fake positive pcr tests

Are False Positive PCR Tests Bigger Problem Than COVID-19?

By Nikolay Stoykov, Managing Director, Alaric Securities.

Over the last 6 months I feel like all of us have been driven mad by this new COVID-19 virus. In the beginning, we were forced to quarantine for nearly 2 months with very little evidence that this disease is actually easily transferrable. Then we were forced to wear masks in public. Finally, just when we were getting our lives back after the nightmarish spring, in July governments across the world started reintroducing new restrictions all over….

I don’t know about you but I feel like this is the definition of cruel and unusual punishment – Can I have my life back, please, I feel like asking. The reply I seem to get from governments all over the world is – NO!!!!  You see, Nikolay, statistics are bad, they say – you can’t travel freely abroad and you need to wear a mask in public even though it is the summer.

I really became quite angry at the beginning of July that I actually started following the global statistics on COVID. (I know that is the definition of crazy – to look for the truth myself). I have been following those for about a month now and while I am not a health expert, I do have a degree in statistics and I started noticing some strange things about it. Let’s look at the global statistics provided by Worldometer (an independent website that aggregates and verifies official data):

The first obvious thing is that while new daily cases globally has gone up nearly 3 times since the beginning of May, the number of daily deaths attributed to the virus has not increased. I know that people most susceptible to COVID-19 tend to have other underlying conditions, so attributing deaths to COVID only can be tricky. What also varies are reporting policies across different countries which makes comparison over different time periods more difficult. However, if anything, with the passage of time, one would expect doctors to become more accurate in attributing deaths to COVID-19 instead of some other underlying diseases. If, however, we take statistics at face value it would appear that the ratio of daily deaths to daily infections has decreased 3 times from nearly 7% in early May to less than 2% in late July…I am no infectious disease expert, as I stated earlier, but with my statistical background, I find this very suspicious. Without the introduction of new medicines or effective vaccines, mortality rates of most viruses rarely change significantly. And the change in the ratio of daily deaths to daily infections from 7% to 2% is quite significant. I was beginning to suspect that maybe that at least some of the increase of reported cases is due to false positive PCR results.

Second, I began to hear about people recovering from the virus but getting re-infected within a fairly short time – sometimes less than 3 months. I know this is a new virus and did I mention that I am no health expert but if this virus is related to the common flu virus aren’t there supposed to be at least some similarities between the two – in other words, at least some reasonably long immunity from the COVID-19 virus… And then the virus hit close to home, we had an employee that tested positive for the virus about two weeks ago. I was expecting him to get sick, develop symptoms but it turned out he had NO symptoms… That is when I realized that currently there is no procedure in Bulgaria, and probably most countries to confirm a positive test… Once a person tests positive, he/she is put in isolation.

I started looking at the statistics here, in Bulgaria. Roughly about 5-10% of the daily tests give positive results. That seems quite low, in other words, the vast majority of the people getting tested now have no symptoms and are largely doing it either as a precaution or to comply with regulations for travel abroad. Then I started asking myself, what is the reported false positive rate of PCR tests, and that is really the key here, there are no reliable statistics on it but I found some medical articles reporting it to be between 2 and 3%. That seems quite low but given that sometimes only 5% of daily tests are positive, the false positives could sometimes be nearly half the daily infections!

Finally, I am not saying COVID-19 is a hoax, I think that the virus is quite real and potentially very dangerous. However, with mass PCR testing going on globally, people should be aware that a small percentage of false positive results, like 2-3% of all tests, can become a huge number due to the sheer number of tests administered daily. I think there should be a procedure to confirm a positive test result, as with any other disease, especially for people that do not show any symptoms. I certainly do believe that a sizable percentage of the globally reported daily infections can be due to false positive PCR results.


us unemployment rate 2020

Waiting for the SPX Godot?

By Nikolay Stoykov, Managing Director, Alaric Securities

If anybody had asked me 12 months ago where do I think SPX will be in May 2020 if unemployment in the US, and most developed countries, is near 20% I probably would have laughed it off as a ridiculous question. However, if that person insisted, I probably would have said something like 1000 for SPX and 10000 for Dow Industrial.

