Six years ago, back in 2013, we presented what we then viewed (and still view) as the best trading strategy of the New Abnormal period, when we said that buying the most shorted names while shorting the names that have the highest hedge fund concentration and institutional ownership is the surest way to generate alpha, to wit:

… in a world in which nothing has changed from a year ago, and where fundamentals still don’t matter, what is one to do to generate an outside market return? Simple: more of the same and punish those who still believe in an efficient, capital-allocating marketplace and keep bidding up the most shorted names.

Following this initial observation, we would periodically urge readers to keep doing this simple trade year after year, which repeatedly proved to be the best source of alpha in a market that has become infatuated with beta, as none other than Bank of America confirmed in late 2019 when it showed that going long the most shorted names and shorting the most popular ones has continued to be not only the most consistently profitable, alpha-generating strategy, but that in 2019, the top 10 crowded stocks underperformed the 10 most neglected stocks by 23%, the most on record!

The topic of high investor concentration also dominated the latest hedge fund monitor report from Goldman Sachs which once every quarter summarizes the bank’s take on hedge fund positioning based on 13F reports.

Not surprisingly, what it found is that as the coronavirus pandemic sparked a 34% plunge in US equities – before the Fed stepped in – hedge funds, scrambling to protect against further losses, concentrated their portfolios even further into their favorite growth stocks. This happened even as HF tilts to growth stocks and defensive industries were large coming into 2020, and at the start of 2Q rivaled the most extreme levels on record. In fact, according to Goldman, the two stocks with the largest increase in hedge fund popularity in 1Q – AMZN and MSFT – already ranked among the top stocks in our VIP list of the most popular hedge fund long positions. This represents the seventh consecutive quarter with the same top 5 VIPs. AMZN has topped the

Authored by Charles Hugh Smith via OfTwoMinds blog,

Virtually nothing in America's top-down financial and political realms is actually transparent, accountable, authentic or honest.

Opting out is as diverse as the individuals who choose to opt out. For many people in China, for example, the obvious choice when you've lost your job and can no longer afford expensive urban life is to return to your ancestral village, where you're likely to have grandparents, parents or aunts / uncles with a house and a patch of agricultural land.

Since urbanization has been a feature of American society for generations, this is not an option for most Americans, who are by and large rootless cosmopolitans who rarely even know their neighbors, as they move around the country out of necessity or ambition.

Just as "capitalism is no longer attractive to capitalists," (per Wallerstein), urban living has lost its luster in ways few dare even discuss. Urban centers on the Left and Right Coasts have been magnets for jobs and capital, drawing in hundreds of thousands of new residents seeking higher paying employment. This vast influx pushed rents and housing valuations to nosebleed heights, and as a result all the local governments reckoned tax revenues would skyrocket every year like clockwork and all the developers building tens of thousands of over-priced rental units also assumed the trend would continue forever.

Too bad they didn't read Laozi and learn that The Way of the Tao Is Reversal: whether you call it the Tao or merely reversion to the mean, demanding $3,000 a month for cramped apartments and $1 million for decaying bungalows were extremes that begged for a reversal.

The federal unemployment payments and bailouts make it easier to extend the delusion and denial for a few more months, but eventually the gravity of reality will overpower magical thinking and everyone counting on overvalued assets and overpriced rent, healthcare, childcare, college tuition, etc. remaining at pre-pandemic levels will have to start dealing with deep, permanent declines in sales, employment, income, asset valuations, tax revenues, etc.

The higher the costs and taxes, the greater the sacrifices that will be needed to slash and burn budgets and spending. For high-cost, high-tax

Authored by Bruce Wilds via Advancing Time blog,

It doesn't matter what you think, the reality we face is what we are seeing here on the ground. Reality is what it is and our government will as usual muddle through with poorly thought out politically correct solutions geared to kick the can down the road. This brings me little delight. I have gone a bit quiet lately because of how events are slowly unfolding, the keyword, in this case, is slowly. Rather than a wave washing over us we are experiencing a troubling drip after drip of bad news which a majority of the population has now come to accept as normal. You can put lipstick on a pig but no matter what you tell yourself, it is still a pig.

Holy Shit! This ain't good

In some ways what is happening to people across the world could be compared to what occurred when the white-man came to America. The Indians slowly traded their freedom for baubles and what they did not trade away was slowly taken by force. In this analogy, technology is the shiny promise unto which we sadly surrender our future. Beware, those that claim the promise technology is the key to a better future are not quick to share its rewards. They prefer to turn us into mindless slaves and government is a tool they employ in their efforts.

