Alphabet Shares Slide After Top- & Bottom-Line Miss, Ad Revenue Disappointment

Alphabet Shares Slide After Top- & Bottom-Line Miss, Ad Revenue Disappointment

After slashing 6% of its workforce and issuing a ‘code red’ warning over ChatGPT, Alphabet missed its top- and bottom-line in tonight’s earnings:

  • *ALPHABET 4Q REV. $76.05B, EST. $76.51B

  • *ALPHABET 4Q EPS $1.05, EST. $1.20

Revenue growth was just 1% YoY…

That’s the lowest EPS since Q4 2020…

That’s quite a miss (especially relative to the recent share price resurgence)…

Sundar Pichai, CEO of Alphabet and Google, spoke up about his AI investments:

Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond. There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices. We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet.”

Under the hood, Alphabet met its Cloud expectations but disappointed on ad revenue:

  • 4Q Google Cloud Rev. $7.32B, Est. $7.3B

  • 4Q Google Ad Rev $59.04B, Est. $60.64B

  • 4Q YouTube Ads Rev. $7.96B, Est. $8.27B

  • 4Q Google Services Rev. $67.84B, Est. $68.9B

As we noted above, Alphabet recently implemented a broad round of layoffs, and CFO Ruth Porat is signaling that the company will keep up the financial discipline.

“We have significant work underway to improve all aspects of our cost structure, in support of our investments in our highest growth priorities to deliver long-term, profitable growth,” she says in the press release accompanying the results.

“The underlying results in the fourth quarter do reflect headwinds due to the challenging macroeconomic environment.”

Alphabet’s shares are trading down after-hours (almost erasing all of today’s melt-up gains)…

Bloomberg’s Edward Ludlow reported that Porat told him: “We are committed to re-engineering our cost base to long-term profitable growth.”

Tyler Durden
Thu, 02/02/2023 – 16:16

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Democrats Say They Support Green Energy. Why Do Their Policies Say Otherwise?


Wind energy turbines are seen at sunrise

Since Grover Cleveland was president, no one has accused the average politician of being principled or even consistent. Year after year, Republicans claim to care about fiscal prudence but, when in power, spend like Democrats. In their turn, Democrats insist that they want to engineer a transition to a green energy economy, but their actions contradict this goal.

Of course, you would miss these contradictions if you looked only at the effort Democrats pour into distributing green energy subsidies. The infrastructure bill of 2021 and the Inflation Reduction Act adopted last year included enormous subsidies for green energy. Then Congress doubled down by enacting the $1.7 trillion omnibus bill at the end of 2022. This bill includes large funding increases for clean energy and other climate-related programs, including the Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy, biofuel research and development, and other agencies’ climate research agendas.

Looking at the subsidies alone, you could believe that Democrats are all in on using the government to impose green energy. But such a focus is too narrow.

For one thing, most innovations capable of truly addressing climate change are likely yet to be discovered by the private sector. Betting that the few options picked and heavily favored by government officials—namely solar and wind—will prove to be the best options is risky. And, in fact, government incentives could be counterproductive as they direct investment toward politically alluring but scientifically or economically unpromising options, while leaving genuinely promising options underfunded regardless of their merits. We have seen this happen before with the Section 1705 green energy program, when DOE funding attracted many private investors to the now-defunct Solyndra and Abound solar.

Another contradiction marring the Democrats’ approach to green energy is that they want to pay for the subsidies by dramatically increasing taxes on income and capital gains. That’s counterproductive, since heavily taxing capital gains will reduce private sector innovation and investments, including green energy projects. Furthermore, neither subsidies nor taxes on income or wealth do much to curb energy usage. For this outcome, user fees applied to energy would be more appropriate. Yet Democrats, being more interested in soaking the rich, continue to obsess over income and capital gains.

Greater reliance on green energy also requires a stupendous increase in mineral extraction to provide the needed materials. Even if the world unquestionably possessed the mineral capacity necessary for the global energy transformation envisioned by President Joe Biden, Democrats in practice are enemies of mining. The U.S. Mining Association estimates that the country has $6.2 trillion of recoverable mineral resources like copper and zinc available for mining on millions of acres of federal, state, and private lands. Unfortunately, our labor, health, and climate regulations often make it practically impossible to profitably mine. As a result, these precious resources stay in the ground, which explains why the United States went from being the world’s No. 1 producer of minerals in 1990 to seventh place today.

