The Bolton Subpoena

The drama surrounding Congress’ power to compel Executive Branch officials to testify under oath in congressional proceedings is becoming increasingly intense and complicated, and I admit that I would enjoy it as an intellectual puzzle more if the fate of the Republic did not hang on how it gets resolved.

The first stage of the impeachment hearings, just concluded, had plenty of excitement.  As the President’s defenders continually remind us, there’s not a whole lot of direct evidence connecting Trump himself to the politically-motivated scheme to get the Ukrainians to subject the Bidens to a criminal investigation, not for the purpose of advancing US national security interests for the purpose of helping Trump get re-elected in 2020.

It is ironic—to put it as mildly, and as respectfully, as I can—for the President’s defenders to raise this particular defense, given that it is the President himself, of course, who is preventing anyone who might be in possession of such evidence—e.g. Messrs. Bolton, Mulvaney, Pompeo, Giuliani, et. al.—from supplying such evidence, if it indeed exists.

The President (and his lawyers) have chosen not to comply, and have ordered Executive Branch officials not to comply, with any congressional subpoenas, on the ground that “the President and his immediate advisors are absolutely immune from testimonial compulsion by a congressional committee on matters related to their official duties.” [See the DOJ’s memo regarding the subpoena issued to Don McGahn in the Mueller Report hearings (May 20, 2019), and Letter of White House Counsel Pat Cipollone to Speaker Pelosi, Chairman Schiff and others (Oct 8, 2019)):   .

“Congress may not constitutionally compel the President’s senior advisers to testify about their official duties.  This testimonial immunity is rooted in the separation of powers and derives from the President’s status as the head of a separate, co-equal branch of government. Because the President’s closest advisers serve as his alter egos, compelling them to testify would undercut the “independence and autonomy” of the presidency, and interfere directly with the President’s ability to faithfully discharge his responsibilities.

This is an assertion of breathtaking scope, and it has ramifications far beyond its ramifications for the impeachment inquiry, as important as those may be. The President is not simply claiming that senior advisors can invoke a privilege of one kind or another to avoid testifying about specific events or conversations—”executive privilege,” for instance, or the privilege of confidential communication, or a national security privilege, or the attorney-client privilege, or even the 5th Amendment privilege against self-incrimination—depending upon the events or conversations in question. Nobody disputes any of that.

But an absolute immunity from any compulsion to testify before Congress? Congress cannot compel the Secretary of Defense to testify about combat operations in Syria, or the development of new weapons systems? Congress cannot compel the National Security Advisor, or the Secretary of State, to testify in a proceeding examining a possible bribery scheme conducted at the behest of the President? Really?

I am happy to say that this is not the law of the land.

The DOJ’s Office of Legal Counsel would like us to believe that it is; OLC has made the argument for the existence of such an absolute immunity in a number of memos—beginning, I believe, with one authored by William Rehnquist, then at the OLC, in 1971.

But that’s just the Executive Branch deciding the scope of its own powers—a “We have considered the matter and we hereby give ourselves an absolute immunity from congressional oversight” kind of thing.  But as Madison put it in the Federalist, “No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. should be the judge in his own case.” In a system like ours, governed by the Rule of Law, the Executive Branch does not—and cannot—have the last word when it comes to the scope of its own powers.

The Executive Branch has had the temerity to submit this claim of absolute immunity to judicial scrutiny and evaluation only twice.  In Comm. of the Judiciary v. Miers, 558 F.Supp.2d 53 (DDC 2008), the court rejected it outright, declaring it “unprecedented” and “without any support in the case law.” [The government did not appeal that ruling, fearing, perhaps, that an appeals court decision would affirm the obviously correct result of the district court and they’d have to throw out all those OLC memos …]

And yesterday, Judge Jackson of the DC district court again rejected the OLC position in a comprehensive, 118-page opinion upholding the congressional subpoena issued to former White House counsel Don McGahn to testify at the hearings surrounding the Mueller investigation:

OLC’s long-held view that senior-level presidential aides have absolute testimonial immunity is neither precedential nor persuasive … There is no principled basis for concluding that senior-level presidential aides should have absolute testimonial immunity….

To make the point as plain as possible, it is clear to this Court that, with respect to senior-level presidential aides, absolute immunity from compelled congressional process simply does not exist. Indeed, absolute testimonial immunity for senior-level White House aides appears to be a fiction that has been fastidiously maintained over time through the force of sheer repetition in OLC opinions, and through accommodations that have permitted its proponents to avoid having the proposition tested in the crucible of litigation. And because the contention that a President’s top advisors cannot be subjected to compulsory congressional process simply has no basis in the law, it does not matter whether such immunity would theoretically be available to only a handful of presidential aides due to the sensitivity of their positions, or to the entire Executive branch. Nor does it make any difference whether the aides in question are privy to national security matters, or work solely on domestic issues….

And, of course, if present frequent occupants of the West Wing or Situation Room must find time to appear for testimony as a matter of law when Congress issues a subpoena, then any such immunity most certainly stops short of covering individuals who only purport to be cloaked with this authority because, at some point in the past, they once were in the President’s employ….

The United States of America has a government of laws and not of men. The Constitution and federal law set the boundaries of what is acceptable conduct, and for this reason, as explained above, when there is a dispute between the Legislature and the Executive branch over what the law requires about the circumstances under which
government officials must act, the Judiciary has the authority, and the responsibility, to
decide the issue….

As far as the duty to appear is concerned, this Court holds that Executive branch officials are not absolutely immune from compulsory congressional process—no matter how many times the Executive branch has asserted as much over the years—even if the President expressly directs such officials’ non-compliance. This result is unavoidable as a matter of basic constitutional law, as the Miers court recognized more than a decade ago.

Today, this Court adds that this conclusion is inescapable precisely because compulsory appearance by dint of a subpoena is a legal construct, not a political one, and per the Constitution, no one is above the law. That is to say, however busy or essential a presidential aide might be, and whatever their proximity to sensitive domestic and national-security projects, the President does not have the power to excuse him or her from taking an action that the law requires. Fifty years of say so within the Executive branch does not change that fundamental truth. Nor is the power of the Executive unfairly or improperly diminished when the Judiciary mandates adherence to the law and thus refuses to recognize a veto-like discretionary power of the President to cancel his subordinates’ legal obligations.

