“Capitulation”: Nomura Explains What Is Behind The Market’s “Freak Out”

On Monday morning, when the market’s moves were still relatively orderly, Nomura’s Charlie McElligott made a prescient observation why momentum stocks were getting slaughtered, and why the “value to growth” rotation was about to leave hedge funds with even greater losses.

To those who listened and unwound, congrats, because on Tuesday, with the Dow down almost 600 points at its lows, McElligott writes that the cross-asset markets de-risking continues, which somewhat surprisingly is occurring in conjunction with a collapse in market expectations for 2019 Fed implied hikes, down to just 31.5bps.

This is a clear shift in market sentiment, because even as the market prices in a dovish Fed, stocks are getting crushed.

This “Best is Behind Us” / “Fed has tightened us into a slowdown” view is entrenching itself alongside the weekend escalation of Trade War Cold War between China and US, which is clearly now bleeding into the supply-chain and broad sentiment, the Nomura strategist writes today and notes that signs of capitulation are visible across the asset spectrum, as “VaR-down” behavior becomes apparent via new local- and multi-year lows/wides being made, with the credit blow out accelerating and HYG down for 8 days in a row (the record is 9).

VaR-down with liquidation of “longs” and 100-500bps of outperformance from shorts:

Meanwhile, contrary to what JPM suggested recently when it saw no further selling pressures in the quant space, yesterday’s US Equities Momentum factor unwind (with the market-neutral strategy -3.5% on session) was a 1st %ile event dating back to 1983, with the selloff of “Momentum Longs” (-4.5%) in particular was a 0%ile move, i.e., extremely rare.

What happened was that as hedge fund liquidations continue, whether due to redemption requests or otherwise, uber-crowded longs in the US Software industry were being liquidated according to McElligott, with GS basket of Software Cos trading 8x’s EV / Sales -10.0% on the day, an impossible -8.7SD move across all returns in its 2.5 yr history; Elsewhere, S&P Tech was -3.8%, Russell 2k Tech -4.6%; Finally, the Nomura strategist notes, or rather warns, that Nasdaq 100 30d volatility sits at 35, the highest level since late 2011, which just means more mechanical “VaR-down” is coming for these “longs”.

Going back to today’s market, here are some additional observations from McElligott: 

  • Overnight we see US 10Y yields break their post-Labor Day range though 3.05% to the downside, while I also note that front Eurodollar too break to the upside through both 50- and 100- DMA’s over the past week, and are nearing a break of the 200- DMA for the first time in 13 months
  • Global Credit selloff becoming particularly acute as the “cycle psyche” turns, with US IG CDX back through pre-2016 election levels and EU HY (iTraxx Crossover) making new 2 year wides / EU SubFin 1.5 year wides
  • EU periphery sovies getting ugly again, in particular the BTP-Bund spread out to 327bps, the widest in 5.5 years
  • US inflation Breakevens show both 5Y- and 10Y- kind making now YTD lows
  • Cryptocurrency selloff moves to unprecedented levels with Bitcoin -30% MTD / Ethereum -33% MTD / Litecoin -35% MTD respectively, and greater than $700B+ of market value destroyed since the “mania” peaked in January, as the chief proxy of “QE-era speculative excess” is defenestrated into an existential crisis

* * *

So what is the root cause behind this seemingly relentless market freakout?

To McElligott, the answer is the theme where “tighter financial conditions” bleed across and reset (lower) risk-asset term premium—is picking-up steam, ESPECIALLY now that the Fed’s pivot to a “softer tone” perversely acts to “confirm” the market’s multi-month “tightening ourselves into a slowdown” worst fears.

Here, after markets were spooked by Powell’s Octoebr 3 line that policy is “a long way from neutral”, over the past week, multiple Fed speakers seemingly attempted to “walk-back” the hawkishness of that comment with a more moderate data-dependent tone, with Powell himself acknowledging last week that the Fed is “…well aware of” the three key challenges to growth in 2019—fading fiscal stimulus, slowing demand abroad and the lagged-impact of the prior policy normalization.

Two days later, the “tantrum-ing” market then further seized on Vice Chair Clarida’s Friday commentary where he “moved the goalposts” of Powell’s October “…long way from neutral” statement, instead saying “…I think being at neutral would make sense”—which to McElligott was “effectively a RATE CUT with regards to prior forward expectations” as we discussed yesterday.

