, "The company had nearly $40 million in publicly disclosed federal contracts over the past decade, with the FBI and the Pentagon’s Defense Advanced Research Projects Agency among its customers."

In 2011, Packet Forensics and Saulino, its spokesman, were featured in a Wired story because the company was selling an appliance to government agencies and law enforcement that let them spy on people’s web browsing using forged security certificates.

The company continues to sell “lawful intercept” equipment, according to its website. One of its current contracts with the Defense Advanced Research Projects Agency is for “harnessing autonomy for countering cyber-adversary systems.” A contract description says it is investigating “technologies for conducting safe, nondisruptive, and effective active defense operations in cyberspace.” Contract language from 2019 says the program would “investigate the feasibility of creating safe and reliable autonomous software agencies that can effectively counter malicious botnet implants and similar large-scale malware.”

Saulino is also listed as a principal with a company called Tidewater Laskin Associates. Incorporated in 2018 (and sharing the same Virginia Beach, VA address as Packet Forensics - a UPS store - with different mailbox numbers), Tidewater obtained an FCC license in April 2020 for unknown reasons.

Calls to the number listed on the Tidewater Laskin FCC filing are answered by an automated service that offers four different options but doesn’t connect callers with a single one, recycling all calls to the initial voice recording.

Saulino did not return phone calls seeking comment, and a longtime colleague at Packet Forensics, Rodney Joffe, said he believed Saulino was retired. Joffe, a cybersecurity luminary, declined further comment. Joffe is chief technical officer at Neustar Inc., which provides internet intelligence and services for major industries, including telecommunications and defense. -AP

And now a company linked to Saulino, which didn't exist before September, took control of a massive chunk of the Pentagon's internet space on inauguration day for unknown reasons.

According to a terse and opaque explanation from the Pentagon's Brett Goldstein - head of the Defense Digital Service which is running the project, the military hopes to "assess, evaluate and prevent unauthorized use of DoD IP address space" and "identify potential vulnerabilities" in order to defend against cyber-intrusions by global adversaries who consistently infiltrate US networks - occasionally from unused internet blocks. What that has to do with Global Resource Systems is anyone's guess.

Explanations for what the internet space could be used for are purely speculative, and include "honeypots" - machines set up with vulnerabilities laid as bait to draw hackers, "Or it could be looking to set up dedicated infrastructure — software and servers — to scour traffic for suspect activity."

"This greatly increases the space they could monitor," said Madory.

Why did the Pentagon choose Global Resource Systems - a company linked to a 'spooky' individual - on inauguration day? "As to why the DoD would have done that I’m a little mystified, same as you," internet pioneer Paul Vixie told AP.

More via AP:

Deepening the mystery is Global Resource Systems’ name. It is identical to that of a firm that independent internet fraud researcher Ron Guilmette says was sending out email spam using the very same internet routing identifier. It shut down more than a decade ago. All that differs is the type of company. This one’s a limited liability corporation. The other was a corporation. Both used the same street address in Plantation, a suburb of Fort Lauderdale.

“It’s deeply suspicious,” said Guilmette, who unsuccessfully sued the previous incarnation of Global Resource Systems in 2006 for unfair business practices. Guilmette considers such masquerading, known as slip-streaming, a ham-handed tactic in this situation. “If they wanted to be more serious about hiding this they could have not used Ray Saulino and this suspicious name.”

Guilmette and Madory were alerted to the mystery when network operators began inquiring about it on an email list in mid-March. But almost everyone involved didn’t want to talk about it. Mike Leber, who owns Hurricane Electric, the internet backbone company handling the address blocks’ traffic, didn’t return emails or phone messages.

Despite an internet address crunch, the Pentagon — which created the internet — has shown no interest in selling any of its address space, and a Defense Department spokesman, Russell Goemaere, told the AP on Saturday that none of the newly announced space has been sold.

Tyler Durden Mon, 04/26/2021 - 05:54

What Does Wall Street Like And Hate The Most About Working From Home

Now that Deutsche Bank is directly competing with BofA in polling its clients, having launched its own fund manager survey a while back, DB credit strategist Jim Reid is preparing to publish the full results of the latest monthly survey in which he polled nearly 700 people. And ahead of publishing the full survey results, he highlighted what Wall Street professionals said they like and dislike most about WFH.

People could chose up to two options: an overwhelming 68% of Wall Street workers thought the lack of commute was the best WFH factor. That was nearly double the 35% who said they liked seeing more of their family!

In terms of what people hated, it’s a lack of in-person team interaction (71%) and a lack of divide between work and home life (49%) that were well ahead.

As Reid concludes, "if companies are desperate to get people back to the office it seems investment into research into a teleporter would be a good move as commuting is by far the biggest bugbear!"

We will present more results on WFH and market-related answers, when Deutsche publishes the full poll on Monday.

Tyler Durden Mon, 04/26/2021 - 05:45

The Fall Of Turkey, The Rise Of Bitcoin

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

It never ceases to amaze me how tone deaf those with power are.  

Turkish President Recep Tayyip Erdogan is in serious trouble for the first time in his political career.  He’s a man staring at a massive electoral problem coming this fall.

Erdogan is currently presiding over an economy in complete freefall. With recent reports of food riots over government handouts of potatoes and onions the news only seems to be getting worse there on the eve of national elections.

Turkey is emblematic of what happens to a country systemically mismanaged because of its geopolitical importance. A man like Erdogan is able to maintain power because he’s constantly schmoozing both sides of the Bosporus to get subsidies to fuel his personal ambitions.

This is part of the reason why Turkey has the largest army in NATO while the private economy has the worst foreign capital liabilities position of any major emerging market.

And it looks like Erdogan may have finally overplayed his hand too many times in the last year.

He has made multiple major missteps on the geopolitical stage, attempting to assert Turkey as a regional powerhouse only to be thwarted at every turn by Russia.  Be it Libya, Cyprus, Syria, Azerbaijan, or Iraq Putin has outplayed Erdogan at every turn.

With each of these setbacks his gambits become more and more desperate.  And he is egged on by the U.S. and the EU to make these gambits as he hides behind the shield of Turkey’s membership in NATO.

Anyone else who wasn’t so strategically important who made this many major geopolitical and military blunders would have already been overthrown. But now it looks like he’s run his full course.

This puts him in the position of thinking he can play Russia off the U.S. to his advantage and then turn around and play the U.S. off Russia for his advantage.  In all instances he only sees the upside and never the down.

His real weakness is Turkey’s foreign currency deficit which cannot be serviced nor is there any incentive for it to resolve itself because Erdogan constantly bites the hand that feeds him.  China and Russia are more than wealthy enough to have helped Erdogan balance Turkey’s books since the U.S. first attacked him financially in 2018.

I wrote about this extensively at the time.   

But Erdogan always turns on the person who last helped him thinking he’s a bigger player than he is. 

And now with President Biden acknowledging the Armenian Genocide, one of the few things Turkey and Israel have agreed on for decades, Erdogan is being told he’s no longer needed by the U.S. Erdogan has maintained power through aggressive nationalist domestic policy. His Neo-Ottoman ambitions played well at home for nearly two decades but with the Turkish economy now hollowed out by his adventurism and mismanagement of the Lira he’s is serious trouble politically in a way he hasn’t ever been.

There’s many angles here to Biden’s Armenian Genocide move here. It’s a clear rebuke of Israel while the U.S. and Iran are in deep negotiations about bringing back the JCPOA, which have made significant progress. Remember, the WEF and Europe want the JCPOA, Israel does not. And this week’s fireworks between Iran and Israel point to a dangerous future the closer we get to its reinstatement and Iran rejoining the global economy.

