The country has refused to allow inspectors to access disputed sites…
Iran may be engaging in “undeclared nuclear material and activities,” a nuclear watchdog agency revealed this week, raising concerns that the Islamic theocracy might be developing weapons outside of international oversight.
The International Atomic Energy Agency said in a declassified letter released on Friday that earlier in the year it had “identified a number of questions related to possible undeclared nuclear material and nuclear-related activities at three locations in Iran that had not been declared by Iran.”
The agency multiple times requested “clarifications” regarding Iran’s nuclear activities, including its use of uranium and whether it had engaged in research and development of nuclear processes.
Yet Iran refused to allow inspectors access to sites where possible nuclear projects were ongoing. The country said it would “not recognize any allegation on past activities and does not consider itself obliged to respond to such allegations.”
The agency “continued to request clarifications and access,” though by early March Iran still had not allowed access to the sites in question.
The country’s refusal was “adversely affecting the Agency’s ability to clarify and resolve the questions and thereby to provide credible assurance of the absence of undeclared nuclear material and activities in Iran,” the agency said in its letter.
In a resolution adopted on Friday, the IAEA called on Iran to “fully cooperate with the Agency and satisfy the Agency’s requests without any further delay, including by providing prompt access to the locations specified by the Agency.”
via ZeroHedge News https://ift.tt/2YTqPdD Tyler Durden
Read Here: John Bolton’s Full White House Exposé Leaked Online Tyler Durden
Sun, 06/21/2020 – 11:41
Following the judge’s comments yesterday, he was unlikely to see much profit from the book, but now that the PDF of John Bolton’s controversial tell-all book “The Room Where It Happened” has been leaked online, the neocon-warhawk may not see a penny..
Oh no!! The pdf of Bolton’s book got leaked and people can download it and read it on the phones or iPads! That would mean he doesn’t get a royalty!! Oh no! The Room Where It Happened – John Bolton.pdf – Google Drive https://t.co/K7XgcQ63qT
Interestingly, in his tweet yesterday, President Trump mentioned the “leak”:
“BIG COURT WIN against Bolton. Obviously, with the book already given out and leaked to many people and the media, nothing the highly respected Judge could have done about stopping it…”
Enjoy.
As Ben Garrison recent noted, in an interview Bolton stated that it was OK for the government agencies to lie to the American people if national security is at stake. And it always seems to be at stake for dominant men who want secrecy and power. Bolton is a dangerous liar and his anti-Trump screed cannot be trusted.
It’s time to slam the book shut on Bolton.
via ZeroHedge News https://ift.tt/2YnvOV8 Tyler Durden
In my previous post based on my new book Free to Move: Foot Voting, Migration, and Political Freedom, I briefly explained what the book is about, and why I decided to write it in the first place. In this one, I provide an overview of one of the book’s central arguments: why foot voting outperforms ballot box voting as a mechanism of political freedom.
Most people believe ballot box voting is the ultimate expression of political freedom. When Americans vote in this year’s presidential election – and other elections -we get to decide what government policies we will live under. But ballot box voting has two serious weaknesses: individual voters have almost no chance of affecting the outcome of an election, and for that very reason they have little incentive to make well-informed decisions. These problems can be mitigated by empowering more people to “vote with their feet.”
People can vote with their feet through international migration, by choosing what jurisdiction to live in within a federal system, and by making decisions in the private sector, such as living in a private planned community. These three types of foot voting are often considered in isolation from each other. But they have many commonalities, including as mechanisms for exercising political choice.
Effective freedom requires the ability to make a decisive choice. For example, a person does not have meaningful religious freedom if she has only a 1 in 60 million chance of being able to determine which religion she wishes to practice. A 1 in 60 million chance of deciding what views you are allowed to express is not meaningful freedom of speech. What is true of freedom of speech and religion also applies to political freedom. A person with only an infinitesimal chance of affecting what kind of government policies he or she is subjected to has little, if any, genuine choice.
The near-powerlessness of individual voters also incentivizes them make little or no effort to become informed about political issues. Surveys consistently show that voters are often ignorant even about basic aspects of the political system and government policy. For example, only about a third can even name the three branches of government: executive, legislative, and judicial. In Free to Move, and my previous book Democracy and Political Ignorance, I show how political ignorance is both widespread, and extremely difficult to overcome. Perhaps even worse, voters also have incentives to be “rationally irrational”—to do a poor job of evaluating the political information they do have.
