In Defense of Zero Hedge
- Twitter “deplatforms” Zero Hedge
- An assault on free speech…
- … Even if the speech is misinformed?
- Revisiting old-school journalistic ethics
- Asian “contagion” (not so much)
- Alan Knuckman’s glass-half full outlook
- Commerce Secretary Wilbur Ross’s zero-sum game
- Germany: “We’re gonna need a bigger vault”
- A reader wants to get out the “pitchforks and torches”… Revisiting the mysterious (or not?) acronym for the new “Big 4”… and more!
“Free speech doesn’t belong only to those we agree with, and the First Amendment doesn’t only protect speech that is tasteful and inoffensive.”
So wrote ACLU lawyer Chris Hampton nearly a decade ago. Hampton is an activist for LGBT causes… who nonetheless stood up for the right of Kansas preacher Fred Phelps and his Westboro Baptist Church to hold anti-LGBT protests outside people’s funerals.
It’s in that spirit we hold our nose this morning… and rise to the defense of Zero Hedge.
After we packed up for the weekend, news broke on Friday night that Twitter had permanently suspended the account of Zero Hedge — the “edgy” financial website that got its start during the depths of the global financial crisis in early 2009.
At least others who still have Twitter accounts could register their objection…
Two days earlier, Zero Hedge published an article asserting the Wuhan coronavirus making so much news lately was a bioweapon created by a scientist at the Wuhan Institute of Virology. The article included his email address and phone number. As with every article it publishes, ZH posted a link on Twitter.
Supposedly the act of “doxxing” the scientist is what earned ZH the ban hammer from Twitter — which in a statement cited its "rules against abuse and harassment."
But the move takes place in a wider context, as the Reuters newswire points out. “Social media companies, including Twitter and Facebook, have pledged to take down accounts that spread misinformation about the virus.”
We already anticipate an objection: Twitter is a private company and it has every right to decide who can and can’t play in its sandbox.
True enough. The problem — as we explained in 2018 when InfoWars loudmouth Alex Jones was being “deplatformed” — is that there’s a creepy pas de deux between the social media giants and the federal government.
Time and again, the feds threaten regulation… and the companies fend off that threat by knuckling under to demands for, among other things, “curbing misinformation.”
And goodness knows misinformation abounds when a pandemic threatens to sweep the globe.
Understandable, perhaps. There’s something about the potential for a worldwide health crisis that sends levelheaded people around the bend.
Remember the Ebola scare? What a weird autumn of 2014 that was — when otherwise-sensible folks were sharing links to articles claiming a shuttered prison in upstate New York was being turned into a “FEMA camp” for Ebola patients.
In the present instance, we’re not going to pronounce judgment on Zero Hedge’s coronavirus coverage. Others have deconstructed the article in question, and ZH has punched back with a follow-up attempting to debunk the debunkers. Public health matters are not our speciality.
But the economy and the markets are. And from its earliest days, we’ve seen how Zero Hedge has played fast and loose with the facts.
We well remember a story it published in 2010 or 2011 insinuating that Central Fund of Canada had no gold or silver bullion backing its shares.
For anyone who knew anything about precious metals, the suggestion was both shocking and preposterous. Central Fund was founded in 1961. It was the original vehicle by which folks could get exposure to gold and silver via a purchase on the stock exchange.
As gold ETFs like GLD and IAU came on the scene in the early 2000s and informed observers posed valid questions about their gold backing, Central Fund’s reputation in the gold bug community remained first-class — save for ZH’s drive-by smear, supported with no evidence at all.
Another example: In 2013, JPMorgan Chase began putting restrictions on small-business customers that performed international wire transfers. Zero Hedge and others screamed, “Capital controls!” heralding an imminent financial crisis, while mainstream sources were saying, “Move along, nothing to see here.” Our own review found the truth lay somewhere in the middle — cause for concern, but not a hair-on-fire moment.
That’s the thing about ZH. Everything is a hair-on-fire moment. Its role in the ecosystem of financial media is best summed up as “professional s***-stirrers.”
That’s a very different role from the one we perform at Agora Financial… even though we and ZH both occupy the very broad category of “alternative financial media.”
Zero Hedge is available for all to read, and is supported by ads — which in a way puts it in a similar class with mainstream sources like CNBC and MarketWatch.
We, on the other hand, generate the vast bulk of our revenue from the subscription fees of readers like you. This business model cuts out the middleman, so to speak. You’re paying us directly for our information and analysis — which we prepare knowing full well you’ve sought it out for the purpose of preserving and growing your wealth.
So the work we do entails a way higher level of responsibility to the reader. With that responsibility always top of mind, we seek out only the facts, and follow them wherever they might lead.
Of course, that’s what journalists used to do. When I took on managing editor duties of this e-letter nearly a decade ago, I brought 20 years of journalism experience with me — along with a devotion to that profession’s now-abandoned values of accuracy and probity.
In addition, each day’s episode of The 5 — along with a vast amount of Agora Financial’s paid content — is reviewed by a team of copy editors who administer a healthy dose of fact-checking along with the usual scrub for spelling, grammar and punctuation. The leader of that team, like me, has a journalism background and an old-school dedication to precision with the facts.
