Month: January 2021

Only Two House Republicans Genuinely Believe Vote Counts Were Severely Compromised

Yesterday, the newly elected House of Representatives’ held its organizational session to recognize the credentials of those elected, select a Speaker, and adopt rules for the counting presidential electors, among other start-of-session matters.

During the session, Rep. Chip Roy (R-TX) filed an objection to seating those members purportedly elected in states in which the Trump Campaign and its allies are challenging the certified vote counts (Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin). Rep. Roy, who is on record opposing efforts to challenge validly appointed presidential electors, explained his objection:

I do not make this objection lightly and take no pleasure in it, but believe that I am compelled to do so because a number of my colleagues — whom I hold in high regard — have publicly stated that they plan to object to the acceptance of electors from those particular six states due to their deeply held belief that those states conducted elections plagued by statewide, systemic fraud and abuse that leaves them absolutely no way for this chamber or our constituents to trust the validity of their elections.

Such allegations – if true – raise significant doubts about the elections of at least some of the members of the United States House of Representatives that, if not formally addressed, could cast a dark cloud of suspicion over the validity of this body for the duration of the 117th Congress.  After all, those representatives were elected through the very same systems — with the same ballot procedures, with the same signature validations, with the same broadly applied decisions of executive and judicial branch officials — as were the electors chosen for the President of the United States under the laws of those states, which have become the subject of national controversy. And while the legislatures of those states have sent us no formal indication that the results of these elections should not be honored by this body, it would confound basic human reason if the presidential results were to face objection while the congressional results of the same process escaped without public scrutiny.

While the Constitution and the 12th Amendment do not make Congress the judge of the states’ presidential electors, it does require us to be the arbiters of the elections to this body. If the electors for the office of the president were not in question, neither would be the election certificates of my colleagues present here today.

Rep. Roy’s objection was rejected 371-2.

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Icahn Dumps $600 Million In Herbalife Back To The Company, Will Surrender 5 Board Seats

Icahn Dumps $600 Million In Herbalife Back To The Company, Will Surrender 5 Board Seats

About 8 years after Carl Icahn famously entered the Herbalife fray, spurring a short squeeze that helped decimate Bill Ackman’s now-infamous $1 billion short against the company, Icahn appears to be making his exit.

Icahn reportedly will be selling $600 million worth of his stake back to Herbalife and, as a result, will be relinquishing his 5 board seats. The company will be buying back the massive chunk of stock using cash on hand and its credit facility. The transaction is set to close by January 7, 2021. 

An Herbalife PR put out Sunday night said:

Herbalife…today announced that on January 3, 2021, it entered into an agreement to repurchase approximately $600 million of the Company’s common shares beneficially owned by Carl C. Icahn and certain of his affiliates, at a purchase price of $48.05 per share, the closing price of Herbalife Nutrition’s common shares on December 31, 2020, the last trading day prior to the execution of the purchase agreement.

The purchase of the shares will be funded from Herbalife Nutrition’s cash on hand and existing credit facility. The repurchase announced today is a part of the Company’s 2018 share repurchase program that, including the shares to be repurchased in this transaction, will have resulted in the Company repurchasing a total of approximately $1.5 billion in shares.

Icahn’s Directors resigned effective January 3, 2020, the release says: “Pursuant to a support agreement entered into in 2013, at a time when the Company was under pressure from short sellers, the Company agreed to give Icahn Enterprises five board seats for as long as it held at least 14 million Company common shares. In light of the fact that this transaction will take Icahn Enterprises’s holdings under this threshold, all five director designees previously nominated by Icahn Enterprises resigned from the Company’s board of directors on January 3, 2021 and the support agreement was terminated at the same time.”

Herbalife spun the transaction as showing confidence in its stock by buying back the shares. “Our decision to repurchase these shares is a testament to the strength of our business and our long-term growth prospects…” the company’s CEO said. 

Icahn said that the time for activism in Herbalife “has passed”: 

“I made the initial investment in Herbalife Nutrition more than eight years ago, because I believed strongly in the Company’s strategy, products and business model. When I began purchasing the shares, I believed it was undervalued for extraneous reasons that I thought made little sense. At the time, I believed the Company was in need of an activist and that certainly turned out to be correct. Yet, the time for activism has passed as the Company has grown, and I don’t typically invest billions of dollars in companies where our role as activist is not needed. That being said, Herbalife Nutrition’s products and business opportunity are needed now more than ever, and I look forward to remaining a shareholder of the Company.”

In other words, Icahn has squeezed all of the juice out of Herbalife he possible could. Since the beginning of 2013, Herbalife shares are up about 147%.

Over the same 8 year period, the company reduced its share count by about 41%. 

The company’s total liabilities have ballooned from under $1.8 billion to now nearly $4 billion. 

Over the same course of time, its TTM net income has slipped from a record of near $500 million to now about $355 million.

As a result of the battle between Icahn and Ackman, the FTC ultimately fined Herbalife $200 million in 2016 and forced it to fundamentally re-structure its business. The regulator failed to deem the company a pyramid scheme, despite FTC Chairwoman Edith Ramirez famously stating during an FTC presser that the office had “not determined” Herbalife to “not be a pyramid”. This failure to label the company a pyramid scheme directly was seen as a success. Since then, there has been little news regarding whether or not Herbalife has been abiding by its settlement.

So, we guess the only question left now is whether or not Ackman will take a second swing…

For a trip down memory lane, here’s the on-air CNBC spat that started it all. 

 

Tyler Durden
Mon, 01/04/2021 – 08:49

via ZeroHedge News https://ift.tt/3b7BMQM Tyler Durden

“Be Prepared” – Blain Fears 2021’s “No-See-Um” Moments

“Be Prepared” – Blain Fears 2021’s “No-See-Um” Moments

Authored by Bill Blain via MorningPorridge.com,

A New Hope… Misses The Obvious

“It’s not fair to take it away from us like this..”

Welcome to the New Year – may it be a brave and hopeful one for us all. 

I’m starting the New Year wondering if the Malicious Market Gods have launched the planet on to a new more vomit-inducing loop of the rollercoaster? 

It feels like we’ve become anaesthetised and insensitive to shock.. The bizarre has become normal and we simply shrug it things that would have seem impossibly improbable just a few years ago. We forget the lessons of the past – thus are doomed to repeat them. I can’t fathom some of the headlines: Bitcoin soared to $34500 on the third day of the new year, and proponents snake-oil salesmen sagely proclaiming it’s headed for $100k by year end. Donald Trump is still plotting to hold the White House, yet Republicans still support him. Brexit got done but didn’t. The ECB is going to focus on climate change. And markets look set to rise and rise and rise and rise…. 

Whoa.  Hand me a bottle of common sense….

The end of the old year and the beginning of the new is the traditional time to address fundamental questions about future returns, risk, value and the economic outlook.  Jan 1st is just another date, and these are concepts investors should be constantly questioning. Everyone is determined that 2021 will be a better year! Which the market takes to mean – going higher… 

Boy Scout Time: Be Prepared…

As the narrative develops, the outlook changes. A new time frame leads to an increased danger of confirmation bias, misreading the lessons, and reinforcing false-positive highlights. Which is why I’m concerned the overly rosy market “past performance in 2020” is setting us up for a nasty rash of reality in the coming 12 months. 

There you go.. in my very first paragraphs of the New Year I’m sounding bearish! I’m not. I’m merely reminding readers of the possibility that all that glitters is not necessarily gold. 

I fully expect 2021 will see a sharp recovery and uptick in global economic activity. Successful vaccination programmes and repressed consumer demand will drive massive discretionary spending, but drive up retail debt to pay for it. Governments will keep their fingers on the fiscal boost button, and the money presses busy, to sustain economies through to the end of the pandemic and beyond. As money seeps into the real economy – which hasn’t happened despite years of QE – inflation is a distinct possibility.

There will be good news, and bad news to balance it. Consequences are inevitable. Reflating the global economy creates new risks that will need to be addressed; the years of too low interest rates, inflation, and mismatched risk returns. 

Whatever we’d like to believe about markets hitting record highs in 2020, the reality is the whole global economy remains rattled to the core and will remain excessively juddery and vulnerable till vaccinations beat the pandemic: a) Vaccines will only be effective if people are vaccinated, and b) they are already proving logistically more difficult than blithe politicians expected. It might take longer than the market is currently pricing in.