Medical ethics requires doctors to get the “informed consent” of patients before treatment. Government policies also carry serious risks. Like medical operations, they too are literally matters of life and death. Yet, widespread public ignorance ensures that elections rarely secure anything approaching informed consent of the governed. Elected governments are like doctors over whom you have almost no control, mandating treatments you know little about.
Voting is not the only mechanism of traditional political participation. Some can also try to influence government policy by lobbying, campaign contributions, and political activism. But opportunities for such participation “beyond voting” are highly unequal, with only an estimated 25% of Americans engaging in it at all. Even if access to such participation could somehow be equalized, we would still be left with the reality that each individual citizen would have only a miniscule chance of influencing policy outcomes. If participation beyond voting were fully equal, each individual participant would have no better odds of changing things by that mechanism than they do by voting. In both cases, increasing the influence of some necessarily means diminishing that of others.
Things are very different when people “vote with their feet.” When you decide what jurisdiction to live in, that is a decision you have real control over. That in turn creates strong incentives to seek out relevant information. The same applies to private-sector decisions, and choices about international migration. Most people probably devote more time and effort to deciding what television set or smartphone to buy, than to deciding who to vote for in any election. The reason is not that the television set is more important than who governs the country, but that the decision about the TV has real effects.
In Chapter 1 of the book, I explain how these two advantages of foot voting over ballot box voting translate into superiority from the standpoint of several different theories of political freedom, including government by consent, negative freedom, positive freedom, and “nondomination” theory. I also describe how foot voting is superior under the criteria for “fair value” of political participation set forth in John Rawls’ great work A Theory of Justice. While I am a libertarian and that background was part of what led me to write Free to Move, the position I defend in the book does not rely on any distinctively libertarian premises. To the contrary, it can be defended based on a wide range of theories of political freedom associated with the liberal tradition, including left-wing strands thereof. Nondomination theory and Rawls’ position are far from libertarian, yet foot voting turns out to trump ballot box voting even under their criteria.
Chapter 1 also offers responses to a number of objections to the case for foot voting. They include claims that foot voting decisions cannot really be considered “political” because they are driven by “economic” factors, arguments that foot voting is inimical to the interests of families and dependent children, and claims that the problem of political ignorance can be easily overcome through education or information shortcuts.
I do not claim that foot voting can completely displace the ballot box as a mechanism of political choice. In the book, I describe several constraints on foot voting, and also explain how the two mechanisms can be mutually reinforcing in some ways. But the advantages of foot voting over ballot box voting do justify greatly expanding the role of the former. Chapters 2 through 4 of the book describe how that can be done.
UPDATE: The Introduction to the book, which provides an overview of the rest, is available for free download here.
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Throughout the country, prosecutors are bringing charges against individuals who used the George Floyd-inspired protests as an excuse for rioting, looting and mayhem. The ubiquity of video cameras has facilitated some of these investigations and arrests, though widespread mask-wearing has made it more difficult to identify some perpetrators who did not otherwise identify themselves, such as through social media posts.
Most charges related to rioting and looting are filed by local prosecutors, but the Feds have gotten into the act as well, filing a wide range of charges against a wide range of activity. Some of these cases involve plausible federal interests, such as alleged interstate conspiracies to use protests as a cover for criminality. Others, not so much.
As part of a Justice Department-led drive to crack down on violence growing out of protests spurred by George Floyd’s killing at the hands of Minneapolis police, the federal government is prosecuting more than 70 people for alleged behavior that runs the gamut from mere vandalism, to inciting looting through Facebook Live posts, to arson, and, in one case, murder.
While some of the cases are unquestionably grave, others seem less so, and have raised questions about whether the federal government is stretching its authority to satisfy President Donald Trump’s desire to see a forceful federal intervention in the protests.
Two cases, for instance, involve individuals facing federal felony charges for breaking police car windows, relying on federal statutes not often applied in such instances. In another case, federal authorities charged a man with possession of a Molotov cocktail, arguing that because he had used an imported bottle of Patron Citronge Pineapple Tequila to make the incendiary device, the case fell under the federal government’s regulation of foreign commerce.
Existing doctrine is quite permissive (too permissive, in my view) of attempts by federal prosecutors to turn local criminality into federal crimes. If all a U.S. Attorney has to do is identify some object crossed state lines, virtually every activity becomes subject to federal prosecution. Further, it allows federal prosecutors to select cases for federal prosecution not based upon any legitimate federal interest, bur rather on whether a given case serves the political interests of the office, the Justice Department, or the Administration.
