Month: September 2018

Professor Slams Kavanaugh: “A Right-Wing Creep Obsessed With Overturning Roe v. Wade”

Authored by Abigail Marone via Campus Reform,

An associate professor at Georgia Southern University shared his distaste for Judge Brett Kavanaugh on Twitter, but later backtracked on many of the comments after he was asked by Campus Reform to elaborate.

“Pull back the nomination and name some other right-wing creep obsessed with overturning Roe v. Wade” Jared Yates Sexton tweeted on September 23.

“For me, the label is earned as this: Kavanaugh is a longtime Republican who has espoused conservative ideals, thus the term right wing, and personally I find the allegations against him – that he attempted to assault a woman, that he forced himself on another, that as of this morning he’s been accused of participating in drugging women in order to assault them – supremely creepy” Yates Sexton told Campus Reform.

“I’m not going to say all creeps are right wing. There are liberal creeps, libertarian creeps, anarchist creeps. It just so happens this one is right wing.” He did not elaborate on his comments about overturning Roe v. Wade.

“Just assume everyone in Trump’s orbit and everyone he chooses for positions is completely terrible. It saves a lot of time” he tweeted on September 16.

“My comment about everyone Trump nominates being terrible was hyperbole and a reaction to the exhaustion of all these scandals,” Yates Sexton admitted to Campus Reform. “It’s just so exhausting and the Kavanaugh thing was a very rotten cherry on top of a toxic sludge sundae.” 

Yates Sexton also shared his thoughts on Kavanaugh’s virginity.

“Kavanaugh says he was a virgin in high school, and I’m sure, in his mind, this is saying he was naive or that he wasn’t sexual in nature, but subconsciously, this is the toxic masculinity at play. He’s saying, back then, he couldn’t have assaulted her. He wasn’t man enough.”

“A president caught on tape talking about sexually assaulting women nominating a man for the Supreme Court who’s being accused of sexual assault and now rape – is ripe for a discussion of how our culture’s patriarchal ideas of masculinity are problematic and help create rape culture, which is what the Me Too Movement is considering.”

He also acknowledged, “I wasn’t saying Kavanaugh’s defense was intended to frame any of this, but that subconscious perceptions and rhetoric constantly influence language.”

“The Republican Party needs to go away” because they are willing to do “anything to defend a man accused of rape” he tweeted on September 20.

Georgia Southern University told Campus Reform they had no comment on these “personal, political statements by an employee.”

Editor’s note: Campus Reform encourages civil discourse and acknowledges professors’ First Amendment right to free speech. The purpose of this article, like any other, is to present the facts and allow our readers to form their own opinions.

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Millennials, Boomers Targets of Two New Shows: New at Reason

'The Cool Kids'Over the weekend we will more or less hit the halfway mark of the new fall TV season: The new shows number 20 or so depending on how you count the exhumations of Murphy Brown and Last Man Standing, and The Cool Kids and God Friended Me are the 9th and 10th to debut.

To celebrate that epochal moment, the networks are offering up shows that target their past—the baby boomers, the generation for whom television was invented—and what they hope will be their future, the millennials, though there’s some question that the kids are going to cooperate. Television critic Glenn Garvin takes a look.

View this article.

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GOP Leaders Threaten Rosenstein With Subpoena If He Refuses To Testify About McCabe Memos

Roughly nine months after Deputy AG Rod Rosenstein testified before the House Judiciary Committee that he would not fire Special Counsel Robert Mueller without “good reason”, House Republicans are again moving to haul him in for questioning following a steady drumbeat of pressure that has intensified over the past week. This comes after they said they would subpoena the memos themselves late Thursday.

Rosie

According to the Washington Post, Rosenstein will be called back to Capitol Hill to testify, and if he refuses, the House will subpoena him, said Rep. Mark Meadows, who tweeted Friday that GOP leadership had agreed on a plan.

The calls for Rosenstein’s testimony have intensified since the New York Times published a bombshell story last Friday alleging that Rosenstein tried to organize an attempt to oust President Trump via the 25th amendment, and that he had suggested surreptitiously recording the president. However, the story, which was drawn from memos allegedly taken by former FBI Deputy Director Andrew McCabe, has been disputed by some people who attended a meeting with McCabe and Rosie the day before Mueller’s appointment was announced. Since then, reports about Rosenstein’s imminent firing/resignation have proven false, as Trump has said he wants to hear Rosenstein’s side of the story. The two, who met briefly Thursday, will meet again next week.

