Thursday, March 26, 2020

Wake Up! Your Fears Are Being Manipulated

We have a terrifying example in 9/11 of how this goes... Let's calm down and figure out who has what to gain by stirring panic...  
I'm not worried about the guy coughing next to me. I’m worried about the ones who seem to be looking for Jim Jones.
Jones was the charismatic founder of the cult-like People’s Temple. Through fear-based control, he took his followers’ money and ran their lives. He isolated them in Guyana where he convinced over 900 of them to commit suicide by drinking cyanide-laced grape Kool Aid. Frightened people can be made to do anything. They just need a Jim Jones.
So it is more than a little scary that media zampolit Rick Wilson wrote to his 753,000 Twitter followers: “People who sank into their fear of Trump, who defended every outrage, who put him before what they knew was right, and pretended this chaos and corruption was a glorious new age will pay a terrible price. They deserve it.” The tweet was liked over 82,000 times.
The New York Times claims that “the specter of death speeds across the globe, ‘Appointment in Samara’-style, ever faster, culling the most vulnerable.” Others are claiming Trump will cancel the election to rule as a Jim Jones. “Every viewer who trusts the words of Earhardt or Hannity or Regan could well become a walking, breathing, droplet-spewing threat to the public,” opined the Washington PostDrink the damn Kool Aid and join in the panic en route to Guyana.
The grocery store in Manhattan, just after the announcement of the national state of emergency, was pure panic. I saw a fight break out after an employee brought out paper towels to restock the shelf and someone grabbed the whole carton for himself. The police were called. One cop had to stay behind to oversee the lines at the registers and maintain order. To their credit, the NYPD were cool about it. I heard them talk down one of the fighters, saying, “You wanna go to jail over Fruit Loops? Get a hold of yourself.” Outside New York, sales of weapons and ammunition spiked.
Panic seems to be something we turn on and off, or moderate in different ways. Understanding that helps reveal what is really going on.
No need for history. Right now, in real time, behind the backs of the coronavirus, is the every-year, plain-old influenza. Some 12,000 people have died, with over 13 million infected from influenza just between October 2019 and February 2020. The death toll is screamingly higher (as of this writing, coronavirus has infected 60,653 and killed 819 Americans). Bluntly: more people have already died of influenza in the U.S. than from the coronavirus in China, Iran, and Italy combined. Double in fact. To be even blunter, no one really cares, even though a large number of bodies are piling up. Why?
The first cases of the swine flu, H1N1, appeared in April 2009. By the time Obama finally declared a national emergency seven months later, the CDC was reporting that 50 million Americans, one in six people, had been infected, and 10,000 Americans had died. In the early months, Obama had no HHS secretary or appointees to the department’s 19 key posts, as well as no commissioner of the Food and Drug Administration, no surgeon general, no CDC director. The vacancy at the CDC was especially important because in the early days of the crisis, only they could test for the virus (sound familiar?). Yet some 66 percent of Americans thought the president was protecting them. There was no panic. Why?
Of course, Trump isn’t Obama. But if you really think it is that black and white, that one man makes that much difference in the multi-leveled response of the vast federal government, you don’t know much about bureaucracy. Most of the people who handled the swine flu are now working the coronavirus, from the rank and file at CDC, HHS, and DHS to headliners like Drs. Andrew Fauci (in government since 1968, worked ebola) and Deborah Brix (in government since 1985, prior to corona was an Obama AIDS appointee).
Maybe the most salient example is 9/11. Those who lived through it remember it well, the color threat alerts, the jihadi cells around every corner, the sense of learned/taught helplessness. The enemy could be anywhere, everywhere, and we had no way to fight back. But because the Dems and Repubs were saying the same thing, there was a patina of camaraderie to it (led by Rudy Giuliani and Mike Bloomberg, where are they now?), not discord. But the panic was still very real.
Why? We panicked when people took steps to ensure we would. We were kept calm when there was nothing to gain by spurring us to panic (the swine flu struck in the midst of the housing crisis; there was enough to worry about). After 9/11, a fearful populace not only supported everything the government wanted to do, they demanded more. Nearly everyone cheered the wars in Afghanistan and Iraq, and not believing the government meant you were on their side. The Patriot Act, which did away with whole swaths of the Bill of Rights, was overwhelmingly supported. There was no debate over torture, offshore penal colonies, assassinations, kidnappings, and all the little horrors. The American people counted that as competent leadership and re-elected George W. Bush. Fear was political currency.
Need a 2020 example of how to manipulate panic? Following fears of a liquid bomb, the TSA limited carry-on liquids to four ounces for years. Can’t be too careful! Yet because of corona, they just changed the limit for hand sanitizer only (which, with its alcohol content, is actually flammable, as opposed to say, shampoo) to 12 ounces. Security theater closed down alongside Broadway tonight.
False metrics are also manipulative because they make fear seem scientific. We ignore the low death rate and focus on the number of tests done. But whatever we do will never be enough, never can be enough, the same way any post-disaster aid is never delivered quick enough because the testing is not (just) about discovering the extent of the virus. For those with naughty motives, it is about creating a race we can’t win, so testing becomes proof of failure. Think about the reality of “everyone who wants one should get a test.” The U.S. has 331 million people. Testing 10 percent of them in seven days means 4,714,285 individuals a day while the other 90 percent hold their breath. Testing on demand is not realistic at this scale. Selective decision-based testing is what will work.
South Korea, held up as the master of mass testing, conducted at its peak about 20,000 a day. Only 4 percent were positive, a lot of effort for a little reassurance. Tests are valuable to pinpoint the need for social distancing, but blunt tools like mass social distancing (see China) also work. Tests do not cure the virus. You can hide the number of infections by not testing (or claim so to spur fear), but very sick people make themselves known at hospitals and actual dead bodies are hard to ignore. Tests get the press, but actual morbidity is the clearest data point.
There will be time for after-action reviews and arguments over responsibility. That time is never in the midst of things, and one should question the motives of journalists who use rare access to the president to ask questions meant largely to undermine confidence. If they succeed, we will soon turn on each other. You voted for him; that’s why we’re here now. Vote for Bernie and Trump wins and we all literally die. You bought the last toilet paper. You can afford treatment I can’t. You’re safe working from home while I have to go out. Just wait until the long-standing concept of medical triage is repackaged by the media as “privilege” and hell breaks loose in the ERs. We could end up killing each other even as the virus fades.
At the very least, we will have been conditioned to new precedents of control over personal decisions, civil life, freedom of movement and assembly, whole city lockdowns, education, and an increasing role for government and the military in health care. Teachers, don’t be surprised if less of you, and fewer classrooms, are needed in the virus-free future, in favor of more classes online. It’s almost as if someone is taking advantage of our fears for their own profits and self-interest.
There are many reasons to take prudent action. There are no good reasons for fear and panic. The fear being promoted has no rational basis compared to regular influenza and the swine flu of 2009. We have a terrifying example in 9/11 of how easily manipulated fearful people are. Remaining calm and helping others do so is a big part of what your contribution to the disaster relief could be.
That’s one way to see this. Too many right now, however, seem to be looking for Jim Jones.
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Insanity: Stock Enter New Bull Market On Day Initial Claims Hit 3.3 Million

