Month: September 2022

Traditionalism Rising, Part I: Defining Traditionalism and Locating It in the Court’s 2021 Term

Eugene has graciously invited me to write a few posts about my new article, Traditionalism Rising, (forthcoming in the Journal of Contemporary Legal Studies and part of a symposium this fall at the University of San Diego School of Law). The piece builds on and extends a larger project about constitutional traditionalism developed in earlier papers (here and here), as well as in a broader research program, The Tradition Project, that my colleague (and Volokh co-conspirator) Mark Movsesian and I have pursued over several years at our Center for Law and Religion. I’ve been a dedicated reader of the Volokh Conspiracy since I was a law prof pup, so it is a pleasure for me to contribute something.

My posts will: (1) define traditionalism and locate it in the Supreme Court’s work this past term; (2) compare traditionalism and originalism, particularly what the paper calls “liquidated originalism”; (3) address traditionalism’s “level of generality” problem, the problem how to select the operative tradition; (4) offer several justifications for traditionalism; (5) consider the problem of traditionalism’s politics. Most of the material is excerpted or summarized from the article, but I invite readers to look at the piece for the full-dress argument. I welcome reactions to the paper, which is still a draft.

What is traditionalism? When people hear the word tradition connected to law, they sometimes think of judicial restraint, or deference, or minimalism (or “Burkeanism”), or some vaguer injunction to “go slow” or respect stare decisis and the interests served by it. Or they may think of approaches to particular clauses or parts of the Constitution—to the Due Process Clause, for example, or to Justice Frankfurter’s “tradition” approach to inherent executive power.

Traditionalism is different from all of these. Traditionalism is a unified approach to determining constitutional meaning and constitutional law with two central elements: concrete practices, rather than principles, ideas, judicial precedents, legal rules, and so on, as the determinants of constitutional meaning and law; and (2) the endurance of those practices as a composite of their age, longevity, and density, evidence for which includes the practice’s use before, during, and after enactment of a constitutional provision.

Practices: Traditionalism takes two types of concrete practices as determinative of meaning and law: the practices of the political organs of government, including state and local governments; and the practices of individual citizens or groups of citizens. Traditionalism therefore rejects abstract principles or values as the primary determinants of meaning. But it also does not depend chiefly upon constitutional caselaw, judicial outputs, legal rules, stare decisis, reasoned judicial elaboration, and so on. One of its foci is “popular practices” (of governments or citizens), giving weight to the concurrence of practices across space that are not limited to the nerve centers of legal and political power. This emphasis on concrete, often (but not only) decentralized, political and cultural practices differentiates traditionalism from methods like Burkean minimalism and common-law constitutionalism, which prize judicial (especially Supreme Court) outputs, as well as approaches of “gloss” that focus exclusively on the branches of the national government and sideline other actors.

Endurance: Endurance is the other key feature, a composite of age (the antiquity of a practice); longevity (the timespan and continuity of the practice across time); and density (the extent to which the practice was used or adopted across space). Think of a ski slope: it can be long and smooth with good snow for skiing from beginning to the end; or short and sparse, with interspersed snowy and snow-less sections. Sections of the slope that are smooth may be densely packed with snow or coated only with a thin, icy layer. The longer (age), the more seamlessly smooth (longevity), and the more snow-packed (density) the slope, the better for skiing. Just so for practices, whose legal authority grows in proportion to the presence of each of these elements of endurance.

Enduring practices, I argue, are presumptively determinative of constitutional meaning and constitutional law. Sometimes, for reasons of bad faith, mistake, or powerful and widely embraced moral reasons running against a practice, the presumption is overcome. But in the ordinary course, text and practice tend to line up. Ordinarily, we do what we mean, and we mean what we do.

Traditionalism in the 2021 term: I’ve detailed the extensive use of this method across the domains of constitutional law in previous work, but in this article one of my objects was to locate it in the Supreme Court’s most recent term. From due process to the right to keep and bear arms, religious liberty, free speech, and more, the Court applied a method that very much resembles traditionalism, and it did so self-consciously.

I cannot canvas all of these areas here (see the piece if you are interested), so let me give one example in the right to keep and bear arms, an example I’ll stick with in subsequent posts. It’s well known that in Bruen v. New York State Rifle and Pistol Association, the Court held that New York’s “proper cause” regulation of the right to carry a weapon for self-defense outside the home, requiring the applicant to show a “special need for self-protection distinguishable from that of the general community,” violated the Second Amendment. The Court observed that only those regulations “consistent with this Nation’s historical tradition of firearms regulation” will be constitutional—a “historical tradition that delimits the outer bounds of the right to keep and bear arms.”