If there was a lesson in 2020, it was resilience – just how effectively companies and governments were able to address the crisis in terms of managing/muddling through it. Whatever you think of poor government responses and bureaucratic delay, it could have been much, much worse. (It’s been a trade-off between swamped health services versus economic activity – a classic compromise.)

Despite the ongoing brush with financial mortality, markets begin 2021 at never so high levels – which means they’ve never had so far to fall. 

The upside is they are still massively supported by zero rates, the money flooding markets from QE and stimulus, and the Pavlovian “buy any dip” because of the fiscal and monetary support. The world’s 2,000 or so billionaires got $1.9 trillion richer in 2020 as financial asset prices soared on the back of government largesse supporting markets. 50% of the US stock market is owned by the richest 1%. 

What’s the downside? Whatever nonsense you’d been reading over your Christmas calorie fest about potentially limitless future investment gains, I reckon this is likely to prove a very difficult year for markets as the global picture morphs from corona-panic to expectation of recovery. A cosmetically more positive environment may well trigger some surprising outcomes – including a return of common sense. 

Last year was about reacting to a shock and the response to it. The key market reaction was to arbitrage the massive government and central bank support. That became sell-fullfilling after the speed of the Spring Rally. This year will be about normalisation – and the markets have repeatedly shown themselves highly allergic to normalisation. Reduced stimulus in the face of real growth could we shock us all! 

The amount of money chasing markets through 2020 drove some pretty wild speculation. I won’t bother mentioning that Tesla failed to hit its 500k car delivery target, yet is worth a multiple of the rest of the auto sector which profitably sells 26 million cars. I won’t waste time arguing against the $400k target one analyst ascribes to BC.  

Instead… I will simply ask: if this year is about economic recovery and growth are investors more likely to focus back on the real issues: the fundamentals of risk and return, growth and profits. I suspect so. 

Meanwhile, there also some key long-term plays and themes underway: 

UK

Does the UK’s successful Brexit deal mean it’s time to buy the UK? The investment banks and analysts all think so, and expect surging confidence to drive up the value of underperforming UK Inc. But what about the chances UK Inc breaks up? The Scottish Election in May 2021 is going to be the next critical moment: the likelihood the SNP takes an absolute majority with a sizable majority of the Scottish electorate in favour of independence will be an unparalleled challenge to perceptions of the UK. 

Debt and Equity Levels

Does the corporate debt splurge, zero returns and massive stock over-valuations mean it’s time to diversify out of traditional financial assets and into alternative and private assets with better risk/return profiles? 

As sovereigns spend their way out of crisis, either rip up your Reinhart and Rogoff debt-to-GDP orthodoxy, or figure out the reality that ultra-low interest rates are crushing real growth. Concerns on just how damaging the low-rate/rising debt levels are, and the absolute low levels of returns and overpriced stocks, means investors have to look wider for returns. 

Alternatives

I’m expecting “Alternatives” (my real-job as opposed to my ramblings in the Porridge) in terms of private debt and hybrid private equity transactions to be the major growth market this year. There are a number of fascinating “Distressed Covid” opportunites in real assets out there, plus a large number of potentially high return private deals to be funded. 

China

Do the travails of Jack Ma and Alibaba over December stand as a stark warning against an investment pivot to Asia? (Alibaba has been my worst performing position this year..) How should investors weigh the China risks: Hot/conflict with the West? ESG fails on surveillance, freedom, Uighurs and Hong Kong? When a nation is willing to chuck a reporter into jail for 4 years for simply reporting facts on Coronavirus – you have to wonder. The crash in Asian Tech stocks during the Christmas/New Year markets was impressive – breaking all kinds of key support lines and the 50 day moving averages.

What Next – No-See-Ums

The themes above are all largely visible threats. Many market analysts say Covid has accelerated a Technological shift, while others believe the ease with which Sovereigns have raised borrowing and spending means it’s time to reassess the role of the State. The shift from monetarist Shareholder Capitalism towards more socialised Stakeholder Capitalism and the importance/role of ESG will continue to develop…. 

BUT BUT BUT… It’s the “no-see-ums” that inflict the crushing market shifts. Last year it was a long-expected virus that exposed how unprepared we are. Maybe nothing happens in 2021, or maybe it’s a supervolcano, a climate event, a meteor, or something we create ourselves like a war or political meltdown. 

Or maybe its just waking up to reality? Later this week I’ll be writing up some of the reading I’ve been doing over the break about de-carbonisation and the real-cost of renewables (especially on and off-shore Wind) and just how much we’ve been fooling ourselves about their financial viability. The big investment themes in markets and governments are rightly about climate change, green investment and decarbonisation. What if we are going down completely the wrong track?

The biggest market crashes always come because we jump on board bandwagons, assuming someone else has done the work… when it become clear stocks are overvalued, or homes aren’t worth that much, that lithium batteries are a dead-end, or that windfarms make zero economic sense… these are the No-See-Um moments when markets stumble…. 

Tyler Durden
Mon, 01/04/2021 – 08:34

via ZeroHedge News https://ift.tt/35681f2 Tyler Durden

Can a Fighting Words Charge Lead to a Higher Sentence Because of the Defendant’s Racial Motivation?

“Fighting words”—face-to-face personal insults that are likely to start a fight—are generally constitutionally unprotected, and can be criminally punished (usually under disorderly conduct statutes). But in R.A.V. v. City of St. Paul (1992), the Supreme Court struck down a statute that imposed heightened punishment on those “fighting words” that “arouse[] anger, alarm or resentment in others on the basis of race”: Even when some speech (e.g., fighting words, libel, obscenity, etc.) is constitutionally unprotected, the law can’t selectively impose extra punishment on unprotected speech that, say, expresses racist views.

Yet in Wisconsin v. Mitchell (1993), the Supreme Court unanimously upheld a “hate crime” statute that imposed extra punishment on defendants who chose their targets based on race, religion, or the like. The law, the Court held, punished conduct (there, aggravated battery) coupled with discriminatory victim selection: “whereas the ordinance struck down in R.A.V. was explicitly directed at expression …, the statute in this case [Mitchell] is aimed at conduct unprotected by the First Amendment.”

And “[t]he defendant’s motive for committing the offense is one important factor” in sentencing. “[I]n many States the commission of a murder, or other capital offense, for pecuniary gain is a separate aggravating circumstance under the capital sentencing statute”; likewise, the Court held, the deliberate selection of a victim based on race can be an aggravating circumstance, too, including in noncapital cases.

Now I actually think both R.A.V. and Mitchell are correct, and are consistent with each other. But of course this raises the question: What happens if a hate crime enhancement is imposed on a crime that (unlike aggravated battery) involves speech, e.g., disorderly conduct via fighting words?

In Thursday’s decision in City of Columbus v. Fabich, the Ohio Court of Appeals held that this is fine under Mitchell (in an opinion by Judge Jennifer L. Brunner, joined by Judges Julia L. Dorrian and Laurel Beatty Blunt). First, an excerpt of the facts, which are important because they shed light on the defendant’s motivation:

[Willis] Brown testified that he lived on North Monroe Avenue and was a Near East Area Commissioner for his neighborhood.  Fabich, he said, was a long-time neighbor who lived on the same street approximately one block away.  Brown recounted that he and another neighbor, Dana Moessner, were admiring landscaping that Moessner had done for Fabich’s next door neighbor when Fabich pulled up in his car.  According to Brown, Fabich got out of the car and expressed the opinion that Brown and Moessner (who was also an area commissioner) were not good commissioners….

During Brown’s direct testimony, video of a portion of the altercation was played…. Fabich can be heard to repeatedly say, “Bye Nigger Brown,” “go away, Nigger Brown,” and other similar remarks to someone off screen. The person off screen (whom the parties apparently do not dispute was Willis Brown) can be heard shouting back at intervals urging Fabich to “be respectful” and not to “call people names.” At one point, Fabich tells the person off screen, “Go back to your plantation.” At another point, he appears to say, “If you’re calling me Tarzan, you’re Nigger Brown.” Later he says, “If you’re going to make fun of my whiteness, we’re going to have it out.” Shortly before the end of the recording, Fabich says, “You called me Tarzan. Let’s have some race fun.” …

Fabich testified that he was engaged in unloading … plants from his car in front of his house when Brown told him, “Tarzan, get your white ass back in the house.” Fabich testified that “Tarzan” is a derogatory term for a white person living in a predominantly black community and that he knew this because Brown had spelled it out for him on prior occasions and because Fabich had looked it up. Fabich said that there had been bad feelings between him and Brown for some time prior to the events underlying the case. Fabich said the “Tarzan” remark set him off and that he was not fully cognizant of what he was saying during the interaction with Brown as he continued to place his shrubberies….