This leaves Turkey with almost no friends anymore as it is clear the JCPOA is supposed to be the carrot to Iran while maximum isolation stick is transferred to Russia. This is a very high-stakes game which is as much a power play by Europe against Israel and the U.K. as it is anything else.

And that leaves Turkey with a decision to make.

Today, Turkey’s foreign debt position is only marginally better than it was in 2018 and got worse over 2020.  Deleveraging in dollar terms improved and then it got worse once the Fed went back to the zero-bound after the Coronapocalypse and Erdogan let go of control of Turkey’s Central Bank.

source: tradingeconomics.com

If you are playing a game this big and understand the rules of it at the level Erdogan does, then I cannot understand why he let the Bank of Turkey reverse course after his scathing attacks on the IMF in 2018, which, to be fair were spot on and, in my opinion, the right course of action for Turkey to free itself from the vaster powers.  

But it didn’t work out that way and the situation in Turkey today is worse than it was in 2018 because now he can no longer count on Putin and/or Xi to bail him out.  All of the major powers are now tired of him and his game and are allowing him the big fall from grace.

This is why the lira is imploding and it’s why Erdogan is trying to save himself by backing the U.S.’s play in Ukraine and announcing the banning of bitcoin for payment services in Turkey. 

I’m sure the WEF and the Biden administration are happy with him for this.

The timing of this announcement was done to stifle the latest breakout to a new high in Bitcoin and undermine the Coinbase (COIN) IPO, which was very successful especially when you remember Facebook’s IPO back in 2012.  Since then it’s been one attack after another on the crypto market as I talked about in a recent post.

And it looks like it’s finally been successful in slowing down bitcoin’s momentum. First causing a big breakout in high-quality altcoins.  DASH hit $400, Decred hit $250, Litecoin went past $300, Monero threatened $375.  ARRR $15.00, And DOGE hit a truly staggering $0.45.  

They have all since finally succumbed to the same loss of momentum which is shaping up to being a significant top, possibly now, for the rest of 2021. There’s been sufficient stabilization of the U.S. treasury market with good demand for the long-end of the yield curve, evidenced by a solid 20-year auction this week, to warrant some consolidation of 2021’s immense gains.

The important thing to remember here, isn’t that bitcoin is or even was in a bubble, but that this rotation into altcoins occurred because people no longer want to rotate back to USDs or EURs.  They want custody.

And that brings me back to the counter-move by China who threw Turkey’s banks a lifeline by announcing that China’s banks can now import gold for the first time since 2019.  

Since Turkey’s banks can hold gold as reserves, the languishing gold price has really harmed them and Turkey’s financial position.   Because if a new rally in gold starts with last week’s move up in gold prices, then watch Turkey’s foreign debt position improve as well.

It won’t quell the rampant inflation, soaring food prices and any of Turkey’s other societal problems in time for elections later this year. Turks, by the look of the current polling, are beginning to see that Erdogan doesn’t have any real answers nor does he have any friends.

If they have to swallow being the only country left to refuse to admit to their own history this will be a moment of memetic collapse for them about just how far their position has fallen thanks to Erdogan’s failed adventures and failed stewardship of their wealth.

The suppression of gold was important to try and keep a lid on institutional money moving into bitcoin. China enabling some stability in gold prices should mitigate some of the downward momentum in the crypto-space, depending on how much leverage is still out there. With the U.S. economy getting an artificial boost from all the ridiculous stimulus money flowing out from D.C. in the most unsustainable way, the Fed is under no compunction to bail out emerging markets, like Turkey, short of dollars.

Erdogan had to take steps to stem the tide against the lira. Making a public move against bitcoin was the easiest thing, and obviously done to appease his partners in the West who then stabbed him in the back less than a week later. But it won’t be enough and this move may have been the strongest signal yet of how powerful bitcoin’s ability to find weaknesses in the financial system is.

Erdogan wouldn’t have made this announcement against bitcoin and cryptos if it didn’t pose a real threat to the lira. In a world where US dollar stablecoins are paying 10+% and can be bought and sold for nearly nothing, what could a Turkish bank possibly offer Turks at this point other than an unsafe place to park their money?

Turkey is rapidly approaching a serious decision point as is Erdogan. His pride has led him to places he should have never went and having bit the hands that fed him too many times, his future along with his government’s is looking grim. Thankfully for his victims there are solutions available to protect them from him.

*  *  *

UPDATE: Erdogan’s goons have now gone after the 2nd bitcoin exchange in Turkey in less than a week. These are the moves of a desperate leader.

Tyler Durden Mon, 04/26/2021 - 05:00

"The Problem Is That Your Ideas Are Stupid" - Bill Maher Blasts "Gullible" Millennials

Something strange is occurring in the gutter of "liberal comedy"... After four years of constant attacks on anything 'Trumpian' and constant ignorance of anything 'Left', one man has begun to realize that there is plenty of farce on both sides of the aisle and virtue-signaling to your cocktail party co-conspirators just doesn't pay the bills anymore (cough CNN cough).

Last week, Comedian Bill Maher used his HBO show to highlight some awkward 'facts' and ask some uncomfortable questions about media and politicians approach to COVID.

This week, he has taken aim at the heart of the problem - American Millennials and Gen Z and their total ignorance of history.

"In India, young people touch old people's feet to show reverence. In Japan, there's a national 'respect for the aged' day.

You know the reason why advertisers in this country love the 18-34 demographic... because it's the most gullible.

A third of people under 35 say they're in favor of abolishing the police...not defunding, but doing away with a police force altogether... which is less of a policy position and more of a leg tattoo.

36% of Millennials think it might be a good idea to try Communism... but much of the world did try it... I know most of Millennials think that doesn't count because they weren't alive when it happened... but it did happen, and there are people around who remember it. Pining for communism is like pining for BetaMax or MySpace.

So when you say 'you're old, you don't get it', get what? Abolish the police? ...and the Border Patrol? ... and Capitalism? ... and cancel Lincoln?

No, "I get it"... the problem isn't that I don't get what you're saying or that I'm old. The problem is that your ideas are stupid.

If you say "let's eat in the bathroom and shit in the kitchen", yeah, that's a new idea, but I wouldn't call it interior design.

You think someone 80 is hopeless because they can’t use an iPhone? Maybe the one who is hopeless is the one who can’t stop using it.

You think I'm out of it because I'm not on Twitch? Well maybe I 'get Twitch' but I just think people watching other people play video games is a waste of fucking time.

20% of Gen Z agree with the statement that "society would be better off if all property was owned by the public and managed by the government" and another 29% say 'they don't know if that's a good idea'...

Here's who does know... anyone who wasn't born yesterday!"

Watch the full monologues here (timestamped to begin at 5:13)

 

Tyler Durden Mon, 04/26/2021 - 04:54

The Used Car Loan Business Is Scorching

Used car auto lenders are falling ass backward into business as the global semi shortage and supply chain bottlenecks have caused used-car prices to rocket.

This is also creating a boom for the banks that involve themselves into used car loans, which generally have higher yields than traditional new-car loans, the Wall Street Journal reported on Tuesday.

Institutions like Ally Financial are benefiting from the shift. It says it'll see yields on auto originations jump to the 7% range for the rest of 2021, up from a 6.66% average in Q1. The bank's auto leasing yields have also surged, jumping to 8.6% in the most recent quarter in 2021 from 5.2% at the beginning of 2020.