The endurance of the practice of regulation was emphasized by the Court, which examined “‘historical precedent’ from before, during, and even after the founding,” concluding that “we find no such tradition in the historical materials.” It created a typology of age, endurance’s first feature, categorizing the evidentiary historical periods to be investigated as “(1) medieval to early modern England; (2) the American Colonies and the early Republic; (3) antebellum America (4) Reconstruction; and (5) the late-19th and early 20th centuries.” It discussed the element of continuity, endurance’s second feature, in explaining that a “long, unbroken line” “stretching from Bracton to Blackstone is much more likely to be part of our law than a short-lived, 14th century English practice.” And it discussed density, endurance’s third feature, especially post-ratification, where evidence of a single state’s or a territory’s regulation (“a few late-19th century outlier jurisdictions”) could not overcome the broader local and state tradition of non-regulation. Though pre- and post-ratification practice was potentially less probative of meaning than practices at ratification, the Court considered practices of all historical periods as relevant to its interpretation provided they were not “inconsistent with the original meaning of the constitutional text.”

The Court distinguished different types of local regulatory practices—those that prohibited only concealed carry of “unusual” weapons, “pocket pistols,” and the absence of historical continuity of those regulations; those that prohibited the carrying of weapons only to the extent that the bearer was “causing fear or affray”; those that prohibited only concealed carry but permitted open carry; and others—from the broader practice of prohibiting all forms of public carry absent special justification at issue in Bruen.

Bruen is also important because the Court acknowledged, for the first time, traditionalism’s prevalence across constitutional law—in the First Amendment, the Sixth Amendment, and the Establishment Clause. And the Court was clear that when it speaks of consulting “history,” it means reliance on concrete practices that will assist it and other courts in drawing “analogies” or disanalogies from the conduct (government or private) under consideration, to determine the law of the Constitution at issue. In Bruen, then, as in many other cases this term, we see clear steps toward traditionalism, and a clear recognition of its growing importance.

The post Traditionalism Rising, Part I: Defining Traditionalism and Locating It in the Court's 2021 Term appeared first on Reason.com.

from Latest https://ift.tt/r5PdLCU
via IFTTT

Arkansans Will Vote on Marijuana Legalization. But Their Votes May Not Count.


Grounded marijuana in the shape of Arkansas.

One of the most direct ways for voters to have a say in the way their government works is through ballot initiatives. This year, the Arkansas state government may simply ignore one.

More than two-thirds of Americans surveyed support the legalization of marijuana, a number that has grown consistently for decades. Members of Congress have promised action on the issue, but so far have failed to deliver.

In the absence of federal progress, many states have taken up the mantle. Currently, more than three-fourths of U.S. states have legalized pot to some extent. Typically, this requires some sort of buy-in from the state legislature, though not always: Arkansas is one of a handful of states, and the only Southern state, that allows voters to directly pass laws and amend the state constitution by ballot referendum. Placing an initiative on the ballot requires collecting signatures from registered voters equal to 8 percent of the total votes for governor in the most recent election. Currently, that number is 89,151.

In July, Responsible Growth Arkansas, a pro-legalization group, submitted a ballot measure with over 190,000 signatures, more than twice the necessary number. The measure’s full title is, “An Amendment to Authorize the Possession, Personal Use, and Consumption of Cannabis by Adults, to Authorize the Cultivation and Sale of Cannabis by Licensed Commercial Facilities, and to Provide for the Regulation of Those Facilities.” It would legalize marijuana for recreational use in the state for anyone age 21 or older and impose a 10 percent state sales tax. A previous ballot measure legalized medical marijuana in the state in 2016.

Under state law, once a successful petition is submitted, the State Board of Election Commissioners (SBEC) must either approve or deny the ballot measure’s “title and popular name” to ensure that each is “presented in a manner that is not misleading” such that voting in favor of a measure would be voting against what the title proposes.

On August 3, the SBEC denied the measure’s title and, therefore, its ballot eligibility. The board called the title “misleading due to the omi[ssion] of material information that would give the voter serious ground for reflection.” It gave examples such as “omitting” that the measure would repeal the state constitution’s “limitation on the maximum dosage” of THC, as well as “removing the concentration limit from edible products.” In essence, the board contends that pledging to legalize a substance does not sufficiently imply removing limits on that substance.

The following day, Responsible Growth Arkansas sued Secretary of State John Thurston, who also chairs the SBEC. It asked for an expedited review schedule since any ballot measures would have to be certified before August 25. The Arkansas Supreme Court preliminarily ordered Thurston to certify the measure for November’s general election ballot but noted that it would not ultimately be able to hear arguments on the case until September. Case briefs were due Friday, more than a week after the certification deadline.

Now, voters will have the option to vote for or against legalizing recreational marijuana in Arkansas, but if the court upholds the SBEC’s ruling, those votes may not be counted.

