Joe Biden Wins South Carolina Primary, Trump Says “End Of Bloomberg’s Joke Campaign”
Biden, who had only earned 15 delegates after the first three states had voted in the 2020 Democratic presidential primary, outpaced current front-runner Vermont Independent Sen. Bernie Sanders with a projected 60% of the vote to take control of at least 20 of South Carolina’s 54 pledged delegates.
This was the first time in his three presidential runs that he won a state primary or caucus.
Biden was quick to take a victory lap:
Thank you, South Carolina! To all those who have been knocked down, counted out, and left behind — this is your campaign. Together, we will win this nomination and beat Donald Trump.
Amid a larger than expected African American voter turnout, Biden dominated the initial vote count…
And is forecast to win the primary.
The double-digit win for Biden, along with the likelihood of collecting many or most of the 54 delegates at stake, gives his campaign a much-needed shot in the arm ahead of the Super Tuesday primaries next week.
President Trump was not slow in reacting either:
Sleepy Joe Biden’s victory in the South Carolina Democrat Primary should be the end of Mini Mike Bloomberg’s Joke of a campaign. After the worst debate performance in the history of presidential debates, Mini Mike now has Biden split up his very few voters, taking many away!
Bernie Boards Wrong Private Jet In Awkward Senior Moment
Democratic Socialist Bernie Sanders experienced a brain malfunction on Saturday when he accidentally boarded the wrong private jet, according to TMZ.
While wrapping up campaign stops in South Carolina and Massachusetts ahead of Super Tuesday, the 78-year-old boarded the wrong gulfstream.
As for this little mix-up here, it’s kinda funny. Bernie’s been flying all over the country for different campaign events — so the guy’s definitely busy and has a preoccupied mind at the moment. Mistakes like this (getting on the wrong Gulfstream) are bound to happen. –TMZ
While Sanders has been pictured on multiple commercial flights, he’s taken criticism for flying private jets at all while railing against the elites. Earlier this month, he was pictured boarding a different private jet – while candidate Elizabeth Warren took her own to the same D.C. airport from different locations just 36 minutes apart, according to the report – which notes that they could have simply flown together and saved the planet.
Down in South Carolina, someone alleged he had as many as three Gulfstreams to himself to get somewhere just a couple hours away. Unclear if that’s true, but here’s something to keep in mind.
It’s a 2 hr drive from Charleston to Myrtle Beach & locals do it all the time – Not @BernieSanders– He & his entourage flew from Charleston to Myrtle Beach in not 1, not 2, but 3 Gulfstream Jets today. It took them 10 minutes to fly. Who is the elitist?? #BernieIsACommunistpic.twitter.com/2CWMXVn4eE
As we have been discussing, establishment figures in the Democratic party and the media have been preparing to block any nomination of Bernie Sanders, including using the “superdelegates” to hand the nomination to another candidate. The New York Times reported Thursday that the Democratic establishment was preparing for open warfare over blocking Sanders, even if it shatters the unity of the party.
If Sanders does not receive the necessary votes, they intend to take away the nomination even if he has the most votes in the first round. The key again are the superdelegates who are not elected in the primaries but given votes as elected officials.
“The party decides its nominee. The public doesn’t really decide the nominee.”
In 2016, many of us objected to the concerted effect of the Democratic establishment and the Democratic National Committee to rig the primary for Hillary Clinton. Later it was revealed that the Clintons have largely taken over the DNC by taking over its debt and the DNC openly harassed and hampered Sanders at every stage. Despite this effort, Sanders came close to beating Clinton, who has never forgiven him for contesting a primary that she literally bought and paid for with the DNC. The simmering rage was still evident in Clinton’s attack on Sanders and suggestion that she might not support him if he were the nominee (a suggestion that she later took back).
Well the supers are back and Sanders may again find that it is the party elite, not the voters, who determine who will be the next nominee. The irony is that the elite hardly has an inspiring record. In 2016, every poll showed that voters did not want an establishment figure so the establishment rigged the process for the ultimate establishment figure. Clinton lost to the most unpopular Republican candidate in history. I remain convinced that Sanders could have won that election, a position recently suggested by Michael Bloomberg.
