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Waking Up and Smelling The Coffee

Waking Up and Smelling The Coffee

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Investors in Asia are certainly waking on Friday and smelling the coffee after a tumultuous overnight session, which alternated between a good hard dose of economic reality, the challenges of the international community working together for the greater good, and yet another Muddy Waters China shortcoming to fruition.

US Initial Jobless Claims delivered an eye-watering increase of 6.6 million new claims for unemployment benefits – blowing last week’s 3.3 million increase out of the water. Nearly 10 million Americans have effectively lost their jobs in the past two weeks delivering a harsh insight into the scale of the economic wreckage that the COVID-19 pandemic will foist on the developed world. The efficiency of the Federal bureaucracy in providing the cheques from the first $1.2 trillion stimulus programme to the man on the street will now be crucial. The scale of the job losses means that more follow-on work from Washington DC will need to be enacted, and quickly.

The news wasn’t all bad though, with President Trump tweeting that a production cut agreement between Saudi Arabia and Russia totalling some 10 million barrels per day, is on the cards. The gulf between the reality of the Presidential optimism and real life is well documented, of course. But even this seed of hope was enough to propel oil to record gains overnight, with Brent crude rising 35% intra-day at one stage. The Canadians signalled that they were prepared to join any cuts, but the sticking point will, of course, be the US oil industry.

Although both Texas and Oklahoma’s regulators have some flexibility in the law to reduce production, the reality is that American participation under the law is challenging. Big oil itself, appears to be reluctant as well to cap output, showing just how disconnected they are from the requirement of the world to work together for the greater good during the COVID-19 pandemic shock. The Whiting Petroleum debacle is highlighting the mentality pervading the US oil industry. We can though, expect some serious arm twisting behind the scenes from the White House, with President Trump “picking volunteers” from the US side.

With a demand shock estimated at 10/15 million barrels per day, and storage above ground, and on the water, running out globally, the need for action has reached critical levels. OPEC+ though will be in no mood for any compromise unless US producers “volunteer” to cut production as well. That said, I remain confident that the seeds of a new deal have been sown, and that we have seen the lows in oil prices for the time being.

Finally, China’s answer to Starbuck, Lukin Coffee Inc delivered a most unwelcome scalding triple-shot of coffee into the laps of its hapless, and mostly American, investors. Lukin Coffee’s ADR shares plunged by 80% overnight as the company announced potential financial miscreance from its COO and his staff. That had been telegraphed by a Muddy Waters report earlier this year highlighting, and of course denied, allegations of the fabrication of sales revenue. The fact that the announcement was made overnight by the Chairman and CEO and the Board of Directors, on whose watch it all happened, and all of whom appear to have their jobs still, highlights the challenges of corporate governance that pervade American boardrooms still. Did I mention Whiting Petroleum?

Another waft of coffee blew across Asia this morning, to awake investors from their slumber. Australian, Hong Kong and Singapore PMI’s for the most part, disappointed, taking the edge of a modestly positive week for the region. China continues to provide the ray of hope though, Caixin Services and Composite PMI’s printing at 43.0 and 46.7, respectively. Although below 50.0, both nearly doubled from last month’s prints, hinting that an incipient recovery in China remains on course.

Tonight’s data highlight will be the US Non-Farm Payrolls data. However, with the disaster of the US Initial Jobless Claims overnight, all bets are off as to where the Non-Farms will print. Market guesstimates of a 100,000 drop in payrolls may well prove to be just that, guesstimates. I would hazard that the headline number will be much worse than that and will also be reflected in an unemployment rate much higher than the 3.80% forecast. Even with President Trump’s oil plan, US equities are most likely being set up for a weak finish to the week. The sad reality is that the world will get much worse before it gets better, as COVID-19 wrecks carnage on employment and economic activity. Much of the world will and must remain on fiscal life support from national governments for some months to come.