For its part, representatives from Responsible Growth Arkansas indicated that they were pleased with the court’s order, confident that they will prevail at trial. The state, meanwhile, fought the order, saying it was “unfair” for voters to be “unnecessarily confused by being faced with a ballot measure, the votes for which will not be ultimately counted.”

The post Arkansans Will Vote on Marijuana Legalization. But Their Votes May Not Count. appeared first on Reason.com.

from Latest https://ift.tt/EF2oaOc
via IFTTT

Today in Supreme Court History: September 6, 1983

9/6/1983: The City of Richmond solicited bids for installing plumbing fixtures at the city jail. The J.A. Croson Company’s bid was denied because it did not meet the “set-aside requirement” for minority contractors. The Supreme Court declared this decision unconstitutional in City of Richmond v. J.A. Croson Co. (1989).

The Rehnquist Court (1989)

The post Today in Supreme Court History: September 6, 1983 appeared first on Reason.com.

from Latest https://ift.tt/xGth2ek
via IFTTT

Traditionalism Rising, Part I: Defining Traditionalism and Locating It in the Court’s 2021 Term

Eugene has graciously invited me to write a few posts about my new article, Traditionalism Rising, (forthcoming in the Journal of Contemporary Legal Studies and part of a symposium this fall at the University of San Diego School of Law). The piece builds on and extends a larger project about constitutional traditionalism developed in earlier papers (here and here), as well as in a broader research program, The Tradition Project, that my colleague (and Volokh co-conspirator) Mark Movsesian and I have pursued over several years at our Center for Law and Religion. I’ve been a dedicated reader of the Volokh Conspiracy since I was a law prof pup, so it is a pleasure for me to contribute something.

My posts will: (1) define traditionalism and locate it in the Supreme Court’s work this past term; (2) compare traditionalism and originalism, particularly what the paper calls “liquidated originalism”; (3) address traditionalism’s “level of generality” problem, the problem how to select the operative tradition; (4) offer several justifications for traditionalism; (5) consider the problem of traditionalism’s politics. Most of the material is excerpted or summarized from the article, but I invite readers to look at the piece for the full-dress argument. I welcome reactions to the paper, which is still a draft.

What is traditionalism? When people hear the word tradition connected to law, they sometimes think of judicial restraint, or deference, or minimalism (or “Burkeanism”), or some vaguer injunction to “go slow” or respect stare decisis and the interests served by it. Or they may think of approaches to particular clauses or parts of the Constitution—to the Due Process Clause, for example, or to Justice Frankfurter’s “tradition” approach to inherent executive power.

Traditionalism is different from all of these. Traditionalism is a unified approach to determining constitutional meaning and constitutional law with two central elements: concrete practices, rather than principles, ideas, judicial precedents, legal rules, and so on, as the determinants of constitutional meaning and law; and (2) the endurance of those practices as a composite of their age, longevity, and density, evidence for which includes the practice’s use before, during, and after enactment of a constitutional provision.

Practices: Traditionalism takes two types of concrete practices as determinative of meaning and law: the practices of the political organs of government, including state and local governments; and the practices of individual citizens or groups of citizens. Traditionalism therefore rejects abstract principles or values as the primary determinants of meaning. But it also does not depend chiefly upon constitutional caselaw, judicial outputs, legal rules, stare decisis, reasoned judicial elaboration, and so on. One of its foci is “popular practices” (of governments or citizens), giving weight to the concurrence of practices across space that are not limited to the nerve centers of legal and political power. This emphasis on concrete, often (but not only) decentralized, political and cultural practices differentiates traditionalism from methods like Burkean minimalism and common-law constitutionalism, which prize judicial (especially Supreme Court) outputs, as well as approaches of “gloss” that focus exclusively on the branches of the national government and sideline other actors.

Endurance: Endurance is the other key feature, a composite of age (the antiquity of a practice); longevity (the timespan and continuity of the practice across time); and density (the extent to which the practice was used or adopted across space). Think of a ski slope: it can be long and smooth with good snow for skiing from beginning to the end; or short and sparse, with interspersed snowy and snow-less sections. Sections of the slope that are smooth may be densely packed with snow or coated only with a thin, icy layer. The longer (age), the more seamlessly smooth (longevity), and the more snow-packed (density) the slope, the better for skiing. Just so for practices, whose legal authority grows in proportion to the presence of each of these elements of endurance.

Enduring practices, I argue, are presumptively determinative of constitutional meaning and constitutional law. Sometimes, for reasons of bad faith, mistake, or powerful and widely embraced moral reasons running against a practice, the presumption is overcome. But in the ordinary course, text and practice tend to line up. Ordinarily, we do what we mean, and we mean what we do.

Traditionalism in the 2021 term: I’ve detailed the extensive use of this method across the domains of constitutional law in previous work, but in this article one of my objects was to locate it in the Supreme Court’s most recent term. From due process to the right to keep and bear arms, religious liberty, free speech, and more, the Court applied a method that very much resembles traditionalism, and it did so self-consciously.