Yet, the same people that gave us the Clinton nomination will be working their magic again at the Democratic Convention. What is fascinating is that the establishment would prefer to risk the election by alienating the huge young following of Sanders rather than allow Sanders to be the nominee. If they give the nomination to another establishment figures like Biden or a billionaire like Bloomberg, the establishment would enrage millions of Sanders followers who could well stay home in 2020.
Wealth Of World’s Ten Richest Men Now Greater Than GDP Of 85 Poorest Countries
Bernie Sanders appears on track to clinch the Democratic nomination to the consternation of the DNC, and every American voter who abhors his vision of a ‘Democratic socialist’ society has been reflecting on the successes and failures of capitalism. Of course, over the past ten years, there’s no question that economic inequality has widened, if only because the Federal Reserve and the rest of the central banks embarked on an unprecedented experimented in loose monetary policy.
Now, as LearnBonds pointed out in a recent report, the cumulative wealth of the world’s ten richest people is now larger than the aggregate GDP of 85 impoverished countries.
According to IMF figures for 2019 released back in October, the poorest 85 countries have a combined GDP of $ 813 billion. For comparison, by LB’s count, the net worth of the world’s 10 wealthiest individuals is $ 858.1 billion.
In a bar chart, LB offers a few more helpful comparisons:
Here’s another example:There isn’t a single African country that has a higher GDP when compared to the cumulative wealth of the top ten richest people. Nigeria, which has Africa’s highest GDP of $ 446.543 billion, amounts to about half of the net worth of the top ten wealthiest.
Here’s another fun chart:
Of course, the one thing Bernie Sanders’ supporters always seem to leave out during their tirades about evil billionaires is that most of this wealth isn’t real. It’s not like they have a giant vault filled with dabloons that they can swim in like Scrooge McDuck. Jeff Bezos, for example, holds like 99% of his wealth in Amazon stock. If something were ever to happen to Amazon, like – god forbid – Microsoft overtaking it as the top provider of cloud computing services, Bezos’ net worth will take a huge nosedive.
Millions of savers and retirees would also get hurt as well, as the value of much of their equity index holdings would vanish.
Of course, after this week, perhaps the elitest of the elites’ wealth is a little lower.
A couple of years ago I posted an article that gave a brief overview of the Trilateral Commission, quoting directly from numerous former members of the institution and how their overarching goal was for the integration of nation states at the expense of self determination.
It was in the article where I argued that the prevailing model for globalists dating back to at least the First World War has been to use crisis as an opportunity, first by instigating periods of chaos before presenting themselves as the order to the ensuing turmoil. Four of the world’s largest global institutions – The Bank for International Settlements, the International Monetary Fund, the World Bank and the United Nations – were founded on this principle. Without a series of crises there would have been no rationale for them to exist.
A trend over the past few years has been how in the midst of geopolitical conflict global bodies and world leaders have called for the likes of the European Union and the World Trade Organisation to undergo substantial reforms in the wake of a rise in political nationalism and protectionism. The push for reform has been largely justified on the grounds that the international ‘rules based global order‘ – brought to be out of the ruins of World War II – is under threat, and all as a direct consequence of the growth in anti-globalisation movements that are often characterised as ‘populism‘.
So if global institutions want to broaden their level of power through deeper centralisation, where exactly does the Trilateral Commission fit into that? Earlier this month I happened by chance on a blog called ‘Dorset Eye‘, which launched in 2012 and describes itself as ‘an online citizen media magazine in which local, national and international members of the public have their voices heard‘.
Before we look at some of detail contained within the brochure, it should be noted that its publication came two years after the deaths in 2017 of the Trilateral Commission’s two founding members – David Rockefeller and Zbigniew Brzezinski. It also followed the death of Peter Sutherland, who was the European Chairman of the Commission from 2001 to 2010 and also the former chairman of Goldman Sachs. In particular, with Rockefeller and Brzezinski now deceased, the Trilateral Commission now sees a need to ‘recreate‘ itself and carry on the work of it’s founding father’s.
