As I’ve noted in an earlier post, Tennessee law generally provides that courts in divorce cases must “restrain[] both parties from harassing, threatening, assaulting or abusing the other and from making disparaging remarks about the other to or in the presence of any children of the parties or to either party’s employer.” Here’s how it played out in one case, Stark v. Stark.
Pamela Stark had been a prosecutor who was married to Joe Stark, a Memphis Police Department sergeant. She petitioned for divorce, “alleg[ing] that she was injured during a physical altercation with Husband days before the complaint for divorce was filed.” She also sent an e-mail to the Mayor about the matter:
Wife’s four-page email to the mayor likewise claimed that she was a victim of domestic violence at the hands of Husband and a victim of misconduct by the Memphis Police Department [in the handling of the investigation -EV]. She identified her husband by name and rank and described her version of the physical altercation between them and the events that followed. Wife asked the mayor to “look into this before it goes further.”
And she posted a Facebook post:
The husband asked the court to order the post removed, arguing “that such dissemination of these allegations could cause immediate irreparable harm to Husband’s reputation and employment,” in part because “he and Wife have many mutual friends on the social media site because Wife worked as a prosecutor.” The judge agreed:
THE COURT: Counsel [referring to Pamela Stark], here’s the problem. You’re under a mutual restraining order. You are. Notwithstanding that any other—when you filed your Complaint, the restraining order was put into place. And that included not to make any disparaging comments to an employer. The mayor is his employer. Bottom line.
You can sit there and argue that you have a freedom of speech, and but the moment you sat there and said in this letter referencing your husband, that changed it. That was about him. It wasn’t about a general concern about police corruption.
The fact that, you know, another police officer was arrested yesterday or last week or last month, if you want to sit there and rant about that, have at it. But if you’re going to make references to your husband, about your husband, about your situation, then that is off limits. Bottom line.
That post shall be removed today, and a mandatory injunction will go into effect that there will be no communication with employers…. Whatever allegations have been made, we’ll deal with that in due course. But at this point involving making any further allegations in social media is completely inappropriate and is being enjoined.
The wife at first refused to take down the post, but was jailed (for four hours) until she did. Clearly unconstitutional, I think.
Unfortunately, the Tennessee Court of Appeals held (just last Friday) that Pamela Stark’s appeal didn’t use the proper procedural route for challenging the preliminary injunction and therefore declined to reach the First Amendment question. But if you ever find yourself challenging a similar Tennessee injunction in the future—or the statute that indirectly seemed to lead to it—please let me know.
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Tennessee plans to execute three death row inmates this year, despite serious concerns about the state’s lethal injection drugs.
The inmates facing execution are Nicholas Todd Sutton (scheduled to be killed on February 20), Oscar Franklin Smith (scheduled for June 4), and Harold Wayne Nichols (scheduled for August 4). Last week, Smith’s lawyers filed a complaint detailing problems with potassium chloride, one of drugs in the state’s three-drug protocol. The drug induces cardiac arrest, but it is possible for consciousness to continue for as long as three minutes after the heart has already stopped. Meanwhile, the intravenous injection of the drug can cause a “searing, burning” sensation throughout the veins. With the administration of paralytics, execution staff and witnesses are prevented from seeing an inmate’s true reaction to the painful process.
The complaint also includes an email between state prison officials showing that the state has been aware as early as August 2018 that the drug is not mixing properly. Administered intravenously, the compounded potassium chloride will feel like rocks entering the body. It may also fail to reach the heart, meaning that the subject could die in another, even more painful way: slowly suffocated to death by the previously administered paralytic.
Smith’s attorneys also note that the state’s supply of vecuronium bromide, the paralytic in its three-drug solution, expired in November 2019. Emails included in the complaint show that the state is interested in obtaining pentobarbital as a replacement. This may be less painful than Tennessee’s current three-drug protocol, but pentobarbital was linked to a set of botched executions in Oklahoma in 2014.
At least three death row inmates have chosen to die by electric chair since 2018, believing the state’s three-drug protocol to be a worse fate.
“This whole question of how we kill our prisoners is sort of a sideshow when the system is as broken as it is,” Abraham Bonowitz, co-director of Death Penalty Action, tells Reason. “All of that really exposes the flaws of the system.”
This isn’t the first time a state has behaved improperly when faced with a limited supply of execution drugs. Arkansas, for example, rushed to execute four of its death row inmates in 2017 because its drugs were expiring. Among those killed was Ledell Lee, whom the Innocence Project and the American Civil Liberties Union now believe died for a murder that he likely did not commit. And in 2014, Louisiana tricked a hospital into providing a drug needed to carry out an execution. The state suggested that the drug was needed for a “medical patient,” leading the hospital to believe it was treating a sick inmate.
