Videos Show Police Aggression Against Protesters Across the Country. Here Are Two Ways to Help It Stop.

As Americans emerged from quarantine to protest police brutality—and as protesters in many cities were joined by opportunistic vandals and looters—politicians have imposed rules that only exacerbate tensions between cops and communities.

Urban leaders across the U.S. imposed curfews last night. In Philadelphia, for instance, residents got little notice before being told a citywide curfew was going into effect from 6 p.m. until 6 a.m. In D.C., the curfew went from 11 p.m. to 6 a.m., with the National Guard called in to help with enforcement. In Tennessee, the governor issued a statewide curfew from just after 8 p.m. until 5 a.m.

Nonetheless, protests continued apace, producing yet more law enforcement horror stories. Here’s a small sampling:

A lot more examples here and here. See also, from Reason:

While a lot of leaders take steps guaranteed to make tensions worse, a few legislators are getting to work on substantive ways to fix our criminal justice system so that cops can’t kill with impunity.

Rep. Justin Amash (L–Mich.) says he will be introducing legislation to end qualified immunity for police officers. “This week, I am introducing the Ending Qualified Immunity Act,” Amash tweeted on Sunday, attaching a letter he was distributing to colleagues in the House of Representatives. Qualified immunity “was created by the Supreme Court in contravention of the text of the statute and the intent of Congress,” he writes to them. “It is time for us to correct their mistake.”

Amash’s letter explains:

As part of the Civil Rights Act of 1871, Congress allowed individuals to sue state and local officials, including police officers, who violate their rights. Starting in 1967, the Supreme Court began gutting that law by inventing the doctrine of qualified immunity. Under qualified immunity, police are immune from liability unless the person whose rights they violated can show that there is a previous case in the same jurisdiction, involving the exact same facts, in which a court deemed the actions to be a constitutional violation.

This rule has sharply narrowed the situations in which police can be held liable—even for truly heinous rights violations—and it creates a disincentive to bringing cases in the first place.

This is one of the big reasons police are often able to hurt people without consequence.

“The brutal killing of George Floyd by Minneapolis police is merely the latest in a long line of incidents of egregious police misconduct,” writes Amash. “This pattern continues because police are legally, politically, and culturally insulated from consequences for violating the rights of people whom they have sworn to serve.”

(See also: “The Supreme Court Has a Chance To End Qualified Immunity and Prevent Cases Like George Floyd’s.”)

Meanwhile, Sen. Brian Schatz (D–Hawaii) says he’ll introduce legislation to demilitarize the police:

QUICK HITS

• The rise and fall and rise again of the “outside agitator” narrative.

• Trump has no authority to designate Antifa a “domestic terrorist group” (and it’s a bad idea anyway).

• Supreme Court update:

• “The swabs that were performed over the last 10 days showed a viral load in quantitative terms that was absolutely infinitesimal compared to the ones carried out a month or two months ago,” said Italian doctor Alberto Zangrillo, head of the San Raffaele Hospital in Italy’s hardest-hit region.

• COVID-19 has been “slamming the consequences” of insitutional racism home “as we die at a significantly higher rate than whites, are the first to lose our jobs, and watch helplessly as Republicans try to keep us from voting,” writes Kareem Abdul-Jabbar in the Los Angeles Times.

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Should the Supreme Court Reconsider Keller v. State Board of California?

In Keller v. State Bar of California (1990), the Supreme Court unanimously upheld the constitutionality of requiring practicing attorneys to join an “integrated” state bar association—a bar association that both regulates the practice of law within the state and lobbies on behalf of the interests of the legal profession (as determined by the bar). The decision expressly rested on Abood v. Detroit Board of Education, which allowed for mandatory public sector union dues. Abood is no longer good law, however, having been overturned in Janus v. AFSCME. So does this mean the Supreme Court should reconsider Keller?

This morning the Supreme Court denied certiorari in Jarchow v. State Board of Wisconsin, which presented that question. Justice Thomas, joined by Justice Gorsuch, dissented from the denial of certiorari. Justice Thomas wrote:

A majority of States, including Wisconsin, have “integrated bars.” Unlike voluntary bar associations, integrated or mandatory bars require attorneys to join a state bar and
pay compulsory dues as a condition of practicing law in the State. Petitioners are practicing lawyers in Wisconsin who allege that their Wisconsin State Bar dues are used to fund “advocacy and other speech on matters of intense public interest and concern.” App. to Pet. for Cert. 10. Among other things, petitioners allege that the Wisconsin State Bar has taken a position on legislation prohibiting health plans
from funding abortions, legislation on felon voting rights, and items in the state budget. Petitioners’ First Amendment challenge to Wisconsin’s integrated bar arrangement is foreclosed by Keller v. State Bar of Cal., 496 U. S. 1 (1990), which this petition asks us to revisit. I would grant certiorari to address this important question.

In Abood v. Detroit Bd. of Ed., 431 U. S. 209 (1977), the Court held that a law requiring public employees to pay mandatory union dues did not violate the freedom of speech guaranteed by the First Amendment, id., at 235–236. In Keller, the Court extended Abood to integrated bar dues based on an “analogy between the relationship of the State Bar and its members, on the one hand, and the relationship of employee unions and their members, on the other.” 496 U. S., at 12. Applying Abood, the Court held that “[t]he State Bar may . . . constitutionally fund activities germane to [its] goals” of “regulating the legal profession and improving the quality of legal services” using “the mandatory dues of all members.” 496 U. S., at 13–14.

