Month: July 2019

The Last Few Days Exemplify Why I’m Libertarian (and Why You Should Be Too)

Things are getting uglier by the second in American politics and the sheer awfulness of the current moment perfectly illustrates why I’m libertarian. Do you really want to live in a world where you’re constantly living inside either Donald Trump’s mind or that of Rep. Alexandria Ocasio-Cortez’s (D–N.Y.) democratic socialist “squad”?

Our lives are too short, too fleeting, too important to spend all of our waking hours engaged in the systematic organization of hatreds, which is as good a working definition of politics as there is. There’s ultimately not a lot of wiggle room between Trumpian conservatism, which demands complete reverence for the Donald and includes bolder and bolder threats to stifle free speech along with free trade, and Ocasio-Cortez’s Green New Dealism, which explicitly uses the totalist regimentation of all aspects of American life during World War II as its model. If I wanted to deal with politics all the time, I’d move to a totalitarian country already.

Libertarians are not anarchists but believers in limited government. Certain rights cannot be voted away but we believe that there are areas of life where consensus legitimately rules and that policy should be set by the group rather than the individual. Precisely because politics is a form of force and coercion, though, the parts of our lives governed by consensus should be as small as possible, limited to essential services such as basic infrastructure, law enforcement, safety standards, welfare for the indigent, and some education. The government should treat all people as individuals and all individuals as equal before the law. Over the years, I’ve become less dogmatic about exactly how little or how much the state should do, preferring instead to talk about libertarian as an adjective or a pre-political sensibility, “an outlook that privileges things such as autonomy, open-mindedness, pluralism, tolerance, innovation, and voluntary cooperation over forced participation in as many parts of life as possible.”

Where you and I will draw those lines will likely differ depending on a variety of things and, by all means, let’s have fierce yet civil debates over the scope and efficacy of specific policies and actions. But let’s also avoid the shit show currently on display. Leading the parade of fools is, of course, President Trump, whose recent tweets are not simply racist or in poor taste but deeply un-American.

Where exactly does he get off telling people that if they don’t like everything about the United States, they should leave? That only one of the four Democratic representatives he was originally attacking was actually born in a foreign country underscores his lack of cognitive functioning and the deep-seated nativism of his mindset. Even if you’re born here, he’s saying, you’re not really American unless you look like him.

More importantly, Trump’s aggressively banal jingoism stands in direct and obvious contradiction to the origins of the United States, both as colonial havens populated by religious dissenters and people seeking economic opportunity, and later as a breakaway republic from an oppressive government. “Our Country is Free, Beautiful and Very Successful. If you hate our Country, or if you are not happy here, you can leave,” the president counseled today, as if exit is the only legitimate option when it comes to lobbying for political change.

If he read books, I’d suggest that Trump pick up a copy of Albert O. Hirschman’s 1970 treatise on “responses to declines in firms, organizations, and states.” Exit, Voice, and Loyalty discusses the different ways individuals can effect change. Leaving to go elsewhere—exit—is indeed an option, but so is basically sucking it up and becoming an uncritical organization man (loyalty), or complaining and working to change the system (voice). Trump’s basic argument is reductio ad Archie Bunkerism—love it or leave it. It’s not worth engaging seriously and indeed, the only reason he isn’t being more roundly mocked is that he’s wrapped his dumb canard in ugly, divisive language that participates in long traditions of racial and ethnic exclusion.

By the same token, the Ocasio-Cortez squad offers no hope of escaping politics, either. Instead, it seeks to fully regulate expression in the name of political purposes. One of its members, Rep. Ayanna Pressley (D–Mass.), effectively channels Trump’s “you’re with us or against us” mindset when she declares, “We don’t need any more brown faces that don’t want to be a brown voice. We don’t need black faces that don’t want to be a black voice. We don’t need Muslims that don’t want to be a Muslim voice. We don’t need queers that don’t want to be a queer voice.”

The unwillingness of Ocasio-Cortez to acknowledge good-faith disagreements even with her political allies—she’s accused Rep. Nancy Pelosi (D–Calif.) of “explicitly singling out newly elected women of color,” insinuating that the Democratic Speaker of the House is racist like the president—is a tactic used by Trump and his supporters.

This is politics at its absolute worst. It helps explain why the long-term trend of Americans refusing to identify as a Democrat or a Republican proceeds apace. Last month, Gallup found just 27 percent of respondents admitting that they are Democrats and only 26 percent admitting that they are Republicans. Each of those numbers is at or near historic lows.

Who can blame us, really? Especially when there is a legitimate alternative to reducing your entire existence to political grudge matches between repellent teams who explicitly tell you to check your brain at the door? “The Libertarian Moment” didn’t materialize when Matt Welch and I first coined the phrase in 2008, nor did it materialize when it was being talked about in the pages of The New York Times Magazine, that’s for sure. But the idea of living in a world beyond politics, where we can agree to disagree about how to live most of our lives, is looking better and better all the time.

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Rickards: Trump’s Currency War Declaration Has Sparked A Multi-Year Gold Rally

Authored by James Rickards via The Daily Reckoning,

Trump has had it!