Meanwhile, Zero Hedge occupies its own s***-stirring niche — and quite successfully, it seems. There’s room for everyone. Or there should be.
That’s what disturbs us about the Twitter ban. It comes back again to what we said 18 months ago when Alex Jones was the target. It’s one more step in a “public-private partnership” setting slender boundaries for what’s acceptable discourse and what’s not.
If ZH wants to speculate about the origins of the coronavirus, that’s their prerogative. Let them compete in the marketplace of ideas. If their articles are baseless or bogus, well, that’s what competition is for.
But banning ZH from a major social media platform has the effect of pushing ZH’s ideas “underground”… which ironically draws more attention to them. “Hey, why’d they get banned? Must be something really awesome there. Better go check it out.”
“Misinformation” withers in the sunshine. Twitter, under ever-present government pressure, just gave it a dark and damp environment where it can fester and ultimately flourish. Alas, it won’t be the last time.
For once, a huge sell-off in Asia did not result in “contagion” spreading west across the globe.
After a break for the lunar new year, the Chinese stock market reopened today for the first time since Jan. 23. A week and a half of pent-up panic over the coronavirus sent China’s major indexes down 8% on the day.
But as markets are closing in Europe, the main indexes there are modestly in the green. And stateside, the Dow has recovered about 200 of the 600 points it shed on Friday — up three-quarters of a percent at 28,464 as we check our screens. The S&P 500 is up a little stronger, and the Nasdaq stronger still.
Crude, however, is not sharing in the rally. It’s down nearly a buck at $50.56 — testing a low seen three times in the last 12 months. Gold is also selling off, the bid knocked back to $1,577.
“The truth is it’s not really the coronavirus that’s to blame for the latest stock market dip,” says our Alan Knuckman from his perch in the Chicago options trading pits. “Smart traders just use times like these as a profit-taking excuse.
“Look, I’m no doctor… and I can’t predict global catastrophe (nor would I WANT to). But we’ve been through similar situations — with news outlets riling people up and convincing them to batten down the hatches.
“Things are NEVER as bad as they seem… especially not when companies are posting record-breaking numbers!”
Here’s one thing we can say with certainty: Coronavirus will not be an economic boon to the United States.
That’s what Commerce Secretary Wilbur Ross said to Fox Business last week. “I don't want to talk about a victory lap over a very unfortunate, very malignant disease. But the fact is it does give businesses yet another thing to consider when they go through their review of their supply chain… So I think it will help to accelerate the return of jobs to North America. Some to U.S., probably some to Mexico, as well.”
Oy. We’re not always fans of The Wall Street Journal’s editorial board, but they’re on target here: “This is apparently how you think when you believe that global trade and commerce are a zero-sum game.
“Mr. Ross has become so focused on treating China as an economic adversary that he sees every loss for China as a net benefit to the U.S. But as the markets are saying, a slowdown or recession in China caused by the virus and quarantine will have economic consequences around the world — including the U.S.”
To paraphrase Roy Scheider in Jaws, “You’re gonna need a bigger vault.”
“German banks are stuffing vaults with money to help offset the mounting cost of negative interest rates,” Bloomberg News reports, “and some of them are running out of space.”
The country’s central bank, the Bundesbank, just reported that physical cash holdings by German banks total a record 43.4 billion euros, or $48 billion. The figure has tripled since the European Central Bank adopted negative rates in 2014.
“Accepting deposits to fund loans is at the heart of banking, but European lenders are awash in liquidity and argue that they can’t pass it all on in the form of credit,” Bloomberg explains. “That leaves them sitting on billions of euros they have to take to the ECB or find another solution for.”
A Munich-based precious metals trader had to turn away several requests for banknote storage in its vaults. No room.
Maybe the ECB could adopt an emergency vault-construction program and put some unemployed Germans to work. Bet they could find a few “shovel-ready” locations…
“WOW…!!!” a reader exclaims after we suggested on Friday the Roth IRA’s days might be numbered.
“The Roth IRA should remain intact and untouched. Otherwise, get out the pitchforks and torches…! Unbelievable!!!
“How will we ever retire in this lifetime with these jokers and conmen at the helm. Throw them all out and we will select new fresh meat to take these tired old geezers’ place. I just can’t anymore with these politicians. Doesn’t even matter what side they are on… ‘It’s for your own good’ has been in place too long now…!!! Take the red pill and wake up already, people. Neo help us.
“Looks like we will have to buy real estate and gold.”
The 5: Couldn’t hurt.
“Just thought I’d point out the acronym for the new ‘Big 4’ companies you have anointed is MAGA (Microsoft, Apple, Google and now Amazon).
“Surely, this is a mere coincidence, but for me, I like thinking there might just be a conspiracy event in play.”
The 5: “Coincidence? I think not,” said a reader who wrote in last month after seeing our resident futurist George Gilder name-check all those companies in an episode of The 5.
We confessed at the time it escaped our notice. Heh…
The 5 Min. Forecast
P.S. Shoutout to readers of The Profit Wire — the premium trading service where I team up with Alan Knuckman to identify “fake financial news” and then aim to profit from the real story.
This morning, readers booked a 100% gain on the online-payments company Square — after a holding time of less than two weeks.
Don’t feel bad if you missed out. We have a new recommendation in the works for tomorrow. Access here.