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As I’ve noted in an earlier post, Tennessee law generally provides that courts in divorce cases must “restrain[] both parties from harassing, threatening, assaulting or abusing the other and from making disparaging remarks about the other to or in the presence of any children of the parties or to either party’s employer.” Here’s how it played out in one case, Stark v. Stark.
Pamela Stark had been a prosecutor who was married to Joe Stark, a Memphis Police Department sergeant. She petitioned for divorce, “alleg[ing] that she was injured during a physical altercation with Husband days before the complaint for divorce was filed.” She also sent an e-mail to the Mayor about the matter:
Wife’s four-page email to the mayor likewise claimed that she was a victim of domestic violence at the hands of Husband and a victim of misconduct by the Memphis Police Department [in the handling of the investigation -EV]. She identified her husband by name and rank and described her version of the physical altercation between them and the events that followed. Wife asked the mayor to “look into this before it goes further.”
And she posted a Facebook post:
The husband asked the court to order the post removed, arguing “that such dissemination of these allegations could cause immediate irreparable harm to Husband’s reputation and employment,” in part because “he and Wife have many mutual friends on the social media site because Wife worked as a prosecutor.” The judge agreed:
THE COURT: Counsel [referring to Pamela Stark], here’s the problem. You’re under a mutual restraining order. You are. Notwithstanding that any other—when you filed your Complaint, the restraining order was put into place. And that included not to make any disparaging comments to an employer. The mayor is his employer. Bottom line.
You can sit there and argue that you have a freedom of speech, and but the moment you sat there and said in this letter referencing your husband, that changed it. That was about him. It wasn’t about a general concern about police corruption.
The fact that, you know, another police officer was arrested yesterday or last week or last month, if you want to sit there and rant about that, have at it. But if you’re going to make references to your husband, about your husband, about your situation, then that is off limits. Bottom line.
That post shall be removed today, and a mandatory injunction will go into effect that there will be no communication with employers…. Whatever allegations have been made, we’ll deal with that in due course. But at this point involving making any further allegations in social media is completely inappropriate and is being enjoined.
The wife at first refused to take down the post, but was jailed (for four hours) until she did. Clearly unconstitutional, I think.
Unfortunately, the Tennessee Court of Appeals held (just last Friday) that Pamela Stark’s appeal didn’t use the proper procedural route for challenging the preliminary injunction and therefore declined to reach the First Amendment question. But if you ever find yourself challenging a similar Tennessee injunction in the future—or the statute that indirectly seemed to lead to it—please let me know.
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Just like with China’s “surprising” PMI beat, it is hard to know if the respondents for this morning’s US manufacturing surveys were interviewed before or since the coronavirus pandemic has collapsed global supply chains.
Markit’s Manufacturing PMI beat expectations, printing 51.9 vs 51.7 exp, but fell to 3-month lows.
ISM’s Manufacturing survey smashed expectations, surging back into expansion at 50.9 – highest in 6 months.
So you decide which you believe…
Source: Bloomberg
Under the hood, PMI was broadly positive…
Production rose to 54.3 vs 44.8; highest index since April
New orders rose to 52 vs 47.6; best measure since May
Employment rose to 46.6 vs 45.2
Supplier deliveries fell to 52.9 vs 54.6
Inventories fell to 48.8 vs 49.2
Customer inventories rose to 43.8 vs 41.1
Prices paid rose to 53.3 vs 51.7
Backlog of orders rose to 45.7 vs 43.3
New export orders rose to 53.3 vs 47.3
Imports rose to 51.3 vs 48.8
For context this is the biggest MoM jump in ISM since July 2013 – does that make any sense to you?
But, PMI was not, as Chris Williamson, Chief Business Economist at IHS Markit said:
“US manufacturing limped into 2020, with falling exports dampening output growth and causing a pull-back in hiring. The survey data are consistent with factory production falling moderately, meaning the manufacturing sector looks set to act as a drag on the overall economy once again in the first quarter.
“Weakness looks broad-based. Rising demand from households has helped support production in recent months, but January saw a marked slowing in new orders for consumer goods. Production of capital goods such as business equipment, plant and machinery meanwhile fell for the first time in almost four years, hinting at weakened business investment.