[By the way, the judgment in this case should not be confused with the judgments in several other on-going cases where the President has raided even more outrageous immunity claims, arguing not only that he is absolutely immune from a state criminal investigation [see “The Fifth Avenue Immunity“], but that his immunity extends to his accountants and tax preparers. Those, too, have been summarily, and properly rejected by the courts.]

The DOJ has said, apparently, that it will appeal this decision, but I doubt that it will, for the same reason that it didn’t appeal the decision in Miers: there is simply no basis in the law on which to base this immunity, and an appellate court decision to that effect would mean that Executive Branch officials could no longer in good faith rely on this thoroughly discredited OLC position. [I wouldn’t be surprised if DOJ went ahead and filed a notice of appeal, just to keep stalling, but then voluntarily dismissed the case before the appeals court actually heard the case]

So this brings us John Bolton.  Bolton, along with other senior advisors to the President (Mulvaney, Pompeo, Giuliani et al.), are clearly the only people, other than Trump himself, who can provide us with direct evidence on the question that is now, as it was in 1974, the central one: What did the President know and when did he know it?

The House committee requested Bolton’s testimony, but he declined to appear voluntarily. The committee then made a strategic decision not to issue a subpoena demanding that he appear. The stated reason was that the action would be a futile one; Bolton wouldn’t comply, and the House would have to take him to court (as it did with McGahn) to compel him to do so, and that could take months and months to wind its way through the courts.

I was not, initially, persuaded that that was a strategically wise decision, and Judge Jackson’s decision yesterday may alter the calculus somewhat. Now that the local federal court has declared that there is no basis for non-compliance with a subpoena, it’s a little more difficult for Bolton to decline to comply, and a little easier for the House to hold him in contempt if he does so.

But if the goal is (as it should be) to obtain this critical testimony, under oath, from the president’s closest aides, a recent essay posted at talkingpointsmemos.com has convinced me that there may be more to recommend the House’s decision to forego subpoenas than I had initially thought. The argument goes like this: The House managers at the Senate impeachment trial can, under the Senate’s Impeachment Rules, call Bolton and the others to testify at the trial; Chief Justice Roberts, who will be the “Presiding Officer” at the trial, is authorized to “rule on all questions of evidence, including but not limited to questions of relevancy, materiality, and redundancy of evidence”; should any of the aides or former aides decline to appear on the grounds of a purported immunity, the Chief Justice will have to rule, immediately, on their claims; it is very difficult to imagine, given the absence of any serious constitutional basis for the immunity claim, that Chief Justice Roberts will rule in the advisors’ favor. Thus, “by moving directly to impeachment, the House gets its best chance of winning the testimony of Bolton, Mulvaney, and others, and doing so in a timely fashion.”

I have no idea if this is the thinking inside the House chambers, but it strikes me as plausible and potentially the most likely to actually produce the critical testimony. Stay tuned for more.

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The Bolton Subpoena

The drama surrounding Congress’ power to compel Executive Branch officials to testify under oath in congressional proceedings is becoming increasingly intense and complicated, and I admit that I would enjoy it as an intellectual puzzle more if the fate of the Republic did not hang on how it gets resolved.

The first stage of the impeachment hearings, just concluded, had plenty of excitement.  As the President’s defenders continually remind us, there’s not a whole lot of direct evidence connecting Trump himself to the politically-motivated scheme to get the Ukrainians to subject the Bidens to a criminal investigation, not for the purpose of advancing US national security interests for the purpose of helping Trump get re-elected in 2020.

It is ironic—to put it as mildly, and as respectfully, as I can—for the President’s defenders to raise this particular defense, given that it is the President himself, of course, who is preventing anyone who might be in possession of such evidence—e.g. Messrs. Bolton, Mulvaney, Pompeo, Giuliani, et. al.—from supplying such evidence, if it indeed exists.

The President (and his lawyers) have chosen not to comply, and have ordered Executive Branch officials not to comply, with any congressional subpoenas, on the ground that “the President and his immediate advisors are absolutely immune from testimonial compulsion by a congressional committee on matters related to their official duties.” [See the DOJ’s memo regarding the subpoena issued to Don McGahn in the Mueller Report hearings (May 20, 2019), and Letter of White House Counsel Pat Cipollone to Speaker Pelosi, Chairman Schiff and others (Oct 8, 2019)):   .

“Congress may not constitutionally compel the President’s senior advisers to testify about their official duties.  This testimonial immunity is rooted in the separation of powers and derives from the President’s status as the head of a separate, co-equal branch of government. Because the President’s closest advisers serve as his alter egos, compelling them to testify would undercut the “independence and autonomy” of the presidency, and interfere directly with the President’s ability to faithfully discharge his responsibilities.

This is an assertion of breathtaking scope, and it has ramifications far beyond its ramifications for the impeachment inquiry, as important as those may be. The President is not simply claiming that senior advisors can invoke a privilege of one kind or another to avoid testifying about specific events or conversations—”executive privilege,” for instance, or the privilege of confidential communication, or a national security privilege, or the attorney-client privilege, or even the 5th Amendment privilege against self-incrimination—depending upon the events or conversations in question. Nobody disputes any of that.

But an absolute immunity from any compulsion to testify before Congress? Congress cannot compel the Secretary of Defense to testify about combat operations in Syria, or the development of new weapons systems? Congress cannot compel the National Security Advisor, or the Secretary of State, to testify in a proceeding examining a possible bribery scheme conducted at the behest of the President? Really?

I am happy to say that this is not the law of the land.

The DOJ’s Office of Legal Counsel would like us to believe that it is; OLC has made the argument for the existence of such an absolute immunity in a number of memos—beginning, I believe, with one authored by William Rehnquist, then at the OLC, in 1971.

But that’s just the Executive Branch deciding the scope of its own powers—a “We have considered the matter and we hereby give ourselves an absolute immunity from congressional oversight” kind of thing.  But as Madison put it in the Federalist, “No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. should be the judge in his own case.” In a system like ours, governed by the Rule of Law, the Executive Branch does not—and cannot—have the last word when it comes to the scope of its own powers.