In the executive summary of the brochure, the Commission remarks how ‘the global order that seemed so invincible at the end of the Cold War is now in doubt‘:
Whether the world proves able to tackle the most urgent problems facing mankind today will in part depend on the ability of advanced democracies to overcome their current malaise and work together as they have in past decades.
A forty-five year old organization, the Trilateral Commission is recreating itself to be a leader and an indispensable resource in this effort.
They talk of ‘rediscovering their roots‘, ‘sharpening‘ their mission, and the need for ‘rejuvenating‘ their membership – all under the pretext of overcoming the challenges of the 21st century and to ‘uphold the rules-based international order.’
One of the main challenges, according to the Commission, is that whilst ‘the drive toward deeper integration and greater globalization seemed irreversible until just a few years ago‘, the ‘unintended consequences of these trends— from inequality to cultural alienation—have fueled new forms of discontent, spurring a rise in populism and nationalism in the most advanced economies and democracies in the world.’
The Commission opens themselves up as a solution by stating that ‘today’s institutions—both global and domestic—seem ill-equipped to face these trends down and ensure the maintenance of the rules-based international order.’
They mention how the rise in populism and nationalism has caused nations around the world to become ‘compromised by internal divisions and governed by institutions that are no longer well-suited to the realities of the day.’
As you would expect, the Commission has a plan for meeting these challenges. Firstly, it will require the democracies of North America, Europe and Asia to be ‘revitalized‘, and for the purging of ‘authoritarian regimes gaining confidenceandestablishing themselves more firmly on the global stage.’ Secondly, for this ‘democratic renewal‘ to be achievable, it will ‘require new voices and thinking from all segments of these societies.’
One potential avenue for ‘renewal‘ is the adoption at national levels of the UN devised Green New Deal, championed heavily in the United States by Alexandria Ocasio-Cortez. Come the 2024 election, she will be eligible at thirty five years old to run for the presidency.
But seemingly, the Trilateral Commission’s drive to begin reforms is more immediate than four years into the future. Amidst supposed authoritarian regimes and the breakdown of the international order, they believe themselves to be ideally placed to deal with ‘global ills‘:
The Trilateral Commission is well-poised to play a vital role in this revitalization effort, and seeks to once again become an analytical home for assessing the stresses on the advanced democracies, offering solutions for dealing with them, and catalyzing cooperation among these countries on global economic, political, and security matters.
As noted in the brochure, one of the purposes of creating the Trilateral Commission back in 1973 was to ‘buttress a beleaguered trading order.’ When considering the rise in political protectionism, trade is at the forefront of the discussion. As well as the future trading relationship between the UK and the EU, and the ongoing trade conflict between the U.S. and China, there is now the added element of the Coronavirus which threatens to restrict global supply chains. Taken together, it is a melting pot of developing crises.
Not surprisingly, the Commission considers itself ‘uniquelywell-suited to address themany challenges that are common to advanced democracies and to spur greater cooperation across them‘:
It is the only organization to bring all the affected countries together in this trilateral structure, positioning it well to connect experts, institutions, and other entities to diagnose what is straining these democracies and to prescribe steps to shore them up.
By coincidence or otherwise, in detailing how the international structure of the Commission is capable of meeting ‘pressing global problems‘, one of the examples given for this is in dealing with pandemics. Nuclear proliferation, climate change and protectionism are also recognised as problems.
As I have written about previously, the roots of the Commission stem from the field of banking. Founder David Rockefeller used to be the chairman of Chase Manhattan bank, and at one time eight members of the board at Chase were members of Rockefeller’s Commission. A look at the membership list for 2020 shows that the Commission remains largely populated by corporate interests within the banking, oil and media sectors. You will also find as part of the membership former Prime Ministers and members of national parliaments. In the UK one of the most notable examples is Keir Starmer, who is currently running to be the next leader of the Labour Party. Michael Bloomberg, who is running to be the Democrat candidate in the U.S. election, is also a member.