Democrats committed to a green energy transition should make it a priority to reform counterproductive regulations like the National Environmental Policy Act (NEPA) and to implement other permitting reforms. Yet for the most part they won’t do so, as we saw when they helped strike down the permitting deal cut last year between Senate Majority Leader Chuck Schumer (D–N.Y.) and Sen. Joe Manchin (D–W.Va.). This is especially maddening because the permitting burden has been shown to fail to do much to protect the environment.

Making things worse, when given an opportunity, Democrats will go as far as to proactively wall off undeveloped mineral-rich deposits, restricting any hope of future supply increase. That’s what Interior Secretary Deb Haaland just did when she declared Minnesota’s Superior National Forest, home to an abundance of materials necessary for electric vehicle parts, off limits for mining.

If Democrats were consistent, they would be willing to give up on certain climate goals to keep minerals in the ground. But they won’t do that either. As a result, the United States now relies on countries with unsavory governments, many of which use slave labor, to supply us with the minerals we need to generate green energy. And let’s not forget that our reliance on foreign mineral mining is somehow happening as the administration continues to insist on cumbersome “made in America” requirements in other parts of the economy.

As I said, no one has ever accused politicians of being paragons of consistency.

COPYRIGHT 2023 CREATORS.COM.

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Biden Promotes a Hummer That Doesn’t Even Qualify for His Electric Vehicle Tax Credits


A tweet from President Joe Biden reading "On my watch, the great American road trip is going to be fully electrified. And now, through a tax credit, you can get up to $7,500 on a new electric vehicle," on an orange background.

As part of President Joe Biden’s Inflation Reduction Act (IRA), Congress authorized tax credits on electric vehicles (E.V.s). Starting January 1, motorists wanting to buy a brand-new E.V. could qualify for up to $7,500 toward their purchase without worrying about factors like whether the manufacturer had already qualified for too many credits.

This week, Biden tweeted a picture to tout the program, grinning from the driver’s seat of a GMC Hummer EV:

But there are some obvious problems with the president’s claims, down to the fact that the truck he’s sitting in wouldn’t qualify for the credit.

Long seen as a clear example of an egregious polluter, an all-electric version of the Hummer H2 seemed more likely to show up in The Onion than on the road. But the behemoth exists nonetheless; Business Insider noted its “sheer absurdity” but admitted it’s “surprisingly fun” to drive.

But the IRA establishes very exacting standards for vehicles to qualify for tax credits, and the Hummer EV comes up short on most of them. First, the IRA’s E.V. tax credits only apply to vehicles with retail prices up to $80,000, and even the base model EV2, the least expensive version, now starts over $84,000. (That’s not to mention that the cost could reach almost $120,000 when it’s fully decked out.) The credits also only apply to buyers who make up to $150,000 individually or $300,000 jointly; it’s hard to imagine anyone earning less than that amount shelling out up to six figures on a luxury truck.

No matter which version of the truck Biden was pictured in, it wouldn’t qualify for the tax credits he was promoting with the tweet. And vanishingly few E.V.s qualify for the tax credit to begin with since only those “assembled” in North America are eligible.

Under the IRA, a qualifying vehicle must source 40 percent of its battery’s minerals and 50 percent of the battery’s parts from either the U.S. or a free trade partner country. That’s a high bar to meet when China controls 80 percent of the world’s refining capacity for raw battery minerals.

In December, the Treasury Department postponed the mineral requirement until March as it continued to formulate final rules for implementation. But Sen. Joe Manchin (D–W. Va.), who insisted upon the anti-China rules in the first place, submitted a bill that would go around the Treasury Department and not only implement the mineral requirement as written but make it retroactive to January 1. Notably, the requirements would exclude not only China but the European Union, which, unbeknownst to Manchin, also lacks a free trade agreement with the United States.

Regarding the law’s restrictions, French President Emmanuel Macron told Manchin during a visit to the U.S. last year, “You’re hurting my country.”

The post Biden Promotes a Hummer That Doesn't Even Qualify for His Electric Vehicle Tax Credits appeared first on Reason.com.

