Month: August 2020

By now, conservatives across the US understand that most of the violence being caused in the aftermath of these police shootings isn’t organized by locals, but rather by bands of traveling activists who live in nearby metropolises. In the Midwest, that’s Chicago, a hub of racial activism since Bernie Sanders went to school there back in the 1960s. Some might be coming from Milwaukee as well.

Just like we saw in New York City, many of the looters and people there committing acts of vandalism and violence are drawn from Chicago and other nearby areas.

On Tuesday’s broadcast of the Fox News Channel’s “The Story,” Rep. Bryan Steil (R-WI) stated that local law enforcement in Kenosha, WI are “very concerned large numbers of people are coming up from Chicago and trying to disrupt the public safety in the community of Kenosha,” in the wake of the shooting of Jacob Blake.

Meanwhile, left-wing pundits are already trying to frame the shooting as an act of white supremacist violence even though both the shooter and his victims were armed, and white.

Of course, nobody wants to mention the fact that Wisconsin Gov Tony Evers turned down the White House’s latest offer of assistance.

White House Chief of Staff Mark Meadows blasted Evers for his decision to turn down federal help and instead Meadows said that earlier in the day, he received a call from some members of the Wisconsin congressional delegation “really just pleading for help, said that the local sheriff and mayor and police chief need some additional assistance. So, I got on the phone right away and called the governor and offered assistance in the form of additional National Guard help. As you know, they’re going to have some additional National Guard there tonight. But you’ve got to, as a governor, and as elected officials, you’ve got to either ignore the problem — which, a lot of liberal governors are doing exactly that, they’re ignoring the problem — or you have to deal with it. … The president was on the phone with the governor today as well. We have National Guard standing by that, if the general for the National Guard needs additional help, we’re there to do it. But today, that request was denied by the governor.”

Some readers might wonder what causes some police shootings to evolve into massive “protest” movements, and others to be mostly ignored, or at least relatively much more mild? Kenosha is located right off the main highway that connects Chicago to Milwaukee, making it easily accessible to radical elements who tend to cluster in larger cities (in the second and third tier, if they don’t have rich parents who can help them afford an apartment in Brooklyn).

“This isn’t the Kenosha that I know. And if you look at where Kenosha is located, it’s along the lake between Milwaukee and Chicago. I’m very concerned, and I’ve heard from local law enforcement that they’re very concerned large numbers of people are coming up from Chicago and trying to disrupt the public safety in the community of Kenosha, all the more reason that we need to make sure that our community has the resources to be able to protect people’s lives, their personal livelihood, and their families, now.”

And after the damage is done, the suspects can zip right on back.

Before we go, here’s another photo that probably won’t make it on to MSNBC on Wednesday.

Authored by Jonathan Turley,

We have previously discussed the case of former Covington Catholic High School student Nick Sandmann who was repeatedly and falsely called a racist in an encounter with a Native American activist in front of the Lincoln Memorial. Various media organizations have apologized or settled cases with Sandmann for their unfair coverage, including CNN.

However, when Sandmann spoke at the Republic National Convention, CNN’s political analyst Joe Lockhart again attacked him personally after he criticized how the media got the story wrong. CNN’s Jeff Yang also attacked the teenager and even suggested that his speech proved that he was not innocent. Fellow CNN analyst Asha Rangappa attacked former United Nations Ambassador Nikki Haley as yielding to a racist America for not using what Rangappa suggested was her real name as opposed to “Nikki.” It turns out that Nikki is her lawful middle name and the Hill’s Saagar Enjeti noted it is “a Punjabi name.” That however is an appeal to reason not rage which seems to have little place in our national discourse or media coverage.

The personal attacks on speakers were beyond the pale, but hardly unprecedented.  What happened to Sandmann was a disgrace for the media and he had every right to speak publicly about his treatment by the media.

Sandmann is a pro-life kid who wanted to demonstrate against abortion.  He sought to play a meaningful role in his political system, which is what we all have encouraged.  Indeed, CNN has aired many such calls for young people to have their voices heard. He was in Washington as part of the annual “March for Life.” This is one of those voices.  Sandmann spoke about his horrific experience in being labeled the aggressor in the confrontation when all he did was stand there as an activist pounded a drum in his face.