What began as an elitist organisation remains so today given that is remains dominated by the CEO’s, chairmen and representatives of the some of the biggest corporations and political jurisdictions on the planet.
At a special event in 1998 to mark 25 years of the Trilateral Commission, a list of financial supporters from 1973 to 1998 was published to show names such as Exxon Corporation, AT&T Foundation, The Coca-Cola Company, The First National Bank of Chicago, Morgan Stanley & Co and Goldman Sachs. A list for the present day is not readily available.
Putting that to one side, in devising a ‘new, more focused mission‘, the Trilateral Commission has identified a handful of themes in which it plans to return to regularly. One of these is populism. If the Commission are signalling that populism will be a leading theme of theirs going forward, it suggests that the resurgence in nationalism and protectionism still has some way to run. When you read between the lines they are anticipating that the ramifications of populism will see the fracturing of the international based order, and so will require the rejuvenation of global bodies e.g. greater centralisation of powers, to deal with.
Another interesting statement made by the Commission is that they are ‘also identifying issues that can be advanced by its mix of policy and business leaders and do not necessarily require the adoption by national governments to have an impact.’ Tied into the whole narrative of the breakdown of the ‘rules based global order‘ is how national administrations risk becoming impotent in meeting international challenges. This passage may be suggesting that in the future the traditional model of government legislation – often maligned for not being decisive or willing enough to combat issues such as climate change – could be bypassed in favour of global governance. A world where corporate interests in step with reformed global institutions become in effect an international legislature.
This theory is perhaps further reinforced when the Commission states that they will now ‘focus on tending to the strains that compromise the abilities of today’s advanced democracies to collectively tackle global dilemmas.’ It is my belief that without these ‘strains‘, the Commission does not have sufficient grounds to be able to justify advancing their sphere of influence.
The brochure leaves us in no doubt that the Commission is ‘remaking itself‘. One of the ways it wants to do this is through ‘injecting new, innovative prescriptions into the national debate and governmental process‘ to achieve ‘better domestic and foreign policy outcomes.’
With numerous global media outlets represented on the Commission, along with significant corporate interests, they appear well placed to begin fashioning these ‘prescriptions‘ and directing future public discourse through the mediums of the national press and social media. After all, within the membership are journalists from the UK, Europe and the U.S., a link that makes disseminating information from the Trilateral level down to the general population a much easier task.
This will not be the last example we learn about of global institutions seeking wide scale reforms amidst rising geopolitical instability. The greater level of chaos that is inflicted upon nation states will only strengthen the hand of the Trilateral Commission and others to supersede national sovereignty in favour of globally devised solutions.
Even though Chinese authorities have said that they have observed evidence of person-to-person transmission, health officials in Orange and LA counties in the United States have said that the precautions in place should stop any spread of the coronavirus.
In October of last year, the Global Health Security Index was released and it assessed levels of global health security across 195 countries. It specifically analyzed levels of preparation by focusing on whether countries have the proper tools in place to deal with serious disease outbreaks. Countries were scored on a scale of 0 to 100 where 100 is the highest level of preparedness.
The United States was named as the country with the strongest measures in place and it came first with 83.5 out of 100.
The United Kingdom came second with 77.9 followed by the Netherlands with 75.6.
China, which has initiated a series of lockdowns in response to the outbreak, comes 51st with a score of 48.2.
This map shows levels of preparation across the world and Africa’s vulnerability is immediately noticeable. It has struggled with serious diseases in the past and in 2014 a major Ebola outbreak devastated parts of West Africa, killing over 10,000 people.
So far, countries in Africa have only reported 3 confirmed cases of the coronavirus. Nevertheless, the continent has some of the weakest countries when it comes to containing disease with Equatorial Guinea (16.2) and Somalia (16.6) the worst scoring countries in the Global Health Security Index.
I don’t disagree that China, assuming that the numbers they’ve published are any more real than a lot of their economic numbers, has shown remarkable power to stop the spread of the disease.
And they have done so so as to disrupt supply chains all across the world. This week the equity markets finally came to terms with the real world effects of such a disruption, even if the disease itself is, in the end, controllable and the response to it to this point, overblown.
