Justice Thomas Writes in Favor of a Narrow Reading of 47 U.S.C. § 230

From his statement today respecting the denial of certiorari this morning in Malwarebytes, Inc. v. Enigma Software Group USA, LLC:

I write to explain why, in an appropriate case, we should consider whether the text of this increasingly important statute [47 U.S.C. §230] aligns with the current state of immunity enjoyed by Internet platforms….

[The statute:] Enacted at the dawn of the dot-com era, §230 contains two subsections that protect computer service providers from some civil and criminal claims. The first is definitional. It states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” §230(c)(1). This provision ensures that a company (like an e-mail provider) can host and transmit third-party content without subjecting itself to the liability that sometimes attaches to the publisher or speaker of unlawful content.

The second subsection provides direct immunity from some civil liability. It states that no computer service provider “shall be held liable” for (A) good-faith acts to restrict access to, or remove, certain types of objectionable content; or (B) giving consumers tools to filter the same types of content. §230(c)(2). This limited protection enables companies to create community guidelines and remove harmful content without worrying about legal reprisal.

[The publisher/distributor distinction:] Congress enacted this statute against specific background legal principles. See Stewart v. Dutra Constr. Co. (2005) (interpreting a law by looking to the “backdrop against which Congress” acted). Traditionally, laws governing illegal content distinguished between publishers or speakers (like newspapers) and distributors (like newsstands and libraries).

Publishers or speakers were subjected to a higher standard because they exercised editorial control. They could be strictly liable for transmitting illegal content.

But distributors were different. They acted as a mere conduit without exercising editorial control, and they often transmitted far more content than they could be expected to review. Distributors were thus liable only when they knew (or constructively knew) that content was illegal. See, e.g., Stratton Oakmont, Inc. v. Prodigy Services Co., (N.Y. trial ct. 1995); Restatement (Second) of Torts §581 (1976); cf. Smith v. California (1959) (applying a similar principle outside the defamation context).

The year before Congress enacted §230, one court blurred this distinction…. The court determined that [a service provider’s] decision to exercise editorial control over some content “render[ed] it a publisher” even for content it merely distributed. Taken at face value, [in relevant part,] §230(c) alters the Stratton Oakmont rule … [by] indicat[ing] that an Internet provider does not become the publisher of a piece of third-party content—and thus subjected to strict liability—simply  by  hosting  or  distributing  that  content. [But a] dopting the too-common practice of reading extra immunity into statutes where it does not belong, see Baxter v. Bracey (2020) (Thomas, J., dissenting from denial of certiorari [and writing about qualified immunity]), courts have relied on policy and purpose arguments to grant sweeping protection to Internet platforms….

Courts have discarded the longstanding distinction between “publisher” liability and “distributor” liability. Although the text of §230(c)(1) grants immunity only from “publisher” or “speaker” liability, the first appellate court to consider the statute held that it eliminates distributor liability too—that is, §230 confers immunity even when a company distributes content that it knows is illegal. In reaching this conclusion, the court stressed that permitting distributor liability “would defeat the two primary purposes of the statute,” namely, “immuniz[ing] service providers” and encouraging “selfregulation.” And subsequent decisions … have adopted this holding as a categorical rule across all contexts.

To be sure, recognizing some overlap between publishers and distributors is not unheard of. Sources sometimes use language that arguably blurs the distinction between publishers and distributors…. Yet there are good reasons to question this interpretation.

First, Congress expressly imposed distributor liability in the very same Act that included §230. Section 502 of the Communications Decency Act makes it a crime to “knowingly … display” obscene material to children, even if a third party created that content. This section is enforceable by civil remedy. It is odd to hold, as courts have, that Congress implicitly eliminated distributor liability in the very Act in which Congress explicitly imposed it.

Second, Congress enacted §230 just one year after Stratton Oakmont used the terms “publisher” and “distributor,” instead of “primary publisher” and “secondary publisher.” If, as courts suggest, Stratton Oakmont was the legal backdrop on which Congress legislated, one might expect Congress to use the same terms Stratton Oakmont used.

Third, had Congress wanted to eliminate both publisher and distributor liability, it could have simply created a categorical immunity in §230(c)(1): No provider “shall be held liable” for information provided by a third party. After all, it used that exact categorical language in the very next subsection, which governs removal of content. §230(c)(2). Where Congress uses a particular phrase in one subsection and a different phrase in another, we ordinarily presume that the difference is meaningful….

[Internet companies’ selecting and editing decisions:] Courts have also departed from the most natural reading of the text by giving Internet companies immunity for their own content. Section 230(c)(1) protects a company from publisher liability only when content is “provided by another information content provider.” Nowhere does this provision protect a company that is itself the information content provider. And an information content provider is not just the primary author or creator; it is anyone “responsible, in whole or in part, for the creation or development” of the content.

But from the beginning, courts have held that §230(c)(1) protects the “exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content.” Only later did courts wrestle with the language in §230(f)(3) suggesting providers are liable for content they help develop “in part.” To harmonize that text with the interpretation that §230(c)(1) protects “traditional editorial functions,” courts relied on policy arguments to narrowly construe §230(f)(3) to cover only substantial or material edits and additions.

Under this interpretation, a company can solicit thousands of potentially defamatory statements, “selec[t] and edi[t] … for publication” several of those statements, add commentary, and then feature the final product prominently over other submissions—all while enjoying immunity. Jones v. Dirty World Entertainment Recordings LLC (CA6 2014) (interpreting “development” narrowly to “preserv[e] the broad immunity th[at §230] provides for website operators’ exercise of traditional publisher functions”). To say that editing a statement and adding commentary in this context does not “creat[e] or develo[p]” the final product, even in part, is dubious….

[Internet companies’ decisions to remove certain material:] The decisions that broadly interpret §230(c)(1) to protect traditional publisher functions also eviscerated the narrower liability shield Congress included in the statute. Section 230(c)(2)(A) encourages companies to create content guidelines and protects those companies that “in good faith … restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.” Taken together, both provisions in §230(c) most naturally read to protect companies when they unknowingly decline to exercise editorial functions to edit or remove third-party content, §230(c)(1), and when they decide to exercise those editorial functions in good faith, §230(c)(2)(A).