I cannot canvas all of these areas here (see the piece if you are interested), so let me give one example in the right to keep and bear arms, an example I’ll stick with in subsequent posts. It’s well known that in Bruen v. New York State Rifle and Pistol Association, the Court held that New York’s “proper cause” regulation of the right to carry a weapon for self-defense outside the home, requiring the applicant to show a “special need for self-protection distinguishable from that of the general community,” violated the Second Amendment. The Court observed that only those regulations “consistent with this Nation’s historical tradition of firearms regulation” will be constitutional—a “historical tradition that delimits the outer bounds of the right to keep and bear arms.”

The endurance of the practice of regulation was emphasized by the Court, which examined “‘historical precedent’ from before, during, and even after the founding,” concluding that “we find no such tradition in the historical materials.” It created a typology of age, endurance’s first feature, categorizing the evidentiary historical periods to be investigated as “(1) medieval to early modern England; (2) the American Colonies and the early Republic; (3) antebellum America (4) Reconstruction; and (5) the late-19th and early 20th centuries.” It discussed the element of continuity, endurance’s second feature, in explaining that a “long, unbroken line” “stretching from Bracton to Blackstone is much more likely to be part of our law than a short-lived, 14th century English practice.” And it discussed density, endurance’s third feature, especially post-ratification, where evidence of a single state’s or a territory’s regulation (“a few late-19th century outlier jurisdictions”) could not overcome the broader local and state tradition of non-regulation. Though pre- and post-ratification practice was potentially less probative of meaning than practices at ratification, the Court considered practices of all historical periods as relevant to its interpretation provided they were not “inconsistent with the original meaning of the constitutional text.”

The Court distinguished different types of local regulatory practices—those that prohibited only concealed carry of “unusual” weapons, “pocket pistols,” and the absence of historical continuity of those regulations; those that prohibited the carrying of weapons only to the extent that the bearer was “causing fear or affray”; those that prohibited only concealed carry but permitted open carry; and others—from the broader practice of prohibiting all forms of public carry absent special justification at issue in Bruen.

Bruen is also important because the Court acknowledged, for the first time, traditionalism’s prevalence across constitutional law—in the First Amendment, the Sixth Amendment, and the Establishment Clause. And the Court was clear that when it speaks of consulting “history,” it means reliance on concrete practices that will assist it and other courts in drawing “analogies” or disanalogies from the conduct (government or private) under consideration, to determine the law of the Constitution at issue. In Bruen, then, as in many other cases this term, we see clear steps toward traditionalism, and a clear recognition of its growing importance.

The post Traditionalism Rising, Part I: Defining Traditionalism and Locating It in the Court's 2021 Term appeared first on Reason.com.

from Latest https://ift.tt/r5PdLCU
via IFTTT

Russell Clark: Does Inflation Mean We Can Look For “Big Shorts”

Russell Clark: Does Inflation Mean We Can Look For “Big Shorts”

By Russell Clark of the Capital Flows and Asset Markets substack,

During the just ended school holidays (halleluiah!) I had my family around to stay. Strangely, my father had never seen “The Big Short”, so after dinner we settled down to watch it. The underlying message of the little guy sticking it to the big guy is of course very satisfying, but even at the end of the Big Short, all the main characters accept the fact that bailouts were coming, and closed their positions.

And ever since, buy the dip has been the correct strategy. I made decent money in shorting material stocks from 2011 through to 2016, but the big play underlying that was a potential Chinese Yuan devaluation, which has never materialised. I had assume China would be like South Korea, and see big devaluations when growth slowed. Instead the Chinese Yuan has stayed strong and stable.

Another area I did a lot of work on was clearinghouses. If clearinghouses had followed their own rules, then bankruptcy, or at least large equity raise from large banks were on the cards. In the end, clearinghouses just ignored their own rules to give de facto bailouts. I have many posts on it, so have a look yourself, but shareholders and clearinghouses have continued to prosper.

The US Federal Reserve really sets the tone for global monetary policy. And since 2018, one key commodity has been sending very deflationary signals in the US at least, and that is natural gas. But in 2022, that deflationary signal has well and truly ended. Note that the spike in 2001, coincided with the dot com bust, and 2008 spike coincided with the GFC. Prices this year, continue to surge.

This change in natural gas has made me think about “Big Short” style trades again.

When you short sell, you are looking for a structure that guarantees to put extreme financial pressure on your targets. So if you think China is going to devalue, then short Chinese companies with USD debt. If you think clearinghouses are going to blow up, short the members who need to pay more collateral. This thinking is very much in line with GFC style shorting, but has been a waste of time for the last decade. However, with natural gas prices surging, maybe it makes sense to look at the one last structure that has been yet to tested – autocallables.

