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Nationwide round-up

Anti-red tape office reports over 60% resolution rate

THE ANTI-RED Tape Authority (ARTA) on Thursday said over 60% of 3,964  cases filed have been resolved. In a briefing on Thursday, ARTA Director General Jeremiah B. Belgica said 2,425 complaints were closed, meaning the agencies concerned “followed, released, and streamlined” their system. Mr. Belgica said they are working to close the remaining cases. For “worst case scenarios,” Mr. Belgica said ARTA will file cases against erring officials before the Ombudsman, adding that a set of complaints will be brought on Friday. He declined to name the officials. ARTA also presented new guidelines on issuing permits considering new health protocols, including reduction of the required signatories and allowing e-signatures. — Gillian M. Cortez 

Ex-Ombudsman Morales disagrees with Martires’ SALN policy

OMBUDSMAN SAMUEL R. Martires should prioritize the concerns of the public, not of politicians, his predecessor said on Thursday. “If it turns out that the SALN (State of Assets, Liabilities, and Net Worth) has been weaponized by the requester or if the person who requested it uses it against the morals of public policy, the person whose SALN was requested can file a case against the requester. It is the concern of the politician to fault the request if the requested SALN is being used against morals or public policy,” former Ombudsman Conchita Carpio-Morales said in an interview over ANC. The former anti-graft chief said that Mr. Martires’ order to tighten public access to the records of public servants goes against a Constitutional principle that ensures transparency among government officials. “It goes against the principle of the Constitution that public office is a public trust,” she said. — Kyle Aristophere T. Atienza

Sea dispute won’t be resolved anytime soon — Roque

THE PHILIPPINE government does not expect an immediate resolution of the South China Sea dispute despite President Rodrigo R. Duterte invoking the Hague ruling in its favor during his first United Nations (UN) address early this week. Palace Spokesperson Harry L. Roque, in a briefing on Thursday, said the longtime dispute involving several countries is not likely to get settled soon. “We will for the time being set this aside because I don’t think the resolution of the territorial dispute is forthcoming in our lifetime,” he said. In the meantime, the Duterte administration will focus on trade and investment ties, Mr. Roque said. At Tuesday’s UN General Assembly, Mr. Duterte cited the arbitral win of the Philippines and said any attempt to undermine it will be rejected. This was the first time Mr. Duterte publicly acknowledged the ruling. — Gillian M. Cortez 

Rapid antigen test kit set for pilot use

THE USE of rapid antigen test kits for the coronavirus disease 2019 (COVID-19) will be piloted in Baguio City, which is set to partially reopen to domestic tourists on Oct. 1. The COVID-19 national inter-agency task force issued Resolution No. 73 on Thursday allowing the use of the antigen test kits for domestic tourists, visitors with essential travel, and contacts of confirmed COVID-19 patients in areas with a clustering of cases. “The Department of Health, the Department of Tourism, and the World Health Organization are enjoined to continue providing assistance to the City of Baguio for this undertaking,” the resolution said. In a briefing on Thursday, Palace Spokesperson Harry L. Roque said rapid antigen test kits have a faster turnaround time and are cheaper than RT-PCR testing, currently the only recognized accurate procedure. — Gillian M. Cortez

Group appeals for release of political prisoner with sick 3-month child

A SUPPORT group for families of political prisoners again appealed for the temporary release of detained activist Reina Mae Nasino on “humanitarian grounds” after her three-month old child tested positive for coronavirus disease 2019 (COVID-19). “We call on the government to extend compassion for Reina Mae and her baby girl, River. Let her take care of her sick child. The lethal COVID-19 poses serious threats, especially for a nearly 3-month-old baby who wasn’t able to be breastfed enough after being separated from her mother less than two months ago,” the group KAPATID said in a statement. Ms. Nasino, currently detained at the Manila City Jail Female Dormitory, gave birth on July 1 and was separated from her baby in August following a Manila court order that denied her plea to breastfeed her daughter for a year. — Kyle Aristophere T. Atienza

Biodiversity bureau appeals for help in bird protection as migration season starts;  warns vs hunting, avian flu threat

PAMBC-DAVAO REGION

THE ENVIRONMENT department’s Biodiversity Management Bureau called on the public to help protect passing birds as the southward migration season starts. At the same time, the bureau warned against getting in contact with the birds, both live and dead, as some species could be carriers of avian flu, which poses a threat to the country’s poultry industry. Environment Assistant Secretary Ricardo L. Calderon said in an advisory. Mr. Calderon, director of the biodiversity bureau, also reminded the public of the penalties against hunting these migrating birds as provided under Republic Act 9147, the Wildlife Resources Conservation and Protection Act. Violators face imprisonment of two to four years, and fines of up to P300,000. The southward migration starts in September and the birds take the northern path back to their breeding grounds by March. “These birds stop briefly along wetlands — swamps, marches, intertidal and coastal areas, rivers, ponds, lakes, as well as forests throughout the country, to rest and refuel… We call on the public to help protect these birds,” Mr. Calderon said.

Room for modesty

On Sept. 21, during Standard Chartered Bank’s ASEAN Webinar, Bangko Sentral ng Pilipinas (BSP) Governor Ben Diokno was quoted saying: “Overall, the total amount of additional liquidity injected into the system from these collective (monetary) measures is estimated at P1.4 trillion, equivalent to 7.3% of GDP.” In its magnitude, this is almost 30% of the proposed national budget for 2021.

When the COVID-19 outbreak began, a crucial attribution to the monetary authority was the Governor’s assurance that the BSP would be taking “decisive and immediate actions.” These included reduction of policy rates by 175 basis points to influence the decline in market rates and the cost of money. The banks’ required reserve ratios (RRR) were also slashed by 200 basis points for commercial banks and 100 basis points for thrift and rural banks. Bank regulations were also tweaked to provide relief to the industry and encourage lending both to small business and households.

We owe a great deal to the BSP for its nimble response to the pandemic. What the BSP proposed to do through its monetary accommodations were to ensure market liquidity, support market confidence, mitigate a near freeze of economic activity, sustain financial stability and protect market access to financial services.