He is apparently declaring a currency war on the rest of the world. Trump resents China and Europe cheapening the yuan and the euro against the dollar in order to help their exports and hurt ours.

He says it’s time for the U.S. to cheapen the dollar also. Trump has a point. If you put a 25% tariff on many Chinese exports to the U.S. (as Trump has done) or a 25% tariff on German cars exported to the U.S. (as Trump has threatened to do), it can be a powerful way to reduce the U.S. trade deficit and generate revenue for the U.S. Treasury.

But a trading partner can undo the effect of the tariff just by cheapening its currency.

Let’s say a Chinese-made cellphone costs $500 in the U.S. If you slap a 25% tariff on the imported phone, the immediate effect is to raise the price by $125.

A simple solution to tariffs is to devalue your currency by 20% against the dollar. Local currency costs do not change, but the cellphone now costs $400 when the local currency price is converted to U.S. dollars.

A 25% tariff on $400 results in a total cost of $500 — exactly the same as before the tariffs were imposed. Tariff costs have been converted into lower production costs through currency manipulation.

There’s only one problem with Trump’s currency war plan. There’s nothing new about it. The currency wars started in 2010 as described in my 2011 book, Currency Wars. 

As soon as one country devalues, its trading partners devalue in retaliation and nothing is gained. It’s been described as a “race to the bottom.” Currency wars produce no winners, just continual devaluation until they are followed by trade wars.

That’s exactly what has happened in the global economy over the past 10 years. But the final step in the sequence is often shooting wars. That’s what happened leading up to WWII. Let’s hope the currency wars and trade wars don’t turn into shooting wars as they did in the 1930s.

Meanwhile, the Fed is a critical player in the currency war because it has a major influence on the dollar.

The world is waiting to see what it does at its policy meeting on July 31. There is almost no chance the Fed will raise rates. The choices are to cut rates or keep rates unchanged. The market is betting heavily on a rate cut, for what it’s worth.

If the Fed cuts rates, we’ll have to see how other central banks react. But the Fed has many factors to consider when it meets later this month…

For the past 10 years, Fed policy changes have been relatively straightforward to forecast, based on a simple model. The model said the Fed would raise rates consistently in 0.25% increments until rates are normalized around 4% (the amount needed to cut in case of recession).

The exceptions (where the Fed would “pause” on rate hikes) would occur when job creation is low or negative, markets are disorderly or strong disinflation threatens to turn to deflation. Markets certainly became disordered late last year, when the U.S. stock market nearly entered a bear market. And so the Fed paused.

None of those conditions apply today. Job creation is strong, markets are at all-time highs and disinflation is mild. But a new factor has entered the model, which is the fear of causing a recession.

Estimated growth for the second quarter of 2019 is 1.3% annualized, compared with 3.1% in the first quarter. Using the Fed’s own models (which are different from mine), the Fed is concerned that if they don’t cut rates, a market correction and recession may occur.

But if they do cut rates, inflation may result due to tight labor markets and higher costs due to tariffs.

This Fed decision will likely come down to the wire. Second-quarter GDP will be reported on July 26, and personal income and outlays will be reported on July 30. Both data points (and underlying inflation data) will be available right before the July 31 decision date.

Markets will cheer a rate cut and probably sell off if the Fed does not cut rates. But both the markets and the Fed itself will have to wait until the last possible minute before this conundrum is resolved.

And the world will be watching very closely.

The dollar price of gold has been on a roller-coaster ride for the past six years. But the past six weeks have been a turbocharged version of that. Investors should expect more of the same for reasons explained below.

The six-year story is the more important for investors and also the more frustrating. Gold staged an historic bull market rally from 1999 to 2011, going from about $250 per ounce to $1,900 per ounce, a 650% gain.

Then, gold nose-dived into a bear market from 2011 to 2015, falling to $1,050 per ounce in December 2015, a 45% crash from the peak and a 51% retracement of the 1999-2011 bull market. (Renowned investor Jim Rogers once told me that no commodity goes from a base price to the stratosphere without a 50% retracement along the way. Mission accomplished!)

During that precipitous decline after 2011, gold hit a level of $1,417 per ounce in August 2013. It was the last time gold would see a $1,400 per ounce handle until last month when gold briefly hit $1,440 per ounce on an intra-day basis. At last, the six-year trading range was broken. Better yet, gold hit $1,400 on the way up, not on the way down.

The range-bound trading from 2013 to 2019 was long and tiring for long-term gold investors. Gold had rallied to $1,380 per ounce in May 2014, $1,300 per ounce in January 2015, and $1,363 per ounce in July 2016 (a post-Brexit bounce).

But, for every rally there was a trough. Gold fell to $1,087 per ounce in August 2015 and $1,050 per ounce in December 2015. The bigger picture was that gold was trading in a range. The range was approximately $1,365 per ounce at the top and $1,050 per ounce at the bottom, with lots of ups and downs in between. Yet, nothing seemed capable of breaking gold out of that range.

The good news is that gold has now broken out to the upside. The $1,440 per ounce level is well within reach and the $1,400 per ounce level seems like a solid floor, despite occasional dips into $1,390 per ounce territory. Gold’s trading at $1,416 today.