Sandmann said this morning in an interview that he only learned at 3 am in the morning on the bus home that he was being labeled a racist who attacked or harassed this activist.

In addition to Lockhart, CNN opinion writer Jeff Yang said that the speech confirmed to him that he was guilty all along.

“Hey @N1ckSandmann, I watched your speech tonight at the #RNCConvention2020 with an open mind, thinking I might hear something that would convince me of your position that you were an innocent victim of a cruel media. I was disappointed, but not surprised, to hear otherwise.”

So Yang now believes Sandmann was the aggressor or the one who was at fault?  Yang even criticized Sandmann for not extending a “branch of peace” to Nathan Phillip, the Native American elder in the confrontation. Sandmann did nothing wrong in front of Lincoln Memorial. He just stood there as Phillip pounded a drum in his face.  Yet, Yang now believes that the media was not wrong or Sandmann innocent.

Yang previously personally attacked Pete Buttigieg for calling for a “vision shaped by the American Heartland rather than the ineffective Washington Politics.” Yang again viewed Buttigieg’s political statement as a license for personal insults:

“Okay, gloves off: This is the bullshittiest quote of many bullshitty quotes from this man, whose vision was shaped by Harvard, Oxford, McKinsey & Company and a keenly honed sense of ambition. Dude, your dad was a lit professor and you went to a private prep school. Quit fronting.” 

Nothing on the content of Buttigieg’s point. Just a personal attack from the CNN commentator.

The Sandmann controversy arose because of the very bias that Yang reaffirmed this week.  For many, the mere fact that he was wearing a MAGA hat was enough to declare him a racist.  An example that we previously discussed is the interview of “Above the Law” writer Joe Patrice with Elie Mystal. In the interview, Mystal, the Executive Editor of “Above the Law”, attacked this 16 year old boy as a racist.  Patrice agreed with Mystal’s objections to Sandmann wearing his “racist [MAGA] hat.” They also objected to Sandmann doing interviews trying to defend himself with Mystal deriding how this “17-year-old kid makes the George Zimmerman defense for why he was allowed to deny access to a person of color.”

It was entirely false that Sandmann was denying “access to a person of color.”  Yet, the interview is an example of the criticism (which continued with Lockhart) of Sandmann speaking publicly about his treatment. Mystal and Patrice compared this high school student to a man who was accused of murdering an unarmed African American kid and continued to slam him even after the true facts were disclosed.

After his remarks at the RNC (which is not an easy thing for most teenagers to do), Lockhart declared on Twitter “I’m watching tonight because it’s important. But i [sic] don’t have to watch this snot nose entitled kid from Kentucky.”

Why is this teenager “entitled”?  Because he is discussing his role in a national controversy or his abuse by the media, including CNN? CNN settled with Sandmann. When did that become “entitled”? The message from these media personalities seems to be that Sandman is expected to simply stay silent and such interviews make him either a George Zimmerman wannabe or a textbook case of entitlement. Of course, media figures like Lockhart can continue to slam Sandmann, but he is . . .  well . . . entitled to do so.

Nikki Haley gave one of the most polished speeches at the RNC. 

There is clearly much in the speech that many do not accept about racism in America. However, Haley lashed out that it is

“…now fashionable to say that America is racist. That is a lie. America is not a racist country. This is personal for me. I am the proud daughter of Indian immigrants. They came to America and settled in a small Southern town. My father wore a turban. My mother wore a sari. I was a Brown girl in a Black and White world. We faced discrimination and hardship. But my parents never gave in to grievance and hate. My mom built a successful business. My dad taught 30 years at a historically black college. And the people of South Carolina chose me as their first minority and first female governor. America is a story that’s a work in progress. Now is the time to build on that progress, and make America even freer, fairer, and better for everyone.”

That speech led to an immediate personal attack from Rangappa that Haley bowed to racism by dropping her real name: “Right. Is that why you went from going by Nimrata to ‘Nikki’?” Rangappa asked.