The Executive Branch has had the temerity to submit this claim of absolute immunity to judicial scrutiny and evaluation only twice.  In Comm. of the Judiciary v. Miers, 558 F.Supp.2d 53 (DDC 2008), the court rejected it outright, declaring it “unprecedented” and “without any support in the case law.” [The government did not appeal that ruling, fearing, perhaps, that an appeals court decision would affirm the obviously correct result of the district court and they’d have to throw out all those OLC memos …]

And yesterday, Judge Jackson of the DC district court again rejected the OLC position in a comprehensive, 118-page opinion upholding the congressional subpoena issued to former White House counsel Don McGahn to testify at the hearings surrounding the Mueller investigation:

OLC’s long-held view that senior-level presidential aides have absolute testimonial immunity is neither precedential nor persuasive … There is no principled basis for concluding that senior-level presidential aides should have absolute testimonial immunity….

To make the point as plain as possible, it is clear to this Court that, with respect to senior-level presidential aides, absolute immunity from compelled congressional process simply does not exist. Indeed, absolute testimonial immunity for senior-level White House aides appears to be a fiction that has been fastidiously maintained over time through the force of sheer repetition in OLC opinions, and through accommodations that have permitted its proponents to avoid having the proposition tested in the crucible of litigation. And because the contention that a President’s top advisors cannot be subjected to compulsory congressional process simply has no basis in the law, it does not matter whether such immunity would theoretically be available to only a handful of presidential aides due to the sensitivity of their positions, or to the entire Executive branch. Nor does it make any difference whether the aides in question are privy to national security matters, or work solely on domestic issues….

And, of course, if present frequent occupants of the West Wing or Situation Room must find time to appear for testimony as a matter of law when Congress issues a subpoena, then any such immunity most certainly stops short of covering individuals who only purport to be cloaked with this authority because, at some point in the past, they once were in the President’s employ….

The United States of America has a government of laws and not of men. The Constitution and federal law set the boundaries of what is acceptable conduct, and for this reason, as explained above, when there is a dispute between the Legislature and the Executive branch over what the law requires about the circumstances under which
government officials must act, the Judiciary has the authority, and the responsibility, to
decide the issue….

As far as the duty to appear is concerned, this Court holds that Executive branch officials are not absolutely immune from compulsory congressional process—no matter how many times the Executive branch has asserted as much over the years—even if the President expressly directs such officials’ non-compliance. This result is unavoidable as a matter of basic constitutional law, as the Miers court recognized more than a decade ago.

Today, this Court adds that this conclusion is inescapable precisely because compulsory appearance by dint of a subpoena is a legal construct, not a political one, and per the Constitution, no one is above the law. That is to say, however busy or essential a presidential aide might be, and whatever their proximity to sensitive domestic and national-security projects, the President does not have the power to excuse him or her from taking an action that the law requires. Fifty years of say so within the Executive branch does not change that fundamental truth. Nor is the power of the Executive unfairly or improperly diminished when the Judiciary mandates adherence to the law and thus refuses to recognize a veto-like discretionary power of the President to cancel his subordinates’ legal obligations.

[By the way, the judgment in this case should not be confused with the judgments in several other on-going cases where the President has raided even more outrageous immunity claims, arguing not only that he is absolutely immune from a state criminal investigation [see “The Fifth Avenue Immunity“], but that his immunity extends to his accountants and tax preparers. Those, too, have been summarily, and properly rejected by the courts.]

The DOJ has said, apparently, that it will appeal this decision, but I doubt that it will, for the same reason that it didn’t appeal the decision in Miers: there is simply no basis in the law on which to base this immunity, and an appellate court decision to that effect would mean that Executive Branch officials could no longer in good faith rely on this thoroughly discredited OLC position. [I wouldn’t be surprised if DOJ went ahead and filed a notice of appeal, just to keep stalling, but then voluntarily dismissed the case before the appeals court actually heard the case]

So this brings us John Bolton.  Bolton, along with other senior advisors to the President (Mulvaney, Pompeo, Giuliani et al.), are clearly the only people, other than Trump himself, who can provide us with direct evidence on the question that is now, as it was in 1974, the central one: What did the President know and when did he know it?

The House committee requested Bolton’s testimony, but he declined to appear voluntarily. The committee then made a strategic decision not to issue a subpoena demanding that he appear. The stated reason was that the action would be a futile one; Bolton wouldn’t comply, and the House would have to take him to court (as it did with McGahn) to compel him to do so, and that could take months and months to wind its way through the courts.

I was not, initially, persuaded that that was a strategically wise decision, and Judge Jackson’s decision yesterday may alter the calculus somewhat. Now that the local federal court has declared that there is no basis for non-compliance with a subpoena, it’s a little more difficult for Bolton to decline to comply, and a little easier for the House to hold him in contempt if he does so.

But if the goal is (as it should be) to obtain this critical testimony, under oath, from the president’s closest aides, a recent essay posted at talkingpointsmemos.com has convinced me that there may be more to recommend the House’s decision to forego subpoenas than I had initially thought. The argument goes like this: The House managers at the Senate impeachment trial can, under the Senate’s Impeachment Rules, call Bolton and the others to testify at the trial; Chief Justice Roberts, who will be the “Presiding Officer” at the trial, is authorized to “rule on all questions of evidence, including but not limited to questions of relevancy, materiality, and redundancy of evidence”; should any of the aides or former aides decline to appear on the grounds of a purported immunity, the Chief Justice will have to rule, immediately, on their claims; it is very difficult to imagine, given the absence of any serious constitutional basis for the immunity claim, that Chief Justice Roberts will rule in the advisors’ favor. Thus, “by moving directly to impeachment, the House gets its best chance of winning the testimony of Bolton, Mulvaney, and others, and doing so in a timely fashion.”

I have no idea if this is the thinking inside the House chambers, but it strikes me as plausible and potentially the most likely to actually produce the critical testimony. Stay tuned for more.