Equities

Wall Street seized on President Trump’s potential oil deal overnight, ignoring the disaster of the Initial Jobless Claims. One can’t really blame them for that though, markets preferring to predict the future and not the here and now. The S&P 500 rose 2.28%, the NASDAQ rose 1.72%, and the Dow Jones rose 2.23%., as the giant rallies in oil lifted sentiment.

With after-hours US futures falling 0.70%, Asia is having an altogether more modest day, perhaps also reflecting that fact that the world’s largest oil importers are all in this region. The Nikkei 225 is up 0.60% while both the Shanghai Composite and CSI 300 are flat on the day. The announcement of new social gathering restrictions by Hong Kong has seen the Hang Seng ease by 0.50% with the Straits Times also lower by 0.70%.

The rise in oil prices overnight has seen Jakarta outperform, rising 1.50% today in a welcome respite for both stocks and the currency. Somewhat surprisingly, the resource-heavy Australian indices are flat on the day.

Overall, Asia has a cautious look about it today with a potential oil production deal being offset by weaker data in Asia and most especially the US. The COVID-19 case numbers crossing the 1 million mark may also be dampening sentiment. Asia will remain in a wait and see mode for the rest of the session as the world awaits the Non-Farm Payroll data from the US this evening.

Currencies

The primary movers have been Petro-currencies overnight as oil prices recorded their largest one-day gains ever. The Norwegian krona, Russian Ruble and Canadian Dollar all outperformed overnight. Against the other majors, though, the US Dollar continued to outperform despite the appalling data emerging from the US.

The US Dollar continues to benefit from haven status and the shortage of Dollar funding internationally, with the Dollar Index breaking through 100.00 overnight to 100.15. The chief loser was the Euro with EUR/USD falling 1.0% through 1.0900 to 1.0850. It is hard to see any material recovery in the single currency occurring until material progress is observed in the continents COVID-19 battle.

The USD/CNY remains a bastion of stability, content to trade each side of the 7.1000 mark, with the stronger dollar being offset by weaker components in other parts of the basket.

Oil

Oil had a tumultuous overnight session as President Trump implied that a coordinated production cut agreement was at hand. Whether that is true or not, oil had its largest-ever one-day rally at one stage, with Brent climbing 35% intra-day. As the dust settled, Brent crude finished the session 21% higher at $29.80 a barrel and WTI rising 22% to finish around $ 25.00 a barrel.

After such huge gains overnight, it is no surprise that some profit-taking has occurred in Asia to pare those increases. Brent crude has fallen 3.0% to $28.00 a barrel, and WTI has eased 4.0% to $24.25 a barrel.

From here, we can expect intra-day price moves to be entirely dictated by OPEC+ headlines. These will render any technical levels irrelevant as the street plays headline ping-pong. What does seem clear though, is that there is a willingness by the significant players to engineer some sort of mutually agreeable production cut deal. Something that can and must happen. For that reason, it is likely that we have now seen the lows of oil for the foreseeable future unless the momentum witnessed so far collapses in disagreement.

Gold

The Initial Jobless Claims frightened gold market participants and gold saw a rush of haven driven buying overnight. Gold rose 1.35% to $1613.00 an ounce.

Gold is unchanged in Asia today but for now, looks like it will be well supported on any dips towards $1600.00 an ounce. Overall, gold remains anchored within a wide, but real, $1550.00 to $1650.00 an ounce range. More bad news from tonight’s US Non-Farm Payrolls will likely give gold another shot of upward momentum and leave it poised to test the upper limits of its recent range early next week.

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Illegal Immigrants Leave US Hospitals With Billions In Unpaid Bills

Illegal Immigrants Leave US Hospitals With Billions In Unpaid Bills

By Autumn Spredemann of The Epoch Times

Tens of thousands of illegal…

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Illegal Immigrants Leave US Hospitals With Billions In Unpaid Bills

By Autumn Spredemann of The Epoch Times

Tens of thousands of illegal immigrants are flooding into U.S. hospitals for treatment and leaving billions in uncompensated health care costs in their wake.