But instead of being a “dovish relief story,” it instead did the opposite in the minds of investors who are seemingly committed to pulling-forward the “end of the cycle” trade.

Meanwhile, as tighter financial conditions / higher interest rates eventually slow the real economy (see yday’s NAHB sentiment collapse / “miss”), Charlie’s thesis continues to expect timing of said slowdown coming after the March 2019 hike, “at which point I believed the market would “sniff” said slowdown and thus REMOVE HIKES from the front-end as the Fed would be forced to “pause”—in turn, steepening the curve.”

Instead, some in the market are pulling-forward this “end of cycle” view into the NOW, which is being exacerbated by already ugly performance and year-end illiquidity / dealer balance sheet “tightness” leading to capitulatory behavior—with the concurrent volatility in-turn is nuking legacy QE-era “curve flattening” derivative trades, i.e. the consensual U.S. Equities “Growth over Value” positioning

And, as the Nomura strategist has said before, this Trasury curve bull steepening would act as the ultimate “end of cycle” risk-off signal, telling traders that we were at the end of Fed policy normalization—because growth trajectory is decelerating, fiscal stimulus impacts are rapidly diminishing, financial conditions are net / net “tighter” and that policy has approached the level where it is no-longer “stimulative”

Which brings us to McElligott’s conclsion, in which he notes that “in the sense that I still believe that in this current state the Fed will hike two more times (Dec18 and Mar19) before the “gig is up,” I am surprised that the market is taking this current (and still somewhat modest Fed language shift reversal) as THE “Fed pause / slowdown” cue; but regardless of the timing-scenarios, the risk now is that the market de-risking only FURTHER acts to tighten financial conditions (especially in Credit) while bleeding sentiment further in a vicious cycle.“

Finally, adding insult to injury is the mega Fed balance-sheet shrinkage tomorrow, when $27.1BN of combined Treasuries and MBS- mature, acting to further “tighten” financial conditions.

* * *

And, as a bonus, for any funds still desperate to position themselves, here is McElligott’s take on how to position in Growth vs Value during this turbulent period:

Growth LONGS are “expensive stuff” that gets CRUSHED at the end of cycles because they will see the largest cuts in forward EPS—and we’re seeing said “revisions lower” within “Growth LONGS” in real-time

Only later then does “Value” get the additional kicker from “Value LONGS,” as after we hit slowdown / recession, the market begins to price-in the next Fed EASING cycle, and these primarily “economically sensitive” stocks see the highest re-weighting / benefit to the rate cuts through their cyclicality

This is not going to be a “linear” path; there are periods where both Growth- and Value- can work—however, I believe that relatively speaking, Value continues to outperform over the next 1Y window, continuing its enormous outperformance QTD:

  • Value: Dividend Yield +11.5% QTD; EBITDA / EV +11.0% QTD; Predicted E/P +7.8% QTD; E/P +7.8% QTD; Dividend Payout +6.5% QTD; B/P +5.6% QTD; Sales / Price +5.6% QTD; Cash Flow / EV +3.1% QTD
  • Growth: Predicted 1Y EPS Growth -9.8% QTD; Predicted LTG -8.4% QTD; Sales Growth -5.1% QTD; 5Y EPS Growth -2.4% QTD; PEG -2.2% QTD

THE PURGE—“MOMENTUM” CAPITULATION AS “GROWTH LONGS” SEE LIQUIDATION BEHAVIOR TO THE BENEFIT OF “VALUE” FACTOR MARKET-NEUTRAL: Look at the contrast in the Q1 “peak QE-era” to the current QTD “peak QT-era…

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Pat Buchanan: Will Democratic Rebels Dethrone Nancy?

Authored by Patrick Buchanan via Buchanan.org,

After adding at least 37 seats and taking control of the House by running on change, congressional Democrats appear to be about to elect as their future leaders three of the oldest faces in the party.

Nancy Pelosi of California and Steny Hoyer of Maryland have led the House Democrats for 16 years. For 12 years, they have been joined in the leadership triumvirate by Jim Clyburn of South Carolina.

If these three emerge as speaker, majority leader and majority whip, all three Democratic leaders will be older than our oldest president, Ronald Reagan, was when he went home after two terms.