“More encouragingly, business expectations for the year ahead perked up, coinciding with an easing of trade tensions and the signing of new North American and Chinese trade deals. Companies are therefore expecting the soft patch to be short-lived, though fears surrounding the Wuhan coronavirus and any further potential escalation of trade tensions could erode this optimism.”
So it seems like a global pandemic is great for US manufacturing!!!! We suspect ISM will see one of its biggest drops in Feb after the hopes of the trade deal crash on the shores of coronavirus.
It is impossible to predict what lays ahead! The coronavirus outbreak could be a nothing burger or become a watershed event. A mountain of debt has formed over the years and whether countries and central banks can hurl enough resources at this crisis to calm a growing fear remains to be seen. It is fear versus more promises of stimulus and at some point, all bets are off. To highlight the vulnerability of the financial markets we can always turn the spotlight back upon derivatives. Hundreds of billions of dollars do not matter when we are talking about death or something like the derivative markets.
Currently, China is looking to dump a wagon full of stimulus into an already highly leveraged market to offset the toll taken from virus fear. China said that billions of dollars will start flowing into markets at the opening and the Chinese government has ordered that short-selling of shares be halted. This instability makes it important to revisit issues that have been swept under the rug or simply overlooked. For most people, the derivatives market falls into this category, partly because they don’t understand exactly what derivatives are or why this market is so important. Everyone paying attention knows that the size of the derivatives market dwarfs the global economy. Several books on derivatives have been written and the size of the derivatives market could be larger than $1.2 quadrillion. To put this in perspective it is about 20 times the size of the world economy.
Attempting to regulate and control our complex global markets is easier said than done.This can be seen in derivatives which are usually lengthy complex legally binding agreements that are very difficult to dissect and often reek with potential contagion. Derivatives fall into many categories from futures, options, credit default swaps, and any complex combinations of these. They can also be used to wager, bet, and spectate on a market move or direction. Regulation is difficult and spotty at best in that a derivative transaction in one country might be considered a simple spot trade in another. I have become convinced after studying derivatives that QE following the 2008 financial crisis may have been geared to hold up the underlying value of assets thatfeed into and support the massive derivative market rather than help the economy.
Derivatives Could Explode Like A Bomb!
Way back in the middle of 2014, the Bank for International Settlements revealed that the amount of over-the-counter (OTC) derivatives outstanding was around 710 trillion dollars at the end of 2013. Most of that exposure is held by banks. The US Office of the Comptroller of the Currency at the time reported the exposure of US banks to derivatives totaling 237 trillion dollars. Of that, four big banks, JP Morgan Chase, Citibank, Goldman Sachs and Bank of America accounted for over 219 trillion dollars. The staggering size of this market is beyond anything that can be comprehended.
When I tried to get more recent numbers I ran into fairly stiff resistance which I contribute to the fact nobody knows the true exposure that is difficult to assess. Hopefully, much of the derivative exposure somehow nets out so that real exposure is far less than the hundreds of trillions of dollars on the books. This is only part of a much larger market that includes hundreds of trillions of dollars in non-reported agreements and private contracts. The efforts to achieve more reporting, more platform trading and central clearing of derivatives have fallen behind because of the complexity of crafting mutually consistent regulations at the jurisdiction level, for a highly globalized market.
While This Is Not A Current Chart Note The Trend Line!
Many derivative writers should be called “too clever by half” if they think they have successfully controlled the risk or removed the implications and problems massive defaults would cause. They pump these out because they make money in the process of structuring and selling these agreements. A derivative is in many cases an insurance policy covered by collateral. Sadly, those who buy and write derivatives often play fast and loose with the value of the collateral or flat out lie about it. This moves them from an insurance policy and into the area of high risk.
Those of us skeptical of the market wonder whether the coronavirus will be dismissed as another over-hyped hysteria or devastate economies. The potential that things could get ugly does exist. If at some point, a “mob mentality” takes over logic could get tossed out the window. This is when claims their actions are for the “greater good” becomes irrelevant. Temporarily, we are on hold while events unfold around us. The window has gone dark and our vision is limited. Just remember those in government generally take care of themselves first, in their minds they are the priority.
The latest NBC/Wall Street Journalpoll spends a lot of time sussing out American voters’ views on President Donald Trump’s impeachment and the 2020 election. But something else is tucked in there too: new numbers on the national mood when it comes to capitalism and socialism.
Fifty-two percent of those polled said they viewed capitalism positively, while just 19 percent said the same about socialism. In an almost mirror flip, 18 percent had a negative view of capitalism, while 53 percent viewed socialism negatively.
