The Sad, Embarrassing Spectacle of Chris Christie’s Donald Trump Endorsement

Chris Christie dropped out of the presidential race weeks ago, but he still managed to be Super Tuesday’s biggest loser—thanks to Donald Trump.

It’s been a rough couple of days for the New Jersey governor. After endorsing Trump for president last week in an embarrassing spectacle of a press conference, Christie went on to defend his decision to George Stephanopoulos on ABC.

The interview was even more of an embarrassment than the press conference. Stephanopoulos pointed out that Christie and Trump share almost no common goals by playing Chris Christie’s own words back to him—on the infeasibility of building a border wall, on Trump’s disinterest in reforming entitlements, on banning Muslims from entering the United States—and then asking Christie to explain how his positions aligned with Trump.

Christie had no good answer to any of these questions, because no good answer was possible. All he could say was that he and Trump don’t agree on every issue, and that he’s endorsing him anyway. But Stephanopoulos made it look practically like he and Trump don’t agree on any issue. Christie was left struggling to defend his endorsement using only vague generalities. Trump is the strongest, the best, the only one who can make America great again, blah blah blah, winning, whatever. 

 There was something else about the interview, too—a strange air of submission. While running for president, Christie, who has known Trump for well over a decade, consistently called Trump, by his first name, Donald. But in the interview, he referred to him exclusively as “Mr. Trump,” as if he were a flunky in The Trump Organization.

In endorsing Trump, Christie had been made to look both ridiculous and untrustworthy. And Christie’s presidential backers, as well as residents of his home state, noticed.

On Tuesday, New Hampshire Union Leader publisher Joseph McQuaid, who endorsed Christie in the GOP race, issued a scathing follow-up: “Boy, were we wrong,” the piece declared. “Watching Christie kiss the Donald’s ring this weekend — and make excuses for the man Christie himself had said was unfit for the presidency — demonstrated how wrong we were.” Later that day, six New Jersey papers called on Christie to resign, saying, “We’re fed up with his opportunism. We’re fed up with his hypocrisy.” And new polling suggests that Christie’s endorsement of Trump is hurting his reputation with residents of New Jersey.

Which brings us to last night. Christie introduced Trump before his victory celebration in Florida, and then the governor stood silently behind Trump while the candidate rambled on and answered questions. As he stood there, staring silently into the distance, clapping occasionally (but not enthusiastically), Christie looked trapped and terrified, anxious and confused, like a panicked hostage desperate to escape his captor. The power balance between the two men was clear: Christie, the vicious political attack dog, had somehow been tamed into a subservient house-pet.

There was something more than a bit pathetic about the sad, absurd little scene (replay the whole event in all its non-glory via C-SPAN). It was almost enough to make me feel sorry for Christie. Almost, but not quite. Christie chose to endorse Trump, chose to stand by him, chose to put himself in a position where he would have to defend Trump’s various offenses and positions, reconcile them with his own statements, and look ridiculous in the process. He chose to be dominated by Trump.

But Christie’s experience should serve as a lesson for others tempted to follow in his footsteps. Attempts to defend an embarrassment like Trump will only lead to embarrassment for his defenders; they will be enabling his campaign, but not themselves. 

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Republican Elites Are Frightened by Their Own Base

I see...President Rubio? ||| Imgur.comIf you squint hard enough at last night’s Super Tuesday results, you can see some glimmer of hope for the excruciatingly slow-to-action #NeverTrump crowd. “Trump won VA by 2.8 points, Arkansas by 2.2, Vermont by 2.3,” pointed out The Weekly Standard’s John McCormack. “These margins are essentially meaningless in terms of delegates, but if Trump went 4/11 instead of 7/11, press would say he had a bad night.” Marco Rubio heavily outperformed polls in Virginia, and both he and Ted Cruz dominated among late-deciding voters. The final delegate haul for Super Tuesday will be considerably closer than the press coverage felt like last night. Squint, squint, squint.

But if the number-crunchers of PredictWise are correct that Donald Trump as of this morning has an 82 percent chance of winning the GOP presidential nomination, then the number-one Monday morning quarterbacking question of the entire political season is surely this: What in hell took Republicans so long to compete against their clownshow authoritarian front-runner? As George Will put it on Sunday,

Unfortunately, Rubio recognized reality and found his voice 254 days after Trump’s scabrous announcement of his candidacy to rescue the United States from Mexican rapists. And 222 days after Trump disparaged John McCain’s war service (“I like people that weren’t captured”). And 95 days after Trump said that maybe a protester at his rally “should have been roughed up.” And 95 days after Trump retweeted that 81 percent of white murder victims are killed by blacks. (Eighty-two percent are killed by whites.) And 94 days after Trump said he supports torture even “if it doesn’t work.” And 79 days after Trump said he might have approved the internment of Japanese Americans during World War II. And 72 days after Trump proved that he does not know the nuclear triad from the “Nutcracker” ballet. And 70 days after Trump, having been praised by Vladimir Putin, reciprocated by praising the Russian murderer and dictator. And so on.

