Podcast on the Blaine Amendments Case

For those who are interested, my colleague Marc DeGirolami and I have recorded a new episode for our Legal Spirits podcast series on last month’s oral argument in the Blaine Amendments case, Espinoza v. Montana Dep’t of Revenue. The episode touches on a couple of issues that I didn’t address in my short VC post on the case last month, including the standing and mootness arguments that some of you mentioned in the comments. I don’t think those arguments will persuade a majority of the Justices, but Justice Kagan’s point about mootness (if that’s what it is) seems more powerful to me now than it did at first. Anyway, listeners can judge for themselves. Here’s the link.

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Senate Votes To Acquit Trump on All Charges

The Senate on Wednesday acquitted President Donald Trump of both impeachment charges, ending a monthslong battle that did little more than clarify the intense polarization between Democrats and Republicans in Congress and around the country.   

Trump was impeached by the House in December for abuse of power over his role in attempting to pressure Ukrainian President Volodymyr Zelenskiy into announcing investigations that zeroed in on Trump’s domestic political foes. The House also charged Trump with obstruction of Congress after he refused to turn over various documents and used executive privilege to prohibit certain witnesses from testifying in the inquiry. 

In a near party-line vote, senators rejected the abuse of power article 52-48 and the obstruction of Congress article 53-47. The only defection was Sen. Mitt Romney (R–Utah), who broke with the GOP and voted to convict Trump on the former charge, making him the first senator to ever support removing a president from his or her own party. The move undercut Trump’s argument that his impeachment was completely partisan and not supported by anyone in the Republican party.

The saga began with an August whistleblower complaint detailing a July 25 phone call between Trump and Zelenskiy. During that conversation, Trump asked Zelenskiy to “do us a favor” and probe former Vice President Joe Biden and his son, Hunter—a request that was widely seen as an attempt to bolster his own 2020 re-election chances. In addition, Trump pushed to have Zelenskiy announce an investigation into a highly criticized theory that Ukraine, rather than Russia, executed widespread election interference in the 2016 presidential race. Also in July, the White House withheld millions of dollars of congressionally authorized security assistance to Ukraine without explanation; it was disbursed on September 11, following the release of the whistleblower complaint.

In September, House Speaker Nancy Pelosi (D–Calif.) announced the start of an impeachment inquiry. In October, the House passed formal rules for the proceedings. A series of witnesses testified in closed-door depositions and again in public throughout November and December, culminating in the House’s December 18 vote to advance impeachment against Trump.

During the House hearings, members of the GOP accused Democrats of trampling on Trump’s right to due process by collecting the initial testimonies outside of the public eye; Democrats countered that the private setting allowed them to hear from witnesses without allowing them to coordinate their stories. These rules for impeachment inquiry hearings were set by House Speaker John Boehner (R–Ohio) and other Republicans in 2015. 

GOP lawmakers continuously challenged the reliability of witnesses, most of whom painted a consistent story of Trump behaving inappropriately. Bill Taylor, the chargé d’affaires in Ukraine, said that it was “crazy to withhold security assistance for help with a political campaign.” Gordon Sondland, the U.S. ambassador to the European Union, claimed that there was a well-understood quid pro quo between the two leaders in exchange for a White House meeting. 

As the impeachment moved toward a Senate trial, Majority Leader Mitch McConnell (R–Ky.) referred to the proceedings as “the most rushed, least thorough, and most unfair impeachment inquiry in modern history.” The Kentucky Republican lambasted Democrats for not even attempting to subpoena witnesses and documents by using the courts. It’s a legitimate objection to the second article of impeachment. As Reason‘s Jacob Sullum notes, the House’s case “suffered from an arbitrary, self-imposed deadline,” driven largely by political motivations as opposed to practical ones.

While initially focused on proving Trump’s innocence, his lawyers pivoted to downplay the impeachable nature of the offenses after national security adviser John Bolton claimed that Trump directly tied the security aid to the investigations.