The poll of 1,000 registered voters was conducted last week (and has a 3.1 percentage point margin of error).
“Democratic primary voters have a net-positive impression of socialism (40 percent positive, 23 percent negative), and Dem voters ages 18-34 view it even more favorably (51 percent to 14 percent),” reports NBC. “But key general-election groups like independents…suburban voters and swing-state voters have a much more negative impression of socialism.”
The first votes for the Democratic presidential nominee are being cast in Iowa today.
FREE MINDS
A false positive drug test prompted the authorities to take an Alabama mom’s newborn, just four hours after she gave birth. The hospital “declined to comment on why [Rebecca Hernandez] was drug tested in the first place,” says NBC. But “in many parts of the state, hospitals test mothers without their consent, and tests are often done on a case-by-case basis” that winds up biased against poor women.
A 2015 investigation from ProPublica found that Alabama’s rules—aimed at stopping drug use by pregnant women and new mothers—are some of the most strict in the country.
Hernandez has since been reunited with her new son, but the experience was a “nightmare,” she told WAFF last week.
Her doctor, Yashica Robinson, said the false positive probably came from Hernandez eating a poppy seed muffin the day before she went into labor. Robinson criticized same-day drugs tests that trigger the takeaway of newborn children and said hospitals should wait on lab-confirmed results, which in this case cleared Hernandez.
FREE MARKETS
Warren’s tax returns show gas-well royalties.TheWall Street Journalobserves:
On her first day as President, Elizabeth Warren says she will “ban fracking—everywhere,” while putting a “total moratorium” on leases offshore and on federal lands. Ms. Warren has signed a pledge to refuse campaign contributions over $200 from the oil-and-gas industry. She’s a past sponsor of a Senate bill called the Keep It in the Ground Act.
So it’s worth noting that, for years, she and her husband reported modest income from natural-gas royalties in her native state of Oklahoma….Ms. Warren’s campaign has posted 11 years of her tax returns, which show gas income from at least 2008. That year she filed jointly with her husband, Bruce Mann, who had $872 in royalties from gas wells in Oklahoma. There are smaller amounts—a few hundred dollars—reported over the next several tax returns, before the yearly earnings stop….
“Elizabeth and Bruce sold or transferred these mineral interests to her children several years ago,” a Warren campaign spokesman said. “Her children still own them. They generated a few hundred dollars a year.” How long did Ms. Warren and Mr. Mann receive these royalties? Were the amounts larger in the past? The campaign declined to say. For context, gas wells become less productive over time.
“If you ask us, there’s nothing wrong here,” the Journal‘s editorial board adds. But “it belies the purism of her presidential rhetoric. She speaks as if oil inevitably stains everything it touches.”
QUICK HITS
“A recent national poll by Data for Progress found an outright majority of all voters support decriminalizing sex work,” reports the organization. “Additionally, two-thirds of voters age 18–44 support decriminalization.”
The best Super Bowl ad:
Two Super Bowls ago I was sitting in a prison cell.
Today I am a free woman and my story was featured in a Super Bowl Ad.
I will spend the rest of my life fighting for the wrongly and unjustly convicted!
A proposed judiciary ethics rule would “tighten existing guidance that lets [federal] judges belong to…but not take leadership roles” in the conservative Federalist Society and the liberal American Constitution Society. Supreme Court Justice Clarence Thomas has called this an attempt “to silence the Federalist Society.”
The latest NBC/Wall Street Journalpoll spends a lot of time sussing out American voters’ views on President Donald Trump’s impeachment and the 2020 election. But something else is tucked in there too: new numbers on the national mood when it comes to capitalism and socialism.
Fifty-two percent of those polled said they viewed capitalism positively, while just 19 percent said the same about socialism. In an almost mirror flip, 18 percent had a negative view of capitalism, while 53 percent viewed socialism negatively.
The poll of 1,000 registered voters was conducted last week (and has a 3.1 percentage point margin of error).
“Democratic primary voters have a net-positive impression of socialism (40 percent positive, 23 percent negative), and Dem voters ages 18-34 view it even more favorably (51 percent to 14 percent),” reports NBC. “But key general-election groups like independents…suburban voters and swing-state voters have a much more negative impression of socialism.”
The first votes for the Democratic presidential nominee are being cast in Iowa today.
FREE MINDS
A false positive drug test prompted the authorities to take an Alabama mom’s newborn, just four hours after she gave birth. The hospital “declined to comment on why [Rebecca Hernandez] was drug tested in the first place,” says NBC. But “in many parts of the state, hospitals test mothers without their consent, and tests are often done on a case-by-case basis” that winds up biased against poor women.