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Central Bank ‘Pause’ Panacea Prompts Massive Stock Short-Squeeze, Buying-Panic In Bonds

Central Bank ‘Pause’ Panacea Prompts Massive Stock Short-Squeeze, Buying-Panic In Bonds

Tl;dr: Markets melted up after the following folding foursome:

  • Fed‘s Powell says “disinflation” 13 times

  • BOC pausing

  • BOE pausing

  • ECB one more and done, turns to “climate QE”

Most notably, Powell’s “pussying out” of pushing back against market euphoria, drove US financial conditions to their ‘loosest’ since Jackson Hole… where he warned “more pain is coming”, and most presciently to today’s actions: “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”

Source: Bloomberg

The market continued to shift Fed rate trajectory expectations in a dovish direction…

Source: Bloomberg

And that ripped stocks higher with Nasdaq leading the charge on the day (but we note that The Dow slipped lower on the day). Stocks all reversed lower together at 1400ET (no obvious catalyst), but the last hour saw the bid return with Nasdaq up over 3% (and The Dow desperately trying to end green)…

From the start of Powell’s presser, Nasdaq is up almost 6%…

The Nasdaq came within a few ticks of being up 20% (a new bull market) from the December lows…

The P/E for the S&P (and Tech stocks) are at their highest since April…

Source: Bloomberg

“Most Shorted” stocks were up a stunning 13% from the start of the Powell presser yesterday as the short-squeeze continued through the cash open today. The basket reached all the way up to its post-Nov-CPI squeeze highs before rolling over a little late on…

Source: Bloomberg

Powell achieved the most-impressive short-squeeze yet of this tightening cycle…

Source: Bloomberg

Growth stocks are dominating Value stocks as an ‘easier’ Fed is eyed as imminent (fascinating that the Value/Growth pair reached all the way up to the moment when The Fed last unleashed its easy money spigot)…

Source: Bloomberg

There is no fear anymore apparently as the put-call ratio has collapsed…

Source: Bloomberg

With put volume plunging…

Source: Bloomberg

And no demand at all for downside protection as put vols crashed relative to call vols (upside crash demand jumps)…

Source: Bloomberg

VIX notably decoupled from stocks today, rising up near 19 as stocks rallied…

Source: Bloomberg

As Bloomberg’s Cameron Crise noted, at one point, the SPX was up more than a percent and the VIX was up more than a vol. On a closing basis, that has only happened 16 times since the inception of the VIX in 1990. And on those occasions, the equity market has tended to decline over the ensuing month. The numbers since the Covid era, representing the modern market environment, are even more negative; on average, the SPX has tumbled 2.37% in the week after twin 1% rises.

Yesterday’s Treasury bid extended gains with yields down across the curve and the belly outperforming (5Y -4bps, 2Y and 30Y -1.5bps) but yields reversed higher after Europe closed…

Source: Bloomberg

The 2Y Yield plunged back towards 4.00%, reaching its lowest since October…

Source: Bloomberg

Jay Powell’s favorite yield curve indicator plunged to its most inverted ever…

Source: Bloomberg

Christine Lagarde’s even easier-sounding press conference prompted a bloodbath for EU sovereign bond bears with yields collapsing everywhere…

Source: Bloomberg

And perhaps most notably, the core 10Y Bund yield crashed by the most since 2011…

Source: Bloomberg

Additionally, US Mortgage rates have tumbled for the 4th straight week to the lowest since Sept 2022…

Source: Bloomberg

The dollar retraced a lot of yesterday’s drop after the ECB was more dovish than The Fed…

 

Source: Bloomberg

With the Euro roundtripping the move too, ending notably lower today…

Source: Bloomberg

Bitcoin was once again rejected at $24k…

Source: Bloomberg

Gold ended the day lower – erasing all of yesterday’s gains – despite an even more dovish ECB after yesterday’s dovish Fed

And despite the exuberance about The Fed being ‘one and done’, oil prices tumbled again with WTI back to a $76 handle…

Finally, broadening participation and brightening prices improve the probability that October’s low is the one that sticks for US large-cap equities, yet signs of excessive optimism started to emerge with the January rally, Bloomberg Intelligence strategists Gina Martin Adams and Michael Casper said in a note Thursday.

The BI Market Pulse index continued its climb further into manic territory, signaling elevated risk-taking and more-volatile equity markets likely in the short term.

And as Nomura’s Charlie McElligott noted, the panic-grab into stocks yesterday was among the most aggressive ever…

…and historically, in the short-term, has not ended well.

