Politics & Oil – What The President Failed To Mention

Submitted by Ken Wells via OilPrice.com,

“What we have here is a failure to communicate.” That’s what the warden says to Paul Newman in the movie Cool Hand Luke, right after he knocks him into a ditch. The oil and gas industry has its own failure to communicate and the longer prices bump along the bottom, the worse it seems to be getting.

Much of the communication problem centers on whether the world still needs oil and gas and how long that need will last. The additional source of confusion is what low oil prices have to do with the future energy mix. The best evidence of that failure to communicate can be seen in the comparison between President Obama’s State of the Union address on January 12th and ExxonMobil’s projections on energy use released less than two weeks later. Their perspective on the role that oil plays in our economy – no, actually in the lives of people all over the globe – is so radically different that there is no common ground.

In the President’s annual address to Congress, one of the big applause lines came when he pointed out that the U.S. has reduced oil imports by 60 percent under his administration and, “gas under $2 a gallon ain’t bad either.” Both Democrats and Republicans cheered for that.

Then he continued, “Rather than subsidize the past, we should invest in the future, especially in communities that rely on fossil fuels. We do them no favor when we don’t show them where the trends are going.”

What trend? The political and diplomatic efforts to address global warming. But the President missed, or chose not to recognize, another trend – the world is not decreasing its use of oil and gas; it is increasing it. That information was highlighted a couple of weeks later when the ExxonMobil analysis was released. That study looks ahead to the year 2040 and projects that fossil fuels will still provide 80 percent of the world’s energy need.

The Cliff Notes version of the analysis is that:

1. Undeveloped nations will become more developed,

 

2. Populations will grow (from 7.2 billion people worldwide today to nine billion in 2040), and

 

3. Global energy demand will increase by 25 percent. About a third of the energy used will come from oil. Natural gas will be the biggest winner, with consumption up by about 40 percent. Renewable energy use will increase substantially and coal will be the big loser.

That is a changed landscape to be sure, and not the sort of change that should cause policymakers to think they can ignore any energy source to fuel world growth. Interestingly, one of the biggest changes predicted in the report has less to do with energy sources and more to do with using our energy more efficiently. Where the study predicts that world energy use will go up 25 percent, we could see twice that increase if we don’t adopt efficiency measures. To put it another way, we need to be aggressive in implementing efficiency measures or we may not have enough energy to meet growth demands.

Looking at one measure, light vehicles are predicted to use about 40 percent less fuel, not because we will all be driving electric cars, but because stingier gas-powered vehicles could get 45 miles per gallon.

To some extent, the difference between the State of the Union address and ExxonMobil’s vision of the future is a tale of two cities, Washington and Houston. One is driven by the optics of politics and the limitations of the legislative process. The other is driven by the realities of the marketplace and the simple realities of statistical analysis. But it also sounds like a tale of two planets – one world in which energy sources can be changed with a flip of a switch and one world where people and governments continue to act in their own best interests.

So where is the common ground? How do we stop the massive failure to communicate? How about this:

  • No one in the energy industry should believe that we live in a static economic model where oil continues to be king forever and there is no room for alternative energy sources. The costs of alternative energy will continue to decrease and the benefits of those sources under specific circumstances and for specific purposes will increase.
  •  Oil and gas aren’t going anywhere. Petroleum engineers and geologists entering college next year will work their entire careers exploring for hydrocarbons.
  •  While we are going through a historic down cycle in oil and gas, failure to plan for a future that includes those commodities risks shortages that could make the costs astronomical.
  •  Somewhat higher (and predictably stable) oil and gas prices help every part of the energy pie. Low prices are killing the oil and gas sector, but they are also making it impossible for renewables to thrive without subsidies.
  •  Incentives for efficiency promise to provide us with the greatest long-term bang for the buck.
  • Government policies need to be grounded in the reality that fossil fuels are going to be with us for a long time to come and that renewables will take time to prove themselves. Policies need to reflect a mixed and balanced approach to the full array of energy sources, the “all of the above” policy that the Administration once talked about but never fully embraced. Let’s note that none of the Presidential candidates from either party are talking about a balanced energy policy either.

