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Fed, IMF Sound Warning That More QE Could Lead To "Unintended Consequences"

Fed, IMF Sound Warning That More QE Could Lead To "Unintended Consequences" Tyler Durden Wed, 11/25/2020 - 15:44

Five years ago we wrote that the world’s most exclusive club has eighteen members. They gather every other month on a Sunday evening at 7 p.m. in conference room E in a circular tower block whose tinted windows overlook the central Basel railway station. Their discussion lasts for one hour, perhaps an hour and a half. Some of those present bring a colleague with them, but the aides rarely speak during this most confidential of conclaves. The meeting closes, the aides leave, and those remaining retire for dinner in the dining room on the eighteenth floor, rightly confident that the food and the wine will be superb. The meal, which continues until 11 p.m. or midnight, is where the real work is done. The protocol and hospitality, honed for more than eight decades, are faultless. Anything said at the dining table, it is understood, is not to be repeated elsewhere.

"The Tower of Basel" - BIS headquarters.

Few, if any, of those enjoying their haute cuisine and grand cru wines— some of the best Switzerland can offer—would be recognized by passers-by, but they include a good number of the most powerful people in the world. These men—they are almost all men—are central bankers. They come to Basel to attend the Economic Consultative Committee (ECC) of the Bank for International Settlements (BIS), which is the bank for central banks. 

The conclaves have played a crucial role in determining the world’s response to the global financial crisis. "The BIS has been a very important meeting point for central bankers during the crisis, and the rationale for its existence has expanded,” said former BOE governor Mervyn King. “We have had to face challenges that we have never seen before. We had to work out what was going on, what instruments do we use when interest rates are close to zero, how do we communicate policy. We discuss this at home with our staff, but it is very valuable for the governors themselves to get together and talk among themselves.”

Those discussions, say central bankers, must be confidential. “When you are at the top in the number one post, it can be pretty lonely at times. It is helpful to be able to meet other number ones and say, ‘This is my problem, how do you deal with it?’” King continued. “Being able to talk informally and openly about our experiences has been immensely valuable. We are not speaking in a public forum. We can say what we really think and believe, and we can ask questions and benefit from others.”

The conversation is usually stimulating and enjoyable, say central bankers. The contrast between the Federal Open Markets Committee at  the US Federal Reserve, and the Sunday evening G-10 governors’ dinners was notable, recalled Laurence Meyer, who served as a member of the Board of Governors of the Federal Reserve from 1996 until 2002. The chairman of the Federal Reserve did not always represent the bank at the Basel meetings, so Meyer occasionally attended. The BIS discussions were always lively, focused and thought provoking. “At FMOC meetings, while I was at the Fed, almost all the Committee members read statements which had been prepared in advance. They very rarely referred to statements by other Committee members and there was almost never an exchange between two members or an ongoing discussion about the outlook or policy options. At BIS dinners people actually talk to each other and the discussions are always stimulating and interactive focused on the serious issues facing the global economy.”

All the governors present at the two-day gathering are assured of total confidentiality, discretion, and the highest levels of security. The meetings take place on several floors that are usually used only when the governors are in attendance. The governors are provided with a dedicated office and the necessary support and secretarial staff. The Swiss authorities have no juridisdiction over the BIS premises. Founded by an international treaty, and further protected by the 1987 Headquarters Agreement with the Swiss government, the BIS enjoys similar protections to those granted to the headquarters of the United Nations, the International Monetary Fund (IMF) and diplomatic embassies. The Swiss authorities need the permission of the BIS management to enter the bank’s buildings, which are described as “inviolable.”

(For more on the secretive group that runs the world read our background post on the BIS).

* * *

It is perhaps at one of these recent dinner events at the most important dining room table in the world that the world's central bankers saw a variant of the chart below, which shows that unprecedented expansion of central bank balance sheets:

What the chart shows is that, as BofA CIO Michael Hartnett put it so eloquently two weeks ago, as of this moment, central banks are purchasing an unprecedented $1.2 billion in assets every single hour... and there is no end in sight.

As another strategist, Morgan Stanley's Matthew Horbach, framed this firehose of liquidity just the 8 DM central banks which will be active in 2021 are expected to add liquidity worth 0.66% of annual nominal GDP, on average, every month in 2021. "That is a rapid pace of global liquidity injection, the likes of which we haven't seen outside of 2020" Hornbach casually inserts.

Needless to say, this is all very troubling not in the least because it is obviously expanding what is already the biggest asset bubble of all time: troubling, because while both US and global stocks are currently at all time highs, this has only been made possible thanks to the relentless, record firehose of central bank liquidity that is openly propping up asset prices. Indeed, we have gotten to the point where even established strategists cast aside the lies and admit that liquidity is all the matters, as Hornbach did when he said that "central bank liquidity both greases the wheels of transactional finance and changes the opportunity set available to investors."

Now, central bankers - dumb career academics as some of them may be - are not all idiots, and they clearly understand that what they are doing is merely buying time while in the process making a massive bubble even bigger, so much so that when the next crash comes, it could mean the end of fiat currency and western capitalism as we know it, especially if central banks lose what little credibility they have.

It may also explain why, amid the generally cheerful commentary in today's FOMC Minutes, according to which FOMC "participants saw the ongoing careful consideration of potential next steps for enhancing the Committee's guidance for its asset purchases as appropriate", there were two distinct warnings that the Fed's $120BN in monthly QE could lead to catastrophic consequences.

Of course, the Fed would never use alarmist language like that. Instead what the minutes did say was subdued, but just as alarming, to wit:

  • Several participants noted the possibility that there may be limits to the amount of additional accommodation that could be provided through increases in the Federal Reserve's asset holdings in light of the low level of longer-term yields, and they expressed concerns that a significant expansion in asset holdings could have unintended consequences.
  • A few participants expressed concern that maintaining the current pace of agency MBS purchases could contribute to potential valuation pressures in housing markets.

What this means translated into simple English, is that the Fed itself is starting to have doubts that its shotgun approach of stimulating the markets, or rather "the economy" as they call it, may be reaching its limits and that the next major expansion in QE could have "unintended consequences", i.e., a market crash. And just as bad, they also concede that just the current $40BN in MBS purchases could lead to another repeat of the housing bubble of 2006/2007... and its inevitable bursting.

Of course, such warnings come and go; meanwhile what the Fed also said is that for all its concerns, it will most likely continue to pump liquidity, as the central bank is absolutely mortified of another crash - as only then will its lack of tools to sustain financial markets become apparent. As such, the Fed will do everything in its power to not only short circuit the business cycle in perpetuity, but also avoid any market drops... ever again. This is what the Minutes also said:

  • Participants noted that the Committee could provide more accommodation, if appropriate, by increasing the pace of purchases or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases.
  • Alternatively, the Committee could provide more accommodation, if appropriate, by conducting purchases of the same pace and composition over a longer horizon.
  • While participants judged that immediate adjustments to the pace and composition of asset purchases were not necessary, they recognized that circumstances could shift to warrant such adjustments. Accordingly, participants saw the ongoing careful consideration of potential next steps for enhancing the Committee's guidance for its asset purchases as appropriate.
  • Few participants indicated that asset purchases could also help guard against undesirable upward pressure on longer-term rates that could arise, for example, from higher-than-expected Treasury debt issuance.

And while we understand the tight constraints under which the FOMC operates - where every word is scrutinized under a microscope - the IMF does not have such limitations. Which may explain some surprisingly honest warnings from its managing director, Kristalina Georgieva, who yesterday said that the pandemic-induced collapse in activity has put central banks under pressure to deliver more rate cuts and policy accommodation, but "more of the same is not possible and will not be sufficient today.

