New in The Atlantic: “How the American Bar Association Can Fix Its Mess”

The Atlantic has published an essay based on a post I wrote here last week about Lawrence VanDyke’s nomination to the Ninth Circuit. Here is the conclusion:

What happens next? Nominees, of course, could refuse to meet with the ABA. Though that option includes a risk: The most damning allegations will not be refuted. There is a far more productive approach. These interrogations should be treated as hostile depositions. A court reporter and videographer should be present, as well as privately retained counsel to push back on unfounded accusations. In the event that the nominee is rated as qualified, there would be no need to release the transcript. Going forward, when a nominee is rated as unqualified, the transcript should be released, and the recording should be posted publicly online. There is no reason to rely on disputed accounts of the interview.

As originally designed, the confidential nature of this process made some sense. The interviews were not recorded to ensure that members of the bar could candidly critique a potential jurist, and to prevent the nominee from facing public embarrassment if the report was released. But the VanDyke letter turns that practice on its head. He was sandbagged at the last minute, and he was not given a chance to address any of the accusations it contained. This wound was entirely self-inflicted. If the ABA wanted to rate a nominee like VanDyke as unqualified, the organization should have followed its own rules to a T. Instead, it ran a slipshod process, led by a person whose objectivity was open to question.

This process should no longer be a black box. If reports faithfully reflect the interviews, faith can be restored in the ABA. If the process remains shrouded in secrecy, Americans can safely discount future findings.

To date, the ABA has continued to stand by the VanDyke report. That decision should be reconsidered. The organization should assign a second investigator, whose objectivity cannot be question, to review the recommendation. That move would restore some faith in the process.

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Several Blasts Of Arctic Air Will Bring Early Winter To Northeast 

Several Blasts Of Arctic Air Will Bring Early Winter To Northeast 

Several days ago, Ed Vallee, head meteorologist at Empire Weather LLC, stated that an Arctic blast of cold air would roll into the Mid-Atlantic and Northeast regions later in the week, with the chance of producing one of the first snowmaking weather events of the year.

As of Wednesday morning, there’s more evidence that Vallee’s forecast has been spot on. Tens of millions across the Mid-Atlantic and Northeast regions will get an early shot of winter over the next several days. 

The first round of Arctic air will make its way from the north-central U.S. into the Great Lakes and Northeast Wednesday through Saturday. The cold weather could produce the first significant snowstorm of the year for parts of the interior, including places like northern New England, where at least 6 inches of snow is expected Thursday into Friday.

Another blast of Arctic air will arrive across the Mid-Atlantic and Northeast regions early next week. 

AccuWeather’s Dan Kottlowski told USA Today that the eastern two-thirds of the nation could be 20 degrees below average for the first half of November. “A widespread killing freeze is likely to end the growing season across much of the South early next week,” he said.

As for the second half of November, “extreme cold is expected to give way to a milder pattern to close out November, it may take until the third week of November to clear out the well below-normal temperatures from the northern Plains through the Great Lakes,” AccuWeather meteorologist Paul Pastelok said.

The Lower Contiguous 48 States heating degree day (HDD), an index designed to quantify the demand for energy needed to heat a structure, certainly shows that energy usage is already surging as colder weather rolls into parts of the Midwest, Central, Mid-Atlantic and Northeast regions. 

Henry Hub Natural Gas Futures in the last 18 sessions have jumped more than 30% on weather forecasts detailing the upcoming winter blast. 


Tyler Durden

Wed, 11/06/2019 – 07:01

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After WeWork Disaster, SoftBank’s Masa Son Says “Bad Judgement” Led To First Loss In Decade

After WeWork Disaster, SoftBank’s Masa Son Says “Bad Judgement” Led To First Loss In Decade

SoftBank Group reported its first quarterly loss in 14 years on Wednesday morning, severely impacted by lousy technology bets with its $100 billion Vision Fund.

The Japanese investment bank wrote down $6.5 billion of losses from its flagship investment fund for Q3. It suffered a massive $4.6 billion loss from WeWork, a startup that as recently as a few months ago was worth $47 billion earlier this year, only to effectively be insolvent just a few weeks ago.