Tyler Durden
Thu, 02/02/2023 – 16:02

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Long After WWII, Russia Once Again Threatened With German Tanks “With Crosses On Them”: Putin

Long After WWII, Russia Once Again Threatened With German Tanks “With Crosses On Them”: Putin

On Thursday Russian President Vladimir Putin attended events marking the 80th anniversary of the battle of Stalingrad, and in his speech hailing Russia’s historic victory against Nazi Germany in World War II, he didn’t hold back, lashing out against Berlin’s contemporary decision-making regarding the war in Ukraine.

“Unbelievable, but it is a fact: we are once again being threatened with German tanks – Leopards – that have crosses [painted] on their sides,” Putin said in a provocative statement that evoked Nazi invasion imagery.

Sputnik, Kremlin Pool via AP

“Those who expect to win on the battlefield apparently do not understand that a modern war with Russia will be utterly different for them. We are not the ones sending our tanks to their borders,” Putin added while saying Russia is sure in its victory, and ominously warning that “we will deploy more than just tanks”. 

“These powers which try to wage an undeclared war against Russia will receive a tough response to their actions,” the president remarked, according to state media translation.

The city where the memorial ceremony took place has since 1961 been called Volgograd, a change that occurred during the de-Stalinization process

Putin had earlier laid flowers at the eternal flame on Mamayev Kurgan, a hillside where much of the fighting took place that now hosts the “Battle of Stalingrad” museum complex and the city’s famous statue “The Motherland Calls.”

The crucial battle of August 1942 to February 1943 was key in ultimately deciding the outcome of WWII, given it ended with Hitler’s 6th Army surrendering, and marked the first devastating capitulation for Berlin, setting the stage for an allied victory by May 1945. But in total an estimated 2 million German and Soviet soldiers and civilians died in a mere 6 months of fighting. 

The range of Soviet soldiers that perished defending the city is commonly estimated anywhere from 750,000 to 1.1 million. For this reason, Putin’s speech on the 80th anniversary of the key Nazi defeat also hailed Russian grit and determination. “Such degree of resistance, self-sacrifice and spiritual power were invincible, incomprehensible and terrifying for the enemy,” he said.

Archived photo of German tanks after the battle of Stalingrad.

He said the Stalingrad battle displayed for all time the “courage of our soldiers and the talent of their commanders” – while drawing parallels to Russia’s current military operations in Ukraine.

“The defenders of Stalingrad… have left us a great heritage: love for the Motherland, the readiness to defend its interests and independence and to show resistance while facing any trials,” he said.

Tyler Durden
Thu, 02/02/2023 – 15:50

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Banks Tightening Consumer Credit May Be What Triggers Recession

Banks Tightening Consumer Credit May Be What Triggers Recession

By Vincent Cignarella, Bloomberg Markets Live reporter and strategist

A surge in revolving credit has not gone unnoticed by lenders. The Fed’s Senior Loan Officer Opinion Survey on bank lending practices showed banks tightening lending standards for commercial, mortgage, and credit card loans.

Tighter credit likely will drive slower spending, a reduction in risk and the potential for the Fed to pivot sooner rather than later to avoid or shorten a potential recession. That would be more good news for bond bulls.

The tightening standards are a result of most banks assigning the probability of between 40% and 80% to the likelihood of a recession in the next 12 months, with no bank reporting a probability less than 20%. The next report on revolving credit is scheduled for Feb. 7.
 
For risk, in particular the US Treasury market is something to watch. Any slowdown in spending would give the current bid in fixed income yet another boost.

Tyler Durden
Thu, 02/02/2023 – 15:36

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Hunter Biden $55,000 Offer For Russian Oligarch Info Falls Under Fresh Scrutiny

Hunter Biden $55,000 Offer For Russian Oligarch Info Falls Under Fresh Scrutiny

An email from Hunter Biden to US aluminum company Alcoa is raising fresh concerns over the first son’s access to classified documents which were recently discovered in his father’s home in Wilmington, Delaware, as House Republicans kick off investigations into allegations of influence peddling.

The emails which date back to 2011 reveal Hunter Biden offering to trade information on Russian oligarchs to Alcoa for $55,000, according to the NY Post‘s original October 2021 report.

Specifically, Hunter – while his father was Vice President – offered to provide a “statistical analysis of political and corporate risks, elite networks associated with Oleg Deripaska, the Russian CEO of Basic Element company and United company RUSAL.”

Deripaska had notably just signed a metal supply agreement with Alcoa – which Hunter also offered a “list of elites of similar rank in Russia, map of [Deripaska’s] networks based on frequency of interaction with selected elites and countries.”