US Unemployment Rate April May 2020

On May 24 2019 SPX closed 2826 with unemployment at around 4% and on May 21 2020 SPX closed 2948 with unemployment at least 14% and probably closer to 20%, if expectations for May 2020 are to be taken into account. What is going on here, many people are asking – economic data is abysmal and expected to continue to be bad but markets seem oblivious and actually trading at a higher level than a year ago when economic data was actually quite good…

That is a very difficult question to answer as markets tend to move without giving us a clear explanation why but I believe that the answer/explanation lies in the interest rate environment we are facing. Let’s take a look at some historical comparisons:

In 2000, SPX dividend yield was around 1.1% with 30 year Treasury bonds trading at 5.8%.

In 2007, SPX dividend yield was around 1.9% with 30 year Treasury bonds trading at 4.6%

In May 2019, SPX dividend yield was around 1.9% with 30 year Treasury bonds trading at 3%.

In May 2020, SPX dividend yield was around 2% with 30 year Treasury bonds trading at 1.4%.

It is true that everybody expects the future dividend yield in SPX to be lower than the 12-month historical yield but even with a hefty drop of 30%, which is a lot worse than most expectations, SPX dividend yield will be still higher than the 30 year Treasury bond yield. From a historical perspective, unless there are waves of defaults and SPX dividends are cut by more than 50%, equity markets still offer quite good value relative to government bond yields.

Now with yields so low, I can not help but remember Alan Greenspan’s words – “People buying government bonds here are desirous for losing money” but they are still buying them… Anyway, all I am trying to say is that equity markets seem to be a lot more attractive investment than US government bonds.

In this low-interest rate environment, I feel like the Fed is pushing investors into risky assets and if there is anything I learned in 2009 is that one should not fight the Fed… Here is what I like:

  • Equity Markets – broad cap ETFs like SPY or still distressed sectors like XLE or EEM
  • High Yield Markets – HYG/JNK ETFs, still yielding nearly 7% with a 5-year maturity
  • Hybrid Securities – PFF (preferred stock ETF), CWB (convertible bond ETF)

This is not a recommendation. The information provided is an objective and independent explanation of the matter. Alaric Securities OOD and other entities of the group do not trade in the above financial instruments.


Negative Oil. Which Oil?

By Nikolay Stoykov, Managing Director, Alaric Securities

In case you missed it, WTI May futures traded negative 40 USD/barrel yesterday. Having some experience in the space, I received a lot of questions – what does this mean, where are we going from here, etc.

WTI – A Broken Promise

WTI May 2020 Futures on Intraday Graph 

Let’s address them one at a time…

First, when people talk about oil, they usually refer to WTI. However, WTI is really just one of more than 100 widely quoted types of oil. Even more than that WTI, as a volume of world production, represents no more than 1% of total. Yes, it is popular and certainly heavily traded but less than 1% of trading volumes actually go into delivery. More than 99% of the trading volumes come from hedgers and speculators that never take delivery.  Unless you live in the state of Oklahoma, WTI price really has no impact on what your gas station charges.

Second, WTI contracts have only one delivery point – Cushing, Oklahoma. I suggest you go on Google Earth and see where that place is. But the last time I checked, that was deep in the continental USA, far away from any port and possibility of a tanker loading the oil. That is a very, very big problem because the storage facilities in Cushing have limited capacity and as of today – NO CAPACITY. It is the responsibility of the buyer of WTI to find that storage…

Moreover, the storage charge which in good times is usually about 1-2% a month has become exorbitantly high and now running at approximately 20 USD/barrel per month. And to cap it all, this charge varies per day…Who is to say where the limit on that charge is. Can it go to 50 USD/barrel per month? I am not sure, but I was startled to see that CME last night listed options on Jun 2020 WTI contract with -50 (negative 50) strike.

I can go on and on but I think it is unnecessary. WTI spot and future prices have become totally disconnected from other world oil blends. We do NOT expect that disconnect to disappear anytime soon and we expect it to wreak tremendous damage on investors in the energy sector.