Exploding debt and a slow recovery following the 2008 financial crisis. Many of us claimed it really was not a true recovery but rather a debt-fueled false economy. All this continued with the aid of a few major distractions which took our eyes off the ball. Then the corona-virus hit. Looking back, the first diversion was the emergence of ISIS and the wave of refugees that destabilized Europe and the second was the trade war with China. This was another matter that was not resolved but ended in a small initial agreement that remains unfulfilled and the promise of a solution at some point in the future. This issue and all of the above should leave us unimpressed.

Recently we have been hearing more rumbling of growing conflict with China. It is difficult to

Following the disappointing late Friday publication of a pivotal study by the New England Journal of Medicine, according to which Gilead's Remdeisivir presented no marked benefit for those Coronavirus patients who were healthier and didn’t need oxygen or those who were sicker, requiring a ventilator or a heart-lung bypass machine, and that the only statistically significant improvement was observed in patients on supplemental oxygen, while also concluding that "given high mortality despite the use of remdesivir, it is clear that treatment with an antiviral drug alone is not likely to be sufficient", overnight there was more bad news, this time from the world of potential coronavirus vaccines, after the Telegraph reported that the Oxford University team in charge of developing a vaccine said a recent decline in the infection rate will make it increasingly difficult to prove whether it’s been successful.

"It’s a race against the virus disappearing, and against time," Professor Adrian Hill, director of the university’s Jenner Institute, told the newspaper. "We said earlier in the year that there was an 80% chance of developing an effective vaccine by September. But at the moment, there’s a 50% chance that we get no result at all."

Citing a similar challenge to that which crippled the Remdesivir China trial, Hill said he expects fewer than 50 of the 10,000 people who have volunteered to test the vaccine trial in coming week to catch the virus. If fewer than 20 test positive, the results may be useless, he said. Reuters separately reported that the Oxford University team may join Moderna in a large-scale testing program in July.

The disappointing update comes after Oxford's trial partner, pharma giant AstraZeneca announced a $1.2 billion deal with the US government to produce 400 million doses of the unproven coronavirus vaccine first produced in Prof Hill's Oxford lab.Meanwhile, the British Government has agreed to pay for up to 100 million doses, adding that 30 million may be ready for UK citizens by

The war between sacrificing your mental health to stay quarantined in hope that you will spare your physical health the trouble of the coronavirus is a war that mental health appears to be winning.

Americans across the nation are eager to finally get the hell out of the house, despite the potential consequences of the ongoing coronavirus pandemic. But at the same time, they are also scared as hell.

Things will only get more interesting over Memorial Day weekend, as much of the country begins to re-open after almost 2 months of being locked down. Numbers are starting to tick back up at vacation destinations and malls across the nation, albeit with customers now almost always donning face masks and keeping 6 feet between themselves.

Take, for instance, NYC dry cleaner Rolando Matute, who was recently quoted in a Bloomberg piece as stating: “I don’t really feel safe. I’m dealing with a lot of clothes, a lot of credit cards and a lot of customers, but I feel like I have to because I have a family. Someone has to work.”

He has moved into his basement to quarantine himself from his wife, daughters and mother, who suffers from asthma. His wife "leaves his dinner on the back patio every night, alongside the food bowls for their two cats".

“I’m like a cat, eating dinner on the patio. I don’t even go into the house anymore,” he said.

Experts are predicting another 50,000 Americans could die, on top of the 94,000 that are already dead, if states don't change their plans to ease up on social distancing. 

To some people, this means it's a time to step out and test out what a test of life before the pandemic was like. For others, it means that nothing changes until there is a vaccine or cure. 

When Covid-19 flares up again, it “will test our social fabric and bring these differences into relief,” according to Ayman Fanous, chair of psychiatry at Brooklyn’s SUNY Downstate Health Sciences University. Fanous continued: “Conflict is inevitable as people are just going to reach breaking point.”

Some

Summary:

• US nears 100k deaths
• Russia sees new cases below 10k for 9 straight days
• Brazil sees new cases, deaths rise at alarming rate
• Mexico reports another daily record jump of ~3,300
• UK furor over Dominic Cummings grows
• Oxford vaccine trial sees new obstacles

* * *

Sunday's New York Times front page says it all…

Front page of today's New York Times.

