It’s Recession, Not No-flation, That Is Scaring The Fed

Via Bloomberg’s Richard Breslow,

What a unique situation we get to witness over the next two days. The market assumes that the FOMC meeting is being held early. And that is largely true. With the one caveat that if the reaction of asset prices isn’t to their liking they will get a second bite at the apple to adjust the message. Which is one big reason, even among those who fear Fed Chairman Jerome Powell just might be less dovish than expected [ZH: he wasn’t!], there remains a strong buy the dip mentality.

All eyes, as they say, will be on the gaps to lower yields from the end of May.

Whether the gaps get filled at all, or hold if tested, will tell you a lot about market dynamics. The real answer comes down to whether investors conclude prices got too far ahead of the economic data or have faith that the year-long trend will continue.

What happens in the very short-term is anyone’s guess, and largely irrelevant. But it will take a lot, lot, lot to turn long-term bond bulls into anything else. And that certainly won’t be his, or any other central banker’s, intention. If anything, willing to openly concede that supporting financial conditions is part of the game plan has fully emerged into the mainstream. The practice of doing so no longer has to be a poorly kept secret.

With fewer monetary resources at their disposal than they would like, they need the market to continue doing a chunk of their work for them. Which is understandable given the lack of faith that effective fiscal policy will be on hand.

There are a couple of things to keep in mind.

Should we come out of the testimony with the 25 basis point cut, or even a bigger one, seemingly baked in the cake, assume that the chances of them taking it back in the foreseeable future are exceedingly small. That is true whatever the explanation for the move. And no talk of data-dependence is going to change that.

Take it as confirmation that, whatever the projected pace of rate changes, the market correctly understands, and will continue to price this, as merely the prelude of things to come. Talk of inflation is a red herring. The subtext of all of this is how to ward off a potential recession.

It doesn’t even matter if the debate about whether one is imminent or not is unsettled. Because their keep-them-up-at-night reality is worrying about what they can effectively do should one happen. And the fact of life with recessions, all of the predictive models notwithstanding, is they are, in fact, notoriously difficult to predict. And don’t require an aging economic cycle to occur.

The term “global headwinds” has become unfortunate. It’s too broad as to be useful and risks just being a cliche. Because in today’s world, credit events in Europe or Asia, trade disputes and a lot of other risks are just as likely to be the cause. These are things the Fed has no control over. And don’t have to rise to the level of black swans to be the trigger.

The Fed’s struggle is all about trying to figure out if there is any way to make a potential recession as mild as possible. They probably feel they can deal with a mild one with the resources at hand. But a bad one is going to be a problem. Especially because their unspoken reality is that QE loses its oomph over time. And that sell-by date is rapidly approaching. They have to figure out when, and how fast, they should spend the rate room they have. And, perhaps, reconsider whether they should have been hiking a lot earlier than they had the gumption to do.

via ZeroHedge News https://ift.tt/32ins0R Tyler Durden

Trump—Who Once Said Jeffrey Epstein ‘Likes Beautiful Women as Much as I Do’—Moves to Distance Himself From the Disgraced Palm Beach Billionaire

The ties that bind President Donald Trump and Jeffrey Epstein, the Florida billionaire arrested this week for alleged sex crimes against teen girls and young women, have been getting a lot of understandable scrutiny. Trump and Epstein partied together in the 1990s, reports Business Insider, and he told a reporter in 2002:

He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it—Jeffrey enjoys his social life.

But White House advisor Kellyanne Conway said the friendship between Epstein and Trump ended long ago. They haven’t had contact “in years and years and years,” said Conway. “And [Trump], like everyone else, sees these charges, the description of these charges against Epstein, as completely unconscionable and obviously criminal. Disgusting, really.”

Trump himself stressed to reporters that while he knew Epstein at one time, he hasn’t been associated with him for many years.

The New York Post alleges that Trump even had Epstein banned from Mar-a-Lago over his predatory behavior, citing an April 2011 court filing in a Florida case between Epstein and lawyer Bradley Edwards. “Trump allegedly banned Epstein from his Maralago Club in West Palm Beach because Epstein sexually assaulted a girl at the club,” the New York Post quotes an unspecified document as saying. (I’ve been through the April 2011 filings in the Epstein-Edwards case and been unable to find this particular statement, however.)

Trump has also been taking heat for his labor secretary, Alexander Acosta, being the U.S. prosecutor that allowed Epstein’s incredibly lax plea deal in Florida in 2008. Acosta was quiet in the days immediately following Epstein’s July 6 arrest, but tweeted on Tuesday:

“The crimes committed by Epstein are horrific, and I am pleased that NY prosecutors are moving forward with a case based on new evidence.

With the evidence available more than a decade ago, federal prosecutors insisted that Epstein go to jail, register as a sex offender and put the world on notice that he was a sexual predator.