A 2015 investigation from ProPublica found that Alabama’s rules—aimed at stopping drug use by pregnant women and new mothers—are some of the most strict in the country.
Hernandez has since been reunited with her new son, but the experience was a “nightmare,” she told WAFF last week.
Her doctor, Yashica Robinson, said the false positive probably came from Hernandez eating a poppy seed muffin the day before she went into labor. Robinson criticized same-day drugs tests that trigger the takeaway of newborn children and said hospitals should wait on lab-confirmed results, which in this case cleared Hernandez.
FREE MARKETS
Warren’s tax returns show gas-well royalties.TheWall Street Journalobserves:
On her first day as President, Elizabeth Warren says she will “ban fracking—everywhere,” while putting a “total moratorium” on leases offshore and on federal lands. Ms. Warren has signed a pledge to refuse campaign contributions over $200 from the oil-and-gas industry. She’s a past sponsor of a Senate bill called the Keep It in the Ground Act.
So it’s worth noting that, for years, she and her husband reported modest income from natural-gas royalties in her native state of Oklahoma….Ms. Warren’s campaign has posted 11 years of her tax returns, which show gas income from at least 2008. That year she filed jointly with her husband, Bruce Mann, who had $872 in royalties from gas wells in Oklahoma. There are smaller amounts—a few hundred dollars—reported over the next several tax returns, before the yearly earnings stop….
“Elizabeth and Bruce sold or transferred these mineral interests to her children several years ago,” a Warren campaign spokesman said. “Her children still own them. They generated a few hundred dollars a year.” How long did Ms. Warren and Mr. Mann receive these royalties? Were the amounts larger in the past? The campaign declined to say. For context, gas wells become less productive over time.
“If you ask us, there’s nothing wrong here,” the Journal‘s editorial board adds. But “it belies the purism of her presidential rhetoric. She speaks as if oil inevitably stains everything it touches.”
QUICK HITS
“A recent national poll by Data for Progress found an outright majority of all voters support decriminalizing sex work,” reports the organization. “Additionally, two-thirds of voters age 18–44 support decriminalization.”
The best Super Bowl ad:
Two Super Bowls ago I was sitting in a prison cell.
Today I am a free woman and my story was featured in a Super Bowl Ad.
I will spend the rest of my life fighting for the wrongly and unjustly convicted!
A proposed judiciary ethics rule would “tighten existing guidance that lets [federal] judges belong to…but not take leadership roles” in the conservative Federalist Society and the liberal American Constitution Society. Supreme Court Justice Clarence Thomas has called this an attempt “to silence the Federalist Society.”
While the world will be focusing on every development out of China which is struggling to contain the fallout from the coronavirus pandemic which has now infected nearly 17,500 people across the globe, in terms of newsflow DB’s Jim Reid writes that this week the highlight could be today’s first US democratic primary in Iowa – the first of four this month. There’ll also be a number of data releases, including PMIs from around the world (today and Wednesday), before the US jobs report comes out on Friday, now without a lockup and forcing traders and analysts to scramble to decipher what the BLS has reproted. Earnings season will also continue to be in full flow.
While Iowa only makes up about 1% of nationwide delegates, we will start to see some sign as to momentum of the various candidates. Technically there will also be Republican primaries, but these are widely considered a foregone conclusion in favor of President Trump. In terms of what to expect, the national polling average from RealClearPolitics shows former Vice President Joe Biden still in the lead at the moment, with 27.2%, followed by Senator Bernie Sanders on 23.5% and Senator Elizabeth Warren on 15.0%.
However, in Iowa, the polling average shows Sanders in the lead, with 24.7%, and Biden in second on 21.0%. Furthermore, both former Mayor Pete Buttigieg (16.3%) and Warren (15.2%) are around the crucial 15% mark that is important when it comes to accumulating the delegates required to win the nomination.
In terms of what will happen, the race remains competitive, with FiveThirtyEight’s model at time of writing giving Sanders a 40% chance of winning the most votes in Iowa, followed by Biden on 34%, with Buttigieg on 18% and Warren on a 16% chance. It’s true that often the winner of the Iowa caucuses don’t actually go on to be the nominee – indeed on the Republican side the winners in 2008, 2012 and 2016 all lost out to someone else. Nevertheless, it’s the first indicator of real votes we have, and very important in terms of momentum for each of the candidates, as it’s only 8 days later that the next primary takes place in New Hampshire, and between the two votes there’ll be another TV debate between the candidates on the Friday.