Here is how investors can protect themselves:

  1. Avoid WTI based ETFs like USO and USL. Most likely those ETFs will be liquidated, however, the big question is can USO go to 0 during the next roll period – May 5 to May 8.
  2. If looking for oil beta exposure look at Brent Futures and ETFs like BNO which are based on them.
  3. Best of all, for long oil exposure look at oil stocks or ETFs like XLE. There is a reason why Warren Buffett does NOT trade futures – 6 sigma events tend to happen a lot more often in the futures markets than most statistical models indicate.

This is not a recommendation. The information provided is an objective and independent explanation of the matter. Alaric Securities OOD and other entities of the group do not trade in the above financial instruments.


Opinion: 6 things all investors should be thankful for

Three years ago, I gave thanks for how cheap oil was pulverizing Vladimir Putin, the Organization of the Petroleum Exporting Countries and other global turkeys. This year, Americans and investors have at least as many reasons to be thankful, transcending the poisoned U.S. politics we’ll all — ahem — carefully avoid at Thanksgiving dinner.

Right?

Let’s count ‘em up. Number six is the one that counts most.

1. We have a really solid world economy

After China’s mini-financial panic of 2015-16, which shaved U.S. exports to Asia and with it U.S. growth and stock prices, the opposite is happening now. Global growth forecasts are improving, and Bank of America Merrill Lynch, at least, thinks emerging-market stocks are still cheap because the economies there have room to grow. Healthy trading partners are good for the U.S., whether a president who portrays trade as a zero-sum game understands that or not.

2. Unemployment near a 17-year low and middle-class real incomes at a record

October’s 4.1% unemployment rate is the same as in the giddy peaks of 1999. Even better, median household income, adjusted for inflation, has surpassed its old dot-com peak.

Best of all, this is happening in a low-inflation economy with no bubbles worth worrying about. There’s plenty of manufacturing capacity available, housing affordability is fine in most places, and nearly stable over the last year. Housing prices are up 4%, but incomes are up 3%, according to the National Association of Realtors.

That means we can continue for a good while with slowly declining unemployment and rising real wages, before some bubble or rot derails the expansion. If recent improvement in business investment helps productivity growth, that will sustain good times even longer. If President Donald Trump’s corporate-tax cut bill helps investment — dubious, not least because it’s unlikely to pass — all the better.

Let trolls claim Trump accomplished this without actually passing any economic policy, by spreading the goodwill and confidence whenever he calls nuclear-armed North Korean dictator Kim Jong Un fat on Twitter. As long as the troll who’s your uncle passes the stuffing.

3. Low interest rates mean high purchasing power

The percentage of folks’ income that goes to monthly debt service (including the student loans your millennial nephews caterwaul about) is the lowest in the 35 years that data have been kept, Moody’s Analytics chief economist Mark Zandi says.

Simple: When the interest rate on your mortgage is 3% and change, your car loan is free or close to it, and even credit cards are cheap, you can afford more. That’s a good thing. Especially when you’re also richer because of rising stock prices, and low inflation suggests interest rates will rise only slowly.

4. Oil’s still cheap.

Crude CLF8 isn’t as cheap as it was, but still saving the ordinary household hundreds of dollars a year compared with when it was $100 a barrel. It’s also expensive enough now to stabilize the energy companies, which is useful in the short term. Over time, as electric cars take over the market, they’ll have problems, but we can deal with those when the time comes.

5. Our family still loves us (and doesn’t give a fig about bitcoin)

Shawn Langlois’ piece about what to say to relatives who ask about bitcoin BTCUSD, rather than starting a fight, is worth reading if you missed it.

Here’s my answer: “Now, now, that holiday where we all pretend to believe in something even 12-year olds know is bogus is next month.” Then, drink. And pour them a bigger one.

If this spoiled your child’s Christmas, two observations:

First, sorry.

And, congratulations: If your kids are reading MarketWatch that young, they’re well on their way to prosperity!

If you believed in Santa yourself until just now, let me sell you bitcoin from my (imaginary) private stash. Great stocking stuffer!