I’m not saying it is one way or the other. I’ve heard every conspiracy theory about this virus you can imagine. It speaks directly to the power of rumor and the ability for people absent good information to make up stories that fit their personal bias.
And in this post B. betrays his in a way that, frankly, highlights just how little he understands America, its culture and the electorate.
Under the U.S. medical system testing will be expensive for the patients. Insurances may not pay for it. Many people will be unable or unwilling to spend money on it. Care for serious cases will also be limited by high prices. This guarantees that the virus will spread further. China was smart enough to guarantee 100% state coverage for testing and all necessary care. The U.S. should follow that principle but is unlikely to do so.
Trump announced that Vice-President Pence, a man who does not believe in science, will lead the response. The libertarian and neo-liberal approach to the problem will further the epidemic’s growth. Only after it becomes really severe will the necessary measures be taken.
His assumptions are ridiculous. People in the U.S. get the annual flu shot, which is demonstrably ineffective, by the millions. The flu shot is subsidized through insurance and government redistribution of wealth via taxes.
If the threat becomes truly real to people in the U.S. they will get tested. The Trump administration will allocate billions to it and the people here, already inculcated over the generations in public health will respond accordingly.
If China was able to test 320,000 people that quickly, and the test is so effective, why is the CDC going it alone developing its own test and not just using China’s?
This is what we pay governments to do, coordinate disaster response, work with other governments, provide basic infrastructure for society.
The dysfunctional medical system in the U.S. isn’t a function of the “libertarian or neo-liberal approach,” which itself is a criticism that doesn’t understand the very real difference between those two schools of thought.
It’s a function of the ever-growing push to socialize medical care (and everything else) in the first place.
The great myth of central planning is that capital can be rationally allocated through the elimination of profit and incentive. And that will just magically produce the right outcomes for society.
Because in the end, the U.S. doesn’t have a libertarian medical system. It has a socialized system so arcane and expensive that is designed to make the argument for more control over public health not less.
But this isn’t B.’s biggest error. His biggest error is in thinking that Donald Trump is some kind of bastion of the free market and in favor of the rational allocation of scarce resources through it.
He’s not. He never has been and he won’t ever be. Trump likes markets he can control and doesn’t believe in open competition. If he did he wouldn’t erect trade barriers and engage in economic strangulation.
So to say that Trump is in trouble because of this virus to this point is nonsensical.
Trump’s reelection chances are sinking as Covid-19 cases rise. The incompetence of his administration will come under new light. The stock markets will continue to tumble and erase the economic gains Trump had claimed. Bernie Sanders’ chances of winning, if he survives the pandemic, will increase as his prime campaign promise -Medicare for all- will become even more acceptable when the problems with the current U.S. healthcare system come under new public scrutiny.
Trump’s re-election chances will rise with this coronavirus. Those who hate him will hate him more, like B. (who is German and doesn’t vote here). Those who love him will rally around him if he leads.
… the president occupies what Theodore Roosevelt called the “bully pulpit,” the White House. He can use that pulpit daily to command the airwaves and inform, lead, unite and direct the nation during what could be a months-long crisis. And Trump alone has the power to declare a national emergency, should that be needed.
If Trump acts as a leader, urging unity in the struggle to contain the virus and discover a vaccine, the hectoring from the Democratic left, already begun, can come to be seen as unpatriotic.
And this is something he can and will do. I wasn’t crazy about Trump’s presser the other day, blasting the CDC for creating a panic which Trump feels helped drop the stock markets this week.
That’s not leadership. That’s whining. And the biggest threat to Trump’s re-election at this point is Trump, not Bernie Sanders or whomever the Democrats nominate after stealing it from him.
The biggest fear the leftists in the U.S. and Europe have at this point is that Trump and his band of ‘know-nothings’ like Pence actually steer the U.S. through the upcoming crises well.
What if the U.S. healthcare system survives this? What if the doom porn purveyors are all wrong? What if COVID-19 really isn’t that much worse, in the end, than the annual flu?
Trump can and will make easy political work of his opponents trying to hector him for spending cuts by reminding them all that they have done nothing but block his ability to control the border to the country.