That approach is the only way to replace our failure to communicate with the type of public policy that transitions us into the future. To borrow from a guy who was pretty successful in communicating his message to the America people eight years ago, that would be “change we can believe in.”


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Students Object to MLK Quote on Campus Building. Blame Intersectionality.

MLKYes, even Dr. Martin Luther King, Jr. offends some college students. The University of Oregon student union recently contemplated removing MLK’s “I have a dream” quote from its place of honor on the wall of a campus building because, well, the famous anti-racist statement isn’t super-duper inclusive. I mean, come on: it doesn’t even mention gender!

This isn’t even the first time that UO students have turned on a famous phrase. In the 1970s, students successfully petitioned administrators to replace a quote that used “men” as a stand-in for all people. MLK was the compromise decision.

As Reason’s Nick Gillespie wrote in response to the controversy, the revolution not only eats its own, but “vomits it all up and gives it another go.”

Indeed, as I observed in a recent column for The Daily Beast, “the modern campus left is an intersectionality ouroboros—the snake from Greek mythology that eats its own tale.” Intersectionality is the idea—popular among campus leftists—that all oppression is linked, and that it’s not enough to stand against one kind of “ism” without also condemning all other kinds. This kind of thinking led gay anti-Israel activists to shut down an event at a pro-gay conference because the organizers were affiliated with a Jewish group. As I wrote for The Daily Beast:

It does not tolerate dissent, and it considers differences of opinion to be unbridgeable. Agreeing with Dr. King that racism is bad is insufficient. Standing with pro-LGBT+ group that includes Jews is unacceptable. And even adopting all the correct liberal views is no guarantee of avoiding the angry mob, because these views must always be expressed in hypersensitive, politically-correct language. A student could support equal rights for illegal immigrants, for example, but still be accused of committing a microaggression for neglecting to use the proper PC terminology: undocumented person.

Inclusivity doesn’t leave room for sanity on college campuses. And that’s a trend we should all find dispiriting.

Full thing here.

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Most. Expensive. Market. Ever

Are stocks cheap? Is the 'Stock-Market' "priced-for-perfection"? Here is your answer…

The answer is – Yes and Yes-er!

h/t @Not_Jim_Cramer

 

Simply put, the S&P 500's forward earnings based valuation has never (in the history of the time series) been higher relative to consensus expectations of economic growth… ever.

So next time your "wealth"-taxer suggests you buy-the-f##king-dip, show him the chart above and have him explain how economists "must" be under-estimating growth, because equity analysts are never wrong.


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First Case Of Sexually Transmitted Zika Virus Confirmed In Texas

Earlier today, we documented the rather extreme steps Brazil is taking in what has so far been a futile attempt to combat the rapid spread of the head-shrinking Zika virus.

There have been nearly 4,000 cases of microcephaly in Brazil since the start of last year and the WHO has now declared “a public health emergency of international concern.” For her part, President Dilma Rousseff signed a decree authorizing health officials to essentially break into Brazilians’ homes even if no one is home in an effort to uncover mosquitoe breeding grounds. As a reminder, the Aedes mosquito is taking the blame on this particular pandemic.

On Tuesday afternoon, we’re reminded that you don’t have to be bitten by a South American mosquito to get Zika as Dallas officials confirmed the first Zika virus case in Dallas County acquired through sexual contact.

“Dallas County Health and Human Services confirmed the case Tuesday afternoon and said the patient was infected after having sexual contact with an ill individual who returned from a country where the virus is known to be present,” NBC reports, adding that “Dallas County health officials said there are no reports of the Zika virus being transmitted locally by mosquitoes [but] imported cases of the virus make local spread possible. 

“Now that we know Zika virus can be transmitted through sex, this increases our awareness campaign in
educating the public about protecting themselves and others,” said Zachary Thompson, DCHHS director. 