But by construing §230(c)(1) to protect any decision to edit or remove content, courts have curtailed the limits Congress placed on decisions to remove content, see e-ventures Worldwide, LLC v. Google, Inc. (MD Fla. 2017) (rejecting the interpretation that §230(c)(1) protects removal decisions because it would “swallo[w] the more specific immunity in (c)(2)”). With no limits on an Internet company’s discretion to take down material, §230 now apparently protects companies who racially discriminate in removing content.  Sikhs for Justice, Inc. v. Facebook, Inc. (CA9 2017), aff ‘g (ND Cal. 2015) (concluding that “‘any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune'” under §230(c)(1)).

[Internet companies’ decisions about structuring their output and user interface:] Courts also have extended §230 to protect companies from a broad array of traditional product-defect claims. In one case, for example, several victims of human trafficking alleged that an Internet company that allowed users to post classified ads for “Escorts” deliberately structured its website to facilitate illegal human trafficking. Among other things, the company “tailored its posting requirements to make sex trafficking easier,” accepted anonymous payments, failed to verify e-mails, and stripped metadata from photographs to make crimes harder to track. Jane Doe No. 1 v. Backpage.com, LLC (CA1 2016). Bound by precedent creating a “capacious conception of what it means to treat a website operator as the publisher or speaker,” the court held that §230 protected these website design decisions and thus barred these claims.

Consider also a recent decision granting full immunity to a company for recommending content by terrorists.  Force v. Facebook, Inc. (CA2 2019). The court first pressed the policy argument that, to pursue “Congress’s objectives, … the text of Section 230(c)(1) should be construed broadly in favor of immunity.” It then granted immunity, reasoning that recommending content “is an essential result of publishing.” Unconvinced, the dissent noted that, even if all publisher conduct is protected by §230(c)(1), it “strains the English language to say that in targeting and recommending these writings to users … Facebook is acting as ‘the publisher of … information provided by another information content provider.'”

Other examples abound. One court granted immunity on a design-defect claim concerning a dating application that allegedly lacked basic safety features to prevent harassment and impersonation. Herrick v. Grindr LLC (CA2 2019). Another granted immunity on a claim that a social media company defectively designed its product by creating a feature that encouraged reckless driving. Lemmon v. Snap, Inc. (CD Cal. 2020).

A common thread through all these cases is that the plaintiffs were not necessarily trying to hold the defendants liable “as the publisher or speaker” of third-party content. §230(c)(1). Nor did their claims seek to hold defendants liable for removing content in good faith. §230(c)(2). Their claims rested instead on alleged product design flaws—that is, the defendant’s own misconduct.  Cf. FTC v. Accusearch, Inc. (CA10 2009) (Tymkovich,  J.,  concurring)  (stating that §230 should not apply when the plaintiff sues over a defendant’s “conduct rather than for the content of the information”). Yet courts, filtering their decisions through the policy argument that “Section 230(c)(1) should be construed broadly,” give defendants immunity.

[Conclusion:] Paring back the sweeping immunity courts have read into §230 would not necessarily render defendants liable for online misconduct. It simply would give plaintiffs a chance to raise their claims in the first place. Plaintiffs still must prove the merits of their cases, and some claims will undoubtedly fail. Moreover, States and the Federal Government are free to update their liability laws to make them more appropriate for an Internet-driven society.

Extending §230 immunity beyond the natural reading of the text can have serious consequences. Before giving companies immunity from civil claims for “knowingly host[ing] illegal child pornography,” Doe v. Bates (EDTex. 2006), or for race discrimination, Sikhs for Justice, we should be certain that is what the law demands. Without the benefit of briefing on the merits, we need not decide today the correct interpretation of §230. But in an appropriate case, it behooves us to do so.

I like the broad reading of § 230 as a policy matter, and I think it’s defensible as a statutory matter. And I think some of the distinctions that Justice Thomas’s opinion draws, for instance between platform design features and platform publishing decisions isn’t consistent with the text: Deciding how to organize your newspaper, magazine, or book, and what communicative “features” to include in it (e.g., what information to include connected to photographs), is indeed the function of a “publisher,” and I think § 230 should reasonably be read as applying that to web sites and other platforms.

But on balance I think Justice Thomas’s argument is a forceful and thoughtful analysis of the statutory text, and the common-law backdrop against which the text (especially terms such as “publisher”) should be interpreted. And of course it will be especially important in the debate, because it’s coming from a Supreme Court Justice (and one who is so admired by some and so disapproved of by others); so I thought I’d pass it along.

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Justice Thomas Writes in Favor of a Narrow Reading of 47 U.S.C. § 230

From his statement today respecting the denial of certiorari this morning in Malwarebytes, Inc. v. Enigma Software Group USA, LLC:

I write to explain why, in an appropriate case, we should consider whether the text of this increasingly important statute [47 U.S.C. §230] aligns with the current state of immunity enjoyed by Internet platforms….

[The statute:] Enacted at the dawn of the dot-com era, §230 contains two subsections that protect computer service providers from some civil and criminal claims. The first is definitional. It states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” §230(c)(1). This provision ensures that a company (like an e-mail provider) can host and transmit third-party content without subjecting itself to the liability that sometimes attaches to the publisher or speaker of unlawful content.

The second subsection provides direct immunity from some civil liability. It states that no computer service provider “shall be held liable” for (A) good-faith acts to restrict access to, or remove, certain types of objectionable content; or (B) giving consumers tools to filter the same types of content. §230(c)(2). This limited protection enables companies to create community guidelines and remove harmful content without worrying about legal reprisal.

[The publisher/distributor distinction:] Congress enacted this statute against specific background legal principles. See Stewart v. Dutra Constr. Co. (2005) (interpreting a law by looking to the “backdrop against which Congress” acted). Traditionally, laws governing illegal content distinguished between publishers or speakers (like newspapers) and distributors (like newsstands and libraries).

Publishers or speakers were subjected to a higher standard because they exercised editorial control. They could be strictly liable for transmitting illegal content.

But distributors were different. They acted as a mere conduit without exercising editorial control, and they often transmitted far more content than they could be expected to review. Distributors were thus liable only when they knew (or constructively knew) that content was illegal. See, e.g., Stratton Oakmont, Inc. v. Prodigy Services Co., (N.Y. trial ct. 1995); Restatement (Second) of Torts §581 (1976); cf. Smith v. California (1959) (applying a similar principle outside the defamation context).