Now that new evidence and additional testimony is available, the NY prosecution offers an important opportunity to more fully bring him to justice.”

It’s unclear to what new evidence he refers, considering the current indictment against Epstein lists the same old complaints from 2002-2005 that informed the 2008 case.

But some people aren’t satisfied with criticizing Acosta’s actions back then (or his defense of it now) and seemingly want to make him into a supervillain. The Guardian is running a silly story about Acosta trying to “slash funding to anti-sex trafficking agency by 80%.“

The twisted impetus for the newspaper’s claim is that 2020 budget plans for Department of Labor would slash the budget of the International Labor Affairs Bureau from $68 million to $18.5 million. “The proposed reduction is so drastic that experts say it would effectively kill off many federal efforts to curb sex trafficking and put the lives of large numbers of children at risk,” the Guardian insists. Notably, it does not offer any specifics on what budget cuts would mean for any particular programs, instead letting us know that congressional Democrats say it will be bad.

In my five-plus years reporting extensively on U.S. efforts to fight sex trafficking, I’ve hardly ever encountered any mentions of the International Labor Affairs Bureau. Most of the human rights work it does concerns forced labor in sectors like agriculture and manufacturing. Whatever this agency may be doing to combat sex trafficking, it is far from a central front in the feds’ fight.

Meanwhile, there are dozens of other agencies and initiatives devoted to fighting sex trafficking, and federal budgets for these entities have continually increased. For instance, according to the State Department’s latest Trafficking in Persons Report, Department of Justice funding for federal-state anti-sex trafficking task forces soared from $2.8 million in fiscal year 2017 to $23.1 million the following year.

ELECTION 2020 

Sen. Tulsi Gabbard (D–Hawaii) accused Sen. Kamala Harris (D–Calif.) of pulling a “political ploy” with her debate-stage attack on Joe Biden for his opposition to federally mandated busing—a position Harris herself later admitted to holding. (Her campaign tried to get around the discrepancy by pointing out that it’s a different year than when Biden opposed it.)

“Really what she’s saying is her position is the same one she was criticizing Joe Biden for,” Gabbard told CBS News. “So this is just a political ploy and I think a very underhanded one just to try to get herself attention, to move herself up in the polls. “I think we need to be above that. All of us.”

FREE MINDS

Prince versus Andy Warhol winds up in a good ruling for Fair Use. From Mike Masnick at techdirt:

There’s a fair bit of background to this story, so stick with me, but the short version is that a photographer, Lynn Goldsmith, took a bunch of photos of Prince in 1981. In 1984, Vanity Fair magazine (owned by Conde Nast) licensed Goldsmith’s photographs for an article the magazine was doing about Prince. The magazine then commissioned Warhol to do a painting of Prince based on Goldsmith’s photographs. That resulted in this 1984 spread:

Apparently Warhol actually created a bunch of paintings based on Goldsmith’s photographs, most of which have been sold, and a few of which are now in the Warhol museum. You can see all the images in the original complaint in this case.

After Prince died, Vanity Fair reran its article, and then teamed up with some other Conde Nast publications, and put out a special magazine called “The Genius of Prince” using one of Warhol’s other portraits.”

The court’s ruling? “It is plain that the Prince Series works are protected by fair use.” More here.

FREE MARKETS

Hawaii decriminalizes marijuana. Hawaii has joined 25 other U.S. states in either decriminalizing or legalizing cannabis, with a law that will take effect in January 2020. “The new law removes the possibility of jail time as a penalty for up to three grams of marijuana, but maintains a $130 fine,” reports Vox.

“Unfortunately, three grams would be the smallest amount of any state that has decriminalized (or legalized) simple possession of marijuana,” notes the Marijuana Policy Project. “Still, removing criminal penalties and possible jail time for possession of a small amount of cannabis is an improvement.”

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Morgan Stanley Calls For 50bps Of Rate Cuts In Three Weeks

Now that Powell telegraphed a rate cut at the July 30/31 FOMC meeting is virtually certain, the question is whether the Fed will cut once or twice. And while many still believe that the Fed’s “insurance” cut will be just 25bps, or 1 rate cut, as Bloomberg’s Elena Shulyatyeba writes, “we do not see support for a 50-bp cut given limited interest-rate ammunition compared with previous economic cycles”, noting that the current level of the fed funds rate gives policy makers the capacity for 9 rate cuts compared to 20 at the start of the last recession and 25 ahead of the 2001 downturn, others disagree.

Case in point, Morgan Stanley’s Chief Economist Chetan Ahya, who is bucking the trend and writes this morning that “a  strong policy response is necessary to guard against risks of a further, sharper loss of economic momentum.” Specifically, the “weak incoming data” – which is an odd statement for an economy which just added so many jobs it surpassed even the most optimistic forecast – “lingering trade tensions, and preventing both financial conditions from tightening and a non-linear adverse impact on growth are key reasons for a front-loaded adjustment.”