Autocallables or structured products as they are known in Europe, are products mainly sold to retail investors to generate yield. A typical structure involves offering to pay a 5 to 10% yield as long as large benchmark equity index does not fall more than 50%, or rise more than 10%. If the index falls 50%, then the product changes from a yield product to a equity product, and you lose 50% of your initial capital. If the index rises 10%, the yield payments stop, and you get 100% of your capital back. Autocallables are popular globally, but the standout market in recent years has been South Korea. Despite a population of only 50 million, its autocallable market is close in size to Europe or the US. The Korean autocallable market really began to grow in the post GFC period.

In recent months an unusual spread has opened up between VIX (a measure of implied volatility for the S&P 500) and VKOSPI (a measure of implied volatility for the KOSPI 200). Historically, they have tended to move closely together.

While the S&P 500 has better long term returns than the KOSPI 200, returns this year have broadly speaking been inline, making this gap in volatility hard to understand.

Volatility divergences can be warning signs that Korea’s very large autocallable market could be in getting into trouble. One example is the Chinese market in 2015. Due to falling volatility in Korea, it became harder for the structurers to create products with the yield that investors wanted. Korean autocallables then began to sell products linked to HSCEI market, which had much higher implied volatility allowing higher yields. However when capital outflows fears caused Chinese markets to fall in 2015, the HSCEI fell by 50%. Even before the fall in the HSCEI, we saw a growing divergence in VHSCEI and VKOSPI in 2014, which in hindsight was a warning signal. It is noticeable a divergence is growing again this year too.

Issuance of autocallables has been strong, and there are growing divergences in volatility markets. The implication is that volatility could explode higher than people expect, and then stay there. With natural gas prices moving higher, central banks may well be constrained in their ability to bring it down, and save banks and investors that have been short volatility. I will get into more detail with future posts.

Tyler Durden
Tue, 09/06/2022 – 07:20

via ZeroHedge News https://ift.tt/GHBIjrQ Tyler Durden

US Expands With New Base In Oil & Gas Rich Syrian Province

US Expands With New Base In Oil & Gas Rich Syrian Province

Chinese state media is reporting based on Syrian war monitors that the Pentagon has expanded its presence inside Syria by establishing a new hub of operations in the northeastern province of Hasakah this past weekend.

“The new military base was set up in the village of Naqara, 3 km southwest of the city of Qamishli in Hasakah province, said the Syrian Observatory for Human Rights” – as cited in Xinhua.

US soldiers on patrol inside Syria, via AFP

The biggest, and main US base in Hasakeh province remains at Syria’s al-Omar oil fields, which is a legacy of the Trump administration’s “secure the oil” policy. While President Joe Biden has rejected this overt rhetoric focused taking energy resources, the past month witnessed multiple alleged instances of coalition forces ferrying oil across the Iraq border in tanker trucks. 

As we detailed earlier of an August statement from Syria’s oil ministry:

“US occupation forces and their mercenaries,” referring to the US-backed Syrian Democratic Forces (SDF), “steal up to 66,000 barrels every single day from the fields occupied in the eastern region,” amounting to around 83 percent of Syria’s daily oil production.

According to the ministry’s data, the Syrian oil sector has incurred losses nearing “about 105 billion dollars since the beginning of the war until the middle of this year” as a result of the US oil theft campaign.

Presumably the establishment of a third main base inside oil and gas rich Hasakah province is toward furthering efforts at denying Damascus its own energy resources. The Syrian and Russian governments have for years condemned Washington for its ongoing occupation of a sovereign country. China too, has quietly backed Damascus, also given the presence of Chinese foreign fighters – Islamic Uyghur extremists in particular – which are reportedly present in Idlib.

Another major American base, but which is not in Hasakah, is at al-Tanf. US special forces at the base are there ostensibly in support of Arab and Kurdish anti-Assad fighters. The base’s location is strategic, given it is near the three-way border between Iraq, Syria, and Jordan. Despite the Pentagon for years touting its “counter-ISIS” mission in Syria, the main US target has clearly remained both the Assad government and its Iranian allies. Far-reaching US sanctions have decimated the Syrian economy, impacting the broader population hardest amid runaway inflation.

In August, China’s foreign ministry denounced the “appalling” US actions of “plundering” Syrian resources…

A mere two weeks ago the White House ordered two rounds of airstrikes in Syria against what’s been described as “Iranian” and “Iran-backed” groups, in response to US outposts in Syria coming under sporadic rocket attacks from unknown militants.

Tyler Durden
Tue, 09/06/2022 – 06:55

via ZeroHedge News https://ift.tt/dB7LUSa Tyler Durden

Capitulation Is Coming

Capitulation Is Coming

Submitted by QTR’s Fringe Finance

The ethos in stock market trading last week was all too familiar: it reminded me of every trading day over the last 10 years. The market had a legitimate reason to plunge to start the week – a continuation of Friday’s selloff which, in my opinion, was for a very good reason – but instead the market rallied on the open and pared its losses by the close. The market held steady for most of the week thereafter. 