So what explains the long paralysis of the anti-Trump Republicans? The New York Times on Saturday published a damningly detailed answer to that question, including this concise nugget: “Donors have dreaded the consequences of clashing with Mr. Trump directly. Elected officials have balked at attacking him out of concern that they might unintentionally fuel his populist revolt.”

In other words, Republican elites are terrified of their own customers. That’s worth reflecting on critically, even if you happen to share their loathing of Donald J. Trump.

Renaissance Man. ||| PinterestNewt Gingrich last night tweeted out a job application to be the next Chris Christie: “Trump’s shift toward inclusiveness, team effort and unity was vitally important He has to build a Reagan like inclusiveness to win this fall.” This may have come as a surprise for those who cling stubbornly to the fiction that Gingrich is some kind of dazzling Man of Ideas, but since at least the mid-1990s the jabberin’ Georgian has been more concerned with the science of populist rhetoric than public-policy entrepreneurship. When the Cato Institute a decade ago put out a grim collection of “limited government” hypocrisies titled The Republican Revolution 10 Years Later: Smaller Government or Business as Usual?, just about the only contributor who wasn’t openly embarrassed by the track record of the 1994 takeover was Gingrich himself. Not because of how he governed, but how he won.

“People who dismiss our victory as a fluke do not study our base very often,” Gingrich wrote. “We had nine million additional votes in 1994, the largest one-party increase in American history. There is a huge pool of uncommitted voters who have no interest in politics. Thus, when campaigns are able to mobilize such groups, they win in a big way.” Well, neat.

Republican politicians have long since grown accustomed to—in fact, dependent on—the chasm between their own bomb-throwing rhetoric and dud-like accomplishments. For evidence, look no further than the 114th Congress, currently under unified Republican rule for the first time since 2007. How have the alleged fiscal conservatives responded to finally having some legislative power during the Barack Obama presidency? By blowing up the sequestration cuts, waving away the debt ceiling, and once again punting their duty to pass budget legislation in favor of a single, last-minute omnibus spending package with all kinds of freedom-harshing provisions within. You can read all about it in the current issue of Reason, which should be in your mailbox by now.

As the libertarian Kentucky Republican Rep. Thomas Massie recently told me,

I think it’s like Charlie Brown and Lucy….The voting population is so tired of…trying to kick the football, and it gets pulled away from them at the last second. They have sent some people here to Congress who said all the right things, they ran as Tea Party candidates, then they got up here and they voted for the omnibus bill, or voted for Speaker [John] Boehner on their first day after pledging they wouldn’t vote for him. And so what they’re looking for is somebody that’s not going to be controlled when they get here.

Even more reckless than mere promise-breaking is pandering to either the real or imagined prejudices of the base. John McCain, a lifelong elitist with open hostility toward the conservative grassroots, famously went to “crazy base-land” when he could finally smell the ring of power, reversing his positions and rhetoric on gay marriage, immigration, and even condom use. Mitt Romney, the Republican who has taken on Trump with the most gusto during this campaign season, arguably paved the way for his success by out-immigrant-bashing the 2012 field while promising hardest to protect old-age entitlements. Couple this with the old establishment chestnuts about somehow balancing a budget while undoing the allegedly “devastating cuts” to our military, and a picture emerges of structural insincerity and the ritual, nose-holding manipulation of the activist base.

Time and time again, the GOP establishment has given its own grassroots the back of its hand. As I wrote one year ago,

The Republican Party in 2015 has a huge and unsated anti-Establishment passion, one that’s only stoked by the primacy of elite characters like Jeb Bush (and Mitt Romney before him). Establishment vs. anti-Establishment has been the internal GOP divide since at least spring of 2010 (when Tea Party types began primarying Republican darlings in earnest); led to just a brutal parliamentary smackdown of grassroots activists at the 2012 Republican National Convention, and is as inevitable in the 2016 presidential campaign as water flowing downhill. This fight will be had, no matter how hard RNC Chairman Reince Priebus tries to schedule it out of existence. Candidates who figure out how to channel anti-establishmentarianism will punch above their weight during primary season (something Ben Carson and Ted Cruz in particular seem to understand); candidates who fight against it (Bush most openly) are in for a rude surprise.