“Nothing in the Bolton revelations, even if true, would rise to the level of an abuse of power or an impeachable offense,” said Alan Dershowitz, the retired Harvard professor turned lawyer for Trump. “Even if everything in there was true, it constitutionally doesn’t rise to that level,” echoed outside lead counsel Jay Sekulow. Dershowitz would go on to argue that a quid pro quo put forward by Trump in attempts to secure his re-election could not be impeachable because politicians believe their electoral success to be in “the national interest.”

Also under scrutiny throughout the trial was whether impeachment requires a violation of a criminal statute. “It certainly doesn’t have to be a crime,” said Dershowitz in 1998—a position he would go on to retract in his 2018 book The Case Against Impeaching Trump. During Trump’s trial, he refined his position further, asserting that the offense must be “crime-like.” Legal consensus heavily favors Dershowitz’s original position, with even McConnell acknowledging that impeachment does not demand the commission of a crime.

Ken Starr, the ex-independent counsel whose report led to the impeachment of former President Bill Clinton, argued that impeachment proceedings are not valid unless they achieve broad bipartisan support. That claim fails to withstand historical evidence: impeachments have always been partisan affairs, including the one Starr helped facilitate.

Democrats throughout the proceedings stuck to a rehearsed script, continuously citing evidence that they say shows Trump leveraged his office for personal benefit. Although the minority party clearly knew that an acquittal was almost certain, impeachment manager Rep. Adam Schiff (D–Calif.) made an appeal to the center during his closing arguments as he tried to rebut claims that the impeachment was wholly partisan. 

“History will not be kind to Donald Trump. If you find that the House has proved its case and still vote to acquit, your name will be tied to his with a cord of steel and for all of history,” he said. “But if you find the courage to stand up to him…your place will be among the Davids who took on Goliath.”

Some Senate Republicans have conceded that the House proved Trump acted improperly. In a statement, Sen. Lamar Alexander (R–Tenn.) provided the argument that is perhaps most emblematic of where many of his colleagues stand.

“There is no need for more evidence to conclude that the president withheld United States aid, at least in part, to pressure Ukraine to investigate the Bidens; the House managers have proved this with what they call a ‘mountain of overwhelming evidence,'” he wrote. “There is no need to consider further the frivolous second article of impeachment that would remove the president for asserting his constitutional prerogative to protect confidential conversations with his close advisers.”

In the end, Trump didn’t have to convince Senate Republicans that he was innocent. He just needed them to say out loud that it doesn’t matter.

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When China’s Supply Chains Break, So Will The Delusion The US Economy Is Invulnerable

When China’s Supply Chains Break, So Will The Delusion The US Economy Is Invulnerable

Authored by Charles Hugh Smith via OfTwoMinds blog,

Was it ever plausible that China’s economy could grind to a halt and there wouldn’t be any consequences for the U.S. economy? No.

Many commentators talk about supply chains in China, but how many have actually visited factories in China, other than carefully choreographed PR visits to suitably high-tech facilities? I’ve visited many factories in China, and not with a staff of minders who swiftly guide the visitors through the happy story of high-tech wonderland.

I’ve visited some high-tech facilities but also many low-tech factories, where most of the supply chain originates, usually with one or two bored local government functionaries. You get a much less distorted view of the supply chain on the ground, away from the carefully guided tours.

Since we weren’t important visitors, nothing was staged. Workers glanced at us, as in what are they doing here?, but otherwise we simply observed everyday operations.

As I’ve reported here for a decade, profit margins in the vast majority of these supply chain companies are wafer-thin, with 1% being bandied about as a typical profit margin. Due to the extremely distorting way imports and exports are recorded, as little as $10 of every $400 iPhone “imported” from China actually stays in China as wages, overhead and profit. We estimate China only makes $8.46 from an iPhone.

Most of the high-value components are manufactured elsewhere in the world, and all the profit and overhead flows to Apple HQ in Cupertino, California.

The reality is that much of the supply chain is at risk of financial collapse. Many if not most of the thousands of spontaneous protests in recent years in China are not political; they’re workers demanding back pay or promised bonuses from shuttered supply-chain companies.