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“Fruit Of The Poisonous Tree” – FISA Alterations Could Pose Significant Trouble For FBI

“Fruit Of The Poisonous Tree” – FISA Alterations Could Pose Significant Trouble For FBI

Authored by Sara Carter via SaraACarter.com,

Key Points

  • FBI officials concerned that FBI lawyer Kevin Clinesmith’s tampered and altered documents to obtain Foreign Intelligence Surveillance Warrant will put into question all the evidence gathered to obtain the warrant.

  • Horowitz referred Clinesmith to DOJ Prosecutor John Durham appointed by Attorney General William Barr for further investigation.

  • Other FBI officials will be wrapped up into Clinesmith’s warrant tampering. Who approved the warrants?

  • Criminal Defense Attorney David Schoen says FBI failed to make immediate correction of any materially false statement or any material omission. “Clearly no such correcting submission was made here.”

  • FBI Lawyer Kevin Clinesmith led the interview on George Papadopolous in February, 2017.

  • Clinesmith was anti-Trump and removed from the Russia investigation.

Department of Justice Inspector General Michael Horowitz’s anticipated report will reveal that the Foreign Intelligence Surveillance Application warrant was tampered with but the significance of that cannot be understated. It means that Horowitz’s discovery will discredit the bureau’s handling of its investigation into President Donald Trump’s campaign and Russia during the 2016 presidential election and it could make any information discovered during the course of seeking approval for the FISA and after ‘fruit of the poisonous tree’,” according to numerous sources who spoke to SaraACarter.com.

“Based on what we know, Clinesmith’s tampering of documents appears to have been significant enough to have played a role in the FISA courts decision to grant a warrant to spy on an American, maybe more than one American,” said a U.S. official, who spoke on condition of anonymity due to the sensitivity of the matter.

“There is concern among the FBI that all the evidence will come into question, as it should – particularly the case of the ‘fruit of the poisonous tree’ that the evidence itself is tainted – if that’s true than anything gained from that evidence might also be tainted. This could be a problem for anyone who approved the FISA as well.”

What we now know is that FBI lawyer Kevin Clinesmith, allegedly altered an email that FBI officials used to prepare to seek court approval to renew the wiretaps on former Trump campaign advisor Carter Page, as first reported by the New York Times and verified by SaraACarter.com. The extent of the alterations in the FISA application is still unknown but it was significant enough for Horowitz to refer Clinesmith to Connecticut Federal Prosecutor John Durham, who was appointed by Attorney General William Barr to investigate the origins of the FBI’s handling of the probe. Durham’s probe has also expanded to the CIA, of which he has interviewed numerous officers and the Pentagon’s Office of Net Assessment, which paid FBI confidential informant Stephan Halper to collect information on several Trump campaign advisors, as first reported by this new site.

The DOJ obtained three FISA renewal orders on Page. According to the NYT “the paperwork associated with the renewal applications contained information that should have been left out, and vice versa, the people briefed on the draft report said.”

That’s a serious problem, stated the U.S. official. Why? Because Clinesmith’s alterations in the documents played a role in the ability for the FBI to continue to wiretap Page throughout the renewal process.

David Schoen, a criminal defense attorney, told SaraACarter.com that the FISA process requires absolute scrutiny as the defendant, the person targeted by the warrant, is not represented by anyone due to the extraordinary secrecy of the process.

Schoen noted, if an “agent falsifies, materially alters with false information, or makes a material omission in documents relied on to authorize surveillance – and here it was to authorize the most intrusive kind of surveillance by the most secretive court in the land – then any further step in the process and any material obtained by surveillance from the point of his illegal conduct forward is arguably poisoned by the initial illegal materially false alteration or material omission.”

“Moreover, while all courts rely completely on the integrity of the surveillance application and supporting documentation and on the agents presenting them, the FISC must by definition do so to an even greater degree because it is all presented ex parte and the entire process is shrouded in secrecy , but can impact on the privacy of American citizens to the greatest degree imaginable,” he added.

More importantly said Schoen, “the FISC has an express rule of procedure affirmatively requiring the immediate correction of any materially false statement or any material omission. Clearly no such correcting submission was made here.”

Making matters worse, Clinesmith was vehemently anti-Trump, raising significant questions of bias. He was removed in February, 2018, from the Russia investigation, in the same fashion former FBI Special Agent Peter Strzok, who headed the investigation into Trump’s campaign, was removed. Clinesmith’s anti-Trump text messages stated the “crazies have won” and “viva la resistance” in relation to Trump’s presidential victory.

Was Clinesmith a low level FBI attorney? Or did he play a significant role in the early investigation?
George Papadopolous, who was central to the FBI’s investigation into Trump and believes the FBI took a FISA out on him, said no.
On Monday, Papadopolous told Fox and Friends, that Clinesmith was the “attorney who interviewed me from the Department of Justice, I know the New York Times mentioned him as some sort of low level attorney for the DOJ, but I don’t think he was a low level attorney.”

“This individual brought an entire delegation from Washington D.C. to interview me in February, 2017 and we now know he, and some of the others who interviewed me are under criminal investigation,” Papadopolous added.

“So I think the report is not going to be as pleasant as many people think it’s going to be for the FBI and its probably going to lead into criminal prosecution that Durham is going to be taking over from him.”

Will the altered evidence collected by Clinesmith taint the rest of the evidence submitted to the court?

Clinesmith was caught. But what happens to the information the FBI collected and who else may have collected information regarding the targets:Papadopolous and Page both foreign policy advisors early on during the Trump campaign. Further, it would stand to reason that any information submitted on former Trump National Security Advisor Army Lt. Gen. Michael Flynn, would also come under scrutiny as well if it was used in any way during the investigation.

Another question that lingers is the FBI’s relationship with its alleged confidential informant Halper, who was a paid contractor for the DOD. He also apparently sent reports to the FBI and those reports would be significant in Durham’s investigation, according to sources.

Halper’s reports may or may not have been used in obtaining the FISA, on Page and whose reports may now come into question by the Justice Department, said several sources familiar with the Office of Net Assessment and the FBI.

Horowitz’s report is expected to be hundreds of pages long and mostly unredacted.

If that is the case, the majority of information that has been requested by Republican lawmakers but has remained classified on the Russia investigation may be declassified in an effort to get the report out to the American public, according to sources.