As NBC dryly notes, because there’s no vaccine and there are no available treatments, your best bet is to “avoid mosquitoes” and abstain from having sex with the infected.

We wonder if Washington will soon follow in Brazil’s footsteps and grant health officials the right to enter private property without obtaining a warrant in the course of hunting for mosquitoes.

*  *  *

From DCHHS

DALLAS (Feb. 2, 2016) – Dallas County Health and Human Services (DCHHS) has received confirmation from the Centers for Disease Control and Prevention (CDC) of the first Zika virus case acquired through sexual transmission in Dallas County in 2016. The patient was infected with the virus after having sexual contact with an ill individual who returned from a country where Zika virus is present. For medical confidentiality and personal privacy reasons, DCHHS does not provide additional identifying information.

“Now that we know Zika virus can be transmitted through sex, this increases our awareness campaign in educating the public about protecting themselves and others,” said Zachary Thompson, DCHHS director. “Next to abstinence, condoms are the best prevention method against any sexually-transmitted infections.”

Zika virus is transmitted to people by mosquitoes and through sexual activity. The most common symptoms of Zika virus are fever, rash, joint pain, and conjunctivitis (red eyes). The illness is usually mild with symptoms lasting several days to a week.

DCHHS advises individuals with symptoms to see a healthcare provider if they have visited an area where Zika virus is present or had sexual contact with a person who traveled to an area where Zika virus is present. There is no specific medication available to treat Zika virus and there is not a vaccine. The best way to avoid Zika virus is to avoid mosquito bites and to avoid sexual contact with a person who has Zika virus. “Education and awareness is crucial in preventing Zika virus,” said Dr. Christopher Perkins, DCHHS medical director/health authority. “Patients are highly encouraged to follow prevention recommendations to avoid transmitting and spreading Zika virus.” DCHHS recommends the following to avoid Zika virus: Use the 4Ds to reduce the chance of being bitten by a mosquito.  DEET All Day, Every Day: Whenever you’re outside, use insect repellents that contain DEET or other EPA approved repellents and follow instructions.  DRESS: Wear long, loose, and light-colored clothing outside.  DRAIN: Remove all standing water in and around your home.  DUSK & DAWN: Limit outdoor activities during dusk and dawn hours when mosquitoes are most active. Travelers can protect themselves by doing the following:  Choose a hotel or lodging with air conditioning or screens on windows or doors.  Sleep under a mosquito bed net if you are outside or in a room that is not well-screened


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Surging Bank Risk Screams The Rebound In Stocks Is Over

BMO's Mark Steele is a man of few words, preferring pictures to make his points… but they matter:

Let’s just keep it simple. When bank risk breaks to the upside, it’s bad for equities…

European bank risk is breaking out…

 

which has arrested the pullback in U.S. bank risk – which is now soaring…

 

And that bodes ill for global stocks…

 

Stocks have had a nice counter-trend rebound on the back of a counter-trend rebound (from deeply oversold) in the price of oil. That rebound is also fading, with WTI eyeing the $30 mark once again.

We believe portfolios should be structured towards what the market rewards in this environment:

  • As our relative strength breadth heat map points out, that appears to be Utilities and Staples, with a great divide between those sectors and anything else.
  • Equities aside, treasuries look great.

Something systemic this way comes.


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S&P Just Downgraded 10 Of The Biggest US Energy Companies

Just 10 days after “Moody’s Put Over Half A Trillion Dollars In Energy Debt On Downgrade Review“, moments ago S&P decided it wanted to be first out of the gate with a wholesale downgarde of the US energy companies, and announced that it was taking rating actions on 20 investment-grade companies, including 10 downgrades.

The full release is below:

Standard & Poor’s Ratings Services said today that it has taken rating actions on 20 investment-grade U.S. oil and gas exploration and production (E&P) companies after completing a review. The review followed the recent revision of our hydrocarbon price assumptions (see “S&P Lowers its Hydrocarbon Price Assumptions On Market Oversupply; Recovery Price Deck Assumptions Also Lowered,” published Jan. 12, 2016).