Here’s how bankrupt supply-chain factory owners deal with bankruptcy: they leave in the middle of the night and vanish. The workers get stiffed and there’s no recourse, no court hearing, no nothing.

The financial underpinnings of the supply chain have been eroding for years, as this unvarnished December 2018 report from a Chinese economist explains.

A Great Shift Unseen Over the Last Forty YearsLook at our profit structure. To put it plainly, China’s listed companies don’t really make money. Then who has taken the few profits made by China’s more than 3,000 listed companies? Two-thirds have been taken by the banking sector and real estate. The profits earned by 1,444 listed companies on the SME board and growth enterprise board are not even equal to one and half times the profit of the Industrial and Commercial Bank of China.

China’s economic decline indicates that there is a major issue with the focus on expansion and growth: It has deviated from the fundamental and moved to speculation. These are the words of former chief of China’s central bank, Zhou Xiaochuan.

What are our current financial risks? They are hidden, complex, acute, contagious, and malevolent. Structural imbalance are massive, and violations of law and regulations are rampant.

We have rampant speculations everywhere, in too many aspects. In short, it’s arbitrage.

In other words, a consequential percentage of the supply chain companies in China are only viable due to expanding debt and speculation. Any disruption of this fragile balance between losing money manufacturing/assembling but covering the losses with risky speculative gains will sink the companies: the doors are locked and the owners disappear rather than face the music.

The unpaid workers have little choice if they can’t find a job within days: they have to return to their ancestral villages and towns, where paid work is scarce but it doesn’t take much to get by.

The cost of living in China’s major cities has been soaring for years, and factory workers’ pay has not kept up. If jobs dry up, or the employer doesn’t pay the promised wages and bonuses, hanging out in expensive cities with no income is not an option.

Some workers may opt to return home just to avoid getting the coronavirus in crowded dormitories and factories.

U.S. corporations that assume their supply chains will return to normal in a week or two are in for a big surprise: consequential chunks of their supply chains, likely chunks they never paid much attention to, will dry up and blow away. The factories will not re-open, and the workers won’t return.

Any way they cut it, costs will rise whether Corporate America seeks suppliers outside China or alternative suppliers in China. With global wages stagnant for the past decade or two, raising prices is a non-starter. Net-net, corporate profits will fall even if sales remain robust, which is unlikely given the world’s largest economy and manufacturing center is grinding to a halt.

Once the supply chain breakdown comes home to roost in Corporate America, the mass delusion that the U.S. economy is invulnerable will collapse in a heap. Was it ever plausible that China’s economy could grind to a halt and there wouldn’t be a domino-like collapse of all the weak links in its supply chains? No. Companies living on debt and speculation only needed the slightest push to careen off the cliff into insolvency. The coronavirus is that push.

Was it ever plausible that China’s economy could grind to a halt and there wouldn’t be any consequences for the U.S. economy? No. Alas, mass delusions always end badly.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


Tyler Durden

Wed, 02/05/2020 – 16:45

via ZeroHedge News https://ift.tt/2SmJ1cn Tyler Durden

Senate Votes To Acquit Trump on All Charges

The Senate on Wednesday acquitted President Donald Trump of both impeachment charges, ending a monthslong battle that did little more than clarify the intense polarization between Democrats and Republicans in Congress and around the country.   

Trump was impeached by the House in December for abuse of power over his role in attempting to pressure Ukrainian President Volodymyr Zelenskiy into announcing investigations that zeroed in on Trump’s domestic political foes. The House also charged Trump with obstruction of Congress after he refused to turn over various documents and used executive privilege to prohibit certain witnesses from testifying in the inquiry. 

In a near party-line vote, senators rejected the abuse of power article 52-48 and the obstruction of Congress article 53-47. The only defection was Sen. Mitt Romney (R–Utah), who broke with the GOP and voted to convict Trump on the former charge, making him the first senator to ever support removing a president from his or her own party. The move undercut Trump’s argument that his impeachment was completely partisan and not supported by anyone in the Republican party.