From Zero Hedge:

One would think that on the day the US reported 3.3 million (!) initial jobless claims, more than 5 times the weekly peak hit during the financial crisis, and a 30-sigma event...
... one which presages not a recession but an economic depression, stocks would be lower.
One would be wrong, because as Virus Fears abate...
Source: Bloomberg
... Liquidity fears re-appear, as FRA-OIS signals renewed tightening in funding conditions...
Source: Bloomberg
... and systemic counterparty risk concerns are soaring (LIBOR-OIS spread screaming to its highest since Dec 2008)
Source: Bloomberg
Meanwhile, the Fed's wanton monetization of debt, aka 'helicopter money'...
... has triggered growing concerns about USA's sovereign status, with the US default probability suddenly a hot topic again.
Source: Bloomberg
But for the 3rd day in a row, the cash market open in the US sparked another buying-panic (as it seems the "$850 billion buyer" in month-end rebalancing is in the market)...
... while the month-end pension rebalance suddenly appeared in the last 10 minutes of trading, sending the ES up by 40 points in literally one trade after it emerged that the Market on Close imbalance was $7 billion!
And so, after the furious rally of the past three days, and coupled with the last 10 minute Market On Close surge, the S&P is now back in a bull market, surging just over 20% from its Friday lows!
Yet as Morgan Stanley warned, despite the majestic gains in stocks, breadth remains disappointing......
Source: Bloomberg
... and the rally has seen virtually no confirmation as intraday highs fail to hold.
Both IG and HY credit was bid again today...
Source: Bloomberg
As The Fed's shocking entry into the corporate bond market has sparked a massive over-reaction, with the LQD IG ETF swing from a 5% discount to NAV to a stunning 5% premium...
Source: Bloomberg
... and something similar observed in the HYG ETF, even though the Fed isn't buying junk bonds... yet.
More concerning is that Treasury yields, once again, refused to play along with stocks' exuberance...
Source: Bloomberg
... as the 10Y continued to trade completely oblivious of what's going on with stocks, and has been oddly quiet for the past 3 days.
The easing in Treasury conditions has helped send the Treasury VIX tumbling even as equity VIX remains elevated.
The dollar plunged today (the 3rd day in a row lower after 10 days straight up)...
Source: Bloomberg
This is the biggest 3-day drop since March 2009...

Source: Bloomberg
Cryptos were flat today with Bitcoin the week's best performer still...
Source: Bloomberg
In commodity-land, oil tanked despite the weak dollar, PMs gained, copper flatlined...
Source: Bloomberg
WTI tumbled back to a $22 handle as EIA forecast an even bigger than expected tumble in global demand...

Finally, what will the next bubble The Fed will inflate to rescue the world be?
Because the "everything bubble" is done...

Source: Bloomberg