If anything this will strengthen Trump’s hand across a number of real issues.
During times of crisis and/or war how often is there a radical change in leadership? Not often. It will take a lot more than a few thousand points off the Dow and some fear-mongering to shift the electoral map of the U.S. far enough for Bernie Sanders to beat him.
Public health crises are not the time to grind political axes. The fact that even the best critics of the U.S. succumb to that tells you the depth to which the failures of Marxism scare them.
Because make no mistake, any failure to contain this virus will come from our having too much faith in the myth of central planning, not in not having enough of it.
There hasn’t been any official word out of the Steyer camp yet; the last thing the ‘candidate’ tweeted was a tweet urging supporters to go out and support the race’s true champion of climate justice, an issue that Biden, Bloomberg and the rest of the Democratic pack brutalized him over his investing record (which of course includes holdings in fossil fuel companies etc…).
It’s a great day to vote for the leader who will take immediate action on climate change, and beat Donald Trump in November.
Steyer is most famous for financing an advertising campaign urging lawmakers to sign his petition to impeach President Trump – he called it the ‘Need to Impeach’ campaign. They eventually did, but we suspect that Steyer’s unyielding support for the issue had little to do with it.
Sayonara, Tom. We’ll miss you, and your dumb tie, too.
After The Market’s Week From Hell, Here’s A List Of Who Was Puking
Over the past 7 days, which came just after the stock market hit an all time high, and which turned out to be the worst week for the S&P since the vomit-inducing days of the 2008 financial crisis, and also saw the fastest 10% correction from a market peak on record…
Of course, as we now know, the answer to ii) was “oh yes” as an entire generation of traders who had never seen a violent market crash recoiled in terror at the relentless selling, which sent the Dow more than 3% lower on 3 distinct occasions.
“A lot of us hadn’t seen this type of crash in our careers,” admitted Justin Wilder, a 31-year-old research analyst at DRW Holdings LLC in Montreal who has never experienced an actual bear market in his career. “There’s definitely some nervousness on the floor, both for the trading and our health” added Justin who was still in high school when Lehman filed for bankruptcy and the S&P lost more than half of its value before the Fed stepped in with QE… and the rest is history.
Other Millennials were just as incredulous: “With coronavirus, the market has found a reason to correct in a way that I’d never seen before,” Julian Carvajal, a 30-year-old FX trader at TCX Investment Management told Bloomberg.
“It’s been mental, and that’s probably an understatement,” said Rishi Mishra, a 29-year-old research analyst at Futures First, who was definitely in high school when Lehman filed for bankruptcy. “Many of us who weren’t trading during the 2008 crisis see this as one of those days you could tell your grandchildren about.” Well, Rishi, you may want to hold off on the grandchildren stories, especially if the Fed does not step in some 24 hours from now to prevent what may be a historic puke on Monday now that “community-spread” cases have emerged in the US, as well as the first coronavirus death.
But while we now know the answer to ii) what about i)? Courtesy of the latest weekly report from Deutsche Bank’s flow expert Parag Thatte, we now know the answer to that too.
The answer to “who was selling” is, in short, everybody.
But before we get into the details, a quick reminder: we have been warning for the past two months that positioning and pricing in equities was extremely elevated, with most investors “all-in” in many cases with record leverage, and increasingly disconnected from growth indicators. And just in case any of the abovementioned millennial “traders” claim there were no signs a crash was imminent, well… there were,like the market being the most overbought and complacent ever, with every investor all-in as recently as last month:
… and ushered in the “Profane, Greedy Traders of Reddit” who “Are Shaking Up the Stock Market” even as US consumers just reported the highest median current value of their market investments.
In short, everyone felt invincible, and all thanks to the Fed’s QE4 which injected $ 600BN in the market and made even a modest drop appear impossible.