It also seems to me that the Department of Justice, at least at the moment, is the least active in pursuing cases where federal involvement can be most readily justified: Alleged cases of police brutality against peaceful protesters. There is no reason to believe local authorities are incapable of prosecuting local crimes committed by those within their jurisdiction. There are, however, ample reasons to suspect that, at least in some jurisdictions, local authorities cannot be trusted to investigate or prosecute members of law enforcement who violate the rights of citizens. If the Justice Department really wants in on the post-protest prosecutions, this is where it should focus.
The destruction of property and violence against individuals should be prosecuted. Under our constitutional system, primary responsibility for such prosecutions lies with state and local governments, not the Feds.
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Florida Nears 100k Mark As US Reports Largest Jump In Daily COVID-19 Cases In 7 Weeks: Live Updates Tyler Durden
Sun, 06/21/2020 – 11:26
With only a few more hours to go until US equity futures open on Sunday night, it appears the dire situation across the American south and West has gone from bad to worse. According to a Washington Post tally of coronavirus data released by each state on Saturday, 8 states on Saturday reported their highest single-day case counts since the pandemic began, and the pan-US tally of new infections surpassed 30,000 for the second straight day (both Friday and Saturday). The US hasn’t regularly reported 30k COVID-19 cases a day in seven weeks. And while New York and the surrounding states that caught the brunt of the outbreak – or the first wave, at least – haven’t seen the feared upsurge in new cases.
States across the South and West, including Florida, Texas, Georgia, South Carolina, Utah, Washington, Nevada and Missouri, set records for single-day confirmed cases, and 13 states set new highs for their 7-day averages.
On Sunday, Florida reported another 3,494 new cases, bringing the statewide total to 97,291. Though Sunday’s number broke a streak of daily records, it is still well above the 7-day average seen in recent weeks, leaving the state on track to pass the 100k case mark tomorrow.
Florida would become the 7th state to pass 100k behind New York, California, New Jersey, Illinois, Texas, Massachusetts.
According to the NYT, 22 states were listed under the “increasing” tab of its coronavirus tracker.
Furthermore, while the Washington Post reported that the first iterations of the COVID-19 tests distributed nationwide in March and April by the CDC were so inaccurate as to be practically useless, a chorus of Democratic critics led by Joe Biden has spoken out against President Trump over a remark he made during last night’s rally in Tulsa, when he suggested that he pressed the CDC to hold back on the testing during the early days of the outbreak.
Even if Trump was telling the truth (the president, of course, has a widely acknowledged tendency to exaggerate when speaking extemporaneously at these rallies), a surge in testing during the early days of the outbreak may have only created more confusion. But many of the president’s Democratic critics claimed Trump’s remarks further cemented the notion that he put the economy before safeguarding the lives of the most vulnerable Americans.
“The President said tonight that he slowed down testing so the public death toll wouldn’t be worse,” Elizabeth Warren tweeted. “We still don’t have a national testing strategy & Trump’s plan is to bury his head. This is a deadly failure.”
Outside of the US, Spain officially entered the next phase of its reopening plan on Sunday, which included allowing tourists from most of Europe, but warning that social distancing measures must be followed to avoid a second wave. Speaking just before the three-month-old measures expired at midnight Saturday, Spanish PM Pedro Sánchez asked the country to keep its guard up.
“We will leave behind the state of alarm and we will enter the new normality…our economy is starting to beat. We are in a situation where we can move forward. We can’t drop our guard,” he reportedly said.
After finally wrestling a surprisingly virulent outbreak under control, Saudi Arabia on Sunday removed curfews and other restrictions imposed to fight its spread after 73 days of w relatively restrictive lockdown that also kept millions of Muslim pilgrims out of the Holy Cities as pilgrimmages were put on hold.
Over in East Asia, South Korea reported 48 new cases of the virus, 8 of which were imported, half from Bangladesh and half from Pakistan. In response, South Korea announced Saturday that it would restrict travel from both countries.
via ZeroHedge News https://ift.tt/3hMZFh7 Tyler Durden
You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla.
Dear junkies addicted to the Federal Reserve’s free-money smack: like all addicts, you firmly believe you’re not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you’re going to buy the dip and max out your margin account because the craving cannot be denied.
Speaking of denial: you don’t realize you’re the dealers’ chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.