As Georgieva explained (clearly paraphrasing words that were spoonfed to her by someone with far greater experience with the capital markets) with rock-bottom rates and low or negative bond yields, central banks are "going back to the lab, reviewing their frameworks to identify innovative strategies and tools that will support the recovery from this crisis and beyond."

But the punchline is when she warned that "new strategies and tools might produce new side effects as well,” and "additional monetary stimulus may pose important risks to financial stability."

That's right: not only did "several participants" warn about "unintended consequences" in case of a "significant expansion in asset holdings", but the IMF explicitly now warns that additional stimulus may leads to "important risks to financial stability."

And just in case the message was missed, the IMF head next said that "monetary policy makers will need to balance a short-term boost to inflation and output against a buildup of macro-financial vulnerabilities."

Separately, Tobias Adrian, the IMF’s monetary and capital market director, issued an almost similar warning arguing that central banks should consider "not only the path of output, unemployment, and inflation, but also expected macro-financial stability, with the proposed approach capable of jointly quantifying risks to all these variables."

In summary, the IMF's recommendation was the old fallback: "Monetary policy should not and cannot do the job alone" and that "fiscal policy has a significant role to play." Which is great in a world where politics still functions; unfortunately as the hyperpolarized political environment in the US so vividly shows, major fiscal stimulus may remain a mirage until 2022 unless the Democrats win the January Georgia runoffs.

Which then means that it will once again be up to the Fed.

And while stocks and bonds have been delighted by this eventuality, surging to record highs as new trillions in QE means just one thing - even higher asset prices, one wonders if we are now on the verge of a Rubicon where, if "several participants" in the FOMC and the head of the IMF are correct, the next QE fails to lift stocks but instead triggers the next crash.

Doctors Warn Side Effects From COVID-19 Vaccine "Won't Be A Walk In The Park"

Doctors Warn Side Effects From COVID-19 Vaccine "Won't Be A Walk In The Park" Tyler Durden Wed, 11/25/2020 - 15:25

Fevers, sweats, migraines and muscle aches that last for days - these are just some of the symptoms reported by various 'Phase 3' trial participants who volunteered for the vaccine trials run by Pfizer, Moderna and others. Though AstraZeneca noted in its preliminary results that its vaccine (which uses the more traditional adenovirus vector) seemed to produce side effects that are less severe than some of its competitors.

As scientists try to ensure the US reaches a 70%+ vaccination rate (the cut-off point at which herd immunity is believed to kick in) a group of doctors just warned that public health officials and drugmakers need to be "transparent" with patients about the potential side effects of vaccination, and ensure precautions are taken to ensure patients don't skip their follow-up visit.

This is a top concern for Dr. Sandra Fryhofer of the American Medical Association, who warned that the side effects might deter many of her patients from receiving the follow-up shot. Dr. Fryhofer expressed her concerns during a virtual meeting on Monday with the CDC and representatives from various vaccine makers

"We really need to make patients aware that this is not going to be a walk in the park," Fryhofer said during a virtual meeting with the Advisory Committee on Immunization Practices, or ACIP, an outside group of medical experts that advise the CDC. She is also a liaison to the committee. "They are going to know they had a vaccine. They are probably not going to feel wonderful. But they've got to come back for that second dose."

During the meeting on Monday, Dr. Nancy Messonnier, director of the CDC's National Center for Immunization and Respiratory Diseases who frequently participated in CDC press briefings during the early days of the outbreak, said the agency would work to develop guidance if a health-care worker got a vaccine and then felt unwell the following day, since this could "impact planning on a hospital level in terms of which staff gets vaccinated which day?" she said.

Beyond ensuring hospitals aren't left in the lurch because they decided to vaccinate their entire staff at the same time, the doctors also discussed a novel strategy: using "positive" language to talk about the sideeffects. One example would be referring to side effects as a "response" to the vaccine.

Of course that won't actually do anything to mitigate the side effects.

As one might expect, some patients who participated in the study actually got upset when they didn't experience severe side effects post-vaccination, believing it was a sign they had received the placebo not the actual vaccine.

The doctors apparently brought in a anonymous North Carolina woman who participated in the Moderna study. "If this proves to work, people are going to have to toughen up," she said. "The first dose is no big deal. And then the second dose will definitely put you down for the day for sure...You will need to take a day off after the second dose."

Still, missing one day of work is certainly preferable to missing 14 days, which, as one doctor noted, is an "enormous" amount of time. 

FOMC Minutes Show Fed Split Over Asset-Purchase Plans

FOMC Minutes Show Fed Split Over Asset-Purchase Plans Tyler Durden Wed, 11/25/2020 - 14:12

The market has ripped higher since the November 5th FOMC statement (helped by vaccine hype and election hope) and it seems from the Minutes that there is some disagreement in the central planning ranks.

The key sentence in the well-managed Minutes was:

“Many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon.”

Many Fed officials saw bond-buying as insuring against risks...

Most participants favored moving to qualitative outcome-based guidance for asset purchases that links the horizon over which the Committee anticipates it would be conducting asset purchases to economic conditions.”

But there was disagreement...

A few participants were hesitant to make changes in the near term to the guidance for asset purchases and pointed to considerable uncertainty about the economic outlook and the appropriate use of balance sheet policies given that uncertainty.”

But others fear they may have reached their limit...

“Several participants noted the possibility that there may be limits to the amount of additional accommodation that could be provided through increases in the Federal Reserve’s asset holdings in light of the low level of longer-term yields, and they expressed concerns that a significant expansion in asset holdings could have unintended consequences.”


As a few hawks saw bubbles elsewhere...

“A few participants expressed concern that maintaining the current pace of agency MBS purchases could contribute to potential valuation pressures in housing markets.”

There was very little reaction in markets to the Minutes for now.

*  *  *

Full Minutes below:

Minutes of the Federal Open Market Committee, November 4-5, 2020 by Zerohedge on Scribd

Didn't We Learn This Lesson 400 Years Ago?

Didn't We Learn This Lesson 400 Years Ago? Tyler Durden Wed, 11/25/2020 - 14:10

Authored by Simon Black via,

Exactly 400 years ago, 102 Pilgrims were staring down what promised to be a brutal winter, after first coming to shore, and setting up a tiny village in Plymouth, Massachusetts.

The industrious, God-fearing Pilgrims decided to pull together and pool their resources and efforts to better survive winter. They created a commune, and elected a Governor to call the shots.

By the spring of 1621, half of the Pilgrims had died from starvation, disease, and exposure.

One of the Pilgrims, William Bradford, explained in his journal that communal living “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.”

Young single men found it unjust that they had to do all the hard work, but received no more reward for it. And wives “deemed it a kind of slavery” to be forced to do chores for men besides their husbands.

Clearly, this little experiment in collectivizing society had failed. So they reversed course, and tried something new; every man for himself.

This might sound harsh, or even counterproductive. But on the contrary, Bradford explained:

This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use… The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.

400 years later, it seems leaders have forgotten the lesson.

We are entering winter grappling with COVID-19, a lockdown-stunted economy, and as I noted Monday, millions of hungry Americans relying on food banks to survive.

And tyrannical governments seem to be doing everything they can to stop us from responding to these problems as we see fit.

We’ve been told to abandon any sense of reason, trust the experts, and “listen to the scientists”.

But this month, New England Journal of Medicine published the results of a study to test the theory that extreme lockdowns are effective at controlling the spread of COVID-19.