A spokeswoman for House Speaker Paul Ryan said Friday that the Judiciary Committee “is calling the shots” and that “we support the Judiciary Chairman.”

As WaPo points out, House Republicans attempted to curry the votes to impeach Rosenstein, claiming that his Rosenstein’s DOJ wasn’t complying with an investigation into the genesis of the Mueller probe. But in recent weeks House leaders had changed their tune, saying that Rosie had become cooperative. Trump has also considered firing him at least twice.

An agreement from GOP leaders to call Rosenstein to testify puts to rest any lingering speculation that the House would schedule a vote to impeach Rosenstein during the last few days that lawmakers are in town, before departing Washington for an extended pre-midterm campaign period. Meadows’s tweet did not say exactly when he expected Rosenstein to appear on Capitol Hill, but it will surely be after most lawmakers are scheduled to be away from Washington.

Earlier this week, Meadows said that he wanted Rosenstein to testify next week. On Thursday, Rep. Jim Jordan (R-Ohio) said he thought Republicans were “moving in a good direction as far as getting Mr. Rosenstein to come before Congress,” and that he expected Rosenstein would meet with lawmakers “soon”.

Jordan also added the joint committee plans next week to meet with former FBI general counsel James Baker. Lawmakers also are expected to meet during the third week of October with Nellie Ohr, a former contractor for Fusion GPS, the firm behind a dossier detailing Trump’s alleged personal and business ties to Russia, according to two members. Ohr is married to Bruce Ohr, a Justice Department official who met on several occasions with former British intelligence officer Christopher Steele, who compiled the information in the dossier.

While it’s unclear exactly when Rosenstein will testify, his testimony will come as Republicans interview several other witnesses in their investigation, including Nellie Ohr, wife of former deputy attorney general Bruce Ohr, who had ties to Fusion GPS, the opposition research firm that hired an ex-British spy to compile the Trump dossier, that were not properly disclosed.

Then again, it’s still certainly possible that Trump could change his mind and fire Rosenstein before he has an opportunity to testify.

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Nashville Cop Charged With Criminal Homicide for Shooting Man in the Back as He Fled

A white Nashville police officer, accused of fatally shooting a black man in the back as he fled, was charged yesterday with criminal homicide.

Daniel Hambrick, 25, sustained three gunshot wounds on July 26: two in his back and one in the back of his head. His alleged killer, Metropolitan Nashville Police Officer Andrew Delke, turned himself in to the authorities yesterday before being released on $25,000 bond. At first, Night Court Magistrate Evan Harris said there wasn’t evidence to charge him. But Judge Michael Mondelli of the local General Sessions Court eventually signed off on the criminal charge.

Hambrick’s death has renewed the debate over police culpability in controversial, officer-involved fatal shootings. Nationally, it’s rare for such officers to face criminal charges. In the Nashville area, particularly when the officers in question were on duty, it’s almost unheard of.

Delke’s arrest warrant describes what happened in the lead-up to the shooting. Delke, a member of a stolen vehicles task force, was on patrol when he encountered a Chevrolet Impala at an intersection. Both Delke and the Impala had stopped at stop signs, but the Impala “conceded the right of way by not pulling in front of him,” the warrant says.

This made Delke “suspicious,” and when the Impala eventually continued on its way, the warrant says he “followed behind it.” Delke ran the Impala’s license plate and discovered it was not stolen. “Nevertheless, because Officer Delke understood that part of the Task Force directive was to make traffic stops, he continued to follow to see if he could develop a reason to stop the Impala,” according to the warrant.

Delke continued following the car, and at one point turned on his police lights. The Impala didn’t pull over, so he turned his lights off and kept following it “from a distance” until he “lost track” of the car,” the warrant says. He drove around searching for it, and eventually found a different four-door sedan that he “mistook” for the Impala. Delke pulled up near the car, at which point one of the “individuals in the area,” Hambrick, started to run away. Police have previously said Hambrick was in the car before he started running.

According to the arrest warrant, Delke chased Hambrick. As they were running, Delke “saw a gun in Mr. Hambrick’s hand” and told him to “drop the gun,” warning he would shoot if Hambrick did not comply. Delke “decided to use deadly force” when Hambrick appeared not to listen.