The saga began with an August whistleblower complaint detailing a July 25 phone call between Trump and Zelenskiy. During that conversation, Trump asked Zelenskiy to “do us a favor” and probe former Vice President Joe Biden and his son, Hunter—a request that was widely seen as an attempt to bolster his own 2020 re-election chances. In addition, Trump pushed to have Zelenskiy announce an investigation into a highly criticized theory that Ukraine, rather than Russia, executed widespread election interference in the 2016 presidential race. Also in July, the White House withheld millions of dollars of congressionally authorized security assistance to Ukraine without explanation; it was disbursed on September 11, following the release of the whistleblower complaint.

In September, House Speaker Nancy Pelosi (D–Calif.) announced the start of an impeachment inquiry. In October, the House passed formal rules for the proceedings. A series of witnesses testified in closed-door depositions and again in public throughout November and December, culminating in the House’s December 18 vote to advance impeachment against Trump.

During the House hearings, members of the GOP accused Democrats of trampling on Trump’s right to due process by collecting the initial testimonies outside of the public eye; Democrats countered that the private setting allowed them to hear from witnesses without allowing them to coordinate their stories. These rules for impeachment inquiry hearings were set by House Speaker John Boehner (R–Ohio) and other Republicans in 2015. 

GOP lawmakers continuously challenged the reliability of witnesses, most of whom painted a consistent story of Trump behaving inappropriately. Bill Taylor, the chargé d’affaires in Ukraine, said that it was “crazy to withhold security assistance for help with a political campaign.” Gordon Sondland, the U.S. ambassador to the European Union, claimed that there was a well-understood quid pro quo between the two leaders in exchange for a White House meeting. 

As the impeachment moved toward a Senate trial, Majority Leader Mitch McConnell (R–Ky.) referred to the proceedings as “the most rushed, least thorough, and most unfair impeachment inquiry in modern history.” The Kentucky Republican lambasted Democrats for not even attempting to subpoena witnesses and documents by using the courts. It’s a legitimate objection to the second article of impeachment. As Reason‘s Jacob Sullum notes, the House’s case “suffered from an arbitrary, self-imposed deadline,” driven largely by political motivations as opposed to practical ones.

While initially focused on proving Trump’s innocence, his lawyers pivoted to downplay the impeachable nature of the offenses after national security adviser John Bolton claimed that Trump directly tied the security aid to the investigations.

“Nothing in the Bolton revelations, even if true, would rise to the level of an abuse of power or an impeachable offense,” said Alan Dershowitz, the retired Harvard professor turned lawyer for Trump. “Even if everything in there was true, it constitutionally doesn’t rise to that level,” echoed outside lead counsel Jay Sekulow. Dershowitz would go on to argue that a quid pro quo put forward by Trump in attempts to secure his re-election could not be impeachable because politicians believe their electoral success to be in “the national interest.”

Also under scrutiny throughout the trial was whether impeachment requires a violation of a criminal statute. “It certainly doesn’t have to be a crime,” said Dershowitz in 1998—a position he would go on to retract in his 2018 book The Case Against Impeaching Trump. During Trump’s trial, he refined his position further, asserting that the offense must be “crime-like.” Legal consensus heavily favors Dershowitz’s original position, with even McConnell acknowledging that impeachment does not demand the commission of a crime.

Ken Starr, the ex-independent counsel whose report led to the impeachment of former President Bill Clinton, argued that impeachment proceedings are not valid unless they achieve broad bipartisan support. That claim fails to withstand historical evidence: impeachments have always been partisan affairs, including the one Starr helped facilitate.

Democrats throughout the proceedings stuck to a rehearsed script, continuously citing evidence that they say shows Trump leveraged his office for personal benefit. Although the minority party clearly knew that an acquittal was almost certain, impeachment manager Rep. Adam Schiff (D–Calif.) made an appeal to the center during his closing arguments as he tried to rebut claims that the impeachment was wholly partisan. 