1,000 Americans who have died from coronavirus, or just 1% of US death toll. pic.twitter.com/BAlMlY9utq

— Norbert Elekes (@NorbertElekes) May 24, 2020

…By midnight ET on Sunday, many expect the number of confirmed coronavirus-linked deaths in the US will have passed the critical 100k milestone, a number that's represents not only a critical psychological milestone but an upper limit on the death toll promised by President Trump.

With the growing focus on the death toll and doubts emerging about the effectiveness of remdesivir and the progress made by Moderna,  the Telegraph published a report in Sunday's paper claiming that an Oxford University-affiliated vaccine trial, which one overly-enthusiastic scientist once claimed might produce substantial quantities of a "safe" vaccine by the fall – potentially enough to start administering the vaccine to the most vulnerable health-care workers, actually hasn't made much progress at all, and only has a ~50% chance of success, according to scientists affiliated with the project.

This is the same vaccine that AstraZeneca struck a $1.2 billion deal with the US government to produce 400 million doses of the unproven vaccine as part of President Trump's operation "Warp Speeds", which is looking increasingly like a moonshot, big-swing on a few untested therapies and vaccines in the hope that at least one might pan out.

Elsewhere, in the UK, the press remains fixated on the scandal over whether Boris Johnson senior advisor Dominic Cummings violated quarantine rules to visit several family members. As calls for Johnson to fire Cummings over the transgression intensify, Cummings and the administration have insisted

As the "stay home, save lives" crowd confronts the fact that their beloved "experts" were, in reality, about as well-informed as the rest of us when they made the fateful recommendation that the imposition of lockdowns – in most cases legally enforced – was the best option for combating the spread of SARS-CoV-2, a Nobel-prize-winning scientists from Stanford said in an interview published Sunday that, according to his models, the lockdowns didn't save lives, but actually caused more deaths.

According to the Telegraph, Michael Levitt correctly predicted the initial trajectory of the pandemic, but was ignored by now-disgraced Imperial College epidemiologist Niall Ferguson, whose warnings were embraced by the UK government as justification for the lockdown, despite the fact that the projections proved to be extremely flawed and dramatically overestimated the virus's potential for devastation. As early as march, Levitt warned that Ferguson's projections had over-estimated the potential death toll by "10 or 12 times".

Instead of helping the situation, Fergusons' projections created an unnecessary "panic virus" which spread among global political leaders, Prof Levitt told the Telegraph.

Prof Levitt, a British-American-Israeli who shared the Nobel prize for chemistry in 2013 for the "development of multiscale models for complex chemical systems", has said for two months that the planet will beat coronavirus faster than most other experts predict.

"I think lockdown saved no lives," said the scientist, who added that the Government should have encouraged Britons to wear masks and adhere to other forms of social distancing.

"I think it may have cost lives. It will have saved a few road accident lives – things like that – but social damage - domestic abuse, divorces, alcoholism – has been extreme. And then you have those who were not treated for other conditions."

Data from various studies has offered a mixed picture about the effectiveness of the lockdowns. The number of cases and deaths has undoubtedly plunged in the US and across Europe since strict lockdowns were almost universally enacted, but many wonder whether governments are being overly cautious, perhaps to a dangerous degree.

Though his models have been vindicated by the passage of time, Levitt said his initial concerns

Two weeks ago, when showing the uncanny correlation between defaults and the unemployment rates, we predicted that the number of Chapter 11 filings that is about to flood the US will be nothing short of biblical.

All that was missing was a catalyst… and according to Bloomberg that catalyst arrived in the past week or so, as retail landlords have been sending out thousands of default notices to tenants, who in turn have experienced a collapse in foot traffic, sales and cash flow due to the COVID-19 pandemic, and are simply unable to pay their debt obligations.

According to Bloomberg, restaurants, department stores, apparel merchants and specialty chains have been receiving notices from landlords – some of whom have gone as long as three months without receiving rent.

"The default letters from landlords are flying out the door," said Andy Graiser, co-president of commercial real estate company, A&G Real Estate Partners. "It’s creating a real fear in the marketplace."

Pressure from default notices and follow-up actions like locking up stores or terminating leases was cited in the bankruptcies of Modell’s Sporting Goods and Stage Stores Inc. Many chains stopped paying rent after the pandemic shuttered most U.S. stores, gambling that they could hold on to some cash before landlords demanded payment.