As best I can tell, the Area Commission is an advisory body, though one with some potential influence, for instance in “[r]eviewing all applications for and related to proposed development and demolition within the Near East Area.” Brown was also apparently a local Democratic Party Central Committee member, at least as of August 2017. But while his Commissioner role seems to be part of the backstory behind the tension between Fabich and Brown, it doesn’t seem to be directly involved in this incident.

Fabich was sentenced “to 60 days in jail (with 17 days of jail-time credit), 30 days on house arrest,” with “a further 90 days of jail time [suspended] on condition of 2 years of probation.” (According to QFM96, “Sean Fabich, 48, has a record of assault and other crimes dating back three years,” having “been charged with assault, resisting arrest, violation of a protection order, improper use of 911, obstructing official business, and several counts of animal cruelty.”) Without the hate crime enhancement, the offense would have been a fourth-degree misdemeanor, punishable by at most 30 days in jail.

The court analyzed the R.A.V. First Amendment challenge thus:

In this case, the City has convicted Fabich of ethnic intimidation based on his having uttered racially charged fighting words to a black person. Hypothetically, had Fabich confronted Brown with different fighting words that disclosed no racial bias, he might have instead been found guilty only of disorderly conduct, not ethnic intimidation. That juxtaposition seems, at first, to place this situation squarely within the reach of R.A.V.‘s prohibition on regulating the content of fighting words.

However, another hypothetical leads us in a different direction: What if Fabich had confronted Brown with fighting words that were not racially charged but then, after the fact, confessed that his motive for verbally attacking Brown had been racial? In that case, despite having uttered no biased fighting words, could he still have been found guilty of ethnic intimidation based on the unbiased fighting words in conjunction with his confessedly biased motive for having uttered them? This hypothetical line of reasoning highlights the fact that the triggering culpability element in the ethnic intimidation ordinance is not the content of the fighting words, but rather, it is the “motives, reasons or purposes for” which the fighting words were uttered.

In other words, assuming arguendo that the City successfully proved a bigoted motive for Fabich’ directing fighting words toward Brown, then the ordinance is constitutional as applied to him. The ordinance does not seek to punish his use of the n-word more severely compared to other fighting words. It punishes a bigoted motive for employing fighting words against Brown, without regard to what those words were. Mitchell … inform[s] that it is permissible for a government to add to the punishment of crimes where the criminal acts were committed due to a repugnant or socially destabilizing (for example, racist) motive. Thus, even as applied to Fabich (assuming a bigoted motive), we find that the City’s ethnic intimidation ordinance is constitutional….

And the court concluded there was adequate evidence that (1) Fabich’s speech was indeed “fighting words” (for space reasons, I omit the discussion of that) and (2) “one of the motives, reasons or purposes for the commission of the offense [was] the victim’s race”:

[I]t is not enough that someone who becomes involved in an altercation utters racial slurs in the course of the altercation; {[i]n fact, if the mere use of a racial slur during an argument would justify a conviction for ethnic intimidation, then our basis for finding the ordinance to be constitutional would be undermined.} [R]ather, the victim must be targeted “by reason” of their race or in this case their race must serve as one of the “motives, reasons or purposes for the commission of the offense.” To put it more plainly, becoming infuriated with someone for a nonracial reason and, in the course of that angry altercation, hurling a slur does not suffice to transform disorderly conduct into ethnic intimidation….

[For instance, in an earlier case], an African-American couple became involved in an argument with a white man over parking arrangements…. The Eighth District Court of Appeals found that, while the evidence supported a conviction for aggravated menacing, the evidence did not support a conviction for ethnic intimidation, reasoning as follows: … “We recognize that while [the defendant]’s use of the “N word’ [is] offensive, ‘repugnant or obnoxious language does not, in itself, demonstrate tha[t] an action was undertaken ‘by reason of the victim’s race.”” … “[T]he evidence demonstrates that the threats between [the victim] and [the defendant] were prompted by their random, happenstance dispute over where the car was parked. As a result, there is insufficient evidence to demonstrate that [the defendant] threatened [the victim] with a gun because of his race.” [Discussion of two other similar precedents omitted. -EV]

In this case, however, the cause of the rift between Fabich and Brown is considerably less clear-cut than in [the prior precedents]. It is undisputed that Brown and Fabich had, by Brown’s own testimony, been neighbors for a long time and had many past interactions…. But why things came to a head on the day that they did or why the two men wound up trading racial insults (with Fabich dealing the vast majority of racial invective), is a matter of inference….

[Given the guilty verdict], we must credit the assertion that Fabich initiated the interaction and began using racial slurs against Brown without specific provocation. Moreover, the evidence in the record amply supports that the argument between Brown and Fabich included racially abusive language, and the jury could have inferred racial animus from Fabich’s statement, “Let’s have some race fun.” Under the circumstances, viewing the evidence in the light most favorable to the prosecution [the norm when reviewing a guilty verdict for sufficiency of the evidence -EV], the record is sufficient to conclude beyond a reasonable doubt that at least one of Fabich’s motives in perpetrating disorderly conduct toward Brown was racist.

When using a manifest weight analysis and weighing the testimony as if we were the proverbial “thirteenth juror,” the picture is more complicated, but the racial motive behind the altercation still finds support. Brown stated that he never called Fabich “Tarzan,” that he had never used the term before, and testified that he did not hear Fabich reference having been mocked for his whiteness during the video of the incident. Moessner testified in support of this one-sided narrative when he claimed that neither he nor Brown said anything at all in response to Fabich.

But, during the video, a person off screen can be heard shouting back at Fabich, much of it inaudible. And at several points during the video, Fabich references an insult apparently offered by Brown: “If you’re calling me Tarzan, you’re Nigger Brown.” “If you’re going to make fun of my whiteness, we’re going to have it out.” “You called me Tarzan. Let’s have some race fun.” Though the video is somewhat hard to hear, the neighbor (Waderker) who recorded the video, was not at all reticent about confirming that Fabich made the remarks concerning the “Tarzan” insult. This apparently led Fabich to respond with the torrent of vile racist language, which we have already recounted in detail.

In short, the manifest weight of the evidence is to the effect that these long-time neighbors, Fabich and Brown, became involved in an altercation ‘that was motivated, at least in part, by racial animus. Whether that racial animus between the two men was mutual (as it may have been) is of no moment—Brown and his alleged “Tarzan” remark are not on trial.

What matters is whether Fabich was motivated by Brown’s race when he hurled racist invective at him. Because, unlike in [prior precedents], the record at trial does not offer another clear explanation for Fabich’s motive, we conclude that the jury did not lose its way in concluding from Fabich’s statements that Fabich’s motive was, at least in part, racial….

The evidence in this case showed that Fabich used racially charged fighting words in combination with other racially derogatory statements. Though the content of these words is not (and cannot constitutionally be) the target of the ethnic intimidation ordinance, the lack of other explanation for the conflict between Fabich and Brown permits those words to serve as evidence of Fabich’s motivation for the conflict and the use of fighting words. We therefore affirm Fabich’s convictions for disorderly conduct and ethnic intimidation….

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Bitcoin & Ethereum Bounce Back After Crypto Carnage

Bitcoin & Ethereum Bounce Back After Crypto Carnage

After a monumental run over the new year holiday, the opening of Bitcoin futures trading sparked a major downdraft in cryptocurrencies overnight.

Futures crashed to fill the gap from Thursday’s close, before bouncing back hard…

Source: Bloomberg

Spot Bitcoin collapsed alongside futs, dropping below $28k, but has ripped back above $31k since…

Source: Bloomberg

And overnight saw Ethereum scream higher to $1170 before plunging to below $900 and now ripping back higher, above $1000…

Source: Bloomberg

As Reuters reports, traders said bitcoin’s drop on Monday was not unusual for the volatile asset, whose wild price swings have in part prevented it from becoming widely used as a currency.

“It’s still an unavoidably volatile asset by its nature,” said Joseph Edwards of crypto brokerage Enigma Securities.

“For the most part, this looks like a purely technical move, signalled and caused by short-term euphoria,” he added.

Fuelling bitcoin’s rally has been the perception it can act as a hedge against the risk of inflation as governments and central banks turn on the stimulus taps to counter the economic impact of the COVID-19 pandemic.