“History will not be kind to Donald Trump. If you find that the House has proved its case and still vote to acquit, your name will be tied to his with a cord of steel and for all of history,” he said. “But if you find the courage to stand up to him…your place will be among the Davids who took on Goliath.”

Some Senate Republicans have conceded that the House proved Trump acted improperly. In a statement, Sen. Lamar Alexander (R–Tenn.) provided the argument that is perhaps most emblematic of where many of his colleagues stand.

“There is no need for more evidence to conclude that the president withheld United States aid, at least in part, to pressure Ukraine to investigate the Bidens; the House managers have proved this with what they call a ‘mountain of overwhelming evidence,'” he wrote. “There is no need to consider further the frivolous second article of impeachment that would remove the president for asserting his constitutional prerogative to protect confidential conversations with his close advisers.”

In the end, Trump didn’t have to convince Senate Republicans that he was innocent. He just needed them to say out loud that it doesn’t matter.

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Undercover Cops Hired 118 Handymen, Then Arrested Them All for Not Having Licenses

The residents of Hillsborough County, Florida, can sleep safely tonight following the arrest of 118 people for performing unlicensed contracting work as part of a Hillsborough County Sheriff’s Office sting known as “Operation House Hunters.”

The sting, according to Patch, saw sheriff’s deputies pose as homeowners seeking handymen on social media to do jobs that required licensure. These unsuspecting handymen would be lured to one of five homes, where undercover deputies filmed them performing or agreeing to perform prohibited tasks like painting or installing recess lighting.

The stings were carried out between March and December of last year. The arrests were announced yesterday.

“These 118 con men and women were posing as contractors & preying on innocent homeowners in Hillsborough County, who were just looking to repair or improve their home,” said Hillsborough County Sheriff Chad Chronister at a Tuesday press conference. The mug shots of those picked up in the sweeps were displayed behind him on big posters.

The Sheriff’s Office also released a compilation video of some of the handymen caught up in the sting operation, including several who had past criminal convictions, or who had been caught previously performing unlicensed contract work.

Only eight of the people arrested as part of Operation House Hunter were repeat offenders, according to the Hillsborough County Sheriff’s Department. The other 110 were arrested for first-time offenses. The bulk of those charges were for “unlawful acts in the capacity of a contractor,” a misdemeanor offense that can come with a $1,000 fine and a 12-month jail sentence. Repeat violations can result in a felony charge.

That the Sheriff’s sting operation netted few master criminals is not surprising to Leslie Sammis, a criminal defense lawyer in Tampa, Florida, who has represented clients caught up in these sting operations in Hillsborough County.

“The real con men that are trying to trick homeowners are usually too experienced to get caught up in one of these types of sting operations. So the stings tend to catch someone that crosses the line in an unsophisticated way,” Sammis told me in an email.

Frequently, she says, officers will hire a handyman on the pretext of performing work that doesn’t need a license, and then during the course of the job ask them to do something that does, like unhooking a toilet or laying some tiles.

“When the handyman says no, then the undercover detective moves the conversation to something else and then comes back to the question later in a different way,” says Sammis. “By the time the handyman gets to the location, they want to make the homeowner happy and end up agreeing to perform work that they didn’t intend on doing when they first arrived. The undercover detective[s] are just creating a crime that probably wouldn’t occur otherwise.”

Using stings to nab unlicensed contractors isn’t unique to Hillsborough County. Cops and regulators have conducted similar operations in New York and California.

Occupational licensing, whether it’s of contractors or hair braiders, is often much more about protecting incumbent businesses and government licensing revenue than it is about safeguarding the welfare of consumers.

Operation House Hunters is a perfect illustration of this, with cops going to great lengths to manufacture licensing law violations that either wouldn’t have happened or wouldn’t have produced unsatisfied parties.

The more effort law enforcement spends entrapping handymen, the fewer personnel and resources they have to devote to deterring other, more serious crimes. “These sting operations rake in big money in fines and court costs,” Sammis says. “Catching real criminals actually committing a crime is much harder.”