The stakes are enormous, and landlords are suffering, too. An estimated $7.4 billion in rent for April hasn’t been paid, or about 45% of what’s owed, according to a recent analysis by CoStar Group, which also found that just a quarter of of expected rent payments have been received by landlords.

"If the landlords don’t put a pause on their actions, you’re going to see more bankruptcies."

The question then becomes who will bail out the landlords, and whether their creditors will be just as generous in accepting forbearance.

That said, receipt of a default notice don't necessarily mean a retailers will get booted anytime soon, especially since there is nobody waiting in line for the real estate: some landlords are merely sending letters to preserve their legal rights while discussing the situation with

After months of relative quiet amid the coronavirus pandemic, thousands of protesters flooded the streets of Hong Kong, defying the city's ban on gatherings to voice their opposition to a new "national security" law proposed by Beijing which would threaten the city's autonomy and the civil liberties of its residents.

May glory be to thee, #HongKong! Call us terrorists, whatever you want, after the #WuhanVirus outbreak, #China has no more credibility in the world. #HongKongProtests #NationalSecurityLaw #StandWithHongKong pic.twitter.com/6K7J1eZ3D4

— Ray Chan (@ray_slowbeat) May 24, 2020

Hundreds of riot police charge at protest lines outside Sogo. Some protesters arrested #HongKongProtests #HongKong pic.twitter.com/UOrspVd1m9

— James Pomfret (@jamespomfret) May 24, 2020

Mainstream media, what is happening in #HongKong?pic.twitter.com/vfSU5sZCVb

— Oh boy what a shot (@ohboywhatashot) May 24, 2020

The protesters, most of whom could be seen donning masks, were hit with tear gas less than an hour after the start of the demonstrations which resulted in at least 120 arrests – including 40 of which were people accused of blocking Gloucester Road. A water cannon truck was also deployed according to SCMP."

Tear gas in causeway bay 24May #HongKong pic.twitter.com/jWv0qT3dx7

— LucyO (@Lucy0HKer) May 24, 2020

The first rounds of tear gas were fired around 1:30 p.m. local time outside a Causeway Bay shopping mall. 20 minutes later, the first arrest was made, according to the Epoch Times.

Rounds of tear gas are fired in Causeway Bay on Sunday

Video: SCMP/Phila Siu pic.twitter.com/6O5db8ihT8

— SCMP Hong Kong (@SCMPHongKong) May 24, 2020

The Muslim holy day of Eid comes at the end of Ramadan, and could be somewhat comparable to Easter for Christians in terms of importance on the Islamic calendar. 

The eve of Eid fell on Saturday, creating tensions at al-Aqsa Mosque in Jerusalem as worshipers pressed their way into the area which sits atop Temple Mount, given Israeli police attempted to prevent a mass gathering amid national coronavirus lockdown measures.

The situation turned explosive in East Jerusalem as Palestinians were prevented from entering, leading to running violent clashes with police.

It comes also amid growing Palestinian anger at Israeli PM Netanyahu's plans to push forward in annexing large parts of the West Bank, notably the Jordan Valley, as part of Trump's 'deal of the century'.

And there's already been running clashes with police in and around Jerusalem related to Israeli authorities closing down places of worship – mosques, churches, and synagogues alike – amid the coronavirus pandemic. 

In many places across the Gaza Strip and occupied West Bank over the weekend Palestinians reportedly performed what's called Eid al-Fitr prayers marking the holiday in open squares and streets due to pandemic safety measures. 

Though the Muslim holiday is typically festive, it was a different story in East Jerusalem, were scores were reportedly arrested amid the clashes with Israeli police. 

After Israeli authorities have declared one of Islam's holiest sites "closed" – along with local Muslim clerics – Palestinian activists declared the Israelis didn't have the authority to do so:

Israel ruins the Joy of Eid .. ????????
Dozens of Israeli occupation soldiers aggressively attacked, assaulted and arrested Palestinian worshippers who performed Eid prayer at one of the gates of Al Aqsa mosque compound.#EidUlFitr #Act4Palestine pic.twitter.com/pjQt8mXWBP

— Janna Mahmoud (@jannamahmoud3) May 24, 2020

The whole region is on edge as both Hamas and PA leadership under Abbas have hinted at preparations for a new intifada, after rejecting the Trump 'peace plan' and Tel Aviv's push to annex parts of the occupied West Bank