If we are to borrow what Mohamed A. El-Erian (The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse, 2016) wrote in his April 20, 2020 Bloomberg article, what the BSP did was “stunning.” The BSP, like many central banks from both emerging markets and advanced economies have all “gone in, deploying emergency interventions in record time that have already exceeded the steps they took during the financial crisis and its aftermath.”

While commending central banks, El-Erian also warned, “no good deed goes unpunished.”

He cited five risks faced by central banks which opted for “bazooka methods,” in addressing the pandemic crisis. We focus on four most relevant to the Philippines.

First, aggressive monetary easing contributes to a possible disconnect between asset valuation and their underlying fundamentals. We seem to have been spared of this trouble whether in the equities or in the real estate market because confidence remains at rock bottom. Despite the BSP’s “all it takes” efforts to stimulate the economy and keep market activity resilient, the PSEI composite index continues to struggle at around 5,900 from December 2019’s 7,815.

Second, due to uncertainty in the pandemic trajectory, decision making is fraught with risks. It is not unimaginable that central banks could misjudge the volume of liquidity required by the market and pump in more than necessary.

Based on its own disclosure, the BSP has injected an additional equivalent of P1.4 trillion in the system. But on Sept. 22, one broadsheet reported that the “BSP siphon(ed) off P1.5 trillion of liquidity.” This was the total outstanding amount retrieved by the BSP’s liquidity facilities or its open market operations (OMO) such as the overnight deposit facility (ODF) which absorbed a reported amount of P1.09 trillion. That would be about 73% of BSP’s mopping up operations validated by the central bank’s second quarter 2020 Economic and Financial Developments Report.

In effect, since the viral outbreak, the BSP has eased monetary policy in the hope that more money and lower interest would encourage more credit activity by the banks. The money actually came from the BSP’s reduction in RRR, purchases of government securities from the secondary market, and its accommodation of national government borrowings.

The problem is that the actual increase in domestic liquidity was not P1.4 trillion but only P633 billion representing the increase in July 2020 over its level at the end of December 2019. Around P800 billion remains with the BSP because of its own mopping up operations.

Unfortunately, banks are lending less. Total loans at the end of last year stood at P10.966 trillion, declining to P10.857 trillion at end-July 2020, a reduction of more than P100 billion. Given weak credit demand, banks have been placing their excess funds with the BSP, and some with the NG which are also deposited with the BSP.

Have lending rates followed the easy monetary stance?

There seems to be some bottleneck in the transmission of monetary policy. At the end of 2019, high and low lending rates averaged 8.018% and 5.497%, respectively. At the beginning of the pandemic in January-February 2020, these rates even climbed to 10.327% and 6.037%, respectively. At end-May 2020, despite the BSP’s aggressive stance, high lending rates averaged 11.457% while the average of low lending rates hit 6.232%.

Aside from the relatively high lending rates, what could have contributed to weak credit activity was the reported banks’ tighter lending standards. BSP’s media release of July 27, 2020 reported that “results of the Q2 2020 Senior Bank Loan Officers’ Survey (SLOS) 1 showed that most of the respondent banks tightened their overall credit standards for loans to both enterprises and households during the quarter.”

Based on the modal approach — which depends on the option with the highest response among respondents — this is the first time that the majority of respondent banks have reported tighter credit standards following 44 consecutive quarters of broadly unchanged credit standards.

This type of bank behavior is naturally risk-driven. And the banks have some good basis for trying to manage risks. Latest statistics confirm that the non-performing loan ratio has gone up from 1.6% to 2.3%, from end-December 2019 to end-July 2020, or about P70 billion in past due accounts. As desolation in economic activities takes hold, banks are seeing a big decline in their loans to deposit ratio. Loans proved weaker than expected, while people refrained from spending, and in the process, kept their money with the banks.

It is good the banks have stepped up. As Bankers Association of the Philippines President Bong Consing assured in a webinar at the end of April, local banks have been building up their buffer for an expected hike in NPLs due to the lockdown of economic activities.

But complicating this build-up in bank stress is the possible concentration risks arising from “banks’ investments in government securities as well as recent efforts to boost domestic liquidity amid the pandemic.” This was highlighted by the Fiscal Risks Statement for 2021 by the Development Budget Coordination Committee. The risk could come from the fact that herd behavior among banks could trigger a sell-off of government securities (GS). Banks invest around P2.2 trillion in GS. With an increasing non-performing loan ratio, the probability of a liquidity squeeze cannot be ruled out.

Again, this is pushing on a string.

Third, by excessively inflating the economy and avoiding market failure, central banks could open themselves to accusations that they could be unwittingly favoring some sectors. Ownership of central bank policies could be undermined.

Finally, when leaders in both the Executive and Congress realize the enormous power of central banks and their capacity to move fast in responding to liquidity needs during the pandemic, it is possible that the regular quantitative easing (QE) could be modified to a more popular QE, or people’s QE. This is a populist stance, involving greater access of nearly everyone to central bank facilities.

As the IMF once proposed, “the effectiveness of intervention program depends on several factors including which assets the central bank can buy, or lend against, and who it can deal with.” Central bank accommodation of public debt could be another issue.

It is also key to a more effective health and economic management that both the risks and the burden be commonly shared by all stakeholders in a whole-of-society approach. Adjustment programs cannot be cast in stone. They should be subject to regular reassessment and recalibration as we move along. We move as one, we shall heal as one.

In this spirit, the central bank can be more modest with what it does and much more with what it can do. There is room for recognizing the limits of monetary policy and its great synergy with other public policies.

Of great relevance was the caution by Bank for International Settlements (BIS) General Manager Agustin Carstens, formerly Bank of Mexico governor and finance minister, during a panel with the Swiss National Bank and UBS in May when he said: “Central banks cannot intervene in government debt markets on a large scale for any great length of time. Eventually, the natural boundaries between fiscal and monetary policy will need to be fully restored to preserve central bank credibility.”