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Undercover Cops Hired 118 Handymen, Then Arrested Them All for Not Having Licenses

The residents of Hillsborough County, Florida, can sleep safely tonight following the arrest of 118 people for performing unlicensed contracting work as part of a Hillsborough County Sheriff’s Office sting known as “Operation House Hunters.”

The sting, according to Patch, saw sheriff’s deputies pose as homeowners seeking handymen on social media to do jobs that required licensure. These unsuspecting handymen would be lured to one of five homes, where undercover deputies filmed them performing or agreeing to perform prohibited tasks like painting or installing recess lighting.

The stings were carried out between March and December of last year. The arrests were announced yesterday.

“These 118 con men and women were posing as contractors & preying on innocent homeowners in Hillsborough County, who were just looking to repair or improve their home,” said Hillsborough County Sheriff Chad Chronister at a Tuesday press conference. The mug shots of those picked up in the sweeps were displayed behind him on big posters.

The Sheriff’s Office also released a compilation video of some of the handymen caught up in the sting operation, including several who had past criminal convictions, or who had been caught previously performing unlicensed contract work.

Only eight of the people arrested as part of Operation House Hunter were repeat offenders, according to the Hillsborough County Sheriff’s Department. The other 110 were arrested for first-time offenses. The bulk of those charges were for “unlawful acts in the capacity of a contractor,” a misdemeanor offense that can come with a $1,000 fine and a 12-month jail sentence. Repeat violations can result in a felony charge.

That the Sheriff’s sting operation netted few master criminals is not surprising to Leslie Sammis, a criminal defense lawyer in Tampa, Florida, who has represented clients caught up in these sting operations in Hillsborough County.

“The real con men that are trying to trick homeowners are usually too experienced to get caught up in one of these types of sting operations. So the stings tend to catch someone that crosses the line in an unsophisticated way,” Sammis told me in an email.

Frequently, she says, officers will hire a handyman on the pretext of performing work that doesn’t need a license, and then during the course of the job ask them to do something that does, like unhooking a toilet or laying some tiles.

“When the handyman says no, then the undercover detective moves the conversation to something else and then comes back to the question later in a different way,” says Sammis. “By the time the handyman gets to the location, they want to make the homeowner happy and end up agreeing to perform work that they didn’t intend on doing when they first arrived. The undercover detective[s] are just creating a crime that probably wouldn’t occur otherwise.”

Using stings to nab unlicensed contractors isn’t unique to Hillsborough County. Cops and regulators have conducted similar operations in New York and California.

Occupational licensing, whether it’s of contractors or hair braiders, is often much more about protecting incumbent businesses and government licensing revenue than it is about safeguarding the welfare of consumers.

Operation House Hunters is a perfect illustration of this, with cops going to great lengths to manufacture licensing law violations that either wouldn’t have happened or wouldn’t have produced unsatisfied parties.

The more effort law enforcement spends entrapping handymen, the fewer personnel and resources they have to devote to deterring other, more serious crimes. “These sting operations rake in big money in fines and court costs,” Sammis says. “Catching real criminals actually committing a crime is much harder.”

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Peloton Plummets After Missing Revenue Guidance

Peloton Plummets After Cutting Revenue Guidance

Any retail investors who had just gotten long Tesla in the past 24 hours, had a terrible day following the biggest one day drop in the EV-automaker’s history. Yet if those same investors were consoling themselves that their momo long in the company that popularized stationary bikes with an ipad superglued at the front yelling at the rider for motivation, i.e., Peloton, would offset their P&L losses, were in for a shock after the company reported a stellar quarter, where every metric beat expectations only to see the stock plunge as much as 16% after hours, wiping out all the year’s gains after the company guided to slightly weaker Q4 revenue.