Here’s how it ends, figuratively speaking: you’ll wake up inside your Mercedes in a god-forsaken patch of urban wreckage, all the doors will be locked and you won’t remember even leaving the party, much less how you got here.
You’ll compulsively check your account and find that your margin call exceeds the value of your entire portfolio because the bottom dropped out while you were in a Fed-smack-induced haze, dreaming of prancing unicorns and angels dancing in the head of a pin.
Only now will you understand you were not a trading genius who would get out at the top, no problem, but a bagholder, played perfectly by the big dealers who sold to you. Now you’re wiped out because you don’t have enough cash to cover the margin call that’s left after your portfolio was liquidated.
You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla. The dealers who you thought were your pals at the party made sure you wouldn’t be around to cause a scene when you found you could no longer count on the Fed’s baggies of the good stuff.
While you gird yourself for the agonies of cold turkey, consider Exhibit 1, the Fed’a balance sheet in February 2020:
2/5/20 $4.166 Trillion
2/12/20 $4.182 Trillion
2/19/20 $4.171 Trillion
Notice anything about the Fed’s supply of free-money smack? It dried up. But all the junkies didn’t notice because they were so sure that the Fed’s supply of junk was infinite.
A funny thing happened on February 19–the market topped out and crashed the following week. Now look at this month’s supply of Fed smack:
6/3/20 $7.165 Trillion
6/10/20 $7.168 Trillion
6/17/20 $7.094 Trillion
Umm, notice any similarity?
Fed junkies know one thing: the only thing that matters is the Fed’s junk. Real economy: doesn’t matter. Corporate sales: doesn’t matter. Corporate profits: doesn’t matter. Tax receipts: doesn’t matter. Household income: doesn’t matter.
The only thing that matters is the Fed is supplying baggies of the good stuff. Spoken like a true junkie, my friend, but once the high wears off consider what the Fed can’t do:
1. It can’t reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.
2. It can’t make people take on the risks and heartaches of starting new businesses.
3. It can’t force employers to hire more employees.
4. It can’t make unprofitable businesses profitable.
5. It can’t force people to buy assets at prices that no longer make financial sense.
6. It can’t make insolvent businesses and local governments solvent.
7. It can’t force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.
8. It can’t lower the unaffordable cost structure of the entire economy.
9. It can’t de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.
10. It can’t stop people from selling their assets.
In summary, The Fed can’t stop the unwinding of an unsustainable bubble of epic proportions. We are entering The Greatest Depression because Fed smack has zero effect on the real world; its only effect is to increase the delusion that asset bubbles are all that matters.
Also recall that the Deep State is not going to allow Jay Powell to re-elect Donald Trump with a stock market rally. From the point of view of the inner circle of the Deep State, the market collapse in March was simply a test to confirm what happens when the free-money smack is withdrawn. The test was a success and now the real crash can begin. Only this time it won’t last three weeks. It will last all the way through October because, well, you know why: Deep State to Powell: Stop Goosing Stocks Higher Or You’ll Re-Elect Trump (June 9, 2020)
Conservative Activist Calls To ‘Cancel Yale’ For Being Named After Slave Trader Tyler Durden
Sun, 06/21/2020 – 10:57
In addition to its reputation as one of the greatest and most exclusive institutions of higher learning on the planet, Yale is well known for its dedicated activist community. For most, it’s a phase before they go on to law school and then White & Case or whichever intrinsically evil corporate law behemoth swallows them up. Still, they press on with ‘demonstrations’ like interrupting football games, blocking traffic and building makeshift occupied protests on the city green, that generally accomplish little more than annoying the rest of the New Haven community, all breathlessly chronicled by the Yale Daily News.
It is largely thanks to this community of activists that Yale’s connection to the slave trade has been unearthed. Before he laid the foundation for what would become Yale University, Elihu Yale was a successful slave trader. Of course, Yale’s direct connection to slavery isn’t unique among the Ivies. A Democracy Now article from 7 years ago notes that “…many major U.S. universities — Harvard, Yale, Princeton, Brown, Dartmouth, Rutgers, Williams and the University of North Carolina, among others — are drenched in the sweat, and sometimes the blood, of Africans brought to the United States as slaves.”
Given that Ivy League educated “activists” have led the progressive far-left’s vindictive reckoning with history (elite American universities have been the most successful petri dish for the ideology that has become the American “progressive” left’s obsession with victimization and righting wrongs from centuries ago), it was only a matter of time before the angry mob turned on them, too. And now, a white man who once tweeted that his goal in life is to “burn the American university system to ash for what it’s done to the minds of this generation” – could there be a more noble cause? – has made #CancelYale a reality.