Two Terms ago, we overruled Abood in Janus v. State, County, and Municipal Employees, 585 U. S. ___ (2018). We observed that “Abood was poorly reasoned,” that “[i]t has led to practical problems and abuse,” and that “[i]t is inconsistent with other First Amendment cases and has been undermined by more recent decisions.” Id., at ___ (slip op., at 1). After considering arguments for retaining Abood that sounded in both precedent and original meaning, we held that “States and public-sector unions may no longer extract agency fees from nonconsenting employees.” 585 U. S., at ___ (slip op., at 48).

Our decision to overrule Abood casts significant doubt on Keller. The opinion in Keller rests almost entirely on the framework of Abood. Now that Abood is no longer good law, there is effectively nothing left supporting our decision in Keller. If the rule in Keller is to survive, it would have to be on the basis of new reasoning that is consistent with Janus.*

Respondents argue that our review of this case would be hindered because it was dismissed on the pleadings. But any challenge to our precedents will be dismissed for failure to state a claim, before discovery can take place. And in any event, a record would provide little, if any, benefit to our review of the purely legal question whether Keller should be overruled.

Short of a constitutional amendment, only we can rectify our own erroneous constitutional decisions. We have admitted that Abood was erroneous, and Abood provided the foundation for Keller. In light of these developments, we should reexamine whether Keller is sound precedent. Accordingly, I respectfully dissent from the denial of certiorari.

[*] Respondents resist this conclusion by citing Harris v. Quinn, 573 U. S. 616 (2014), which predates Janus. But all we said in Harris was that “a refusal to extend Abood” would not “call into question” Keller. Harris, 573 U. S., at 655. Now that we have overruled Abood, Keller has unavoidably been called into question.

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Market Suddenly Soars As Schwab & Robinhood Suffer Outages

Market Suddenly Soars As Schwab & Robinhood Suffer Outages

Tyler Durden

Mon, 06/01/2020 – 10:28

Accelerating losses into and across the open this morning suddenly reversed at around 0938ET… which coincidentally is when Charles Schwab’s website seemed to start having difficulties…

Source: DownDetector

The outage is nationwide…

Source: DownDetector

Robinhood also having issues…

 

Probably just a coincidence…

 

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The Epitome Of Rioting Irony And Ignorance In Two Tweets

The Epitome Of Rioting Irony And Ignorance In Two Tweets

Tyler Durden

Mon, 06/01/2020 – 10:15

Authored by Mike Shedlock via MishTalk,

ESPN NBA Reporter Chris Martin Palmer made a fool out of himself with a pair of Tweets, one of which exploded in his face.

My how things change when it is your gated community that is being burnt down.

Palmer deleted his Tweet but here is his “Burn that s**t down. Burn it all down.” Tweet Archive.

Comments Pour In

A lot of people have been affected and lives lost, but we need to all remember… Chris Palmer can’t get his Starbucks today.

More Replies to Palmer

Amazing Irony

Palmer incites looters to burn things down just as long as they stay away from his gated community. 

But they didn’t. 

And that is what happens when you openly encourage violence against others. 

I suspect the career of Chris Martin Palmer is now over. 

If it’s not, it should be.

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US Manufacturing ‘Soft’ Survey Data Disappoints With Modest Rebound

US Manufacturing ‘Soft’ Survey Data Disappoints With Modest Rebound

Tyler Durden

Mon, 06/01/2020 – 10:04

Following May’s preliminary PMI rebound, final ‘soft’ survey data for the US manufacturing sector was expected to consolidate its rebound.

However, while Markit’s PMI held its rebound at 39.8 (from 36.1) it was slightly below the 40.0 expectations and showed no improvement over the flash print.

ISM Manufacturing showed a similar picture – with a modest rebound but disappointingly missing expectations (up from 41.5 to 43.1, but less than the 43.8 exp)

Source: Bloomberg

Markit reports that a marked decline in total sales and negative sentiment towards the outlook for output over the coming year drove employment down, as firms reduced workforce numbers substantially. At the same time, lower input buying and weaker overall demand conditions put pressure on suppliers to lower their prices. Consequently, input costs fell again, in turn helping manufacturers to cut their output charges at a record pace as firms sought to remain competitive.

Under the hood of ISM’s data, things are not pretty…

 

While most respondents suggested some level of optimism that the corner has been turned:

  • “Fuel sales demand are beginning to rebound in May as stay-at-home orders are lifted across the country.” (Petroleum & Coal Products)

  • “Returning to full production for automotive, ramp-up will still depend on speed of automotive start-ups. We have built up inventory to stock. Ready to ship.” (Fabricated Metal Products)

  • “Business activity remains strong for consumable applications and very weak in durable segments.” (Plastics & Rubber Products)

  • “We see a lot of positive signs, despite what’s going on. People seem to continue to be building and looking to projects for fall of 2020 and beyond. There is good optimism out there.” (Nonmetallic Mineral Products)

  • “Despite the COVID-19 issues, we are seeing an increase of quoting activity. This has not turned into orders yet, but it is a positive sign.” (Computer & Electronic Products)

There were a few non-believers:

  • “Current conditions in the automotive, construction, oil and gas, agriculture equipment, and tube/pipe markets are all adversely impacting our business results.” (Chemical Products)

  • “We see an issue with suppliers that are affecting production. At the same time, social distancing measures in [the] manufacturing plant and customer demand are impacting the rate of production.” (Transportation Equipment)

  • “Increased COVID-19 sales in the food business has really stressed our production capabilities.” (Food, Beverage & Tobacco Products)

Digging into some of the pricing details, We see the following “essential” commodities higher in price:

Alcohols; Crude Oil; Freight; Personal Protective Equipment (PPE; PPE — Gloves; and PPE— Masks

But most other commodities are lower in price…

Acrylate Monomers; Aluminum; Base Oils; Copper; Corn; Diesel Fuel (3); Methanol; Nylon; Oil Based Products; Packaging Materials; Plastic Products; Polypropylene; Solvents; Steel; Steel — Carbon; Steel — Cold Rolled; Steel — Hot Rolled; Steel — Stainless; and Steel Products.

Chris Williamson, Chief Business Economist at IHS Markit said:

“Manufacturing remained in a deep downturn in May, as measures taken to contain the spread of COVID-19 continued to cause production losses, disrupt supply chains and hit demand. Job losses meanwhile continued to run at one of the highest rates in over a decade, and pricing power has collapsed.

“With increasing numbers of companies restarting production, we should see some improvements in the output trend in coming months, and it was reassuring to see signs of the downturn already starting to ease in May, suggesting April was the eye of the storm as far as the production collapse is concerned.

“There remains a high risk that any recovery will be frustratingly slow as ongoing social distancing measures, high unemployment, job insecurity and damaged balance sheets constrain consumer and business spending. The recovery will of course also fade quickly if virus infections start to rise again. For now, however, we focus on the good news that we may be past the worst in terms of the economic decline.”

But, despite all that, The Dow is back to pricing in economic expansion…

Source: Bloomberg

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Rabobank: “Things Are Getting Real… Everywhere You Look, Decades Are Happening In Weeks”

Rabobank: “Things Are Getting Real… Everywhere You Look, Decades Are Happening In Weeks”

Tyler Durden

Mon, 06/01/2020 – 09:45

Submitted by Michael Every of Rabobank

“There are years where nothing happens, and there are weeks where decades happen.” So said Lenin, who knew a thing or two about revolutionary times. The US faces its worst protests/riots since 1968, which are whipped up by the far right, or the Russians, or ANTIFA –newly-designated as a terrorist organisation by President Trump– depending on what you read. The editor of China’s Global Times has trolled this must be Hong Kong protestors at work – with no Twitter fact-check; certainly Hong Kong’s “If we burn, you burn with us” fits the real rage on display. So should markets think not of the end of lockdown but the start of breakdown? (We have certainly swapped quarantine for curfew in many places.) Perhaps – but 1968 and 1992 were both followed by the usual US exceptionalism. Indeed, the US private sector just sent the first astronauts into space from US soil in a decade, with plans for a moon landing and a trip to Mars. Then again, we are decades further into neoliberal financialisation now, with all the resultant atrophying of previous US strength: the public sector can no longer put a man on the moon; it has to be outsourced.

Re: decades in weeks and breakdowns, on Friday markets –and this Daily– felt a Rubicon was about to be crossed when Trump tweeted “CHINA!” just before a press conference on the subject. However, despite his aggressive rhetoric on the South China Sea and “Wuhan virus”, the conclusion was a bazooka had not been brought to the table. Trump announced: the beginning of the process of ending Hong Kong’s separate legal status from China; a shift in the US travel advisory; action to limit access to US universities; and a working group to protect the US financial system from China; and sanctions on HK and PRC individual. Yet he did not walk away from the phase one trade deal – Trump opted to leave the WHO entirely instead. Equities and CNH both rallied Friday, and Hong Kong was up strongly today. Wrongly.

Loss of US recognition will not directly impact Hong Kong much, as China says, yet:

  • The shift on visas prevents Chinese nationals studying STEM at post-grad level in the US if they attended a military university (around 4% of the total in the US) OR have links to a firm signing up to Beijing’s policy of ‘Military-Civilian Fusion’: that covers anything larger than an SME.

  • The working group on financial markets is almost certain to recommend delisting Chinese equities from the US, a process already underway, and escalate restrictions on US capital flows into China, also underway.

  • We should expect the list of sanctioned individuals to be lengthy and embarrassing. Some will have at least one account with a Western bank, which will have to be closed and moved to a Chinese bank, causing a backlash (last week saw former Hong Kong CEO CY Leung call for a boycott of a bank that could not be more ‘Hong Kong’). Moreover, once Chinese banks are doing that banking instead, US sanctions will then apply to them. We will still end up with restrictions on USD usage in Hong Kong/China that the market think we have dodged.

  • Trump was never going to walk away from a trade deal even if many observers already see it as dead: why bother? If China sticks to it, great – but it won’t change the political direction of travel; and if they don’t, it’s more fuel on the anti-China fire in the near future.

