Plunge in Investment, Production, and Consumption Requires Smart Reopening, Not More ‘Stimulus’

Plunge in Investment, Production, and Consumption Requires Smart Reopening, Not More ‘Stimulus’

The Tea Party’s Front Page. Slowly, our freedoms are being chipped away with, ‘We know better…’ justification as its hammer and chisel. Conservative news to help keep the USA free. All the latest breaking news without the liberal bias. from Wikipedia, the free encyclopedia NEW YORK, NY / ACCESSWIRE / August 1, 2020 / Pomerantz LLP announces that a class action lawsuit has been filed against Co-Diagnostics, Inc. In his latest letter to investors, Mohnish Pabrai warned about the perils of buying stocks at high prices. He explained that it’s possible to overpay for even the market’s most promising companies. Giving Microsoft as an example, Pabrai noted: “MICROSOFT HAD A VERY STRONG ENTRENCHED MONOPOLY POSITION Latest News

This week’s gross domestic product report painted a stark picture; namely, a historic plunge in the production of goods, provision of services, and private investment.

The nation’s economy shrank at a 32.9% annualized rate. That marks an actual decline of 9.5% from earlier this year.

Meanwhile, massive government transfer payments funded by borrowing and printing of money caused disposable personal income to soar at a 42.1% annual clip despite the loss of more than 24 million jobs accompanying this economic contraction.

>>> What’s the best way for America to reopen and return to business? The National Coronavirus Recovery Commission, a project of The Heritage Foundation, assembled America’s top thinkers to figure that out. So far, it has made more than 260 recommendations.  Learn more here.

The data bear out the everyday experience of millions of Americans. Government-mandated closures and people responding to what they heard from some public health officials shriveled economic output over the past six months.

Personal consumption dropped at a 34.6% annualized rate. In fact, the plunge in consumption exceeded the record rise in personal income.

Durable goods sales were down only slightly, by 1.4% annualized, thanks to a slight increase in sales of vehicles and recreational equipment. However, sales of household furnishings and equipment decreased modestly. Non-durable goods (items such as shoes, clothing, and groceries) dropped by 15.9% annualized.

Elsewhere, the situation proved far more dire. Consumption of personal services fell off a cliff, down 43.5% annualized.

Zooming out year over year, we get a clearer picture of the damage. Overall household consumption of services declined 18%. Spending on food services and accommodations (bars, restaurants, movie theaters, etc.) fell 40%.

Jarringly, spending on health care services dropped by 24.2% compared with last year as people postponed elective procedures. In some instances, treatment of serious health conditions is being delayed.  

Even the surge in personal income—the bright spot in the report—is problematic. Instead of representing compensation for productive enterprise, this reflects federal stimulus checks combined with enhanced unemployment benefits of $600 weekly.

Now, 70% of the unemployed earn more off the job than on the job, and 20% earn double their prior salary. That creates a danger: There’s no reason to worry about inflation now, but eventually the Federal Reserve will have to reverse those actions and tighten.

So, what happens then? Nobody really knows, but it could be a disaster. Friday afternoon, Fitch Ratings downgraded the outlook on U.S. government debt to negative, warning of the “risks to U.S. economic dynamism and reserve currency status” from the rising debtload.  Indenturing future Americans to pay for this extravagant spending is generational robbery.

For now, Americans are saving the surplus in cash as a result of an uncertain economic future, combined with large swaths of the market being closed for business.

The personal savings rate rocketed to 25.7%, far higher than the average of under 7% over the past 30 years. Because this influx of cash is temporarily being saved rather than spent, it hasn’t resulted in an increase in inflation.

Prices declined overall in the quarter on the heels of the drop in demand. Once families start spending these savings—or the banks start lending the new deposits—inflation pressures could rapidly grow.

Unlike typical savings, these savings do not represent capital acquired from productive output. Instead, these trillions are a ticking inflation time bomb. 

Unfortunately, politicians in both parties are calling for more government spending to stimulate personal consumption. Yet, the federal government and central bank have injected more than $5.5 trillion into the economy already in a series of bailouts and transfer payments. That’s nearly $17,000 for each adult and child living in the U.S.

More borrowing and money printing is not the solution to restoring consumption. So long as businesses remain forcibly closed, and people are prohibited from life activities, consumption will lag.

Look at the nearly 8 million jobs returned in May and June as Americans eagerly emerged from forced hibernation. A lifting of restrictions—not government spending—deserves credit for this partial rebound.

The report also highlights the drop in private domestic investment of 49%. Every category outside information-processing suffered a large decline, including residential and nonresidential, structures, and equipment.