My life goal is to burn the American university system to ash for what it’s done to the minds of this generation. And salt the ground on which it stood. https://t.co/JwXR2eRQPZ
Indeed, the only reason that the statues on Yale’s New Haven campus haven’t yet been vandalized is probably because all of Yale’s students are back home. And outside the Yale student body, nobody in the community is really that invested in these issues.
Kelly, a podcast host and conservative commentator, has (somewhat facetiously) proposed legislation which he’s calling “‘the Strip University Credentials Act’ for every American university like Yale, Georgetown, and Brown who are founded by slave owners.” While the “Suc Act” isn’t a genuine piece of proposed legislation, the ideas expressed by Kelly fit with the American far-left’s platform of leveraging the power of the state to coerce institutions into kowtowing to their political demands.
Kelly on Saturday fired off a tweet noting that Yale University is named after Elihu Yale, a British merchant and slave trader: “Yale University was named for Elihu Yale. Not just a man who had slaves. An actual slave trader. I call on Yale to change its name immediately and strip the name of Yale from every building, piece of paper, and merchandise,” he tweeted.
He then called on Congress to pass a (non-existent) bill that would punish American colleges that didn’t act to strip the legacy of the slave trade from their universities.
I am calling on both parties in Congress to pass the Strip University Credentials Act for every American university like Yale, Georgetown, and Brown who are founded by slave owners. I’m calling it the SUC Act.
End university racism and these monuments to slavery. #SucAct
Some of Jesse Kelly’s tweets have more fight in them than an entire GOP Senate. https://t.co/ICCwXihNGa
— Emerald Robinson ✝️ (@EmeraldRobinson) June 21, 2020
Others noted that Yale has several ‘racist’ pieces of art hanging in its museum of British Art located within the university’s sprawling campus in downtown New Haven.
Princeton famously was forced to reckon with its history of slavery a few years back when the New York Times ran a series on the school’s blood-soaked history. Virtually all of the Ivy League schools (one of which – Columbia – is named after Christopher Columbus) and many other elite American colleges and universities have connections to the slave trade, since dozens of American colleges date back to the 19th and 18th centuries.
Curious to learn more? NPR’s “All Things Considered” dedicated an episode to this topic back in 2013.
We’re surprised we haven’t see any other media organizations resurface this since now, especially after the college bribery scandal re-centered the American university system as a primary progenitor of economy.
via ZeroHedge News https://ift.tt/3eo6PX7 Tyler Durden
In my previous post based on my new book Free to Move: Foot Voting, Migration, and Political Freedom, I briefly explained what the book is about, and why I decided to write it in the first place. In this one, I provide an overview of one of the book’s central arguments: why foot voting outperforms ballot box voting as a mechanism of political freedom.
Most people believe ballot box voting is the ultimate expression of political freedom. When Americans vote in this year’s presidential election – and other elections -we get to decide what government policies we will live under. But ballot box voting has two serious weaknesses: individual voters have almost no chance of affecting the outcome of an election, and for that very reason they have little incentive to make well-informed decisions. These problems can be mitigated by empowering more people to “vote with their feet.”
People can vote with their feet through international migration, by choosing what jurisdiction to live in within a federal system, and by making decisions in the private sector, such as living in a private planned community. These three types of foot voting are often considered in isolation from each other. But they have many commonalities, including as mechanisms for exercising political choice.
Effective freedom requires the ability to make a decisive choice. For example, a person does not have meaningful religious freedom if she has only a 1 in 60 million chance of being able to determine which religion she wishes to practice. A 1 in 60 million chance of deciding what views you are allowed to express is not meaningful freedom of speech. What is true of freedom of speech and religion also applies to political freedom. A person with only an infinitesimal chance of affecting what kind of government policies he or she is subjected to has little, if any, genuine choice.
The near-powerlessness of individual voters also incentivizes them make little or no effort to become informed about political issues. Surveys consistently show that voters are often ignorant even about basic aspects of the political system and government policy. For example, only about a third can even name the three branches of government: executive, legislative, and judicial. In Free to Move, and my previous book Democracy and Political Ignorance, I show how political ignorance is both widespread, and extremely difficult to overcome. Perhaps even worse, voters also have incentives to be “rationally irrational”—to do a poor job of evaluating the political information they do have.