Donald Trump is calling out Republicans for being phonies, and he’s right. I may cheer lustily for him to lose, but until they re-examine their own lousy policies and politics (especially though not only on foreign policy and spending), I will not be cheering for the establishmentarians to win.

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In “Foregone Conclusion,” Bookies Pay Out Trump Bets Early

On Tuesday, Donald Trump “schlonged” the GOP field.

After what amounted to a series of truly epic wins on the heels of a “disappointing” showing in Iowa, the GOP frontrunner stormed to victory last night, sweeping seven states and serving notice that the “protest vote”- at least on the GOP ticket – is not only alive and well, but is ascendant.

Although establishment candidate Marco Rubio and the good-natured John Kasich feigned confidence, it’s likely game over.

Trump is all but assured to lock up the nomination and now, the GOP faces an identity crisis. Neither of the two frontrunners (Trump and Cruz) represent the establishment. The preferred party candidate (Jeb Bush) was beaten so badly that he was forced to simply throw in the towel or risk further embarrassment.

For those who missed it, here’s what the delegate race looks like after Super Tuesday:

For anyone who thinks Trump won’t ultimately secure the nomination, you might want to check with the bookies, because Paddy Power has gone ahead and paid out on Trump winning the GOP nomination

“Since 1988, the candidate to clean up on Super Tuesday has always gone onto win their party’s nomination,” Ireland’s largest bookmaker said in e-mailed statement on Wednesday. As Bloomberg notes, “gambling companies pay out early when they regard the result as a foregone conclusion, in part because it draws publicity and in part because gamblers often recycle winnings into other wagers.”

Right.

And the next wager is on Trump taking the oath of office. It’s looking more and more likely that that bet will pay off early too.


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Crude Tumbles After DOE Confirms Biggest Inventory Build In 11 Months

Following last night's yuuge inventory build reported by API (+9.9m) and large rise in Cushing levels (+1.8m), DOE reported a crude build of even yuuger 10.37mm barrels (against the 7.1mm expectation) – the largest since early April 2015. Cushing saw a 1.2mm build – the most in 3 months. On the other side of the ledger, production fell for the 6th week in a row (-2.6% YoY to lowest since Nov 2014). Crude prices recovered from API's losses as algos ran stops on the back of headlines about Saudi increases prices to Asia but DOE's headline sent WTI back to its lows.

API:

  • Crude +9.9mm (+3.3mm exp)
  • Cushing +1.8mm (+700k exp)
  • Gasoline -2.2mm (-1.1mm exp)
  • Distillates +2.7

DOE:

  • Crude +10.37mm (+7.1m exp)
  • Cushing +1.19mm
  • Gasoline -1.468mm
  • Distillates +2.88mm

Which means Cushing has seen inventory builds in 16 of the last 17 weeks…

 

As storage concerns are becoming extreme…

 

As we detailed previously...Genscape joins the ever louder chorus that the US is approaching the capacity tipping point:

 

Production is at its lowest level since Nov 2014, and is now down 2.6% YoY (the biggest YoY drop since Aug 2012)

 

But while US production is down, US imports (of cheap Iranian oil?) are at their highest in 2 years…

 

As refinery throughput is at a seasonal record… (ready for another glut in gasoline?)

 

Crude, after weakness from last night's API data, rallied this morning as algos latched on to Saudi price rises to Asia (running stops to the API level)…

 

Charts: Bloomberg


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Jesse Ventura Says He Might Run For President If Bernie Sanders Isn’t Nominated

Submitted by Barry Donegan via TheAntiMedia.org,

Former independent Minnesota Governor Jesse Ventura, who says he is leaning towards supporting U.S. Senator from Vermont Bernie Sanders for president in 2016, indicated that he is considering getting into the presidential race if Sanders fails to win the Democratic primary.

In a Monday interview with The Daily Beast, Ventura said that he will likely launch a run for president by June if former Secretary of State Hillary Clinton defeats Sanders.

They’re setting the groundwork for me because if Bernie loses, by the time we get to June, how sick are the people going to be of all these people,” he said.

Ventura has claimed in the past that he might seek the Libertarian Party’s nomination for president and said that he considers former Republican New Mexico Governor Gary Johnson, the Libertarian Party’s best-known currently-announced candidate, a personal friend. The Libertarian Party’s nominating convention is set to take place in May of this year.