WeWork, formally called We Co., was bailed out by SoftBank last month, when the bank plowed $10 billion into the office space subletting company to save it from bankruptcy.

SoftBank CEO Masayoshi Son, 62, has been questioned by the investment community for overlooking valuations and corporate governance issues at WeWork. Son’s judgment in paying top dollar for startup companies that don’t make money has come into question.

Collapsing valuations of WeWork and Uber, to name a few, have severely dented profit growth at SoftBank.

“The operating loss was 704.4 billion yen in the three months ended Sept. 30, the Tokyo-based company said in a statement. That easily surpassed the 230.8 billion yen average of analysts’ projections, and compared with a 705.7 billion yen profit a year earlier. Its signature Vision Fund — the world’s single largest pool of startup investments — reported a 970.3 billion yen loss in the quarter,” reported Bloomberg.

SoftBank’s Vision Fund has high exposure to technology startups (about 88 startups in its portfolio) that don’t turn a profit was valued around $77.6 billion.

Most of Vision Fund’s technology startups have never operated outside a global synchronized recovery; in fact after the bursting of the dotcom bubble, Masa Son almost went bankrupt.

So today’s global synchronized downturn, with the very real threat of a global trade recession, has forced investors to rotate out of speculative companies into ones that have stable cash flows. This triggered a valuation reset for speculative companies and a massive headache for Vision Fund who is now seen holding the bag.

Son on Wednesday was quoted as saying, “there was a problem with my judgment; that’s something I have to reflect on.”

The trend is clear for SoftBank: more write-downs are ahead as its investments in Vision Fund implode one by one, something we discussed in depth in “Is SoftBank The Bubble Era’s “Short Of The Century“.


Tyler Durden

Wed, 11/06/2019 – 06:46

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Election 2019: Republican Gov Loses Close Race In Kentucky, Dems Win Virginia State House, Airbnb Loses Jersey City

Election 2019: Republican Gov Loses Close Race In Kentucky, Dems Win Virginia State House, Airbnb Loses Jersey City

If anybody else was in office, few Americans would have cared about the outcome of this year’s off-off-year election: This year’s races were overwhelmingly local, with several states battling for control of the state house. But with President Trump in office, pundits rarely miss a chance to blame him for any setbacks suffered by the GOP.

And for Republicans, this year’s election had a few setbacks, but there were victories as well.

Matt Bevin

Democrat Andy Beshear claimed victory Tuesday night in an extremely tight race for the governorship of Kentucky. It looks like Beshear, whose father served two terms as governor during the Obama years, will ultimately prevail over Republican incumbent Matt Bevin, who has yet to concede, citing vague “irregularities.” Bevin was a supremely unpopular governor due to cuts to Medicaid and Pension cuts enacted by his administration. Even the personal support of his close ally, President Trump, who campaigned for Bevin during a rally in Kentucky the night before the vote, wasn’t enough to secure a second term for Bevin, the New York Times reports.

Still, with supermajorities in both chambers of the state house, Republicans will likely continue to dominate Kentucky politics.

Perhaps even more consequential for Trump, Democrats in Virginia managed to take back the state house. With the governorship and both chambers of the state house under Democratic control for the first time in a generation, analysts expect Virginia, once the home of the NRA, to push through new gun control measures and expand access to abortion, according to WSJ.

Many pundits commented that the election showcased the growing rural-urban divide, as urban and suburban voters appeared to increasingly favor Democrats and oppose President Trump.

The Washington Post and many Dems excitedly proclaimed that the 2019 race had completed Virginia’s transformation from “red to blue.” It also positions Gov. Ralph Northam, who was nearly forced out of office in a blackface scandal nine months ago, to be one of the most important governors in the modern history of the state.

In Mississippi, Republican Lieutenant Gov. Tate Reeves prevailed over Democratic AG Jim Hood in a race that reaffirmed Republicans’ dominance of the Deep South.

President Trump tweeted his congratulations to Tate…

…While also distancing himself from Bevin’s loss.

Dems retained control of the state house in New Jersey, but perhaps the most interesting race in the state was a referendum question on the ballot in Jersey City.