In short, Trump put US-China decoupling on the table – and STILL pushed the stock market up. Those who don’t see that might want to look at Hong Kong’s money changers, who are having to turn away hundreds of customers due to a lack of USD in the face of massive demand; and this is matched by inquiries over emigration and foreign property purchases. The Hong Kong Finance Secretary has even had to come out and say there are no plans to change the city’s HKD peg to the USD or to impose capital controls: that this had to be said speaks volumes. The South China Morning Post likewise points out Beijing may be holding back on a massive stimulus package because it is keeping its power dry and asks: is it for looming US decoupling? It’s certainly not because the economy is doing well from the latest PMI data (manufacturing 50.6 with new export orders 35.3 and 54% of firms seeing insufficient demand; services at 53.6; and Caixin manufacturing 50.7.)

Meanwhile, the tectonic shift on the US-China front runs through all other markets. Mexico has questioned the US over the phase one trade deal given USMCA Article 32.10 states an FTA with a non-market economy allows the other two parties to terminate or update it. Obviously it isn’t a FTA –it’s barely a deal anymore– but Mexico is stirring the pot given much of the US trade lost to China is likely to be gained by it, underlining the new regionalisation underway.

Far more significantly, Trump postponed the G7 meeting set for June because Germany’s Angela Merkel refused to attend. In response to this slight, as well as the milquetoast EU reaction to Hong Kong, who are still set to proceed with a September EU-China investment summit, Trump has shifted the “out of date” G7 date to September – and invited Australia, South Korea, India, and Russia to join. Yes, Russia used to be in G8, and Australia, South Korea, and India are all in the G20. Yet this overlooks the fact that all of the above except Russia feel threatened by China, and are establishing new national security mechanisms to deal with those concerns, including trading arrangements (India may be buying the Aussie barley China no longer is, for example). Moreover, reverse Nixon-ing to bring in Russia from the cold would be the requisite move to encircle China. That’s realpolitik over liberal ideals.

Please listen to Lenin, Europe (where watches are still set back to 2005). The EU debt/budget debate would have been timely 15 years ago, but the block looks to be drifting into a geo-strategic headache if the US and Russia were to build bridges over the top of it, or if the global architecture fragments, WHO style. Even the UK may opt for the US over an EU FTA (and for Australia, India, etc.). This is a real risk of that building in the British determination to walk away from deadlocked EU trade negotiations within weeks; and in the UK dumping Huawei and angling for a new “D10” (D for Democracy) of countries to unite behind a Western technological 5G alternative; and as the UK says 2.9m Hong Kongers are eligible for British residency – this from a government seen as having won the Brexit debate over immigration.  

Everywhere you look, decades are happening in weeks. Are they taking us towards US collapse or renaissance? Towards European solidarity or division and (further) European irrelevance? Towards a Chinese century – or very rapidly away from it?

Does this matter for your market/asset? How can it not?! Bond yields are very low; volatility is very low; equities are very high; and the USD is well off its highs. Not all of these can be correct if those tectonic plates are about to shift: only one can.

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Key Events In The Coming Week: The Worst Jobs Report Since The Depression, ECB, Brexit And More

Key Events In The Coming Week: The Worst Jobs Report Since The Depression, ECB, Brexit And More

Tyler Durden

Mon, 06/01/2020 – 09:37

It’ll be a reasonably busy week ahead, DB’s Jim Reid writes (hot in pursuit of a new office desk) with the US jobs report on Friday the highlight, while also of interest will be the ECB’s latest decision on Thursday and whether they’ll announce more policy action, along with the release of PMIs (Monday – manufacturing and Weds/Thurs – services) from around the world. Finally, Brexit will return to the headlines as another negotiating round between the UK and the EU takes place. The most violent US riots in decades may also continue indefinitely.

Looking ahead to the key market moving events this week, for payrolls the consensus on Bloomberg is currently expecting -8000k job losses and the unemployment rate to rise to 19.6%, the highest level since the Great Depression in the 1930s, and up from the 14.7% reading in April. Within this it’ll be worth looking at the sectoral breakdowns for an idea of which industries are being hit the hardest. For example, in April the level of employment in leisure and hospitality fell by 47%. Meanwhile young people are being hit especially hard, and the teenage unemployment rate (for 16 to 19 year olds) rose to an astonishing 31.9% in April. Elsewhere PMIs (and the ISMs) will be important but the diffusion nature makes it incredibly difficult to calibrate to growth at extreme turning points. For the Fed, they meet next week so we’re now in blackout period so don’t expect to hear much from the committee members.

On the ECB meeting on Thursday DB expects large downward economic revisions to the staff forecasts more towards our house view. This supports calls for a doubling of the PEPP to €1.5tn and an extension to mid-2021 (this may be problematic to achieve if the Bundesbank ends up being constitutionally barred from participating in the ECB’s QE). The risk is a soft commitment to increase but no firm numbers until the next meeting on July 16th. There is also a clash between the PEPP being temporary policy and for it to be permanent enough to allow reinvestment. However, a lengthening of the “crisis” period means reinvestment until at least the end of 2022 would be appropriate to avoid a premature tightening of financial conditions. Expect all to be announced on Thursday. Also expect lots of press conference questions on the German Constitutional Court hearing.

Over in the political sphere, Brexit negotiations between the EU and the UK on their future partnership will continue via videoconference from tomorrow to Friday. This is the fourth round now, and thus far there hasn’t been a great deal of progress. Indeed, at the end of the third round in May, the UK’s chief negotiator, David Frost, said that “we made very little progress towards agreement on the most significant outstanding issues between us”. This is the last negotiating round before a high level meeting in June where the two sides will be taking stock of progress. It’s also important as if the two sides want to extend the transition period that concludes at the end of 2020, they only have until the end of June to agree.