Oleg Deripaska

Now, in light of the fact that classified documents have been found all over the house that Hunter was living at, the Alcoa revelation raises new questions over Hunter’s access to sensitive information.

The deeply detailed proposal has come under sharp scrutiny given recent revelations that Hunter Biden had access to the Delaware lake-front home where secret papers from his father’s time as vice president were discovered in a garage, basement and library — combined with Republicans taking control of the House of Representatives.

Rep. Jim Banks (R-Ind.), the high-profile former chairman of the conservative Republican Study Committee, told The Post that the Alcoa solicitation fits within a broader picture. -NY Post

The Biden family is the most corrupt family in the history of American politics,” said Banks. “The biggest question facing Republican investigators: Where to begin?”

Sen. Ron Johnson (R-WI) has also raised the question over whether Hunter used classified documents found at the 6,850 sqft mansion in his business dealings.

Specifically, Johnson referenced an April 12, 2014 email from Hunter to his business partners about Ukraine, which looked “suspiciously” like it could have contained classified information.

“It reads like one of those scene-setters — highly detailed information in terms of Ukraine,” Johnson told Fox News on Tuesday.

The email, from Hunter to partner Devon Archer, includes a 22-point memo which he described as “thoughts after doing some research.” It included predictions such as the election of former Ukrainian President Petro Poroshenko, as well as “some sort of decentralization will likely occur in the East.”

“If it doesn’t the Russians will continue to escalate there [sic] destabilization campaign, which could lead to a full scale take over of the eastern region most critically Donetsk,” Hunter wrote. “The strategic value is to create a land bridge for RU[ssia] to Crimea.

Next week kicks off fresh hearings in the House Oversight Committee, which will investigate Hunter’s alleged influence peddling – including cashing in on his ties to his father in order to rake in millions from foreign companies.

“We have evidence that … we’ll continue to be transparent with as we start our hearings next week, where this family is taking in millions of millions of dollars from our adversaries,” said Rep. James Comer (R-KY), Chairman of the committee. “And I think we need to determine what was that money for [and] who supplied that money?”

“Why did the FBI, according to Elon Musk and the Twitter Files … the FBI was implying to them that that laptop was Russian disinformation,” Comer continued. “It’s not, and what’s concerning is the FBI had the laptop. Why were they doing that?”

“The New York Post is fourth biggest newspaper in America; they’re a credible news organization. They’ve done extensive reporting on on the hard drive,” Comer said, adding that the committee must dispel “a lot of misconceptions about the laptop.

“So we’re gonna start with with the hard drive, because there’s a lot of evidence on the hard drive that would suggest that Joe Biden knew very well what his family was involved in.”

“There’s emails from some of these people’s texting and emailing Hunter Biden saying, ‘Thanks for setting up the meeting with your dad. This is why we’re investigating – we want to make sure that our national security is not compromised,” Comer continued, adding that Hunter’s international business dealings are particularly suspicious given the services he was providing to foreign agencies.

“We’d like to know what that consulting was. I feel like if China or anyone pays you millions of dollars they expect to get a return on that investment,” said Comer. “If they would explain that, then think that a lot of these problems would subside a little bit, but all they do is just like roll their eyes or the audacity of Republicans to ask these questions.”

The oversight committee has pressed Treasury Secretary Janet Yellen to release more than 150 suspicious activity reports filed by banks regarding foreign transactions and wires to and from Hunter Biden, his businesses and associates. -NY Post

“Right now, we just want the bank records. Those suspicious activity reports were created to help Congress and everyone communicate about foreign suspicious foreign transactions,” said Comer. “If you do a major foreign transaction with a country, the bank is probably going to write a suspicious activity report to cover themselves for liability.”

Tyler Durden
Thu, 02/02/2023 – 15:08

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Nearly Half Of Chicago Public School Students Chronically Absent In 2022

Nearly Half Of Chicago Public School Students Chronically Absent In 2022

Authored by Hannah Max via IllinoisPolicy.org,

Chronic absenteeism rates are higher in Chicago than statewide, with 49% of low-income Chicago students missing at least 10% of their days in school. That rate has nearly doubled since the pandemic.

Chronic absenteeism in Chicago Public Schools is on the rise: nearly 45% in 2022, according to state data. That compares to a statewide rate of 30%.

The rate is even higher among Chicago’s low-income students, with 49% missing at least 10% of their schooling, according to Illinois State Board of Education data.