“Three things cannot be long hidden: the sun, the moon, and the truth.”

Of all the things that bulls have going for them, one of the most powerful is the perpetual tailwind of psychological buy-in to the narrative that stocks are always going to move higher. Not unlike the jet stream helping an airplane along a cross-country flight, this psychological buy-in has been an uninterrupted undercurrent in capital markets in this country for a century.

Ergo, as the above chart shows, there have been very few bumps in the road that have been able to shake this unwavering mentality. Even giant market disruptions, like the one we saw after people finally realized Covid was going to be a big deal, eventually find a way to smooth out and continue moving in one direction: up.

All this “smoothing out” of late has occurred regardless of valuation, common sense, geopolitical events or monetary. Yet I still believe last week’s speech by Jerome Powell at Jackson Hole all but guarantees another massive shockwave coming for markets. Hell, Powell said twice within the last two paragraphs of his speech that the Fed needed to stay at it until the job was done:

That brings me to the third lesson, which is that we must keep at it until the job is done. History shows that the employment costs of bringing down inflation are likely to increase with delay, as high inflation becomes more entrenched in wage and price setting. The successful Volcker disinflation in the early 1980s followed multiple failed attempts to lower inflation over the previous 15 years. A lengthy period of very restrictive monetary policy was ultimately needed to stem the high inflation and start the process of getting inflation down to the low and stable levels that were the norm until the spring of last year. Our aim is to avoid that outcome by acting with resolve now.

These lessons are guiding us as we use our tools to bring inflation down. We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep at it until we are confident the job is done.

“You’re not goin’ anywhere ya think lump! Ya still until the job’s done!”

Since then, even the most dovish members of the FOMC, including one Neel Kashkari, have continued to posture up:

“I was actually happy to see how Chair Powell’s Jackson hole speech was received,” Kashkari said in an interview with Bloomberg’s Odd Lots podcast on Monday, reflecting on the steep drop after Powell spoke. “People now understand the seriousness of our commitment to getting inflation back down to 2%.”

“I certainly was not excited to see the stock market rallying after our last Federal Open Market Committee meeting,” he said. “Because I know how committed we all are to getting inflation down. And I somehow think the markets were misunderstanding that.”

“One of the biggest mistakes they made in the 1970s at the Fed is they thought that inflation was on its way down. The economy was weakening. And then they backed off and then inflation flared back up again before they had finally quashed it,” Kashkari said. “We can’t repeat that mistake.”

While the market mills around, I’ve become convinced that any decided move significantly higher, including breaching all time highs again, isn’t going to happen without a Fed pivot. Otherwise, the market will likely stay in ebb-and-flow mode for the time being. If inflation starts to come down, we could see a bit more of a risk on environment, but the fact is that if Jerome Powell means what he says and says what he means regarding his monetary policy stance going forward, I still think we’re going to see capitulation at some point.

As a reminder, many people saw the days leading up to last week’s speech as an opportunity to be optimistic – they thought Powell would finally start to indicate to the market that the Fed was easing. Instead, the opposite happened.

So the market is already likely in a dazed state of semi-surprise. And if the Fed follows though, there is no doubt in my mind we are still in for a market crash. As I’ve said in numerous past articles, the fact that we have hiked so much so quickly will eventually lead to a “surprise” shock to equity markets.

That surprise may very well pop up in September or October, when the Fed’s QT hits “full stride”:

The Federal Reserve’s balance-sheet unwind is set to ramp up this week, which means the central bank will finally begin unloading the Treasury bills it started amassing almost three years ago. 

As part of its broader plan to reduce its $9 trillion portfolio, the Fed will boost its monthly caps for the amount of Treasuries and holdings of mortgage-backed securities that it will let mature to $60 billion and $35 billion, respectively, while using its $326 billion stash of T-bills as filler when coupons run below the monthly level. September will be the first month that bills will be redeemed since coupons will fall below the monetary authority’s new cap.

Further, long before rates were as high as they are now, I raised the point that the sell off so far has mostly been orderly. We haven’t seen the “extreme fear” capitulation-style moment yet. As was the case with 2020, the market rarely puts in lows without real fear or capitulation. Today’s market hasn’t had its “hell is coming” moment like the March 2020 market did – the Dow was off 9.26% that day.

CNBC Anchor Admits Bill Ackman Stood to Benefit From His 'Hell Is Coming' Coronavirus Rant :: Grabien - The Multimedia Marketplace

In addition, valuations using a Schiller PE or market cap/GDP metric still remain well above historic means. This makes a very easy case for stocks to move lower yet. With the Fed’s attitude as it stands, who wants to be buying equities at a Shiller PE of 30x?