A crucial piece of the classified documents would be any exculpatory evidence that wasn’t presented to the FISA court, according to a senior lawmaker. It would in effect, be evidence that would say there was no collusion between Trump and the Russians and may very well be the evidence collected by Halper during his interactions with Trump’s advisors.

In May, Trump gave Barr the authority to declassify the documents, which have been described as four major buckets by Republicans.

On December 9, Horowitz, whose office has remained tight lipped on the matter, is expected to release the report and he will testify before Congress two days later on Dec. 11.


Tyler Durden

Tue, 11/26/2019 – 09:15

Tags
Law Crime
Politics

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US Home Price Growth Accelerates For First Time Since Feb 2018

US Home Price Growth Accelerates For First Time Since Feb 2018

With the home-price bidding-war slowing dramatically, and bubble-central in the Bay Area seeing home prices fade, expectations were for a continued slowdown in national home prices, but, for the first time since Feb 2018, US Case-Shiller 20-City Composite home price growth accelerated in September.

The index of property values increased 2.1% from September 2018, higher than the median estimate of 2%.

Source: Bloomberg

The 0.36% MoM jump is the biggest since March 2018.

Prices rose from the prior month in 17 cities, led by a 0.8% increase in Seattle and a 0.7% gain in Los Angeles.

Home prices fell in San Francisco, Chicago and Boston.

All 20 cities in the index, with the exception of San Francisco, showed annual gains, led by a 6% surge in Phoenix.

As S&P writes, home prices rose in September as lower mortgage rates and a solid labor market generated buyer interest in a market where supply remains lean.


Tyler Durden

Tue, 11/26/2019 – 09:05

Tags
Business Finance

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What’s Behind The Relentless Market Melt-Up: Dealers Choking On “Gamma” As Meltup Becomes Reason For Meltup

What’s Behind The Relentless Market Melt-Up: Dealers Choking On “Gamma” As Meltup Becomes Reason For Meltup

A few days ago we showed how a gamma-gravity “castle” has been erected by dealers at the 3,100 and 3,150 strikes, where total notional for SPX and SPY strikes had reached a whopping $8 billion, making it virtually impossible for stocks to escape this 50 points “gravitational” range.

Source:

Now, in a testament to the reflexive nature of markets, where trader intentions often direct market outcomes, Nomura’s quant Charlie McElligott shows how the recent surge in equity gamma has created a feedback loop in which rising stock prices force dealers to load up on more risk, forcing stocks to risk more, and so on.

As McElligott notes, with the S&P grinding higher, it has become “the perfect virtuous feedback loop for the market to choke on sustained “Long Gamma,” as customers sell Vol to Dealer desks largely via yield enhancement strategies” which in turn feels like a perpetual marketwide “pin” positioned between the abovementioned gamma strikes of 3100 and 3150.

The resulting “extreme” SPX gamma, which has reached the 94th percentile and Delta, at 99th %Ile, continues to spark the levitation in the markets and the “feel good” stasis for stocks, particularly as such massive Dealer “Long Gamma” squelches intraday volatility due to hedging flows selling strength and buying weakness, which in turn means spot vol crumbles and provides yet another feedback loop to push risk even higher.

For a visual representation of the above, McElligott shows why this extreme dealer “long gamma” matters: as follows:

  • 1) intraday movement is squelched by dealers selling strength and buying dips (thus negligible ‘hi / low’ 1d range),
  • 2) subsequently creating flows which insulate the market against large drawdowns (note: %’s are ‘positive,’ but are inverted axis for formatting purposes with Python)

Further supporting the bullish technical case, the current underlying positioning snapshot shows that the dealer “Long Gamma” position would not flip “Short” until all the way down in the 3050-3060 range (where a move below would subsequently allow us to “release” and MOVE), while the Delta position would flip down close to 3020-3030.

There’s more: as noted above, there is an additional boost to equities via the vol complex, and specifically courtesy of VIX ETNs, where McElligott points to an “insane” 99.4 %ile “Net Long Vega” position, which “continues to mean rebalancing flows which sell UX1 fut to buy UX2—creating extremely outsized “SELL VIX” flows as a “second-order”catalyst for higher stocks.” As a reminder, it was a mirror image of this picture, when net Vega hit a record low, that sparked the February 2018 VIXtermination.

Putting the above together to explain yesterday’s market action, McElligott says that on Monday we saw an extension of the recent grab from clients to get their “Net Exposure” longer to capture this overall move in index, as shorts were violently covered on the day, see Russell 2000 +2.1%, Leveraged Balance Sheet +3.5%, High Realized Vol basket +2.2%, 1Y Price Momentum Shorts +1.3%, although some have speculated that a reason for yesterday’s massive short squeeze was an unwind of Moore Capital’s short book.

* * *

So while the above makes sense if one looks at stocks as nothing more than a self-fulfilling prophecy, which works for a while at which point everything reverses, how does one explain the recent slump in yields?

According to McElligott, Treasuries “simply cannot sell-off” despite upcoming supply in front of the holiday shortened week (5s today, 7s tomorrow) and the clear multi-week pivot from a risk-asset market which was “long worst-case scenario and short good news” which was the narrative for much of 2019, where locally we see more of the same “bull-flattening” in US curves despite new overnight headlines that the US and China have reached consensus on properly resolving relevant issues around “Phase 1.”