The pandemic and 17 months out of the classroom appear to have seriously aggravated the problem.

Absenteeism in CPS was 24% for all students and just over 25% for low-income students in 2019. That was the final full school year before the pandemic shut down in-person learning in CPS schools.

But those numbers may not show the severity of the absentee issue in CPS. A recent report by the Chicago Board of Education Inspector General shows administrators in CPS may have misreported absent students as transfers, boosting attendance rates and other key metrics.

Chronic absenteeism among Chicago’s low-income students

The Board of Education reported 49% of low-income students in Chicago Public Schools were chronically absent during the 2021-2022 school year. Chronic absenteeism is determined by missing 10% or more of school days per year either with or without a valid excuse. That means nearly half of Chicago students from low-income families missed 18 or more days of school.

Research shows frequent absences from school place children and adolescents at a higher risk of poor outcomes, such as dropping out of school and lower academic achievement. Experts also find lower socioeconomic status is associated with higher levels of absenteeism.

Amid high rates of absenteeism, students from low-income families in CPS are struggling to meet proficiency in core subjects. Just 14% of 3rd through 8th grade students from low-income families met proficiency standards in reading and 9% in math this spring. Compared to students who are not from low-income families, low-income students were 28 percentage points less likely to score as proficient in reading and 27 percentage points less likely in math.

Missing school certainly can’t help.

It may be worse than the numbers show

While CPS absenteeism rates are already high, the data may be worse than reported because of miscoding of students as transfers rather than truant.

The CPS Inspector General’s 2022 annual report released in early January 2023 questioned the reliability of CPS’s transfer and dropout data, which is used to calculate metrics such as attendance rates. The investigation found “a districtwide problem of schools failing to document transfers and lost children as required by law and CPS policy.”

This misreporting of students is not new to CPS. The Office of the Inspector General has investigated and reported on this kind of misconduct five times since 2014, according to the report.

The report concludes the consequence of this misreporting is twofold: it causes significant negative effects on vulnerable students and produces unreliable CPS metrics.

CPS has procedures in place to locate and reengage missing students. Students whose absenteeism is hidden by administrators do not receive those interventions and the reengagement assistance they need and would otherwise have received if they were properly reported.

The district’s key metrics, such as attendance and graduation rates, may be skewed by misreporting.

CPS student attendance isn’t helped by the frequent Chicago Teachers Union walkouts

The militant bargaining tactics used too often by Chicago Teachers Union leaders to get their demands met have not been in the best interests of CPS students and families. They have left district students missing even more days of classroom instruction. CTU has walked out on students five times since 2012, with students missing at least 24 days of school as a result.

It’s probably hard for students to take school seriously when CTU walks out at a moment’s notice.

CPS is committed to improving student attendance

The Illinois Policy Institute contacted CPS for comment about the district’s low rates of absenteeism.

The district responded that it is committed to improving and expanding methods which work to help students return and stay in the classroom. CPS has made additional investments during the 2022-2023 school year since COVID-19 impacted student attendance in districts across the country. Investments include targeted interventions, additional systems of support, mental health services and other support services.

See the entire response from Chicago Public Schools about chronic absenteeism.

Tyler Durden
Thu, 02/02/2023 – 14:45

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Police Harassed a Man Holding a ‘God Bless the Homeless Vets’ Sign. He’s Suing.


Jeff Gray holding a cardboard sign.

Police in two Georgia towns—Alpharetta and Blackshear—arrested, searched, and even issued criminal citations against a man for holding a sign intended to raise awareness for homeless veterans. Jeff Gray, a U.S. Army veteran himself, says the police tried to stop him from exercising his First Amendment rights. Now, officials in both cities are facing a federal lawsuit.

“Jeff Gray doesn’t need a government-issued permission slip to speak — the First Amendment is his permission slip,” said Harrison Rosenthal, an attorney for the Foundation for Individual Rights and Expression (FIRE), a First Amendment nonprofit that filed the lawsuits on Gray’s behalf. “Speaking out in public areas is a core First Amendment right, whether government officials recognize it or not.”

Since 2011, Jeff Gray has uploaded videos of himself engaging in what he calls “civil rights investigations” in cities across the southeastern United States. In these videos, Gray peacefully tests whether local law enforcement will respect his constitutional rights—often by holding a cardboard sign with a message about homeless veterans or recording police during routine traffic stops. Frequently, his efforts result in arrests, “I’ve been arrested at least eight or nine times,” Gray tells Reason. “What I’ve learned from these investigations is that if they think that you’re a homeless person, they don’t treat you as an equal human. They treat you as less than human.”