The study, which enforced a strict quarantine and social distancing regimen on Marine recruits, found there is no correlation between strict lockdowns and reduced COVID-19 transmission.

In fact the control group, which went about life as normal, had a lower percentage of COVID infections (1.7%) compared to the test group under strict lockdown (2%).

So, will Governors “listen to the scientists”?

Hardly. Several states are going so far as to attempt to cancel Thanksgiving– or at least place a strict limit on the number of family members you can invite to your own home to share a meal.

Oregon recently decriminalized hard drugs– invite five people over to smoke crack, and you’re all good. But if you are caught sharing a Thanksgiving meal with seven family members, you could face 30 days in jail and a $1,250 fine.

California says you can host no more than two other families, but everyone must stay outside, with guests seated six feet apart, in all directions.

The state of California will graciously allow your houseguests to enter your home… but only to use the bathroom.

(Meanwhile, the Governor of California, Gavin Newsom, was caught dining out maskless with about a dozen friends for a lobbyist’s birthday party.)

But these are just the latest authoritarian escalations, which should surprise no one.

Since March, Governors have simply been ruling by decree to shut down businesses, define who is an essential employee, and stop people from earning a living, even though courts have deemed these lockdowns unconstitutional.

But governors are ignoring the courts and imposing lockdowns anyway.

And we see the results– 11 million out of work, record consumer debt, corporate debt, and government debt, and a pandemic that has still not been controlled, despite the restrictions.

It took a 50% death rate from disease and hunger in Plymouth in the winter of 1620 to convince the Pilgrims that controlling people wasn’t saving lives, or creating prosperity.

But individual liberty accomplished what authoritarianism and communism could not.

Now more than ever people need the freedom to make their own decisions, to decide for themselves if they want to open their businesses, earn a living, and have family over to share a Thanksgiving meal.

And if those basic freedoms which we all took for granted just one year ago seem out of reach, take one more lesson from the Pilgrims.

They hopped in a tiny wooden boat, and crossed the Atlantic at great personal risk just to have a shot at building a free life by their own design.

Today, it is not nearly as dangerous or difficult to find greener pastures.

Just removing yourself from a city goes a long way, as does settling amongst neighbors who aren’t ready to turn you in to the Gestapo for celebrating Thanksgiving.

But also, don’t be afraid to look overseas.

When people think that your personal liberty is a threat to them, it makes sense to at least consider the possibility that at some point, your home country may no longer be right for you.

*  *  *

On another note… We think gold could DOUBLE and silver could increase by up to 5 TIMES in the next few years. That's why we published a new, 50-page long Ultimate Guide on Gold & Silver that you can download here.

"Compliance Units" - Maryland Police Partner With Local Officials To Enforce Virus Rules

"Compliance Units" - Maryland Police Partner With Local Officials To Enforce Virus Rules Tyler Durden Wed, 11/25/2020 - 13:45

Besides Maryland Governor Larry Hogan (R) telling inhabitants of the Mid-Atlantic state this week that they have 'no constitutional right' to refuse wearing a mask during the COVID-19 pandemic, the governor has also dispatched "compliance units" to enforce coronavirus safety measures at businesses, including bars and restaurants. 

Starting at 5 p.m. Wednesday, Maryland State Police and local officials will combine forces in "high-visibility compliance units" to monitor capacity levels, mask-wearing, and social distancing at bars and restaurants, reported WBAL TV

For the first time since June, the state recorded 32 new virus-related deaths in a single day - also reporting 4,325 new cases - adding to total cases of more than 185,000. The positivity rate of 6.6%, makes it a red zone state. 

After months of declining cases, the resurgent virus has forced Hogan to reimpose harsh restrictions on businesses and deploy compliance units that will start in Baltimore and Frederick counties. 

"We don't look to shut down places immediately, and in some areas of the state, we will have the health department with us; however, again, it is about educating, see if we can get that business into compliance," Maryland State Police Sgt. Travis Nelson said.

Last week, Hogan said the virus was beginning to ravage the state: 

"We are in a war right now, and the virus is winning. Now more than ever, I am pleading with the people of our state to stand together a while longer to help us battle this surging virus," he said.

Compliance units are expected to operate statewide in the near term. State troopers will work with local health departments and liquor board inspectors to enforce new restrictions. 

"The intent is really to find the major violators of these public health orders," Nelson said. 

A business operator who breaches the new public health measures could face a $5k fine and possibly one year in jail.

"If somebody is intentionally violating the orders, we are going to give them a written notice that says this is what you have to do if you want to stay open," Nelson said. "If that is violated, then the health department will issue a closure order. At that point, the business is required to remain closed until such time the health department feels that it is safe for them to reopen."

While many small businesses in the state have been devastated by the virus pandemic shutdowns - the question remains just how many business operators will follow the new rules, or if some are willing to incur the $5k fine and risk jail just to keep the cash flow coming in amid a covid winter the threatens many with imminent bankruptcy. 

Months ago, a Maryland man was sentenced to one year in jail for a series of pandemic parties he hosted in late March. 

Our Frustrations Run Far Deeper Than COVID Lockdowns

Our Frustrations Run Far Deeper Than COVID Lockdowns Tyler Durden Wed, 11/25/2020 - 13:20

Authored by Charles Hugh Smith via OfTwoMinds blog,

The reality is the roulette wheel is rigged and only chumps believe it's a fair game.

It's easy to lay America's visible frustrations at the feet of Covid lockdowns or political polarization, but this conveniently ignores the real driver: systemic unfairness. The status quo has been increasingly rigged to benefit insiders and elites as the powers of central banks and governments have picked the winners (cronies, insiders, cartels and monopolies) and shifted the losses and risks onto the losers (the rest of us).

We now live in the world the 19th-century French economist Frederic Bastiat so aptly described: 

"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."

As I noted in The One Chart That Predicts our Future, ours is a two-tier society and economy with a broken ladder of social mobility for those trying to reach the security of the technocrat class and a well-greased slide for everyone who trips and slides from relative security down to the ever-expanding ALICE-precariat class: assets limited, income constrained, employed.

As Bastiat observed, those rigging the system to benefit themselves always create a legal system that lets them off scot-free and a PR scheme that glorifies their predation as well-deserved rewards that are the natural due of their enormous appetite for hard work and innovation.

You know, hard work and innovation like this:

JPMorgan Makes $1 Billion From Gold Trading After Paying $1 Billion Fine For Manipulating Gold Trading.

Embezzling a couple billion dollars also earns you a get out of jail free card: none of the perps in Wall Street's skims, scams and frauds ever gets indicted, much less convicted, and none of Wall Street's legalized looters ever goes to prison.

And this is a fair and just system? Uh, right. Meanwhile, the reality is the roulette wheel is rigged and only chumps believe it's a fair game. Those who know it's rigged have essentially zero agency (control / power) or capital to demand an unrigged game or finagle their way into the elite class doing the skimming.

The net result is soaring frustration with a patently unfair system that's touted as the fairest in the entire world. Gordon Long and I do a deep dive into the frustrations with systemic unfairness in our new video, The Frustrations of Unfairness Are Reaching a Boiling Point.

The key takeaway in my view is the unfairness isn't limited to the economy, society or politics-- it's manifesting in all three realms. It isn't just frustration with domestic issues--the global economic order is also a source of unfairness and powerlessness.

We each drew up a list of specific drivers of unfairness / frustration. Here's my list:

And here's Gordon's list:

There is much more in our presentation. These are the dynamics that are tearing apart our social cohesion and that will soon start destabilizing the economy--regardless of how much "money" the Federal Reserve prints.