The week ahead also has a number of data highlights, with the main ones likely to be the release of manufacturing (today), services and composite (Wednesday) PMIs from around the world. We have already had the preliminary PMIs from a number of countries, so those countries such as Italy where we haven’t had the preliminary numbers will take on added interest. Also of note will be the ISM manufacturing and nonmanufacturing indices from the US, out today and Wednesday respectively. Back in December, the ISM manufacturing reading fell to 47.2, its lowest level since June 2009, though the consensus is expecting an uptick for January to 48.4, so that’s one to keep an eye out for.
On Friday, we’ll also get the US jobs report for January, the first one that will be subject to the new lockup rules meaning it is unclear if wire services will have any prepared data at the time the report comes out. The current consensus expectation is for a +160k increase in nonfarm payrolls in January, up from the +145k increase in December, with the unemployment rate remaining at 3.5%, and average hourly earnings growth ticking up a tenth to +3.0% year-on-year. Other key data out this week will come with the Euro Area’s retail sales for December on Wednesday, while in Germany, there’ll be the release of December’s factory orders on Thursday and industrial production on Friday.
Also earnings season continues this week, with another raft of companies reporting. Looking at things so far, of the 225 S&P 500 companies that have reported, 74.4% have reported a positive surprise on earnings and 64.1% have reported a positive surprise on sales. Looking to the week ahead, today sees Alphabet report. Then tomorrow we’ll hear from Walt Disney, BP and Sony. On Wednesday, there’s Merck, Novo Nordisk, GlaxoSmithKline, Siemens, Qualcomm, BNP Paribas and General Motors. Thursday sees reports from L’Oréal, Bristol-Myers Squibb, Philip Morris International, Total, Sanofi, Enel, Nordea Bank, UniCredit, Société Générale, Twitter and Toyota. And finally on Friday, we’ll hear from AbbVie.
Finally on US politics, tomorrow sees President Trump give his State of the Union address to Congress.
Below is a day by day summary of key events, courtesy of Deutsche Bank:
Monday
Data: January Manufacturing PMIs from Indonesia, South Korea, Japan, China, India, Russia, turkey, Italy, France, Germany, South Africa, Euro Area, UK, Brazil, Canada and US, China December industrial profits, Japan January vehicle sales, US December construction spending, January ISM manufacturing
Central Banks: Fed’s Bostic speaks
Earnings: Alphabet
Politics: Iowa caucuses held in the US
Tuesday
Data: UK January construction PMI, Euro Area December PPI, Italy preliminary January CPI, US December factory orders, final December durable goods orders, non-military capital goods orders excluding aircraft
Central Banks: Reserve Bank of Australia decision
Earnings: Walt Disney, BP, Sony
Politics: President Trump delivers State of the Union address to Congress
Wednesday
Data: January services and composite PMIs from Japan, China, India, Russia, Italy, France, Germany, Euro Area, UK, Brazil and US, Euro Area December retail sales, US weekly MBA mortgage applications, January ADP employment change, ISM non-manufacturing index, December trade balance, Canada December international merchandise trade
Central Banks: Brazil central bank decision, BoJ’s Wakatabe, ECB’s de Guindos, Bank of Canada’s Wilkins and Fed’s Brainard speak
Earnings: Merck, Novo Nordisk, GlaxoSmithKline, Siemens, Qualcomm, BNP Paribas, General Motors
Thursday
Data: Germany December factory orders, January construction PMI, US preliminary Q4 unit labour costs, nonfarm productivity, weekly initial jobless claims, Japan December labour cash earnings, household spending
Central Banks: Reserve Bank of India decision, ECB publishes Economic Bulletin, BoJ’s Masai, ECB’s Lagarde and Villeroy and Fed’s Kaplan speak
Earnings: L’Oréal, Bristol-Myers Squibb, Philip Morris International, Total, Sanofi, Enel, Nordea Bank, UniCredit, Société Générale, Twitter, Toyota
Friday
Data: China January trade balance, Japan preliminary December leading index, Germany December trade balance, industrial production, France December industrial production, manufacturing production, trade balance, Italy December retail sales, US January change in nonfarm payrolls, unemployment rate, labour force participation rate, average hourly earnings, final December wholesale inventories, December consumer credit, Canada January net change in employment, unemployment rate, participation rate
Central Banks: Russian monetary policy decision, Fed’s Quarles speaks (00:15 UK time), Fed releases semi-annual monetary policy report to Congress
Earnings: AbbVie
Politics: US Democratic primary TV debate
Finally, focusing on 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, and the employment report on Friday. There are a few speaking engagements from Fed officials this week.