According to Bloomberg, a multi-million dollar battle over home-sharing in Jersey City has come to an end with a decisive loss for Airbnb. The new rules place a 60-day short-term rental cap on properties where he owner isn’t present. That’s a major blow to the tech darling, which is preparing to go public next year. Airbnb dumped $5 million into campaigning for residents to vote against the new law, but 70% voted in favor.

Now, with one year until the presidential election, and impeachment proceedings in Congress and the Democratic nomination battle just beginning, many have been trying to frame Republicans’ losses on Tuesday as a reflection on Trump. However, experts quoted by BBG said Tuesday’s results have little predictive value for the 2020 election.

“It’s just too far out, and we don’t know what the circumstances will be next year,” said Kyle Kondik of the University of Virginia Center for Politics.


Tyler Durden

Wed, 11/06/2019 – 06:22

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ABC Issues ‘Cover Your Ass, Lawyer-Speak’ Response To Bombshell Epstein Coverup Claims

ABC Issues ‘Cover Your Ass, Lawyer-Speak’ Response To Bombshell Epstein Coverup Claims

ABC News has responded to the Veritas video, saying “at the time, not all of our reporting met our standards to air, but we have never stopped investigating the story. Ever since we’ve had a team on this investigation and substantial resources dedicated to it. That work has led to a two-hour documentary and a 6-part podcast that will air in the new year.”

Robach added in a statement “I was caught in a private moment of frustration,” and was “upset that an important interview I had conducted with Virginia Roberts didn’t air because we could not obtain sufficient corroborating evidence.” (Somehow the Miami Herald got the job done, however.)

O’Keefe suggests this is a ‘cover your ass, lawyer-speak response.’

Others have noted that this seems to be a pattern for the MSM:

***

A new undercover video from Project Veritas reveals that ABC News knew of Jeffrey Epstein’s sex crimes, yet decided to ignore it according to undercover footage from Project Veritas.

Amy Robach, ‘Good Morning America’ Co-Host and Breaking News Anchor at ABC, explains how a witness came forward years ago with information pertaining to Epstein, but Disney-owned ABC News refused to air the material for years. Robach vents her anger in a “hot mic” moment with an off-camera producer, explaining that ABC quashed the story in it’s early stages.  “I’ve had this interview with Virginia Roberts (Now Virginia Guiffre) [alleged Epstein victim]. We would not put it on the air. Um, first of all, I was told “Who’s Jeffrey Epstein.  No one knows who that is.  This is a stupid story.”

She continues, “The Palace found out that we had her whole allegations about Prince Andrew and threatened us a million different ways.” -Project Veritas

“…[T]here will come a day when we will realize Jeffrey Epstein was the most prolific pedophile this country has ever known,” said Attorney Brad Edwards.

According to Robach, “I had it all three years ago.

Watch:

This is far from the first time Epstein’s crimes have been covered up, minimized, or ignored.

Perhaps most famously, former US Secretary of Labor Alex Acosta negotiated a ‘sweetheart deal’ for Epstein in 2008 after he pleaded guilty to soliciting prostitution from a minor. The pedophile financier was able to ‘work’ outside of prison most days, during which time he reportedly continued to abuse girls.

Additionally, the Manhattan DA’s office headed by Cyrus Vance Jr. had ‘graphic and detailed evidence’ of Epstein’s crimes when a prosecutor argued for leniency during his 2011 sex offender registry hearing, according to an April report in the New York Post.

In advance of the hearing, then-deputy chief of Sex Crimes, Jennifer Gaffney, had been given a confidential state assessment that deemed Epstein to be highly dangerous and likely to keep preying on young girls, the DA’s office admitted in its own appellate brief eight months after the hearing.

Manhattan prosecutors were aware the state board had assigned Epstein a risk assessment of 130, a number that is “solidly above the 110 qualifying number for level three,” with “absolutely no basis for downward departure,” the brief notes.

Nevertheless, Gaffney argued that he should be labeled a level one offender, the least restrictive, which would keep him off the online database. –New York Post

While Acosta lost his job in the Trump administration over his actions in 2008, will anyone be held truly accountable for enabling Epstein’s decades-long pattern of abuse?