While oil prices deteriorated over the past 15 months, the U.S.-based investment-grade companies we rate had been largely immune to downgrades. However, given the magnitude of the recent reductions in our price deck, most of the investment-grade companies were affected during this review. We expect that many of these companies will continue to lower capital spending and focus on efficiencies and drilling core properties. However, these actions, for the most part, are insufficient to stem the meaningful deterioration expected in
credit measures over the next few years.

A list of rating actions on the affected companies follows.

DOWNGRADES

Chevron Corp. Corporate Credit Rating Lowered To AA-/Stable/A-1+ From AA/Negative/A-1+

The downgrade reflects our expectation that in the context of lower oil and  gas prices and refining margins, the company’s credit measures will be below our expectations for the ‘AA’ rating over the next two years. We anticipate Chevron will significantly outspend internally generated cash flow to fund major project capital spending and dividends this year and generate little cash available for debt reduction over the following two years. We note that the company has significantly more debt than in the last cyclical downturn while oil and gas production are at similar levels. The stable outlook reflects our expectation that credit measures will improve over the next three
years assuming lower capital spending and higher commodity prices.

EOG Resources Inc.: Corporate Credit Rating Lowered To BBB+/Stable/A-2 From A-/Stable/A-2

The downgrade reflects increased leverage following the reduction in our oil and natural gas price assumptions, along with lower capital spending and a slight production decline in 2016. We now expect funds from operations (FFO)/debt to fall and remain below 45% over the next two years, which we view as too low for an ‘A-‘ rating, given the company’s strong business risk profile. The stable outlook reflects our estimate that FFO/debt will approach 30% in 2016 and improve thereafter as commodity prices rise under our price deck assumptions. We apply a one-notch uplift to the anchor for comparable rating analysis, given that EOG’s leverage is lower than many of its ‘BBB’ rated peers. 

Apache Corp.: Corporate Credit Rating Lowered To BBB/Stable/A-2 From BBB+/Stable/A-2

The downgrade reflects increased leverage following the reduction in our oil and natural gas price assumptions, along with lower capital expenditures and a modest year-over-year production decline in 2016. We now expect FFO/debt to fall and remain below 30% over the next two years, levels we view as too low for a ‘BBB+’ rating, given the company’s strong business risk profile. The stable outlook reflects our estimate that FFO/debt will approach 20% in 2016 and improve thereafter as commodity prices rise under our price deck assumptions.

Devon Energy Corp.: Corporate Credit Rating Lowered To BBB/Stable/A-2 From BBB+/Negative/A-2

The downgrade reflects our expectation that in the context of lower oil and gas prices, the company’s credit measures will be below our expectations for the ‘BBB’ rating through 2018. Devon outlined steps to reduce debt following acquisitions announced in December 2015, including selling assets. However, we anticipate that the company will outspend internally generated cash flow over the next two years without further limiting capital spending or reducing dividends. The stable outlook reflects our expectation that Devon’s credit measures will improve over the next three years under our rising commodity price assumptions.

Hess Corp.: Corporate Credit Rating Lowered To BBB-/Stable/– From BBB/Stable/–

The downgrade reflects our expectation that in the context of lower oil and gas prices, the company’s credit measures will be below our expectations for the ‘BBB’ rating over the next two years. Hess enters 2016 with ample liquidity, including $2.7 billion in cash and has sharply curtailed capital spending. However, we forecast that the company will outspend internally generated cash flow to fund capital spending and dividends through 2018. The stable outlook reflects our expectation that credit measures will improve over the forecast period. We note that proceeds from assets sales, operating cost reductions, or other sources of funding could provide an opportunity to improve the company’s balance sheet.