Both rises in rates are happening as benchmark rates remain low.

Dealers usually borrow to finance their floor inventory, the Journal notes, and when there's supply chain disruption - as there is now - it can hurt banks' loan growth. But as supply picks up and used car prices start to fall, "for banks there may be an offset in the form of faster dealer floor-plan loan growth."

But it isn't all blue skies and rainbows for lenders: this type of environment can prompt intense competition, and automakers saw their captive financing arms gain share in the used-car loan market versus banks in 2020. 

Average rates on used car loans last year were 8.4%, down from over 9% in 2019. And the average loan term hit a record high last year. With shares of names like Ally and Capital One trading "at or above their highest price-to-book ratios in years" and potential looming credit risk, stocks of used-car loan players may already be robustly valued. 

 

Tyler Durden Mon, 04/26/2021 - 04:15

How Russia Could Kickstart Another Oil Price War

Authored by Cyril Widdershoven via OilPrice.com,

Russia’s President Vladimir Putin is starting to feel the heat of new U.S. sanctions, as Washington is putting some additional bite into its confrontation with Moscow.

At the same time, new sanctions or even a full-out (proxy) confrontation are looming on the horizon, looking at the tensions at the Russian-Ukrainian border. Putin’s reactions are straightforward, threatening asymmetric responses to any Western pressure or military interference in the coming months. 

The still fledgling or outright weak reactions of Western governments, especially in Europe, are received in Russia as a sign of weakness. Even though current US-EU sanctions on Russian institutions and oligarchs are taking their toll, the larger picture hasn’t changed much.

Russia’s military buildup on the eastern Ukrainian border, the unilateral decision to block the Black Sea for international shipping and naval forces, in breach with the Montreux Convention, and the threat of increased US sanctions on the NordStream 2 involved parties, doesn’t seem to have changed Putin’s strategic considerations. The global critique about the Russian treatment of Navalny is seen by Moscow as external interference in an internal issue, not to be discussed even during Putin’s yearly “State of Union” address to the Russian people.

US President Biden, however, seems not to be satisfied at all with the effects of current sanctions on Russia. New, harsher measures are already planned, even after last week’s Washington decision to expel Russian diplomats and bar US banks from buying Russia’s sovereign bonds on the primary market. Until now, most US sanctions have been linked to Russian interference in US elections, cyber-attacks and its appalling treatment of the political opposition. 

Moscow’s reaction until now has been rather icy, the Bear doesn’t seem to be impressed by the threat of new sanctions. This reasonably soft Russian approach could, however, change very quickly, as Putin’s State of the Union address issues asymmetric reactions on all levels if so-called “red-lines” are crossed.

For the outside world, however, it’s not really clear what those red lines exactly are.  Moscow already has indicated that additional Western sanctions or a military build-up in the Ukraine-Black Sea arena are a red-line. Analysts are now speculating what the Russian reaction to such actions could be. 

Western analysts mainly fear a military reaction, looking at the Ukrainian issue at present. The immense military buildup on Ukrainian borders could lead to a direct open involvement of Russian troops under the pretext of ‘protecting’ Russian citizens and interests in the region, as has been done before in Georgia and other places. This full out Cold-War approach is an option not to diminish straight away, as Russian aggressive maneuvering has been building up since the Arab Spring, with its involvement in Syria and Libya being the clearest examples.

Others are wondering if a possible Russian retaliation could be through blocking oil and gas supplies to Europe and and or the U.S.

Increased energy supply dependency of the EU and the US increases Moscow’s geopolitical leverage. This situation has divided the leading European powers. Germany, for example, is hinting at opening up to Moscow, while France and the UK are taking the opposite approach. 

Then there’s the largely undiscussed nuclear option. Another oil price war. While it may seem counterintuitive to some, Moscow could decide to push down prices in order to hurt international oil and gas companies, and independent US shale companies in specific. By taking on the U.S. oil industry, Biden’s economic recovery could be dealt some serious damage.

Another oil price war could destabilize the entire U.S. shale patch, which is still recovering from last year’s oil price implosion. During 2020 Russia has grown to be the third-largest oil supplier to the United States, overtaking even Saudi Arabia. Oil analysts have noticed it, but US politicians have turned a blind eye. The power of oil suppliers should not be undervalued, especially not when it’s in the hands of a rival world power. 

An aggressive move by Moscow doesn’t necessarily have to be at the expense of others in the OPEC+ alliance. In fact, other OPEC members could actually benefit from a direct assault on US oil and gas export markets. Asian economies such as China or India will not be unhappy with lower oil prices, and Beijing even could be a supporter as it will hurt the US at a time that Washington is expanding its sphere of influence in the South China Sea.

Tyler Durden Mon, 04/26/2021 - 03:30

Second Turkish Crypto Exchange Collapses, Four Employees Arrested On Suspicion Of Fraud

Just days after major Turkish Crypto exchange Thodex collapsed, its CEO fled with a rumored $2 billion (and was reportedly detained) and dozens of people were arrested, Turkey’s cryptocurrency investors were dealt another blow as second big exchange collapsed.

In a statement posted late Friday on its website, Vebitcoin said it halted operations citing deteriorating financial conditions claiming that unspecified financial strain led to the decision — possibly caused by an unusually high number of withdrawals leading up to Turkey’s forthcoming cryptocurrency ban, according to CoinTelegraph.

“We have decided to cease our activities in order to fulfill all regulations and claims,” the announcement read in part.

Demiroren News Agency said its Chief Executive Ilker Bas and three other employees have been detained on Saturday. The Financial Crimes Investigation Board has blocked Vebitcoin’s accounts and opened a probe. Vebitcoin is - or rather was - Turkey’s fourth biggest exchange with close to $60 million in daily volumes, according to CoinGecko.com which tracks data on price, volume and market value on crypto markets. More than half of this volume came from Bitcoin, which dropped 19% this week.

On Saturday morning, Muğla chief public prosecutor Mehmet Nadir Yağcı announced in a statement to local media that four employees have been detained by law enforcement following allegations of fraud.

"Following the search and seizure operations carried out at the company headquarters and at some addresses, 4 people, who are company directors and employees, were detained. The investigation carried out by the Directorate of Cyber ​​Crimes Branch of the Muğla Police Department is carried out in a multifaceted and meticulous manner."

The collapse of Vebitcoin comes days after Thodex halted operations and its 27-year-old founder fled to Albania. Thodex had about 390,000 users according to a lawyer for the victims and losses could be as high as $2 billion, according to Turkey’s Haberturk newspaper. Police subsequently issued upwards of 75 arrest warrants and detained 62 in connection to a possible exit scam.

This week's rout marks the worst period for Bitcoin since it tumbled amid a wider slump in risk assets at the end of February with bitcoin sliding as low as $48,000 late on Sunday, amid broader weakness in the entire crypto space.

The two exchanges were part of the cryptocurrency boom that had drawn in legions of Turks seeking to protect their savings from rampant inflation and the collapsing Turkish currency. Turkish inflation hit 16.2% in March, more than three times the central bank’s target, and the lira has weakened more than 11% against the dollar this year -- its ninth consecutive year of losses - making it the year's worst performing major currency.

The boom in Turkish crypto trading which saw daily volume on local crypto markets close to $2 billion for Friday, according to data from CoinGecko.com, regulators have come knocking. In early April, Turkey’s Central Bank has banned cryptocurrencies as a form of payment from April 30, and the country has prohibited payment and electronic money institutions from mediating money transfers to cryptocurrency platforms.