Those investments are crucial to enhancing productivity, which in turn enables income earners of all levels to enjoy higher standards of living and job opportunities.

Lawmakers should keep those numbers in mind when crafting monetary and fiscal stimulus.

Our economic misery stems from the suppression by government edict of the supply of goods and services. Likewise, those same edicts artificially suppress demand as consumers remain unable to engage in commercial activity.

Masking this economic misery by racking up trillions more in debt and instructing the central bank to distribute trillions more to favored interests might be politically expedient. After all, who doesn’t want “free” money to cover business expenses or bonuses for losing a job? However, it’s irresponsible.

Government-mandated closures and public perception of the crisis continue to deter investment and suppress economic activity. The skyrocketing federal debt and rapidly expanding central bank balance sheet creates the additional risk of a monetary crisis.

A full recovery requires a safe reopening rather than more fiat currency, borrowing, and government spending. Only then will we see both investment and consumption return in full force.

The post Plunge in Investment, Production, and Consumption Requires Smart Reopening, Not More ‘Stimulus’ appeared first on The Daily Signal.

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Author: Constitutional Nobody

Confederate Gulch und Diamond City – Wikipedia

Confederate Gulch und Diamond City – Wikipedia

Confederate Gulch and Diamond City

Location in Montana

Small alluvial fan, also called alluvial fan

Gold digger with washing pan, 1871

Rinsing with pressurized water in Montana, Alder Gulch 1871

Risdon Excavator, Fairbanks Gold Mining Company, 1914

Dry land dredge on Mahinapua Lake, Hokitika

  • Lagerstättenkunde
  • MINES & MINING CAMPS of Broadwater County (englisch)
  • Montana´s Gold and Silver Boom – 1862–1893, In: (englisch)
  • Gold Mining at Confederate Gulch, Montana, In: (englisch)
  • Source:

    Confederate Gulch und Diamond City – Wikipedia

    SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Co-Diagnostics, Inc. of Class Action Lawsuit and Upcoming Deadline – CODX

    NEW YORK, NY / ACCESSWIRE / August 1, 2020 / Pomerantz LLP announces that a class action lawsuit has been filed against Co-Diagnostics, Inc. (“Co-Diagnostics” or the “Company”) (NASDAQ:CODX) and certain of its officers. The class action, filed in United States District Court for the District of Utah, Central Division, and indexed under 20-cv-00481, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Co-Diagnostics securities between February 25, 2020, and May 15, 2020, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.

    If you are a shareholder who purchased Co-Diagnostics securities during the class period, you have until August 17, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at To discuss this action, contact Robert S. Willoughby at or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.

    [Click here for information about joining the class action]

    Co-Diagnostics, Inc., a molecular diagnostics company, intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules. It also intends to sell diagnostic equipment from other manufacturers as self-contained lab systems.

    The Complaint alleges that Defendants made continual, knowing and willful misstatements about their main product, a COVID-19 diagnostic test, to pump of the price of Co-Diagnostics’ stock while the officers and directors exercised low priced options and dumped their stock into the market. Their fraudulent misstatements, and disregard for the basic scientific principles that make the falsity of their statements clear in retrospect, cost investors to lose millions of dollars.

    In the late morning and early afternoon of May 14, 2020, third parties revealed startling information about Co-Diagnostics’ allegedly 100% accurate test.

    The Salt Lake Tribune (“Tribune”) reported that, which used tests developed by Co-Diagnostics, “declined to join other major Utah labs in a joint experiment to confirm one another’s quality.” Moreover, the Tribune revealed that TestUtah’s tests (by Co-Diagnostics) “have a higher ‘limit of detection’ – that is, they require more of the virus to trigger a positive result – than most other coronavirus tests approved for sale in the U.S., according to an analysis by the life sciences publication BioCentury.” This meant that Co-Diagnostics’ tests were likely to have a much higher false-negative reporting rate, meaning that potentially thousands of infected people were inaccurately told that they did not have the disease, an observation that was consistent with earlier concerns about TestUtah’s lower rate of positive test results.

    The Tribune article also expressed concern relating to and testing services that also used Co-Diagnostics’ tests.

    Also on May 14, 2020, Iowa Governor Kim Reynolds issued a public statement, stating, “I’m pleased to announce that the State Hygienic Lab completed the Test Iowa validation process yesterday, achieving high ratings of 95 percent accuracy for determining positives and 99.7 percent accuracy for determining negatives.” These results did not comport with statements previously made by Co-Diagnostics on May 1, 2020.