Medical ethics requires doctors to get the “informed consent” of patients before treatment. Government policies also carry serious risks. Like medical operations, they too are literally matters of life and death. Yet, widespread public ignorance ensures that elections rarely secure anything approaching informed consent of the governed. Elected governments are like doctors over whom you have almost no control, mandating treatments you know little about.
Voting is not the only mechanism of traditional political participation. Some can also try to influence government policy by lobbying, campaign contributions, and political activism. But opportunities for such participation “beyond voting” are highly unequal, with only an estimated 25% of Americans engaging in it at all. Even if access to such participation could somehow be equalized, we would still be left with the reality that each individual citizen would have only a miniscule chance of influencing policy outcomes. If participation beyond voting were fully equal, each individual participant would have no better odds of changing things by that mechanism than they do by voting. In both cases, increasing the influence of some necessarily means diminishing that of others.
Things are very different when people “vote with their feet.” When you decide what jurisdiction to live in, that is a decision you have real control over. That in turn creates strong incentives to seek out relevant information. The same applies to private-sector decisions, and choices about international migration. Most people probably devote more time and effort to deciding what television set or smartphone to buy, than to deciding who to vote for in any election. The reason is not that the television set is more important than who governs the country, but that the decision about the TV has real effects.
In Chapter 1 of the book, I explain how these two advantages of foot voting over ballot box voting translate into superiority from the standpoint of several different theories of political freedom, including government by consent, negative freedom, positive freedom, and “nondomination” theory. I also describe how foot voting is superior under the criteria for “fair value” of political participation set forth in John Rawls’ great work A Theory of Justice. While I am a libertarian and that background was part of what led me to write Free to Move, the position I defend in the book does not rely on any distinctively libertarian premises. To the contrary, it can be defended based on a wide range of theories of political freedom associated with the liberal tradition, including left-wing strands thereof. Nondomination theory and Rawls’ position are far from libertarian, yet foot voting turns out to trump ballot box voting even under their criteria.
Chapter 1 also offers responses to a number of objections to the case for foot voting. They include claims that foot voting decisions cannot really be considered “political” because they are driven by “economic” factors, arguments that foot voting is inimical to the interests of families and dependent children, and claims that the problem of political ignorance can be easily overcome through education or information shortcuts.
I do not claim that foot voting can completely displace the ballot box as a mechanism of political choice. In the book, I describe several constraints on foot voting, and also explain how the two mechanisms can be mutually reinforcing in some ways. But the advantages of foot voting over ballot box voting do justify greatly expanding the role of the former. Chapters 2 through 4 of the book describe how that can be done.
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Throughout the country, prosecutors are bringing charges against individuals who used the George Floyd-inspired protests as an excuse for rioting, looting and mayhem. The ubiquity of video cameras has facilitated some of these investigations and arrests, though widespread mask-wearing has made it more difficult to identify some perpetrators who did not otherwise identify themselves, such as through social media posts.
Most charges related to rioting and looting are filed by local prosecutors, but the Feds have gotten into the act as well, filing a wide range of charges against a wide range of activity. Some of these cases involve plausible federal interests, such as alleged interstate conspiracies to use protests as a cover for criminality. Others, not so much.
As part of a Justice Department-led drive to crack down on violence growing out of protests spurred by George Floyd’s killing at the hands of Minneapolis police, the federal government is prosecuting more than 70 people for alleged behavior that runs the gamut from mere vandalism, to inciting looting through Facebook Live posts, to arson, and, in one case, murder.
While some of the cases are unquestionably grave, others seem less so, and have raised questions about whether the federal government is stretching its authority to satisfy President Donald Trump’s desire to see a forceful federal intervention in the protests.
Two cases, for instance, involve individuals facing federal felony charges for breaking police car windows, relying on federal statutes not often applied in such instances. In another case, federal authorities charged a man with possession of a Molotov cocktail, arguing that because he had used an imported bottle of Patron Citronge Pineapple Tequila to make the incendiary device, the case fell under the federal government’s regulation of foreign commerce.
Existing doctrine is quite permissive (too permissive, in my view) of attempts by federal prosecutors to turn local criminality into federal crimes. If all a U.S. Attorney has to do is identify some object crossed state lines, virtually every activity becomes subject to federal prosecution. Further, it allows federal prosecutors to select cases for federal prosecution not based upon any legitimate federal interest, bur rather on whether a given case serves the political interests of the office, the Justice Department, or the Administration.