In recent days, altcoins have dominated bitcoin and the BTC/ETH ration collapsed to its lowest (ETH relatively strongest) since Thanksgiving…

Source: Bloomberg

Additionally, @SkewDotCom notes that there is a very large position on the Jan21 36k calls, open nearly 18k bitcoin options or approximately $600mln notional. Most likely the largest pin in the young history of the bitcoin options market.

With futures open interest at record highs…

Meanwhile, as CoinTelegraph notes, it’s all change for the better among Bitcoin’s core fundamentals. After a month of small decreases, network difficulty is once again set to push upwards to hit new record highs.

Bitcoin 7-day average hash rate 6-month chart. Source: Blockchain

At the next automated readjustment later this week, difficulty is currently expected to increase by just over 5%.

The past two readjustments saw drops of 2.5% and 0.4% respectively, an interesting contrast to the rapid increases in spot price seen at the same time.

Difficulty is arguably Bitcoin’s most important technical aspect when it comes to its status as “hard” money, allowing the network essentially to govern itself and stay secure regardless of miner participation or price action.

In tandem with difficulty, hash rate is likewise challenging all-time highs. As of Monday, seven-day average values for the metric stand at 145 exahashes per second (EH/s), just 1 EH/s off record highs seen last October.

Hash rate refers to the computing power dedicated to participating in the Bitcoin network, and current data suggests that participation and desire to keep the network secure is stronger than ever.

Tyler Durden
Mon, 01/04/2021 – 08:21

via ZeroHedge News https://ift.tt/2MAt6It Tyler Durden

Can a Fighting Words Charge Lead to a Higher Sentence Because of the Defendant’s Racial Motivation?

“Fighting words”—face-to-face personal insults that are likely to start a fight—are generally constitutionally unprotected, and can be criminally punished (usually under disorderly conduct statutes). But in R.A.V. v. City of St. Paul (1992), the Supreme Court struck down a statute that imposed heightened punishment on those “fighting words” that “arouse[] anger, alarm or resentment in others on the basis of race”: Even when some speech (e.g., fighting words, libel, obscenity, etc.) is constitutionally unprotected, the law can’t selectively impose extra punishment on unprotected speech that, say, expresses racist views.

Yet in Wisconsin v. Mitchell (1993), the Supreme Court unanimously upheld a “hate crime” statute that imposed extra punishment on defendants who chose their targets based on race, religion, or the like. The law, the Court held, punished conduct (there, aggravated battery) coupled with discriminatory victim selection: “whereas the ordinance struck down in R.A.V. was explicitly directed at expression …, the statute in this case [Mitchell] is aimed at conduct unprotected by the First Amendment.”

And “[t]he defendant’s motive for committing the offense is one important factor” in sentencing. “[I]n many States the commission of a murder, or other capital offense, for pecuniary gain is a separate aggravating circumstance under the capital sentencing statute”; likewise, the Court held, the deliberate selection of a victim based on race can be an aggravating circumstance, too, including in noncapital cases.

Now I actually think both R.A.V. and Mitchell are correct, and are consistent with each other. But of course this raises the question: What happens if a hate crime enhancement is imposed on a crime that (unlike aggravated battery) involves speech, e.g., disorderly conduct via fighting words?

In Thursday’s decision in City of Columbus v. Fabich, the Ohio Court of Appeals held that this is fine under Mitchell (in an opinion by Judge Jennifer L. Brunner, joined by Judges Julia L. Dorrian and Laurel Beatty Blunt). First, an excerpt of the facts, which are important because they shed light on the defendant’s motivation:

[Willis] Brown testified that he lived on North Monroe Avenue and was a Near East Area Commissioner for his neighborhood.  Fabich, he said, was a long-time neighbor who lived on the same street approximately one block away.  Brown recounted that he and another neighbor, Dana Moessner, were admiring landscaping that Moessner had done for Fabich’s next door neighbor when Fabich pulled up in his car.  According to Brown, Fabich got out of the car and expressed the opinion that Brown and Moessner (who was also an area commissioner) were not good commissioners….

During Brown’s direct testimony, video of a portion of the altercation was played…. Fabich can be heard to repeatedly say, “Bye Nigger Brown,” “go away, Nigger Brown,” and other similar remarks to someone off screen. The person off screen (whom the parties apparently do not dispute was Willis Brown) can be heard shouting back at intervals urging Fabich to “be respectful” and not to “call people names.” At one point, Fabich tells the person off screen, “Go back to your plantation.” At another point, he appears to say, “If you’re calling me Tarzan, you’re Nigger Brown.” Later he says, “If you’re going to make fun of my whiteness, we’re going to have it out.” Shortly before the end of the recording, Fabich says, “You called me Tarzan. Let’s have some race fun.” …

Fabich testified that he was engaged in unloading … plants from his car in front of his house when Brown told him, “Tarzan, get your white ass back in the house.” Fabich testified that “Tarzan” is a derogatory term for a white person living in a predominantly black community and that he knew this because Brown had spelled it out for him on prior occasions and because Fabich had looked it up. Fabich said that there had been bad feelings between him and Brown for some time prior to the events underlying the case. Fabich said the “Tarzan” remark set him off and that he was not fully cognizant of what he was saying during the interaction with Brown as he continued to place his shrubberies….

As best I can tell, the Area Commission is an advisory body, though one with some potential influence, for instance in “[r]eviewing all applications for and related to proposed development and demolition within the Near East Area.” Brown was also apparently a local Democratic Party Central Committee member, at least as of August 2017. But while his Commissioner role seems to be part of the backstory behind the tension between Fabich and Brown, it doesn’t seem to be directly involved in this incident.

Fabich was sentenced “to 60 days in jail (with 17 days of jail-time credit), 30 days on house arrest,” with “a further 90 days of jail time [suspended] on condition of 2 years of probation.” (According to QFM96, “Sean Fabich, 48, has a record of assault and other crimes dating back three years,” having “been charged with assault, resisting arrest, violation of a protection order, improper use of 911, obstructing official business, and several counts of animal cruelty.”) Without the hate crime enhancement, the offense would have been a fourth-degree misdemeanor, punishable by at most 30 days in jail.

The court analyzed the R.A.V. First Amendment challenge thus:

In this case, the City has convicted Fabich of ethnic intimidation based on his having uttered racially charged fighting words to a black person. Hypothetically, had Fabich confronted Brown with different fighting words that disclosed no racial bias, he might have instead been found guilty only of disorderly conduct, not ethnic intimidation. That juxtaposition seems, at first, to place this situation squarely within the reach of R.A.V.‘s prohibition on regulating the content of fighting words.

However, another hypothetical leads us in a different direction: What if Fabich had confronted Brown with fighting words that were not racially charged but then, after the fact, confessed that his motive for verbally attacking Brown had been racial? In that case, despite having uttered no biased fighting words, could he still have been found guilty of ethnic intimidation based on the unbiased fighting words in conjunction with his confessedly biased motive for having uttered them? This hypothetical line of reasoning highlights the fact that the triggering culpability element in the ethnic intimidation ordinance is not the content of the fighting words, but rather, it is the “motives, reasons or purposes for” which the fighting words were uttered.

In other words, assuming arguendo that the City successfully proved a bigoted motive for Fabich’ directing fighting words toward Brown, then the ordinance is constitutional as applied to him. The ordinance does not seek to punish his use of the n-word more severely compared to other fighting words. It punishes a bigoted motive for employing fighting words against Brown, without regard to what those words were. Mitchell … inform[s] that it is permissible for a government to add to the punishment of crimes where the criminal acts were committed due to a repugnant or socially destabilizing (for example, racist) motive. Thus, even as applied to Fabich (assuming a bigoted motive), we find that the City’s ethnic intimidation ordinance is constitutional….

And the court concluded there was adequate evidence that (1) Fabich’s speech was indeed “fighting words” (for space reasons, I omit the discussion of that) and (2) “one of the motives, reasons or purposes for the commission of the offense [was] the victim’s race”:

[I]t is not enough that someone who becomes involved in an altercation utters racial slurs in the course of the altercation; {[i]n fact, if the mere use of a racial slur during an argument would justify a conviction for ethnic intimidation, then our basis for finding the ordinance to be constitutional would be undermined.} [R]ather, the victim must be targeted “by reason” of their race or in this case their race must serve as one of the “motives, reasons or purposes for the commission of the offense.” To put it more plainly, becoming infuriated with someone for a nonracial reason and, in the course of that angry altercation, hurling a slur does not suffice to transform disorderly conduct into ethnic intimidation….