6. Markets still work — including, especially, the marketplace of ideas

From the day after Donald Trump’s inaugural address, we’ve seen the power of simple insistence on truth. It began with journalists laughing former Trump spokesman Sean Spicer pretty much out of town upon his yammering that Trump’s inaugural crowd was yuuge when we’d all seen the pictures.

In the months since, the power of truth has saved us from disastrous policies based on fictions, and (more importantly) begun to restore the centrality of facts and evidence in public life Trump disdains.

Persistent deconstruction of Trump’s health-care bill destroyed it, and changed public opinion on universal or near-universal health care, probably forever.

Now the same thing is happening on taxes, with advocates and journalists each, separately, documenting how the GOP proposals would be less a tax cut than a redistribution of tax burden — to the coasts, and to the upper middle class, as red states and very wealthy people pay less. And the bill is increasingly unpopular as citizens figure it out.

RIP supply-side economics, 1978-2018? Maybe. A small-d democratic revival, for sure. And that’s way more important.

Spicer’s replacement, Sarah Sanders, took grief this week for forcing reporters to say what they were thankful for before she would answer their questions, but it’s an easy question.

I’m thankful for the good sense of the American people, free speech and free markets, all of which always restore balance in the end.

Article originally published by Tim Mullaney at marketwatch.com


stock market’s Trump rally

Opinion: Will Santa Claus save the stock market’s ‘Trump rally’?

CHAPEL HILL, N.C. — Do you believe in Santa Claus?

Many bulls on Wall Street evidently do.

Every year as Thanksgiving approaches, brokers and analysts begin referring to an imminent Santa Claus Rally as a reason to be bullish. Their behavior has taken on particular urgency this year, since the remarkable post-election Trump rally appears to have gotten ahead of itself.

These brokers and analysts are just like the retailers who shamelessly roll out their Christmas decorations as early as Halloween. That’s because there is no statistical basis for believing in a Santa Claus Rally in November or December.

In fact, the only seasonal year-end strength that does enjoy statistical support doesn’t kick in until after Christmas.

To be sure, brokers and analysts are rarely fazed by the absence of a strong statistical foundation, so it shouldn’t be a surprise that belief in the Santa Claus Rally persists. Last year, for example, as you can see from this chart, “Santa Claus Rally” started being a widely used search term the week before Thanksgiving—and reached a crescendo right before Christmas. According to the data collected by Google Trends, other years have followed the same script almost precisely.

So we can forecast with a high degree of confidence that coming days will see a big increase in references to a “Santa Claus Rally.”

Of course, not all analysts have the same thing in mind when they refer to a Santa Claus Rally. Some appear to be referring to nothing more precise than the market rising at some point between Thanksgiving and New Year’s. That’s meaningless, of course, since the market rises at some point during every season of the year—just as it also falls.

Others appear to have the month of December in mind, but that also isn’t very compelling. Even though December is one of the better months of the calendar for the stock market, on average, it isn’t the best (as judged by average returns of the Dow Jones Industrial Average DJIA, -0.19%   since the late 1890s, when it was created). July has an even better record, for example. At the 95% confidence level often used when assessing if a pattern is genuine, statisticians are unable to conclude that December’s record is any different than those of other months.

The one definition of the Santa Claus Rally that does enjoy statistical support is based on seasonal strength between Christmas and early January. Over the last 120 years, the stock market between Christmas and New Years has risen 76% of the time, with the Dow producing an average gain of 1.01%. That compares to an average gain of just 0.10% across all other trading periods since 1896 of similar length, over which the stock market rose just 55% of the time.

In both respects, the Santa Claus Rally is statistically significant.

What all this means: The stock market cannot turn to Santa Claus to keep the Trump Rally going. The only real Santa Claus Rally doesn’t arrive until Christmas—just like the jolly old man himself.

For more information, including descriptions of the Hulbert Sentiment Indices, go to www.hulbertratings.com or email [email protected]

Article and media originally published by Mark Hulbert at marketwatch.com


Russia is Shooting Itself in the Foot Keller

Russia is shooting itself in the foot: Keller

(Bloomberg) -- Christian Keller, Head of EM Research at Barclays Capital, discusses the crisis in Ukraine, and his outlook for both Russia and China. He speaks on Bloomberg Television’s “The Pulse.”