Given these valuations, the fact that the economy is turning into recession, the Fed’s posturing and rate hikes that I still believe have not resonated through the economy yet, there is a case to make that this market is going to have to move 20%, 30% or even 40% lower before it hits a bottom. And in my opinion, it’s worth watching how the market makes this bottom instead of just how low it goes.

Capitulation and real fear will be the sign that I will look for to reassess valuations but, based on the reaction to last week’s speech by Jerome Powell, we are nowhere near that point just yet.

If you have the means to support my work and want to become a subscriber, you can use this link for 50% off.

Disclaimer: I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

Tyler Durden
Tue, 09/06/2022 – 06:30

via ZeroHedge News https://ift.tt/xVly1Uz Tyler Durden

Germany Announces Another €65BN Energy Stimulus Even As ECB Seeks To Crush Demand

Germany Announces Another €65BN Energy Stimulus Even As ECB Seeks To Crush Demand

In a time when the ECB is doing everything in its power to halt and reverse Europe’s energy hyperinflation by crushing demand as it hikes rates so high it will lead to widespread unemployment and recessions, oblivious of the political blowback such a move will spark, Europe’s politicians are doing just the opposite, and are again quietly flooding the system with billions of fiatscoes, knowing too well they all be political cadavers should tens of millions of Europeans freeze in the coming winter.

Which is why a few just days before the ECB is expected to hike rates by as much as 75bps, the German government on Sunday unveiled its third (so far) and latest multi-billion euro plan to help households cope with soaring prices, and said it was eyeing windfall profits from energy companies to help fund the relief. With this latest move – which will ensure energy firms spend even less on future capacity and growth capex – Germany has just obviated all of the ECB’s tightening efforts, similar to what the Biden admin is doing in the US.

Ass France 24 reports, with German businesses and consumers reeling from the pain of sky-high energy prices, as Europe’s biggest economy seeks to extricate itself from reliance from Russian supplies in the wake of Moscow’s invasion of Ukraine, Chancellor Olaf Scholz unveiled another €65 billion “inflation fighting” stimulus package (yes, when it comes to printing money to crush inflation, Europe is just as smart as the US), announcing rapid measures to prepare for the coming cold season will ensure that Germany would “get through this winter.”

The latest agreement, which brings total relief to almost 100 billion euros since the start of the Ukraine war, was hammered out overnight into Sunday by Germany’s three-way ruling coalition of Scholz’s Social Democrats, the Greens, and the liberal FDP.

Among the headline measures are one-off payments to millions of vulnerable pensioners and a plan to skim off energy firms’ windfall profits. In short, creeping nationalization of the energy sector.

The government had made “timely decisions” to avoid a winter crisis, Scholz said, including filling gas stores and restarting coal power plants.But preventative measures, including a drive to reduce consumption, have done little to break a sharp increase in household bills.

The latest announcement follows two previous relief packages totaling 30 billion euros, which included a reduction in the tax on petrol and a popular heavily subsidized public transport ticket. But with the expiration of many of those measures at the end of August and consumer prices soaring, the government has been under pressure to provide new support.

Inflation rose again to 7.9 percent in August, after falling for two straight months thanks to previous government relief measures. The take-off in energy prices is expected to push inflation in Germany to around 10 percent by the end of the year, its highest rate in decades.

Scholz said however that not everyone is suffering from the high consumer prices. Some energy companies which may not be using gas to generate electricity were “simply using the fact that the high price of gas determines the price of electricity and are therefore making a lot of money,” he said, echoing the US wealth-redistributor-in-chief himself, who similarly is taking aim at energy company profits.

“We have therefore resolved to change the market organization in such a way that these random profits no longer occur or that they are skimmed off.”

The trimming of windfall profits would create “financial headroom that should be used specifically to relieve the burden for consumers in Europe,” the government said in its policy paper. The move could potentially bring “double-digit billions” of euros in relief, finance minister Christian Lindner estimated in the press conference.

It’s wasn’t immediately clear if Germany had any idea just how catastrophic a message it was sending to energy companies with this latest socialist tactic, one which virtually guarantees European energy supply will collapse – after all, if the government can take your hard-earned money with the flip of a switch, why invest in growth. Of course, with Europe itself on the brink of collapse, it will cross that bridge if it ever even gets to it.

And since Germany is aware that such socialist measures may not be too popular in Germany, the Scholz government said it would push for the move to be implemented across the European Union first, before going ahead with the measure on its own.

As we reported on Sunday, Brussels on Monday said it would prepare “emergency” action to reform the electricity market and bring prices under control. Scholz said he expected the EU to “deal quickly” with the issue, adding that it was “very clear that we need rapid changes in this area”.