Central Bank chief Sahap Kavcioglu said more regulations are in the pipeline in a televised interview on Friday. “We are working on regulations in terms of cryptocurrency,” he said. “There are disturbing money outflows to outside of Turkey via cryptocurrencies.”

Turkey's crypto ban has become a hot-button issue, as opposition leaders have voiced support for crypto.

Tyler Durden Mon, 04/26/2021 - 02:45

The Ignorant World And What to Do About It

Authored by Joakim Book via The American Institute for Economic Research,

A spectre is haunting the Western world – the spectre of a grossly mistaken understanding of the world. 

British kids have nightmares about the climate. Half of French respondents think it likely that climate change will cause “the extinction of the human race.” American teachers coddle students who have panic attacks when wildfires rage somewhere on the planet. Eco-anxiety has clearly gripped the Western world, but what’s worse is that most people have a dismal outlook on all of humanity’s progress, not just climate change. 

Because slow changes don’t get noticed, and because humans use mental shortcuts to understand the world, we end up with a grossly misinformed view of what is. The late Hans Rosling, the Swedish professor of international health that most of us know as the excited man on YouTube (the one who explains the progress of the world with bubbles and giant blocks), dedicated his life to dispelling these misperceptions. The Gapminder Foundation that now carries on his legacy writes

“Our ignorance surveys have shown that the general public is misguided about many basic global facts. Reliable global statistics exist for nearly every aspect of global development, but these numbers are not transformed into popular understanding because using and teaching statistics is still too difficult.” 

Gapminder routinely asks 12 questions (sometimes with a thirteenth question on global temperatures, which most people tend to get right) about basic, uncontroversial, changes in global development – multiple-choice questions on things like demographic change, how many girls in poor countries finish primary school, and what’s happened to extreme poverty in the last twenty years. 

The results are terrible, but it’s not a question of ignorance. If people genuinely didn’t know, by chance alone they’d pick the right answer a third of the time: this is the chimpanzee threshold. Instead, the average human gets 2.2 answers right. The results for some questions, like global life expectancy (50, 60, or 70 years?), ought to scare us more than any dismal vision of climate change. Having more than doubled since 1900, the global improvements in the last forty years seem to have passed most smart people by. Of students and faculty at top universities less than one in five manage to get this right – even Nobel Laureates underperform the chimps. The worst-performing groups were Swedish trade unionists (10% got the answer right) and Norwegian teachers (7% correct). In one memorable lecture, Rosling animatedly exclaimed “What in the world are you teaching the kids?!”

In that one line lies much of the problem for our continued misinformation about the world. 

Media coverage inundates us with a constant flow of catastrophes from one part or the world or another, while overlooking the great non-events of the world. When super cyclones kill 128 people instead of the hundreds of thousands they used to or would have, we don’t even hear about them. When hundreds of thousands of people are lifted out of extreme poverty a day, every day, that’s no longer newsworthy. The result is, Gapminder notes, that “people end up carrying around a sack of outdated facts that you got in school (including knowledge that often was outdated when acquired in school).”

Counteracting that requires information and an updated framework for thinking about the world. To embrace the notion that things gradually get better – not worse – as we solve more problems, invent better things, and bring more people into the global marketplace. The return of such an optimist mentality (Rosling prefers ‘possibilist’) requires nothing more than accepting that “facts are better than myths – especially for understanding the world.”

Thou shalt not misinform

To say that the world is getting better is not to be complacent about its problems. It is not to be Pollyannaish about the future or believe that from here the only way is up. It’s to say that, on net and over time, the world gets better. It’s to say that progress is hard-earned; that it’s a gradual process, with deep structural and historical roots; that the small heavens we may create in our own lives combine to make the entire world slightly less bad than it was yesterday. I work for you doing what I’m good at; you work for me doing what you’re good at – and inventors and entrepreneurs halfway around the world figure out ways to do things that make both our lives better.  

This isn’t a predetermined path, and it most certainly isn’t always up. Last year was a setback in just about every way we know how to measure (mortality, life expectancy, poverty). The twentieth century saw some of humanity’s worst atrocities: world wars, genocide, autocrats. Sometimes progress pauses, and sometimes our past progress gives rise to new challenges we have yet to overcome – like the concentration of CO2 in the atmosphere from the coal and oil we burned for (great!) use as fuel, production, and transportation. 

While that’s a global challenge to talk seriously about with our children, we don’t have to overdo it. Imbuing them with mistaken doom-mongering helps nobody. When we do, we’re not setting up the next generation for a flourishing world, or even a factful one. 

Nobody told these kids that wildfires destroy less area now than they used to and forests in California burned much more before Europeans arrived. Deaths from natural disasters, those like storms, hurricanes, and floods that we usually associate with worsening climate change, are massively down over almost any time frame, even though we are many more people on the planet. Child mortality is falling everywhere around the globe, and we produce more food than we ever have. None of those trends are about to suddenly stop, reverse, and undo the progress we’ve already made. 

What is the point of studying when the world is collapsing around us?

This is a point that many schoolchildren have raised, Greta Thunberg perhaps most prominently. The world is heading for an urgent climate disaster, so why should they study for a future they won’t have? 

One reason would be to learn that the world isn’t collapsing, that things are getting better – even though the pandemic coverage and climate change alarmism seem to suggest otherwise. Disasters are quick and sudden; progress is slow and hard-won. We live longer, healthier, safer, better, and more fulfilling lives, with better access to almost anything you can imagine. So far, human ingenuity has outpaced anything that a hostile planet has thrown at us or a declinist mentality has conjured up.

In all this mess, thankfully, there’s at least one thing you can do: imbue your child not with the dangers of the world, but with the factful progress of the world. This is what Tony Morley, a fellow traveler and prominent advocate for progress, is doing: Targeted at 6-to-12-year-olds, Morley is bringing together a hundred one-page stories about the forces, the people, and the astonishing history of how humans have progressed and collectively improved our global living standards. Human Progress for Beginners tries to

“tell the dramatic history of human civilization and the jagged upward path of improved living standards in the last 250 years. Since the dawn of the Industrial Revolution, civilization has experienced the greatest increase in living standards, prosperity, and well-being in our species’ history. […] Human Progress for Beginners will tell the untold story of progress for young readers in a bright and engaging book, the likes of which has never been attempted.”

Chapters span the innovations that rocked our world: the printing presses, steam power, and combustion engines; the history of living standards, of light, and of food; and the progress of literacy, peace, and pollution. 

“Progress forward,” Morley emphasizes, “is not progress completed,” and our world certainly has room for improvement. But that’s not reason enough to despair and invoke the doom-and-gloom zeitgeist of “civilizational decline,” “apocalypse,” or “climate emergency.” Instead, we ought to celebrate our achievements, even in the areas that many of our young people now believe are irrevocably destroyed. 

It’s a counterintuitive notion and a difficult thing to wrap one’s head around, that the world can both be better and is still in many respects bad. We do nobody any favors, least of all our children, by exaggerating one while forgetting how far we’ve come.

Tyler Durden Mon, 04/26/2021 - 02:00

Illinoisans Overwhelmingly Oppose Racial Indoctrination Rampant In Schools, Yet They Cower In Silence

By Mark Glennon of Wirepoints

Illinois’ political establishment is far out of touch with the general public on the racial dogma now forced on students from kindergarten through college. Yet a stunning two-thirds of Illinoisans say they don’t speak up, thereby ceding control to an intolerant, extremist minority.