Last year, Gary Johnson said in an interview with The Daily Caller that he would welcome a head-to-head matchup against Ventura for the Libertarian Party’s nomination “because that potentially could be a televised-kind-of-a-debate situation.

In a Monday interview with The Associated Press, Ventura described the conditions under which he would be most likely to run for president,If it’s Hillary Clinton and Marco Rubio, the chances are better. I don’t want the revolution to die if Bernie gets beat.

Incidentally, while Ventura has stopped short of fully endorsing any particular candidate during the primary season, he says he is somewhat torn between Trump and Sanders when trying to identify a favorite.

People give them no PAC money, no special interest money. To me, that’s the most important thing,” said Ventura.

 

See, I’m an independent and I despise the two parties. I love what Trump’s doing to the Republicans. He’s got them in complete disarray. In fact, it looks like the WWE when you watch their debates,” the former pro wrestler added.

However, Ventura said that he leans more towards Sanders than Trump due to the Senator from Vermont’s positions on campaign finance reform, foreign policy, and ending the War on Drugs. Ventura said that he has concerns with the hawkish tone Trump uses when describing his approach for dealing with ISIS.


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Egypt’s Dire Dollar Shortage

Authored by Prof. Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

Ever since General Sisi ousted the Muslim Brotherhood, the Egyptian economy has remained in shambles. Businessmen are fed up.  They are ignoring government gag orders, and are making their voices heard. And why not?  They are losing sales, missing deadlines, and scrapping expansion plans because of limited access to U.S. dollars.

Where are the greenbacks that Egyptians demand? Well, even though General Sisi has passed the begging bowl, the cupboard is pretty bare (as the accompanying chart shows).  This, in part, is due to the Muslim Brotherhood.  The Brotherhood did one thing well: they blew through foreign exchange reserves like wildfire.   Not surprisingly, the Sisi administration is squeaky tight about holding on to its limited reserves.

As night follows day, when the demand for foreign currency exceeds its supply at an official rate, a black market (read: free market) for foreign exchange emerges.  As the following chart shows, the black market EGP/USD premium has exploded to 17.5%.

The only sure-fire way to save the pound and eliminate Egypt’s USD shortage is to install a currency board.  This would allow the quantity of pounds in circulation to be determined by a free-market mechanism.

So, just what is a currency board? Operating under currency board rules, a monetary authority issues notes and coins convertible on demand into a foreign anchor currency at a fixed exchange rate. As reserves, a currency board holds low-risk, interest-bearing bonds denominated in the anchor currency.  The reserve levels are set by law and are equal to 100 percent, or slightly more, of its monetary liabilities. A currency board generates profits
(seigniorage) from the difference between the interest it earns on its reserve assets and the expense of maintaining its liabilities. By design, a currency board has no discretionary monetary powers and cannot engage in the fiduciary issue of money. Its operations are passive, and automatic. The sole function of a currency board is to exchange the domestic currency it issues for an anchor currency at a fixed rate.  Consequently, the quantity of domestic currency in circulation is determined solely by market forces, namely the demand for domestic currency.

There have been many currency boards, and none have failed.  By design, they can’t be broken. Even the currency board designed by John Maynard Keynes, which was installed in North Russia, during the civil war, worked like a charm. 

But, you may ask, what about Argentina’s Convertibility System (1991 2001). That system was not a currency board.  It might have had the appearance of a currency board, but appearances can be deceiving, particularly in Argentina.  Even though it linked the peso to the USD at a one-to-one rate, the Convertibility System was a system that operated with monetary discretion – unlike a currency board.  And over long periods of time,
the discretion was wild.

A currency board would give Egypt stability, and while stability might not be everything, everything is nothing without stability


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Is A Major Treasury Squeeze On Deck: 10-Year Trades “Super Duper” Special In Repo

Over the past several days, in addition to the ongoing bear market rally in the S&P500, another dramatic move has been the impressive slide in Treasury prices, manifesting itself in the following spike in 10Y yields:

 

This move has prompted rates traders to wonder if the selling was organic, if somewhat panicked, unwinding of long positions or just an influx in new shorts, whether due to macro considerations or as rate-locks as a slew of new Investment Grade issuance comes to market.

Courtesy of Stone McCarthy and Credit Agricole, both of whom point out our favorite repo market “stress” indicator, the “specialness” level of the 10Y, we now have the answer: as of this morning, there has been an unprecedented spike in new shorts manifesting itself in a plunge in the repo rate on the 10Y alone even as all other points on the curve remain largely unchanged.