Marathon Oil Corp. Corporate Credit Rating Lowered To BBB-/Stable/A-3 From BBB/Stable/A-2

The downgrade reflects our expectation that in the context of lower oil and gas prices, Marathon’s credit measures will be consistently below our expectations for the ‘BBB’ rating. Marathon enters 2016 with ample liquidity, including $1.2 billion in cash and has substantially reduced capital spending and dividends. We estimate that the company will outspend generated cash flow to fund capital spending and dividends this year and that cash flow coverage of debt has declined meaningfully. The stable outlook reflects our projections that credit measures will improve over the next two years. We note that proceeds from assets sales or other external sources of funding could provide an opportunity to improve the company’s balance sheet.

Murphy Oil Corp.: Corporate Credit Rating Lowered To BBB-/Stable/– From BBB/Negative/–

The downgrade reflects our expectation of increased leverage and worsening credit measures following the reduction in our oil and natural gas price deck assumptions. Despite the company’s recent reduction in planned capital spending for 2016, we expect debt to EBITDAX to remain above 2x and FFO to debt below 30%, which we view as too high for a ‘BBB’ rating, given the company’s satisfactory business risk profile. The stable outlook reflects our expectation that debt to EBITDAX will remain below 4x under our base case assumptions.

Continental Resources Inc.: Corporate Credit Rating Lowered To BB+/Stable/– From BBB-/Stable/–; Recovery Rating ‘3’ (high end of the range) assigned.

The downgrade reflects our expectation of increased leverage and worsening credit measures following the reduction in our oil and natural gas price deck assumptions. Despite Continental’s reduction in capital spending for 2016, we expect FFO to debt to fall below 20% and debt to EBITDAX to exceed 4x over the next two years. We view these credit measures as too high for a ‘BBB-‘ rating, given what we view the company’s business risk profile as satisfactory. We now view Continental Resources’ financial profile as aggressive. We also assigned a ‘3’ (high end of the range) recovery rating to the company’s senior unsecured notes.

Hunt Oil Co.: Corporate Credit Rating Lowered To BB+/Negative/– From BBB-/Negative/–

The downgrade reflects our expectation that in the context of lower oil and gas prices, Hunt Oil’s credit measures will be below our expectations for the ‘BBB-‘ rating over the next two years. In addition, the company is challenged by continued suspension of liquefied natural gas (LNG) shipments from Yemen due to ongoing fighting in the country. Hunt has an interest in the Yemen gas liquefaction plant and receives substantial distributions when the project is operating. The negative outlook reflects the likelihood that we will lower the rating if we do not expect LNG shipments from Yemen to resume by end of third quarter of 2016, or other factors occur that result in weaker than currently anticipated credit measures.

Southwestern Energy Co.: Corporate Credit Rating Lowered To BB+/Negative/B From BBB-/Stable/A-3; Recovery Rating ‘3’ (low end of the range) assigned.

The downgrade reflects our expectation of increased leverage and worsening credit measures following the reduction in our oil and natural gas price deck assumptions, and incorporates our assumption of significantly reduced capital spending and a moderate production decline in 2016. We now expect FFO to debt to fall and remain below 20% over the next two years, which we view as too low for a ‘BBB-‘ rating, given that we view the company’s business risk profile as satisfactory. We now view Southwestern Energy’s financial profile as aggressive. We also assigned a ‘3’ (low end of the range) recovery rating to the company’s senior unsecured debt. The negative outlook reflects the potential for a downgrade if we no longer expect FFO/debt to improve to above 20% in 2018.

LONG-TERM CORPORATE CREDIT RATING PLACED ON CREDITWATCH WITH NEGATIVE  IMPLICATIONS; SHORT-TERM RATING AFFIRMED

Exxon Mobil Corp.: ‘AAA’ Corporate Credit Rating Placed On CreditWatch With  Negative Implications; ‘A-1+’ Short-Term Rating Affirmed

The CreditWatch placement reflects the expectation that credit measures will be weak for the ratings through 2018 under our price assumptions. We will assess management’s financial policies and strategies for mitigating the potential impact of the downturn, as well as review the company’s 2015 financial results and the implications for credit quality. We currently expect to resolve our review within 90 days. We currently anticipate that if we lower ratings, we would not lower them by more than one notch.

RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS

ConocoPhillips: ‘A’ Long-Term And ‘A-1’ Short-Term Corporate Credit Ratings Placed On CreditWatch With Negative Implications

The negative CreditWatch placement reflects the potential that we could lower ratings over the next 90 days pending a review of expected 2016-2018 financial results, and ConocoPhillips’ ability to fund expected negative free cash flow without materially increasing debt leverage. We currently expect to resolve our review within 90 days. We intend to review the company’s ability to achieve expected cost savings and substantial asset sales and its ability to lower capital spending without significantly affecting production levels.

Newfield Exploration Co.: ‘BBB-‘ Corporate Credit Rating Placed On CreditWatch With Negative Implications

The CreditWatch placement reflects our expectation that credit measures will be weak for the current rating over the next one to two years. We will assess management’s financial policies and strategies for mitigating the potential impact of lower commodity prices over the next several weeks, as well as review the company’s 2015 financial results and the implications for credit quality. We expect to resolve the CreditWatch placement within 90 days. We currently anticipate that if we lower the ratings, we would not lower them by more than one notch.

 

RATINGS AFFIRMED; OUTLOOK REVISED

Anadarko Petroleum Corp.: ‘BBB’ Corporate Credit And ‘A-2’ Short-Term Ratings Affirmed; Outlook Revised To Negative From Stable;

The outlook revision reflects increased leverage following the reduction in our oil and natural gas price assumptions, along with lower capital spending and a modest year-over-year production decline in 2016. The negative outlook reflects our estimate that FFO/debt could fall below 20% and debt/EBITDAX could exceed 4x for a sustained period if the company does not complete additional noncore assets sales, as we currently anticipate.

National Fuel Gas Co. (NFG): ‘BBB’ Corporate Credit Rating And ‘A-2’ Short-Term Ratings Affirmed; Outlook Revised to Negative From Stable.

The negative outlook reflects our expectation that the company’s credit measures will be weak for the ratings over the next two years because of lower oil and gas prices. NFG has curtailed E&P spending, but we expect spending and dividends to exceeds internally generated cash flow over the next two years, in part, due to investment in a pipeline expansion. We forecast that the company’s credit measures will return to acceptable levels for the rating in 2018 due to higher expected commodity prices, increased E&P production, and lower capital spending.

Noble Energy Inc.: ‘BBB’ Corporate Credit Rating Affirmed; Outlook Revised To  Negative From Stable

We revised our rating outlook to negative from stable, reflecting our expectation that credit measures will remain weak for the ratings over the next one to two years. Although we expect the company to remain cash flow neutral for the year under our revised price assumptions, we expect FFO/debt to remain below 30% in 2016 and 2017, and adjusted debt/EBITDA to rise slightly above 3x in 2017, but we believe both measures will improve in 2018. We could lower the rating if we project that the company will sustain adjusted debt/EBITDA above 3x for a prolonged period.

RATINGS AFFIRMED

Occidental Petroleum Corp.: ‘A’ Corporate Credit Rating And ‘A-1’ Short-Term  Rating Affirmed; Outlook Stable

We have affirmed the ratings on Occidental, reflecting our expectation that the company will continue to maintain conservative financial policies such that FFO/debt will average above 60% through 2018, albeit modestly below 60% in 2016. Our expectations include the receipt of about $1 billion from Ecuador in 2016 for the recent settlement awarded by the International Centre for Settlement of Investment Disputes, which is a key support underlying our expectations. Cash flows are supported by the start of the Al Hosn gas project in the United Arab Emirates and the low decline rate of the company’s Permian enhanced oil recovery operations.

EQT Corp.: ‘BBB’ Corporate Credit Rating Affirmed; Outlook Stable

We have affirmed the ratings on EQT, reflecting our expectation that it will continue to maintain conservative financial policies, such that FFO/debt will not fall below 45% for a sustained period. EQT should continue to benefit from its midstream operations that allow it to capture more favorable pricing to help buffer the negative price differentials typical of Marcellus shale producers.