Source: Bloomberg


Markit Alaric Blockchain - alaric trader securities broker stock trader

Blockchain: disruption or distraction?

(Markit) Jeffrey Billingham - a vice president in Markit’s Processing division and a leader of the Chain Gang discusses blockchain technology, Bitcoin protocol and the new market potential for the truly forward thinkers .

The financial industry began 2016 with a host of blockchain promises. While many of these promises show encouraging momentum, a clear implementation strategy remains elusive. If every bank, exchange, infrastructure provider and clearing house put their internal working groups in one room, all would agree to one point: blockchain technology is not a silver bullet for financial markets. However, beyond defining what the technology is not, few seem to agree on what the technology actually is.

The financial industry has invested over $1 billion in the last 14 months to support blockchain consortia, pilot programs, companies and other efforts to create consensus about implementing blockchain. This activity indicates a high level of excitement, but is atypical of how innovative technology enters a market. We would expect the industry to eschew consensus and exhibit bolder, unilateral moves in pursuit of competitive advantage. Moreover, if incumbent institutions were slow to move, we would expect blockchain startups to build new banks.

For now, neither is happening in earnest. A cynic would say the focus on partnerships only shows that players are hedging their bets. The eternal optimist would say that players need to partner to be successful.

Nevertheless, there is merit to the collaborative approach. A blockchain isn’t simply software to install, but rather the foundation of a robust peer-to-peer network. We at Markit certainly appreciate the time and efforts necessary to build a successful network. And, to be fair, at least one startup has obtained a banking license.

However, the question persists: why a blockchain? How did we go from a conversation about a digital currency to talk of a revolution in the creation and transfer of financial products and agreements?

Though unfashionable to admit, it started with some key perceptions about the Bitcoin protocol. Specifically:

1) Bitcoin transactions settle within minutes - minimal settlement latency.

2) Payers and receivers of bitcoin use a distributed ledger - no central data store.

While the financial industry struggled to come to terms with the post-crisis financial framework and its associated systemic costs, the Bitcoin protocol provided tantalizing solutions. Settlements, reconciliations, and the security apparatus around these processes, all of which can theoretically move to a blockchain, are massive drivers of cost for a financial enterprise.

At the same time, digital currency and distributed ledger startups had to reinvent themselves after the price of bitcoin slid throughout 2014. Realizing that budding interest from capital markets offered a lifeline, these companies moved away from digital currencies and towards concepts like enterprise blockchains, colored coins, metacoins, side chains, smart contracts, etc.

This union of convenience between cost-conscious financial firms and revenue-hungry technology firms propagated visions of a new operating paradigm in finance, but has yet to produce a long term framework that gets us there.

Instead, the industry distracted itself with a spate of false choices: it is “Bitcoin” or “The Blockchain?” Should a blockchain be “public” or “private?” Is this technology “the end of banking” or “just a database?” These questions prevent us from exploring the real elegance of blockchain technology.

If blockchains are to play a revolutionary role in financial services, 2016 must be the year that firms agree to disagree about the role of blockchain, forge their own paths, and dare others to follow.

Blockchain technology presents a new model for the architecture of the global financial system. That’s why consensus building, however well-intentioned, often results in a focus on the least common denominator, dimming our understanding of the bigger picture.

Speaking at the South by Southwest conference, Mark Thompson, CEO of The New York Times Company, explained how he thinks about new technology, specifically applying virtual reality tools to news reporting: “You can’t wait for someone to jump off the cliff, you have to jump first…We want to be braver than our rivals and be out there and be smart about it. Don’t make crazy bets when you’re not sure. But we cannot be complacent. We know what complacency leads to and we have to be brave.”

The financial industry must adopt the same mindset with blockchain. We can start with cost saving initiatives that digitize assets and agreements, but need to also understand that blockhain’s potential to transform management of collateral and securitize a range of financial products represents new market opportunities that will captured by truly forward thinkers in the industry.

by Jeffrey Billingham - a vice president in Markit’s Processing division and a leader of the Chain Gang, Markit’s group implementing distributed ledger technology.

Article originally published on Markit.