By 2020’s election, all three House leaders would be over 80.

Was this gerontocracy what America voted for when it awarded Democrats control of the U.S. House?

Hardly. Some Democrats won in 2018 by pledging not to vote for Pelosi as speaker, so unpopular is she in their districts. And if all who said they want new leadership were to vote for new leaders on the House floor Jan. 3 — when the speaker will be chosen — Pelosi would fall short. The race for speaker could then break wide-open.

Some 16 Democrats vowed Monday to oppose Pelosi on the House floor, one shy of being enough to block her return to the speakership after eight years.

In a letter that went public, the 16 declared:

“Our majority came on the backs of candidates who said that they would support new leadership because voters in hard-won districts, and across the country, want to see real change in Washington. We promised to change the status quo, and we intend to deliver on that promise.”

The likelihood of the rebellion succeeding, however, remains slim, for no credible challenger to Pelosi has yet announced.

What explains the timidity in the Democratic caucus?

Pelosi punishes enemies. Democrats calling for new leaders have already been branded as sexists with the hashtag “#FiveWhiteGuys.”

Yet evidence is mounting that a Pelosi speakership would prove to be an unhappy close to her remarkable career.

One week after the election, 150 protesters from the Sunrise Movement and Justice Democrats blocked Pelosi’s House office to demand action on climate change. They were joined by the youngest member of the incoming Congress, Alexandria Ocasio-Cortez.

Pelosi declared herself “inspired” by the protesters, 51 of whom were arrested. She urged police to let them exercise their democratic rights and pledged to revive the House Select Committee on Energy Independence and Global Warming, which Republicans abolished.

Dismissing the committee as “toothless,” the protesters demanded that Pelosi’s party commit to bringing an end to the use of all fossil fuels and to accepting no more campaign contributions from the oil and gas industry.

Not going to happen with Pelosi as speaker. For when it comes to the leftist agenda of liberal Democrats from safe districts — Medicare for all, abolish ICE, impeach Trump — Pelosi would pigeonhole such measures to avoid the party’s being dragged too far to the left for 2020.

And if the House were to pass radical measures, the bills would die in the Senate or be vetoed by the president.

Moreover, within Pelosi’s party in the House, the various factions are going to be demanding a new distribution of the seats of power, of which there are only so many to go around.

Democratic women, who won more seats than ever, will want more, as will the Congressional Black Caucus and the Hispanics. It will most likely be white male Democrats, that shrinking cohort, who will be the principal losers in the new House.

That adage about Democrats being a collection of warring tribes gathered together in anticipation of common plunder has never seemed truer.

What, then, does the new year promise?

As it becomes apparent that there is little common ground for bipartisan legislation on Capitol Hill — except perhaps on infrastructure, and that would take a long time to enact — the cable news channels will look elsewhere for the type of action that causes ratings to soar. That action will inevitably come in the clashes between Trump and his enemies and the media that sustain them.

Out of the House — with Adam Schiff, Elijah Cummings, Maxine Waters and Jerrold Nadler as new chairs — will come a blizzard of subpoenas and a series of confrontations with witnesses.

From special counsel Robert Mueller’s office will almost surely come new indictments, trials and the long-anticipated report, which will go to the Justice Department, where Matthew Whitaker is acting attorney general.

Then there is the presidential race of 2020, where the Democratic Party has yet another gerontocracy problem.

By spring, there could be 20 Democrats who will have announced for president. And five of the most prominent mentioned — Hillary Clinton, Bernie Sanders, John Kerry, Joe Biden and Mike Bloomberg — are also over 70, with Elizabeth Warren turning 70 in June.

While some candidates will be granted airtime because they are famous, the lesser-known will follow the single sure path to the cable studios and the weekend TV shows — the trashing of Trump.

Trading barbs is not Nancy Pelosi’s kind of fight.

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WTI Crude Crashes To $53 Handle, 12-Month Lows

Oil is plunging again this morning (down almost 6%) on persistent fears that a surplus will re-emerge next year despite OPEC’s plans to cut production.

As trader await API inventory data tonight, expected to show a ninth weekly increase – the longest streak in a year – concerns grow that Russia may not play nice with OPEC and cut production when they meet next month.

“The name of the game in the oil market is volatility,” International Energy Agency Executive Director Fatih Birol said at a conference in Oslo.