More importantly, a new multi-year bull market has now emerged. Turning points from bear to bull markets (and vice versa) are not always recognized in real time because investors and analysts are too wedded to the old story to see that the new story has already started.

But, looking back it’s clear that the bear market ended in December 2015 at the $1,050 per ounce level and a new bull market, now in its fourth year, is solidly intact. The recent break-out to the $1,440 per ounce level is a strong 37% gain for the new bull market. This price break-out has far to run. (The 1971 – 1980 bull market gained over 2,100%, and the 1999 – 2011 bull market gained over 650%).

The price action over the past six weeks has been even wilder than the price action over the past six years. As late as May 29, 2019, gold was languishing at $1,280 per ounce. Then it took off like a rocket to $1,420 per ounce by June 25, 2019, an 11% gain in just four weeks.

Gold just as quickly backed-down to $1,382 per ounce on July 1, rallied back to $1,418 per ounce on July 3, and fell again to $1,398 per ounce on July 5. These daily price swings of 1.5% are the new normal in gold. Again, the good news is that the $1,400 per ounce floor seems intact.

What’s driving the new gold bull market?

From both a long-term and short-term perspective, there are three principal drivers: geopolitics, supply and demand, and Fed interest rate policy; (the dollar price of gold is just the inverse of dollar strength. A strong dollar = a lower dollar price of gold, and a weak dollar = a higher dollar price of gold. Fed rate policy determines if the dollar is strong or weak).

The first two factors have been driving the price of gold higher since 2015 and will continue to do so. Geopolitical hot spots (Korea, Crimea, Iran, Venezuela, China and Syria) remain unresolved and most are getting worse. Each flare-up drives a flight-to-safety that boosts gold along with Treasury notes.

The supply/demand situation remains favorable with Russia and China buying over 50 tons per month to build up their reserves while global mining output has been flat for five years.

The third factor, Fed policy, is the hardest to forecast and the most powerful on a day-to-day basis. The Fed has a policy rate-setting meeting on July 31. There is almost no chance the Fed will raise rates. The issue is whether they will cut rates or stand pat.

The case for cutting rates is strong. U.S. growth slowed in the second-quarter to 1.3% (according to the most recent estimate) from an annualized 3.1% in the first-quarter of 2019. Inflation continues to miss the Fed’s target of 2.0% year-over-year and has been declining recently. Trade war fears are adding to a global growth slowdown.

On the other hand, the June employment report showed strong job creation, continued wage gains, and increase labor force participation. All of those indicators correspond to higher future inflation under Fed models. The G20 summit between President Trump and President Xi of China led to a truce in the U.S.-China trade war and the prospect of continued talks to end the trade war.

In short, there’s plenty of data to support rate cuts or no cuts in July. The Fed is biding its time. Meanwhile, the market is highly uncertain. A good headline on trade results in a stronger dollar and weaker gold. The next day, a bad headline on growth results in a weaker dollar and stronger gold.

This dynamic explains the erratic up-and-down price movements of the past week. The dynamic is likely to continue right up until the July 31 Fed meeting in two weeks.

With so much uncertainty and volatility in the dollar price of gold lately, what is the prospect for a rally in precious metals prices and stocks that track them?

Right now, my models are telling us that the gold rally will continue regardless of the Fed’s action on July 31.

Expectations today are that the Fed will cut rates at the next FOMC meeting, but the probabilities are far from a sure thing. If the Fed cuts rates, the market will simply move its expectations of further rate cuts to the next FOMC meeting (September 18). The weak dollar/strong gold rally will continue.

If the Fed does not cut rates, gold may suffer a short-term drawdown, but markets will assume the Fed made a mistake. Expectations for a 50bp (0.5%) rate cut in September will start to build.

That new forward expectation will power gold higher just as surely as the missed July rate cut.

That covers gold. But what about silver?

Many investors assume there is a baseline silver/gold price ratio of 16:1. They look at the actual silver/gold price ratio of 100:1 and assume that silver is poised for a 600% rally to restore the 16:1 ratio. These same investors tend to blame “manipulation” for silver’s underperformance.

That analysis is almost entirely nonsense. There is no baseline silver/gold ratio. (The “16:1 ratio” is an historical legacy from silver mining lobbying in the late 19th century, a time of deflation, when farmers and miners were trying to ease the money supply by inflating the price of silver with a legislative link to gold.

The result was “bimetallism,” an early form of QE. The ratio had nothing to do with supply/demand, geology, or any other fundamental factor. Bimetallism failed and was replaced with a strict gold standard in 1900).

This does not mean there is no correlation between gold and silver prices. As Chart 1 below reveals, there is a moderately strong correlation between the two. The coefficient of determination (expressed as r2) is 0.9.

This means that over 80% of the movement in the price of silver can be explained by movements in the price of gold. The remaining silver price factors involve industrial demand unrelated to gold prices.

Chart 1

Recently, a huge gap has opened up between the rally in gold prices (shown in gold on Chart 1 with a right-hand scale) compared to silver prices (shown in grey on Chart 1 with a left-hand scale).

Given the historically high correlation between gold and silver price movements, and the recent lag in the silver rally, the analysis suggests that either gold will fall sharply or silver will rally sharply.