 

Diwa C. Guinigundo is the former Deputy Governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was Alternate Executive Director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

Abetting the information crisis

Despite the people’s Constitutionally protected right to information, the Office of the Ombudsman has issued a memorandum restricting access to the Statements of Assets, Liabilities and Net Worth (SALNs) of the officials that are in its custody, among them that of the President.

Because President Rodrigo Duterte’s 2016 Executive Order No. 2 mandating public access to information held by agencies under the Executive Department is still in force (though hardly of any use), some of his die-hard followers are saying he had no hand in it, and that by issuing Memorandum Circular No. 1, Series of 2020, Duterte appointee Samuel Martires is risking his displeasure.

But it seems likely that Mr. Duterte knew about it before it was issued, was consulted about it, and approved of it. No official of the regime would have risked provoking his ire by doing something seemingly in conflict with his supposedly anti-corruption policy without clearing it with him. The Office of the Ombudsman is by law independent, but as some Presidents, specially Mr. Duterte, have demonstrated, the law can be ignored with impunity by a chief executive determined to impose his will even on those branches of government that are supposed to be independent and coequal, such as the Courts and Congress. Resistance can be costly: as the supreme appointing power in government, and with his control over the budget process, Presidential disfavor can mean not getting that wished-for appointment, or drastic cuts in one’s agency’s funding.

The Palace’s reaction to the Memorandum — its “respecting” it rather than taking issue with it — also speaks volumes about how much of a deception is Mr. Duterte’s supposed commitment to freedom of information. He has himself refused to make his 2018 SALN public despite a 2019 request from the Philippine Center for Investigative Journalism (PCIJ). When PCIJ staff requested Martires for it, they were told he was preparing new guidelines for the release of the SALNs in the custody of his Office. Because the Martires Memorandum covers Mr. Duterte’s 2019 SALN, that document is now similarly inaccessible to the media and the public.

The Memorandum limits access to the SALNs of the country’s highest officials only to those who filed them or their representatives; to an individual with a court order regarding a pending case; and to the field investigation units of the Office of the Ombudsman itself during an investigation. Issued in the context of already ongoing public and media difficulties in getting government-held information including Mr. Duterte’s own SALNs, the restrictions qualify as part of the regime ploy to deny the media and the public access to information, which has included attacks on the independent press and journalists, and the shutdown of the free television and radio services of ABS-CBN network.

The attacks on independent journalists — barring them from covering Mr. Duterte, red-baiting and demonizing them as terrorists, filing criminal libel suits against them, withdrawing the registration of media organizations — and the shutdown of ABS-CBN have one thing in common: they were moved by government officials’ disapproval of the way they and their statements and acts were being reported. They disdain being asked the questions responsible journalism demands practitioners should raise. They resent the exposure of their wrongdoing by those journalists and media organizations that take seriously the Fourth Estate function of monitoring and holding power to account. Like their Malacañang patron, they pay lip service to free expression and the people’s right to know, but do all they can to frustrate both.

The reason should be clear enough. Information on what government is doing, which includes its officials’ amassing unexplained wealth as a possible sign of plunder, theft of public funds, taking kickbacks, and other forms of unlawful behavior, is vital to the need to end or at least keep corruption at a minimum. Without knowing what the President down to the lowest-ranking clerk are up to, not only containing corruption, but also changing things for the better is next to impossible — and likely to delude the public into thinking that everything is honest and aboveboard.

That was exactly what happened during the Marcos dictatorship, the 48th anniversary of whose inception was marked this week. With media under government restriction, and secrecy the government policy, during that period (1972-1986) most Filipinos were kept in the dark not only about the human rights violations, the war in Mindanao, the rice and energy crisis, and the growing public debt, but also about the unprecedented levels of regime corruption whose legacies of poverty and underdevelopment still haunt this country today.

The framers of the 1987 Constitution included in that document such provisions as acknowledging the people’s right to know and created a number of government oversight agencies to prevent a repetition of the past. But in the fourth year of the Duterte administration, the State agency charged with investigating and penalizing public sector corruption, the Office of the Ombudsman, is restricting access to information on the assets, liabilities, net worth and financial and business interests of the country’s highest officials on grounds that lawyers’ groups have described as without any legal basis.

The Memorandum cites the Code of Conduct and Ethical Standards for Public Officials and Employees (Republic Act 6713) to justify the restrictions. But the Act only names the Office of the Ombudsman custodian of the SALNs of the President, Vice-President, and officials of Constitutional commissions. It does not authorize the Office to limit access to those documents, which by law are supposed to be available to the public. The same law recognizes the people’s right to be informed about “the assets, liabilities, net worth and financial and business interests” of all government officials.

The Duterte regime’s denying the public access to government information prevents the populace’s meaningful involvement in the politics and governance of this country as the essential condition to bringing about the social, economic and political changes needed to bring it to the 21st century — changes Mr. Duterte was promising during his 2016 campaign for the Presidency, and in anticipation of which he was elected by 33% of the electorate. And yet his regime is curtailing the right to information because it instinctively knows that knowledge is profoundly empowering and that the truth can enable the citizenry to take control of their own lives through active political engagement and informed decision-making.

Lack of information and the resulting confusion have already made millions of Filipinos leery of political and civic involvement. They do vote every three years, but often with a large dose of cynicism and indifference to the consequences of their choosing for officials the clowns, crooks, assassins, and dolts with whom the Philippines has been burdened since Commonwealth days.

Ours is supposed to be the Information Age. Trillions of bytes of information deluge billions throughout the planet daily via online media and print, film and broadcasting. But here we still are in the Philippines, with much of the populace denied the knowledge they need to make sense of what’s happening and to change what needs changing.

It is a government-abetted information crisis in furtherance of keeping things the way they are and have always been. Change is not coming. What is in store for this country for so long as the oligarchy is in power is more of the same poverty, corruption, indifference to the people’s woes, incompetence, tyranny and sheer mindlessness that have plagued it for decades — or worse.