Courtesy of Deutsche Bank, here is a day-by-day calendar of events

Monday

  • Data: May manufacturing PMIs from Australia, South Korea, Japan, China, India, Russia, Turkey, Italy, France, Germany, Euro Area, UK, South Africa, Brazil, Canada, United States and Mexico, Japan Q1 capital spending, May vehicle sales, US April construction spending, May ISM manufacturing

Tuesday

  • Data: Japan March all industry activity index, final April machine tool orders, Germany June GfK consumer confidence, France May business confidence, US March FHFA house price index, April Chicago Fed national activity index, new home sales, May Conference Board consumer confidence, Dallas Fed manufacturing activity
  • Central Banks: Reserve Bank of Australia monetary policy decision
  • Politics: Fourth UK-EU future relationship negotiating round begins

Wednesday

  • Data: May services and composite PMIs from Australia, Japan, China, India, Russia, UK, Brazil and United States, Germany May unemployment change, Italy preliminary April unemployment rate, Euro Area April PPI, unemployment rate, US weekly MBA mortgage applications, April factory orders, final April durable goods orders, nondefence capital goods orders ex air, May ADP employment change, ISM non-manufacturing
  • Central Banks: Bank of Canada monetary policy decision

Thursday

  • Data: May services and composite PMIs from Italy, France, Germany and the Euro Area, May construction PMIs from Germany and the UK, Euro Area April retail sales, Canada April international merchandise trade, US April trade balance, final Q1 nonfarm productivity, weekly initial jobless claims
  • Central Banks: ECB monetary policy decision

Friday

  • Data: UK final May GfK consumer confidence, Japan April household spending, preliminary April leading index, Germany April factory orders, Italy April retail sales, US May change in nonfarm payrolls, unemployment rate, average hourly earnings, April consumer credit, Canada May net change in employment

* * *

Finally, looking at just the US, Goldman writes that the key economic data releases this week are the ISM manufacturing index on Monday, the ISM non-manufacturing index on Wednesday, the jobless claims report on Thursday, and the employment report on Friday. There are no scheduled speaking engagements from Fed officials this week, reflecting the FOMC blackout period.

Monday, June 1

  • 09:45 AM Markit US manufacturing PMI, May final (consensus 40.0, last 39.8)
  • 10:00 AM Construction spending, April (GS -5.5%, consensus -6.0%, last +0.9%): We estimate a 5.5% decrease in construction spending in April, with scope for broad-based declines in both non-residential and residential construction.
  • 10:00 AM ISM manufacturing index, May (GS 44.5, consensus 43.7, last 41.5): Our manufacturing survey tracker increased by 5.2pt to 38.7 in May, following somewhat stronger regional manufacturing surveys on net. We expect the ISM manufacturing index to rebound by 3.0pt to 44.5 in May.

Tuesday, June 2

  • 5:00 PM Lightweight motor vehicle sales, May (GS 11.8m, consensus 11.0m, last 8.6m)

Wednesday, June 3

  • 08:15 AM ADP employment report, May (GS -6,000k, consensus -9,500k, last -20,236k); We expect a 6,000k decline in ADP payroll employment, reflecting lower jobless claims than in April and higher oil prices. While we believe the ADP employment report holds limited value for forecasting the BLS nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 09:45 AM Markit US services PMI, May final (consensus 37.4, last 36.9)
  • 10:00 AM Factory orders, April (GS -13.0%, consensus -14.2%, last -10.4%); Durable goods orders, April final (last -17.2%); Durable goods orders ex-transportation, April final (last -7.4%); Core capital goods orders, April final (last -5.8%): Core capital goods shipments, April final (last -5.4%) We estimate factory orders fell by 13.0% in April following a 10.4% decrease in March. Durable goods orders fell sharply in the April advance report.
  • 10:00 AM ISM non-manufacturing index, May (GS 45.0, consensus 44.5, last 41.8): Our non-manufacturing survey tracker increased by 5.6pt to 39.6 in May, following somewhat stronger regional service sector surveys. We expect the ISM non-manufacturing index to rebound by 3.2pt to 45.0 May report.

Thursday, June 4

  • 08:30 AM Trade balance, April (GS -$49.2bn, consensus -$49.1bn, last -$44.4bn): We estimate the trade deficit increased by $4.8bn in April, reflecting a rise in the goods trade deficit.
  • 08:30 AM Nonfarm productivity, Q1 final (GS -2.8%, consensus -2.5%, last -2.5%); Unit labor costs, Q1 final (GS +5.1%, consensus +4.8%, last +4.8%): We estimate nonfarm productivity was revised down by three tenths to -2.8% (qoq ar) in Q1. We estimate growth in Q1 unit labor costs – compensation per hour divided by output per hour – was revised up to +5.1% in Q1.
  • 08:30 AM Initial jobless claims, week ended May 30 (GS 1,800k, consensus 1,800k, last 2,123); Continuing jobless claims, week ended May 23 (consensus 19,039k, last 21,052k): We estimate initial jobless claims declined but remain elevated at 1,800k in the week ended May 30.