Since I have articulated the case for continued strength in gold prices, my expectation is that gold will continue to outpace silver.

Either way, both metals are heading higher.

via ZeroHedge News https://ift.tt/2lfswlq Tyler Durden

Bad News For Bulls: Global Trade Has Stabilized

Here is some good news (for the global economy) that is surely bad news (for stock markets).

Saxobank’s global head of macroeconomic research, Christopher Dembik, confirms in his latest note, that the latest world trade data tend to confirm a stabilization in global trade growth, at least in the short term, mostly resulting from a positive base effect.

The CBP world trade volume is back to positive territory, though it remains very weak compared to levels reached last year. The three-month moving average was out at 0.4% year-on-year in April 2019 versus a lowest point reached this year at minus 0.4% in past February.

The next release of the CPB world trade monitor is scheduled for 25 July 2019.

Looking at more up-to-date trade data, especially weekly cost of freight proxies, the stabilization is more obvious.

After seasonal adjustment, the 20-day moving average of the Baltic Dry Index is likely to turn positive this week. The latest data released last week was out at minus 3% year-on-year.  We also notice the same trend towards stabilization for the Harpex index, which is a good measure of trade in consumer goods.

However, there is a silver-lining for stock investors as Dembik warns that this stabilization may be short-lived as risk remain elevated due to the trade war, potential currency war and China’s slowdown that has not stopped yet.

In our view, weak global trade will continue to negatively weigh on growth in H2, despite more dovish central banks and upcoming global fiscal stimulus.

What a strange world we live in…

via ZeroHedge News https://ift.tt/2jNdD9I Tyler Durden

Congressman Asked Bureau of Prisons Three Times About Nonviolent Offender Who Later Died in Maximum Security Lockup

Before Rick Turner died in federal prison earlier this year, a member of Congress sent sent three messages to the Bureau of Prisons from Turner’s family begging for Turner to be transferred somewhere safer.

Reason obtained correspondence showing that the office of Rep. Rob Wittman (R–Va.) forwarded three messages from Turner’s family to the Bureau of Prisons between October and December of last year and asked for more information on his case. The first two inquiries were ignored.

As Reason previously reported, Turner was found dead in June in his cell at USP Florence, a maximum security federal penitentiary in Colorado, less than a year after arriving there. Family members say he feared for his life in a violent, gang-controlled prison that he should have never been sent to in the first place.

Turner was sentenced to a mandatory 40 years in prison for his role in a Virginia methamphetamine trafficking ring. Federal prosecutors hammered him with firearm enhancements and drug charges that magnified his sentence by decades after he turned down a plea deal and was found guilty at trial. The judge in Turner’s case called his sentence “excessive” and “wrong,” and one of the jurors wrote last week that he would have nullified if he’d known Turner would receive 40 years.

Although Turner had no prior criminal record or history of violence, he was sent to a maximum security penitentiary because of the length of his sentence. If he had been sentenced just a few months later, after Congress reduced some of the mandatory minimum laws he was sentenced under, or if he had received a lighter sentence like the rest of his co-conspirators, all of whom took plea deals, things might have been different.

On Oct. 4, 2018, Turner’s sister, Mandy Turner-Richards, wrote to Rep. Wittman’s office asking for the congressman’s help in getting Turner transferred to another facility, saying he was receiving death threats.

“Due to the gang presence in maximum security prisons, Rick has received constant threats against his life as he refuses to be in a gang,” Turner-Richards wrote. “Rick wants to remain unaffiliated and focus on bettering his life, but this seems to be impossible in his current setting. I ask for your help in contacting the Bureau of Prisons in regards to transferring my brother to a lower security prison where he will be able to safely engage in programming and focus on getting better.”

Wittman forwarded Turner-Richards’ message to Jennifer Edens, the chief of legislative affairs for the Bureau of Prisons, and wrote, “I would appreciate you reviewing the enclosed documentation and providing me with any information that may be helpful to my constituent.”

Wittman’s office sent another inquiry on October 22, but received no response to either request. On December 6 Wittman’s office forwarded another letter from Turner’s sisters begging for their brother to be transferred out of USP Florence.

“My family is not famous, nor do we know any superstars, and we do not have a lot of money to hire expensive legal representation,” Turner-Richards wrote. “I know you are fully aware of the financial burdens put on families with incarcerated loved ones. With my brother not having a violent bone in his body, we can not comprehend why he was sent to a max security prison where he is not able to even do the therapies and things that Honorable Judge T. S. Ellis sentenced him to do. The RDAP [Residential Drug Abuse Program] program that he was sentenced to enroll in is not even available in the max security prison.”

The Bureau of Prisons finally responded on December 13. A legislative affairs specialist wrote that, under the rules, Turner would have to serve 18 months in the prison’s general population with a clean disciplinary record before he would be eligible to apply for a relocation.

“Additionally, policy does not recognize/provide hardship transfers,” the Bureau of Prisons official wrote. “Therefore, nearer January 2020, Mr. Turner needs to submit a request to his Unit Team for a nearer release transfer.”

FAMM, a nonprofit advocacy group that opposes mandatory minimum sentences, has called for an investigation into Turner’s death.