Here are the company’s Q2 results, as well as Q3 and full-year guidance:

  • Q2 sales $466.3MM, beating estimates of $423.65m
  • Q2 loss per share 20c, beating adj EPS est. loss 34c
  • Q2 adj. EBITDA loss $28.4 million, beating estimated loss $65.9m

The additional metrics were also solid:

  • Connected fitness subscribers 712,005; beating est. 686.84K
  • Subscription revenue $77.1MM; beating est. $68.75MM

Looking ahead, however, a problem emerged as the company now sees Q4 revenue of $470MM to $480MM, the top end of the range badly missing the estimate $494.2MM. The company also guided to Q4 EBITDA loss $25m to loss $35m, roughly in line with the consensus EBITDA loss $31.75m. Additionally, Peloton also sees 3Q Connected fitness subscribers 843K to 848K, 85% growth at midpoint.

Surprisingly, for the full year, Peloton actually guided higher, and now sees FY2020 revenue of $1.53b to $1.55b, after seeing $1.45BN to $1.50BN in November, both above the est. $1.49b. Full year 2020 adj. Ebitda loss was also trimmed to $95m-$115m, after initially seeing a loss of $150m to $170m, also in line with the estimate loss $158m.

Not even the modest improvement in full year sub expectations, as PTON now sees FY20 Connected fitness subscribers of 920,000 to 930,000, up 81% at the midpoint, and up from the previous November guidance of 885,000 to 895,000 was enough to appears the company which appears was priced to perfection, and the one disappointing revenue guidance was enough to send the stock plunging…

… much to the delight of shorts. And speaking of Peloton shorts, a bizarre observation emerges, because the company with a 40 million float, and 43.2 million total shares outstanding, somehow has a total short interest of 45 million, or 112% of the float!

As Bloomberg notes, “short interest of more than 100% of the float is unusual, but has precedent.” According to IHS Markit’s Sam Pierson, “the reason is that when shares are sold short, the purchaser of the shares is free to lend them to another short seller. The current estimate of short interest from IHS Markit is based on international reported borrowing of shares. It stands in contrast to data from financial analytics firm S3 Partners, which shows Peloton short interest at 86% of float.”

In other words, someone was very aggressive in rehypothecating their already lent out shares, a rather risky proposal should the stock ever spike on unexpected positive news.

To be sure, if and when an unexpected upside catalyst emerges, this unprecedented short interest could well make Peloton into the next Tesla/Volkswagen. Until then, and certainly today, the shorts will have the (interim) laugh.


Tyler Durden

Wed, 02/05/2020 – 16:23

via ZeroHedge News https://ift.tt/381LUWR Tyler Durden

Record Surge In Global Virus Cases Sparks Panic-Bid For Stocks To All-Time Highs

Record Surge In Global Virus Cases Sparks Panic-Bid For Stocks To All-Time Highs

What better catalyst is there for buying US equities with both hands and feet that the Director-General of The World Health Organization – who has been down-playing the pandemic for days – admitting that the last 24 hours saw the biggest surge in coronavirus cases worldwide since the crisis began? And as far as rumors of a vaccine, how long will that take?

China did not supply liquidity last night, but momentum was still with the small cap tech stocks in ChiNext…

Source: Bloomberg

European markets all bounced higher once again today…

Source: Bloomberg

And as Industrials, Trannies, and Small Caps roared higher in the US, Nasdaq lagged (everything saw quite an ugly close)…

Futures show the surge on the vaccine and the complete ignorance of WHO comments…

 

Dow gapped through 29,000 and never looked back (IBM, UNH, and BA accounted for half of the index gains alone)

And the S&P 500 almost perfectly top-ticked the record high from January (after testing the spike lows from the Iran missile strike)…

The last 3 days have been the biggest short-squeeze since September’s melt-up (and melt back down)…

Source: Bloomberg

As high-growth, super-expensive software stocks plunged today by the most in 2 months…

Source: Bloomberg

The GS 8X EV / SALES software basket is a basket of US growth software stocks that carry the highest EV/S multiples in the group.