In January 2022, Gray was harassed by Alpharetta police as he stood outside city hall holding a sign that read “God Bless Homeless Vets.” Video footage released by FIRE shows Gray peacefully standing with the sign, occasionally saying “God bless the homeless veterans” to passersby. But Gray was soon interrupted. According to the lawsuit, a city councilman told Gray there was “no panhandling here” and directed a nearby police officer, Arick Furr, to order Gray to leave the area.

When Gray refused to leave, Furr demanded Gray’s identification. According to the lawsuit, “Gray declined and asked Lt. Furr to describe the ‘reasonable, articulable suspicion that crime is afoot,’ to justify his demand that Gray show him an identification card.” Furr responded by again telling Gray that “panhandling” is illegal in the city, adding “I’m not going to deal with you,” before handcuffing Gray. Making matters worse, Furr turned off Gray’s camera despite his objections. According to the lawsuit, in a later disciplinary report, Furr conceded that he “knew that he should not have manipulated the camera and should have allowed the camera to continue to record.”

Another officer, Harold Shoffeitt, soon joined Furr. The pair, after attempting to interrogate Gray, eventually released him. However, Furr created a “CRIMINAL TRESPASS WARNING” against Gray ordering him not to return to the area for one year.

Gray also faced police harassment in the small town of Blackshear. According to that lawsuit, Gray was engaged in a similar demonstration in August 2021 when he was stopped by the local police chief, who told Gray that he could protest only if he first obtained a permit, adding that the law was “kind of silly, but that’s what the rules are.” Gray refused to leave and was issued a criminal citation for violating the local ordinance, though the citation was later dropped.

In the lawsuits against both cities, FIRE challenges a local law. In the case of Alpharetta, the suit claims that the city’s anti-panhandling law is overly broad and a content-based restriction on speech, arguing that simply asking others for money in a public space is clearly protected by the First Amendment. And even if the law were constitutional, the law would not apply to Gray, because he was not panhandling.

In the suit against Blackshear, FIRE argues that the city’s law requiring formal permission to protest is also clearly unconstitutional, writing that “the public parks, streets, and sidewalks of the City of Blackshear, including the sidewalks in front of Blackshear City Hall, are traditional public fora, immemorially held in trust for the use of the public to communicate thoughts or discuss public questions.”

In addition to other claims, the lawsuit against Alpharetta also singles out Furr and Shoffeitt for retaliating against Gray for engaging in First Amendment–protected speech, illegally compelling him to identify himself, and interfering with this right to film police activity.

“I have been harassed, trespassed, handcuffed and arrested countless times for peacefully exercising my First Amendment rights,” Gray said in a Monday press release. “My intention is to ensure that all Americans from the wealthiest millionaire to the poorest homeless person can exercise these rights without fear of consequence from our government.”

With these lawsuits, FIRE hopes “that cities will take a look at their ordinances and their statutes and their regulations and dust off old dusty law books and make sure there’s nothing unconstitutional lingering in there,” FIRE Attorney Adam Steinbaugh tells Reason. “If you have an old law that’s just sitting around and it’s unconstitutional, sooner or later, a police officer’s going to pick up that book and throw it at somebody.”

The post Police Harassed a Man Holding a 'God Bless the Homeless Vets' Sign. He's Suing. appeared first on Reason.com.

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Instant Karma’s Gonna Get You

Jennifer Frey, a philosopher at the University of South Carolina, had a very interesting tweet in response to the Ron DeSantis higher education reforms unveiled yesterday.

I’m very sympathetic to this form of argument in general when it comes to free speech debates, but in this case I don’t think conservatives will find it very persuasive. It is worth unpacking why.

In short, we are further down the game tree than Frey assumes that we are.

For me a very important argument against censorship regimes is that you should not trust the censors or assume that they will always agree with you. If you set up a speech code, you better think carefully about whether you’d be ok with your enemies implementing it. A free speech regime is to an important degree a non-aggression pact. I won’t try to censor you, if you don’t try to censor me. Breaking that rule or norm risks retaliatory moves down the road.

So should folks like DeSantis worry about what will happen to state universities when their political opponents win political power, whether in Florida itself or in blue states generally? I don’t think that is or should be a particular worry for them. So why not?