It also seems to me that the Department of Justice, at least at the moment, is the least active in pursuing cases where federal involvement can be most readily justified: Alleged cases of police brutality against peaceful protesters. There is no reason to believe local authorities are incapable of prosecuting local crimes committed by those within their jurisdiction. There are, however, ample reasons to suspect that, at least in some jurisdictions, local authorities cannot be trusted to investigate or prosecute members of law enforcement who violate the rights of citizens. If the Justice Department really wants in on the post-protest prosecutions, this is where it should focus.
The destruction of property and violence against individuals should be prosecuted. Under our constitutional system, primary responsibility for such prosecutions lies with state and local governments, not the Feds.
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Last week, I updated the analysis on the break above the 200-dma, which changed the market’s complexion.
“If the markets can break above the 200-dma, and maintain that level, it would suggest the bull market is back in play.”
Then, in our Tuesday follow up, we discussed how the markets had pushed to more extreme overbought conditions and the importance of the market to hold the 200-dma on a subsequent correction.
“That correction came swiftly on Thursday. The surge in COVID-19 cases in the U.S. undermined the “V-Shaped” economic recovery meme. As we noted, the market had rallied into overhead resistance, and the correction found support at the 200-dma.”
As we saw in April and May after the initial surge off the March 23rd lows, the market has once again begun to consolidate its gains to work off the short-term overbought extension. With Friday’s sell-off, we can update our risk/reward range, which has turned more positive in the short-term.
-2.9% to the 200-dma vs. +4.9% to recent highs. Positive
-5.7% to the 50-dma vs. +9.1%% to all-time highs. Positive
-11.2% to previous consolidation lows vs. +9.1% to all-time highs. Negative
-15.2% to March bounce peak vs. +9.1% to all-time highs. Negative
However, the market reversal on Friday from a strong opening to a weak close, is a good reminder of just how volatile markets can be. Despite the technical backdrop becoming more bullish short-term, we hedge our portfolios against just this type of risk.
From Bubble, To Bust, To Bubble
In January and February of this year, we wrote articles discussing why we were taking profits from our portfolios and reducing overall portfolio risk. In “This Is Nuts,” we stated:
“When you sit down with your portfolio management team, and the first comment made is ‘this is nuts,’ it’s probably time to think about your overall portfolio risk. On Friday, that was how the investment committee both started and ended – ‘this is nuts.’
We discussed the overbought, extended, and complacent market over the last couple of weeks. Still, on Friday, I tweeted out a couple of charts that illustrated the excess.”
Our portfolio management meeting Friday morning started with “This is nuts.”
Importantly, I want to direct your attention to the Nasdaq, which is where portfolio managers have been stuffing cash.
There are several things to note about the chart above:
Every time, and it is only a function of time, the Nasdaq gets extremely extended above the 2-year moving average, it reverts to, or beyond, that average.
The MACD is more extremely extended currently than in the past 25-years.
The current deviation above the 2-year moving average matches the extension seen in February before the collapse.
On the S&P 500, there are warning signs as well. As shown below, the number of stocks on “bullish buy signals” has reached an extreme weekly. Historically, such extremes have preceded short-term corrections and bear markets.
Also, as noted last week, the number of S&P 500 stocks trading above their 50-dma has peaked and started to turn lower. Such has always been a precursor to a short-term correction or worse.
At the moment, the over-riding investment belief is that markets can’t decline because of the Fed. However, all it will take is an unexpected, exogenous event to trigger selling and quick correction of 10-15% due to the current lack of liquidity in the market.
What could such an event be? I have no clue. The market has already factored that in a second wave of the Virus. However, one thing no one is currently expecting is for states to shut down commerce once again. I don’t think that will happen either, but you get my point.
Again, this is why we maintain our hedges.
The Problem With Two-Year Forecasts
As markets get overly bullish, extended, and exuberant, Wall Street tends to come up with new ways to “sucker,” I mean “rationalize,” investors into taking on additional risk.
One thing I had hoped for in 2018-2019 is that we would get a correction large enough to revert some of the excessive valuation levels which existed. Such would provide higher future rates of return over the next decade, allowing investors to reach their investment goals.
Instead, through the Fed’s actions, the correction was halted, and the “clearing process” was not allowed to occur. The outcome has been even higher levels of corporate leverage, and valuations remain grossly elevated on many different levels.