“What more can a family do?” FAMM President Kevin Ring says. “They got a member of Congress to notify BOP that their brother feared for his life, and the BOP responds with boilerplate policy language. BOP has the authority under current law to keep a nonviolent offender like Rick out of maximum security institutions. They didn’t use it. We want to know why, and we want this to stop happening.”

Vice reported last week that Turner’s attorney got the government to agree to a post-conviction motion in which Turner would waive his right to appeal and agree to testify for the government in exchange for a reduced sentence. But that process promised to drag on for months.

Turner-Richards told Vice her brother said to her, “They’ll kill me before that.”

Turner’s cause of death has not been publicly released yet. The Bureau of Prisons did not respond to a request for comment.

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IEA: Huge Oil Glut Coming In 2020

Authored by Nick Cunningham via OilPrice.com,

The oil market saw a rather significant surplus in the first half of 2019, much larger than previously expected. Looking forward, supplies are set to tighten in the second half of the year, but that may only be a hiatus before the glut returns.

Global oil supply exceeded demand by about 0.9 million barrels per day (mb/d) in the first six months of this year, according to the International Energy Agency’s latest Oil Market Report. This retrospective look upends the prevailing sentiment that occurred just a few weeks ago. For instance, the IEA said that the oil market saw a surplus of about 0.5 mb/d in the second quarter, while the agency previously thought there was going to be a 0.5 mb/d deficit.

“This surplus adds to the huge stock builds seen in the second half of 2018 when oil production surged just as demand growth started to falter,” the IEA said.

“Clearly, market tightness is not an issue for the time being and any re-balancing seems to have moved further into the future.”

The extension of the OPEC+ cuts through the first quarter of 2020 removes a major uncertainty, but the IEA said it “does not change the fundamental outlook of an oversupplied market.”

The conclusions echo those of OPEC itself, which said in its own report published a day earlier that the “call on OPEC” will be significantly lower next year. Rising U.S. shale production will exceed additional demand both this year and next, which means that the market could see a significant surplus in 2020. In other words, OPEC+ faces a conundrum: Keep its current production cut deal intact and face a worsening glut, or cut further.

“On our balances, assuming constant OPEC output at the current level of around 30 mb/d, by the end of 1Q20 stocks could increase by a net 136 mb. The call on OPEC crude in early 2020 could fall to only 28 mb/d,” the IEA said. OPEC produced 29.83 mb/d in June.

OPEC put demand for its oil at a higher 29.3 mb/d next year, which, to be sure, is a rather significant discrepancy from the IEA figure. However, the conclusion is the same – OPEC may be forced to slash production further if it wants to head off a price slide. OPEC’s figures imply that it may need to cut output by 560,000 bpd; the IEA implies a deeper 1.8 mb/d reduction might be needed.

The IEA was diplomatic, saying that the threat of a renewed surplus “presents a major challenge to those who have taken on the task of market management.” Notably the IEA did not downgrade its demand forecast, sticking with growth of 1.2 mb/d for this year. Days earlier, the U.S. EIA downgraded its demand estimate to 1.1 mb/d. The Paris-based IEA was more optimistic about a rebound in economic growth, even as it downgraded its second quarter demand growth figure by a whopping 450,000 bpd to just 800,000 bpd year-on-year.

All three of the major forecasters – OPEC, IEA and EIA – see robust supply growth from U.S. shale. The specific figures vary, but they generally see non-OPEC production (with U.S. shale accounting for most of the total) growing by around 2 mb/d this year, and by even more next year. In other words, non-OPEC supply growth for both 2019 and 2020 exceed demand.

The one bit of uncertainty in those forecasts is the unfolding slowdown in the U.S. shale industry. As Bloomberg reported, “pipeline limits, reduced flow from wells drilled too close together, low natural gas prices and high land costs” are putting a squeeze on Texas shale drillers. Financial results are bad, and have been rather grim for quite some time. Despite huge increases in production (or, because of such extraordinary growth) North American oil companies have burned through $187 billion in cash since 2012.

The big question is whether or not the blistering rate of growth begins to slow as investors sour on the industry. Right now, there is only patchy evidence of this, with the rig count down and the pace of growth seemingly on the wane. Bloomberg cited more than a half dozen shale drillers that have dramatically scaled back their production growth forecasts as they slow the pace of drilling. It remains to be seen if, in the aggregate, U.S. output begins to flatten out.

If that occurs, it would be a massive relief to OPEC, which would find its task of rebalancing a bit easier. Otherwise, by 2020, the cartel may be forced to cut production by even more than it already has.

via ZeroHedge News https://ift.tt/2lf20sm Tyler Durden

Congressman Asked Bureau of Prisons Three Times About Nonviolent Offender Who Later Died in Maximum Security Lockup

Before Rick Turner died in federal prison earlier this year, a member of Congress sent sent three messages to the Bureau of Prisons from Turner’s family begging for Turner to be transferred somewhere safer.

Reason obtained correspondence showing that the office of Rep. Rob Wittman (R–Va.) forwarded three messages from Turner’s family to the Bureau of Prisons between October and December of last year and asked for more information on his case. The first two inquiries were ignored.