    In fact, Defendant Brent Satterfield (“Satterfield”), Ph. D., Co-Diagnostics’ Chief Science Officer, himself has recently confessed that the lower positive rates for Co-Diagnostics’ tests “has certainly got all of us scratching our heads a bit,” and that the tests will correctly identify 95% of true positive results-a massive discrepancy from Co-Diagnostics’ representations of 100% accuracy given that the tests are intended to be administered among hundreds of thousands or even millions of people.

    Based on the release of third-party information casting serious doubt as to Co-Diagnostics’ bold claims of 100% accuracy, the stock price began to fall, closing the day at $22.13 per share on May 14, 2020, after hitting an intra-day low of $18.35 per share, a greater than 38% decrease in price within hours.

    At that point, Co-Diagnostics could have, but did not, revise its claims of 100% test accuracy, given that Co-Diagnostics released earnings and first-quarter 2020 financials to the public after-hours and had a scheduled investor call for the same evening.

    Co-Diagnostics reported that it achieved record sales and that the start-up had finally, after nearly seven years, reached profitability. However, it did not address the testing accuracy or sensitivity allegations or correct Defendant Satterfield’s prior statements about tests being 100% accurate.

    Rather, the call was described by The Gazette, a Cedar Rapids, Iowa publication covering, as sounding “more like Thanksgiving with drunk uncles – dogs were barking, people were swearing, and someone was moaning.” The Gazette also noted that “[n]one of Co-Diagnostics or Nomi Health’s news releases about the Logix Smart tests have revealed how many tests have been sold, for how much, and so far all three testing initiatives in Iowa, Nebraska and Utah have been secretive about the tests and the results.”

    That same day, the FDA issued a press release about testing accuracy. Another, much larger drug company had created a diagnostic test for COVID-19 that was under increasing public scrutiny for apparent inaccuracy. The FDA announced to the public that “[t]he FDA looks at a variety of sources to identify and understand potential patterns or significant issues with the use of the Abbott test. No diagnostic test will be 100% accurate due to performance characteristics, specimen handling, or user error, which is why it is important to study patterns and identify the cause of suspected false results so any significant issues can be addressed quickly.” (Emphasis added).

    Based on the multiple third-party sources revealing serious problems that were known, or should have been known, in advance of May 14, 2020, the stock price further fell to close at $17.07 per share on May 15, 2020, or a decrease of 22.86% from the prior day’s closing price.

    By May 20, 2020, a statistician, Zhiyuan Sun, wrote an article specifically about Co-Diagnostics’ allegedly 100% accurate COVID-19 test. Sun explained:

    “In May, Co-Diagnostics announced its COVID-19 in vitro test had been found to have 100% accuracy, 100% specificity (likelihood of preventing a false-negative error), and 100% sensitivity (likelihood of preventing a false-positive error), as per independent verification in laboratories across the world.

    To start off, Co-Diagnostics came to the conclusion that its test was 100% effective on all three diagnostic dimensions (specificity, accuracy, and sensitivity) based on studies with small sample sizes. For example, laboratory testing of the Logix test kit conducted in Australia involved about 100 COVID-19-positive patients and 100 COVID-19-negative patients. With a sample size that small, a low error rate, say 1% to 2%, could be really hard to detect. In fact, the study itself explicitly stated that the test could in fact be between 96% to 98% effective, rather than 100%.

    In addition, the testing environment is by no means indicative of the actual prevalence of COVID-19 in the population at this point in the pandemic. Among the test samples, 50% contained SARS-CoV-2, and obviously, at this point, nowhere near half the people in the world have been exposed to the coronavirus. “But wait a minute!” the intelligent reader might say. “Nothing in the world is perfect, so who cares if a test’s results are off by 1% or 3%? Effectiveness of 97% is still nothing short of an A-plus. You’re just being a devil’s advocate, Zhiyuan!” Unfortunately, this is one of the cases where it is critical to pay attention to the devil in the details. In fact, a 1% or 3% error rate can render a in vitro test almost useless. Here’s why.

    Let us assume, for the sake of argument, the true sensitivity of Logix is 98%, and its true specificity is also 98%. In other words, the probability of the test delivering a false positive is 2%, and the probability of the test returning a false negative is also 2%. Both of these values are directly stated as being probable in studies citing Logix’s range of effectiveness, and they are valid assumptions given that the test has not been fully vetted by the FDA or other regulators. It is also common knowledge that because there are not enough viral tests for the COVID-19, the number of people who have the virus is likely to be significantly higher than official figures. For example, it is estimated that up to 4.1% of the residents of Los Angeles County have COVID-19 antibodies. Let’s use that 4.1% figure in our calculations as a measure of prevalence of COVID-19 (a lower prevalence would hurt the test even more). Assuming 1 million people are given the Logix test, 41,000 should test positive for an ongoing SARS-CoV-2 infection. However, if the test provides a false negative 2% of the time, only 98% of those 41,000 — 40,180 — would show up as positives.