Cimarex Energy Co.: ‘BBB-‘ Corporate Credit Rating Affirmed; Outlook Stable

Although credit measures should weaken for Cimarex Energy Co. in 2016 under our revised price assumptions, we expect them to remain adequate for the rating. We project FFO/debt above 40% in 2016 and commit the majority of its capital in the Permian and the Mid-Continent region, albeit at reduced levels in response to the current hydrocarbon prices. The stable outlook reflects our view that the company’s leverage will improve in 2017 and liquidity will remain strong.

Pioneer Natural Resources Co.: ‘BBB-‘ Corporate Credit Rating Affirmed;  Outlook Stable

The affirmation reflects our view that Pioneer will maintain FFO/debt above 45% over the next two years, as it continues to invest and grow production in the Permian Basin. Our estimates incorporate the reduction in our oil and natural gas price assumptions, a modest year-over-year increase in capital spending, about 10% production growth in 2016, and the company’s recent $1.4 billion equity offering.


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Obama Could Still Stop ‘Megan’s Law’ From Making Sex Offenders Get Special Passports

Both the U.S. House and Senate have signed off on a bill to brand registered sex offenders as such on their passports and require federal officials to notify foreign governments whenever certain offenders intend to travel there. The bill is now on its way to President Obama; it’s unclear whether he’ll sign. 

If he does, it will be “the first time in U.S. history that any such special designation will appear on the passports of any U.S. citizens,” writes lawyer and New America Foundation Senior Fellow David Post at The Volokh Conspiracy, “and I think it should send at least a small chill down all of our spines.”    

Dubbed “International Megan’s Law,” the measure—sponsored by Rep. Chris Smith (R-N.J.)—says the secretary of state must impart a “visual designation” in “a conspicuous location” on the passports of all “covered sex offenders.” Covered sex offenders include anyone whose victim was a minor. 

This is where people start to lose sympathy—for better or worse, most can’t muster much concern for the constitutional rights of rapists and child molesters. But because of our overbroad sex-offender registry requirements, “covered sex offenders” may include teens who text each other explicit photos, men who offer to pay for sex with someone who is—known or unbeknownst to them—under 18, and statutory rape cases where the the age disparity between offender and victim is small and the relationship consensual. These people are already required to register with state and federal officials as sex offenders, thereby subjecting them to rules about where they can live, work, etc. Now they may face a lifetime of trouble traveling and perhaps even be prevented from entering certain countries entirely

Beyond the injustice of it, there’s no evidence that the law—applied broadly or even only to those accused of the most serious sex crimes—would actually thwart international human trafficking or sex tourism, the stated goal of the bill according to Rep. Smith. For one thing, the passport requirement would only apply to sex offenders done serving their sentences, obviously. But we have little reason to think most of these people will reoffend. As Reason contributor Lenore Skenazy points out at the New York Post, “the general belief is that sex offenders have one of the highest recidivism rates around—that they get out of prison only to offend again. Surprisingly, the opposite is true.” A Bureau of Justice report places the sex-offender recidivism rate at 5.3 percent, a recidivism rate lower than any crime other than murder. 

What’s more, when it comes to those who have committed the most heinous crimes or are the most likely to reoffend, we already have a mechanisms in place to either prevent them from getting passports or notify foreign governments when they’re traveling abroad. The Secretary of State can deny passports to people convicted of certain sex crimes, and Immigration and Customs Enforcement’s (ICE) “Operation Angel Watch” already notifies foreign officials when Americans convicted of certain sex crimes are traveling there.

And the reason ICE knows the travel habits of these sex offenders? Because all people on state sex offender registries—regardless of why they’re there or how long ago their crimes were committed—are required under federal law to “inform his or her residence jurisdiction of any intended travel outside of the United States at least 21 days prior to that travel.” 