 

Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).

www.luisteodoro.com

Nomination sensations

US Supreme Court Justice Ruth Bader Ginsburg died last week. The only member of the Court not coming from either Yale or Harvard law schools, her death prompted numerous tributes, particularly as to her status as a “feminist icon.”

In her earlier years, Justice Ginsburg was known as a highly experienced litigator. But it is her work of the past 27 years, as a member of the Supreme Court, that her legacy will likely be most measured.

It is also, perhaps, where things get complicated.

To put it tersely: she was a judge. Yet to be remembered for advocating from the bench her own brand of progressive legal philosophy seems disconnected to the identity and functions that a member of the judiciary is supposed to exhibit.

Not the least of which is objectivity.

Supreme Court justices are not supposed to engage in policy. As one commentator wrote: it is not “the job of a judge to make the world a better place.”

No. As previously discussed here (“A Supreme but humble Court,” June 7, 2018), the “Supreme Court has a far narrower function: decide cases and determine constitutionality of laws. That is the reason why justices are all lawyers and are not subject to shorter terms (justices serve until 70 years old, provided they remain on ‘good behavior’).”

“Unlike Congress, the Supreme Court is NOT mandated to engage in policy. The dispensing of wisdom and expertise in political, scientific, social, economic, security, etc., are not primarily asked of Supreme Court justices.

“Because, if policy wisdom and expertise are indeed needed, then why limit membership to lawyers? There are many intelligent, experienced, and astute businessmen, economists, doctors, soldiers, etc.

“That such are not needed of justices is precisely because the Supreme Court’s function is limited to the legal. Its warrant is narrow, albeit complicated and highly technical.”

For someone in a supposedly pedantic, technically focused office, Justice Ginsburg’s death nevertheless set off a political firestorm, with many on the Left hysterically promising apocalypse should US President Donald Trump nominate her replacement.

The American Spectator’s Doug Bandow framed the situation correctly: “It is sad that a life so well lived did not benefit from even the shortest decent interval before considering the politics.” But ironically, it was precisely Justice Ginsburg’s progressive politics that is to be blamed for this.

Because of the Left, “politics [has become] impossible to ignore.” “Modern liberals… abandoned fidelity to the rule of law in reality if not rhetoric. Their commitment to a ‘living constitution’ — the evolving meaning of which depended upon any number of factors, including, it sometimes seemed, sunspots and the phase of the moon — turned them into politicians and the courts into continuing constitutional conventions.”

Put another way: liberal progressive insistence of a “living constitution” led to politicizing the court and in judicial activism.

It also had the effect of converting the Supreme Court appointment process into a war of attrition.

It wasn’t always like this. For the first 199 years of US existence under its Constitution, Supreme Court appointments were usually sober inquiries into the nominee’s expertise. That is until the Left — motivated purely by power politics — decided to unjustly harass and torpedo the 1987 Supreme Court nomination of the highly respected and qualified Robert Bork.

In any event, President Trump’s constitutional duty (US Constitution, Article II) is clear cut: he is the president for four years (unless re-elected in November) and is tasked to “nominate, and by and with the Advice and Consent of the Senate, shall appoint… Judges of the Supreme Court.”

Hopefully, he appoints a textualist/originalist to the Supreme Court, one deciding cases in accordance with what the Constitution says rather than imposing his or her personal politics under the guise of a “living” or evolving constitution.

Anyway, Philippine Supreme Court appointments tend to be smooth affairs. There is also the supposedly non-political Judicial and Bar Council process (the benefits of which really remain to be seen).

One notable exception was the appointment made by President Gloria Arroyo following Chief Justice Reynato Puno’s retirement on May 17, 2010, just a few days after the presidential elections of May 10, 2010.

Inasmuch as the Constitution’s Article VII.15 prohibits appointments “two months immediately before the next presidential elections and up to the end of his term,” was President Arroyo still entitled to appoint a Supreme Court justice “within 90 days from the occurrence” of the vacancy, as required by Article VIII.4.1?

The Supreme Court (in De Castro vs JBC, 2010) said yes, pointing out that “had the framers intended to extend the prohibition contained in Section 15, Article VII to the appointment of Members of the Supreme Court, they could have explicitly done so.” Thus, the appointment ban “does not refer to the Members of the Supreme Court.”

Which hasn’t prevented, though, Supreme Court justices from being removed by impeachment or quo warranto. But that’s another discussion.

 

Jemy Gatdula is a Senior Fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.

jemygatdula@yahoo.com

www.jemygatdula.blogspot.com

facebook.com/jemy.gatdula

Twitter @jemygatdula

The 10 most useless phrases in financial markets

IT HAS BEEN more than a year since we last visited the question of annoying financial clichés. I recently asked the Twitterati their least favorite finance phrases, and I was shocked at the overwhelming response. Why does this matter? Useless finance phrases have a pernicious effect on our psyche, leading us to blindly accept ideas that should instead receive critical analysis. It’s not just that catchy phrases are no substitute for actual thinking, they are often wrong.

Once again, let’s consider a new batch of the most meaningless phrases in finance:

1. “Don’t Get Complacent.” What, exactly, should an investor do with this bit of advice? How does a lack of complacency manifest itself in an investment portfolio? Should the recipients of this advice liquidate some or all of their holdings? Or should they merely be on the lookout for some heretofore unknown risk — as they always should?

“Don’t have a smug or uncritical satisfaction with oneself or one’s achievements” makes for a nice sentiment in a high school valedictorian speech or a college paper on Epicurean philosophy, but it is not what street types describe as “actionable advice.”

As someone who is in the advice business, I like to offer specific and identifiable actions, as in “buy this and sell that.” To be fair, something like “Hey, you have had a great run during this rally. Be careful about getting overconfident” is not the worst advice one could get — it’s just squishy and hard to express in a trade.

2. “Profit Taking.” This phrase tends to appear anytime there’s been a run up in asset prices, followed by reversal. It is never a simple consolidation or just a break from a relentless buying spree. Instead, the claim is that buyers at lower prices are now sellers at higher prices, booking a profit. This is always proffered without evidence or explanation.