Repeating his mantra that Germans will “never walk alone” through the energy crisis, the chancellor unveiled a raft of measures, including a one-off payment of 300 euros to millions of pensioners to help them cover rising power bills. The government will also target students with a smaller one-time transfer of 200 euros, and an heating cost payment for people receiving housing benefits.

Berlin also set aside 1.5 billion euros for work on a successor to the wildly popular nine-euro monthly ticket on local and regional transport networks.

The relief package as a whole should be financed without planning to take on further debt, Lindner said, which of course is just another lie.

“These measures are included within the government’s existing budget plans,” covering 2022 and 2023, he said, with the remainder covered by the windfall energy profit measures. We’ll check back on that particular statement in 6 months… assuming there is still a Germany then.

As for the bigger picture for Europe, we can’t help but wonder just how it all ends when you have the central bank scrambling to contain the energy hyperinflation by crushing demand (and sending the cost of money through the stratosphere) on one hand, while on the other every European government is rapidly sending out fiscal stimmies to the locals, seemingly unaware that this is precisely what the ECB does not want to see.

Tyler Durden
Tue, 09/06/2022 – 05:45

via ZeroHedge News https://ift.tt/xnhN3jw Tyler Durden

Arkansans Will Vote on Marijuana Legalization. But Their Votes May Not Count.


Grounded marijuana in the shape of Arkansas.

One of the most direct ways for voters to have a say in the way their government works is through ballot initiatives. This year, the Arkansas state government may simply ignore one.

More than two-thirds of Americans surveyed support the legalization of marijuana, a number that has grown consistently for decades. Members of Congress have promised action on the issue, but so far have failed to deliver.

In the absence of federal progress, many states have taken up the mantle. Currently, more than three-fourths of U.S. states have legalized pot to some extent. Typically, this requires some sort of buy-in from the state legislature, though not always: Arkansas is one of a handful of states, and the only Southern state, that allows voters to directly pass laws and amend the state constitution by ballot referendum. Placing an initiative on the ballot requires collecting signatures from registered voters equal to 8 percent of the total votes for governor in the most recent election. Currently, that number is 89,151.

In July, Responsible Growth Arkansas, a pro-legalization group, submitted a ballot measure with over 190,000 signatures, more than twice the necessary number. The measure’s full title is, “An Amendment to Authorize the Possession, Personal Use, and Consumption of Cannabis by Adults, to Authorize the Cultivation and Sale of Cannabis by Licensed Commercial Facilities, and to Provide for the Regulation of Those Facilities.” It would legalize marijuana for recreational use in the state for anyone age 21 or older and impose a 10 percent state sales tax. A previous ballot measure legalized medical marijuana in the state in 2016.

Under state law, once a successful petition is submitted, the State Board of Election Commissioners (SBEC) must either approve or deny the ballot measure’s “title and popular name” to ensure that each is “presented in a manner that is not misleading” such that voting in favor of a measure would be voting against what the title proposes.

On August 3, the SBEC denied the measure’s title and, therefore, its ballot eligibility. The board called the title “misleading due to the omi[ssion] of material information that would give the voter serious ground for reflection.” It gave examples such as “omitting” that the measure would repeal the state constitution’s “limitation on the maximum dosage” of THC, as well as “removing the concentration limit from edible products.” In essence, the board contends that pledging to legalize a substance does not sufficiently imply removing limits on that substance.

The following day, Responsible Growth Arkansas sued Secretary of State John Thurston, who also chairs the SBEC. It asked for an expedited review schedule since any ballot measures would have to be certified before August 25. The Arkansas Supreme Court preliminarily ordered Thurston to certify the measure for November’s general election ballot but noted that it would not ultimately be able to hear arguments on the case until September. Case briefs were due Friday, more than a week after the certification deadline.

Now, voters will have the option to vote for or against legalizing recreational marijuana in Arkansas, but if the court upholds the SBEC’s ruling, those votes may not be counted.

For its part, representatives from Responsible Growth Arkansas indicated that they were pleased with the court’s order, confident that they will prevail at trial. The state, meanwhile, fought the order, saying it was “unfair” for voters to be “unnecessarily confused by being faced with a ballot measure, the votes for which will not be ultimately counted.”

The post Arkansans Will Vote on Marijuana Legalization. But Their Votes May Not Count. appeared first on Reason.com.

from Latest https://ift.tt/EF2oaOc
via IFTTT

Today in Supreme Court History: September 6, 1983

9/6/1983: The City of Richmond solicited bids for installing plumbing fixtures at the city jail. The J.A. Croson Company’s bid was denied because it did not meet the “set-aside requirement” for minority contractors. The Supreme Court declared this decision unconstitutional in City of Richmond v. J.A. Croson Co. (1989).

The Rehnquist Court (1989)

The post Today in Supreme Court History: September 6, 1983 appeared first on Reason.com.

from Latest https://ift.tt/xGth2ek
via IFTTT