The proof is in a poll released last month that was mostly buried and ignored by the press. It primarily addressed what schools now teach as unquestionable truth: critical race theory, often called anti-racism or wokism.

Illinoisans don’t like it. The American Council of Trustees and Alumni, which commissioned the poll, summarized their findings this way:

A majority  of respondents  favor equipping teachers to develop core skills and competencies over the encouragement of  progressive  political activism.  Illinoisans  also  favor  a curriculum that  focuses  on “American founding principles and . . . documents” over  one that  incorporates  key  tenets of the  New York Times’ 1619  Project.  At  the post secondary level,  strong  majorities  oppose reducing police presence on campus;  support viewpoint diversity; favor a merit-based application process;  and  prioritize  reducing the cost of tuition over expanding  diversity  and equity  programs.     

That’s completely at odds with mandates from the state’s politicians and education officials. The Illinois State Board of Education recently approved woke teaching standards with its “Culturally Responsive Teaching and Learning Standards” for K-12 education, and the state earlier made “implicit bias” training required by law for Illinois teachers.

Among the survey’s specific findings:

• Sixty-two percent of Illinoisans say it’s more important to expose students to a variety of perspectives, compared to just 23% who want teachers to embrace progressive viewpoints and perspectives; 15% were not sure where they stood. The view was shared by a plurality of Democrats (49.6%) as well as majorities of Republicans (78%) and Independents (69%).

• Illinoisans reject a core piece of woke teaching, 1619 Project published by The New York Times, which aims to “reframe the country’s history” by putting slavery and its enduring consequences “at the very center of our national narrative.” Forty-eight percent of respondents favored a focus on “American founding principles and . . . documents,” compared to 38% who favored “new curriculums that teach children to understand that America is founded on slavery and remains systemically racist today.”

• 57% of respondents said training programs should focus on making teachers better equipped to help students develop core skills and competencies, not on social justice or progressive politics. Just 34% said the priority should go toward teaching progressive viewpoints and social justice advocacy to help teachers overcome their own biases and build more inclusive classrooms

• “A resounding 84% of respondents,” according to the poll’s sponsor, said that “all people should be treated equally on merit” when the question was posed in general terms. When asked to think about the college admissions process specifically, 63% answered that “all people should be treated equally based on merit, even if that results in less racial diversity at selective colleges and universities,” including 89% of Republicans, 62% of Independents and a plurality (47%) of Democrats.

The polling was done by a reputable firm, Eighteen92, which surveyed 800 Illinois residents.

That last bullet point above is particularly striking because it means Illinoisans even oppose affirmative action, and it’s affirmative action that is systemic in most of America, not racism.

Perhaps that shouldn’t be surprising since even Californians oppose affirmative action. In November they voted overwhelmingly to retain their constitutional ban on affirmative action, which is another story that was buried. “The margin of defeat, 56 to 44 percent, was striking to students of political history, because it suggests that race neutrality is more popular now than when it was initially mandated by a 1996 ballot initiative that passed by a slightly smaller margin,” said The Atlantic, which did cover it.

Most significant of all, however, is that over two-thirds of Illinoisans say they are afraid to speak up on these issues.

Why?

Because they fear the mob.

Sixty-four percent of respondents reported that they stop themselves from expressing their opinion on controversial political and social issues “often” (30%) or “sometimes” (34%), with an additional 18% doing so “rarely,” according to the survey sponsor. No surprise there. National surveys, as the sponsor wrote, “have repeatedly shown that political correctness has silenced important discussions—among students on college campuses and in the broader marketplace of ideas.”

Of those who reported self-censoring, 22.4% said the main reason they do so is because they are worried about unfair criticism, while 22.0% answered that they are “worried about professional or academic consequences” for saying the wrong thing.

This must end.

Critical race theory is perhaps the most pernicious and destructive movements our age. It is a doctrine of hatred and division designed purposefully to stoke racial division, just as countless tyrannical movements throughout history have inflamed racial division to divide and conquer.

It expressly rejects the goals of color blindness and the melting pot, which have been among the most noble aspirations of America and most all of the Western Hemisphere. By asserting that race, not character, fundamentally defines all humans, it rejects, at its core, the most fundamental premise of our society – that all men are created equal.

Yet it gains momentum every day. “When I say that critical race theory is becoming the operating ideology of our public institutions, I am not exaggerating, wrote a senior fellow at the Manhattan Institute this week in City Journal. “[F]rom the universities to bureaucracies to K-12 school systems, critical race theory has permeated the collective intelligence and decision-making process of American government, with no sign of slowing down.”

What the majority lacks is courage. Courage to stand one’s ground in the face of a mob. Courage to speak up to politicians, administrative officials and school boards. From that City Journal column:

Above all, we must have courage, the fundamental virtue required in our time: courage to stand and speak the truth, courage to withstand epithets, courage to face the mob, and courage to shrug off the scorn of elites. When enough of us overcome the fear that currently prevents so many from speaking out, the hold of critical race theory will begin to slip. And courage begets courage. It’s easy to stop a lone dissenter; it’s much harder to stop 10, 20, 100, 1,000, 1 million, or more who stand up together for the principles of America. Truth and justice are on our side. If we can muster the courage, we will win.

“I Refuse to Stand By While My Students Are Indoctrinated.” That’s the title under which a New York teacher last week published his case for why children “are afraid to challenge the repressive ideology that rules our school.”

Read his column. Find your own way to show the courage he has. Do not stand by while our children are indoctrinated.

Tyler Durden Sun, 04/25/2021 - 23:30

Yuan Forward Sales Surge To Highest Since 2015

Another month, another gaping discrepancy between Chinese FX reserve data and actual yuan cross-border flows.

In the same month that PBOC data revealed that FX reserves stood at US$3,170bn in March, $35BN lower than February (granted mostly on valuation effect, which when netted out implies that FX reserves declined by $4bn), Goldman has calculated that net FX flows were actually $34BN into the Chinese economy.

According to Goldman's Maggie Wei, in March, there was $2BN in net inflows via onshore outright spot transactions,and US$7BN in net inflow via freshly entered and canceled forward transactions, while a separate SAFE dataset on “cross-border RMB flows” shows that domestic banks saw net RMB receipt of $25BN from onshore to offshore. Combining the three, Goldman's "preferred" FX flow measure suggests a total of $34BN inflows in March, which while slightly slower than February, was a mirror image of the picture implied from FX reserve data.

Digging deeper into the numbers reveals that FX inflows related to the goods trade surplus remained strong at $26BN in March, even higher than the single month goods trade surplus at $14bn in March. The FX conversion ratio for net goods trade surplus in Q1 2021 stood at 81%, higher than 45% in Q4 2020. Services trade related FX outflow in March was modestly higher at $6BN, vs $2BN in February.

FX inflows notwithstanding, China’s net foreign exchange settlement, which the US Treasury considers a more comprehensive proxy for intervention because it includes the activities of China’s state-owned banks, and surged to about $180 billion last year, remained persistently wide compared to the modest decline in PBOC FX assets. As a reminder, historically these two data series have tracked each other closely but a striking divergence emerged since last November.

Commenting on China's FX shennanigans, Bloomberg's Ye Xie notes that yuan forward transactions surged as corporates hedged their currency exposure, with settlement data showing that yuan-forward sales surged in March to the highest since 2015 as China’s currency weakened during the period. "The increased trading of currency derivatives is a healthy development, suggesting Chinese companies have become more prudent managing their currency exposure" according to Wang Chunying, spokeswoman for the State Administration of Foreign Exchange.