*  *  *

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Global Stocks Set For Best Month Ever As Dollar Dumps Near 3-Year Lows

Global Stocks Set For Best Month Ever As Dollar Dumps Near 3-Year Lows Tyler Durden Wed, 11/25/2020 - 13:15

With just a few days (of illiquid markets) to go, global stocks (MSCI World) is set for its greatest monthly return ever...

Source: Bloomberg

As the dollar dumps to its weakest against its fiat peers since April 2018...

Source: Bloomberg

Small Caps are outperforming this week (continuing an enormous month); Nasdaq is lagging but still up 2% this week...

The Dow is also having its best month since Jan 1987...

Source: Bloomberg

Which sent "Extreme" greed to "Extremer" greed...

Source: CNN

This is easy!!

Small Caps have dominated mega-tech this month... but did they stumble at resistance?

Source: Bloomberg

Energy stocks gave a little back today but remain up yuuuge in November. Utes are the laggards but are also up on the month...

Source: Bloomberg

Momentum staged a very small comeback relative to value today, but it's been an ugly month...

Source: Bloomberg

Treasury yields fell today but remain modestly higher on the week (2y unch, 30Y +8bps)...

Source: Bloomberg

Bitcoin was modestly lower on the day, back below $19,000, but still up large on the week...

Source: Bloomberg

Its been an ugly month for PMs as copper and crude exploded higher... hope!

Source: Bloomberg

Gold futs managed to bounce off their 200DMA and back above the $1800 level...

WTI surged back to almost $46 today - its highest in 8 months...

Finally, we note that investors should really be giving thanks to just one 'thing' this holiday... Global Central Banks!!

Source: Bloomberg

The best month ever for global stocks on the back of $14 trillion in global liquidity pukage for the last few months.

And you should probably ignore this too...

Source: Bloomberg

Oh and Maradonna died... I guess the 'hand of god' finally caught up with him.

Have a great Thanksgiving.

Demanding Silicon Valley Suppress "Hyper Partisan Sites" Over MSM News Is Fraud: Greenwald

Demanding Silicon Valley Suppress "Hyper Partisan Sites" Over MSM News Is Fraud: Greenwald Tyler Durden Wed, 11/25/2020 - 12:45

Authored by Glenn Greenwald via,

Due in part to a self-interested desire to re-establish their monopoly on discourse by crushing any independent or dissenting voices, and in part by a censorious and arrogant mindset which convinces them that only those of their worldview and pedigree have a right to be heard, they largely devote themselves to complaining that Facebook, Google and Twitter are not suppressing enough speech. It is hall-monitor tattletale whining masquerading as journalism: petulantly complaining that tech platforms are permitting speech that, in their view, ought instead be silenced.

In Tuesday’s New York Times, three of those censorious tech reporters — Kevin Roose, Mike Isaac, and Sheera Frenkel — published an article on Facebook’s post-election deliberations over how to alter its algorithms to prevent the spread of what they deem “misinformation” regarding the election. The most consequential change they implemented, The New York Times explained, was one in which “hyperpartisan pages” are repressed in favor of promoting “a spike in visibility for big, mainstream publishers like CNN, The New York Times and NPR” — a change the Paper of Record heralded as having fostered “a calmer, less divisive Facebook.”

More alarmingly, the NYT suggested (i.e., prayed) that these changes, designed by Facebook as an election-related emergency measure, would instead become permanent. Marvel at these two paragraphs and all of tenuous and self-serving assumptions buried in them:

The conceit that outlets like The New York Times, CNN and NPR are the alternatives to “hyper-partisan pages” is one you would be eager to believe, or at least want to induce others to believe, if you were a tech reporter at The New York Times, furious and hurt that millions upon millions of people would rather hear other voices than your own, and simply do not trust what you tell them. Inducing Facebook to manipulate the algorithmic underbelly of social media to artificially force your content down the throats of citizens who prefer to avoid it, while rendering your critics’ speech invisible — all in the name of reducing “hyper-partisanship,” “divisiveness,” and “misinformation” — is of course a highly desirable outcome for mainstream outlets like the NYT.

The problem with this claim is that it’s a complete and utter fraud, one that is easily demonstrated as such. There are few sites more “hyper-partisan” than the three outlets which the NYT applauded Facebook for promoting. In the 2020 election, over 70 million Americans — close to half of the voting population — voted for Donald Trump, yet not one of them is employed by the op-ed page of the “non-partisan” New York Times and are almost never heard on NPR or CNN. That’s because those news outlets, by design, are pro-Democratic-Party organs, who speak overwhelmingly to Democratic readers and viewers.

It is hard to get more partisan than the news outlets which the NYT tech reporters, and apparently Facebook, consider to be the alternatives to “hyper-partisan” discourse. In April, Pew Research asked Americans which outlet is their primary source of news, and the polling firm found that the audiences of NPR, CNN and especially The New York Times are overwhelmingly Democrats, in some cases almost entirely so:

As Pew put it: “about nine-in-ten of those who name The New York Times (91%) and NPR (87%) as their main political news source identify as Democrats, with CNN at about eight-in-ten (79%).” These outlets speak to Democrats, are built for Democrats, and produce news content designed to be pleasing and affirming to Democrats — so they keep watching and buying. One can say many things about these news outlets, but the idea that they are the alternatives to “hyper-partisan pages” is the exact opposite of the truth: it is difficult to find more hyper-partisan organs than these.

Then there is the question of who does and does not spread “misinformation.” It is rather astonishing that the news outlets that did more than anyone to convince Americans to believe the most destructive misinformation of this generation: that Saddam had WMDs and was in an alliance with Al Qaeda — The New York Times, The Atlantic, NBC and The New Yorker — have the audacity to prance around as the bulwarks against misinformation rather than what they are: the primary purveyors of it.

Over the last four years, they devoted themselves to the ultimate deranged, mangled conspiracy theory: that the Kremlin had infiltrated the U.S. and was clandestinely controlling the levers of American power through some combination of sexual and financial blackmail. The endless pursuit of that twisted conspiracy led them to produce one article after the next that spread utter falsehoods, embraced reckless journalism and fostered humiliating debacles. The only thing more absurd than these hyper-partisan, reckless outlets posturing as the alternatives to hyper-partisanship is them insisting that they’re the only safeguards against misinformation.

Note how insidiously creepy is The New York Times’ description of a censored, regulated internet. They call it “a vision of what a calmer, less divisive Facebook might look like,” and claim an unnamed Facebook employee described it as “a nicer news feed.”

Yes, discourse that is centralized and regulated, where no dissent is tolerated, where alternative voices are silenced, is always “calmer” and “less divisive.” That’s always the core goal of censorsing speech and ideas: to eliminate “divisiveness” and to pacify the population (“calmer” and “nicer”). That is always the result when orthodoxies imposed downward from the most powerful institutions of authority can no longer be meaningfully challenged.

The censorious mentality being peddled with increasing aggression is always chilling and dangerous. That it is media outlets — which ought to be the most vocal champions of free discourse — instead taking the lead in begging and pressuring Silicon Valley to censure the internet more and more is warped beyond belief. The internet should be free and left alone, especially by those with their record of deceit and propaganda.

Indeed, if we are to have it an internet controlled from above by unseen tech overlords in the name of eliminating “hyper-partisanship” and “disinformation” and fostering a “calmer” and “nicer” population, the sites now being artificially and manipulatively promoted are the absolute last ones who can credibly claim entitlement to that benefit.