Surveillance video from a nearby school shows Hambrick being shot. It appears the officer stopped for a moment, then fired while Hambrick was still running:

Delke was not wearing a body camera, and there was no dash camera on his vehicle. Last year, the Nashville Metro Council set aside $15 million for all officers to receive body cameras, though Councilman Steve Glover says this would actually cost $50 million. Just 20 Nashville cops currently wear body cameras.

In the aftermath of the shooting, Delke was reassigned to a desk job. He has since been decommissioned, meaning he’s still getting paid but is effectively suspended from the force. He’s due in court October 30, and his attorney, David Raybin, says he plans to plead not guilty.

Delke’s case may be unique for the Nashville area. The New York Times reports that neither Delke’s attorney nor a spokesman for the prosecutor’s office could “recall any other case in which a Nashville police officer had been charged with such a crime for an act that happened while on duty.” The Nashville Tennessean agrees: “no Nashville police officer in recent memory has been charged after shooting someone while they were on duty.”

Nashville isn’t alone. Since 2015, at least 3,677 cops across the country have shot people fatally. Since 2005, fewer than 100 have faced criminal charges. Only 32 have actually been convicted, with roughly half of those convictions resulting from guilty pleas.

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“Baffling” Surge In Oman Crude Price Sends Oil Market Into “Turmoil”

While oil traders have been generally punting to the “November Iran sanctions” as the reason why in recent weeks a bevy of $100 oil forecasts have emerged (even if Goldman disagrees), a more immediate cause for the prevailing oil price bullishness has emerged in recent days and it has to do with Oman oil – a low-quality crude – which this week turned into the world’s costliest oil benchmark, “confounding traders and throwing the market into turmoil” according to Bloomberg.

Traditionally an obscure, little used benchmark, Oman oil which trades on the Dubai Mercantile Exchange and which will play a key role when Saudi Arabia sets the cost of its shipments to Asia next month, is now more expensive than New York’s West Texas Intermediate and London’s Brent. In fact, earlier this week, the Oman futures contract rose above $90 a barrel making it one of the costliest grades in the world.

On Wednesday, Oman briefly traded as high as $90.90 a barrel on the DME., although after some profit taking by the end of Singapore trading at 4:30 p.m., it was at $88.96 a barrel, still materially higher compared to $82.15 for Brent, and $72.36 for WTI.

According to Bloomberg’s Javier Blas, the dramatic 2-day gain of 11% reverberated around the annual Asia Pacific Petroleum Conference in Singapore — one of the biggest gatherings of the global oil-trading industry. “Have you seen Oman?” replaced “Good evening” for many in the cocktail circuit.

Adding to the mystery is that Oman is considered a sour crude due to its high sulfur content, making it more difficult to refine into petroleum products such as gasoline and diesel. That means it usually trades at a discount to lower-sulfur, or sweet benchmarks Brent and WTI. But not this week.

So what drove the bizarre price surge?

Here, again, Iran emerges as a key culprit because among the reasons suggested to justify the price surge includes lower supply of similar-quality barrels from Iran due to U.S. sanctions, coupled with growing purchases by top crude importer China.

Commenting on the speed and strength of Oman’s surge versus other benchmarks, industry consultant JBC Energy GmbH said in a report on Thursday that “it is very unusual to see DME at a premium to ICE Brent, let alone at such a high level. Given that the vast share of Omani crude is delivered to China, it is easy to conclude that it is the main driver for this unusual jump.”

As Bloomberg further explains, the status of Oman crude was boosted by Saudi Arabia’s decision to start using it as a reference in how it prices supplies to Asia.

Now, concern is growing over whether the surge will inflate the cost of the Middle East producer’s cargoes compared with those from Kuwait and Iraq, who haven’t switched to the new benchmark, according to a Bloomberg survey of five traders and refiners.

Of course, it is likely that Saudi Arabia may soon price itself out of the market, which in turn will normalize the price spike and send Oman lower. Hinting at just that, Bloomberg quotes one executive at an Asian buyer who said it might consider seeking to take fewer the cargoes from Saudi Arabia if they are too expensive versus other supplies.

“While we expect the spread to quickly return back to normal levels, Oman should remain relatively strong, reflecting the increasing tightness in the Asian crude balance,” JBC added in its report. Healthy processing margins and reinvigorated independent refiners in China are providing ample demand, it said.

The closely watched spread between Oman and swaps for Dubai crude, another key Middle East benchmark used to price regional cargoes, widened to a record of over $10 a barrel earlier this week, surpassing the peak set in 2011 at $6.22 a barrel, according to data from S&P Global Platts. It was at $5.73 a barrel on Thursday.