Ironically, the correction in the stock market that began toward the end of the summer — about an 11% pullback in the Nasdaq 100 Index following a 77% gain from the lows less than six months earlier — was very likely actual profit taking as a driver of the selling.* And yet, the one time the phrase could have been used accurately, no one seemed to bother with it.

3. “More buyers than sellers.” The problem with this phrase is in its truncation, making the shortened version nonsense. The actual phrase is “There are more buyers than sellers at this price level.”

Look at the Nasdaq Level II quote for any stock. The bid/ask spread is there, but so too are all of the various bids below and asks above the current market price, along with the number of shares at each price level. Prices move higher or lower when there are more willing buyers or willing sellers at any given level.**

Hence, the phrase “more buyers than sellers” only makes sense when referring to specific price levels, and not the actual 1-to-1 ratio of a buyer for every seller.

4. “The stock market hates uncertainty.” This could be the 2020 phrase of the year. It is not merely wrong, it reflects a fundamental misunderstanding of what drives markets. Buyers and sellers operate probabilistically, without certainty. If there was any certainty, who would ever take the opposite side of your trade?

Note that uncertainty isn’t the same as risk. As discussed previously, when the range of outcomes is understood, you don’t have uncertainty; you merely have an unknown future outcome.

The rare times when there is “certainty” are few and far between. A good example is late 1999, when everyone was sure markets had no limits, and again in March 2009, when everyone believed markets were going to keep crashing. It seems whenever there is certainty, the herd is wrong.

5. “The easy money has been made.” This phrase is only made in hindsight. What this bias translates as is “Darn, I missed an opportunity for a money-making trade, if only I knew then what I know now.” It never is easy.

6. “Earnings missed estimates.” This phrase is backwards. When an analyst creates an estimate as to a company’s next quarterly profit, he or she is making an educated guess as to that future data. A compilation of the analyst community’s various guesses together is a consensus estimate.

But make no mistake about it: One is a fact and the other is an opinion. When the quarterly facts get released, we find out how accurate the opinions were. Hence, it was the guesses — and not the earnings — that were wrong. Stated with greater precision, the estimates missed the earnings — and not the other way around.

7. “Cash on the sidelines.” Every trade swaps cash for stock between both sides of the trade. T+1 (or T+3) settlement dates mean money is always moving back and forth between various parties. Hence, there are always trillions of dollars on the sidelines, in transaction settlements, at prime brokers or in trading accounts. I have yet to see a study that correlates all that cash in money market accounts with some accurate forecast of future market performance.

8. “On a go-forward basis.” Other than historical analysis, isn’t everything on a go-forward basis?

Anytime you are discussing what the economy or the market or a company or stock might do, it is on a go-forward basis. What already happened is history, and unless you are Marty McFly you can’t go backwards in time. What is happening live, in real time, hardly needs any prediction; it’s already too late. Pretty much all you are left with is the future. Saying “on a go forward basis” is useless and redundant.

9. “It is already in the price.” This is a tough one, because when used correctly, it is an accurate statement. The problem arises from its occasional incorrect usage.

Thank Nobel laureate Eugene Fama. He eloquently explained how prices incorporate all known information in his efficient market hypothesis. Price reflects the sum total of this known information, manifest in the decisions buyers and sellers have collectively made.

But genuinely new and unknown information is not in the price. A sudden surge or sell off of stocks occurs when that new information gets reflected in new prices. When that happens, it obviously was not already in the price.

10. “110%” (Alternatively, “1,000%”). This phrase isn’t limited to the world of finance. It’s often used in the world of sports and a lot of other places. The maximum anyone can ever give, or feel, or believe, or whatever, is 100%. Anything over that is a mathematically impossible embellishment.

Lately, we have been witnessing “hyperbole inflation.” To wit: 110% has become 200%, and then 1,000%. But this raises a question: If you are going to do something more than the maximum of 100%, then why only a little more than the most possible? Whenever someone says they blank something 1,000%, you might wonder why they are being so stingy. Why not 2,000% or 100,000% or a billion percent?

Either it is 100%, or it is a nonsense number that is less than an infinite amount of even bigger numbers, a hyperbole-fail. Unless you give an infinite percentage, which is either impossible, or the same exact thing as 100%.

Those are my most useless phrases in finance. What are yours?

BLOOMBERG OPINION

 

*Prices might go higher eventually, but many traders are paid based on their profitability (“P&L”). When huge gains accrue over a short period of time — like the March to August 2020 period — some traders lock in those gains, guaranteeing their quarterly or annual bonus for the year.

**Say you are looking at a stock, where the bid is $25.45 and the ask is $25.50. There are only a certain number of shares for sale at $25.50. Once that volume of stock has been purchased, the lowest ask becomes $25.55. Imagine there are buyers for 10,000 shares of stock at that price, but sellers only offer 5,000 shares. Once all the stock at $25.50 is sold, the next buy will take place at the next price, e.g., $25.55. Hence, “more buyers than sellers” makes sense when referring to specific price levels, and not the actual ratio of buyers and sellers.

NK troops ‘killed’ missing S. Korean

SEOUL — A South Korean fisheries official who went missing this week was questioned in North Korean (NK) waters before being shot dead by troops who then doused his body in oil and set it on fire, South Korea’s military said on Thursday.

South Korea’s military said evidence suggested the man was attempting to defect to the North when he was reported missing from a fisheries boat on Monday about 10 kms (6 miles) south of the Northern Limit Line (NLL), a disputed demarcation of military control that acts as the de facto maritime boundary between the two Koreas.

The exact reason the 47-year-old official was shot is not known but North Korean troops may have been acting under anti-coronavirus orders, South Korea’s military said.

Citing intelligence sources, the military said the unidentified man appeared to have been questioned at sea north of the NLL before he was executed on an “order from a superior authority.” Troops in gas masks then doused the body in oil and set it on fire.

The military said it sent a message on Wednesday to the North through the land border demanding explanations, but has not received any response yet.