“And with the increasing pressure of geopolitics on oil markets that we are seeing, we believe that we are entering an unprecedented period of uncertainty.”

And sellers are not holding their breath – WTI is down almost 6% today to its lowest since Nov 2017…

How long before we are reassured by the mainstream business media that this is great news – for America’s pocketbook?

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Theresa May Gambling On “Unicorn Fantasy” Compromise To Save Brexit Deal

As her draft Brexit deal flounders and senior members of her government threaten resignation if a compromise cannot be reached, UK Prime Minister Theresa May is reportedly going all in on what one lawmaker described as the “unicorn fantasy island” solution: Replacing the Irish backstop (perhaps the most contentious aspect of her 585-page draft agreement) with a commitment to find a “technological solution” that would avoid the return of a hard border between Northern Ireland and the Republic of Ireland, according to the Sun and the Financial Times.

TM

According to one Sky News reporter, the introduction of a commitment to find “technological solutions” might be enough to win over some Brexiteer Tories by helping to assuage their concerns over the possibility that the UK could find itself trapped in the customs union indefinitely following Brexit. However, serious doubts remain about whether the technology even exists to carry this out. May reportedly pledged to explore adding the technology clause during talks Monday night with Ian Duncan Smith, Lord Trimble, Lord Lilley and Owen Paterson. In theory, a technological solution would allow the EU and UK to maintain a “soft border” in Northern Ireland even if the two sides fail to hammer out a trade agreement.

Members of the Brexiteer “Famous Five” told the FT that they’re feeling “positive” about May’s pledge to explore a technological solution.

May’s concession comes as more Tory MPs have come out against the draft plan in its current form, saying it gives “too much away,” according to the Sun.

But while the PM won plaudits from business chiefs, her Brexit deal suffered a fresh blow as a second former Tory leader withdrew his support for it.

Lord Howard said it betrayed too many promises to regain control and so “I can’t vote for it”.

Tory backbench grandee Sir Bernard Jenkin also accused the PM of having “impaled herself” on her soft Brexit plan.

Meanwhile, senior EU figures rowed in to help Mrs May win round her angry Tory MPs.

Michel Barnier has urged rebel MPs to accept Theresa May’s deal by telling them it ensures Britain will “take back control” after Brexit.

The prime minister had previously discarded the “maximum facilitation” model (where technology is used to scan, check and verify cross-border shipments) during the talks leading up to the Chequers plan. And while May is probably hoping that her cabinet could win over the necessary votes to win approval for her deal, according to the FT, the idea is expected to meet with much more hostility in Europe.

Speaking after a two-hour cabinet discussion on the final stages of Brexit talks, Mrs May’s spokesman noted that the draft EU withdrawal treaty mentioned “alternative arrangements” could be deployed to avoid a return to hard border in Ireland.

“One possible alternative arrangement could involve technological solutions,” Mrs May’s spokesman said, confirming that the idea had been discussed in cabinet.

The idea will be seen in Brussels as an unworkable attempt by the prime minister to buy the support of Tory Eurosceptics and the Democratic Unionist party, which oppose the current proposals for a backstop.

May is supposed to travel to Brussels on Wednesday to begin talks to finalize the draft plan and also hammer out details of the accompanying political agreement (which is also facing some complications related to France and Spain, which are pushing for additional demands to be included in the report).

If she can’t secure a workable agreement, it’s likely that a summit set for Sunday will be cancelled, and the European Union will begin contingency planning for a hard Brexit.

Vote

But the fact that May is pinning her hopes for passing the deal on an idea that many derided as a fantasy is fitting in a way. The notion that the UK and EU could ever work out a straightforward, mutually agreeable separation agreement was ridiculous from the very beginning.

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Stossel: Let Them Vape

Our government says e-cigarettes and vaping are the latest “epidemic” among teens. So the Food and Drug Administration (FDA) says it will restrict them. Cities across the country are banning e-cigarette use in public.

But e-cigarettes help smokers quit traditional cigarettes. Michelle Minton of the Competitive Enterprise Institute tells John Stossel that people have misconceptions about e-cigarettes. “It’s about 95 percent less harmful than a normal traditional cigarette,” she says.

That’s because e-cigarettes let people get a hit of nicotine without actually burning tobacco. The burning of paper and tobacco leaves is what makes cigarettes so dangerous.