Only… it was not meant to last, and in a market that took the express elevator up and the Wile-E Coyote anvil down, especially with short interest at all time lows providing almost no natural buffer to a selloff (as there were almost no shorts covering into the plunge)…
… less than a week after markets hit an all time high, stocks crashed, suffering three 3%+ drops in the past week as algos suddenly realized that not even the Fed can print viral antibodies, resulting in the biggest one-day Dow Jones point drop on record (down 1,191 on “Viral Thursday”), but more importantly, the fastest 10% correction from an all-time Dow Jones high since just a few months before the start of the Great Depression.
* * *
Which brings us back to the original question: who was selling?
We already know that retail investors were steamrolled, with the Goldman Sachs Retail Favorite basket tumbling after returning more than 16% YTD just last week, and is now down for the year (curiously, it is still outperforming the GS Hedge Fund VIP basket which as of this morning is down more than 3% in 2020.)
What about non-retail investors?
Oh, where to start with a historic selloff that has sent equities catching down to all other asset classes?
Well, how about at the top: as Thatte writes, equities positioning has flipped from being extremely overweight (95th percentile) to very underweight (12th percentile). DB’s consolidated positioning metric, which was at the top of its historical range last week (95th percentile) has now fallen very sharply to underweight levels (12th percentile).
Meanwhile, the bank’s cross asset breadth indicator has crashed from a near all time high, to what is basically an all time low.
Worse, the true decline in positioning is likely bigger as some data is available only with a lag: as a result positioning is likely to decline further as momentum signals across all asset classes have now flipped to extreme, and in most cases record risk-off.
A more detailed breakdown of selling classes finds that while discretionary investors were indeed taken to the woodshed, it was systematic investors who were absolutely hammered.
Vol control funds equity allocation is down sharply and their selling should start to diminish. Vol control funds have cut exposure to equities from historical maximum last week down to near the bottom of their range (5th percentile), selling $ 65bn of equities over the last one week.
They can still cut equity exposure further if vol rises but with allocations already low, their sensitivity to incremental selloffs should start to diminish.
CTAs have cut equity exposure to being short but are likely to go further. CTAs were extremely long equities until last week and have now flipped to being slightly short (18th percentile) but their positioning remains above levels seen during prior large selloffs in 2011, 2016 and 2018. Volatility as well as trend signals continue to deteriorate and point to them raising their short positions further.
Risk parity funds’ equity exposure is down from a record high but remains elevated. Risk parity funds are likely to cut exposure further as volatility continues to remain elevated, but they tend to move more gradually compared to other systematic funds.
How about non-retail, non-systematic investors? Here too the selling was widespread, with huge outflows from equity funds this week but more to come. Equity funds have seen outflows of -$ 28bn since the selloff began last Friday. However, prior inflows since late October had been extremely strong…
… far more than implied by the modest rebound in global growth and we estimate that equity funds would need to see outflows of about -$ 130bn just to catch down.
Hedge funds, which were perhaps the least euphoric investors into the February meltup thanks to their curiously low beta…
… suffered the least of all investors…
For quants, the pain was widespread, but nowhere more so than the contrarians with value funds cratering to new all time low.
And here is the worst news for Buy-The-Fucking-Dippers: according to Thatte, “in past large selloffs, outflows typically continued for several weeks”… which means that this thing will go on for a long time.
There was some good news: after last week’s rout, stocks are finally realizing that there will be no earnings growth for the second consecutive year, and as a result the S&P is now pricing in negative EPS growth…
… and an ISM plunging to 47.
At the same time the put/call volume has reversed dramatically amid a surge in put buying which – at least from a contrarian standpoint – suggests that the market may finally be at a support level.
Putting this together, it means that unless it is now consensus that a global recession is coming – and as we discussed yesterday, one is certainly likely – the record sell-off may finally be poised to take a break.
California continues to proudly lead the charge toward a disarmed citizenry. In the latest attack on the Second Amendment, Santa Clara County is forming what they call a “county gun team” – a unit of lawyers, analysts, and prosecutors authorized to seek out and confiscate firearms from those the state feels shouldn’t have them.
Okay, Fine. We’re Coming For Your Guns
Remember when Democrats used to try to mollify armed Americans by saying, “No one’s coming for your guns” with every incremental gun control measure they proposed?