“Our military strongly condemns such an atrocity, and strongly demands North Korea provide explanations and punish those who are responsible,” General Ahn Young-ho, who is in charge of operations at the Joint Chiefs of Staff, told a briefing.

The U.S. military commander in South Korea said this month that North Korean troops had been given “shoot-to-kill orders” to prevent the coronavirus entering the country.

In July, a man who had defected to South Korea three years ago triggered a coronavirus scare when he crossed back over the heavily monitored border into North Korea, which says it has had no cases of the disease.

His arrival prompted North Korean officials to lock down a border city and quarantine thousands of people over fears he may have had the coronavirus, though the World Health Organization (WHO) later said his test results were inconclusive.

Last week, South Korean police arrested a defector who they said had tried to return to North Korea by breaking into a military training site in South Korea’s border town of Cheorwon. — Reuters

Singapore starts to ease office restraints

SINGAPORE will allow more people to return to offices and trial a new business travel pass for senior executives as the city moves to re-open more of its economy amid ebbing virus cases.

Though working from home remains the default, the updated requirements allow office staff to return up to half their working time, with no more than half of such employees at the workplace at any point in time, the health ministry said in a statement on Wednesday.

Authorities said the updated measures were “carefully considered to balance the concerns of employers regarding the impact of extended periods of working-from-home on productivity and workplace relations, while creating safe workplaces for employees,” it said. The updated measures will take effect from Sept. 28.

With the business passes, which will be strictly limited at first, they will be for executives with regional or international responsibilities who need to travel regularly, the ministry said. Travelers on this pass will have the option of doing a virus test instead of stay-home notice upon return to Singapore, and self-isolate until the test results are out.

These announcements come as countries worldwide grapple with how to reopen their economies and borders safely amid the pandemic. In the U.K., banks from Goldman Sachs Group, Inc. to JPMorgan Chase & Co. this week halted plans to return workers in London after the government urged people to work from home to stem a surge in virus cases.

In Singapore, the number of daily cases has dropped significantly in recent months following partial lockdown measures imposed in April. Since then, cases have been kept at low levels through mandatory mask-wearing and other social distancing measures as the economy largely re-opened in June. The country has also ramped up containment strategies, including contact-tracing and targeted testing.

Here are more details of the updated measures as well as comments from the briefing:

• Work-related events within the workplace premises like conferences, seminars and corporate retreats will also be allowed to resume, for up to 50 people

• Authorities will consider allowing the resumption of work-related events at external venues at a later date

• Companies must not organize or encourage larger scale social gatherings within or outside the workplace such as parties, celebrations, team bonding activities, dinner-and-dance, and gala dinners

• Employers must continue to ensure clear physical spacing of at least one meter and demarcate safe physical distances

• Cinemas will be allowed to expand their capacities from Oct. 1

• All religious organizations will be allowed to conduct congregational and other worship services for up to 100 persons from Oct. 3. A pilot to increase worship limits up to 250 persons is also being considered, with more details to come

• Singapore will expand the current pilot for wedding receptions and marriage solemnizations to allow up to 100 attendees from Oct. 3

• Government is adjusting the legal cut-off age for children to wear masks to 6 years old and above, up from the current 2 years old and above.

• Results of the community testing operations indicate very low prevalence rates in the community: health ministry

• The end of the pandemic is still “some way” off: health minister Gan Kim Yong

“If all goes well, if we can continue to maintain this level of compliance and we can continue to control the infection well, then we will be able to continue with this path of resuming and opening up our economy and our society,” Lawrence Wong, the education minister who is the co-chairman of the virus task force, said during the briefing.

Mr. Wong said the government is working on the road map to phase three, the so-called stage where limited-sized social, cultural, religious and business gatherings or events would resume until a vaccine is developed. These plans could be shared in a few weeks, he said.

As of Wednesday, the city-state recorded 12 new infections, down from more than a thousand cases a day at the height of the outbreak.  Of the more than 57,000 known cases of the virus in Singapore since the pandemic began, nearly 95% are among migrant workers living in dormitories.

In these dormitories, the government announced earlier on Wednesday it would pilot additional testing there, effectively increasing the frequency to a seven-day cycle from 14 days. This is “to understand how more frequent testing will enable earlier detection of asymptomatic cases among migrant workers,” according to a joint government press release.

Wong said at the briefing that authorities will need a few rounds of regular testing at the dormitories before the country can continue to see a decline in cases there. Even though those facilities were declared clear of the virus last month, clusters have persisted. — Bloomberg

J&J’s single-shot COVID-19 vaccine to be tested on 60,000 volunteers

REUTERS

CHICAGO — Johnson & Johnson (J&J) on Wednesday began a 60,000-person trial of an experimental single-shot COVID-19 vaccine that, if proven effective, could simplify distribution of millions of doses compared with leading rivals requiring two doses.

The company expects results of the Phase III trial by year end or early next year, Dr. Paul Stoffels, J&J’s chief scientific officer, said in a joint news conference with officials from the National Institutes of Health and the Trump administration.

J&J plans to manufacture as many as 1 billion doses in 2021, and more after that, Mr. Stoffels said.

Rival vaccines from Moderna Inc, Pfizer Inc and AstraZeneca all require two shots separated by several weeks, which make them more difficult to administer and means twice as much vaccine is needed to inoculate the same number of people.

“The benefits of a single-shot vaccine are potentially profound in terms of mass immunization campaigns and global pandemic control,” Dr. Dan Barouch, a Harvard vaccine researcher who helped design J&J’s COVID-19 vaccine, said in a telephone interview.

The J&J vaccine also does not need to be stored at extremely cold temperatures, Mr. Barouch noted, another advantage over some rival vaccine candidates.

J&J shares were up 1.2%.

“Big news. Numerous great companies are seeing fantastic results. FDA (Food and Drug Administration) must move quickly,” U.S. President Donald Trump said in a tweet.

J&J published a detailed study protocol for its Phase III trial on Wednesday on the company’s website, joining the three other vaccine makers that have made these details available in recent weeks after calls for increased transparency in the trials.