As Reason previously reported, Turner was found dead in June in his cell at USP Florence, a maximum security federal penitentiary in Colorado, less than a year after arriving there. Family members say he feared for his life in a violent, gang-controlled prison that he should have never been sent to in the first place.

Turner was sentenced to a mandatory 40 years in prison for his role in a Virginia methamphetamine trafficking ring. Federal prosecutors hammered him with firearm enhancements and drug charges that magnified his sentence by decades after he turned down a plea deal and was found guilty at trial. The judge in Turner’s case called his sentence “excessive” and “wrong,” and one of the jurors wrote last week that he would have nullified if he’d known Turner would receive 40 years.

Although Turner had no prior criminal record or history of violence, he was sent to a maximum security penitentiary because of the length of his sentence. If he had been sentenced just a few months later, after Congress reduced some of the mandatory minimum laws he was sentenced under, or if he had received a lighter sentence like the rest of his co-conspirators, all of whom took plea deals, things might have been different.

On Oct. 4, 2018, Turner’s sister, Mandy Turner-Richards, wrote to Rep. Wittman’s office asking for the congressman’s help in getting Turner transferred to another facility, saying he was receiving death threats.

“Due to the gang presence in maximum security prisons, Rick has received constant threats against his life as he refuses to be in a gang,” Turner-Richards wrote. “Rick wants to remain unaffiliated and focus on bettering his life, but this seems to be impossible in his current setting. I ask for your help in contacting the Bureau of Prisons in regards to transferring my brother to a lower security prison where he will be able to safely engage in programming and focus on getting better.”

Wittman forwarded Turner-Richards’ message to Jennifer Edens, the chief of legislative affairs for the Bureau of Prisons, and wrote, “I would appreciate you reviewing the enclosed documentation and providing me with any information that may be helpful to my constituent.”

Wittman’s office sent another inquiry on October 22, but received no response to either request. On December 6 Wittman’s office forwarded another letter from Turner’s sisters begging for their brother to be transferred out of USP Florence.

“My family is not famous, nor do we know any superstars, and we do not have a lot of money to hire expensive legal representation,” Turner-Richards wrote. “I know you are fully aware of the financial burdens put on families with incarcerated loved ones. With my brother not having a violent bone in his body, we can not comprehend why he was sent to a max security prison where he is not able to even do the therapies and things that Honorable Judge T. S. Ellis sentenced him to do. The RDAP [Residential Drug Abuse Program] program that he was sentenced to enroll in is not even available in the max security prison.”

The Bureau of Prisons finally responded on December 13. A legislative affairs specialist wrote that, under the rules, Turner would have to serve 18 months in the prison’s general population with a clean disciplinary record before he would be eligible to apply for a relocation.

“Additionally, policy does not recognize/provide hardship transfers,” the Bureau of Prisons official wrote. “Therefore, nearer January 2020, Mr. Turner needs to submit a request to his Unit Team for a nearer release transfer.”

FAMM, a nonprofit advocacy group that opposes mandatory minimum sentences, has called for an investigation into Turner’s death.

“What more can a family do?” FAMM President Kevin Ring says. “They got a member of Congress to notify BOP that their brother feared for his life, and the BOP responds with boilerplate policy language. BOP has the authority under current law to keep a nonviolent offender like Rick out of maximum security institutions. They didn’t use it. We want to know why, and we want this to stop happening.”

Vice reported last week that Turner’s attorney got the government to agree to a post-conviction motion in which Turner would waive his right to appeal and agree to testify for the government in exchange for a reduced sentence. But that process promised to drag on for months.

Turner-Richards told Vice her brother said to her, “They’ll kill me before that.”

Turner’s cause of death has not been publicly released yet. The Bureau of Prisons did not respond to a request for comment.

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“No Champagne For S&P 3000”: Why Wall Street Doesn’t Believe The Market Should Be At All Time Highs

The Fed’s (and the president’s) obsession with pushing stocks to all time highs has succeeded: the S&P is trading well above 3,000 (much to the chagrin of Morgan Stanley), and if it was Powell’s objective to also get everyone invested in the biggest asset bubble of all time, he is certainly making headway.

As we reported yesterday, both retail investors…

… and hedge funds…

… are gradually capitulating, and together with systematic, risk-parity funds…

… and CTAs…

… are pouring ever more cash into the stock market.

Today, the latest Fund Manager Survey published by Bank of America’s Michael Hartnett cemented these observations, and as BofA notes, this month’s survey “found investors have added risk, rotating into cyclical plays (equities, Europe, industrials, banks) and out of defensive ones (bonds, REITs, utilities, staples)”

As a result, the average cash balance fell to 5.2% from 5.6%, if still above the 10-year average of 4.6% as investors’ allocation to cash ticks down 2ppt to net 41% overweight, also well above the long-term average. As Hartnett reminds us, the FMS “Cash Rule” has been in “buy” territory for the past 17 months.

At the same time, the BofA  Bull & Bear indicator ticks down to 3.0, close but above the contrarian “buy” signal of 2.0 (as a reminder, the FMS Cash Rule works as follows: when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated.)

The reversal in sentiment following the May drop and the June surge, is most evident in the allocation to global equities which has retracted almost all of last month’s dip, rising 31ppt to net 10% overweight.