The House Committee on Homeland Security recently released a report illustrating that from the estimated $451 billion in annual costs stemming from the U.S. border crisis, a significant portion is going to health care for illegal immigrants.

With the majority of the illegal immigrant population lacking any kind of medical insurance, hospitals and government welfare programs such as Medicaid are feeling the weight of these unanticipated costs.

Apprehensions of illegal immigrants at the U.S. border have jumped 48 percent since the record in fiscal year 2021 and nearly tripled since fiscal year 2019, according to Customs and Border Protection data.

Last year broke a new record high for illegal border crossings, surpassing more than 3.2 million apprehensions.

And with that sea of humanity comes the need for health care and, in most cases, the inability to pay for it.

In January, CEO of Denver Health Donna Lynne told reporters that 8,000 illegal immigrants made roughly 20,000 visits to the city’s health system in 2023.

The total bill for uncompensated care costs last year to the system totaled $140 million, said Dane Roper, public information officer for Denver Health. More than $10 million of it was attributed to “care for new immigrants,” he told The Epoch Times.

Though the amount of debt assigned to illegal immigrants is a fraction of the total, uncompensated care costs in the Denver Health system have risen dramatically over the past few years.

The total uncompensated costs in 2020 came to $60 million, Mr. Roper said. In 2022, the number doubled, hitting $120 million.

He also said their city hospitals are treating issues such as “respiratory illnesses, GI [gastro-intenstinal] illnesses, dental disease, and some common chronic illnesses such as asthma and diabetes.”

“The perspective we’ve been trying to emphasize all along is that providing healthcare services for an influx of new immigrants who are unable to pay for their care is adding additional strain to an already significant uncompensated care burden,” Mr. Roper said.

He added this is why a local, state, and federal response to the needs of the new illegal immigrant population is “so important.”

Colorado is far from the only state struggling with a trail of unpaid hospital bills.

EMS medics with the Houston Fire Department transport a Mexican woman the hospital in Houston on Aug. 12, 2020. (John Moore/Getty Images)

Dr. Robert Trenschel, CEO of the Yuma Regional Medical Center situated on the Arizona–Mexico border, said on average, illegal immigrants cost up to three times more in human resources to resolve their cases and provide a safe discharge.

“Some [illegal] migrants come with minor ailments, but many of them come in with significant disease,” Dr. Trenschel said during a congressional hearing last year.

“We’ve had migrant patients on dialysis, cardiac catheterization, and in need of heart surgery. Many are very sick.”

He said many illegal immigrants who enter the country and need medical assistance end up staying in the ICU ward for 60 days or more.

A large portion of the patients are pregnant women who’ve had little to no prenatal treatment. This has resulted in an increase in babies being born that require neonatal care for 30 days or longer.

Dr. Trenschel told The Epoch Times last year that illegal immigrants were overrunning healthcare services in his town, leaving the hospital with $26 million in unpaid medical bills in just 12 months.

ER Duty to Care

The Emergency Medical Treatment and Labor Act of 1986 requires that public hospitals participating in Medicare “must medically screen all persons seeking emergency care … regardless of payment method or insurance status.”

The numbers are difficult to gauge as the policy position of the Centers for Medicare & Medicaid Services (CMS) is that it “will not require hospital staff to ask patients directly about their citizenship or immigration status.”

In southern California, again close to the border with Mexico, some hospitals are struggling with an influx of illegal immigrants.

American patients are enduring longer wait times for doctor appointments due to a nursing shortage in the state, two health care professionals told The Epoch Times in January.

A health care worker at a hospital in Southern California, who asked not to be named for fear of losing her job, told The Epoch Times that “the entire health care system is just being bombarded” by a steady stream of illegal immigrants.

“Our healthcare system is so overwhelmed, and then add on top of that tuberculosis, COVID-19, and other diseases from all over the world,” she said.