Also of note: near-term Oman contracts are surging versus later-dated ones, exacerbating the market backwardation, and suggesting that the price spike is due to a rushed purchase by one of Saudi Arabia’s main clients. As shown in the chart below, the three-month timespread settled at $7.14/bbl on Wednesday, the steepest backwardation since the futures debuted in 2007, according to data compiled by Bloomberg.

Whatever the reasons behind Oman’s surge, they incorporate both the supply- (Iran export cuts) and demand-side (China’s relentless purchases), as Bloomberg’s Alex Longley summarizes, “it’s a signal of just how scarce supply has become in the Middle East.”

That, in a nuthsell, is why trading houses were talking up $100 crude earlier this week, and why we could be about to embark on the tightest quarter in supply-demand balances in more than a decade.

And since Wall Street surely learned the lessons from the 2008 crash which according to some was precipitated by the oil-superspike to $150 (following by a historic crash just weeks later), we wonder if allowing oil to surge above $100 to the highest price in 5 years at a time when the global economic expansion is now one of the longest on record and many are calling for an economic contraction, would be the most sensible thing to do at a time when such brand name investors as Ray Dalio and Ken Griffin are both warning that the next recession and crash will hit some time in 2020.

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The Return of the Inquisition: Do you confess?

In 279 BC, the vast army of King Pyrrhus of Epirus was met by Roman forces at the Battle of Asculum in southern Italy, in what would be one of the costliest military engagements of ancient history.

Pyrrhus fancied himself the second coming of Alexander the Great and believed that he was a descendant of Achilles.

Many of his peers and contemporaries believed Pyrrhus to be the greatest military commander of all time.

His exploits were legendary. And when he set sail for Italy in 280 BC, the Romans did not underestimate him.

The Battle of Asculum was decisive. Pyrrhus actually won the battle; but in defeating the Romans, he lost so many of his men that his army was practically broken.

Pyrrhus purportedly said of his victory, “If we are victorious in one more battle with the Romans, we shall be utterly ruined. . .”

This gave rise to the term “Pyrrhic victory,” which refers to a win that’s incredibly costly.

Pyrrhus also tried his hand at diplomacy with Rome, sending one of his ablest statesmen to the capital to negotiate peace with the Roman Senate.

The emissary was not successful. But he reported back to Pyrrhus that Rome’s Senate was incredibly impressive– “an assembly of kings” comprised of its noblest citizens.

And he was right. In the early days when Rome was still a republic, its Senate was a highly revered institution that stood for wisdom, dignity, and virtue.

They were far from perfect. But the men who served in the Senate during the early republic were heavily responsible for building the most advanced civilization the world had ever seen up to that point.

Needless to say, times changed. Within a few hundred years, the Senate had become a corrupt joke, filled with venal criminals, weak sycophants, and mediocre minds.

I couldn’t help but think of this analogy yesterday watching the Inquisition of Brett Kavanaugh.

If you’re living under a rock (or reading this letter many years from now), Brett Kavanaugh has been nominated to serve as a Justice of the United States Supreme Court. This requires that he be confirmed by the Senate.

Recently a woman emerged who accused Kavanaugh of sexually assaulting her when they were all teenagers, several decades ago.

This is tantamount to accusing the man of a crime.

But rather than treat this as any other criminal matter in which the authorities would investigate the evidence to determine if charges are warranted… or the case is put to a court and jury to decide… the once-hallowed halls of the US Senate have been turned into an embarrassing circus that shines a giant spotlight on the deep social divides in the Land of the Free.

The whole charade is a horrible offense to the basic principles of justice in which a person is presumed to be innocent until proven guilty.

When it comes to claims of sexual assault, however, the man is automatically deemed guilty … and the accuser praised for her courage and bravery before the veracity of the assertion is ever deliberated.

Senator Maize Hirono of Hawaii recently stated, “Not only do women like [Kavanaugh’s accuser], who bravely come forward, need to be heard, but they need to be believed.”

By definition this is neither fair nor impartial, and turns the entire process into a Kangaroo Court… which is what the Senate has become.

At a certain point yesterday, one Senator introduced multiple pieces of evidence on behalf of the accuser, including ‘expert reports’ that justify her inability to remember details from the assault.

This is truly bizarre.