Tyler Durden

Wed, 11/06/2019 – 04:09

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UK Election – What To Look For In The Next Six Weeks

UK Election – What To Look For In The Next Six Weeks

Authored by William Dining, CIO, Waverton Investment Management,

We continue to think that there remains a “political risk” discount on UK assets and on the currency. The combination of it being very unlikely that we have a No Deal Brexit; the part passage by the House of Commons of the revised deal (“Withdrawal Agreement Bill”) last week and the polling suggesting a Conservative victory in this election are all consistent with the political risk discount being at least diminished if not removed. This implies outperformance by UK assets in coming months. But when we recommended increasing exposure to sterling and to UK assets last week we did say:

There are still many risks to sterling during an election campaign. Many of the issues that truly concern the electorate—the NHS; schools; student debt; housing shortages; general malaise about living standards—are seen normally as “Labour issues” by which I mean that opinion polls tend to indicate that Labour is seen as better at dealing with them. But we do not live in normal electoral times and the Labour party’s divisions are a headwind for the party which may diminish their traditional strength in those policy areas. It is therefore all to play for in a campaign.

If we start from the proposition that, whatever your own politics, the best outcome for markets would be a Conservative Overall Majority, what factors will effect market confidence about that outcome in the next 43 days?

1. Opinion Polls

Polling has been unreliable in recent elections but taking YouGov data the current situation (October 24-25 polling) is as below with Conservative 36%, Labour 23% (other parties are Lib Dem 18%, Brexit 12%, Green 6%, other 6%).

Source: https://yougov.co.uk, Waverton

It remains the case that the combined vote share of 59% for the major parties is much lower than historically normal and makes modelling how many seats that support translates into harder than normal. So polling data will probably not be seen as reliable again in this election but a big Tory lead over the campaign will keep confidence high.

Source: https://yougov.co.uk, Waverton

2. Betting markets:

The bookies have also not been right in recent elections but they start this one with the Conservatives at 1/6 to be the next governing party (Labour are 15/2). Odds on a Conservative overall majority are 5/6. No overall majority is 6/5.

There is clearly a risk that this level of confidence could dip at some point during the campaign.

3. Positioning:

The above may suggest that investors have moved back into sterling and UK assets in a big way but that is not necessarily the case. The below from Bloomberg suggests that positioning on sterling is less bearish but that it remains a long way from being bullish. This will be worth watching as an indication of investor confidence in the election in coming weeks.

Source: Bloomberg

4. Which economic issues are getting the most focus:

The Labour Party will, as their video released last night clearly shows, want to run on the issues that concern the electorate away from Brexit. That video promises “To get Brexit sorted” but has no other mention of it. It majors though on the things that are traditionally seen as areas where Labour is trusted more than the Conservatives. So there will be emphasis on the NHS, investing in education, housing, climate change (”green industrial revolution”), All under the umbrella slogans of “For the many, not the few” and “It’s time for real change”.

If Labour can turn the campaign away from Brexit and onto these issues then I do think it’s polling numbers will improve although whether it can come back from this far behind (again) does seem unlikely. Part of the reason it did so much better than expected in 2017 was (a) the Tories ran a terrible campaign and (b) no one expected Labour to win so voting for Corbyn was a “free” protest vote.

This time, whatever your view of Johnson, the Tories are led by someone who is (a) ruthless in the pursuit of power and (2) has a good record as a campaigner. Meanwhile we have had over two years of Corbyn as a credible leader of the opposition who has managed to block things in Parliament but who has faced a pretty disastrous collection of news stories away from Westminster. Hence his low personal poll ratings. We are a long way from “Oh Jeremy Corbyn” at Glastonbury 2017.

5. Which political issues are the focus:

If the Tories can keep the campaign about “delivering Brexit” then they are in a good position. The Lib Dems are running a risk in focusing on reversing the 2016 referendum as their main policy plank. And Labour is divided. A risk to the Conservatives is from traditional Labour voters not coming over to the Tories but instead abstaining or voting for the Brexit Party. But generally I would suggest that the more the campaign is about “delivering Brexit” then the better it is for the Tories.

There is a real possibility that the SNP will do better again in Scotland, certainly at the expense of Labour. Scots who are pro the union will be less willing to vote SNP given the real risk of a second referendum if the party does as well as it did in 2015 when it won 56 of the 59 Scottish seats (it has 35 currently). If the Tories do lose seats in Scotland it has a negative effect on their chances of an overall majority.