The year before Congress enacted §230, one court blurred this distinction…. The court determined that [a service provider’s] decision to exercise editorial control over some content “render[ed] it a publisher” even for content it merely distributed. Taken at face value, [in relevant part,] §230(c) alters the Stratton Oakmont rule … [by] indicat[ing] that an Internet provider does not become the publisher of a piece of third-party content—and thus subjected to strict liability—simply  by  hosting  or  distributing  that  content. [But a] dopting the too-common practice of reading extra immunity into statutes where it does not belong, see Baxter v. Bracey (2020) (Thomas, J., dissenting from denial of certiorari [and writing about qualified immunity]), courts have relied on policy and purpose arguments to grant sweeping protection to Internet platforms….

Courts have discarded the longstanding distinction between “publisher” liability and “distributor” liability. Although the text of §230(c)(1) grants immunity only from “publisher” or “speaker” liability, the first appellate court to consider the statute held that it eliminates distributor liability too—that is, §230 confers immunity even when a company distributes content that it knows is illegal. In reaching this conclusion, the court stressed that permitting distributor liability “would defeat the two primary purposes of the statute,” namely, “immuniz[ing] service providers” and encouraging “selfregulation.” And subsequent decisions … have adopted this holding as a categorical rule across all contexts.

To be sure, recognizing some overlap between publishers and distributors is not unheard of. Sources sometimes use language that arguably blurs the distinction between publishers and distributors…. Yet there are good reasons to question this interpretation.

First, Congress expressly imposed distributor liability in the very same Act that included §230. Section 502 of the Communications Decency Act makes it a crime to “knowingly … display” obscene material to children, even if a third party created that content. This section is enforceable by civil remedy. It is odd to hold, as courts have, that Congress implicitly eliminated distributor liability in the very Act in which Congress explicitly imposed it.

Second, Congress enacted §230 just one year after Stratton Oakmont used the terms “publisher” and “distributor,” instead of “primary publisher” and “secondary publisher.” If, as courts suggest, Stratton Oakmont was the legal backdrop on which Congress legislated, one might expect Congress to use the same terms Stratton Oakmont used.

Third, had Congress wanted to eliminate both publisher and distributor liability, it could have simply created a categorical immunity in §230(c)(1): No provider “shall be held liable” for information provided by a third party. After all, it used that exact categorical language in the very next subsection, which governs removal of content. §230(c)(2). Where Congress uses a particular phrase in one subsection and a different phrase in another, we ordinarily presume that the difference is meaningful….

[Internet companies’ selecting and editing decisions:] Courts have also departed from the most natural reading of the text by giving Internet companies immunity for their own content. Section 230(c)(1) protects a company from publisher liability only when content is “provided by another information content provider.” Nowhere does this provision protect a company that is itself the information content provider. And an information content provider is not just the primary author or creator; it is anyone “responsible, in whole or in part, for the creation or development” of the content.

But from the beginning, courts have held that §230(c)(1) protects the “exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content.” Only later did courts wrestle with the language in §230(f)(3) suggesting providers are liable for content they help develop “in part.” To harmonize that text with the interpretation that §230(c)(1) protects “traditional editorial functions,” courts relied on policy arguments to narrowly construe §230(f)(3) to cover only substantial or material edits and additions.

Under this interpretation, a company can solicit thousands of potentially defamatory statements, “selec[t] and edi[t] … for publication” several of those statements, add commentary, and then feature the final product prominently over other submissions—all while enjoying immunity. Jones v. Dirty World Entertainment Recordings LLC (CA6 2014) (interpreting “development” narrowly to “preserv[e] the broad immunity th[at §230] provides for website operators’ exercise of traditional publisher functions”). To say that editing a statement and adding commentary in this context does not “creat[e] or develo[p]” the final product, even in part, is dubious….

[Internet companies’ decisions to remove certain material:] The decisions that broadly interpret §230(c)(1) to protect traditional publisher functions also eviscerated the narrower liability shield Congress included in the statute. Section 230(c)(2)(A) encourages companies to create content guidelines and protects those companies that “in good faith … restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.” Taken together, both provisions in §230(c) most naturally read to protect companies when they unknowingly decline to exercise editorial functions to edit or remove third-party content, §230(c)(1), and when they decide to exercise those editorial functions in good faith, §230(c)(2)(A).

But by construing §230(c)(1) to protect any decision to edit or remove content, courts have curtailed the limits Congress placed on decisions to remove content, see e-ventures Worldwide, LLC v. Google, Inc. (MD Fla. 2017) (rejecting the interpretation that §230(c)(1) protects removal decisions because it would “swallo[w] the more specific immunity in (c)(2)”). With no limits on an Internet company’s discretion to take down material, §230 now apparently protects companies who racially discriminate in removing content.  Sikhs for Justice, Inc. v. Facebook, Inc. (CA9 2017), aff ‘g (ND Cal. 2015) (concluding that “‘any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune'” under §230(c)(1)).

[Internet companies’ decisions about structuring their output and user interface:] Courts also have extended §230 to protect companies from a broad array of traditional product-defect claims. In one case, for example, several victims of human trafficking alleged that an Internet company that allowed users to post classified ads for “Escorts” deliberately structured its website to facilitate illegal human trafficking. Among other things, the company “tailored its posting requirements to make sex trafficking easier,” accepted anonymous payments, failed to verify e-mails, and stripped metadata from photographs to make crimes harder to track. Jane Doe No. 1 v. Backpage.com, LLC (CA1 2016). Bound by precedent creating a “capacious conception of what it means to treat a website operator as the publisher or speaker,” the court held that §230 protected these website design decisions and thus barred these claims.

Consider also a recent decision granting full immunity to a company for recommending content by terrorists.  Force v. Facebook, Inc. (CA2 2019). The court first pressed the policy argument that, to pursue “Congress’s objectives, … the text of Section 230(c)(1) should be construed broadly in favor of immunity.” It then granted immunity, reasoning that recommending content “is an essential result of publishing.” Unconvinced, the dissent noted that, even if all publisher conduct is protected by §230(c)(1), it “strains the English language to say that in targeting and recommending these writings to users … Facebook is acting as ‘the publisher of … information provided by another information content provider.'”