Slack Soars 30% After Reports Of Salesforce Buyout Talks

Slack Soars 30% After Reports Of Salesforce Buyout Talks Tyler Durden Wed, 11/25/2020 - 12:25

Update (1150ET): Slack shares are trading again, and they're up a staggering 30% even though the deal isn't anywhere near a sure thing.

Salesforce, meanwhile, is down 4%.

This could present an intriguing merger arbitrage opportunity for anybody who is still...trying to make money that way...since the end of the year is often a popular time for deals, and with stocks at record highs and rates still anchored, companies have the incentive to put some money to work.

Speaking on CNBC, Dan Ives said this deal "would make a lot of strategic sense [for Salesforce] as they look to penetrate on the personal collaboration front" creating what's essentially a second major player rivaling only MSFT.

* * *

Slack shares soared Wednesday, forcing a halt during an already abbreviated session, on news that software as a service pioneer and newly minted Dow 30 member Salesforce has held talks to buy the messaging/workflow company.

Any deal, according to CNBC, would likely value Slack at more than its current market capitalization of $17 billion and represent Salesforce's largest acquisition ever. There is no guarantee the talks will lead to a deal, however.

Slack shares were halted after soaring 7% higher.

While shares of Salesforce slumped, dragging the Dow lower.

As Slack shares soared, the joke was on the Twitter bulls who had held out hope that Salesforce might buy Twitter instead. Salesforce CEO Mark Benioff took a close look at Twitter three years ago, but eventually revealed that shareholders were against such a deal. Interestingy, Benioff later revealed in his book that he slipped on a curb and sliced his leg open on his way to a meeting about securing financing for a Twitter buyout, which he took as a sign that he should listen to his advisors and abandon the deal. 

Watch Live: Trump Tells PA Hearing "Election Has To Be Turned Around"

Watch Live: Trump Tells PA Hearing "Election Has To Be Turned Around" Tyler Durden Wed, 11/25/2020 - 12:22

Update (1445ET): President Trump joined the PA hearing by phone and was immediately on the offense, saying that "this is an election we won easily. We won it by a lot. This election has to be turned around."

“What we saw on November 3rd was not the United States of America. Democrats cheated. It was a fraudulent election. It would be very easy for me to wait 4 years and try again. We can't wait for 4 years. Don't be intimidated by these people. They don't love our country!"

"They kept poll watchers in pens in Philadelphia and then they threw them out of the building. You couldn’t see a thing on those cameras. They could have been playing a baseball game."

"It's a disgrace this is happening to our country. We got 11 million more votes than we did 4 years ago. At 10pm in the evening we were way ahead. Everybody knows we won it. The whole world is watching us. We can't let them get away with this. We have more votes than voters!"

Trump ends his remarks by telling Giuliani over speakerphone:

"This is going to be your crowning achievement because you're saving our country."

The witnesses begin:

*  *  *

Upon the request of Pennsylvania Senator Doug Mastriano (R), the state's Senate Majority Policy Committee is holding a public hearing to discuss election issues and irregularities at 12:30 ET.

Former NYC Mayor and current Trump attorney Rudy Giuliani will appear. President Trump was slated to join him, only to cancel following adviser Boris Epshteyn's Covid-19 diagnosis.

Via Right Side Broadcasting:

"Elections are a fundamental principle of our democracy – unfortunately, Pennsylvanians have lost faith in the electoral system," said Mastriano, who recently called for the resignation of State Department Secretary Kathy Boockvar for negligence and incompetence. "It is unacceptable."

"Over the past few weeks, I have heard from thousands of Pennsylvanians regarding issues experienced at the polls, irregularities with the mail-in voting system and concerns whether their vote was counted," said Mastriano. "We need to correct these issues to restore faith in our republic."


What Trump Will Leave In Biden's Inbox

What Trump Will Leave In Biden's Inbox Tyler Durden Wed, 11/25/2020 - 12:15

Authored by Pat Buchanan via,

Dismissing President Donald Trump’s claim that the 2020 election remains undecided, Joe Biden has begun to name his national security team.

Right now, it looks Democratic establishment all the way.

Antony Blinken, a longtime foreign policy aide, is Biden’s choice for secretary of state. Jake Sullivan, one of Hillary Clinton’s closest aides, is said to be his choice for national security adviser.

Biden’s urgency in naming his foreign policy team is understandable.

For if his election is confirmed by the Electoral College, then he will find himself on Jan. 20 with a lineup of foreign policy crises.

First is Afghanistan. While a Beltway battle has erupted over the wisdom of Trump’s decision to cut in half, to 2,500, the number of U.S. troops in Afghanistan by Jan. 15, no one denies the risk this entails for the besieged pro-American government in Kabul.

Ex-Ambassador to Afghanistan and Pakistan Ryan Crocker summed it up Friday before the House Armed Services Committee: “The worst thing we can do is what we are doing. … Basically telling the Taliban, ‘You win. We lose. Let’s dress this up as best we can.'”

America “is waving the white flag” of surrender, said Crocker.

Saturday, a barrage of rockets slammed into the Green Zone of Kabul where many embassies are located, killing eight and wounding two dozen. The Islamic State claimed responsibility.

As President Biden is not going to send fresh regiments of U.S. troops back to Afghanistan, he could, in his first year, face a collapse of the Kabul regime and a triumph of the Taliban, whom we expelled from power 19 years ago for hosting the al-Qaida terrorists who perpetrated 9/11.

Biden could, in his first days in office, preside over the first U.S. defeat in a major war since Vietnam.

A second situation confronting the new president is China. For the China of 2021 is not the China with which Barack Obama and Biden had to deal. The China of today revels in its Communist ideology.

It openly crushes democratic dissent in Hong Kong and defends “reeducation camps” for Muslim Uighurs in Xinjiang, uses air and naval forces and missile threats to assert and to defend its claims to the Paracel and Spratly Islands in the South China Sea, to Taiwan, and to the Senkaku Islands that Japan controls and claims.

U.S. planes and ships flying close to Chinese territorial claims are intercepted and treated as hostile.

This is not a China that is going to back down before American power. If the U.S. imposes sanctions on Beijing, then Beijing will reciprocate with sanctions on the U.S. And if the U.S. decides to use force, the U.S. should not be surprised if China reciprocates in kind.

President Biden, it is said, will find a way to rejoin the Iran nuclear deal from which Trump rudely exited.

And how will this sit with Israel?

Sunday, at a memorial service for Founding Father David Ben-Gurion, Prime Minister Bibi Netanyahu sent a message, clearly for Biden: “We must stick to an uncompromising policy to ensure that Iran does not develop nuclear weapons. … There must be no return to the previous nuclear agreement.”

How will Biden deal with the now-regular Israeli attacks on Iran and Iranian-backed militias in Syria, Iraq and Lebanon? What would Biden do if Iran responded with attacks on Israel?

This is not an academic question. Sunday, the Israelis launched new attacks on Iranian-backed militia in Syria, and Trump has said that if an Iranian hand is found behind an attack that kills an American, then the U.S. will retaliate against Iran.

While his foreign policy advisers argued successfully against a Trump proposal for a preemptive strike on Iran’s nuclear enrichment plant at Natanz, Israeli strikes on Iranian-backed militia in Syria could produce retaliation, and a sudden larger and wider war.

Worst-case scenario: Iran responds to an Israeli attack; Americans are killed; Trump retaliates; and Biden inherits a war with Iran he must fight or seek to end.