    On the other hand, out of the 959,000 people who were actually negative for the virus, a 2% error rate would yield 19,180 cases of false positives — individuals who don’t have the disease despite the test saying they do. All told, that makes 59,360 people getting positive results, but only 40,180 of them would actually be positive. That yields a predictive value of 67.7%.

    In other words, if the Logix test only works as well as it does in this scenario — and it’s right 98% of the time — there’s still a 1-in-3 chance that the test will indicate you have COVID-19 even though you don’t! As one can see, a 32.3% false-positive error rate isn’t very good at all. This problem gets worse if we assume the same prevalence, but lower Logix’s potential sensitivity and specificity estimates to 95% for both. In this scenario, the probability of getting a false positive increases to 55.2%! While the results are surprising, they nonetheless use the basics of conditional probability; here is a calculator in case you want to try it out for yourself. Furthermore, a recent New York University study on COVID-19 in vitro tests developed by Abbott Laboratories (NYSE:ABT) found them to be widely inaccurate and unacceptable for use in patients. Keep in mind, those tests were also promoted as having 100% sensitivity and 99.9% specificity in earlier investigations. Unfortunately, this just serves to highlight how difficult it is to develop an accurate test for diseases with a low rate of prevalence like COVID-19.”

    Co-Diagnostics knew that even a highly accurate test-such as 96%, 98%, or even 99%-was not the same, and not remotely as valuable, as a 100% accurate test. That is because having a 100% accurate test would have significantly distinguished Co-Diagnostics from other, larger, more reputable competitors introducing COVID-19 tests into the marketplace. Additionally, the widespread administration of a COVID-19 test that is even minimally inaccurate can have highly adverse public health consequences. Co-Diagnostics knew this, and so it intentionally issued statements to the public to fend off truthful analysis and scientific skepticism about its supposed miracle test.

    The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See

    SOURCE: Pomerantz LLP


    Mohnish Pabrai And His Favorite Tech Stock, Micron (Q2 Letter)

    Mohnish Pabrai And His Favorite Tech Stock, Micron (Q2 Letter)

    In his latest letter to investors, Mohnish Pabrai warned about the perils of buying stocks at high prices. He explained that it’s possible to overpay for even the market’s most promising companies. Giving Microsoft as an example, Pabrai noted:


    Q2 2020 hedge fund letters, conferences and more

    As such, Pabrai isn’t willing to take part in the current tech surge. However, he isn’t avoiding the sector entirely. According to the most recent 13F filing for is Pabrai Investment Fund, semiconductor company Micron is currently one of the firm’s most significant positions.

    View photos


    According to the firm’s Q1 2020 13F, Pabrai owned 1.8 million shares in Micron Technology, Inc. (NASDAQ:MU) at the end of the first quarter. The position was worth around $76 million at the end of the period.

    View photos


    According to the most recent figures for Pabrai’s firm, it had assets under management of around $450 million at the end of the second quarter. Shares in Micron have risen approximately 20% since the 13F report. This indicates the position now accounts for about 20% of assets under management at the value investor’s firm.

    So far, Pabrai has not gone into detail as to why he decided to buy Micron. And it seems as if he is going to stick to this path for the foreseeable future. When quizzed on the position by a shareholder at the 2019 Pabrai Funds annual meeting, he said, “I would say that I’d be very happy to talk about Micron when we don’t own it. Just defer that question for a few years and then we can talk about it.”

    However, the value investor did provide some information on the tax loss trading he did around the company at the end of 2018.

    Specifically, at the 2019 annual meeting, Pabrai said:


    As he explained, SK Hynix was, alongside Micron, one of the three leading players in the memory business. The other one was a Samsung, which was not “really a pure play.”

    As the investor went on to explain, he decided to pursue the SK trade.” It worked out fine,” he said.

    This suggests that Pabrai entered Micron following his belief that the entire memory sector was undervalued. He’s unlikely to ever invest in a sector he does not understand. So, if he bought Micron on valuation alone, it’s unlikely he would have then gone on to buy SK. The trade indicates that he knew a lot about the business and want to make the most of his knowledge.

    These comments also indicate that while there were other ways to play the sector, Pabrai chose Micron for its value.