As Xie summarizes the above, hedging activities soared since October when regulators cut the reserve requirement to make it less costly to sell the yuan in forwards. It may have helped lower currency volatility. Separately, the settlement data showed net foreign currency inflows continued last month, albeit at a slower pace, as strong exports offset small bond outflows.

Tyler Durden Sun, 04/25/2021 - 23:00

Here's What Data Says About The Myth Of "Racism" In Police Killings

Authored by John Lott Jr. via RealClearPolitics.com,

President Biden claimed that Derek Chauvin's conviction on Tuesday "ripped the blinders off for the whole world to see the systemic racism" of police. With the police shooting that same day of 16-year-old girl in Columbus, Ohio, the White House again pushed the racism claim, noting that this was just another example of how "police violence disproportionately impacts Black and Latino people."

But where is the evidence for these claims? In Chauvin's trial, the prosecution never once mentioned evidence that the now-former officer is racist. A day after the verdict, the Biden administration announced plans for a pattern-or-practice investigation of the Minneapolis Police Department to determine if there is such racism, but the administration’s comments sure sound as if they have already determined the study’s outcome.

In the other case, body camera footage released by police revealed that Ma'Khia Bryant was fatally shot as she charged another girl with a knife. The officer shot one black girl in an attempt to save what appears to be another black girl from being stabbed.

Politicians such as Biden as well as the media have helped create a biased perception that is far from the reality of shootings by police.

In a study, the Crime Prevention Research Center (where I serve as president) found that when a white officer kills a suspect, the media usually mention the officer's race. When the officer is black, news coverage rarely mentions that detail.

And there's evidence that blacks aren't all that fed up with the police. A July 2017 Quinnipiac University poll in New York City found that blacks strongly support the cops in their neighborhoods — 62% approved compared to just 35% who disapproved. That approval rating was 11 percentage points higher than for the New York City Police Department as a whole. It makes sense that people only know their local cops, and rely on media reports to form impressions about other areas they are less familiar with. A 2020 Monmouth University poll found that 72% of both blacks and whites are satisfied with their local police.

There is other evidence. If blacks don't trust the police, they presumably won't turn to them as frequently as whites when a crime occurs. Yet, blacks report violent crime to police at a higher rate than either whites or Hispanics, even when controlling for income levels. Low- and middle-income blacks are about 11 percentage points more likely to report violent crimes to police.

Through extensive research, we found 2,699 police shootings across the nation from 2013-2015. That's far more than the FBI found, since its data is limited to only 1,366 cases voluntarily provided by police departments. The FBI data has other shortcomings, too: It disproportionately includes cases from heavily minority areas, giving a misleading picture of the frequency at which blacks are shot.

Our database keeps track of characteristics of both the suspect and the officer involved in each shooting, local violent crime rates, demographics of the city and police department, and many other factors that help determine what causes police shootings.

Officers kill blacks at a higher rate than their share of the population: 25% of the suspects killed were black, 45% white, and 16% Hispanic. As for where the deaths are occurring, black suspects tend to die in heavily black larger cities with populations averaging over 600,000, while whites are killed in smaller cities with an average population of 250,000. 

White suspects were slightly more likely to be holding a firearm than blacks (63% to 61%). Black and white suspects were both equally likely to be involved in violent crime when they lose their lives at an officer’s hands, though blacks who died were more likely to be involved in drug or property offenses. But police generally have more challenging jobs in cities where blacks are killed. The average city where blacks are killed had a 61% higher violent crime rate and 126% higher murder rate than where the average white was killed.

After accounting for these and other factors, including averaged cultural differences in police departments, we found that black officers were at least as likely as their white peers to kill black suspects, but that black officers were more likely to kill unarmed blacks than were white officers.

The data offered some clues for how to reduce these fatal incidents. It can’t explain all instances, such as George Floyd’s case where Floyd resisted arrest by four officers, or possibly the Columbus case where an attack by a knife-wielding suspect was already in process. But, usually, when more police are present at the scene of a confrontation with a suspect, the odds of a fatality decline. There is about a 14% to 18% reduction in the suspect's chances of being killed for each additional officer present. Officers feel more vulnerable if they are alone at the scene, making them more likely to use deadly force. Also, suspects may be emboldened and resist arrest when fewer officers are present.  

It is a dangerous fiction that prejudiced white officers are going out and disproportionately killing black men.

But that doesn't mean that measures can't be taken to reduce shootings by police. The most obvious step would be to increase the number of officers responding to a call, to avoid forcing lone, vulnerable officers to make life-or-death decisions.

Tyler Durden Sun, 04/25/2021 - 22:30

"It's Like Hand To Hand Combat" - Doctors Mull Strategies For Boosting Vaccine Demand Amid Fears 'Herd Immunity' Now Out Of Reach

Now that President Biden has reached his goal of 200M COVID-19 jabs administered across the US, Americans should expect fewer updates about the vaccination effort. Why? Because from here on out, the pace of new vaccinations is expected to slow substantially now that the vaccine rollout has hit a critical inflection point. As former FDA Director (and current Pfizer board member) Dr. Scott Gottlieb predicted a few weeks back, the US will "struggle" to reach herd immunity.

Since then, mass vaccination centers have been shut down in states across the US. Even in wealthy, deep-blue states like Connecticut, local officials are warning that demand for the new jabs is waning. In many states, unused vaccines are beginning to pile up, leaving thousands of jabs to spoil, while more than 100 countries have yet to receive even a single jab.

In CT, the New Haven Register carried a warning from a top doctor from the Yale University health-care system. Dr. Thomas Balcezak, the chief clinical officer at Yale-New Haven, warned that CT might not reach herd immunity.

He spoke about the slackening in demand:  "Right around 55 percent of the state vaccinated: half is there and half has not yet been vaccinated."

"A slack in that demand tells us the second half of the state isn’t seeking vaccinations with the same ferocity as the first half did. I hope that trend changes," Balcezak said.

And that's a problem, Dr. Balcezak added, because the expectations for herd immunity require between 70% and 80% of the adult population to be vaccinated. And if that level isn't achieved quickly enough, mutant strains of the virus might be able to get the upper hand, as more vaccinated individuals fall ill despite being - in theory - immune to "severe" effects of the illness.

Over the weekend, the New York Times published a story warning that the federal government is already considering new tactics to encourage more people to accept the vaccines, including allowing people to receive the jabs directly from their own doctors. Unfortunately, for these new strategies to be implemented country-wide, a new logistical obstacle will need to be overcome: vaccines will need to be shipped in much smaller batches.

"If you think of this as a war,” said Michael Carney, the senior vice president for emerging issues at the U.S. Chamber of Commerce Foundation, "we’re about to enter the hand-to-hand combat phase of the war."

However Pfizer, Moderna and J&J - which just received permission to continue doling out the shots despite concerns about rare and deadly blood clots - decide to tackle these problems, it has become clear that the timeline for "herd immunity" sketched out below looks almost impossibly optimistic.

To try and make it easier for adults hoping to get vaccinated, President Biden this week urged employers to allow their workers paid time off, if necessary, to allow them to get vaccinated.

Whether these new targeted methods will make a difference in vaccination rates is unclear. As the NYT pointed out, vaccination rates vary widely at the state level.