These Senators are playing the role of judge in this matter. It seems impossible to do this while simultaneously acting as advocate for the accuser.

Another Senator sat smugly and sanctimoniously, leering down at Brett Kavanaugh and demanding explanations about code words for beer and flatulence that date back to Kavanaugh’s high school days.

The fact that a United States Senator would actually consider this important evidence is an utter embarrassment.

Another disgusting perversion of justice is that the United States Senate actually felt compelled to negotiate with the accuser about when/how she would testify.

For example, the accuser wanted to prohibit certain questions, control who could/could not ask questions, determine the order of witness testimony, etc.

This is simply NOT how the justice system is supposed to work.

Accusers must face the accused in a court of law and submit to cross-examination, following the same rules that everyone else has to follow.

No one is supposed to get special treatment. That’s the point. And it is through this process that the truth is eventually discovered.

It’s not that I don’t believe the accuser. It’s entirely possible that she’s telling the truth.

But as this case has not been deliberated objectively through the normal due process that is guaranteed by the Constitution, no one can reach a valid conclusion.

Yet there are countless legions of people, including United States Senators, who have already made up their minds, like the Inquisition demanding, “Do you confess?”

And that’s the saddest part– this manner of Inquisition… trial by social media… has now been condoned and advanced by the United States Senate, an institution whose members have ALL taken a solemn oath to support and defend the Constitution which they are now violating in the worst way.

Clearly the Senate is no longer an assembly of kings… but a brood of bickering, immature weaklings.

(The only resilience displayed has been from the accused and accuser, both of whom have had to endure insane public scrutiny.)

There’s obviously an agenda here.

Perhaps some Senators are trying to win points with the #metoo movement for the upcoming elections.

Or they’re intentionally blocking Kavanaugh simply because he is a Trump nominee.

Whatever their reasons, they may be victorious in achieving their desired outcome.

But it will be a Pyrrhic victory… for it will come at the expense of establishing a dangerous new standard that destroys the most important principles of Justice.

Source

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The Kavanaugh Nomination Fight Has Pulled Us Further Into a Partisan Quagmire

Senate Republicans are moving ahead with voting on Brett Kavanaugh’s Supreme Court nomination; a floor vote could occur as soon as tomorrow.

Is this wise? Necessary? Or just another tactical partisan maneuver in a political era increasingly defined by them? My worry is that there is no good answer, and that because of how both parties have acted, we are hurtling toward a long-simmering crisis of institutional and political legitimacy that can no longer be avoided.

The case for proceeding quickly with a vote following yesterday’s sexual assault hearing goes something like this: Kavanaugh and his accuser, Christine Blasey Ford, both gave their testimonies and answered questions, and both came across as human and believable. While some questions remain about both of their stories—Is Kavanaugh being truthful about his teenage drinking? How did Ford get home after the evening in question?—it is likely that further investigation would not reveal much more than we already know, which includes sworn written statements from all the named parties said to be present on the night of the alleged assault. Perhaps Mark Judge, a Kavanaugh friend who Ford alleges was in the room at the time of the assault, could be compelled to testify and offer further details, but he has already denied recalling any such event under penalty of perjury, and if called he would most likely take the fifth, providing no new information. At this point what we know is what we are going to know, and however imperfect our knowledge is, it is all we are going to have. Senate Republicans should schedule a vote, and see what comes of it.

The case for postponing the vote, and perhaps withdrawing Kavanaugh’s nomination, is that in fact there is still more we could possibly learn: not only from Judge, but from, say, Ford’s parents and family, who have offered just a few terse statements of generic support, and could presumably provide recollections about her as a teenager. With further investigation, we might even learn more from Ford herself, who offered to speak with committee investigators and to sketch a floor plan of the house where she says the assault took place. Without falling down the rabbit hole of Google-maps enabled doppelganger theories, it would then presumably be possible to compare that sketch to the floor plans of the people she says were in attendance, which might provide a little more detail about the location of the alleged event than we have now. Speaking of details, more than a few people have expressed skepticism about Kavanaugh’s essentially innocent descriptions of some of the activities noted in his yearbook—”boofing,” “devil’s triangle,” “Renate alumni.” And then there is the calendar entry in Kavanaugh’s datebook that appears to describe a midsummer night of weekend drinking with friends, who include not only Judge but another individual who was reportedly dating Ford at the time. The prosecutor Republicans brought in to ask their questions touched on this entry briefly at yesterday’s hearing—but was then cut off by GOP lawmakers. There are simply too many unanswered questions, too much doubt about what did or did not happen, in this view, to move forward right now.