So with market professionals and retail investors, capitulating and jumping into the (boiling) pool, to mix metaphors about Wall Street and frogs, one would assume that investors are delighted by what is going on, perhaps?

Wrong: in fact, one can best describe the investors mood as “fear and loathing”, with Hartnett noting that there is “No champagne for SPX 3000”, for several reasons:

  • Nobody expects growth, making the recent equity spike artificial and entirely on the back of central bank multiple expansion. As BofA writes, “FMS global growth expectations rise from last month’s decade low, rebounding 20ppt to net 30% of investors surveyed expecting global growth to weaken over the next year.” As a remninder, last month saw the most bearish growth expectations since the 2000/01 & 2008/09 recessions.

  • Nobody expects inflation, suggesting that as central banks are powerless to stimulate the broader economy, they will be continue to stimulate risk assets. Indeed, only a net 1% of the responding fund managers expect higher global CPI in the next year, “the most bearish inflation outlook in seven years”

  • A recession is imminent as this is now the longest expansion on record: according to the survey, a net 73% of investors think the business cycle is a risk to financial market stability, marking an 8-year high.

  • A record number of investors are worried about debt: in the most ironic observation, a net 48% of investors are concerned about corporate leverage and yet they scramble to buy the debt issued by these same companies; global profit expectations remain flat at net 41% of those surveyed saying they expect profits to deteriorate in the next yea

  • The buybacks are too high: Last but not least, we find the very definition of irony as the survey found that a record number of fund managers, or 38%, find that corporate payout ratios (including share buybacks) are too high. In other words, everyone is buying stocks because buybacks are record high, and yet everyone is also angry thatr buybacks are record high.

The common theme: yes, the Fed managed to push the S&P to 3,000… and the reason there is “no champagne on Wall Street”, and instead fear and loathing dominates, is because nobody believes that number is real, credible or justifiable without i) the Fed’s backstopping, ii) with the economy sliding and iii) on the back of record buybacks. As a result, yes – stocks may be at record highs, but it’s only because the Fed pushed investors – against their will – into the stock market. And it doesn’t take a rocket scientist to guess what will happen when at the first sign of trouble, investors with little faith in the market, rush for the exits.

“The dovish Fed and trade truce have caused investors to reduce cash and add risk,” said Michael Hartnett, chief investment strategist, “but their expectations of an earnings recession and debt deflation still dominate sentiment. The pain trade for the summer remains up in stocks and yields.”

* * *

And speaking of risks, the final observations from the latest FMS lay out what Wall Street thinks is the biggest tail risk, which like last month remains “Trade War” at 36%, if sharply lower than the month before; monetary policy impotence climbs to the second spot at 22%, and a China slowdown (12%) and bond market bubble (9%) round out the top four

Meanwhile, in terms of position crowding risk, Long US Treasuries (37%) remains at the top of the list of the most crowded trades identified by fund managers, ahead of Long US Tech (26%) and Long IG corporate bonds (12%).

For the TL/DR crowd, we have reached the “bazooko circus” stage in the stock market.

via ZeroHedge News https://ift.tt/2k3pJfb Tyler Durden

Dollar Doldrums & Low-Delta Lottery Tickets

Bloomberg’s Richard Breslow has a simple question for the greenback bears, “if the dollar is going down, when if not now?”

If it’s so obvious that the dollar is going down, it’s worth asking, why isn’t it lower? At some point you have to wonder where economic analysis ends and the group think that comes with the comfort of crowds takes over. It seems rather remarkable to be labeled a contrarian when willing to take the other side of a trade that, if anything, looks to be going nowhere fast. And the cost of being short keeps adding up.

The Dollar Index is holding above its one-year average price. With any number of technical support points between there and current levels, can it slice through them and go down anyway? Absolutely. But this is where the going gets awfully tough. The U.S. has a preference for a weaker currency. So does everyone else. They are just being more polite about it. Is there much doubt which direction the yuan would head if left to its own devices?

Traders are concerned that the Fed will not only make good on its rate cut at the July meeting, but throw in some shock and awe. And to reflect that fact, a lot is priced into the market. It wouldn’t be some completely unexpected bolt from the blue. The consensus is for the smaller amount. But there are well-respected market analysts calling for, and expecting, something more meaningful. And they’re suggesting trades to position for it.

If there is reason to be concerned what a rate cut would do to the dollar it shouldn’t stem from the fact that it happens at all. It’s rather, if there is an impression that the market forced them into it. Which, policy makers will always deny. Investors, who believe they are the better forecasters, will continue to take it as a given. Such is the unfortunate legacy of rate setters perpetually afraid to disappoint the market.

And if the Fed moves, is it likely other central banks decide their work was done for them? As acting head of the IMF, David Lipton reiterated that “all of Europe’s policy levers need to be ready for use.” And this, oddly enough, came on the back of comments that the IMF baseline is not that the world economy is stalling or headed for recession. The subtext of which seems to be, that we can’t afford to wait and see what solution might be cobbled together on Huawei and tariffs.

Despite last week’s CPI number, no one is worried that inflation is making a sudden comeback. And, even if it started to, the Committee, for the moment, can afford not to care. Whether they do 25 basis points or 50, the sum total of what they end up cutting isn’t likely to change. Nothing they do is going to increase the likelihood that they would venture below the zero bound. A folly already embraced elsewhere.