But the distribution is uneven: While New Hampshire has given at least one shot to 59 percent of its citizens (that figure includes children, most of whom are not yet eligible), Mississippi and Alabama are languishing at 30 percent.

The laggards are trying to adjust. In Louisiana, where 40 percent of the adult population has had one shot even though all adults have been eligible since March, officials are delivering doses to commercial fishermen near the docks and running pop-up clinics at a Buddhist temple, homeless shelters and truck stops. Civic groups are conducting door-to-door visits, akin to a get-out-the-vote effort, in neighborhoods with low vaccination rates.

Some southern doctors are directly emailing patients to encourage them to get vaccinated.

In Alabama, Dr. Scott Harris, the state health officer, is trying to reach rural white residents, who are mistrustful of politicians and the news media. Dr. Harris is asking doctors to record cellphone videos, with a plea: “Please email them to your patients, saying, ‘This is why I think you ought to take the vaccine.’”

According to the NYT, those in charge of the vaccine rollout have started to compare this late-stage of the adult vaccination rollout to the "ground game" seen in the final phase of a hard-fought political campaign.

White House and state health officials are calling this next phase of the vaccination campaign "the ground game,” and are likening it to a get-out-the-vote effort. The work will be labor intensive - much of it may fall on private employers - but the risk is clear: If it takes too long to reach “herd immunity," the point at which the spread of the virus slows, worrisome new variants could emerge that evade the vaccine.

"If you think of this as a war," said Michael Carney, the senior vice president for emerging issues at the US Chamber of Commerce Foundation, "we’re about to enter the hand-to-hand combat phase of the war."

But the executive director of another national health organization said these efforts might not amount to much. At the end of the day, the people who want the vaccine have had every opportunity to seek it out. What's left are people who are more skeptical of the vaccine. And the recent issues surrounding rare side effects tied to the J&J jab probably haven't helped to dissuade them.

"There are states where they feel they have hit the wall," said Michael Fraser, the executive director of the Association of State and Territorial Health Officials. "The folks that wanted it have found it. The folks that don’t want it are not bothering to find it."

Circling back to the situation in Connecticut, Dr. Balcezak pointed out that rumors about patients who suffered severe COVID-19 symptoms - or even succumbed to the virus - despite being fully vaccinated have also hurt the prospects for the rollout: there have been about a dozen cases across Connecticut where people who were fully vaccinated who nevertheless were hospitalized for COVID-19. Balcezak said one of those people later died, although the patient had "underlying respiratory illnesses."

Tyler Durden Sun, 04/25/2021 - 22:00

GOP Lawmaker Urges FBI To Reassess Decision Concluding 2017 Baseball Shooting Was "Suicide By Cop"

Authored by Samuel Allegri via The Epoch Times,

Rep. Brad Wenstrup (R-Ohio) is asking the FBI to reassess their decision to classify the June 14, 2017 baseball field shooting outside of Washington as “suicide by cop” rather than a domestic terrorism case.

Wenstrup was present when the Republican legislators were targeted by left-wing extremist James Hodgkinson, who fired over 100 rounds at them and other staff, severely injuring House Minority Whip Steve Scalise (R-La.), who was hit on the hip and recovered after many surgeries.

The letter, (pdf) which protests and asks for a reassessment, was addressed to FBI Director Christopher Wray last week and made available to reporters on Wednesday.

The shooter is known to have posted angry messages about then-president Donald Trump and other Republicans. He was wounded during gunfire exchange with Capitol Police and later died at the scene.

“According to FBI Special Agents, the attacker’s motivation was ‘suicide by cop,'” Wenstrup wrote.

“This conclusion defies logic and contradicts the publicly known facts about the perpetrator and the attack. The shooter had an extensive social media record highlighting his hatred of President Trump and Republicans. He had a list of names—including Republican Members of Congress—in his possession. Before carrying out his attack, he asked if the Members at the baseball field were Republicans or Democrats,” Wenstrup wrote.

“He was heavily armed, sought cover during the shooting, well over 100 rounds were fired, and the attacker could not have known that then-Majority Whip Steve Scalise’s security detail was present given that they were in an undercover vehicle and in plain clothes. All these facts are inconsistent with a designation of ‘suicide by cop.’”

He then expresses his frustration, saying that the FBI didn’t conduct thorough interviews at the outset of the investigation, claiming that neither he nor his colleagues were interviewed as witnesses.

“As a member who was present during the attack and the November 2017 briefing, and as a senior member of the House Permanent Select Committee on Intelligence, I request that the FBI Counterterrorism Division promptly review the investigative findings, interview all relevant witnesses, and update, as appropriate, the investigative conclusions—including an internal investigation of how the FBI reached its ‘suicide by cop’ conclusion,” Wenstrup wrote in conclusion.

Wenstrup pointed out that the  Department of Homeland Security and the Office of the Director of National Intelligence recognized the incident as an act of domestic violent extremism, where the shooter was politically motivated and deliberately targeted GOP members.

The appeal to reassess also drew support from Democrats.

“I actually would like to associate my—your comments with my interest in wanting to pursue that as well, Dr. Wenstrup,” Rep. Jackie Speier (D-Calif.), said, according to Politico.

“I’d like to second Dr. Wenstrup’s questions on the near massacre of our colleagues in 2017,” Rep. Jim Cooper (D-Tenn.) said. “So I, like my colleague, Jackie Speier, have a particular interest in that.”

House Republican Whip Steve Scalise (R-La.) uses crutches after returning to Capitol Hill for the first time after being shot in June at a congressional baseball team practice in Alexandria, Va., in Washington on Sept. 28, 2017. (Mark Wilson/Getty Images)

Scalise asserted strongly that the incident was evaluated wrongly by the FBI.

“I was shot by a deranged Leftist who came to the baseball field with a list of Congressional Republicans to kill,” he wrote on Twitter.

“This was NOT ‘suicide by cop.’ End of story.”

I was shot by a deranged Leftist who came to the baseball field with a list of Congressional Republicans to kill.

This was NOT “suicide by cop.”

End of story. https://t.co/cSGYZeQO3I

— Steve Scalise (@SteveScalise) April 21, 2021

The Epoch Times reached out to the FBI for comment.

Tyler Durden Sun, 04/25/2021 - 21:30

The Catalyst For The Next Leg Higher: Buyback Blackout Period Just Ended

Now that even Wall Street's perennial permabull, JPMorgan, has joined most other major banks including Goldman, Deutsche and Morgan Stanley in warning that the coming weeks and months could be treacherous for stocks (DB went so far as predicting a 10%+ correction in the next three months), and saying on Friday that "easy equity gains for the broad market are likely behind us" and as a result its "bullish conviction is now lower", a caution which spooked retail and hedge fund investors alike, with Goldman Prime reported on Friday that its book "saw the largest net selling in 5 weeks (-2.1 SDs), driven by short sales and long sales (4 to 1) and equally by Single Names and Macro Products."

Yet despite the selling stocks have continued to confound everyone, thanks to what we said would be yet another short squeeze, and rose back to all time highs amid mounting bearish sentiment.

And just to add to the confusion, a new catalyst has emerged which is almost assured to push the S&P decisively into record territory.

According to Goldman's John Flood, the Buyback blackout period ended on Friday, with the strategist noting what we previously discussed, namely that buyback authorizations "are already up meaningfully vs prior year YTD values." To wit, "2021 YTD authorizations are +75% vs 2020 YTD auths, +24% vs 2019 auths, and +26% vs 2018 auths (reminder, 2018 was a record buyback year)."