[For instance, in an earlier case], an African-American couple became involved in an argument with a white man over parking arrangements…. The Eighth District Court of Appeals found that, while the evidence supported a conviction for aggravated menacing, the evidence did not support a conviction for ethnic intimidation, reasoning as follows: … “We recognize that while [the defendant]’s use of the “N word’ [is] offensive, ‘repugnant or obnoxious language does not, in itself, demonstrate tha[t] an action was undertaken ‘by reason of the victim’s race.”” … “[T]he evidence demonstrates that the threats between [the victim] and [the defendant] were prompted by their random, happenstance dispute over where the car was parked. As a result, there is insufficient evidence to demonstrate that [the defendant] threatened [the victim] with a gun because of his race.” [Discussion of two other similar precedents omitted. -EV]

In this case, however, the cause of the rift between Fabich and Brown is considerably less clear-cut than in [the prior precedents]. It is undisputed that Brown and Fabich had, by Brown’s own testimony, been neighbors for a long time and had many past interactions…. But why things came to a head on the day that they did or why the two men wound up trading racial insults (with Fabich dealing the vast majority of racial invective), is a matter of inference….

[Given the guilty verdict], we must credit the assertion that Fabich initiated the interaction and began using racial slurs against Brown without specific provocation. Moreover, the evidence in the record amply supports that the argument between Brown and Fabich included racially abusive language, and the jury could have inferred racial animus from Fabich’s statement, “Let’s have some race fun.” Under the circumstances, viewing the evidence in the light most favorable to the prosecution [the norm when reviewing a guilty verdict for sufficiency of the evidence -EV], the record is sufficient to conclude beyond a reasonable doubt that at least one of Fabich’s motives in perpetrating disorderly conduct toward Brown was racist.

When using a manifest weight analysis and weighing the testimony as if we were the proverbial “thirteenth juror,” the picture is more complicated, but the racial motive behind the altercation still finds support. Brown stated that he never called Fabich “Tarzan,” that he had never used the term before, and testified that he did not hear Fabich reference having been mocked for his whiteness during the video of the incident. Moessner testified in support of this one-sided narrative when he claimed that neither he nor Brown said anything at all in response to Fabich.

But, during the video, a person off screen can be heard shouting back at Fabich, much of it inaudible. And at several points during the video, Fabich references an insult apparently offered by Brown: “If you’re calling me Tarzan, you’re Nigger Brown.” “If you’re going to make fun of my whiteness, we’re going to have it out.” “You called me Tarzan. Let’s have some race fun.” Though the video is somewhat hard to hear, the neighbor (Waderker) who recorded the video, was not at all reticent about confirming that Fabich made the remarks concerning the “Tarzan” insult. This apparently led Fabich to respond with the torrent of vile racist language, which we have already recounted in detail.

In short, the manifest weight of the evidence is to the effect that these long-time neighbors, Fabich and Brown, became involved in an altercation ‘that was motivated, at least in part, by racial animus. Whether that racial animus between the two men was mutual (as it may have been) is of no moment—Brown and his alleged “Tarzan” remark are not on trial.

What matters is whether Fabich was motivated by Brown’s race when he hurled racist invective at him. Because, unlike in [prior precedents], the record at trial does not offer another clear explanation for Fabich’s motive, we conclude that the jury did not lose its way in concluding from Fabich’s statements that Fabich’s motive was, at least in part, racial….

The evidence in this case showed that Fabich used racially charged fighting words in combination with other racially derogatory statements. Though the content of these words is not (and cannot constitutionally be) the target of the ethnic intimidation ordinance, the lack of other explanation for the conflict between Fabich and Brown permits those words to serve as evidence of Fabich’s motivation for the conflict and the use of fighting words. We therefore affirm Fabich’s convictions for disorderly conduct and ethnic intimidation….

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Melt Up: Global Stocks, Bitcoin Hit All Time High To Start 2021 As Dollar Implosion Continues

Melt Up: Global Stocks, Bitcoin Hit All Time High To Start 2021 As Dollar Implosion Continues

Virtually every risk asset including Bitcoin is melting up – while the dollar continues to crumble – on the first trading day of the year when the same FOMO euphoria that slammed stocks to all time high in the last seconds of trading on Dec 31, 2020 continued overnight, when world stock markets hit fresh record highs on Monday, as investors hoped the rollout of vaccines would ultimately lift a global economy decimated by the COVID-19 pandemic. S&P futures were up 0.5%, after touching an all time high of 3,773.25 earlier on the back of broad-based moves higher in Asia and Europe after upbeat manufacturing data and rising commodities prices boosted risk appetite. …

… which also helped push MSCI’s All-Country World Index reach a new record high, up 0.6% on the day.

“The year kicks off as 2020 ended, an everything rally with the double V dichotomy (virus vs. vaccine) seeing the hopes that either things get worse and stimulus ramps up or things get better and, well, things get better so long as there’s no hint of liquidity withdrawal and a taper tantrum,” a trader told Reuters.

In the US, Tesla shares rose 2.4% in premarket trading and are set to open at an all-time high after the electric-vehicle maker posted delivery figures over the weekend, with analysts highlighting that, even though co. just missed its 2020 target of 500,000 auto sales, it still came close and beat expectations with a record number of car handovers in 4Q. Shares in Tesla and other U.S. EV manufacturers like Nikola, Lordstown Motors, Workhorse Group could also be in focus on Monday following vehicle numbers from Chinese peers Nio and XPeng.

Cryptocurrency-exposed stocks also soared anew in U.S. premarket trading, kicking off the year with gains after Bitcoin set records over the weekend. Ebang International surged 34%, adding to Thursday’s 23% advance, after the communication equipment company said it plans to launch a cryptocurrency exchange in 1Q. Riot Blockchain (+13%), Marathon Patent (+21%), Bit Digital (+35%) all higher.

As Bloomberg notes, stocks are starting the new year at rich valuations amid expectations that widespread vaccine distribution in 2021, central bank support and government aid will reignite economic growth and boost corporate profits. Purchasing managers indexes showed factory activity across Asia continued to gain momentum in December, spurred by strong demand for the region’s exports, though China’s recovery is starting to moderate.

“Covid cases and vaccine distribution will remain the key focus for investors for now,” said Kerry Craig, global market strategist at JPMorgan Asset Management. “Without the wide distribution of vaccines, the paths of Covid and the economy are locked together, given the impact on social mobility and economic curtailment. This link will be broken as immunity levels rise into the middle of the year, but until then the economic path will be bumpy over the first quarter.”

In Europe, the Stoxx 600 was up 1.5%, led by miners and other cyclicals. European stock indexes were all higher, with Germany’s DAX up 1.3%, Spain’s IBEX up 1.36% and Italy’s FTSE MIB rising 1%. The pan-European STOXX 600 index was on course for its best day since Nov. 9, up 1.6% after the latest PMI data showed euro-area manufacturing grew the fastest in more than 2 1/2 years in December.

The Stoxx Europe 600 Basic Resources Index (SXPP) surged as much as 4.3%, hits highest level since June 2018, thanks to a boost from weaker dollar and a jump in metals prices after expanding Chinese PMI.  The FTSE 100 was up 2.8% on the first day of trading outside the European Union for U.K. stocks. The rollout of AstraZeneca’s vaccine boosted optimism that the country will be able to control the spread of the virus, which forced tighter restrictions across the country.  With the lag between a full vaccine rollout and a global economic recovery, investors will count on central banks to keep money cheap.

Asian stocks also climbed to a new record, as technology shares remained strong in the first session of 2021, although Japan’s Nikkei 225 index shed early gains, falling 0.4% after Prime Minister Yoshihide Suga confirmed the government was considering declaring a state of emergency for Tokyo and three surrounding prefectures as the coronavirus spreads.  Tencent and Samsung Electronics were the biggest boosts to the benchmark MSCI Asia Pacific Index, which advanced for a seventh day. South Korean stocks posted the biggest gains, as names related to Hyundai Motor surged after a broker said the carmaker may unveil its first electric vehicle built on an a dedicated platform sooner than expected. Equities were also strong in Indonesia, Vietnam, Australia, China and Taiwan. Malaysia’s stock benchmark was the region’s biggest decliner, led by glove makers amid Covid-19 vaccine rollouts and a resumption in regulated short-selling in the nation. The New Zealand market was closed for a holiday

“We continue to believe that equities have further room to rise in 2021 as monetary and fiscal stimulus measures provide a tailwind, and we anticipate significant earnings growth as the global economy recovers,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

On the coronavirus front, global infections climbed above 85 million, after U.S. daily cases soared to a record of nearly 300,000 after the New Year holiday. The U.K. is poised to give the first shots of the vaccine from AstraZeneca Plc and the University of Oxford on Monday, in a race against a faster-spreading variant that’s prompted new lockdowns across much of the country.