Friday, June 5

  • 08:30 AM Nonfarm payroll employment, May (GS -7,250, consensus -8,000k, last -20,537k); Private payroll employment, May (GS -6,750k, consensus -7,650k, last -19,557k); Average hourly earnings (mom), May (GS +1.5%, consensus +0.9%, last +4.7%); Average hourly earnings (yoy), May (GS +9.3%, consensus +8.5%, last +7.9%); Unemployment rate, May (GS 21.5%, consensus 19.6%, last 14.7%): We estimate nonfarm payrolls declined by 7.25mn in May, reflecting a continued increase in temporary layoffs and only a gradual reopening from the coronavirus shutdown. Employment surveys showed month-over-month improvement but remained in contractionary territory, while excess initial claims from regular state programs totaled almost 12mn during the May payroll month. Although alternative data suggest a modest increase in the number of workers at work sites in the May, some of the earliest workers to return to work likely remained on payrolls during the pandemic. We assume the BLS will adjust its birth-death model to capture the impact of some temporary business closures (as it did in the April report); however we believe the adjustment will again understate the true magnitude of nonfarm payroll declines.
  • We expect that workers that the most of the 8.1mn workers that were employed but not at work for “other reasons” in April will be reclassified as unemployed in the May household survey, providing an almost 5pp boost to the unemployment rate. Furthermore, our real-time unemployment tracker—which forecasts the unemployment rate based on jobless claims—suggests unemployment might have peaked around the May survey week. Additionally, we expect the participation rate to decline a bit further on account of the virus. Taken together, we estimate the unemployment rate rose almost 7 points to 21.5%. We estimate average hourly earnings increased 1.5% month-over-month and 9.3% year-over-year, reflecting a composition shift towards higher-paid workers that is boosted by positive calendar effects.

Source: Deutsche Bank, Goldman, BofA

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The Rise and Fall and Rise Again of the ‘Outside Agitator’ Story

Feeling uneasy about the disorder erupting at recent protests against police brutality? Don’t worry, the authorities have an explanation: It was the outside agitators what done it.

St. Paul Mayor Melvin Carter claimed Saturday morning that “every single person” arrested in his city the night before had been from out of state. Minnesota Gov. Tim Walz reiterated the idea that the troublemakers were outsiders: His “best estimate,” he said, was that “about 80 percent” of the rioters were from elsewhere. Minneapolis Mayor Jacob Frey warned that “white supremacists, members of organized crime, out of state instigators, and possibly even foreign actors” were trying “to destroy and destabilize our city and our region.” President Donald Trump didn’t agree with Frey’s list of culprits—”It’s ANTIFA and the Radical Left,” he proclaimed—but he grabbed hold of the governor’s number, tweeting as a settled fact that “80% of the RIOTERS in Minneapolis last night were from OUT OF STATE.”

By the end of the day, those figures had fallen apart. KSTP-TV reported that St. Paul had seen 18 civil unrest arrests from Thursday through Saturday morning; just four of the arrestees were clearly from out of state, with two more of uncertain origins. In Minneapolis too, the vast majority of the people arrested were in-state. St. Paul’s mayor soon conceded that he had given out bad information, and by Saturday evening KARE-TV was reporting that the governor “declined to repeat” his 80 percent claim. (KARE also pushed back, less conclusively, against Frey’s list of villains: “Of those arrested from out of state, only one had a Facebook page [with] clearly identifiable support of white supremacy.”)

Now, that still leaves enough gaps in the evidence to keep the outside-agitator story alive if you really like it. After all, you can project pretty much anything you want onto the masked rioters who weren’t arrested. Some of those projections may even turn out to be true, or half-true, or related in some familial way to truth.

But mostly they’ll be wishful thinking.

Activists do travel to protests in other parts of the country, of course. Leninist grouplets drove down to Ferguson; Oath Keepers headed out to the Bundy ranch. And yes, people with their own agendas sometimes try to escalate violence—though they don’t necessarily come from out of town to do it. Visitors are often peaceful, and hotheads can be homegrown. Sometimes they almost have to be homegrown: Given how many places are boiling over right now, it’s hard to believe that they’re all in thrall to outsiders sweeping in from someplace else.

Hard to believe, but convenient to believe. Whether you’re a civic leader trying to preserve your town’s reputation, a cop unhappy at the thought that so many citizens resent your department, or an activist who wants to wave away elements of your movement that you don’t like, it can be comforting to displace everything onto a stock villain, be it Soros or Putin or anarchists or fascists or all of them working in concert in a Prague graveyard. Gov. Walz insisted that he “wasn’t trying to deflect” when he raised the specter of out-of-state rioters. But even if that’s true of Walz, it certainly isn’t true of every person who took his comments and ran with them.

Such beliefs are so convenient, in fact, that they’ve cropped up many times before. There’s a long history of dubious rumors about outside agitators—some of them “possibly even foreign,” as Mayor Frey might say. The most infamous cases were in the Jim Crow South, when segregationists regularly claimed that most blacks were satisfied with their lot and that any conflict was the creation of the national civil rights movement. But there are plenty of other examples. Antebellum southerners convinced themselves that white abolitionists were stirring up slave revolts. 20th century politicians blamed race riots on Bolsheviks right after the Russian revolution, on the Japanese during World War II, on the Soviet bloc in the ’60s. After the first flareup of the 2015 Baltimore riots, city leaders tried to attribute the violence to “isolated pockets of people from out of town.” That tale fell apart the same way the similar storyline did in Minnesota: Nearly all the rowdies arrested that night turned out to be locals.