Then, there are the human rights backsliders that are U.S. partners and allies — Turkey, Egypt, Saudi Arabia. How does Biden deal with the party’s progressives who demand he sanction such partner-nations - without risking the loss of these countries’ cooperation on our policy agenda?

And the question with regard to Afghanistan is also true of Syria and Iraq. How do we extract our military from these endless conflicts without losing any leverage we have, and with it losing our influence over the composition and character of the regime and its direction?

“America First” has an answer to these questions:

If there are no vital U.S. interests imperiled, keep U.S. troops out. And ashcan the utopian nonsense of trying to plant democracy in the sandy soil of a Middle East that has shown itself unreceptive to that particular crop.

The interventionalists got us into the sandbox. Let’s see if they can get us out.

Justin Trudeau Tricked By Greta Thunberg Impersonator, Asked To Set Up Meeting With 'Terrence & Phillip'

Justin Trudeau Tricked By Greta Thunberg Impersonator, Asked To Set Up Meeting With 'Terrence & Phillip' Tyler Durden Wed, 11/25/2020 - 12:00

Every now and then, a head of state will be fooled by a skilled prankster (it has happened to Boris Johnson, Vladimir Putin and even President Trump) and sometimes the audio of the call will be leaked to the media, or some other embarrassing detail will emerge. The release of "Borat 2" and that now-infamous scene with Rudy Giuliani has, if anything, helped to reinvigorate interest in pranking.

As the debate over his parentage - specifically, whether his biological father is Fidel Castro, not Pierre Trudeau - Canadian Prime Minister Justin Trudeau has apparently fallen for a prank caller pretending to be - get this - teenage climate activist Greta Thunberg.

Sky News reports that Trudeau took the call in January. The prank was orchestrated by Russians Vladimir Kuznetsov and Alexey Stolyarov. The pair have only just released audio from the call on YouTube alongside an animated video.

The prankster had Trudeau going for a while, until they made a reference to "Terrence and Philip", two characters from the TV South Park who were last culturally relevant before Thunberg was born.

Here's the quote: "We can create a world where there is a place for everyone - for whites and blacks, Christians and Muslims, for Trump and Putin, for you and me, for Boris Johnson, for Corbyn, for Terrance and Phillip."

Trudeau appears to nod along - but then, realization strikes, as the caller asked the prime minister to set up a meeting with Terrance and Phillip.

At first, he promised to "ask my team to try and figure out how we can connect you", before a few seconds later, he appears to finally realize what's going on: "Terrance and Phillip, were they not in South Park?" he says. "I don't personally know them but I believe they are South Park parodies of Canadians."

Trudeau then politely hangs up the phone.

The prime minister's office told Canadian TV that "this is not the first prank call of a world leader. The prime minister determined the call was fake and promptly ended it."

Ironically, Trudeau wasn't the first Canadian to be pranked by the Russian pair. Earlier this year, they released audio featuring Prince Harry, who is splitting his time in Canada. His wife - who on Wednesday revealed to the NYT that she had had a miscarriage - came up during the fake "Greta" call.

Readers can watch the video of the call below:

Government Worker Wages Drop Most On Record

Government Worker Wages Drop Most On Record Tyler Durden Wed, 11/25/2020 - 11:45

For many liberals, the "safety" and security of a government cocoon is the pinnacle of personal development and self-expression, and by extension, working for the government is the apex of one's professional career. It's why there are over 9 million Federal workers in the US. Luckily, it's a minority and what has kept America's economy vibrant over the years is the great preponderance of private sector workers.

To be sure, the US government - in its attempts to become ever bigger over the years - has aggressively tried to attract as many workers to its ranks as possible over the generations, and in the 1980s it was offering impressive wage gains to government workers of well above 6%.

However, things have changed, and according to the latest personal income report released this morning, it is now punitive to work for the government because in October, wages and salaries for government workers declined by 2.2% compared to last October, the biggest decline on record.

A closer look at recent trends reveals that this is a purely a government worker feature, with wages for private sector employees rebounding soundly from their post-covid crash lows and fast approaching pre-crisis levels.

No wonder the deep state is angry.

While there is no immediate explanation for this surprising drop in government compensation, we are confident that one of the first things the Biden admin will tackle is how to make this number as high as possible because the last thing the ever-bigger government machine wants in its transformation to pure socialism, is to be seen as uncompetitive with private sector alternatives.

Israeli Military Prepares For Possible Trump Preemptive Attack On Iran: Axios

Israeli Military Prepares For Possible Trump Preemptive Attack On Iran: Axios Tyler Durden Wed, 11/25/2020 - 11:30

With just weeks to go to President-Elect Joe Biden's being inaugurated on January 20, Axios reports that Israel is preparing for the possibility that Trump will launch a preemptive attack on Iran.

Axios' Barak Ravid reports from Tel Aviv that "The Israel Defense Forces have in recent weeks been instructed to prepare for the possibility that the U.S. will conduct a military strike against Iran before President Trump leaves office, senior Israeli officials tell me."

Via Asia Times

While not citing specific intelligence, Ravid says Israeli military and intelligence leaders are anticipating "a very sensitive period" just ahead of the inauguration and Trump's exiting the White House.

According to the report:

The IDF's preparedness measures relate to possible Iranian retaliation against Israel directly or through Iranian proxies in Syria, Gaza and Lebanon, the Israeli officials said.

Meanwhile, are we already witnessing the first 'provocation' which is to be blamed on Iran as pretext?

Earlier this month The New York Times reported that President Trump had to be talked out of preemptive strikes on Iran by his own top advisers, who warned it could easily spiral into a major war in only the last weeks of his presidency.

That report included the following mention that not all "options" may have been placed off the table at that time:

After Mr. Pompeo and General Milley described the potential risks of military escalation, officials left the meeting believing a missile attack inside Iran was off the table, according to administration officials with knowledge of the meeting.

Mr. Trump might still be looking at ways to strike Iranian assets and allies, including militias in Iraq, officials said. A smaller group of national security aides had met late Wednesday to discuss Iran, the day before the meeting with the president.

The other recent interesting development includes last Sunday's historic first of a meeting between Israeli Prime Minister Benjamin Netanyahu and Crown Prince Mohammed Bin Salman, where a top issue under discussion was mutual cooperation against Iran.  

Convicted Killer Scott Peterson Among Death Row Inmates Who Scammed Over $400,000 In Fraudulent COVID Benefits

Convicted Killer Scott Peterson Among Death Row Inmates Who Scammed Over $400,000 In Fraudulent COVID Benefits Tyler Durden Wed, 11/25/2020 - 11:28

Today in "why the Federal government and the state of California should not be in the business of capital management" news...

The infamous Scott Peterson was among other death row inmates who were able to fraudulently receive Covid unemployment benefits administered by California, according to analysis released Tuesday. 

Prosecutors in California say they uncovered a "massive scam" that allowed more than $400,000 in California state benefits to be paid to inmates at San Quentin State Prison. This includes Peterson, who is famously in prison for the killing of his wife, Laci Peterson, and his unborn son. 

The Los Angeles Times was the first to report the fraud, which is being called by nine local DA's “the most significant fraud on taxpayer funds in California history.” 

But wait, it gets better. San Quentin's $400,000 "error in judgement" was a small drop in the bucket compared to the $140 million that was sent to other inmates across California's 38 prisons, according the NY Post

The funds were obtained by claims made either by inmates, or by family and friends. Some prisoners didn't even know claims were being submitted on their behalf. It is also being reported that "prison gangs" may have organized large scale schemes to commit the fraud.

Prosecutors say that up to $1 billion may have been paid out to people ineligible for the benefits. 