PROTECTION ‘FOR A LONG TIME’
Mr. Stoffels said J&J started the late-stage study after seeing positive results in its combined Phase I/II trial in the United States and Belgium. The company plans to release those results imminently.

Mr. Stoffels said the safety and level of protection demonstrated in the earlier trial were on par with what was seen in the company’s animal studies. The results showed a single dose could offer sufficient protection “for a long time,” he said.

J&J’s late-stage trial will be conducted at as many as 215 sites in the United States, South Africa, Argentina, Brazil, Chile, Colombia, Mexico and Peru.

The trial will assess whether the vaccine can prevent moderate to severe COVID-19 after a single dose. It will also seek to detect if the vaccine can prevent serious disease requiring medical intervention and whether it can prevent milder cases of the virus.

Mr. Stoffels said it likely will take six weeks to two months to fully enroll the trial.

J&J plans to manufacture doses before approval, so it will be ready to start distribution soon after an FDA green light.

The trial will be overseen by an independent Data and Safety Monitoring Board (DSMB) that will review vaccine safety and effectiveness at pre-set intervals.

Dr. Francis Collins, director of the National Institutes of Health, said all three vaccines being supported by the federal government’s Operation Warp Speed — J&J’s, Moderna’s and AstraZeneca’s — share a common DSMB. Pfizer is running its own trial and has a separate DSMB, Mr. Collins said.

J&J’s trial would be considered a success if it proves to be 60% effective, with a study protocol that could have an efficacy answer after 154 people became infected with the virus.

Stoffels said the company will start counting COVID-19 infections within the study population 15 days after individuals are vaccinated.

The DSMB will take its first look at the vaccine’s efficacy after 20 trial participants have become infected.

Mr. Collins said the DSMB does not include any government employees and is made up of “very highly experienced” scientists and statistical experts.

“Until they are convinced that there’s something there that looks promising, nothing is unblinded and sent to the FDA. So everybody should feel pretty reassured,” Mr. Collins said.

His comments follow concerns that government scientists may be pressured to rush the vaccine testing process to boost U.S. President Donald Trump’s re-election bid.

In August, J&J signed an agreement with the British government on a global Phase III clinical trial to study a two-dose version of its vaccine, which will run in parallel with the single-dose trial.

Mr. Stoffels, in the briefing, said the single-dose version would be “very important for emergency use.” The company will later test a booster dose that could produce even greater immunity to the virus, he added. — Reuters

Protests erupt after Taylor ruling

LOUISVILLE, Kentucky — Two police officers were shot and wounded late on Wednesday in Louisville, Kentucky, during protests of a grand jury ruling decried by civil rights activists as a miscarriage of justice in the fatal police shooting of Breonna Taylor in March.

The grand jury decided that none of the three white officers involved in the deadly police raid on Taylor’s apartment would be charged for causing her death, though one officer was indicted on charges of endangering her neighbors.

The indictment came more than six months after Taylor, 26, a Black emergency medical technician and aspiring nurse, was killed in front of her armed boyfriend after the three officers forced their way into her home with a search warrant in a drug trafficking investigation.

Her death became a symbol, and her image a familiar sight, during months of daily protests against racial injustice and police brutality in cities across the United States. Last month media mogul Oprah Winfrey featured Taylor on the cover of her magazine calling for prosecution of the officers involved in her slaying.

Following the grand jury announcement, protesters immediately took to the streets of Kentucky’s largest city and marched for hours chanting, “No lives matter until Black lives matter,” amid sporadic clashes with police in riot gear.

The demonstrations remained mostly peaceful until several gunshots rang out as heavily armed police closed in on a throng of protesters at nightfall, ordering the crowd to disperse about a half hour before a 9 p.m. curfew was due to go into effect.

A Reuters journalist on the scene heard gunfire erupt from the crowd moments after police had fired chemical irritants and “flash-bang” rounds.

Two officers were shot and wounded, interim Louisville Metropolitan Police chief Robert Schroeder told reporters.

One suspect was arrested, and the two wounded officers were in stable condition — one undergoing surgery — with non-life-threatening injuries, Mr. Schroeder said. He gave no further details.  

Earlier in the day about a dozen people were arrested in a skirmish between hundreds of demonstrators and a group of law enforcement officers in the Highlands neighborhood just outside downtown Louisville. Some windows of nearby businesses were also broken. The crowds largely dissipated after Wednesday night’s shooting. Police said at least 46 arrests were made in all.

Sympathy protests of varying sizes also were held in several other cities on Wednesday, including New York, Washington, Atlanta, and Chicago.

In announcing the grand jury’s conclusions, Kentucky Attorney General Daniel Cameron said the panel had declined to bring any charges whatsoever against two of the three white policemen who fired into Taylor’s apartment on March 13.

The two officers, Sergeant Jonathan Mattingly and Detective Myles Cosgrove, were found to have been justified under Kentucky law in returning fire after Taylor’s boyfriend, Kenneth Walker, shot at them, wounding Mattingly in the thigh, Cameron said.

Walker has contended he believed intruders were breaking into Taylor’s home and that the couple did not hear police announce their arrival, contrary to the account of the officers and a neighbor.

The third officer, former Detective Brett Hankison, was indicted on three counts of wanton endangerment in the first degree, an offense that ranks at the lowest level of felony crimes in Kentucky and carries a prison sentence of up to five years. — Reuters

Osaka, Rapinoe, Mahomes among athletes on 2020 ‘Time 100’ list

US Open champion Naomi Osaka, American soccer player Megan Rapinoe and Super Bowl MVP Patrick Mahomes were among the athletes named on the 2020 “Time 100” list of the most influential people in the world.

The annual list, which is not ranked, honors individuals who have had the most significant impact on the global landscape that year and includes heads of state, business leaders, activists and entertainers, among others. There is no winner named.

The athletes on the US magazine’s list have enjoyed sporting success as well as promoting other causes.