Other examples abound. One court granted immunity on a design-defect claim concerning a dating application that allegedly lacked basic safety features to prevent harassment and impersonation. Herrick v. Grindr LLC (CA2 2019). Another granted immunity on a claim that a social media company defectively designed its product by creating a feature that encouraged reckless driving. Lemmon v. Snap, Inc. (CD Cal. 2020).

A common thread through all these cases is that the plaintiffs were not necessarily trying to hold the defendants liable “as the publisher or speaker” of third-party content. §230(c)(1). Nor did their claims seek to hold defendants liable for removing content in good faith. §230(c)(2). Their claims rested instead on alleged product design flaws—that is, the defendant’s own misconduct.  Cf. FTC v. Accusearch, Inc. (CA10 2009) (Tymkovich,  J.,  concurring)  (stating that §230 should not apply when the plaintiff sues over a defendant’s “conduct rather than for the content of the information”). Yet courts, filtering their decisions through the policy argument that “Section 230(c)(1) should be construed broadly,” give defendants immunity.

[Conclusion:] Paring back the sweeping immunity courts have read into §230 would not necessarily render defendants liable for online misconduct. It simply would give plaintiffs a chance to raise their claims in the first place. Plaintiffs still must prove the merits of their cases, and some claims will undoubtedly fail. Moreover, States and the Federal Government are free to update their liability laws to make them more appropriate for an Internet-driven society.

Extending §230 immunity beyond the natural reading of the text can have serious consequences. Before giving companies immunity from civil claims for “knowingly host[ing] illegal child pornography,” Doe v. Bates (EDTex. 2006), or for race discrimination, Sikhs for Justice, we should be certain that is what the law demands. Without the benefit of briefing on the merits, we need not decide today the correct interpretation of §230. But in an appropriate case, it behooves us to do so.

I like the broad reading of § 230 as a policy matter, and I think it’s defensible as a statutory matter. And I think some of the distinctions that Justice Thomas’s opinion draws, for instance between platform design features and platform publishing decisions isn’t consistent with the text: Deciding how to organize your newspaper, magazine, or book, and what communicative “features” to include in it (e.g., what information to include connected to photographs), is indeed the function of a “publisher,” and I think § 230 should reasonably be read as applying that to web sites and other platforms.

But on balance I think Justice Thomas’s argument is a forceful and thoughtful analysis of the statutory text, and the common-law backdrop against which the text (especially terms such as “publisher”) should be interpreted. And of course it will be especially important in the debate, because it’s coming from a Supreme Court Justice (and one who is so admired by some and so disapproved of by others); so I thought I’d pass it along.

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Desperate Illinois To Borrow From Fed’s “Lender Of Last Resort” Facility A Second Time

Desperate Illinois To Borrow From Fed’s “Lender Of Last Resort” Facility A Second Time

Tyler Durden

Tue, 10/13/2020 – 11:20

Authored by Ted Dabrowski via Wirepoints.org,

Illinois is set to borrow several billion from the Federal Reserve’s Municipal Liquidity Fund (MLF) for a second time if a new U.S. stimulus package and a progressive tax hike scheme for Illinois don’t come through, according to comments from Illinois Gov. J.B. Pritzker. Illinois already borrowed $1.2 billion from the MLF earlier this year in an attempt to close some of the state’s 2020 budget shortfall.

The borrowing is significant since Illinois is the only state in the country to tap the MLF. The Fed created the MLF in April to be a “lender of last resort,” where cities, states and other government entities can go if they can’t raise money as a result of COVID-19. The governor’s comments are an admission that the normal financial markets aren’t willing to lend money to Illinois at competitive terms. 

Normally, billions are raised by cities and states in the municipal bond market, where banks, insurance companies and all types of financial entities lend money directly to governments. But COVID put all that at risk, leading the Fed to step in to make sure governments had somewhere to go if the markets weren’t working.

Fortunately, despite some initial hiccups early on in the pandemic, the financial markets have worked just fine. Billions have been raised by cities and states across the country without having to tap the Fed.

The only exception so far, when it comes to city and state governments, is Illinois. The state borrowed from the MLF in June after the state failed to successfully raise $1.2 billion from the markets one month earlier. New York’s Metropolitan Transportation Authority is the only other borrower in the country to tap the MLF.

COVID-19 has brought to full view all of Illinois’ pre-pandemic problems. The increased stress is highlighting Illinois’ extreme outlier position nationally when it comes to finances, notably pension debts and the state’s unwillingness to reform. Gov. Pritzker continues to count on a federal bailout and more tax hikes to keep the state afloat, but neither will reverse the problems of overwhelming pension costs, the “nation’s least-tax-friendly-state” status and the increasing outmigration of Illinois residents. Wirepoints laid out the state’s outlier status in its recent special report linked here.

Fiscal reality kicks in

Fiscal reality began setting in for Illinois after the state was forced to pay punitive rates when it borrowed $800 million from the markets in May. Illinois’ borrowing rate then was 5.65 percent, five times higher than what well-run, AAA-rated states were paying to borrow money – around 1.1 percent.

It’s a massive penalty that ordinary Illinoisans are being forced to pay through higher taxes or cuts in core government services. The penalty reflects the continued collapse in the state’s finances. Unpaid bills of more than $8 billion$261 billion in state pension debts, and the legislature’s unwillingness to pass any reforms has destroyed confidence in Illinois’ ability to manage its finances. Gov. Pritzker refuses to pursue pension reform, calling any attempts a “fantasy.”

As the below graphic shows, Illinois’ borrowing “penalty” – what the state pays over and above what well-run states pay to borrow – spiked to 4.50 percentage points at the time of the $800 million borrowing in May. That means Illinois’ debt was effectively trading like junk bonds, even though the state was still rated one notch better than junk by all three rating agencies.

Gov. Pritzker has increased Illinois’ dependence on the federal government since the first $1.2 billion MLF borrowing. The governor “balanced” the state’s 2021 budget by including a planned $5 billion borrowing from the Fed, with a further hope to repay that debt via another federal stimulus package.