So, how does Wall Street justify “buying stocks” in the current environment of recessionary economic growth, high unemployment, and collapsing earnings? Easy, you just tell uneducated investors to use earnings estimates 2-years in the future.
“Yes, stocks are expensive based on current earnings, but cheaper using earnings in 2022.” – Wall Street
Faulty Analysis Leads To Faulty Outcomes
There are significant problems with this analysis. The first is that even based on 24-month estimates, stocks are still historically expensive.
Secondly, Wall Street is terrible at estimating forward earnings. Historically, forward estimates are about 33% too high before they are ratcheted sharply lower. So, even if you assume the stock prices don’t move over the next two years, as future estimates are lowered, valuations will rise further.
Using Wall Street logic, if you were buying stocks in 2018 using 2020 estimates, you grossly overpaid for value and wound up paying the price.
Lastly, think about the stupidity of the statement for a moment.
You are paying for earnings two years into the future. Such means that you will have NO appreciation in the price for two years to maintain the “valuation” of what you paid today. Furthermore, every year going forward will have to have higher earnings estimates than current just to maintain the same valuation.
Such is why valuations are so important. By overpaying for assets today, and locking in earnings 24-months into the future, you have guaranteed yourself a long-term period of low returns.
Do you now understand why Buffett is sitting on $137 billion in cash?
A Bearish Pattern Remains
In the short-term, however, the technical backdrop of the market keeps the bulls in control. The market had gotten overheated, but the correction over last week successfully retested the 200-dma.
However, on a monthly basis, there is still a more “bearish” pattern in the works. The broadening range of highs and lows, known as a “broadening” or “megaphone” pattern, is characterized by two diverging trend lines. As noted by Investopedia:
“Broadening formations occur when a market is experiencing heightened disagreement among investors over the appropriate price of a security over a short period. Buyers become increasingly willing to buy at higher prices, while sellers always find more motivation to take profits. This creates a series of higher interim peaks in price and lower interim lows. When connecting these highs and lows, the trend lines form a widening pattern that looks like a megaphone or reverse symmetrical triangle.
The price may reflect the random disagreement between investors, or it may indicate a more fundamental factor. These formations are relatively rare during normal market conditions over the long-term since most markets tend to trend in one direction or another over time. For example, the S&P 500 has consistently moved higher over the long-term. Therefore the formations are more common when market participants have begun to process a series of unsettling news topics. Geopolitical conflict or a change of direction in Fed policy, or especially a combination of the two, are likely to coincide with such formations.”
The Technical Chart
You can understand why there is a disagreement among investors given the current backdrop of a recessionary economy and a bullish stock market driven by the Fed. The ongoing “broadening formation,” which is typical of longer-term market tops, is coupled with a negative divergence in the Relative Strength Index.
Given this is a “monthly” chart, such doesn’t mean the market will crash tomorrow, if even at all. However, it is one of those warning signs which continue to suggest a bit of caution in portfolios is likely advisable.
Portfolio Positioning Update
With our portfolios almost fully allocated towards equity risk in the short-term, we remain incredibly uncomfortable. As noted on Tuesday:
“From a purely technical perspective, the bulls remain in control for now. Fundamentally speaking. However, we remain ‘bears.’ We also realize that with the Federal Reserve intravenously feeding liquidity into the markets, we need to participate. As we stated last week:
“As a portfolio manager, we buy ‘opportunity’ because we have to. If we don’t, we suffer career risk, plain and simple. However, you don’t have to. If you are indeed a long-term investor, you have to question the risk undertaken to achieve further returns in the market currently.”
As noted, fundamentals will eventually matter. We just don’t know when that will ultimately be the case. However, there are more than enough signs to know we are likely close to a peak:
Wall Street firms using 2-year forward “operating (or B.S.)” earnings to justify valuations.
Investors are chasing bankrupt companies.
Companies rampantly issuing debt to shore up liquidity
A complete lack of market liquidity.
Investor over-confidence
Retail investor exuberance.
Overly estimated future earnings growth.
You get the idea.”
As I stated, we are participating, but it doesn’t mean we have to like it. We just have to respect the market for what is.
We continue to hedge our equity exposure with fixed income, dollar, and gold investments. While such hedging does reduce the participation of our equity portfolio short-term, it has mitigated the risk of sudden and unexpected sell-offs.
We are very confident we are not in a “no risk” market currently.
via ZeroHedge News https://ift.tt/2Boinv5 Tyler Durden