“The murderers and rapists and human traffickers should not be getting this money. It needs to stop,” concluded Sacramento County DA Anne Marie Schubert. 

Peter Schiff: The Real Villain Is The Fed

Peter Schiff: The Real Villain Is The Fed Tyler Durden Wed, 11/25/2020 - 11:15


We’re approaching all-out market mania with optimism about a COVID vaccine and the ensuing economic renaissance that many seem convinced is right around the corner. On Tuesday (Nov. 24) the Dow Jones closed about 30,000 for the first time.

On his podcast, Peter Schiff talked about the big stock market rally. He said it’s not really about the presidential election, or the COVID vaccine, or excitement about Joe Biden. The rally is all about the Federal Reserve. And it always has been.

Pres. Donald Trump took the opportunity to call a press conference to tout the Dow record. “The stock market’s just broken 30,000 — never been broken, that number. That’s a sacred number, 30,000, and nobody thought they’d ever see it,” Trump said.

Peter reminds us that Trump said a Biden win would tank the market.

How can Donald Trump claim credit for those gains? Because the markets are forward-looking and the markets are looking forward to President Biden. Yet they’re rallying anyway. So, how can the rally be attributable to Trump?”

After Trump beat Hillary Clinton, he took credit for the rise in the stock market right after the election, saying the markets we’re optimistic about a Trump presidency. By that reasoning, wouldn’t this stock market rise in the wake of a Biden win mean the markets are optimistic about a Biden presidency? As Peter put it, Trump wants to have his cake and eat it too.

He wants to claim credit for the gains after he won and he also wants to claim credit for the gains that happened after he lost.”

But the reality is Trump is not the reason the market went up.

The real reason the market went up is the Fed. The market went up because of the Fed when Obama was president, and the market continued to go up on Trump’s watch because of the Fed.”

Peter said one of the reasons he thinks the markets are rallying this week is the announcement that former Fed chair Janet Yellen will be the next Treasury secretary.

It doesn’t matter whether it’s Trump or Biden. It’s that we have the continuation of this reckless monetary policy.”

Yellen heading up the Treasury Department strips away all pretense of Federal Reserve independence and will ensure that the Treasury will have close ties with the Fed and the two institutions can work closely together.

So, this is exactly what the market wants to hear. Janet Yellen is a super dove.”

Peter said that Yellen is perfect for the position which should really be called the “Secretary of the Debt.”

The Treasury is bare. We’ve got nothing in there buy IOUs. So, her real job is to manage the debt and to help America go deeper into debt by helping us sell our bonds to lenders around the world. But that’s going to be a very difficult thing to do right now because people are smartening up. They don’t want to buy our bonds. So, the buyer is going to be the Fed. And that’s why this cozy relationship is that much more dangerous because the Treasury is going to be selling its debt directly to the Federal Reserve because the Federal Reserve is the only one dumb enough to buy it.

So, this is what the markets are celebrating. It’s not that Biden won or Trump lost.

They don’t care that Biden’s president. They care about the Fed as long as that money machine keeps going. And in fact, anything that Biden does to weaken the economy just guarantees more monetary stimulus to supposedly deal with the weakness in the economy, and what’s supposedly bad for Main Street is great news for Wall Street, and that’s what’s being celebrated.”

In simplest terms – the real villain is the Federal Reserve.

And it needs to be held accountable for the fallout from the explosion of the bubbles they inflate.”

Peter also spent some time in this podcast comparing the 1920s with the 2020s. He argues that the 2020s are not going to be like the boom of the 1920s. It’s going to be more like a combination of the 1930s with low economic growth and the 1970s with high inflation.

China's Xi Belatedly Congratulates Biden On Victory, Hopes For "Win-Win Cooperation"

China's Xi Belatedly Congratulates Biden On Victory, Hopes For "Win-Win Cooperation" Tyler Durden Wed, 11/25/2020 - 11:00

On Wednesday Chinese President Xi Jinping sent a belated message of congratulations to President-Elect Joe Biden for his election victory, reports Xinhua state news agency.

Though most world leaders had issued formal messages in the days following the AP calling the ultra-tight race which unusually wasn't called until the Saturday following Nov.4, this is the first acknowledgement Xi has given to Biden's win.

Chinese President Xi Jinping and then-Vice President Joe Biden raise their glasses in a toast during a luncheon at the State Department, in Washington, Sept. 25, 2015. Via Reuters

Xinhua wrote of Xi's message that the PRC leader "pointed out that promoting the healthy and stable development of China-US relations not only conforms to the fundamental interests of the two peoples, but also is the common expectation of the international community."

And further according to the state media paraphrase:

"It is hoped that both sides will uphold the spirit of non-conflict, non-confrontation, mutual respect, and win-win cooperation, focus on cooperation, manage differences, promote the healthy and stable development of Sino-US relations, and work with other countries and the international community to advance the noble cause of world peace and development."

China's foreign ministry had initially issued a tentative congratulations to Biden on Nov.13, but Xi remained among a handful of world leaders that included the heads of Brazil, Mexico, and Russia to hold out issuing a formal acknowledgment of the results.

According to Axios, Chinese Vice President Wang Qishan on the same day called Vice President-elect Harris to offer congratulations.

Meanwhile it appears Beijing is hoping for a "reset" in relations but is remaining ultra-cautious in its optimism. 

But the pattern of Trump's last weeks in office has already been to bring an onslaught of continued pressure, including the recent expansion of sanctions on Chinese companies with links to the PLA military, against China.

Here Comes The New Recession

Here Comes The New Recession Tyler Durden Wed, 11/25/2020 - 10:45

Authored by James Rickards via The Daily Reckoning,

Let’s start with the basics. There’s no evidence that lockdowns work to stop the spread of coronavirus. None. This is not guesswork.

After ten months of the pandemic, we have data from more than twenty major countries around the world that have tried lockdowns in various forms. The lockdowns range from extreme (as happened in Victoria in Australia) to moderate (Sweden) to non-existent (South Dakota).

The results are striking. There was no material difference in caseloads or fatality rates regardless of what kind of lockdown was used. In some cases, an extreme lockdown reduced the spread for a short period of time. But, sooner than later, the virus returned. Lockdowns may briefly shift the caseload from one time period to another, but they do not change the total caseload over time.

Meanwhile, lockdowns kill. The lack of socialization during a lockdown leads to drastically increased rates of suicide, drug abuse, alcohol abuse, domestic violence and other deadly behaviors. Families are being separated (at best) or torn apart (at worst) due to the separation and stress of lockdowns.

Many people with other diseases such as cancer and heart disease avoid treatment for fear of contagion in hospitals and end up dying as a result. There’s nothing wrong with simple precautions such as hand-washing, social distancing and mask-wearing, although there’s good evidence that masks don’t work either. But, those steps are low cost, and people easily adapt to them.

In conclusion, lockdowns are extreme, don’t work and come at an enormous social cost. They’re mostly virtue signaling for clueless politicians and even more clueless reporters who egg them on.

But the economic damage they cause is vast and undeniable.

There Has Been Improvement

Annualized growth in the second quarter of 2020 was negative 31.4%, the biggest quarterly drop in U.S. history. And, the National Bureau of Economic Research, the designated scorekeeper for when recessions begin and end, declared that a recession began in February.

No one doubts that call for an instant. Since then, some things are much improved, it’s true.  The technical recession was over by June 30. The stock market roared back to new all-time highs by September for the S&P 500 and the NASDAQ Composite. The Dow hit a new all-time high last week.