This is what Stone McCarthy said:

The 10-year issue tightened severely yesterday and is at -175 basis points this morning. This is the tightest that we have seen the 10-year note since December 14th, 2015. We expect the 10-year note to remain quite special even after its auction announcement tomorrow.

 

Indeed, one reason for the spike in shorting could be ahead of the upcoming 3, 10 and 30 Year auction, however, those usually take places just prior, and rarely do they stretch back as much as has been the case this time.

Credit Agricole strategist David Keeble admits as much saying that while it’s typical for the current 10Y to trade special in repo leading up to next auction and settlement, the “super duper” specialness may be related to an accumulation of shorts and playing against swap spreads.

According to Keeble who is cited by Bloomberg, today the 10Y is even more special in repo than SMRA’s -1.75%, and is bid around -2.75% in repo, “more special than usual” before next auction.

He adds that the 10Y swap spreads are bumping up against -18bp level so there’s “a lot of people playing 10Y shorts against swaps” adding that 10Y spreads are down -0.91bp to -17.68bps, touched recently touched a record low -17.88bps.

Another dealer, this time TD securities, adds that the extreme short in current 10Y highlights lack of issue available and the legitimate need for it. It highlights that at the Fed’s Securities Lending Operation yday, dealers wanted $3.173b of current 10Y, received $1.625b, or everything available.

Perhaps all that is happening is that the near record spec shorts in 10Y equivs which have been dominant, and suffering major losses throughout 2015, and which unwound their net short position in the past week as shown below…

 

… are merely reopening recently closed short bets.

However, we fail to see what has changed in the macro landscape to usher in a substantial change in the macro landscape, and we futher believe that once the current tactical move is over, the drift lower in global yields driven primarily by failed central bank policies and negative interest rates, will once again reestablish itself.


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“There Is A Dollar Shortage”: Abu Dhabi Warns On Decreased Dollar Supply

It’s not entirely clear whether Saudi Arabia knew what they were setting in motion when the kingdom moved to deliberately suppress crude prices at the end of 2014.

The idea (of course) was to preserve market share by bankrupting the US shale space and if there were “ancillary benefits” – like say forcing Moscow to give up its support for Bashar al-Assad – well then all the better.

Unfortunately for Riyadh, things didn’t really go as planned. The kingdom’s budget deficit ballooned to 16% of GDP (which, for the uninitiated, is an unmitigated disaster) and this year’s target of 13% will invariably prove to be elusive unless the Saudis decide to either drop the war in Yemen, drop the riyal peg, or (preferably), both.

In any event, the demise of the petrodollar has predictably created a shortage of, well, petrodollars, and it’s starting to show up in the UAE.

“National Bank of Abu Dhabi PJSC, the United Arab Emirates’ largest bank, said there’s a reduced supply of dollars in the country as the region grapples with the impact of oil trading around $30 per barrel and credit downgrades,” Bloomberg reported, earlier today, adding that “banks in the U.A.E., holder of the world’s sixth-largest oil reserves, are facing deteriorating conditions as lower crude leads to a decline in government spending, slower economic growth and falling asset quality.”

There is a dollar shortage,” PJSC CEO Alex Thursby told reporters in Abu Dhabi on Wednesday. “It’s not a crisis, but it is tightening.”

As Bloomberg goes on to note, “the U.A.E.s’ banking sector has lost 56 billion dirhams ($15.25 billion) in government deposits since September 2014.”

Right. Which doesn’t really come as a surprise. The Saudis have (possibly inadvertently) ushered in a new era for the world’s oil producers. This is “life at $30/barrel” per se.

Get used to it.


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Is the Market Misreading the Data?

The US markets are in a quandary.

 

On the one hand, some of the data (GDP growth, unemployment, etc.) suggests the Fed should continue to hike rates. On the other hand, other data points (food stamp usage, labor participation rate) suggest the US never actually entered a real recovery.

 

More importantly, how can the jobs data suggest such a strong employment situation… when one in seven Americans are on food stamps?

 

Let us, consider how the Labor Department calculates the unemployment numbers… those same numbers that the ENTIRE stock market reacts to every few weeks.

 

Every month, the US Government conducts a “Current Population Survey” through which it calls or visits 60,000 US households and asks them questions about their current employment or lack thereof. This usually occurs on the week of the month containing the 12th.