With the outside agitator as your scapegoat, it becomes easier to ignore some significant distinctions. The word “antifa” starts to get used as a synonym for “any radicals who smash things,” whether or not they’re involved with the antifa movement. Bernie Kerik, a former New York police commissioner who wound up serving time, tried to rope in Black Lives Matter too, declaring Friday that “paid left wing radical groups like Antifa, Black Lives Matter and others” were “responsible for extreme violence against innocent civilians, looting and arson”—even as reports from the ground had Black Lives Matter activists trying to rein in looters and vandals. You hear similar confusions when people on the left worry about far-right infiltration of the protests. Much of the gun-toting boogaloo subculture is sympathetic to the protesters, since it shares their complaints about police abuses, yet it gets constantly conflated with right-wing accelerationists who hope to start a race war. People apparently find it pleasing to treat their enemies as one big ball of alien influence.

And yes: It’s entirely possible that some acts of vandalism were carried out by people pretending to be things they’re not. But you’re fooling yourself if you think they all were. There really are activists who think property destruction is a valuable form of protest, and it doesn’t take much effort to find them. I’ve known some of them for decades; if they’re agents provocateurs, they sure are playing a long game.

Sometimes complaints about outsiders are just a way to informally excommunicate people you’d rather not have on your side. Protesters have sharp disagreements about both tactics and long-term goals, and it’s not surprising to see reluctant comrades trying to read each other out of the movement. At times those divisions even fall along an insider/outsider line. When, say, black activists object to white marchers vandalizing businesses in their neighborhood, the vandals might not be from out of state but they still aren’t from around here. But there’s a clear difference between those sorts of messy fissures and a narrative that tries to reduce those complications to an external conspiratorial force.

Urban legends are resilient, and I don’t expect this one to disappear anytime soon. On Sunday, Sen. Marco Rubio (R–Fla.) reenacted the Minnesota show, tweeting that “Only 13 of the 57 people arrested” at a Miami protest “live in the City. Some of the others came from as far away as New York & Minnesota.” He refrained from mentioning that the clear majority were from South Florida, even if they don’t live in the city limits. Meanwhile, former National Security Advisor Susan Rice pointed her finger at #Resistance liberals’ favorite outside agitator, speculating on CNN that all this “is right out of the Russian playbook.”

That sure would be tidy, wouldn’t it? But riots are never tidy. That’s why they call them riots.

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The Rise and Fall and Rise Again of the ‘Outside Agitator’ Story

Feeling uneasy about the disorder erupting at recent protests against police brutality? Don’t worry, the authorities have an explanation: It was the outside agitators what done it.

St. Paul Mayor Melvin Carter claimed Saturday morning that “every single person” arrested in his city the night before had been from out of state. Minnesota Gov. Tim Walz reiterated the idea that the troublemakers were outsiders: His “best estimate,” he said, was that “about 80 percent” of the rioters were from elsewhere. Minneapolis Mayor Jacob Frey warned that “white supremacists, members of organized crime, out of state instigators, and possibly even foreign actors” were trying “to destroy and destabilize our city and our region.” President Donald Trump didn’t agree with Frey’s list of culprits—”It’s ANTIFA and the Radical Left,” he proclaimed—but he grabbed hold of the governor’s number, tweeting as a settled fact that “80% of the RIOTERS in Minneapolis last night were from OUT OF STATE.”

By the end of the day, those figures had fallen apart. KSTP-TV reported that St. Paul had seen 18 civil unrest arrests from Thursday through Saturday morning; just four of the arrestees were clearly from out of state, with two more of uncertain origins. In Minneapolis too, the vast majority of the people arrested were in-state. St. Paul’s mayor soon conceded that he had given out bad information, and by Saturday evening KARE-TV was reporting that the governor “declined to repeat” his 80 percent claim. (KARE also pushed back, less conclusively, against Frey’s list of villains: “Of those arrested from out of state, only one had a Facebook page [with] clearly identifiable support of white supremacy.”)

Now, that still leaves enough gaps in the evidence to keep the outside-agitator story alive if you really like it. After all, you can project pretty much anything you want onto the masked rioters who weren’t arrested. Some of those projections may even turn out to be true, or half-true, or related in some familial way to truth.

But mostly they’ll be wishful thinking.

Activists do travel to protests in other parts of the country, of course. Leninist grouplets drove down to Ferguson; Oath Keepers headed out to the Bundy ranch. And yes, people with their own agendas sometimes try to escalate violence—though they don’t necessarily come from out of town to do it. Visitors are often peaceful, and hotheads can be homegrown. Sometimes they almost have to be homegrown: Given how many places are boiling over right now, it’s hard to believe that they’re all in thrall to outsiders sweeping in from someplace else.

Hard to believe, but convenient to believe. Whether you’re a civic leader trying to preserve your town’s reputation, a cop unhappy at the thought that so many citizens resent your department, or an activist who wants to wave away elements of your movement that you don’t like, it can be comforting to displace everything onto a stock villain, be it Soros or Putin or anarchists or fascists or all of them working in concert in a Prague graveyard. Gov. Walz insisted that he “wasn’t trying to deflect” when he raised the specter of out-of-state rioters. But even if that’s true of Walz, it certainly isn’t true of every person who took his comments and ran with them.