The governor’s refusal to pursue structural reforms has not gone unnoticed by the rating agencies. Neither has the governor’s failure to pursue budget savings since the pandemic started, though the governor has finally begun talking about cuts. He recently asked his agencies to submit proposals for 5 percent cuts in 2021 and 10 percent in 2022.

That hasn’t impressed the S&P, which noted in a recent report:

 “The magnitude of the current budget gap and reliance on one-time measures make us question Illinois’ ability to achieve structural balance in a reasonable time. Even if Illinois receives federal aid in fiscal 2021, we expect that it will face challenging budget gaps beyond the current fiscal year.”

The rating agency’s analysis reads like it is setting the stage for downgrading Illinois to junk: 

“With the need for additional borrowing, an elevated bill backlog, and lingering substantial structural imbalance, Illinois could exhibit further characteristics of a non-investment-grade issuer.”

Illinois is like the financial basket case down the street whose credit score is so poor he has to borrow at crazy rates from payday lenders. The solution isn’t to keep doing the same things over and over. Instead, it’s to cut up the credit cards, change the bad spending habits and restructure the massive debts.

Read more about Illinois’ fiscal mismanagement:

via ZeroHedge News https://ift.tt/2SNT5vN Tyler Durden

Federal Court Rules Against Louisiana High School After Painting Over Student’s Trump Mural

Federal Court Rules Against Louisiana High School After Painting Over Student’s Trump Mural

Tyler Durden

Tue, 10/13/2020 – 10:47

Authored by Jonathan Turley,

Many of us in the free speech community have long complained that the 1969 case of Tinker v. Des Moines Independent Community School District is often dismissed in cases addressing the free speech rights of students. The famous decision declared that students “do not shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.”

Yet, courts have regularly curtailed free speech rights in deference to school officials maintaining discipline and order in their schools, even in the regulation of speech outside of schools. One rare victory emerged this week in Louisiana where a federal judge ruled that Superintendent Frances Varnado and Washington Parish School District board violated the rights of a high school senior by painting over his mural of President Donald Trump. U.S. District Judge Eldon Fallon relied on Tinker and declared the mural to be protected political speech.

Seniors at Pine Junior-Senior High School can pay $25 for an assigned parking spot and paint the spot as they deem fit, so long as the painting does not include profanity, lewd images and other students’ names. Ned Thomas painted an image of President Trump donned in stars and stripes sunglasses and a bandana.

Superintendent Varnado and the school board declared the mural “too political” and ordered it painted over.

Varnado insisted that she was merely trying to “to avoid controversy, not stir it up.”  Of course, many crackdowns on free speech are justified as an effort to avoid controversy or unrest. Thomas said that he was given no chance to contest the decision and that the mural was painted over ten minutes after he received a call from the school.

The case is a classic example of how school officials have become emboldened in acts of censorship and speech regulation. We have been discussing the alarming rise of speech limitations and sanctions imposed by school officials. We have seen a steady erosion of the free speech rights of students in the last decade. The Supreme Court accelerated that trend in its Morse decision. Former JDHS Principal Deb Morse suspended a student in 2002 during the Olympic Torch Relay for holding up a 14-foot banner across from the high school that read “Bong Hits 4 Jesus.” The case ultimately led to the Supreme Court which ruled in Morse v. Frederick ruling in 2007 for the Board — a decision that I strongly disagreed with and one that has encouraged over-reaching by school officials into protected areas.  Cheerleaders are expected to conform their free speech to accept positions or risk removal from their teams and even liking images on social media can get students suspended.

Fallon’s decision is a refreshing endorsement of the free speech rights of high school students. Fallon held:

The parties do not dispute that Tinker governs this case.

The painting of President Trump cannot reasonably be described as obscene or plainly offensive on its face, nor can it be construed as school-sponsored speech. The Court concludes that N.T.’s portrait constitutes pure political speech under the fourth category. Accordingly, the school’s actions will be analyzed under the framework that student speech cannot be restricted on the basis of viewpoint “unless there is a showing of material and substantial disruption.”

N.T.’s painting, while it is certainly a stylized and colorful image, depicts the sitting President of the United States. This is not a case involving a symbol such as a Confederate flag, which has an established meaning as a “symbol of racism and intolerance, regardless of whatever other meanings may be associated with it.” A.M. ex rel. McAllum v. Cash, 585 F.3d 214, 224 (5th Cir. 2009). Moreover, the painting conforms with all Pine Sr. High School rules regarding senior parking spots. In fact, the student obtained the Principal’s approval before the parking spot was ever painted. Because the Washington Parish School Board opened its schools for student speech by enacting its “Senior Paint Your Parking Space” policy, the First Amendment requires that students be allowed to express their political views freely, absent any conflict with school guidelines.

N.T. stated that he intended the painting to reflect his support for the President’s re-election campaign. Had N.T. worn a Trump lapel pin or displayed a Trump bumper sticker on his car, surely this would have amounted to political speech protected under the First Amendment. The Court sees no difference between those acts of expression and N.T.’s painting at issue here.

Bravo.

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The Reawakening of the Black Gun-Rights Movement

thumb

When Second Amendment activist Brent Holmes started showing up at police brutality protests in Richmond, Virginia, over the summer while carrying an assault rifle across his chest, passersby would cheer him on. 

“‘Yes, yes, he gets it,'” Holmes says. “He knows that he has those rights, too.'”

Holmes, who also wears a red baseball cap with the words “I CAN’T BREATHE” embroidered across the front, is part of a community of black gun-rights activists who have been showing up armed to protests in several American cities.

“You have this history well before the Civil War of organized black self-defense in Northern communities,” says George Washington University Professor of Law Robert J. Cottrol, editor of Gun Control and the Constitution: Sources and Explorations on the Second Amendment (1994). Guns have been essential for protecting black civil rights since the antebellum period, Cottrol tells Reason.

Following “the tremendous push” for black voter registration in the 1950s and ’60s, when the Ku Klux Klan decided to try to “intimidate and kill” those who were involved, Cottrol says, “you have [armed] groups beginning to be formed designed to protect the black community and the Civil Rights community.”

“I believe that I’m channeling my ancestors,” says Holmes. 