Right. Is that why you went from going by Nimrata to “Nikki”? https://t.co/buGFcY48gQ

— Asha Rangappa (@AshaRangappa_) August 25, 2020

The problem is that Haley birth name is Nimrata Nikki Randhawa. She is not the first politician to use her middle name like Alexander Boris de Pfeffel Johnson, who goes by Boris. Then there is Willard Mitt Romney.  Was Romney denying his roots by going with Mitt? Yet when a minority member uses her middle name, it is somehow evidence that she is a racist tool.

What is telling is that, rather than address the underlying argument on systemic racism in our society, analysts like Rangappa prefer to attack Haley personally and suggest that she is some type of shill for racism. Why? Rangappa teaches at Yale and in academia such ad hominem attacks are viewed as the very antithesis of reasoned debate.  Likewise, in journalism, such attacks were once viewed as anathema, particularly when they are based on false assumptions.

There is much in these conventions to debate. In truth, I have never liked political conventions and view them all as virtually contentless. Nevertheless, there have been parts of the RNC that I have criticized, including the appearance last night of Secretary of State Mike Pompeo in a departure from past traditions of keeping such cabinet members out of political convention roles.  Once again, such important lines of separation were obliterated by the Trump Administration.  I also found reformed former felon John Ponder’s remarks to be powerful, but I agree with critics that the incorporation of a pardon signing into the events at a political convention to be wrong. I have also previously criticized the use of the White House for the political convention, including for the First Lady’s speech (which I also thought was a good speech).

Those are issue worthy of debate and people of good faith can disagree on the merits. That is a lot more productive than attacking an 18-year-old kid because he had the audacity to criticize the media and support President Trump.  There is, of course, a troubling entitlement evident in these stories. It is the entitlement is enjoyed by media figures who feel total license to personally attack anyone who challenges their narrative or supports Trump. It is not just permitted but popular. This is why Merriam-Webster defines “entitlement” as the “belief that one is deserving of or entitled to certain privileges.”

It turns out the proverbial “deal with the devil” that Elon Musk has made between Tesla and China (a relationship we have called into questions many times, including here and here) could finally be coming back to bite Musk.

It appears that congressional negotiators are starting to take notice of just how cozy Musk and China have becoming over the last few years – and some of them are now “considering whether NASA contracts awarded to Elon Musk’s SpaceX represent a potential national security risk” as a result, according to the Washington Examiner. 

Let us spoil the inquiry for them: yes. But now, it seems like it’s not just us that understands this. 

A congressional Republican aide involved in NASA negotiations was quoted as saying: 

“What is there to stop them from going to Musk directly and saying, ‘We’ll call your line of credit early, unless you give us X, Y, or Z?’ And, there’s no real clarity that there’s any kind of mechanism that would stop that other than good behavior by an individual.”

The question comes at a time of heightened tension between the U.S. and China. In addition to contentious trade negotiations last year, the China-induced global pandemic and questions about ongoing IP theft have kept the Trump administration on guard against potential threats out of China.

Colorado Sen. Cory Gardner said: “I’m concerned that companies in China could come into the U.S., make a sweetheart deal, take sensitive information, take proprietary technologies, and use it to enrich their own space program, their own national security efforts in China.”

Garnder has suggested that “the Government Accountability Office review NASA contractors for potential ties to China” and that NASA leaders take into account ties to China when awarding contracts. “The level of concern I’m hearing from companies who are in the U.S. and are concerned about this is alarming,” Gardner concluded.

Should Garner’s proposals gain traction, they could disproportionately affect SpaceX, due to Musk’s financial involvement with the Chinese government. Tesla secured a $1.4 billion credit line from state owned banks in December, the article notes.  

An aide commented: “The thrust of that is obviously self-interested because they’re competitors, but it doesn’t mean that it’s not a valid concern. It’s sort of a classic dynamic, right? An established provider, an established interest, that is challenged by an upstart interest … if there was no SpaceX, ULA would love it because ULA would get more contracts. That doesn’t mean that the question isn’t worth asking and answering, though.”

The aide argued that it isn’t just Musk’s companies that are being targeted. “There are at least seven aerospace companies that have some element of Chinese investment that would raise red flags, like Tencent,” they said. Some in congress think that Gardner’s proposals are too vague to implement. 