Minton admits that the nicotine in e-cigarettes is addictive. But “on the spectrum of drugs that you can become addicted to, nicotine and caffeine are very similar to each other.”

Click here for full text and downloadable versions.

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The views expressed in this video are solely those of John Stossel; his independent production company, Stossel Productions; and the people he interviews. The claims and opinions set forth in the video and accompanying text are not necessarily those of Reason.

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Goldman Tells Investors “It’s Time To Lift Cash Allocations”

It’s been difficult year for Goldman’s chief equity strategist David Kostin.

On one hand, to your left your have such gloomy analysts as Peter Oppenheimer who two weeks ago said that “things do not look encouraging” as various market signals suggest that “equities could be about to enter a sustained bear market.”

Then, to your right, are “optimistic” economists such as Jan Hatzius, who still expects the Fed to hike 4 times in 2019 in addition to once in December, even as he expects the yield curve to invert in the second half of 2019 and the economy to grind to a crawl, below 2.0% by 2020.

So what do you recommend in your annual equity outlook report when within your own company you have opinions ranging from one extreme to the other, and somehow have to find a way to bridge them?

Well, first you admit that “all good things eventually come to an end” adding cryptically “But when?” Then you launch into some philosophy:

Answering this question represents the fundamental 2019 investment challenge for portfolio managers. For equity investors, risk is high and the margin of safety is low because stock valuations are elevated compared with history. Our baseline assumption is that both economic and profit growth will be positive in 2019 but decelerate from the robust levels of 2018. We forecast the S&P 500 index will generate a modest single-digit absolute return in 2019.

Next, your cover your bases, laying out a future returns matrix that literally covers every possibility:

  • Base Case (50% probability): S&P 500 closes 2018 at 2850, and then climbs by 5% to reach 3000 at year-end 2019. We  forecast EPS will grow by 6% to $173 in 2019 and by 4% to $181 in 2020. Consensus growth equals 8% and 10%. P/E multiple will remain stable at 16x. Valuation has already declined by 12% YTD.
  • Downside Case (30% probability): As 2019 progresses, investors may become increasingly concerned about the risk of a recession in 2020. Earnings estimates are slashed, the P/E contracts to 14x, and S&P 500 ends 2019 at 2500.
  • Upside Case (20% probability): Economic growth remains stronger for longer than investors expect. Consensus 2020 EPS estimates are trimmed only slightly and P/E multiple returns to its recent high of 18x. S&P 500 ends 2019 at 3400.

And visually:

Then just in case your clients end up having light and not so light weapons and are vindictive, should everything go to hell next year, you also casually toss in a reco to go long cash: “Mixed asset investors should maintain equity exposure but lift cash
allocations.” The reason – everyone is overweight stocks and underweight cash:

“Households, mutual funds, pension funds, and foreign investors have equity allocations ranking in the 89th percentile vs. history but have cash allocations at just the 1st percentile.”

As a result, “Cash will represent a competitive asset class to stocks for the first time in many years.”

You justify this downside case by forecasting that while equities will post a higher 2019 absolute total return (7%) than cash (T-Bills, 3%) cash will outperform the projected return on 10-year US Treasuries (1%). Of course, what this means is that Treasuries will likely outperform everything, while cash is flat and stocks tumble.

However to avoid disappointing your bullish clients, which for Goldman is the majority, you leave off on a positive note, saying that you “expect the current bull market in US equities will continue in 2019.”

Our baseline forecast is the S&P 500 index closes 2018 at 2850, and then climbs by 5% next year to reach 3000 at year-end 2019. The 2019 total return including dividends will equal 7%. Consensus bottom-up EPS estimates will decline by 4% from current levels and the forward P/E multiple will remain stable at 16x. Valuation has already declined by 12% since the start of 2018. Put simply, stocks have already started to price in the risk of an economic slowdown.

Finally, even as Kostin expects the bull market to continue, the Goldman strategist tells its clients to “increase portfolio defensiveness” and go overweight Info Tech, Communication Services, and Utilities, while Underweighting Cyclicals.