Producer and Editor: Qinling Li; Cinematographer: Arthur Nazaryan, Qinling Li; graphics by Lex Villena; research by Regan Taylor

Music: “Contact,” by The Tower of Light; “Alone,” by Emmit Fenn; “Dream Escape,” by The Tides

from Latest – Reason.com https://ift.tt/34WVQAo
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Juventus Shares Crash To 6-Month Lows After Ronaldo Tests Positive For COVID

Juventus Shares Crash To 6-Month Lows After Ronaldo Tests Positive For COVID

Tyler Durden

Tue, 10/13/2020 – 10:33

When (arguably) the best soccer (football) player in the world gets sick, it’s big news, not just for Italian soccer (where he plays for Juventus).

According to a statement from the national soccer federation, Cristiano Ronaldo – the Portuguese superstar player – has been dismissed from national squad work after testing positive for Covid-19.

Cristiano Ronaldo was released from the work of the National Team after a positive test for COVID-19, so he will not face Sweden.

The Portuguese international is doing well, without symptoms, and in isolation.

Following the positive case, the remaining players underwent new tests this Tuesday morning, all with a negative result, and are available to Fernando Santos for training this afternoon, in Cidade do Futebol.

News of the positive test sent Juventus shares plunging further, back to their lowest since the peak of the crisis in April…

Source: Bloomberg

The question is – should investors be buying shares in AS Roma or Lazio?

via ZeroHedge News https://ift.tt/2IiJsD8 Tyler Durden

25-Year-Old Nevada Man First American Confirmed To Have Caught COVID-19 Twice

25-Year-Old Nevada Man First American Confirmed To Have Caught COVID-19 Twice

Tyler Durden

Tue, 10/13/2020 – 10:25

Earlier on Tuesday we reported that new research has identified an 89-year-old Dutch woman who was actually the first known patient to be killed after being reinfected with COVID-19. But an equally important discovery was revealed Monday night in an exclusive report by WSJ, which cited new research about to be published by the British medical journal the Lancet, the same journal that published some of the first research on the virus by Chinese scientists (data later used to help justify the lockdowns that swept across the West).

A Nevada man has become at least the fifth known case of a patient confirmed to have likely been reinfected with the virus. The resident of Nevada’s Washoe County had no known immune disorders, or any other underlying conditions, yet he sought treatment at a hospital after testing positive for a second time.

Though the Nevada patient has now recovered, his case, along with the aforementioned case of the woman in the Netherlands, are raising new questions about the permanence of COVID-19 immunity, which raises new problems for proponents of both lockdowns and a strategy that more closely resembles “herd immunity”, which the WHO’s Dr. Tedros recently denounced as immoral.

The 25-year-old patient became “seriously ill” after being reinfected with what appears to have been a different strain of the virus. Remember, the WHO has estimated that 1 in 10 people around the world (the global population as of Tuesday: 7.7 billion according to the Census bureau’s population clock) has already contracted the virus. Previously, scientists had assumed that practically all of them would still be immune.

During the first go-round, the patient exhibited symptoms consistent with COVID-19: fever, soar throat, cough, headache, nausea and diarrhea, among other symptoms. These symptoms fully cleared during isolation by April 27. Then, on June 5, 48 days after the initial positive test, the patient contracted the virus for the second time. His condition was found to be symptomatically “more severe” than the first. He required treatment for shortness of breath.

To be sure, there have been hundreds of thousands of documented cases where COVID-19 sufferers saw their symptoms ebb and flow repeatedly over months, something that has been informally dubbed “long-hauler” syndrome by its sufferers. But the researchers who published the report said they determined that the second infection was caused by a different strain of the virus.

This is because a comparison of the genetic codes showed “significant differences” between each variant associated with each instance of infection. “These findings suggest that the patient was infected by SARS-CoV-2 on two separate occasions by a genetically distinct virus. Thus, previous exposure to SARS-CoV-2 might not guarantee total immunity in all cases,” the authors of the study said. “All individuals, whether previously diagnosed with COVID-19 or not, should take identical precautions to avoid infection with SARS-CoV-2,” they added.

In summary, the big difference between the Nevada patient and past instances of confirmed reinfection in Hong Kong, the Netherlands and Belgium all showed that the second instance was milder than the first. Of course, for the Nevada patient, and the elderly Dutch woman who succumbed to the second infection, that wasn’t the case.

Pi is 1473309920307647 by Zerohedge on Scribd

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The Reawakening of the Black Gun-Rights Movement

thumb

When Second Amendment activist Brent Holmes started showing up at police brutality protests in Richmond, Virginia, over the summer while carrying an assault rifle across his chest, passersby would cheer him on. 

“‘Yes, yes, he gets it,'” Holmes says. “He knows that he has those rights, too.'”

Holmes, who also wears a red baseball cap with the words “I CAN’T BREATHE” embroidered across the front, is part of a community of black gun-rights activists who have been showing up armed to protests in several American cities.

“You have this history well before the Civil War of organized black self-defense in Northern communities,” says George Washington University Professor of Law Robert J. Cottrol, editor of Gun Control and the Constitution: Sources and Explorations on the Second Amendment (1994). Guns have been essential for protecting black civil rights since the antebellum period, Cottrol tells Reason.

Following “the tremendous push” for black voter registration in the 1950s and ’60s, when the Ku Klux Klan decided to try to “intimidate and kill” those who were involved, Cottrol says, “you have [armed] groups beginning to be formed designed to protect the black community and the Civil Rights community.”

“I believe that I’m channeling my ancestors,” says Holmes. 

Producer and Editor: Qinling Li; Cinematographer: Arthur Nazaryan, Qinling Li; graphics by Lex Villena; research by Regan Taylor

Music: “Contact,” by The Tower of Light; “Alone,” by Emmit Fenn; “Dream Escape,” by The Tides

from Latest – Reason.com https://ift.tt/34WVQAo
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Declassified FBI Spreadsheet Exposes Steele Dossier Farce: Media Reports On FBI Reports Of Media Reports

Declassified FBI Spreadsheet Exposes Steele Dossier Farce: Media Reports On FBI Reports Of Media Reports

Tyler Durden

Tue, 10/13/2020 – 10:05

Authored by ‘sundance’ via TheConservativeTreehouse.com,

CBS News Catherine Herridge has obtained a 94-page spread sheet (pdf here) showing dates of media reports, dates of Steele reports on the same material, and the FBI effort to verify or validate the circular process.   In essence this is evidence of the process we initially shared almost three years ago; only now we know the names.