Of course, we already knew this as we reported last month that "Stock Buybacks Soar To All Time High"...

... a reminder of just how short collective memory is, as barely a year ago, the media, Congress and the broader public all rightfully slammed US corporations for having spent the bulk of their cash in the past decade on stock buybacks, and not on building a rainy day fund... which is why everyone demanded a government bailout in the immediate aftermath of the covid crisis.

And since nothing ever changes on Wall Street, expect another burst in buybacks in the coming weeks - much of it funded by the trillions in new corporate debt issued over the past year - not only propping up risk but pushing it to a new all time high.

How high? Here are the details in terms of Goldman desk flows: "we are currently running 1.6x vs 2020 FY ADTV, 1.0x vs 2019 FY ADTV, and 0.9x vs 2018 FY ADTV and we expect this to continue to pick up as we move into open window starting next week. So in other words, 2021 has more authorizations than 2018 (record buyback year), but is only pacing .9x the ADTV (actual purchases) of 2018 so far. That could suggest more purchases to come, or corporates saving their ammo."

What could they be saving their ammo for? Why the next 5-10% pullback of course, at which point they will instruct their banks - such as Goldman - to lift every offer, quickly recovering all losses and pushing the  market to its next all time high.

Tyler Durden Sun, 04/25/2021 - 21:00

No, Dogecoin Does Not Compete With Bitcoin

Authored by Peter St.Onge via CryptoEconomy substack,

Elon Musk’s dogecoin tweets have given the coin a nice run, sending its price from fractions of a penny - where it traded for roughly 8 years - to 40 cents on April 20th before falling back. It was enough to yank bitcoin skeptic Peter Schiff from watching his gold portfolio do nothing - also for roughly 8 years - to crow that “dogecoin is eating bitcoin” and begging dogecoiners to put laser beams on their nose.

So what’s the story, is dogecoin set to overtake bitcoin and then USD to become the world’s reserve currency?

Very wow, but no.

The short answer is because dogecoin and bitcoin serve fundamentally different purposes: at best, dogecoin is one of many medium of exchange (MOE) coins, while bitcoin stands alone as a stable and secure store of value (SOV) where people park their life savings. In other words, dogecoin doesn’t compete with bitcoin any more than your dinner plates compete with your refrigerator, pantry, or freezer.

Let’s first get out of the way that dogecoin was started as a joke. Critics use this to variously criticize dogecoin itself or to criticize bitcoin as joke-by-contagion. Alas, the universe does not care why you invented something. Gunpowder was invented for fireworks, not war, and coca cola was invented to get high, not for kids to enjoy with a Happy Meal. Twitter was invented as a podcasting platform, Facebook as a knock-off Hot or Not, and Wikipedia as the most authoritative source of human knowledge. The universe does not care why you invented something, users decide.

So, with that, what is dogecoin? Like bitcoin, it’s a POW (“proof of work”) coin where transaction processors vote on the rules of the game including how new coins are produced. There are 129 billion dogecoins in existence, with 5 billion new coins issued per year, for 3.9% annual supply inflation. The 5 billion is constant, meaning dogecoin’s inflation rate gets lower and lower as new coins add to a larger base—in 4 years, it falls to 3.3%. 

For comparison, there are 18.6 million bitcoins in existence, growing at 330,000 per year, for annual supply inflation of 1.7% per year. Bitcoin’s supply inflation also declines, halving every four years, so in 2024 supply inflation falls under 1% per year when it will be lower than gold’s supply inflation of about 1.5% per year.

Next up, speed and fees. While bitcoin creates a new block of transaction records every 10 minutes, dogecoin creates one every 1 minute. However, given dogecoin’s smaller ecosystem (market capitalization, miners) you’d want to wait for multiple block confirmations to be sure. The crypto exchange Kraken, for example, requires 40 dogecoin blocks—40 minutes—before considering a deposit valid, the same time they require for bitcoin. So it’s a functional tie on speed.

Next, fees. Dogecoin has been very cheap until recently; a year ago it cost a fifth of a penny to send a transaction. It does have slightly more capacity than bitcoin, but the main reason was almost nobody was using dogecoin, so it was like buying space on an empty cargo ship. Alas, now that Elon’s tweets have lifted dogecoin from the muck, those fees are rising, today at $1.09. More on this later, since it goes to dogecoin’s long term prospects as an MOE.

So far, a Peter Schiff might say “sure, it all sounds like a bitcoin clone.” And that brings us to the important question: how people use it. We can read this directly off valuation as a ratio of usage. This tells us, fundamentally, if people are using dogecoin to store savings like they do in bitcoin, or if they’re simply using dogecoin for transactions. 

On that count, dogecoin today is going for 35c, making those 129 billion coins worth $45 billion. While bitcoin’s 18.6 million coins are currently worth $1 trillion. Meanwhile, CoinMarketCap says 66 billion dogecoins are currently traded daily, worth about $23 billion, and 1 million bitcoins are traded daily, worth about $55 billion. Divide the two and you get a market value of bitcoin at 20x daily volume, but just 2x for dogecoin. This is telling us, loud and clear, that dogecoin is not a store of value. It may not even be a very good medium of exchange, since pure MOE coins like monero or dash trade around 4x daily volume.

Why does the market think dogecoin’s a lousy place to park your life savings? We can speculate that, given it was essentially abandoned for 8 years and is populated by charming but low-commitment users, it cannot begin to compete with bitcoin’s social layer, network effects, brand trust and loyalty, holder dedication and stability, and even bitcoin’s enormous energy use that increases security by increasing the cost of an attack. This last point is important considering that sovereign attack has been the final battle that has killed every previous private money in history.

So, if dogecoin isn’t seen as an SOV for solid reasons, it means it doesn’t even compete with bitcoin. Any more than your dinner plates compete with your fridge. Both are inputs to eating food, yes, but they involve different stages with negligible overlap. For example, if you buy a nicer set of plates you don’t empty out the fridge, and if you buy a bigger fridge or move it where you can reach it easier, you don’t feel the need to go buy smaller plates. And, germane to market capitalization, the vast majority of the food you own is in your fridge or even freezer (“cold storage”), not sitting on a plate at any given moment. Just as the vast majority of people’s life savings are in a bank, house, or stocks, not sitting in their pants pocket to be whipped out at 7/11.

It’ll have to be a separate article, but the wider lesson here - beyond dashing Peter Schiff’s dreams of a Dogecoin Standard - is that bitcoin skeptics are way off when they complain about bitcoin fees or 10 minute blocks. Bitcoin doesn’t pretend to be a medium of exchange, and it hasn’t for years. Users hold it to be a store of value, and it turns out it’s a damn fine one. Nothing else comes close, and certainly not dogecoin.

So if dogecoin doesn’t compete with bitcoin, who does it compete with? Simple: MOE coins and exchanges. Considering these solutions work in seconds and have fees even lower than dogecoin’s pre-Elon days, it’s not clear why one would bother. In which case dogecoin would be, not even an MOE, but that streetwalker among cryptocurrencies: a speculative coin. One whose life’s purpose is, in practice, speculating on Elon Musk joke tweets and then, like a cicada, going dormant for 8 years. 

Can dogecoin still go up? Sure, speculative assets are the Rule 34 of the financial world - they can do anything. But the fundamentals aren’t there to sustain durable demand for dogecoin, certainly not as a store of value and, I think, not even as a medium of exchange.

Tyler Durden Sun, 04/25/2021 - 20:30