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“The Market Is Killing Us” – European Stocks Crash To 2-Year Lows

While US is grabbing the headlines as the hedge fund hotels and momentum darlings of the last 10 years have suddenly collapsed, European markets have been a bloodbath longer and that pain is accelerating rapidly…

As Bloomberg reports, The sell-off in European stocks has been so violent that Guillermo Hernandez Sampere, head of trading at the German asset manager MPPM EK, now spends half his working day on the phone with fearful clients.

“So much pain, the market is killing us,” he said by phone from Eppstein, Germany.

“European equities have lost investor confidence due to Italy, Brexit. Liquidity is the place to be right now.”

Italy and Germany are the worst performers year-to-date…

Hernandez Sampere said it’s best to hide from the European equity correction by holding cash, and the fund has increased its cash positioning to the “high single-digits” in November even though it’s normally fully invested.

He is not alone – a slew of institutional investors are issuing ominous warnings:

Goldman Sachs strategists recommend that mixed-asset investors lift their cash allocations and dial back on risk.

Ken Adams, head of tactical asset allocation at Aberdeen Standard Investments says: “You need a catalyst to trigger buying in European stocks and it’s hard to come up with a story investors can believe in… The region has disappointed in terms of growth expectations and the general political backdrop is challenging.”

And this is happening as Italian bank credit risk explodes…

And Italian redenomination risk (Italeave) soars…

We give the last words to Hernandez Sampere:

“It’s very sad because some shares really look so sexy from a fundamental view,”

“But only a few people give us the money to invest here, the majority of institutional clients redeem.”

But what about the global synchronized recovery?

 

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At Least Half of What You Know About Psychology Is Probably Wrong: Reason Roundup

Psychology’s “reproducibility crisis” grows, as Many Labs 2, a global collaboration of scientists attempting to replicate the results of hyped psychology experiments past, continues to fail (or succeed, depending on how you look at it). In attempting to “replicate 28 classic and contemporary published findings,” the group was only able to do so around half of the time.

Depending on whether they used conventional or “strict significance criterion,” the Many Labs team was able to replicate 15 or 14 of the 28 original studies, respectively.

This is common, notes Ed Yong at The Atlantic. “Whenever psychologists undertake large projects, like Many Labs 2, in which they replicate past experiments en masse, they typically succeed, on average, half of the time,” he writes. “Ironically enough, it seems that one of the most reliable findings in psychology is that only half of psychological studies can be successfully repeated.”

A few years ago, the Open Science Collaboration’s three-year Reproducibility Project looked at 100 previous psychology studies and was able to replicate psychology research results about 40 percent of the time.

“Even famous, long-established phenomena—the stuff of textbooks and TED Talks—might not be real,” Yong points out. Here are some of the previous research findings unable to be backed up by repeated experiments:

  • the idea that mimicking happy facial expressions can actually boost people’s moods
  • social priming (“the field of research about how thinking about or interacting with something … can affect later, vaguely related behaviour,” as one Psychology Today writer puts it)
  • the idea that willpower is a finite personal resource that can be depleted (the subject of a very well-received 2011 book Willpower by social psychologist Roy Baumeister and journalist John Tierney)
  • the finding that exposure to heat primes people to have more belief in global warming
  • the finding that birth order within a family can predict altruism

Some psychologists have blamed non-reproducable results on isolated bad actors–researchers with sloppy technique or unscrupulous data manipulation. Others insist its the replication scientists who are sloppy, using too-small data sets, or failing to understand how the original experiment was done. To ward off these latter critiques, Many Labs took several steps:

  • Many Lab scientists consulted with researchers behind the original experiments
  • Replication-attempt studies had many more participants than in the originals
  • Replication studies were done repeatedly and with participants from different countries

Different cultures and places ultimately didn’t matter much in terms of whether a study was reproducable or not. “Exploratory comparisons revealed little heterogeneity between Western, educated, industrialized, rich, and democratic (WEIRD) cultures and less WEIRD cultures (i.e., cultures with relatively high and low WEIRDness scores, respectively),” reports Many Lab. In addition, “moderation tests indicated that very little heterogeneity was attributable to the order in which the tasks were performed or whether the tasks were administered in lab versus online.”

You can read about Many Labs work in more detail here.

FREE MINDS

Capitalized words could scare college students, a U.K. university warned its faculty. The staff memo at Leeds Trinity advised professors to “write in a helpful, warm tone, avoiding officious language and negative instructions” when explaining course requirements and tasks.