One simple reason: the previously discussed dynamic where CTAs have not only stopped selling, but are back to “100% long”, to wit:

Systematic Trend performance shows us that the strategies have by-and-large increasingly “loaded” the 1Y model window in Global DM Bonds (as it remains deeply “in trend” as the strongest signal across other tenors), thus we see the aggregate signal in the Nomura QIS CTA model for the entirety of Bond futures we track back at “+87% Long” in USD 10Y / EUR 10Y / JPY 10Y / GBP 10Y / AUD 10Y / CAD 10Y // CHF 10Y / FRA 10Y and ESP 10Y, while the signal for BTPs is actually back at “+100% Long”

The Nomura strategist also notes that the signal in Rates futures for CTA have almost entirely weighted the 1Y window, “meaning that the signal remains deeply “in-trend” and thus a “+87% Long” signal across ED4 / ER4 / YE4 and L4”

So what does all this mean for the coming next few days in the market? Here is McElligott’s conclusion:

  • With the volatility suppressing market dynamics noted above, this resumption of the “Everything Duration” rally over the past 2.5 weeks has then stabilized various cross-asset risk-premia/factor strategy performance (see table at bottom)
  • This is particularly notable via the performance reaccelerate across “Carry” strategies, while then too we’ve seen “Momentum” stabilize (particularly across Equities- and Credit-)
  • Conversely, the Oct thru beginning of Nov “reversal” too boosted the performance of Cross-Asset “Value,” now +7.0% QTD after a brutal 2019 YTD performance environment (in light of consistency of trend strength / lack of ‘mean-reversion’)


Tyler Durden

Tue, 11/26/2019 – 08:51

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Schiff Hits The Fan: First House Democrat Publicly Opposes Impeachment

Schiff Hits The Fan: First House Democrat Publicly Opposes Impeachment

With public support for impeachment waning and the risk of a potentially disastrous Senate trial looming, House Democrats have suffered their first impeachment defection after Rep. Brenda Lawrence of Michigan said she no longer supports the effort.

“We are so close to an election. I will tell you, sitting here knowing how divided this country is, I don’t see the value of taking him out of office,” said Lawrence, who instead favors censuring President Trump over allegations that he withheld military aid in Ukraine for self-serving purposes, according to the Washington Examiner.

“I do see the value of putting down a marker saying his behavior is not acceptable.“

“I want to censure. I want it on the record that the House of Representatives did their job and they told this president and any president coming behind him that this is unacceptable behavior and, under our Constitution, we will not allow it,” Lawrence continued.

Lawrence backed the House inquiry as recently as early October, but changed her tune after recent polls reveal a drop in public support for impeachment following weeks of televised testimony from hand-picked witnesses who were unable to conclude that Trump withheld Ukraine aid in a quid pro quo, extortion, or any other phrase that polled well.

According to the FiveThirtyEight average of national polls, support for impeachment has shrunk from 50.3 percent in mid-October to 46.3 percent presently, while opposition has risen from 43.8 percent to 45.6 percent.

Among independents in the FiveThirtyEight average, support for impeachment topped out at 47.7 percent in late October but has sunk to 41 percent over the past three weeks. –The Hill

An impeachment in the House would mean a trial in the GOP-controlled Senate, where witnesses such as Joe and Hunter Biden, Devon Archer, John Kerry’s Stepson and Ukrainian officials would be fair game as Republicans slow-walk America through allegations that the former Vice President and his son were engaged in a pay-for-play political racket.


Tyler Durden

Tue, 11/26/2019 – 08:38

Tags
Politics

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New Amazon Show Features White People Wearing Red MAGA-Style Hats Being Hunted As “Nazis”

New Amazon Show Features White People Wearing Red MAGA-Style Hats Being Hunted As “Nazis”

Authored by Paul Joseph Watson via Summit News,

A new Amazon Prime show starring Al Pacino features a group of “diverse” vigilantes who hunt down and kill “Nazis,” some of whom are depicted wearing red MAGA-style hats.

Called Hunters, the trailer for the show, which is set in New York in 1977, is dominated by Pacino’s character, a Nazi-hunting Jewish ringleader named Meyer Offerman who justifies the killings by asserting, “This is not murder, This is mitzvah.”

“For eons, people like us have been degraded and exterminated. But no more,” says Pacino as images of Jews and black people are shown.

The clips featured in the trailer portray numerous acts of violence against the “Nazis,” including stabbings, a woman being punched in the face and a car containing the victims being blown up.

According to People, the vigilante group, described as “diverse,” discovers that “hundreds of escaped Nazis are living in America” and then “set out on a bloody quest for revenge and justice.”

The plot of the show appears to bear numerous similarities to Jason Blum’s The Hunt, a horror movie that centered around a group of liberals who hunt down red state conservatives.

The release of The Hunt was postponed following criticism from President Trump and the mass shootings in El Paso and Dayton.

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Tyler Durden

Tue, 11/26/2019 – 08:22

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Hate Crime Motivation Enhancement in Illegal Gun Possession Case?

Clark Calloway, Jr. pleaded guilty to illegally possessing a machine gun, being a felon in possession, and receiving a gun in interstate commerce with intent to commit a felony. The presentence report recommended a sentence of 37 to 46 months (based in part on the defendant’s criminal history, which is Category III, meaning significant but not vast).

The federal hate crime sentencing enhancement wouldn’t be applicable to such crimes, because it requires targeting a particular victim or property based on a person’s race, religion, and the like; that can apply to crimes of violence (or even vandalism), but not to illegal gun possession and receipt as such. The government, though, argues that a range of 97 to 120 months would be proper, based in part on the defendant’s ultraviolent plans and in part on the defendant’s intent to target people for killing based on race and religion:

The defendant has regularly communicated via Facebook his support for ISIS ideology and those who have committed violent terrorist acts. See id. at ¶¶ 15 (including stating the perpetrators of the Garland, Texas shooting relating to the “Muhammad Art Exhibit & Contest” event were “martyrs”), and 16-19. These threats progressively worsened, and by late 2016, the defendant’s rhetoric and threats had escalated significantly and he began to espouse his own desires to commit violent crime in the name of his ideology, and the need to do so immediately. See id. at 16-19, 55 and 56. He shared this desire to punish the West and the United States with at least three other people, CHS1, CHS2, and CHS3, during this same period, see id. at ¶ ¶ 20-53, and the statements coincided with the defendant’s efforts to obtain firearms from multiple sources. See id. at ¶ 31 (attempting to acquire assault weapon from witness who later became CHS2, and describing the weapon as a “Kuffar Killer”); and Gov. Opp to Def. Mot. To Dismiss (Docket 29) at 5-6 (defendant attempting to acquire firearms from a non-governmental source, Witness 4 (“W4”), in October 2016). These actions all predated the defendant’s successful acquisition of the firearm from CHS3 in May 2017, by which time the defendant himself stated he was ready to commit violence with the weapon. Id. at ¶ 46-55.