Former SSCI staffer Dan Jones, former Wall Street Journal reporter Glenn Simpson, and Simpson’s crew at Fusion-GPS, pitched and planted phony Trump-Russia evidence with the media and simultaneously gave those fake points to Chris Steele to supplement the dossier.  Using the same method of Ezra Klein’s “JournOList” replication, Dan Jones and Fusion-GPS paid the journalists to run the stories.

…”media reports on FBI reports of media reports”…

Steele then used the same information from Jones and Fusion in his Dossier and cited the planted media reports; as evidence to substantiate.  The Dossier is then provided to the FBI.  The journalists then provide *indulgences* to the FBI as part of the collaboration.

The FBI, specifically Lisa Page, Peter Strzok and public information office Mike Kortan, then leak the outcomes of the FBI Dossier investigative processes to the same media that have reported on the originating material.   It is all a big circle of planting and laundering the same originating false material; aka a “wrap up smear.”

Here’s the 94-page spread sheet:

Steele Spreadsheet 1 by Herridge

Michael Isikoff highlighted the level of how enmeshed media is with the Fusion team in February 2018 when he admitted his reporting was being used by the DOJ and FBI to advance the political objectives of the intelligence community.

Additionally, FBI investigator Peter Strzok and FBI attorney Lisa Page were shown in their text messages to be leaking stories from the Clinton Investigation, the Trump investigation and the Mueller investigation to journalists at Politico, The Wall Street Journal and Washington Post. –SEE HERE

FBI Deputy Director Andrew McCabe was busted by the Inspector General leaking stories to the media and then lying about it to INSD and IG investigators. FBI Director James Comey admitted to leaking stories to the New York Times, and even hired his friend Andrew Richman (off-the-books), gave him access to FBI and NSA databases, and then leaked information to Richman along with another friend Benjamin Wittes at Lawfare blog.

Lest we forget, the IG report on how the FBI handled the Clinton investigation revealed that dozens of FBI officials were actually taking bribes from the media for information:

IG REPORT – We identified numerous FBI employees, at all levels of the organization and with no official reason to be in contact with the media, who were nevertheless in frequent contact with reporters. Attached to this report as Attachments E and F are two link charts that reflect the volume of communications that we identified between FBI employees and media representatives in April/May and October 2016. We have profound concerns about the volume and extent of unauthorized media contacts by FBI personnel that we have uncovered during our review.

[…] We do not believe the problem is with the FBI’s policy, which we found to be clear and unambiguous. Rather, we concluded that these leaks highlight the need to change what appears to be a cultural attitude among many in the organization. (link to pdf – page Xii of executive summary)

Madness.

This is an IG fact-based criticism of the institution of the FBI, not simply a few rogue officials within it.

But wait…. Perspective:

Later it was revealed that Andrew Weissman, Robert Mueller’s #1 special counsel prosecutor, was coordinating investigative efforts with the full support of four AP reporters who were giving Weissman tips.  That’s information from journalists to use in his court filings and submitted search warrants.  Make sure you grasp this: The AP journalists were feeding information to their ideological allies within the special counsel.

Nuts; simply, well, nuts.

And then there’s Devlin Barrett, Lisa Page and Peter Strzok:

(Source Link – pdf Page #5)

Additionally, Christopher Steele has stated in U.K. court records the person in charge of the Clinton Campaign’s opposition research firm, Glenn Simpson from Fusion GPS, arranged and coordinated for Mr. Steele to talk to several journalists (CNN, The New York Times, The Washington Post, Yahoo News and Mother Jones) while Mr. Steele was also the primary source of information for the FBI investigators (including Strzok and Page):

(Source – page #8)

Make sure you read that full response from Christopher Steele above to see the scope of the media engagements he was conducting.

As more evidence surfaces the relationship between journalists, Fusion-GPS, Chris Steele and the media’s DOJ/FBI sources begins blending together. The FBI was using media reports, which were based on Fusion-GPS pitches, to bolster its investigative documents to the FISA court. It is an intelligence laundry operation:

According to the U.K records, Christopher Steele reports this September 2016 meeting with Isikoff was arranged by Glenn Simpson. According to Michael Isikoff on his February podcast, he met Christopher Steele at a Washington, D.C. hotel in Sept. 2016. They were joined by his “old friend” Glenn Simpson, the founder of opposition research firm Fusion GPS, who Isikoff now defines as a “private investigator.”

So Christopher Steele was meeting with journalists, the journalists were writing articles; the FBI was leaking to media and simultaneously citing those same articles as underlying evidence to support their counterintelligence investigations; and all of this was used to validate the investigative documents the FBI was receiving from Christopher Steele; who, along with the leaking FBI officials, was also the source of the media articles.

FUBAR! This is exponentially bonkers.

This is a circle of information, all coming from Dan Jones and Glenn Simpson at Fusion GPS, who was the opposition research firm being financed by Hillary Clinton, along with FBI officials who were using their own strategic leaks to validate their own investigation.

Think about the scale of the reporting, and reporting on reporting, of anonymous leaks, false leaks, lies from “people with knowledge of the matter”, “government officials involved in the matter”, “people familiar with the matter”, “government sources” etc. all going in one unified and semi-coordinated direction – against the aggregate Trump administration.

Now, it actually gets even more convoluted.

Christopher Steele has sworn under oath that he met with multiple journalists (at least eight organizations) in September, mid-October, and late-October 2016: “at Fusion’s instruction“. (pdf page #7)

Overlay upon that sworn admission with what Glenn Simpson (Fusion-GPS) told the House Intelligence Committee while also under oath about his involvement in sharing information derived from Christopher Steele:

(Testimony – pdf link, page #147)

…”without my knowledge and against my wishes”?

Huh?

FBI Director James Comey admits to leaking his ‘memos’ to the New York Times. FBI Deputy Director Andrew McCabe was busted for leaking and lying about it. FBI #2 Counterintelligence Agent Peter Strzok and FBI Attorney Lisa Page are caught in their text messages leaking to Politico, The Wall Street Journal and The Washington Post.