Such beliefs are so convenient, in fact, that they’ve cropped up many times before. There’s a long history of dubious rumors about outside agitators—some of them “possibly even foreign,” as Mayor Frey might say. The most infamous cases were in the Jim Crow South, when segregationists regularly claimed that most blacks were satisfied with their lot and that any conflict was the creation of the national civil rights movement. But there are plenty of other examples. Antebellum southerners convinced themselves that white abolitionists were stirring up slave revolts. 20th century politicians blamed race riots on Bolsheviks right after the Russian revolution, on the Japanese during World War II, on the Soviet bloc in the ’60s. After the first flareup of the 2015 Baltimore riots, city leaders tried to attribute the violence to “isolated pockets of people from out of town.” That tale fell apart the same way the similar storyline did in Minnesota: Nearly all the rowdies arrested that night turned out to be locals.

With the outside agitator as your scapegoat, it becomes easier to ignore some significant distinctions. The word “antifa” starts to get used as a synonym for “any radicals who smash things,” whether or not they’re involved with the antifa movement. Bernie Kerik, a former New York police commissioner who wound up serving time, tried to rope in Black Lives Matter too, declaring Friday that “paid left wing radical groups like Antifa, Black Lives Matter and others” were “responsible for extreme violence against innocent civilians, looting and arson”—even as reports from the ground had Black Lives Matter activists trying to rein in looters and vandals. You hear similar confusions when people on the left worry about far-right infiltration of the protests. Much of the gun-toting boogaloo subculture is sympathetic to the protesters, since it shares their complaints about police abuses, yet it gets constantly conflated with right-wing accelerationists who hope to start a race war. People apparently find it pleasing to treat their enemies as one big ball of alien influence.

And yes: It’s entirely possible that some acts of vandalism were carried out by people pretending to be things they’re not. But you’re fooling yourself if you think they all were. There really are activists who think property destruction is a valuable form of protest, and it doesn’t take much effort to find them. I’ve known some of them for decades; if they’re agents provocateurs, they sure are playing a long game.

Sometimes complaints about outsiders are just a way to informally excommunicate people you’d rather not have on your side. Protesters have sharp disagreements about both tactics and long-term goals, and it’s not surprising to see reluctant comrades trying to read each other out of the movement. At times those divisions even fall along an insider/outsider line. When, say, black activists object to white marchers vandalizing businesses in their neighborhood, the vandals might not be from out of state but they still aren’t from around here. But there’s a clear difference between those sorts of messy fissures and a narrative that tries to reduce those complications to an external conspiratorial force.

Urban legends are resilient, and I don’t expect this one to disappear anytime soon. On Sunday, Sen. Marco Rubio (R–Fla.) reenacted the Minnesota show, tweeting that “Only 13 of the 57 people arrested” at a Miami protest “live in the City. Some of the others came from as far away as New York & Minnesota.” He refrained from mentioning that the clear majority were from South Florida, even if they don’t live in the city limits. Meanwhile, former National Security Advisor Susan Rice pointed her finger at #Resistance liberals’ favorite outside agitator, speculating on CNN that all this “is right out of the Russian playbook.”

That sure would be tidy, wouldn’t it? But riots are never tidy. That’s why they call them riots.

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Trump Can’t Designate Antifa a Domestic Terrorist Group, and It’s a Bad Idea Anyway

President Donald Trump announced Sunday that he would designate the leftist “antifa” movement a domestic terrorist organization, following several days of peaceful protesting but also rioting and looting in the wake of George Floyd’s killing.

Activists informally associated with antifa—which is short for “antifascist”—were responsible for some of the violence over the weekend. They have also committed crimes during previous protests: Trump’s inauguration in D.C., the Portland demonstrations against the Proud Boys, and many others. This is consistent with antifa’s ideology, which holds (generally speaking) that harsh tactics are necessary to combat the far right and does not believe in extending free speech to people who oppose its goals. (My book Panic Attack: Young Radicals in the Age of Trump includes an in-depth look at antifa’s history, tactics, and goals.)

So antifa is well worth criticizing. But Trump’s declaration is flawed in a number of ways.

For one thing, it’s not actually possible for the president to label antifa a domestic terrorist group: There is no such designation. The U.S. State Department maintains a list of known terrorist organizations, but it includes only foreign groups—mostly radical Islamists.

Antifa is obnoxious, and it has been responsible for a fair amount of violence, but it’s obviously not a threat to U.S. security on the same level as al-Qaeda or ISIS. It doesn’t even have a leader, central organization, or formal membership.

For another thing, giving the government greater license to consider all antifa activities terroristic in nature would certainly result in civil liberties violations. The authorities would end up harassing and surveilling Americans who have professed sympathy for the far left but are not engaged in anything approaching criminal activity.

Attorney General Bill Barr said on Sunday that the Justice Department would investigate the “criminal organizers and instigators” who are responsible for this weekend’s mayhem. The government already has all the authority it needs to go after people who committed violence, whether or not they consider themselves part of antifa. A domestic terrorist designation is a meaningless gesture: It gives a bunch of social irritants more legitimacy than they deserve.

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