    Indeed, he has revealed in a recent interview that he discovered the stock while searching through the publication Value Line. He went on to add:


    We can determine from these comments that the fund manager both likes the sector the company operates in and likes the company for the value it offers. It’s unlikely he would invest for any other reasons.

    Unfortunately, at this point, we don’t know his exact reason for building the stake in Micron. With that being the case, all of the above is nothing but speculation.

    Still, value investors might be interested in taking a closer look at this memory business.

    This article first appeared on ValueWalk Premium.

    If you’re looking for value stocks, and exclusive access to value-focused hedge fund managers, check out Hidden Value Stocks.

    By Rupert Hargreaves


    Author: Valuewalk

    Why Investors Should Stay Away From Nio Stock for Now – Wealthiest Investor News

    Why Investors Should Stay Away From Nio Stock for Now – Wealthiest Investor News

    When trading volumes surged to record levels, that may have signaled the end of Nio’s (NASDAQ:NIO) rally on the stock market. NIO stock peaked at $16.44 in early July, driven by three positive catalysts.

    Nio Stock May Actually Be Worth the Gamble This Time

    Strong monthly delivery numbers, China-based stocks trading at new highs, and hype on Tesla (NASDAQ:TSLA) gave Nio shares a lift.

    With profit-taking dominating the stock’s direction, will Nio trade at 16 – $20 in the future?

    InvestorPlace – Stock Market News, Stock Advice & Trading Tips

    Last week, China, as predictable as it is, retaliated after the U.S. ordered the closing of the China consulate in Houston.

    China responded by ordering the closure of the U.S. consulate in Chengdu. The poorly timed tensions between the two mighty countries is an unlucky development for Nio shareholders.

    Macro political risks will put pressure on the stock’s valuation. And now that all three catalysts are gone, chances are high that Nio will underperform in the near-term.

    Strong selling with Nikola (NASDAQ:NKLA) shares is not helping Nio, either. The company filed to sell up to 53,39 million shares. After the announcement on July 17, the stock broke down from the $50 support level.

    Chances are high that Nikola will trade back to Initial Public Offering levels in the $10 range in the months ahead. Unfortunately, the cash raised is perfectly timed to benefit Nikola and not its shareholders.

    Its drop officially marked the end in the Electric Vehicle hype that began in May 2020 and ended at the beginning of July 2020.

    Analysts are often late in their buy and sell calls but investors cannot ignore Goldman Sachs’ (NYSE:GS) bearish note on July 17. The firm warned that Nio’s valuation was too high. It cited that enthusiasm for EV adoption in China will not increase delivery volumes from previous months. Plus, profit expectations are no different over that period.

    Goldman started a severely bearish tone when it set $7.00 price target.

    Fundamentally, Nio’s liquidity is stronger than ever. The company secured a new $1.5 billion credit line on July 10. This effectively removes any bankruptcy risks.

    Management learned from a few quarters ago when sales were slumping, its cash on hand was running low. The lockdown in China hurt sales and put Nio in a dangerous liquidity crunch. Now that China re-opened, the worst is behind it. And Nio is in a good position to invest in its business with the available cash.

    Nio may expand its sales force, open a few more small stores, and bolster its online site to grow unit sales in China. Strong deliveries may lift the stock again.

    Still, a euphoria on EV stocks fueled the last rally. Without strong buying interest for Tesla stock and the recent plunge in Nikola stock, Nio will more likely settle at lower levels.

    Tax credits and other incentives in China may give Nio a gradual lift in sales in the months ahead. If Nio falls back to the high single-digits, investors may be on Nio’s EV dominance in China at a better price.

    According to Stock Rover, Nio’s profitability is still very poor:

    Stock Industry S&P 500 Quality Score 8 55 79 Gross Margin -15.20% 17.00% 29.00% Operating Margin -132.60% 4.30% 13.00% Net Margin -138.60% 3.00% 8.50%

    To Goldman Sachs’ credit, margins are still too weak. Nio will have to expand its business and increase its addressable market in China and worldwide first. Otherwise, the investment is still a dangerous speculation with downside risks.

    Nio still needs production scale and demand growth to reach profitability. The negative numbers in the above table suggest that the stock is still risky speculation.

    Conservative investors should stay away from Nio shares for now. Let the speculators bet on the rebound instead.

    Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities.

    The post Why Investors Should Stay Away From Nio Stock for Now appeared first on InvestorPlace.


    Author: Posted By: Editor

    Plunge in Investment, Production, and Consumption Requires Smart Reopening, Not More ‘Stimulus’

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