 “I look at these provisions as pretty commonsense protections of our space programs and space technologies,” Gardner said. His team seeks to have malefactors banned from NASA contracts for at least a year and then giving NASA the opportunity to extend that ban for as long as 10 years. 

A space industry executive concluded: “You live by wrapping yourself in the flag, you die by wrapping yourself in the flag sometimes. Elon is just having his own tactic used against him. And I promise you that if Elon could find his own Chinese angle to use against ULA, he’d do it.”

Recall, we were months ahead of this story when, back in April, we asked whether or not Musk risked becoming a Chinese asset due to his close ties and financial dependence on the communist country. 

Oil prices continued to rise overnight on the heels of the double-whammy of storms in the Gulf as more than 84% of oil output in the Gulf of Mexico has now shut, while almost 3 million barrels a day of refining capacity has been closed.

“Oil traders will be pre-occupied with the developments of the hurricane today,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. “The most dangerous hurricane of the past 15 years is approaching the major U.S. oil producing and refining center.”

All of which makes today’s inventory data somewhat un-impactful since it is dated from before any shut-ins (although it could signal demand issues if it bucks the API-reported trend).

API

• Crude -4.524mm (-4.3mm exp)

• Cushing -646k

• Gasoline -6.392mm (-2.7mm exp) – biggest draw since April 2019

• Distillates +2.259mm (-700k exp)

DOE

• Crude -4.689mm (-4.3mm exp)

• Cushing -279k

• Gasoline -4.583mm (-2.7mm exp)

• Distillates +1.388mm (-700k exp)

Following API’s reported big draws in crude and gasoline, expectations for official data was for more draws and that was confirmed – the fifth weekly crude draw in a row…

Source: Bloomberg

Notably, Bloomberg’s Mike Jeffers notes that data from the Strategic Petroleum Reserve suggest that another 1.8 million barrels of crude was withdrawn from the SPR last week, so we’ll need to add that to any drop in commercial stockpiles to get a true picture. The volume of crude held in the SPR fell by 6.7 million barrels in the first three weeks of August, after increasing by 21.2 million barrels between April and July.

Additionally, as storms loom, there will typically be draws as drivers fill up to tanks to prepare or evacuate. Then comes a period of slow demand as folks stay put.

US Production rose modestly last week, after falling the prior week (and obviously will fall next week thanks to storm shut-ins) but we note that the rig count rose by 11 last week and we wonder if this is the trough for production in the short-term…

Source: Bloomberg

WTI was trending slightly lower, around $43.60 (up on the day), ahead of the official data, and was unchanged on the data..

Finally, Bloomberg notes that, on its current track, the storm could lead to around 10% to 12% of U.S. refining capacity being shut for more than six months, according to a disaster modeler with Enki Research. 

Tanker rates to ship gasoline from Europe to the U.S. are already surging even before Laura makes landfall.

Chinese media and regional sources are reporting what appears to be the biggest provocation yet amid the months-long US-China ratcheting tensions in the South China Sea.

“China launched two medium-range missiles into the South China Sea on Wednesday morning, a source close to the Chinese military said, sending a warning to the United States,” The South China Post reports in a major breaking development. 

The launch is said to be in response to the major incident from Tuesday, wherein China’s PLA military angrily denounced that a US U-2 spy plane allegedly entered a ‘no-fly zone’ off China’s coast while the PLA conducted live-fire military drills. It was unclear exactly where the claimed breach of airspace happened, however. 

Later reports suggested the spy plane was caught seeking to observe PLA drills in the Bohai Sea off China’s north coast.

The SCMP details further of the deeply alarming “warning” missile launch, citing unnamed Chinese military sources:

One of the missiles, a DF-26B, was launched from the northwestern province of Qinghai, while the other, a DF-21D, lifted off from Zhejiang province in the east. Both were fired into an area southeast of Hainan province and the Paracel Islands, the source said.

The landing areas were within a zone that Hainan maritime safety authorities said on Friday would be off limits because of military exercises from Monday to Saturday.