Compounding the matter are real questions of institutional legitimacy. Republicans spent much of yesterday attacking Democrats for their handling of Ford’s story: Ford was connected with her lawyer through Sen. Dianne Feinstein’s office prior to the allegations becoming public, Ford was unaware of GOP offers to interview her in California (presumably because her lawyers did not adequately relay that offer), and the eventual leak of the existence of the document that turned out to be Ford’s story most likely came from a Democratic source (although both Feinstein and the reporter on the initial story have denied it was her). Because Democrats mishandled the process in a manner designed to confer partisan advantage, many Republicans now argue that they have no choice but to move forward with a confirmation vote; to do otherwise would hand Democrats a victory for playing dirty pool, and to ensure that the nomination process is a poisonous, partisan free-for-all for a generation to come.

The Democratic rejoinder is that Republicans were the ones who escalated the nomination process wars when they refused to hold a vote on President Obama’s nominee, Merrick Garland. To move forward now, with so much outrage and uncertainty, would not only put an asterisk by Kavanaugh’s name and all his future decisions. Because of the large influence of any single Justice, especially one replacing the Court’s longtime swing vote, it would jeopardize the legitimacy of the entire court for years. Perhaps forever.

I find myself at least partially convinced by all of these arguments—and not completely satisfied by any of them. That is precisely the trouble.

Yes, Democrats mishandled Ford’s allegation, but now that it is public, their errors shouldn’t give Republicans a pass to simply hold a hearing, nod, and then proceed as planned. Yes, Republicans escalated the Senate’s procedural cold war with their tactical refusal to vote on Garland, but that doesn’t let Democrats off the hook for their own errors, strategic and otherwise. And yes, it would be helpful and good to know more about both Ford’s story and Kavanaugh’s teenage years, but even if we could, I am not at all sure, based on the bipartisan grandstanding in yesterday’s hearing and the overall tenor of the fight so far, that we actually would.

Which is to say that when it comes to Kavanaugh’s confirmation, there is no easy way to escape from on-the-one-hand, on-the-other-hand oblivion, no possibility of resolving the matter in a way that most parties deem fair and reasonable. There is no avoiding the presumption of bad faith.

So this will almost certainly be decided on the basis of raw, winner-take-all political power, for its own sake, rather than on anything that resembles an attempt at compromise, and it has already the stage for many more similarly ugly and degrading showdowns in the future. Regardless of the outcome, Kavanaugh’s nomination has pulled our nation further into the quagmire of crude partisan power politics. Welcome to the abyss.

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House Intel Committee Votes To Release 53 Trump-Russia Transcripts

The House Intelligence Committee on Friday voted to release 53 transcripts related to the panel’s Trump-Russia investigation, reports The Hill, “teeing up a massive document dump ahead of the November midterm elections.” 

The transcripts will include testimony from several current and former key members of Trump’s orbit, including Steve Bannon, Jared Kushner, Jeff Sessions, Donald Trump Jr., Roger Stone and Director of National Intelligence Dan Coats. 

Also included will be interviews with former Obama administration officials such as former Director of National Intelligence, James Clapper as well as former deputy Attorney General Sally Yates. 

The transcripts — 53 in total — will not immediately be released but will now go to the Office of the Director of National Intelligence for a classification review, which could take days or weeks to complete.

The documents are poised to revive discussion about the House panel’s Russia investigation, which dramatically broke down into partisan infighting and culminated in Republicans moving to end the probe in a party-line vote last March. Democrats have accused the GOP leaders of ending the probe prematurely. –The Hill

House GOP released a report on their findings in April which found no collusion between the Trump campaign and Russia.  

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Here’s The Reason Why Dollar Funding Costs Are Exploding

With the market’s attention yesterday focused on the historic Kavanaugh hearing, it is understandable that the biggest markets story slipped by largely unnoticed: as we noted yesterday morning, that was the sudden spike wider in various dollar basis swaps, amid what appeared to be a widespread, dollar shortage.

Specifically, the cost to hedge FX risk moved sharply higher for foreign investors that hedge USD corporate bond holdings by rolling 3-month FX forwards. On an annualized basis the 3-month hedging cost jumped 47bps to 318bps for JPY/USD and 23bps to 323bps for EUR/USD. As shown in the chart below, the one-day move in the 3 month EUR swap was the biggest since the financial crisis:

The move was broadbased, affecting not just one pair, but virtually every FX pair, confirming that there had been a sharp repricing of dollar liquidity into year-end.