A Salvadorian man is aided by medical workers after cutting his leg while trying to jump on a truck in Matias Romero, Mexico, on Nov. 2, 2018. (Spencer Platt/Getty Images)

A newly-enacted law in California provides free healthcare for all illegal immigrants residing in the state. The law could cost taxpayers between $3 billion and $6 billion per year, according to recent estimates by state and federal lawmakers.

In New York, where the illegal immigration crisis has manifested most notably beyond the southern border, city and state officials have long been accommodating of illegal immigrants’ healthcare costs.

Since June 2014, when then-mayor Bill de Blasio set up The Task Force on Immigrant Health Care Access, New York City has worked to expand avenues for illegal immigrants to get free health care.

“New York City has a moral duty to ensure that all its residents have meaningful access to needed health care, regardless of their immigration status or ability to pay,” Mr. de Blasio stated in a 2015 report.

The report notes that in 2013, nearly 64 percent of illegal immigrants were uninsured. Since then, tens of thousands of illegal immigrants have settled in the city.

“The uninsured rate for undocumented immigrants is more than three times that of other noncitizens in New York City (20 percent) and more than six times greater than the uninsured rate for the rest of the city (10 percent),” the report states.

The report states that because healthcare providers don’t ask patients about documentation status, the task force lacks “data specific to undocumented patients.”

Some health care providers say a big part of the issue is that without a clear path to insurance or payment for non-emergency services, illegal immigrants are going to the hospital due to a lack of options.

“It’s insane, and it has been for years at this point,” Dana, a Texas emergency room nurse who asked to have her full name omitted, told The Epoch Times.

Working for a major hospital system in the greater Houston area, Dana has seen “a zillion” migrants pass through under her watch with “no end in sight.” She said many who are illegal immigrants arrive with treatable illnesses that require simple antibiotics. “Not a lot of GPs [general practitioners] will see you if you can’t pay and don’t have insurance.”

She said the “undocumented crowd” tends to arrive with a lot of the same conditions. Many find their way to Houston not long after crossing the southern border. Some of the common health issues Dana encounters include dehydration, unhealed fractures, respiratory illnesses, stomach ailments, and pregnancy-related concerns.

“This isn’t a new problem, it’s just worse now,” Dana said.

Emergency room nurses and EMTs tend to patients in hallways at the Houston Methodist The Woodlands Hospital in Houston on Aug. 18, 2021. (Brandon Bell/Getty Images)

Medicaid Factor

One of the main government healthcare resources illegal immigrants use is Medicaid.

All those who don’t qualify for regular Medicaid are eligible for Emergency Medicaid, regardless of immigration status. By doing this, the program helps pay for the cost of uncompensated care bills at qualifying hospitals.

However, some loopholes allow access to the regular Medicaid benefits. “Qualified noncitizens” who haven’t been granted legal status within five years still qualify if they’re listed as a refugee, an asylum seeker, or a Cuban or Haitian national.

Yet the lion’s share of Medicaid usage by illegal immigrants still comes through state-level benefits and emergency medical treatment.

A Congressional report highlighted data from the CMS, which showed total Medicaid costs for “emergency services for undocumented aliens” in fiscal year 2021 surpassed $7 billion, and totaled more than $5 billion in fiscal 2022.

Both years represent a significant spike from the $3 billion in fiscal 2020.

An employee working with Medicaid who asked to be referred to only as Jennifer out of concern for her job, told The Epoch Times that at a state level, it’s easy for an illegal immigrant to access the program benefits.

Jennifer said that when exceptions are sent from states to CMS for approval, “denial is actually super rare. It’s usually always approved.”

She also said it comes as no surprise that many of the states with the highest amount of Medicaid spending are sanctuary states, which tend to have policies and laws that shield illegal immigrants from federal immigration authorities.

Moreover, Jennifer said there are ways for states to get around CMS guidelines. “It’s not easy, but it can and has been done.”