The data calendar includes a raft of manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of U.S. factories and services. Chinese factory activity continued to accelerate in December, though the PMI missed forecasts. Japanese manufacturing stabilised for the first time in two years in December, while Taiwan picked up. In Europe, the mfg PMI hit a 2.5 year high despite the double-dip the economy is suffering.

OPEC+ energy ministers hold their monthly virtual gathering Monday to decide whether to add as much as 500,000 barrels a day to production. Minutes of the Federal Reserve’s December meeting are due on Wednesday and should offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year.

Finally, on the political front, President Donald Trump and President-elect Joe Biden will each make last-minute campaign appearances in Georgia on Monday for candidates in two runoff elections that will decide whether Republicans retain control of the U.S. Senate.

Despite the optimism over vaccines, some investors are still sounding caution over the path of the virus, which continues to spread amidst the discovery of a new strain: “The virus retains the upper hand for a while longer,” said Karl Steiner, chief quantitative strategist at SEB, noting that vaccinations have had an uneven start, characterized by vaccine shortages, vaccine resistance and delays.

While all risk assets soared the dollar plunge continued, sliding 0.5% to the lowest since Feb. 16, 2018; it fell against all its G-10 peers “The U.S. dollar is trading a bit weaker, nudged on by risk-on proclivities which see the EUR/USD trading back to key resistance area at 1.2250,” said Stephen Innes, chief market strategist at Axi. “The market continues to build in boatloads of optimism for a global growth recovery in 2021 and an accompanying downward trajectory for the U.S. dollar”

China’s yuan strengthened past 6.5 versus the greenback for the first time since 2018. The Chinese currency traded onshore gained as much as 1.08%, the most since Oct. 9, to 6.4579. The move came as the dollar slid to a nearly three-year low. Also supporting the yuan is China’s economic rebound from the pandemic, with official data showing its manufacturing sector expanding for a 10th straight month in December. The Chinese currency’s yield advantage over the dollar, which is near the widest on record, is also driving capital inflows. “China’s growth remains strong while the U.S. and Europe struggle to contain the virus, and that is helping the yuan to extend a rally into the New Year,” said Ken Cheung, chief Asia foreign-exchange strategist at Mizuho Bank Ltd. “We expect the yuan to gain even further from here as China will lead the world in terms of economic recovery in the first half. The currency may test 6.3 in the coming months.”

In rates, Treasuries were slightly cheaper at the long end in early U.S. trading, having pared Asia-session losses as bunds outperformed after weaker-than-forecast Italian and Spanish manufacturing PMI numbers. Yields were cheaper by ~1bp in 10- to 30-year sectors, leaving 10s around 0.925%; bunds outperform by 4bp, gilts by 3bp. Yields reached session highs during Asia session as month-end gains were unwound.  Large short position at the 137 strike in 10-year note options may attract attention should yields cheapen toward 1%. European bonds rallied sharply after softer-than-expected manufacturing PMI numbers come alongside the resumption of ECB bond purchases. The German curve bull flattened with 10y yields dropping ~3.5bps, widening the spread to peripheral and semi-core bonds. BTP bounce off the lows, OAT futures rally through 168. Cash USTs are quiet, bear steepening marginally. Gilts drift off the highs trading ~1bps cheaper to bunds at the 10y point

Elsewhere, Bitcoin sank as much as 17% in the biggest intraday retreat since March, wiping out tremendous gains made over the weekend.

Looking ahead, potential catalysts this week include Tuesday’s Georgia run-off elections for two Senate seats that will decide control of the chamber, FOMC minutes on Wednesday and Friday jobs report. Looking at the latter, median forecasts are for only a modest increase of 100,000 jobs, while analysts at Barclays expect a drop of 50,000 in jobs, which would be a shock to market hopes of a speedy recovery.

“A number of incoming indicators on activity point to slower momentum as the economy closes out the year, including data on labour markets where initial claims rose during the December survey period,” said economist Michael Gapen in a note. Such a drop would add pressure on the Fed to ease further, another burden for the dollar which is already buckling under the weight of the massive U.S. budget and trade deficits.

In commodities, oil prices reversed an earlier gain that saw Brent crossing $53 a barrel, before sliding as the day’s OPEC meeting begins. The decline in the dollar supported gold, leaving the metal 1.3% firmer at $1,931 an ounce.

Looking at the day’s calendar, US manufacturing data is due later today, while no major earnings release is expected.

Market Snapshot

  • S&P 500 futures up 0.6% to 3,769.75
  • MXAP up 0.9% to 201.80
  • MXAPJ up 1.4% to 671.35
  • Nikkei down 0.7% to 27,258.38
  • Topix down 0.6% to 1,794.59
  • Hang Seng Index up 0.9% to 27,472.81
  • Shanghai Composite up 0.9% to 3,502.96
  • Sensex up 0.6% to 48,170.90
  • Stoxx Europe 600 up 1.6% to 405.20
  • German 10Y yield fell 3.4 bps to -0.603%
  • Euro up 0.7% to $1.2295
  • Italian 10Y yield unchanged at 0.433%
  • Spanish 10Y yield fell 1.7 bps to 0.03%
  • Australia S&P/ASX 200 up 1.5% to 6,684.25
  • Kospi up 2.5% to 2,944.45
  • Brent futures up 1.6% to $52.62/bbl
  • Gold spot up 1.8% to $1,932.73
  • U.S. Dollar Index down 0.5% to 89.45

Top Overnight News from Bloomberg

  • President Donald Trump urged Georgia election officials to “find” thousands of votes and recalculate the election result to flip the state to him — an extraordinary effort to strong-arm fellow Republicans
  • The U.K. gave the first shots of a Covid-19 vaccine from AstraZeneca Plc and the University of Oxford, in a race against a faster-spreading coronavirus variant that’s prompted new lockdowns across much of the country
  • Bitcoin held near a record a day after breaching $34,000 for the first time while Ether, another digital currency, also surged as the crypto rally continues

A quick look at global markets courtesy of Newsquawk

Asian equity markets began 2021 mostly higher while US equity futures traded indecisively after stalling at record levels as participants returned from the New Year’s holiday and heading into this week’s key risk events including the Georgia Senate runoffs on Tuesday, FOMC Minutes on Wednesday and NFP jobs data on Friday. ASX 200 (+1.5%) was led higher by outperformance in metal stocks as gold miners were underpinned after the precious metal surged above the USD 1900/oz level and with the top-weighted financials sector also notching firm gains. Nikkei 225 (-0.7%) began positive but then faltered on reports that Japan could announce a state of emergency for Tokyo and surrounding prefectures as soon as this week after their governors requested such action to stem surging COVID-19 infections, while Japan and Tokyo are to ask restaurants to close no later than 20:00 local time as part of measures to address the virus. KOSPI (+2.5%) outperformed with index heavyweight Samsung Electronics posting fresh all-time highs and after better-than-expected trade data which showed all components topped estimates including the fastest growth in exports in more than two years. Hang Seng (+0.9%) and Shanghai Comp. (+0.9%) were positive but with early jitters seen after the recent announcement by NYSE to delist China Mobile, China Telecom and China Unicom following US President Trump’s executive order in November banning investment in companies with ties to the Chinese military, which prompted threats of countermeasures from MOFCOM and large Chinese oil names felt the pressure on speculation that they could be next in the firing line. Furthermore, participants digested the latest Chinese Caixin Manufacturing PMI which fell short of estimates but still printed an 8th consecutive month in expansionary territory and there were also reports that China’s Foreign Minister Wang Yi extended an olive branch to the incoming Biden administration and suggested that a new window of hope is opening. Finally, 10yr JGBs were rangebound with initial upside stalled by resistance near the psychological 152.00 level and with price action contained amid the absence of BoJ purchases in the market today.