 

Thus, in order for the survey to be accurate…

 

1)   The US Government official has to make the phone call or go in person to the house (there have been some controversies regarding falsifying results).

 

2)   Someone has to pick up the phone or answer the door when the Government employee calls or visits.

 

3)   The person has to agree to an interview regarding the employment status of all members of his or her household with the US Government

 

4)   The person has to answer the interview questions truthfully (more on this shortly).

 

5)   The Labor Department’s economic model has to take this information and accurately render it into a nationwide unemployment number.

 

Thus, for the numbers to be accurate, the person being interviewed has to be willing to talk honestly to the US Government about personal details that could be quite embarassing.

 

Why is this a problem?

 

Consider that as far back as 2003, 30% of Americans viewed the US Government as an “immediate threat” to their “rights and freedoms.” Post 2008, the number has jumped to just below 50%.

 

Again, nearly half of Americans see the US Government as an “immediate threat.”

 

 

Thus, by proxy, roughly half of the people answering the phone or door for the Labor Department’s Current Population Survey have this view. What are the odds these individuals will be forthright and comfortable discussing the details of their family’s employment situation with a US Government official?

 

Even if the official is doing their absolute best to get correct information, the survey respondent might not be totally honest!

 

To top it off, there is debate as to what is the best means of interpreting the raw data. For instance, the Richmond Fed’s NEI measure (which measures those out of the labor force as well as those who are unemployed) puts current unemployment above 8% WAY above the “official” reading of 5.0%!!!

 

 

Even after all of this, there are the revisions to consider… Heck, the Bureau of Economic Analysis revised three years worth of GDP growth data DOWN from 2.3% to 2.0% in July of last year.

 

For this reason and others, we believe that the recovery has been greatly overstated in the media and that the markets are primed for a collapse. Indeed, we’ve already taken out the bull market trendline dating back to the 2009 bottom.

 

 

Another crisis is coming.

 

On that note, we are already preparing our clients for this with a 21-page investment report titled Stock Market Crash Survival Guide.

 

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

 

We are giving away just 1,000 copies for FREE to the public.

 

To pick up yours, swing by:

http://ift.tt/1HW1LSz

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 


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Poetic Justice: Valeant SEC Probe Started After Its Complaint Against Short Seller

In a case of supreme poetic justice, the SEC probe into Valeant which was reported on Monday and which led to a 20% plunge in the price the company’s shares and resulted in Pershing Square’s -19.9% performance through the end of February, was started by Valeant itself following its request of an SEC investigation into short-seller Citron’s claims which made the rounds last fall, and which were among the numerous catalysts that precipitated the historic drop in the price of VRX stock.

As Reuters reports, the regulatory probe of Valeant Pharmaceuticals International, disclosed by the company on Monday, is focused on the drugmaker’s relationship with specialty pharmacy Philidor RX Services and was triggered by Valeant’s own request that regulators investigate a short seller’s allegations, people familiar with the matter said.

Pearson said the SEC review was a continuation of an investigation, requested by Valeant, of a short seller that raised questions about Valeant’s business model and ethics, the people said.

 

In October, Valeant invited the regulator to investigate what it called “completely untrue” allegations from Andrew Left, a short seller and founder of Citron Research, that Valeant used its relationship with Philidor as part of an effort to book false revenues.

 

The SEC probe that resulted has placed focus on Philidor but has also looked into other areas of Valeant’s operations, the people said.

As Reuters adds, this is separate from an existing investigation into Salix Pharmaceuticals, which was purchased by Valeant last year. Ironically, it was none other than Jim Cramer who one year ago said “Valeant’s Not Done Going Higher, Buy on Salix Acquisition.

In that matter, the SEC is primarily focused on whether the former executives misled investors about inventory levels for certain key drugs.

Reuters’ report is based on private conversations that Michael Pearson has had with analysts, which some have suggested may be a violation of Reg-FD: “Some of the people interview by Reuters said that Valeant Chief Executive Michael Pearson described the Philidor link to some brokerage analysts during one-on-one conversations on Monday and Tuesday. “

Valeant told analysts it planned on revealing the SEC investigation in its 2015 annual 10-K report, which has not yet been filed after being delayed by the company, the people said.

As a reminder, just last week Valeant said that Philidor relationship which would lead to the restatement of results, would have a nominal effect on the compnay’s bottom line.

As of this moment the SEC appears to disagree, but the best explanation of this snafu comes from the Twitter account of @JeopardyStocks which summarizes the poetic irony as follows:


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