[Footnote moved: On September 20, 2016, in communicating with Confidential Human Source 1 (“CHS1”) about a terrorist attack that took place in New Jersey and New York, the defendant stated “Good. MaashALLAH! This entire place is insane! May ALLAH destroy it, as it destroyed Sodom, and Gomorrah!” Complaint ¶ 23. On September 25, 2016, the defendant stated that he preferred “Jihad” to “Dawah” (sharing the word of Allah as expressed in the Qur’an) and that “I hate al kaffiroon [disbelievers] anyway.” Id. at ¶ 24. He also acknowledged he was a “soldier of Allah” and that he had made Facebook “friends” with several individuals he believed were ISIS members. Id. at ¶ 25. That same day, the defendant stated that he knew of an individual that was arrested, charged, and convicted of a plot to kill U.S. military personnel at Fort Dix Military Base in New Jersey, stating, “This government must be overthrown. Wallahi [I swear by God]. I’m going to kill some of these crackers before the death angel approaches. I have a vendetta against them … InshaALLAH [God willing(hopefully)]. The battlefield will be here shortly. InshaALLAH.” Id. at ¶¶ 27-28. He also told CHS3 on March 6, 2017, “I hate these Kuffar [non-Muslims]. Not only are they nasty, they are filthy and stupid. InshaALLAH, their time is coming. Cracker Trump just issued another Ban on 7 Muslim countries. InshaALLAH, the end is near!” Id. at ¶ 41.]

The defendant’s desire to commit violence was not limited to non-Muslims. He also regularly advocated for the killing of white people. Id. at ¶ 17 (advocating a race war against whites and stating, “Let’s put bullets in them”); ¶ 28 (having a “vendetta” and wanting to “kill some of these crackers”); ¶ 39 (wanting to “kill these crackers one day”); and ¶ 50 (wanting to use AK-47 against “crackers” instead of “kuffar”). He also regularly advocated for violence and death against law enforcement. Id. at ¶ 19 (“two pigs were just shot in Boise, Idaho,” apparently referencing a shooting of law enforcement officers in Idaho, and stating “choose the bullet over the ballot”); ¶ 54 c. (“When this race war kicks off, we ain’t just slaughtering the Neanderthal. We are executing coons too. I call it “coon” hunting with an AK-47!”) [The defendant stated after he was arrested by the FBI, that “coon” in this message referred to African-Americans he considered disloyal, and “Neanderthal” or “cave dweller” referred to a white person.]; ¶ 55 i (“military and combat veterans: Prepare for death”); ¶ 55 dd. (placing bounty on police officers who killed black man); and ¶ 55 hh. and ii (“Somebody should shoot that cracker cop that killed that young boy in Texas…. Its time we start killing them,” and “Brothers are shooting these cops back. Good.”).

(More details here.) There were also evidence of some targeting of Jews (“The defendant also posted ‘Death to the European, fake, Jewish imposters'”) but slight compared to the other material. Here’s a summary of the government’s argument, both as to hate crime motivation and the other components:

The features of this case that take it “outside the heartland” of U.S.S.G. § 2K2.1 [and thus justify a departure from the presumptive sentence] are: (1) the defendant’s professed allegiance to terrorist groups and ideology; (2) his intent to inflict mass murder; (3) his desire to cause fear in the populace in an effort to cause a revolution; (4) his intent to commit violence based upon his hatred of the victims’ race (white), religion (non-Muslim), and occupation (law enforcement); (5) his repeated and determined efforts to obtain a firearm; and (6) his continued adherence to the same intolerant ideology since being incarcerated.

The defendant’s lawyer has responded, in part:

Undersigned counsel has never questioned the accuracy of Mr. Calloway’s Facebook posts that the government has repeatedly referenced in their filings. During the October 10, 2019 hearing, undersigned counsel stated as much. Likewise undersigned counsel does not dispute the statements attributed to Mr. Calloway when he was being secretly recorded by the confidential informants. However, the statements were made in the course of conversations that focused on other topics that had nothing to do ISIS, violence, race war, kuffars and rednecks. The government has followed a familiar pattern of lifting and referencing only the damaging statements and strung them along as though that was the sole focus or content of Mr. Calloway’s conversations.

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How Can Our Dumb Infrastructure Accommodate Smart Cars?

By this point, driverless car technology has few skeptics. Videos of Tesla cars zipping around in full auto mode and Waymo’s public passenger pilot in Arizona quickly deflate the idea that the software powering driverless cars is not viable. But we’re not quite ready for a more autonomous transit system just yet. While some of our cars are quite smart indeed, much of our infrastructure is stuck in the Stone Age.

The problem is that driverless cars don’t have a great way to communicate with the physical environment right now. After all, autonomous driving is not just a question of geonavigating a vehicle from point A to point B. It’s a dynamic feat where the decisions a car must make will constantly change depending on things like the weather, the actions of other cars, and unexpected roadway intruders.

How to give cars better vision

For a while, policymakers focused on what’s called “vehicle-to-vehicle” (V2V) communications systems as a way to give autonomous vehicles sharper vision. V2V tech focuses on intercar sensing, which would allow autonomous vehicles to detect and avoid each other.

Engineers had already been working on these technologies by the late-1990s, but in true government fashion, regulators put most of their eggs and funding behind a single technology standard, Dedicated Short Range Communications (DSRC), which was far from comprehensive enough to do the trick. After all, the armadillos that scurry across desert highways will not have receptors on their shells.

Today, engineers complement V2V technologies with a broader suite of what’s called “vehicle-to-infrastructure” (V2I) transmission mechanisms, which would allow vehicles to also communicate with the physical world around them—through antennas, sensors, and cameras affixed to things like utility poles.

Policymakers are slowly but surely coming around to the understanding that emerging technologies will need more of this kind of “street furniture” to navigate our more connected world. Smart cars, drones, 5G connectivity, and “smart city” applications all need physical networking in order to properly function.

So the question becomes: how can we make sure that our dumb infrastructure gets smart enough in time for these technologies to roll out?