Top Asian News

  • China Wind Giant May Add Mainland Listing Under Merger Plan
  • Banks, Developers Sink as China Caps Loans to Curb Risk
  • Hong Kong Extends School Closures as Virus Cases Persist

European stocks kick off the new year with gains across the board, albeit to varying degrees (Euro Stoxx 50 +1.0%) after the region picked up the baton from a mostly higher APAC session, whilst US equity futures inch higher in lockstep ahead of a risk-abundant week. Looking back at 2020 performance, the top global performers mostly resided among APAC bourses, with Shenzhen, KOSPI, China A50 all among the top gainers. State-side, the NASDAQ Comp outpaced, posting 2020 gains of some 42% whilst the S&P 500 and DJIA rose around 16% and 7% respectively in the year. Europe meanwhile saw more of a downbeat year with the FTSE 100 lower by almost 15%, and over in the EZ the Euro Stoxx 50 shed around 5%, CAC declined around 7%, IBEX and FTSE MIB saw losses of around 16% and 6% respectively for the year whilst the DAX eked gains of around 4% in the 12 months. Back to today’s trade, UK’s FTSE 100 (+2.6%) outperforms as Britain undergoes the first trading day following the end of the Brexit transition period, albeit gains are seemingly led by the heavy-weigh energy and material stocks amid price action in oil and base metals (see commodities section), with those sectors the outperformers this morning alongside the travel & leisure space as vaccine rollouts gain traction, whilst some airliners including Ryanair (-1.3%) and easyJet (-0.7%) are calling for airports to cut landing charges in the recovery period from the pandemic. Overall, sectors do not portray a particular risk tone. In terms of individual movers, Entain (+26.5%) – formerly GVC – soars after the Co. rejected a takeover offer from MGM Resorts worth around GBP 8.1bln, stating the offer “significantly undervalues” the Co. Elsewhere, the CAC (+1.6%) is underpinned by Airbus (+4.5%) whose shares are lifted on the back of reports that the group was reportedly close to delivering 560 planes by 2020-end, short of the record 863 in 2019 but close to the top-end of internal forecasts.

Top European News

  • Germany Leads European Manufacturing to Best Month Since 2018
  • U.K. Bolsters Vaccination With Oxford Shot as Covid Surges
  • Airbus Shares Gain With 560-Plane Target in Sight at End of 2020
  • England School Returns in Doubt as Johnson Warns on Lockdown

In FX, the Greenback continues to depreciate almost across the board, as the DXY slips through 89.500 after yet another fleeting and seemingly futile attempt to regain composure saw the index fade some distance from the 90.000 mark (at 89.822 to be precise). Meanwhile, oil prices are buoyant ahead of OPEC+. Gold has breached Usd 1900/oz and BTC has extended well beyond the Usd 30k mark to set new record highs, with broad risk sentiment bullish at the start of 2021 irrespective of the ongoing pandemic resurgence and several looming events that could roil markets, like the Georgia run-offs, Fed minutes, Italian coalition head-to-head and US labour data. However, the rot shows little sign of stopping for the Buck and the DXY is now hovering just above a fresh multi-year low at 89.418.

  • CHF/EUR/CAD – All vying for top spot in the G10 ranks, with the Franc acknowledging an acceleration in Switzerland’s manufacturing PMI plus weekly sight deposit balances suggesting no SNB intervention, while the Euro is benefiting at the expense of the Dollar and upbeat tone rather than somewhat mixed Eurozone PMIs and Loonie is getting a lift from the aforementioned bid in crude. Usd/Chf is testing 0.8800, Eur/Usd 1.2300 and Usd/Cad 1.2675 before Canada’s Markit manufacturing PMI, the final US print and a trio of Fed speakers.
  • JPY/NZD/AUD/NOK – The next best majors, or recipients of the Greenback’s frailty, as the Yen eyes 102.70 irrespective of reports that Tokyo may be heading for a month long state of emergency from Saturday, the Kiwi reclaims 0.7200+ status, the Aussie approaches 0.7750 and Norwegian Crown sets on 10.4250 against the Euro even though the single currency is elevated and Norway’s manufacturing PMI missed expectations.
  • GBP/SEK – Relative laggards, as Sterling stutters after a peak through 1.3700 in Cable terms and the Swedish Krona runs into resistance ahead of 10.0200 regardless of encouraging manufacturing PMIs to offset some of the coronavirus concerns afflicting both countries. Note also, UK mortgage lending and approvals were much stronger than forecast, but before tighter restrictions to try and quell the pandemic resurgence.
  • EM -Widespread gains vs the Usd, with the Cnh and rallying strongly from the PBoC fix beyond 6.5000, the Krw cheering healthy trade data and the Try boosted by stronger than anticipated inflation that should keep the CBRT in aggressive tightening mode. Elsewhere, the Zar, Mxn and Rub also all deriving impetus from strength in underlying commodities, like bullion, WTI and Brent.
  • CBRT Minutes stated that they decided to implement strong monetary tightening policy taking into account their end-2021 forecast target, which followed their decision to hike the one-week repo target by 200bps to 17% on Christmas Eve. (Newswires)

In commodities, WTI and Brent front-month futures see a firm session thus far in the run-up to the OPEC+ decision-making and against the backdrop of geopolitical risk and vaccine rollouts. The JMMC meeting is due to start 12:00GMT/07:OOEST followed by the OPEC+ confab slated to at 13:30GMT/08:30EST, as usual subject to delays. As things stand, consensus is split over whether the group will further ease output cuts on account of stable prices and vaccine optimism, or whether to maintain current cuts to see how the COVID-19 situation play out, namely due to lockdown and jet fuel demand risks. The JTC over the weekend did not support further easing of curbs. Russia is seemingly opting for a further ease of cuts, whilst Saudi is likely to take a more cautious approach. Unanimity is needed on deciding the February oil quota. Over the weekend, OPEC SG Barkindo voiced concern over the new COVID-variant whilst emphasising that OPEC is “standing ready to adjust these levels depending on market conditions and developments”. Analysts at ING believe that “in the current environment, where there are real concerns over the latest waves of Covid-19, the best route for OPEC+ to take is to keep output cuts unchanged at current levels. Despite the strength in the flat price and spreads, the market is still clearly vulnerable, and adding further supply risks a pullback in prices.” As a reminder, the exclusive Newsquawk OPEC Twitter dashboard is available on the website. Turning to geopolitics, eyes were on Iran over the weekend amid the anniversary of IRCG Commander Soleimani’s death stoking fears of a retaliation. Hostile Iranian rhetoric has ramped up over the past week, namely against US President Trump and other US govt officials, prompting the US to reverse a decision to bring an aircraft carrier home from the Persian Gulf. WTI and Brent front month futures have declined from best levels after reaching highs of USD 49.80/bbl and USD 53.30/bbl respectively – with focus today likely on the togetherness and sentiment of OPEC+ members over the February output decision. Elsewhere, spot gold and silver continue to grind higher amid a weaker Buck coupled with some reflationary play amid the rollout of COVID vaccines, with spot gold powering past the USD 1900/oz mark to a current high around USD 1934/oz. Shanghai copper and Dalian iron ore saw a firm start to the year amid the softer Dollar, reflationary hopes and broader gains across stocks.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 56.3, prior 56.5
  •     10am: Construction Spending MoM, est. 1.0%, prior 1.3%

Central Banks

  • 10am: Fed’s Evans Speaks About Economy and Fed Policy on AEA Panel
  • 10am: Fed’s Bostic Takes Part in AEA/ASSA Panel Discussion
  • 12:15pm: Fed’s Mester Speaks as Discussant in AEA Papers Session
  • 6pm: Fed’s Mester Speaks on Economic Outlook at AEA Annual Meeting

DB’s Jim Reid concludes the overnight wrap with his first note of the year

Happy New Year and hope you all had a good Christmas. Jim’s back tomorrow, but before we look ahead to what will hopefully be a brighter 2021, we’ve just published our performance review for December, Q4 and 2020 (link here). In spite of an astonishingly tumultuous year, 28 out of the 38 non-currency assets in our sample actually posted a positive total return over the last 12 months, and the positive vaccine news in Q4 meant that all but one of the 38 assets gained ground over the last quarter.

We’ll have to wait and see for what 2021 holds in store, but as we begin the year, the main news over the weekend has very much stuck to the major theme of 2020, with rising numbers of coronavirus cases leading to further restrictions (and calls for restrictions) across a range of countries. Here in the UK, Prime Minister Johnson warned yesterday that restrictions in England were “probably about to get tougher” as calls mounted for school closures and even another national lockdown, with the UK’s 7-day case average rising above 50k for the first time. In France over the weekend, the government moved forward its curfew from 8pm to 6pm for 15 of the country’s departments. And in Germany, Chancellor Merkel will be meeting with state premiers tomorrow to discuss an extension of the lockdown, with Bavaria’s Markus Söder calling for an extension until the end of January.