Needless to say this “warning” takes things to a whole new level.

“This is China’s response to the potential risks brought by the increasingly frequent incoming US warplanes and military vessels in the South China Sea,” a military source told SCMP. “China doesn’t want the neighboring countries to misunderstand Beijing’s goals.”

After all, following the Tuesday incident Beijing in a veiled threat said an “unexpected incident” could have easily resulted over the US spy plane operation.

This presumably means the spy plane may have been targeted as “drills” could have rapidly transitioned to becoming fully operational under a perceived US threat.

Authored by Mike Shedlock via MishTalk,

New forms by lenders ask borrowers to confirm at closing that they don’t plan to skip their payments.

Do You Really Intend to Pay?

Dear borrower, please sign here if you intend to pay your mortgage.

That’s the amusing state of affairs as Covid laws allow borrowers to skip payments for a full year.

New Question: Do You Really Plan to Pay This? 

Some mortgage lenders are asking customers taking out a mortgage to confirm they don’t intend to seek forbearance, a move meant to keep losses low during a pandemic that has put millions of Americans on shaky financial footing. 

The unusual requirement comes in the form of a new document included in many borrowers’ closing paperwork. While the language varies, the forms generally tell borrowers that they won’t be allowed to skip payments until their loans are backed by the government, according to forms reviewed by The Wall Street Journal. The forms, known among lenders as “Covid-19 borrower certifications,” often ask home buyers to confirm that they don’t expect changes to their income. Some warn of potential penalties if any of the certifications are later proven to be false.

The New Liar Loans

Since it is impossible to prove intent, the question seems moot.

But the wording tells all you need to know.

Lenders do not want borrowers to skip payments until their loans are backed by the government, after which the lender no longer gives a damn.

Meanwhile, it can take days, weeks or sometimes even months for a newly made loan to get government backing.

Delinquencies Soar

I wrote this for my readership tonight pic.twitter.com/QpYKw0nXcf

— Steve, Wise Owl (@Wise_Owl_Trader) August 25, 2020

New Home Surge to a 13-Year High

Despite the concern and the delinquencies, note that New Home Sales Surge to a 13-Year High With the Midwest Leading the Way.

2020 has been a stunning year for countless reasons, and one of them as we previously reported is that following the covid pandemic there was an absolute avalanche of equity offerings, culminating with some $113 billion in stock sales in the second quarter as we showed before.

Yet while the staggering amount of follow-on offerings is not news, the performance of companies selling their stock is nothing short of shocking, because whereas in a normal world the association dilution with new equity sales would in theory result in depressed stock prices, the reality of the past few months has been anything but.

First, a quick update on equity offerings as of late August.

As Bloomberg notes today, a new milestone in secondary offerings shows the power of this year’s unique market in bringing together sellers and buyers. Issuers and their largest holders have now priced 783 secondary offerings on U.S. exchanges this year, with the total surpassing 2019’s full-year total of 780 on Monday.

In terms of cash proceeds, the $169 billion raised in this year’s secondaries is already the most for a full calendar year since 2015. And unlike the surge in IPOs, which has been driven largely by special purposes acquisition companies, Bloomberg notes that these secondary offerings are being conducted in real businesses.

Two main factors deserve the credit for this years-high in deal flow. On the sell side, companies found themselves scrambling to cover cash needs, while a pandemic spoiled expectations for revenue. On the buy side, traders kept coming back for more after recent deals shocking outperformed the broader market.

And here is the punchline: stocks sold in 2020 secondary offerings closed on Tuesday 39% above their offering price on average. That’s outpacing the year’s 28% gain in the Nasdaq Composite Index, a 40% outperformance.

There’s more: the performance of July’s 98 secondaries, which closed Tuesday an average of 278% above their offering price, serves as a recent and major source of excitement for more paper in the market. Indeed, if investors are clamoring for public companies to sell their stock and raise cash, which company in its right mind would say no?

As Bloomberg concludes, while the pace of deals is now slowing heading into a traditional vacation period for equity capital markets, bankers are optimistic that the final four months of 2020 continue to serve as fertile grounds for even more secondary offerings.