Despite our best attempts to explain assessment tasks, any lack of clarity can generate anxiety and even discourage students from attempting the assessment at all. Generally, avoid using capital letters for emphasis and “the overuse of ‘do’, and, especially, ‘don’t’.

The memo stated that capitalizing certain words might make students anxious by reminding them of “the difficulty or high-stakes nature of the task.”

FREE MARKETS

Free market groups fight tax-break package. Americans for Prosperity and Freedom Partners Chamber of Commerce are urging Congressional Republicans not to renew certain tax extenders, which “provide special interest tax breaks and unfairly pick winners and losers by propping up select industries and companies over others,” they say.

“Americans across the country, including lawmakers from both sides of the aisle, have rightfully decried the billions of dollars in corporate welfare given to Amazon,” the letter continued. “The billions more that are up for renewal in the tax extender package are no different.”

“More than two dozen tax provisions, known as ‘tax extenders,’ expired at the end of 2017, including tax breaks that benefit the renewable energy, motorsports and horse racing industries,” notes The Hill.

Outgoing House Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters last week that he’s developed a “draft package” about which of the expired tax breaks he thinks should be renewed and which should be eliminated following the enactment of Republicans’ tax-cut law last year. He also said it’s unclear what appetite Congress will have to address the expired provisions in the lame-duck session.

FOLLOWUP

Troops pulled from border before caravan arrives. File under good news, bad motives: After deploying thousands of troops to the U.S.-Mexico border in the days leading up to the midterm election, with a supposed purpose of thwarting a group of Central American migrants seeking refuge here, the Trump administration is now pulling the troops before the migrant caravan even shows up.

In other asylum-seeker news, a federal judge has temporarily blocked enforcement of the Trump administration’s new rules limiting who can request to come here.

QUICK HITS

  • Utah Republican Sen. Mike Lee pushes back against his colleague Tom Cotton (R-Arkansas) misrepresenting the FIRST STEP Act.
  • Ivanka pulls a Hillary.
  • “If Iran has a policy of detaining dual nationals as a tool of diplomatic leverage then there will be consequences for Iran,” British Secretary of State for Foreign and Commonwealth Affairs Jeremy Hunt said on his recent trip there. “We will not let them get away with it scot-free. They have to understand this is not a sustainable situation.”
  • Here’s the FDA’s new statement on lab-grown meat.
  • Russian police general Alexander Prokopchuk could wind up leading the international law enforcement agency Interpol. “With a Putin-appointed police general at the helm, the Kremlin would no longer need to abuse Interpol to pursue its goals; it would be able to place the organization at its service,” warns Washington Post contributor Vladimir Kara-Murza.
  • Women’s March founder Teresa Shook is not happy with what it’s become:

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Aspiring Actress Files Restraining Order Against Michael Avenatti

Since TMZ retracted its report that “creepy porn lawyer” Michael Avenatti’s arrest on felony domestic violence charges stemmed from an incident involving his estranged wife, many have speculated about the identity of Avenatti’s mystery victim. Adding a fresh wrinkle to the story, a petition for a restraining order against Avenatti has been filed by an aspiring actress who had a bit part in Ocean’s 8, according to the Blast.

The actress, Mareli Miniutti filed the paperwork at a Santa Monica courthouse days after police said that the face of the woman who had been allegedly battered by Avenatti was “swollen and bruised.”

Av

Avenatti released a statement Monday night again insisting that he had never hit a woman and would soon be cleared.

Miniutti, who has an address listed in lower Manhattan, didn’t respond to press requests for comment. On Wednesday, police were called to an address by a woman who said she had been assaulted the night before. Later, Avenatti was detained on domestic violence charges, but was released on $50,000 bail later that day.

The lawyer and 2020 presidential hopeful has repeatedly insisted that he is innocent and that the charges were a setup…

“I wish to thank the hardworking men and woman of the LAPD for their professionalism. They were only doing their jobs in light of the completely bogus allegations against me,” he said after his arrest.

…And has blamed Trump supporter Jacob Wohl for masterminding the effort to discredit him.

As Avenatti struggles to plan his presidential bid, the “Fight Club PAC” founder and his law firm lost an emergency eviction appeal last week, and must now vacate Avenatti’s Newport Beach offices by 6 am on Nov. 1.

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