As far as unilateral intervention is concerned, you can’t trade off the possibility. Buy a low-delta lottery ticket if the worry is just too great. Now, if you want something that should legitimately be on the radar, keep watching for any news on the debt ceiling issue. Brinkmanship before something is settled is all too real a possibility. But at least this issue will mostly play out publicly.

In what may be a realization that bold predictions on the dollar’s demise were a little too aggressive, some forecasts for how low and how quickly it will fall are being scaled back. Or, it’s concern that the momentum for this trade has dissipated. It’s not as if everyone isn’t feeling the bite of the tariff fight. The weekly CFTC Commitment of Traders reports are probably worth watching more closely than usual.

For something to watch with rapt interest today, focus on EUR/CHF.

It just made an almost two-year low. And that doesn’t argue that it’s the dollar that is in trouble.

via ZeroHedge News https://ift.tt/2jKW9Lf Tyler Durden

Supply chain illuminati

What is the federal government doing to “illuminate” its supply chain and then excise compromised hardware and software? That’s what we ask Harvey Rishikof, coauthor of “Deliver Uncompromised,” and Joyce Corell, who heads the Supply Chain and Cyber Directorate at the National Counterintelligence and Security Center. There’s no doubt the problem is being admired to a fare-thee-well, and some evidence it’s also being addressed. Listen and decide!

In the News Roundup, Nate Jones and I disagree about the Second Circuit ruling that President Trump can’t block his critics on Twitter. We don’t disagree about that ruling, but I’m a lot more skeptical than Nate that it will be applied to that other famous Washington tweeter, Alexandria Ocasio-Cortez.

GDPR still sucks, but now it bites, too. Matthew Heiman explains just how bad the bite was for Marriott and British Airways.

Gus Hurwitz reprises how much – or little – we know about the FTC and Facebook. We won’t know much, he says, until we answer the question, “Where’s the complaint?”

Talk about hard supply chain issues. Congress banned Chinese surveillance cameras from the federal supply chain by law.  But passing a law turns out to be a lot different from actually, you know, getting rid of them.

For a change of pace, Gus and I rag on the US Patent and Trademark Office for its petition asking the Supreme Court to overturn a Fourth Circuit ruling that adding “.com” to a generic term makes it trademarkable. You tell ’em, USPTO! It’s not like adding “.com” to a word has the same creativity and distinctiveness as adding “i” in front of “phone” or “pod.”

Nate and I spar over whether Section 301 can be used to retaliate against France for its 3% digital tax.

Matthew tells us that the Trump Administration isn’t sharing details on classified cyberattack rules with Congress, and after a modicum of mockery, we actually find ourselves agreeing with Congress’s demand to be briefed on the rules.

Finally, in quick hits, I flag the hypocrisy of social justice campaigners who love the idea of privacy until it gets in the way of doxxing people they disagree with—plus the surprising ways that GDPR has enabled personal data breaches on an industrial scale.

Download the 272nd Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed!

As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of the firm.

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Supply chain illuminati

What is the federal government doing to “illuminate” its supply chain and then excise compromised hardware and software? That’s what we ask Harvey Rishikof, coauthor of “Deliver Uncompromised,” and Joyce Corell, who heads the Supply Chain and Cyber Directorate at the National Counterintelligence and Security Center. There’s no doubt the problem is being admired to a fare-thee-well, and some evidence it’s also being addressed. Listen and decide!

In the News Roundup, Nate Jones and I disagree about the Second Circuit ruling that President Trump can’t block his critics on Twitter. We don’t disagree about that ruling, but I’m a lot more skeptical than Nate that it will be applied to that other famous Washington tweeter, Alexandria Ocasio-Cortez.

GDPR still sucks, but now it bites, too. Matthew Heiman explains just how bad the bite was for Marriott and British Airways.

Gus Hurwitz reprises how much – or little – we know about the FTC and Facebook. We won’t know much, he says, until we answer the question, “Where’s the complaint?”

Talk about hard supply chain issues. Congress banned Chinese surveillance cameras from the federal supply chain by law.  But passing a law turns out to be a lot different from actually, you know, getting rid of them.

For a change of pace, Gus and I rag on the US Patent and Trademark Office for its petition asking the Supreme Court to overturn a Fourth Circuit ruling that adding “.com” to a generic term makes it trademarkable. You tell ’em, USPTO! It’s not like adding “.com” to a word has the same creativity and distinctiveness as adding “i” in front of “phone” or “pod.”

Nate and I spar over whether Section 301 can be used to retaliate against France for its 3% digital tax.

Matthew tells us that the Trump Administration isn’t sharing details on classified cyberattack rules with Congress, and after a modicum of mockery, we actually find ourselves agreeing with Congress’s demand to be briefed on the rules.

Finally, in quick hits, I flag the hypocrisy of social justice campaigners who love the idea of privacy until it gets in the way of doxxing people they disagree with—plus the surprising ways that GDPR has enabled personal data breaches on an industrial scale.

Download the 272nd Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed!

As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of the firm.

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