Northern Ireland will also be interesting on the margin. If there is a greater than usual turnout and widespread support for the DUP and Unionist parties who are of the view that Johnson’s new deal with the EU undermines Ulster’s Union with Great Britain, that could again be a problem for the Conservatives if they do not win an overall majority. The DUP may not be willing to enter another agreement to support a minority Tory government.

6. Election fatigue:

This is the 3rd general election in four and half years. We have also had referendums in Scotland in 2015 and across the UK in 2016. This is the most times the electorate has been asked to vote in such a short period of time in UK history. (There were three elections between June 1970 and October 1974 but not the two referenda). As famously said by Brenda of Bristol, a lot of the electorate could be saying “not another one”. There is disillusionment with conventional politics and politicians which is a threat to the Conservatives.

Conclusion

We enter the campaign with the Conservatives looking to be in a strong position. But all campaigns bring risks and they can take unexpected turns. This 6-week one is lengthy by UK standards so a lot of things can and will happen. The main ones to keep an eye on are which issues are dominating the debate and how engaged the electorate appear to be. If Brexit remains front and centre then the Conservatives should do well and meet current expectations. If though Labour can turn the debate, then things could get difficult for the Tories.

We will obviously keep clients appraised of our view on these matters as the campaign unfolds. But greater exposure to sterling and UK assets still seems appropriate. Weakness in either could be a buying opportunity. It may well be too that an actively managed UK equity fund might be best able to respond to market sentiment ‘flip-flopping’ between the FTSE 100- FTSE 250 and overseas- domestic earners if there is some volatility in coming weeks.


Tyler Durden

Wed, 11/06/2019 – 05:00

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Brickbat: That’s Not Funny

British comedian Roy Chubby Brown often works blue. His jokes often touch on racial or ethnic topics and some could be seen as making fun of LGBT people. He’s popular among working-class Brits. But apparently, not among members of the Swansea, Wales, Council. They have canceled an upcoming show by Brown at the Grand Theatre, which the council controls. “We want all our communities and staff to feel welcome and we felt this booking was unlikely to reflect our values and commitments to them,” the council said in a statement.

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US Constructing Two New Bases In Syria’s Oil-Rich Region: Report

US Constructing Two New Bases In Syria’s Oil-Rich Region: Report

Turkey’s state-run media is reporting the United States is planning two new military bases in Syria’s oil-rich Deir ez-Zor province, which are currently under construction, after US special forces convoys were seen patrolling the area in the past days. 

Anadolu Agency, citing local sources, said the bases were under construction as evidenced by the influx of heavy equipment

While the footage captured by Anadolu Agency showed that much construction equipment is being put into action, it was learnt the U.S. has sent 250 to 300 additional soldiers, armored vehicles, heavy weapons and ammunition to the region.

Prior US forward operating base in Syria, near Manbij, via the AP.

The reported added: “The military bases are being built in the 113th Brigade area and near al-Sur region,” according to the sources.

Syria’s largest oil fields, which historically account for most of its domestic energy needs, are located in Deir Ezzor, including Al-Omar, Conoco, and Rumeilan. 

A US coalition statement confirmed last week that American forces are being “repositioned” in Syria’s oil rich region just east of the Euphrates to “protect critical infrastructure” – following Trump’s roll out of his controversial “secure the oil” plan. 

Days ago Russia accused the United States of stealing what rightfully belongs to the Syrian government and people, with Russian Defense Ministry spokesman Igor Konashenkov alleging earlier that US government agencies received over $30 million a month in oil production in Syria.

In response to Tuesday’s Turkish media reports on the establishment of two new American military bases east of the Euphrates, Russian Deputy Foreign Minister Sergey Vershinin said, “Any actions whatsoever – we are not talking about anything in particular now – that the United States undertake to keep themselves militarily present in Syria are unacceptable and illegal from our point of view and under international law.”

Multiple images have surfaced in the past days confirming that the Pentagon has indeed launched a “secure the oil” policy, though not every of Syria’s oil and gas fields east of the Euphrates have witnessed US forces enter. 


Tyler Durden

Wed, 11/06/2019 – 04:15

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