This is the problem that Brent Skorup and Korok Ray considered in their recent Mercatus Center study, called “Smart Cities, Dumb Infrastructure: Policy-Induced Competition in Vehicle-to-Infrastructure Systems.”

State and local governments are going to have to get smart about how they incentivize street furniture installation and monetization. Skorup and Ray suggest a public-private hybrid. Municipalities should tap private companies to install the equipment, with one catch: open access must be baked in, so that different applications and technologies can benefit from the same infrastructure.

What do we need, and why can’t we get it?

Skorup and Ray outline three broad categories of street furniture that we’ll need: 1) basic infrastructure, which includes “passive” structures like utility poles, cabinets, wiring, and the rights-of-way necessary to install such structures; 2) network infrastructure, which is long-lasting networking equipment like fiber cables and data networks; and 3) the devices themselves, like cameras and roadside sensors.

To provide autonomous vehicle coverage across the nation, we’ll need a lot of those things. A survey by the American Association of State Highway and Transportation Officials (AASHTO) projects that some 250,000 traffic signal locations (around 80 percent) should be V2I-enabled by 2040, and another 25,000 non-signal roadside locations will also be online. Then we’ll need “accurate, real-time, localized traveler information” on around 90 percent of our roadways, and ideally more.

That’s a lot of smart lights. And they will necessitate competent planning from the hundreds or thousands of nested municipalities that fund, oversee, and install such infrastructure across the US. Needless to say, this is a rather tall order.

A Government Accountability Office (GAO) report from 2015 dives into exactly what barriers stand in the way of such installing connectivity from sea to shining sea. Setting aside the spectrum management issues, GAO points out that many states and local agencies simply lack the knowledge and resources to adequately deploy and manage the enormous amount of smart infrastructure needed to power these more autonomous roadways.

Okay, so why not let private businesses take the lead? State and local governments already routinely contract the installation and maintenance of old-school telecommunications infrastructure to private companies. Couldn’t Uber or GM or Google just duke it out amongst each other to provide infrastructure services for different locales?

Well, they probably could, but it would almost certainly introduce inefficiencies. The GAO notes that a key factor to smart infrastructure success will be “interoperability.” Much of the street furniture that can fuel better smart car coverage could also serve 5G coverage, or drone communications, or even better garbage truck management.

Even if the networking equipment itself is incompatible, the rights-of-way that a company gets to install, say, a utility pole could also hoist up a 5G antenna. Granting a little networking fiefdom to a single private company could deprive a community of the benefits of open access, which means our environments would be much dumber than they needed to be.

Enter “policy-induced competition”

If policymakers proceed thoughtfully now, we can spare ourselves an artificially dumber infrastructure future. Skorup and Ray outline a model that they call “policy-induced competition” to overcome the dual problems of municipal limitations and private street furniture-hoarding.

Under policy-induced competition, governments would solicit bids for companies to install, maintain, and profit from certain kinds of smart infrastructure, just like they do for other kinds of networking equipment. But the governments would require winning firms to build access into certain categories of equipment.

Here’s a good example of policy-induced competition: gas pumps. When you go to fill up your car, you don’t need to worry about finding a “Honda nozzle” or a “GM gas pump” that will be compatible with your car. You just pull up to any gas station and know that the equipment will be compatible with your car. This didn’t happen on its own, but was the result of a government requirement that all gas nozzles are the same size.

With street furniture, contracts to install or manage basic infrastructure (like utility poles) would come with requirements that the equipment is accessible to other companies and uses so that the community reaps the full benefits of these installations. The devices themselves—things like 5G equipment and cameras—don’t lend themselves to interoperability mandates, and would be almost totally left in the hands of the private sector. Networking equipment is probably too complex for interoperability, too, but the authors leave open the possibility that policy-induced competition may make sense for this category of equipment in some circumstances.

Right now, state and local governments don’t have much of a plan at all for how their municipalities will roll out the ample amounts of infrastructure and equipment necessary for not only smart cars, but also super-fast wireless coverage and smart city technologies. But the longer they wait to get their ducks in a row, the farther away the future of driverless cars will be.

Let’s not waste our super-smart transit technologies on a dumb and unworkable infrastructure. If municipal planners get serious about implementing policy-induced competition now, our streets just might get smart enough to meet the challenges of our networked future in time.

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Disney Streaming Growing By 1 Million New Subscribers Each Day

Disney Streaming Growing By 1 Million New Subscribers Each Day

We’ve previously reported that Disney+, the company’s affordably-priced new streaming service, accomplished in one day what took HBO four years by signing up 10 million subscribers in just 24 hours. Now, the New York Post has gotten its hands on the latest subscriber estimates, and if the figures are accurate, this would be great news for the House of Mouse, and bad news for Netflix.

According to Apptopia, a data provider that has been monitoring downloads and in-app purchases, the streaming app has been downloaded more than 15 million times, which equates to more than one million new subscribers a day since the launch. Most who download the app will go on to purchase at least one of the paid options, the company said. There are also purchases made over the Disney+ website that Apptopia was unable to catch, suggesting that these are lowball numbers.

The service has brought in roughly $5 million in its first 13 days of operating, Apptopia said.

According to Wall Street tech analyst Dan Ives, the numbers suggest that Disney+ will remain a “legit competitor” to Netflix

“This shows the company is gonna be a legit competitor to the likes of Netflix, despite the skeptics that continue to doubt the House of Mouse,” Wedbush analyst Dan Ives told The Post. “The pricing, the content and the bundling was just a pure genius strategy from Iger and Disney,” Ives said, referring to Disney Chief Executive Bob Iger.

Of course, that’s bad news for Netflix shares, which have struggled in recent months – though there’s been some respite since its Q3 earnings report –  as investors have finally begun to envision a scenario where competitors wrest the crown away from Netflix, diminishing its growth prospects and raising the odds of a default for a company that has burned billions of dollars on what some have complained is mostly unwatchable content.

As a reminder, the biggest risk for Netflix (and Disney, and all their streaming competitors), temember the unprecedented cash burn, because while streaming may be a great growth platform it still has to turn a profit, anywhere.


Tyler Durden

Tue, 11/26/2019 – 07:38

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Business Finance
Entertainment Culture

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