The first generation of illegal immigrants who arrive to the United States tend to be healthy enough to pass any pre-screenings, but Jennifer has observed that the subsequent generations tend to be sicker and require more access to care. If a family is illegally present, they tend to use Emergency Medicaid or nothing at all.

The Epoch Times asked Medicaid Services to provide the most recent data for the total uncompensated care that hospitals have reported. The agency didn’t respond.

Continue reading over at The Epoch Times

Tyler Durden Fri, 03/15/2024 - 09:45

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Fast-food chain closes restaurants after Chapter 11 bankruptcy

Several major fast-food chains recently have struggled to keep restaurants open.

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Competition in the fast-food space has been brutal as operators deal with inflation, consumers who are worried about the economy and their jobs and, in recent months, the falling cost of eating at home. 

Add in that many fast-food chains took on more debt during the covid pandemic and that labor costs are rising, and you have a perfect storm of problems. 

It's a situation where Restaurant Brands International (QSR) has suffered as much as any company.  

Related: Wendy's menu drops a fan favorite item, adds something new

Three major Burger King franchise operators filed for bankruptcy in 2023, and the chain saw hundreds of stores close. It also saw multiple Popeyes franchisees move into bankruptcy, with dozens of locations closing.

RBI also stepped in and purchased one of its key franchisees.

"Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023," RBI said in a news release. Carrols also owns and operates 60 Popeyes restaurants in six states." 

The multichain company made the move after two of its large franchisees, Premier Kings and Meridian, saw multiple locations not purchased when they reached auction after Chapter 11 bankruptcy filings. In that case, RBI bought select locations but allowed others to close.

Burger King lost hundreds of restaurants in 2023.

Image source: Chen Jianli/Xinhua via Getty

Another fast-food chain faces bankruptcy problems

Bojangles may not be as big a name as Burger King or Popeye's, but it's a popular chain with more than 800 restaurants in eight states.

"Bojangles is a Carolina-born restaurant chain specializing in craveable Southern chicken, biscuits and tea made fresh daily from real recipes, and with a friendly smile," the chain says on its website. "Founded in 1977 as a single location in Charlotte, our beloved brand continues to grow nationwide."

Like RBI, Bojangles uses a franchise model, which makes it dependent on the financial health of its operators. The company ultimately saw all its Maryland locations close due to the financial situation of one of its franchisees.

Unlike. RBI, Bojangles is not public — it was taken private by Durational Capital Management LP and Jordan Co. in 2018 — which means the company does not disclose its financial information to the public. 

That makes it hard to know whether overall softness for the brand contributed to the chain seeing its five Maryland locations after a Chapter 11 bankruptcy filing.

Bojangles has a messy bankruptcy situation

Even though the locations still appear on the Bojangles website, they have been shuttered since late 2023. The locations were operated by Salim Kakakhail and Yavir Akbar Durranni. The partners operated under a variety of LLCs, including ABS Network, according to local news channel WUSA9

The station reported that the owners face a state investigation over complaints of wage theft and fraudulent W2s. In November Durranni and ABS Network filed for bankruptcy in New Jersey, WUSA9 reported.

"Not only do former employees say these men owe them money, WUSA9 learned the former owners owe the state, too, and have over $69,000 in back property taxes."

Former employees also say that the restaurant would regularly purchase fried chicken from Popeyes and Safeway when it ran out in their stores, the station reported. 

Bojangles sent the station a comment on the situation.

"The franchisee is no longer in the Bojangles system," the company said. "However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."

Kakakhail and Durranni did not respond to multiple requests for comment from WUSA9.

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Industrial Production Increased 0.1% in February

From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 p…

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From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.
emphasis added
Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).

Capacity utilization at 78.3% is 1.3% below the average from 1972 to 2022.  This was below consensus expectations.

Note: y-axis doesn't start at zero to better show the change.


Industrial Production The second graph shows industrial production since 1967.

Industrial production increased to 102.3. This is above the pre-pandemic level.

Industrial production was above consensus expectations.

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