Monday, February 3
10:00 AM ISM manufacturing index, January (GS 48.3, consensus 48.5, last 47.2): Our manufacturing survey tracker rose by 2.1pt to 52.5 in December, following firmer regional manufacturing surveys on net. However, we note that late-month surveys like the ISM could be affected by the outbreak of the coronavirus. Additionally, we do not expect improvement among firms exposed to the commercial aircraft supply chain, as Boeing halted production of the 737 MAX in the month. Taken together, we expect the ISM manufacturing index to rise 0.5pt to 48.3 (from its upward revised level of 47.8).
10:00 AM Construction spending, December (GS +0.7%, consensus +0.5%, last +0.6%): We estimate a 0.7% increase in construction spending in December, with scope for increases in both private and public construction spending.
02:00 PM Senior Loan Officer Opinion Survey (Q4) likely released
04:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will speak on big data and machine learning at a conference in California. Audience Q&A is expected.
5:00 PM Lightweight motor vehicle sales, January (GS 16.7m, consensus 16.8m, last 16.7m)
Tuesday, February 4
10:00 AM Factory Orders, December (GS +1.5%, consensus +1.2%, last -0.7%); Durable goods orders, December final (last +2.4%); Durable goods orders ex-transportation, December final (last -0.1%); Core capital goods orders, December final (last -0.9%); Core capital goods shipments, December final (last -0.4%): We estimate factory orders increased 1.5% in December following a 0.7% decline in November. Durable goods orders rose in the December advance report, driven by a large increase in defense orders.
Wednesday, February 5
08:15 AM ADP employment report, January (GS +175k, consensus +158k, last +202k): We expect a 175k gain in ADP payroll employment, reflecting the impact of lower jobless claims and other ADP model inputs. 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.
08:30 AM Trade balance, December (GS -$48.1bn, consensus -$47.8bn, last -$43.1bn): We estimate the trade deficit increased by $5.0bn in December, reflecting a rebound in the goods trade deficit.
10:00 AM ISM non-manufacturing index, January (GS 54.9, consensus 55.1, last 54.9): Our non-manufacturing survey tracker edged down by 0.1pt to 54.1 in January, following mixed regional service sector surveys. We expect the ISM non-manufacturing index to remain unchanged at 54.9 in the January report.
04:10 PM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will speak on payment system innovation.
Thursday, February 6
8:30 AM Nonfarm productivity (qoq saar), Q4 preliminary (GS +1.6%, consensus +1.5%, last -0.2%); Unit labor costs, Q4 preliminary (GS +1.6%, consensus +1.2%, last +2.5%): We estimate non-farm productivity growth rebounded to +1.6% in Q4 qoq saar (+1.8% yoy), above the trend achieved during this expansion. This reflects steady business output growth in Q4 and only a modest increase in hours worked. We expect Q4 unit labor costs—compensation per hour divided by output per hour—to decelerate to +1.6% qoq ar (+2.5% yoy).
08:30 AM Initial jobless claims, week ended February 1 (GS 215k, consensus 215k, last 216k); Continuing jobless claims, week ended January 25 (consensus 1,710k, last 1,703k): We estimate jobless claims ticked down 1k to 215k in the week that ended February 1. We expect a persistent winter seasonal bias to continue to exert upward pressure on the continuing claims measure through February.
09:15 AM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will speak on the economic outlook at an event in Dallas.
07:15 PM Fed Vice Chair for Supervision Quarles (FOMC voter) speaks: Federal Reserve Vice Chair for Supervision Randal Quarles will give a speech on the economic and monetary policy outlook.
Friday, February 7
08:30 AM Nonfarm payroll employment, January (GS +190k, consensus +160k, last +145k); Private payroll employment, January (GS +185k, consensus +150k, last +139k); Average hourly earnings (mom), January (GS +0.2%, consensus +0.3%, last +0.2%); Average hourly earnings (yoy), January (GS +3.0%, consensus +3.1%, last +3.1%); Unemployment rate, January (GS 3.5%, consensus 3.5%, last 3.5%): We estimate nonfarm payrolls increased 190k in January. While employment surveys on net were little changed in the month, initial jobless claims declined further, and an unseasonably dry survey week in the Northeast and Ohio Valley is set to boost weather-sensitive categories. We also note that January job growth tends to accelerate in tight labor markets, as labor supply constraints may lead firms to implement fewer end-of-year layoffs. We do not expect a significant impact from Census employment in this week’s report. We estimate an unchanged unemployment rate at 3.5%, as we believe the increase in continuing claims over the last two months reflects technical distortions related to residual seasonality—and in any event, the uptrend tentatively retraced in the first three weeks of 2020. We estimate average hourly earnings increased 0.2% month-over-month and 3.0% year-over-year, reflecting neutral calendar effects and continued upward wage pressures.