…. AND the FBI is caught, in at least one FISA application, using Yahoo media reports provided by them AND their investigative source Christopher Steele to establish a basis for FISA “Title I” surveillance; the most intrusive and wide-open search and surveillance authority possible.

The Clinton Campaign is paying Fusion-GPS to conduct opposition research against Donald Trump. In addition to the collaboration between Dan Jones, Glenn Simpson pushed that opposition research into the media, and Fusion GPS is also providing that opposition research –including information from contacts with media– directly to the FBI:

(pdf link – page #4)

… In addition to using the Fusion-GPS opposition research to underpin their counterintelligence investigation, the FBI then turn around and leak the same opposition research information to the media to create secondary support for their counterintelligence investigation.

Tell me again how the media can possibly write about this now?

The problem is not just corruption with the U.S. Justice System, the DOJ and the FBI; the problem is corruption within the media.

We’re talking about thousands of hours of media TV pundits, thousands more columns written, and almost every scintilla of it based on originating intelligence sources -from the larger intelligence system- that are now being exposed as duplicitous and conspiratorial in the scale of their malicious intent.

This larger story-line has traveled in one direction. The narrative has only traveled in one direction. Each thread converging on codependent trails for collective stories all going in one direction. One big engineered narrative endlessly pushed. Think about how far the collective media have traveled with this story over the past eighteen months?

Hell, twenty-something-year-old “journalists” were so committed to the resistance narrative they were even sleeping with their sources to get any little engineering angle possible.

Now, over a period of several years, it has become increasingly obvious the collective journey, using all that expended effort, was intentionally going in the wrong direction.

The media have fully invested themselves in four months of narrative distribution in only one direction. Not a single MSM entity has questioned their travel as a result of false leaks or false sources in the totality of time they have covered the DOJ and FBI story.  They have even won Pulitzer prizes for writing stories about the lies and manufactured evidence.

Nothing within their collective need to will-an-outcome will change the media’s proximity to facts as the truthful story behind the DOJ and FBI corruption is finally exposed. The media are so far away from the place where this story ends, they have no inherent capability to even begin to travel in the opposite direction, toward the truth.

The only way they could align with the truth is to admit that virtually every scintilla of their reportage over the past four years was inherently false or manipulated by the “sources” distributing the material for their willfully blind reporting.

There’s not a single media outlet capable of doing that.

Think about a New York Times, CNN, New Yorker, Wall Street Journal, Mother Jones, Yahoo News or Washington Post journalist having to write an article deconstructing a foundation of four-years worth of lies they participated in creating.

Do we really think such a catastrophic level of corrupted journalism could reconstitute into genuine reporting of fact-based information?

EVER?

Impossible.

via ZeroHedge News https://ift.tt/2SRdP5O Tyler Durden

Nomura Warns, Gamma-Squeeze “Extreme Grab” Could Flip To “Extreme Vomit” By Friday

Nomura Warns, Gamma-Squeeze “Extreme Grab” Could Flip To “Extreme Vomit” By Friday

Tyler Durden

Tue, 10/13/2020 – 09:45

Nasdaq was on a charge again overnight, incessantly bid from the open in Europe, after yesterday’s three-legged meltup – the biggest day in six months – on the heels of what appeared to be the re-emergence of ‘Nasdaq Whale’, which Softbank vehemently denied was them last night (thou doth protest too much?)

As we detailed yesterday, the combination of extreme short speculative futures positioning and the ‘Gamma-Squeeze’ is driving Nasdaq – and thus the mega-tech names – virtuously higher…

…the same “gamma squeeze” dynamic we observed in mid/late August when Masa Son’s SoftBank ended up buying billions in call spreads, sparking a meltup in tech names is back and just like in August, liquidity is dismal which likely means that SoftBank is back for round three (after a failed attempt to squeeze the Nasdaq higher two weeks ago). 

To this point, JPMorgan strategist Shawn Quigg wrote last week that the market’s low liquidity environment “lays the groundwork for dealer positioning (i.e., gamma imbalances) that can further exacerbate existing market trends, and volatility dynamics (e.g., prices up/volatility down to prices up/volatility up). As such, market participants now closely follow large dealer gamma imbalances ahead of potentially impactful macro events, primarily in options on the S&P 500, to gauge potentially trend accentuating dealer flows.”

But, as someone famous once said, “that which can’t go on forever, doesn’t,” and while Nomura’s Charlie McElligott notes “It’s an Equities world, the rest of us are just living in it,”

…the market “gets” the Dealer “short Gamma” dynamic in mega-cap single-names with very large open interest outstanding (remember, the large Oct expiries from the Aug Calls / Call Spreads were in AMZN, ADBE, GOOG and NFLX) and are in the process of self-fulfilling near or even through the strikes which the Dealer(s) is short and thus forced to aggressively Delta hedge…

McElligott warns that the trick again is that “short Gamma” can cut the spot market both ways, just as experienced in the Aug rally then followed by the Sep swan dive…

just like the Aug / Sep “pivot” from extreme grab to extreme vomit, if we were to continue rallying into Friday’s expiration, there will continue being a ton of stock to buy for the Dealers to remain delta hedged and extend the melt-up (i.e. late Aug)—but if we roll over and the individual stocks trade well below the strikes and the options again look “worthless” (back to last week’s levels, LOLOL), there then would be a massive puking of all that Dealer delta hedge, just like the Aug turn into Sep expiry (Note: the same thing would occur if the client were to unwind the position)

In my eyes, we are not quite at that same “vol up, spot up” red-flag level just yet as said Aug / Sep swing, particularly bc the delta hedging is still far too “real” here as judging by NQA +103bps early today vs ESA -6bps and RTYA -92bps – there is just too much convexity out there and it is forcing the standard “short Gamma” into a rally perversion of “buying more to stay hedged the higher it goes”

As I said yesterday however, next week – post Op-Ex – could see spot markets get very “binary,” with the latest index-level options analysis showing that 32% of the Gamma in SPX / SPY is set to come off, and an incredible 60% of the Gamma in QQQ set to roll-off after this expiry – and all with $Delta back at historical super-extremes (SPX at $452.2B – 97.5%ile, QQQ at $20.8B – 100%ile).

Will today’s iPhone 12 unveiling be the “sell the news” trigger? Or will we have to wait for Friday’s Op-Ex?

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