Rapinoe has fought for gender pay equity in soccer while Osaka has supported the Black Lives Matter movement.

Osaka wore a mask bearing the name of a different Black American before each match at the US Open, where she clinched the title, in support of the fight against racial injustice in the United States.

Four-times Women’s National Basketball Association (WNBA) champion and twice Olympic gold medalist Maya Moore, who skipped two seasons of her sport to fight for criminal justice reform in the United States, was also named on the list and penned Osaka’s tribute.

“Watching Naomi Osaka play the US Open, I was inspired by how beautifully she wove her dominant athletic performance into another narrative,” wrote Moore.

“It took humility and grace to point beyond what she was doing, winning on one of the biggest stages in her craft, at something more important.”

Other athletes named on the list included six-times Olympic gold medal-winning sprinter Allyson Felix, six-times world champion Formula One driver Lewis Hamilton, retired 13-times NBA All-Star Dwyane Wade, and back-to-back NBA MVP Giannis Antetokounmpo. — Reuters

Breaks of the game

For a while there, it looked as if the basketball gods were conspiring to alter the outcome of Game Four of the Eastern Conference Finals yesterday. The Heat were up nine with less than a minute to go in the match, seemingly poised to claim their third win in the series. As things turned out, they needed to go through the veritable wringer to secure the victory. And it wasn’t simply because the Celtics refused to give up. So-called breaks appeared to keep going against them en route, testing their limits and challenging their resolve to prevail.

Consider this: The Heat’s Jimmy Butler was whistled for a foul on a driving Jayson Tatum with 29.8 ticks left in the match. Following a successful coach’s challenge, the call was negated, prompting a jump ball on center court, which would have been all well and good (even if the Celtics subsequently controlled the tip), except that the same review enabling the referees to overturn the initial decision showed him: 1) being pushed away with a forearm (an offensive foul not called); and 2) taking a clean swipe at the ball (not at all the foul called) that bounced off Tatum’s leg before going out of bounds. In other words, the Heat wound up being penalized every which way.

Consider this as well: After the Celtics won the tip, Tatum was able to fire off a three-point attempt that missed. The ensuing scramble had the ball going out of bounds on the far end of the floor. After another lengthy review, the Celtics retained possession. Which, again, would have been all well and good, except that, for some reason, they were allowed to inbound much closer to the basket instead of the backcourt, where the ball went out. The result was a quick pass to a waiting Jaylen Brown for a baseline three, an option that would have otherwise been unavailable.

And consider this: With the Heat up two, Butler was fouled in order to stop the clock and send him to the line. After he received the ball and while he was prepping for his first charity try, the horn sounded to enable the Celtics to send in Daniel Theis for the fouled-out Marcus Smart. This shouldn’t have been allowed; he already had the ball. The ensuing reset was tantamount to icing him. Fortunately, he came through; his first attempt bounced around the ring a few times before hitting the net, and his second attempt was on the mark.

Considering that the Heat won in the end, anyway, their travails will, in retrospect, serve to underscore their sheer resiliency, and rightly so. They shot poorly throughout the set-to, and had to rely on grit and determination — not to mention an outstanding effort from 20-year-old rookie Tyler Herro — to come out on top. Now, they’re on the cusp of booking a seat in the National Basketball Association Finals. There’s a reason for their supreme confidence; it oozes from principal owner Micky Arison to head honcho Pat Riley to head coach Erik Spoelstra to All-Star Butler to neophyte Herro to veteran Udonis Haslem to benchwarmer Myers Leonard. It’s fueling their extraordinary 2020 postseason run, and proving the strength of their culture. The Celtics are a fabled franchise. Theirs isn’t bad at all.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

The future of gaming is mobile and portable

By Mariel Alison L. Aguinaldo

Mobile will dominate the future of gaming because of its high penetration rate and portability, according to experts in the field.

“All gamers will have mobile phones. Not everybody’s going to have PCs, not everybody is going to have consoles,” said DC Dominguez, head of games and esports for Globe Telecom, during a September 17 session in the online convention All That Matters.

According to Nielsen’s SuperData Research, mobile games generated $64.4 billion in 2019, close to 60% of the video game industry’s total revenue. This was attributed to the popularity of free-to-play games such as Fortnite and Dungeon Fighter Online, which made $1.8 billion and $1.6 billion respectively in the same year. Mobile versions of Triple-A titles such as Call of Duty and Mario Kart also proved attractive to gamers.

A separate report by Golden Casino News, a gambling and digital gaming publication, places Asia as the biggest part of this market, with China as the biggest revenue generator. Japan and South Korea also made it to the top five, along with the United States and the United Kingdom.

There is also a huge potential for growth in South and Southeast Asia because of increasing rates of smartphone adoption. Global System for Mobile Communications Association (GSMA), an organization that represents the interests of mobile network operators worldwide, projects 89% smartphone adoption for Indonesia in 2025 and 78% for India in the same year.

Cloud gaming, also known as gaming-as-a-service, adds another dimension to the portability of gaming. Through this solution, games can be loaded from a remote server, eliminating the need for a download or to bring a specific console or personal computer. Since the games will be run from the Internet and not on the device’s central processing unit (CPU) or random access memory (RAM), it also makes cloud gaming a mobile-friendly alternative.

However, the service is heavily reliant on 5G, since high internet speeds and low latency are needed for the game to run smoothly. This is already possible for countries like China and South Korea but has yet to be seen in countries like the Philippines where 5G is not yet widely adopted.

While the mobile setup poses barriers to full game immersion, gaming phones, such as the recently launched Asus ROG Phone 3, have been improving graphics and processors for smooth and crisp gameplay. Mobile gaming controllers, such as Razer Kishi and SteelSeries Stratus Duo, allow users to play on their phones with a console feel.

“It’s just a matter of time before the experience on the phone, with additional goggles or devices, catches up, and [the device] doesn’t really matter,” said Quentin Staes-Polet, general manager for Southeast Asia and India at Epic Games, a video game software developer and publisher, in a separate All That Matters session held on September 16.

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