Against this backdrop, the big question for the global economy over the year ahead will be how quickly populations are vaccinated, particularly among vulnerable groups like the elderly and those with underlying health conditions who make up the majority of hospitalisations. If the most affected groups can be vaccinated quickly, that could pave the way for a gradual easing of restrictions and a return to something closer to normality. Already the US and the UK have now given at least 1% of their population the first dose, and the UK is hoping to accelerate their vaccination programme as people begin to receive the Oxford/AstraZeneca vaccine from today, while in the US the head of Operation Warp Speed said yesterday that officials were in talks with Moderna and the FDA about giving some people half the dose to speed up vaccinations. However, markets are likely to be closely watching any issues with Covid-19 or the vaccine rollout, not least given the new variants that have been found in the UK and South Africa which spread more rapidly and have been found in increasing numbers of countries. Indeed, among the respondents to our EMR survey back in December, the top 3 risks for the year ahead were all related to Covid-19 or the vaccine rollout, suggesting it’s top of investors’ minds heading into this year.

In spite of the rise in cases over Christmas however, global equity markets soared to new highs while we were away, with the S&P 500, the Dow Jones and the MSCI World index all closing at record levels on New Year’s Eve. Sentiment has been supported by the passage of fresh Covid-19 relief in the US, which President Trump signed on December 27, as well as the agreement of a post-Brexit trade deal between the UK and the EU, which was announced on Christmas Eve, thus removing a couple of tail risks heading into the new year. The moves capped off a strong year for equities (at least outside Europe), which were supported by unprecedented levels of fiscal and monetary policy support following the pandemic, as well as the promising vaccine news that arrived in Q4. Meanwhile the reflation trade has also continued to gather pace over Christmas, with 10-year US break-evens up to 1.99% on December 31, reaching levels not seen since late 2018. And finally, in one of the other stories of the holiday season, Bitcoin has continued to soar to new highs, and is trading at $33,321 this morning. That means it already has a YTD performance of +14.92%, and it’s only January 4. The moves follow its +49.63% return in December, which was its best month since May 2019, as investors have poured into the cryptocurrency in spite of its historic volatility.

Turning to the present, overnight in Asia equities are trading higher for the most part, with the Hang Seng (+0.84%), Shanghai Comp (+0.91%), Kospi (+2.35%) and the ASX (+1.41%) all posting gains. The exception to this pattern has been the Nikkei, which shed -0.63% after Japanese PM Yoshihide Suga said he’s considering declaring a state of emergency to stem a surge in virus infections. Elsewhere, US equity futures have shown little change with those on the S&P 500 down -0.01%, while Brent Crude (+1.27%) has climbed to a post-pandemic high this morning of $52.46/bbl ahead of the latest OPEC+ meeting. The other main news overnight has been the final December manufacturing PMIs for Asia, with the numbers so far indicating that activity is gaining momentum in the region, as Japan’s 50.0 reading marked the highest since April 2019. China’s recovery showed signs of moderating however, with the Caixin PMI down to 53.0 (vs. 54.9 last month).

In terms of the week ahead, US politics will dominate the calendar, with tomorrow’s runoff elections in the state of Georgia determining which party will control the Senate over the coming 2 years. This is an important one for markets, since the results will affect how much of President-elect Joe Biden’s agenda will be able to pass through Congress, as well as the size of any fiscal stimulus package. As a reminder, in November’s election the Republicans won 50 seats in the Senate to the Democrats’ 48, but 2 seats in Georgia were left unfilled because candidates in that state have to get an outright majority of the votes to get elected, meaning a runoff election is being held. If the Democrats manage to take both seats, the chamber will be split 50-50, and since the Vice President casts the deciding vote, the Democrats will have control following the inauguration of Joe Biden and Kamala Harris on January 20. However, if the Republicans take just one seat or both, that means Biden will have to deal with a Republican-controlled Senate for at least the first two years of his term.

The polls have been on a knife-edge throughout, but the latest polling average from FiveThirtyEight indicates that the Democrats have pulled ahead in recent days with a narrow lead of +1.8pts and +2.2pts in the two races. If they did manage to win both and hence control of the Senate, our US economists think that another large fiscal stimulus package would be likely, possibly including some of the more structural priorities of the new administration such as infrastructure, and thus would represent a material upside to their GDP forecast for this year. However, if they fail to win both, then a Republican-controlled Senate would mean that they can be expected to block the vast majority of Democratic priorities. Either way, the results are unlikely to be known tomorrow, since the state can’t start counting the mail-in ballots until Election Day.

Staying on US politics, on Wednesday the joint session of Congress will take place where the electoral votes from the presidential election are formally counted. Normally this is just procedural, but this year a number of Republican senators have said that they’ll vote to challenge the certification of the results, with a group of Republican senators saying that if an election commission weren’t created to investigate claims of fraud, then they “intend to vote on January 6 to reject the electors from disputed states”. However, given the Democrats control the House and multiple Republican senators have condemned these attempts, this challenge isn’t expected to go anywhere.

On the data front, the two highlights this week are likely to be the December PMIs today and on Wednesday, as well as the US jobs report on Friday. Starting with the PMIs, as mentioned we’ve already had some of the manufacturing numbers from Asia overnight, with the full picture from Europe and the US expected later, before we get the services and composite numbers mid-week. Any surprises should be limited though, given we’ve already had the flash PMIs for a number of the major economies before Christmas, with the flash Euro Area composite reading still at a contractionary 49.8 reading.

Elsewhere, the final US jobs report of 2020 is expected by our economists to show just a +50k increase in nonfarm payrolls, which would be the weakest monthly job growth since the pandemic began, and coincides with renewed lockdown measures in numerous states in response to the recent surge in cases. They expect that the unemployment rate will tick up to 6.8%, in its first increase since the first wave of the pandemic back in April.

Finally, there isn’t a great deal on the central bank front, with no major monetary policy decisions this week. However, we will get the minutes of the December Fed meeting on Wednesday, and hear from a number of speakers including Fed Vice Chair Clarida and Bank of England Governor Bailey over the coming week, along with two new voting members on the FOMC in 2021, in Chicago Fed President Evans and Atlanta Fed President Bostic.

Tyler Durden
Mon, 01/04/2021 – 07:59

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The Risk of Arrest for Cannabis Consumers Is Shrinking

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After rising for three years in a row, marijuana arrests in the United States fell by 18 percent in 2019. Police made about 545,600 such arrests in 2019, according to the FBI, compared to about 663,400 in 2018.

As usual, the vast majority of those arrests—92 percent—were for possession rather than manufacture or sale. The National Organization for the Reform of Marijuana Laws reported that “much of the national decline resulted from a drop-off in marijuana arrests in Texas,” where the total fell by more than 50,000.

Nationwide, marijuana arrests peaked at nearly 873,000 in 2007; the 2019 number was 37 percent lower. While the odds that any given cannabis consumer will be arrested have always been low, they are getting lower. Possession arrests in 2007 represented about 3 percent of marijuana users that year, judging from survey data. That risk in 2019, when there were more cannabis consumers and fewer arrests, was down to about 1 percent.

Marijuana arrests have dropped by 27 percent since Colorado and Washington became the first states to legalize the drug for recreational use in 2012, but the decline has not been smooth. After dropping in 2013, pot busts rose in 2014, fell in 2015, then rose slightly for three consecutive years before dropping substantially in 2019.

Since possession had been legalized in eight states—including California, the most populous—by 2017, it may seem surprising that marijuana arrests initially continued to rise. But because several jurisdictions that legalized pot had previously decriminalized possession, their arrest rates were already relatively low. While California accounts for 12 percent of the U.S. population, for example, it accounted for less than 2 percent of marijuana arrests in 2016.

The risk of arrest is not evenly distributed across the population. The American Civil Liberties Union (ACLU) found that black people are 3.6 times as likely to be arrested for marijuana possession as white people, even though rates of cannabis consumption in the two groups are similar.

Racial disparities persist even after decriminalization and legalization. In 2016, Illinois eliminated criminal penalties for possessing less than 10 grams (about a third of an ounce). The following year, the Chicago Sun-Times reported, four-fifths of the people busted for marijuana possession in that city were African Americans, who account for about a third of Chicago’s population.

In states that legalize marijuana, the ACLU found, the black-white gap shrinks but does not disappear. In Colorado, for example, use in public remains illegal, and black people are almost twice as likely to be arrested for such offenses as whites.

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