Well, it’s official: They’re coming for the guns – some of them, at least. Surprised? You shouldn’t be. As Liberty Nation’s Graham J. Noble once wrote, “Democrats have never come across a gun restriction they didn’t like.”
The Santa Clara Board of Supervisors voted unanimously to approve funding for the proposal, which was put forth by board president Cindy Chavez. The team will consist of seven people – three crime analysts, two lawyers, and two prosecutors. They will be tasked with identifying those who have been ordered to surrender their weapons and ensure these dangerous people aren’t still armed. If necessary, they’ll obtain search warrants for local law enforcement to go and take the guns.
Deputy District Attorney Marisa McKeown explained that “the very voluminous California laws on guns mean nothing if we don’t adequately and smartly enforce them.” She is correct, of course. Those who don’t care to follow the old laws aren’t likely to care much about the new ones. That’s why Second Amendment advocates say gun control doesn’t work.
“The law says that there are categories of people who are not allowed to have a gun,” McKeown said. “If you are a domestic abuser with a restraining order, you can’t have a gun. If you are a convicted felon, you can’t have a gun. If you are a repeated, mentally ill offender who is dangerous, you can’t have a gun.”
The List Grows Ever Longer
While the Board dressed the proposal up as simply a way to protect the victims of domestic abuse, consider the words of the deputy DA. Now let’s have a look at the ever-growing list of people who aren’t allowed to own guns in California – by no means did she disclose them all. According to the Giffords Law Center to Prevent Gun Violence, as of December 10, 2019, the following groups are considered prohibited persons:
Those convicted of a felony or certain domestic violence crimes.
Those addicted to narcotic drugs.
Those convicted of specific crimes (both felony and misdemeanor) involving violence, hate crime offences, or the unlawful misuse of firearms.
Those convicted of violating state laws regarding safe storage of firearms around minors and prohibited people. This usually results in a ten-year prohibition.
Anyone who knows they are subject to an outstanding arrest warrant for a firearm-prohibiting offense – not convicted, simply subject to a warrant.
Those prohibited as a condition of probation.
Wards of the juvenile courts due to the commission of an offense involving violence, drugs, or firearms. This prohibition remains in effect until age 30.
Anyone who knows they are subject to a protective order, restraining order, temporary restraining order, or injunction issued by a court pursuant to state law – including extreme risk protection orders, otherwise known as red flag laws.
Anyone prohibited because of a history of severe mental illness or chronic alcoholism.
This isn’t simply about disarming convicted felons – which is another issue in its own right. The Santa Clara County Gun Team might well be tasked with disarming anyone with a record of mental illness, drug or alcohol abuse, who might be suspected of some crime – violent or otherwise – or even parents who simply didn’t lock up their guns while the kids were home. Will the squad also be used to hunt down any firearms or accessories the state manages to ban in the future? Which groups, exactly, deserve to be stripped of the right to self-defense?
The Costs – In Money, Liberty, And Lives
Santa Clara County already employs one lawyer and a prosecutor who will be on this team. Taxpayers will fork over $ 427,247 to cover the $ 215,653 annual salary for the new attorney and the additional prosecutor’s $ 211,594. Grant money will cover the other expenses, including the remaining three staff member salaries, but the amount was not disclosed.
But what about the human cost? What of the liberty lost when armed citizens are arrested for refusing to surrender their arms – or the lives lost should the encounter turn violent?
The Second Amendment clearly states that the right of the people to keep and bear arms shall not be infringed, but let’s not pretend that actually matters in California. The Golden State has so infringed that right that any argument on Second Amendment grounds seems almost pointless. In truth, many other states and even the federal government have as well.
The argument against this now seems to center on the violation of the right to due process. Under current state laws, this confiscation crew can get search warrants to disarm people who haven’t actually been convicted of anything. But as Herman Cain was always so fond of saying, “the devil is in the details.”
Just as the gun grabbers reinterpreted the Second Amendment by setting their own definition for the word “arms” – or perhaps it was “people” or “infringed,” or some combination – they seem to be the ones deciding just what, exactly, due process means.