And then there’s TSLA!! Which suffered its biggest one-day drop ever…

Following Bitcoin’s 2017 trajectory rather too well…

Cyclicals are almost back to pre-virus levels…

Source: Bloomberg

Big regime change today as Momo tumbled (cough TSLA cough)…that is the biggest drop in momentum in 2 months

Source: Bloomberg

Treasury yields extended their rise (but note the jump in yields occurred on the vaccine headlines at 3amET not the ADP or ISM data)…

Source: Bloomberg

30Y Yields rose to fill the gap from the major virus drop…

Source: Bloomberg

Notably the market has un-priced its demands for Fed easing as stocks soared back to record highs…

Source: Bloomberg

The Dollar Index broke out to the upside of its recent range today…

Source: Bloomberg

Hitting 2-month highs and breaking above all its major moving averages…

Source: Bloomberg

Yuan jumped on the vaccine headlines…

Source: Bloomberg

Bitcoin surged today, nearing $9800 intraday…

Source: Bloomberg

PMs drifted lower today as the dollar gained but copper and crude rallied on vaccine hopes…

Source: Bloomberg

WTI was higher for only the 2nd time in 12 sessions on a surprise gasoline draw and chatter from OPEC+ of more cuts (but we note oil went out weak)…

Source: Bloomberg

Finally, some context for everything else in the world’s reaction to the Wuhan coronavirus… and stocks…

Source: Bloomberg

And maybe, just maybe, the fact that Bernie never won the Iowa caucus, which lowered his odds of a nomination (despite still leading by a mile at the bookies) may have buoyed the market (and Bloomberg just overtook Biden!)…

Source: Bloomberg


Tyler Durden

Wed, 02/05/2020 – 16:00

via ZeroHedge News https://ift.tt/31vzaW4 Tyler Durden

‘The President Is Guilty.’ Mitt Romney Will Break Party Lines, Vote To Remove Trump.

When President Andrew Johnson was impeached in 1868, not a single Democratic senator voted for his removal.

When President Bill Clinton was impeached in 1998, his fellow Democrats were similarly unanimous in their support for acquittal.

Those two facts make what Sen. Mitt Romney (R–Utah) announced on Wednesday afternoon pretty significant. In a speech on the Senate floor, Romney said he plans to vote for President Donald Trump’s removal from office.

“The president is guilty of an appalling abuse of the public trust,” Romney said. Trump’s purpose in asking the Ukrainain government to investigate Joe Biden and his son, Hunter, was “personal and political,” Romney added.

There are two important caveats here. First, Romney’s vote is highly unlikely to derail Trump’s acquittal by the Senate—the final vote is expected later today.

Second, Romney’s home state of Utah is about as anti-Trump as a red state can be in 2020. When he was elected to the Senate in 2018, Romney promised to be an independent voice within the increasingly Trumpy Republican Party—despite his earlier flirtations with a possible cabinet position in the Trump administration.

In an interview with The Atlantic, Romney talked about relying on his Mormon faith to help make what the senator said was “the most difficult decision I have ever had to make in my life.” That’s certainly an appeal to his constituents, and his vote against Trump is certainly a less risky bet than it would have been for many other GOP senators.

And yet. This is an historic vote, and one that will plant a target firmly on Romney’s back. There is no world in which casting this vote makes it easier for Romney to continue to do his job, or to win another term in office. As tempting as it always is to roll one’s eyes when an elected official talks about “doing the right thing,” this is a rare instance where a senator is doing exactly that—or, at least, believes that he is.

Not surprisingly, the announcement earned Romney some praise from Rep. Justin Amash (R–Mich.), the only other current or former Republican to vote in favor of impeaching Trump.

But the vote is unlikely to win Romney praise from his fellow Republicans. Sen. Josh Hawley (R–Mo.), who is widely regarded as one of the White House’s closest allies in the Senate, told CNN’s Manu Raju that he was “surprised and disappointed” by the announcement. Other rebukes will surely use harsher language.

As he concluded his remarks on Wednesday, Romney tried to downplay the historic nature of the vote he was promising to cast.

“The results of this Senate court will in fact be appealed to a higher court: the judgement of the American people,” he said. “I will tell my children and their children that I did my duty to the best of my ability, believing that my country expected it of me.”

“I will only be one name among many,” he added. “No more, and no less.”

But on Wednesday evening, Mitt Romney’s name will likely stand alone.

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