Unemployment fell to 6.9% in early November; still high, but a big improvement over the 14.7% unemployment rate we saw in May. Annualized GDP also bounced back, up 33.1% in the third quarter. That was not enough to make up the first-half decline, but it was a good start.

So, with unemployment down, the economy up and stocks at new all-time highs, does this mean the coast is clear and the pandemic panic is over?

Unfortunately not.

The Great Business Lockdown Part II

We’ve seen a new spike in coronavirus caseloads and fatalities. The possibility of several vaccines being available in the near future is good news, but it will take weeks or months before most Americans get their injections (the vaccine will initially be limited to the most vulnerable citizens, which is good public health policy).

Politicians are doing the only thing they know how to do, which is to lockdown the economy.

So, are you ready for the Great Business Lockdown Part II? You may be ready, but small businesses definitely are not.

Businesses were already struggling after the March – July lockdown and the violent protests that affected many cities this past summer. Now, many will take another hit.

The one thing you can be sure of is that lockdowns destroy small-and-medium-sized businesses, which constitute 45% of GDP and 50% of all jobs.

Joe Biden’s health advisors are the loudest voices in favor of the lockdowns. They may not stop the virus, but they will kill the economy.

More specifically, it looks like we’re headed into a “double-dip” recession. That’s when a recession is followed by a short recovery and then falls back into a second recession. That’s what happened in the early 1980s when one recession ended in July 1980, and a new recession began in July 1981, just a year after the prior recession.

There’s another factor that will deepen the new recession: the mass exodus from cities that’s been underway for months.

Nearly One Million Have Fled NYC

Cities are the greatest concentration of talent and generators of wealth in the history of civilization. In cities, you’ll find writers, bankers, artists, journalists, teachers, students and everyday people who have amazing talents of their own and aspire to be creators or entrepreneurs even as they work routine day jobs.

Talent wants to be near talent, and creativity acts like a magnetic force that attracts even more talent to come to the city and take their chances. From that talent and creativity (with a healthy dose of money and competition) comes enormous wealth creation that is a major driver of the growth of the U.S. economy as a whole and economies overseas.

But, what happens when you throw that entire wealth-creating engine in reverse? What happens when lockdowns, riots, arson, looting and increasing violence, along with vanishing tax revenues and disrespected police turn our cities into wastelands (at best) and killing fields (at worse)? What happens when city schools are shut-down, and children can’t receive a proper education?

The answer is that people leave. They move out and head to suburbs, exurbs or even the country. People leave violence-prone cities like New York, Chicago and Baltimore and head for tax-free states like Texas, Florida and Tennessee. This is not just speculation; the evidence is in.

More than 300,000 New Yorkers have filed formal change of address notices with the U.S. Postal Service from March 1 to October 31.

Considering that each address change notice represents a household, and assuming an average of three persons per household, this means the total number of people moving out is closer to one million. And, since the address change notices are only made available when 11 or more pieces of mail are affected, this means the number of actual moves is higher.

“When Cities Suffer, the Economy Suffers”

Of course, the people who move are those most able to move, which means they have more money and talent than the average citizen. Those left behind are poorer, less educated and have fewer career options on average.

Those poorer citizens are then left to make their way through streets filled with the homeless, the criminally insane, violent criminals and junkies. Police have been defunded or are just taking early retirement and walking off the job.

When you depopulate cities, you destroy the greatest economic engines in the country. When cities suffer, the economy suffers. But the problem is not confined to the cities. This exodus will hurt growth in the country as a whole through supply chains. It’s one more reason why a second recession is coming fast.

The new recession starts now. Stocks are just beginning to get the message. Expect stocks to fall sharply from here. Investors should reduce exposure to stocks while increasing their cash allocations and acquiring gold.

WTI Dips After Worrisome Surge In Gasoline Stocks, Demand At 5-Month Lows

WTI Dips After Worrisome Surge In Gasoline Stocks, Demand At 5-Month Lows Tyler Durden Wed, 11/25/2020 - 10:37

WTI extended gains overnight, after dipping on a surprise crude build reported by API, pushing to 8-month highs above $45 on mounting optimism that recent breakthroughs on a Covid-19 vaccine will lead to a swift recovery in global energy demand next year.

“The recent news around Covid-19 vaccines has boosted crude prices as markets start to look to a return to some sort of normality in 2021,” said HSBC Bank analyst Gordon Gray. “We expect OPEC+ to err on the side of caution as it evaluates how the market evolves.”

Notably, prices have also been supported by renewed geopolitical tensions, with recent attacks on a fuel depot in the Saudi city of Jeddah and on an oil tanker in the Red Sea.


  • Crude +3.8mm (-300k exp)

  • Cushing -1.4mm

  • Gasoline +1.3mm

  • Distillates -1.8mm


  • Crude -754k (-300k exp, +475k whisper)

  • Cushing -1.721mm

  • Gasoline +2.18mm

  • Distillates -1.441mm

Official inventory data flipped the script from API with a 754k draw (vs 3.8mm build). Gasoline stocks rose more than expected (for the second week in a row), which is worrisome...

Source: Bloomberg

Crude production rebounded from storm shut-ins...

Source: Bloomberg

WTI was hovering around $45.30 ahead of the official inventory data, and limped modestly lower after the print...

Bloomberg Intelligence Energy Analyst Fernando Valle notes that gasoline-demand headwinds loom large ahead of the Thanksgiving holiday due to restrictions on travel, with the potential for an extended build in inventories and more pain.

Source: Bloomberg

Gasoline demand remains well below fall 2019 levels at its lowest since June.

Most ominously, Bloomberg reports that the national inventory is at a seasonal high since 1994.

Stockpiles rose 2.2 million barrels to go over 230 million barrels -- the U.S. is swimming in gasoline right now.

Americans Raid Savings To Prop Up Spending As Incomes Slide In October

Americans Raid Savings To Prop Up Spending As Incomes Slide In October Tyler Durden Wed, 11/25/2020 - 10:25

With various fiscal stimulus programs having ended in the summer, and even more set to expire on Dec 31 when nearly 15 million Americans will end up without emergency unemployment claims unless the government steps in, it shouldn't be a surprise that American incomes - largely boosted by government "transfer payments" - shrank in October, sliding -0.7% compared to September, far weaker than the -0.1% expected. At the same time spending remained strong, rising 0.5% in October, above the 0.4% expected, if a modest slowdown from the 1.2% in September, and up for the 6th consecutive month.

Another way of seeing the convergence of spending, which has rebounded strongly from the March crash, and incomes which are shrinking rapidly since the massive multi-trillion spending package in the spring, is shown below.

So with incomes shrinking as government welfare payments fade away, how did American household manage to grow spending  in October for the 6th consecutive month? Simple: by digging deeper into their savings, which as a reminder soared as high 33.7% of Personal Income following the massive fiscal stimulus in April. Well, as of October, this number has tumbled almost back to trendline, and at 13.6%, it was 1% lower than September, and 20% below its record high hit in April.

At this rate, savings will be back to "normal" just around the time the US economy double dips some time in Q1, if JPM's forecast of a -1% GDP print in Q1 is correct. Meaning: the safety net propping up the US consumer, who accounts for 70% of GDP, is almost gone.

Finally, going back to the composition of incomes, an notable observation is that while private sector wages continued their solid recovery in October, rising 3.0% Y/Y, up from 2.6% in September and on track to pre-covid levels, government wages tumbled -2.2% which curiously happens to be the biggest annual drop in government wages on record.

One wonders: as Trump's contemplates next steps, is one of his "presents" to the deep state a big drop in its compensation?