11:00 AM Federal Reserve Board Releases Monetary Policy Report to Congress
Wuhan Begins Human Trials Of New Gilead Coronavirus Vaccine
Last week, scientists in Hong Kong warned that it might take up to a year for them to produce and test a vaccine to fight the deadly coronavirus that has now killed more people than SARS in mainland China. But on Monday, shares of drug company Gilead climbed following reports that it’s conducting a human trial for a drug to fight the outbreak, according to Bloomberg.
Gilead shares have already faded their gains…
…but we suspect that news about the trials is contributing to the forgiving market sentiment in the US, where shares look set to open higher following the bloodbath overnight in Chinese markets.
Here’s more from the Bloomberg report about the clinical trials, which will reportedly be carried out in Wuhan, the epicenter of the viral outbreak. As many as 270 infected patients will be recruited for the study.
Remdesivir, a new antiviral drug by Gilead Sciences Inc. aimed at infectious diseases such Ebola and SARS, will be tested by a medical team from Beijing-based China-Japan Friendship Hospital for efficacy in treating the deadly new strain of coronavirus, a hospital spokeswoman told Bloomberg News Monday.
Trial for the drug will be conducted in the central Chinese city of Wuhan — ground zero of the viral outbreak that has so far killed more than 360 people, sickened over 17,000 in China and spread to more than a dozen nations. As many as 270 patients with mild and moderate pneumonia caused by the virus will be recruited in a randomized, double-blinded and placebo-controlled study, Chinese news outlet The Paper reported on Sunday.
China has kick-started a clinical trial to speedily test a drug for the novel coronavirus infection as the nation rushes therapies for those afflicted and scours for vaccines to protect the rest.
The task of finding a workable vaccine has taken on added urgency now that the outbreak is set to cost the global economy up to 4x what SARS did during the 2002-2003 outbreak, which is why so many companies are racing to develop the vaccine. JNJ is also working on a coronavirus vaccine.
Drugmakers such as GlaxoSmithKline Plc. as well as Chinese authorities are racing to crash develop vaccines and therapies to combat the new virus that’s more contagious than SARS and could cost the global economy four times more than the $40 billion sapped by the 2003 SARS outbreak. The decision to hold human trials for remdesivir shows it’s among the most promising therapies against the virus that so far has no specific treatments or vaccines.
Gilead’s experimental drug hasn’t been approved by any regulators, but it’s being tested on the front lines of the outbreak in the absence of any approved remedies.
All of this begs the question: is ‘we found a workable vaccine’ the new ‘trade deal secured’? Will confirmation be enough to send US stocks to fresh record highs?
Under Tennessee law, when a divorce is begun (and until the proceedings are over), a court must issue
[a]n injunction restraining both parties from harassing, threatening, assaulting or abusing the other and from making disparaging remarks about the other to or in the presence of any children of the parties or to either party’s employer;
And such speech could therefore be a crime (since violating an injunction constitutes criminal contempt of court). Similar rules apply whenever a child custody petition is filed, even if the parties are unmarried and there’s thus no divorce.
Thus, if two coworkers are married, and the wife files for divorce, claiming that her husband had beaten her, she can’t mention this to their joint employer, since that would presumably be “disparaging.” And the injunction isn’t limited to banning false and defamatory remarks; even true statements and expressions of opinion would violate the injunction.
Or say a woman is married to a police officer. She files for divorce, claiming that he had abused her, and then finds evidence that the husband had gotten his coworkers not to investigate the abuse. She can’t then write to the police chief or the mayor to complain, since that too would presumably involve “disparaging remarks” said to the husband’s employer. Indeed, she might be violating the law simply by filing a complaint with the police about her husband’s supposed abuse.
Indeed, I will blog shortly about a case in which such an injunction was issued against a divorcing wife of a police officer, and the court concluded the injunction was violated by the wife’s letter complaining to the mayor. The court went even further, ordering the wife to take down her Facebook posts about her allegations against her husband and the police department.
But in this post, I just wanted to flag the broad statutory restriction. If anyone knows of cases in which this statute (or an order issued under the statute) is being challenged, or might be challenged, please let me know.
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