Imagine a left-wing DeSantis comes to power and is quite willing to meddle in universities to advance their own ideological vision using the kinds of tools DeSantis is now using and might use in the future. Should conservatives fear that possibility and so restrain themselves now? Not really and here’s why. The status quo in universities ALREADY looks like that is the case. They are already ideologically captured. What would a left-wing DeSantis do to get universities to behave more in accordance with his preferences? Probably nothing. Mission already accomplished.

From a conservative perspective, there is little to fear from breaking down the norm that keeps politics out of universities. From their perspective that norm is already gone. Politics is already in the universities, but it came from the inside. The calls are coming from inside the house! It might even be the case that a left-wing DeSantis would try to pull universities to the right. The median Democrat is currently to the right of American universities. Universities are the party of Elizabeth Warren and Bernie Sanders, not the party of Joe Biden.

Where does that leave the distrust of censors argument in favor of free speech in the case of state universities? I’ve been screaming the warning for awhile now. The “other party” that might get control is in fact Republicans like DeSantis. The chickens are already coming home to roost. The censorious on college campuses have been emboldened by the assumption that they will always be in charge on campus. The dean will always be my ally, so why worry? That certainly was not the expectation of students and young faculty in the 1960s when they were pressing to expand free speech protections on campus and disempower administrators, but that is the expectation now. Administrators, students, and young faculty now join hands to draft and implement campus speech codes and enforce political orthodoxy.

That would work out just fine for campus activists if universities were self-contained. If the censored on campus have nowhere to go and no hope of gaining control over the tools of censorship, then that disempowered minority is out of luck and the empowered majority can have a field day. Checks on authoritarian power are politically sustainable in competitive multi-party systems, but when one side thinks it has long-term domination over the political system then that side’s willingness to tolerate checks on its exercise of power fades away. That is true of authoritarian leaders in one-party states, and it is often true of the campus left when it comes to university operations.

But universities are not self-contained, as the DeSantis situation demonstrates. There are external levers of power that can impact universities, and those levers can be pulled by conservatives. Donors, alumni, media, politicians. “Power switching hands” in the university context means power shifting out of the hands of left-wing students, administrators and professors and into the hands of right-wing politicians. We are currently witnessing what happens when the power switches hands. Frey pitches her point as a warning about the future, but she would have been better served by making that point in the past. The future is now.

And that is why we should always listen to E.E. Schattschneider, the great political scientist of the mid-twentieth century. One of his crucial contributions was his analysis of expanding the scope of conflict. As he observed,

The outcome of every conflict is determined by the extent to which the audience becomes involved in it. That is, the outcome of all conflict is determined by the scope of its contagion.

If you are losing a fight, you try to pull new allies into the fight and change the balance of power. For Ukraine fighting a Russian invasion, that means pulling in the United States. For conservatives on campus, expanding the scope of the conflict means appealing to people like DeSantis to try to get them to weigh in. And now they are. The audience is becoming involved in the conflict, and the scope of the conflict is expanding.

If power switches sides in the Florida statehouse, the worst that can happen from a conservative perspective is that things go back to the way they are RIGHT NOW. Universities are already in the worst case scenario from the perspective of many conservatives. No place to go but up. That is how you get Flight 93 elections and conservatives rallying behind Donald Trump, and it is how you get DeSantis higher education reforms. I do not think we are yet to the crisis point, but plenty of conservatives do. If you share their assumptions, then they think it is about time to even the playing field on campus.

I think my disagreements with the DeSantis response to the troubles on college campuses are pretty clear. I have been beating that horse for awhile now. I think the end result of this conflict will be bad for universities and free inquiry. But Frey’s argument won’t cut any ice with conservatives. The potential bad outcome of this, for conservatives, is not that Democrats in the future behave like DeSantis. The potential bad outcome is that universities continue down their current path. I’ve also been warning the left on campus that if they did not clean up their own house there would be a day of reckoning from the political right. That day is arriving faster than I expected, and I’m hardly happy about it

More outside political interference with how universities operate will also not be healthy for the intellectual climate of universities. Free inquiry will be constrained whether there is left-wing political interference or right-wing political interference. But let us not pretend that free inquiry is not being constrained on college campuses right now.

Telling conservative politicians and voters that DeSantis is setting a bad precedent? Well . . . . that’s going to fall of deaf ears.

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