So with Wall Street traders and analysts now back at their desks, and catching up on the key newsflow of the past 24 hours, the question has emerged: what caused it?

Today, Bank of America has provided an explanation for this sudden dollar shortage. According to BofA’s Yuri Seliger, the reason for these sudden increases is the fact that as of yesterday, the three-month FX forward contract extended over the year-end for the first time this year.

It spiked wider, i.e., became more expensive, because banks, and in particular foreign banks, make an effort to minimize their balance sheets on December 31st for regulatory reporting purposes.

As a result, according to BofA these FX hedging costs will likely remain elevated for the remainder of 2018 and normalize on the first day of the new year – a pattern that repeats every year (Figure 1, Figure 2).

Ok but why the far greater move in 2018 compared to years prior?

BofA has an explanation for that too, and it has to do with what changed this year, namely Trump’s tax policy: the increase in costs this year was larger than what we saw last year largely in part to less funding available from corporate investors, as US companies are repatriating their overseas cash. Similarly, hedging costs based on 1-month FX forwards should spike a month prior to the year-end before normalizing in January (Figure 3, Figure 4).

In other words, for all the concerns about a dollar funding shortage, it’s true… but only due to calendar reasons (even though today the various swaps have continued to leak wider). That said, should the blow out in dollar-hedging costs persist, and if it fails to renormalize on the first day of 2019, the question of just who is soaking up all the excess liquidity will certainly become topical once again.

 

 

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“We Have Really Lost Our Way” – Trader Laments Market’s Risk Ignorance

“BTFD”, “Goldilocks”, “Climbing a wall of worry”, “Powell Put”, “Trump Put”, “It’s different this time.”

The excuses to buy stocks – no matter what headline tape bomb explodes – grow longer and more desperate as asset-gatherers and commission-takers know the end is nigh (and judging by the level of insider-selling, so do C-level execs). Of course, to the onlookers, the record-breaking stock markets provide just the ‘price’ evidence that everything must be awesome (right?), but as former fund manager and FX trader Richard Breslow points out, “there’s danger in knowing price, but not value.”

The most accurate thing anyone has said today is also the scariest. Not because it isn’t true. There is no shortage of examples to prove it. Italian assets are getting hammered on budget-deficit-busting news. The European Union won’t like it. The rating companies may take exception. Our own story described it as dealing a “body blow” to the establishment. But Deputy Premier Matteo Salvini’s reaction was, “Markets will come to terms” with it. And that’s the problem. They most likely will.

Via Bloomberg,

But every time “investors,” to use the term loosely, limit their response to selling some futures before deciding to move on and pick-up some carry in the cash market, the ante will continue to be raised at the next episode.

Traders are meant to be regulators on behavior, economic as well as political, but have utterly ceded that function.

This is nothing new, but it’s getting worse. And more dangerous. As I’ve been watching the BTP and MIB markets trade this morning at each dead-cat bounce I’m told things are stabilizing. There’s no contagion. Buyers are looking for value. That markets are orderly.

And that’s good, but when I look again a bit later, prices are lower. I’m absolutely not advocating for any sort of mayhem. Just that we recognize things for what they are rather than check if the central bank is around to be front-run.

On the same day we are featuring an editorial worrying over the potential implications to the stability of Europe of the Italian government actually intending to deliver on their campaign promises, it took almost all night for EUR/CHF to finally take notice. And this in a cross that yesterday traded at one-month highs on fresh buying following multiple buy recommendations based on increasing political stability in… you guessed it: Italy.

I understand that surprises happen. And hindsight isn’t fair to club someone over the head with. But sometimes it is.

Just yesterday demand at the 10-year BTP auction was the highest since last May. Unfortunately for those awarded an allocation, yields today are a whole lot higher. To say the least.

That was putting an inexplicable amount of faith that the finance minister had his two deputy premiers well under control. On very little evidence. Other than a wishful assumption that the even hard-line populists always bow to market-friendly necessities. We really have lost our way.

Incidentally, Italian bank stocks have just been halted. And the MIB was down at one point the best part of 4%. One of the EUR/CHF advocates is writing about risks to the supply of capital should there be a downgrade to junk. Sometimes, traders need to be the adults in the room.

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