The new law would build on this, also establishing the feds must notify foreign officials whenever covered sex offenders intend to travel there, adding the special seal to covered sex offender passports, and setting up an “Angel Watch Center” within the Department of Homeland Security. The Angel Watch Center would receive information from foreign governments about sex offenders traveling to America and share this information with the Justice Department and state and local law-enforcement agencies, thereby instituting a globally coordinated system to monitor the movements of ostensibly free people. Congress has authorized $6 million per year for 2017 and 2018 to carry out the act’s provisions. 

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What CNN’s Polling Last Night Tells Us About Rand Paul’s Campaign

Rand Paul’s appeal to voters seems to decline with age, reveals CNN’s entrance polls in Iowa last night.

Paul, who got 4.5 overall in the actual caucus vote, in CNN’s entrance poll was pulling 13 percent of 17-29 year olds (making him 4th in that category rather than his overall 5th), and only 2 percent of the 65 and olders, with a steady decline in the age groupings between. He was also 4th among 30-44 year olds, with 9 percent, if this entrance poll is representative.

Other tidbits and revelations: Paul’s gender appeal mix seemed even. (Race just isn’t relevant in mostly-white Iowa.)

Education level seemed to have little relevance to Paul. He pulled either 4 or 5 percent in CNN’s accounting in all education categories.

Paul did slightly better with first-time caucusgoers, with 6 percent of them vs. 4 for repeat customers.

Paul came in 4th among independents in this poll, with 10 percent. (Still way worse than his supporters would have guessed, where his independent appeal was supposed to be a big selling point.)

In the “very conservative” category, Cruz crushed with 44 percent to Paul’s 3 percent; Paul did slightly above his own average with 6 percent for “somewhat conservative.”

Paul got 7 percent of those who said they were not born-again or evangelical, 4 percent who said they were. (The very worldly and unconvincingly religious Trump was second with 22 percent of the born-againers.)

In the “what’s your most important issue?” category questions, the only one where Paul swung much above his 4.5 percent weight was “government spending.” He captured 9 percent of them. (And only 1 percent of those who privileged immigration as their top issue.)

For “top candidate quality,” Paul swung above weight on “shares my values” with 7 percent. (He even beat Trump’s 5 percent on that.)

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BofAML Warns The Risk Of “Quantitative Failure” Is Growing

Year-to-date, BofAML's Baraby Martin notes that the market narrative has swung wildly. "US recession…", “global recession…", "China devaluation…", "commodity bust…" and "energy defaults…" have all been blamed as the major drivers of risk assets thus far in ‘16. The bearish concoction has left markets way down from their January levels. In credit, investment-grade spreads widened 16bp last month, and high-yield 36bp – the worst start to the year since 2008.

Over the last week, though, the "central banks to the rescue" narrative has also resurfaced. Not only has the BoJ embraced NIRP policies for the first time, but the ECB has strongly hinted at QE3 in March, and the Fed has added a dovish tinge to its outlook. “Yield”, as a secular theme, continues to stand tall, a full 7yrs after the GFC event. While the growth of negative yielding assets is now well flagged, it’s the other side of the coin which is talked about less: namely the decline in positive yielding opportunities.

Chart 1 shows that the global stock of positive yielding fixed-income debt has shrunk from a peak of $37.6tr in mid-2014 to just $32.5tr now, despite total debt levels rising by $4tr. since.

And yet, the market’s response to the salvo of central bank action lately has been a shallow bounce. On Friday, the Nikkei’s intra-day performance was up/down/up. And in Europe, our equity team’s “low risk” dividend basket has been lagging behind the jump in negative yielding government debt lately (chart 2).

Yield “fatigue” may be overtaking yield “euphoria”.

The further central banks go down the rabbit hole of unique monetary policy, the greater the fear factor of how normality will eventually be restored. And as Michael Hartnett highlights, the risk of “quantitative failure” in markets grows.


via Zero Hedge http://ift.tt/1PT0JzU Tyler Durden