Echoing what Powell lamented in his prepared remarks, MS writes that “corporate confidence and the capex cycle have remained weak”, even if that means that the stock buyback cycle has never been stronger. Furthermore, “uncertainty over trade tensions – the key overhang on the macro outlook – lingers. Against this backdrop and in the context of preventing the downside risks and attendant non-linear impact from materializing” Morgan Stanley argues that a strong policy response is necessary to arrest the recent sharp decline in economic momentum.

A response in the form of 50bps of rate cuts in just three weeks.

To justify its uber dovish outlook, Morgan Stanley lays out the following four arguments why a strong policy response is needed:

1. The global economy has lost significant momentum in the past 9 months

Global GDP growth has slipped quickly from a peak of 4.0%Y in 2Q18 to 3.1%Y in 2Q19. High-frequency indicators, for instance PMIs and trade, are currently close to or below the previous cycle (2015-16) lows. Of particular concern is the dip of the global new orders sub-index (the more forward-looking component) within the manufacturing PMIs to well below 2015-16 lows, suggesting that the outlook for aggregate demand remains anemic.

The slowdown is also broad-based across regions. While the rest of the world began to slow from the middle of 2018, the US economy appeared to have weathered the headwinds as the tailwinds from fiscal stimulus were still supporting growth then. However, as the global slowdown has deepened and the impact from fiscal stimulus is fading, growth momentum in the US is also beginning to slow. As a case in point, the US manufacturing ISM index has weakened sharply over the last eight months and is now converging rapidly in line with global aggregates after a period of outperformance. We expect US growth to slow further, to 1.6% in 2H19 on a sequential quarterly average rate from a pace of 2.8% in 2H18.

2. Lingering trade tensions remain an overhang on corporate confidence

One of the key factors behind the current global slowdown is trade tensions – their impact on corporate confidence and the capex cycle. Corporate sentiment has already weakened significantly and the capex cycle has ground to a halt. While the G20 meeting did not result in an immediate escalation in trade tensions, it did not provide a clear path toward a comprehensive deal either. This “uncertain pause” therefore does not remove the uncertainty created by trade tensions and it remains an overhang on corporate confidence and the macro outlook. As a result, the corporate sector is unlikely to get back to investing unless and until we see a complete resolution on US-China trade policy and that no other major trade disputes are being pursued (for instance with the EU or Mexico).

3. Inflation expectations are slipping again

Actual incoming inflation data, market-based measures of inflation expectations, and the bank’s outlook for inflation all suggest there is room for further policy accommodation. In the US, core PCE is currently at 1.6%Y, below the Fed’s 2% symmetric inflation goal. Market-based measures of inflation expectations have also softened, to close to a 3-year low. With wage growth softening again and overall growth set to slow to a pace below potential, MS is not expecting inflation pressures to build up in a significant way that would constrain easing today. Similarly, in the case of Europe, growth is set to remain sub-par, and headline inflation has been well-below the ECB’s target and has softened more recently. Additional stimulus by the ECB is thus warranted.

4. Protecting against the risk of a non-linear tightening in financial conditions

The economic backdrop is not encouraging and the risks to the outlook remain skewed to the downside. A sharper slowdown in growth will bring corporate credit risks to the fore, particularly in the US as leverage has picked up significantly in the corporate sector, especially among the riskier borrowers. If downside risks were to materialize, it could result in a non-linear tightening of financial conditions. We believe a strong policy response is therefore warranted to keep financial conditions easy and provide support to the cycle. As a reminder, in the last quarter of 2018, growth had slipped but the policy stance had not shifted pre-emptively. This created a situation where financial conditions tightened in a non-linear fashion.

Hence, in the context of managing the risks to the outlook, we think there is a case to be made that policymakers should proceed with a strong policy response. As Chair Powell said at the June FOMC press conference, “an ounce of prevention is worth a pound of cure”. In today’s context, this means it would be better to act more quickly and more aggressively up front, to prevent a sharper and prolonged weakening of the economy

Translation, the Fed must do everything to prevent the market from dropping in a “non-linear’ fashion.

In conclusion, Morgan Stanley expects “the policy-easing cycle to move into full swing and expect a stronger policy response from central banks than what markets and consensus currently expect.” As a result, the bank expects the Fed to cut rates by 50bps at its July meeting and assigns a higher probability to the ECB restarting QE than consensus.

In response, and following Powell’s prepared remarks, the odds of a 50bps hike jumped from 0 to 12.5%…

… and rising.

via ZeroHedge News https://ift.tt/2Jpic41 Tyler Durden

Warning Bells Sound For Europe’s Biggest Exporter

Via Bloomberg Taking Stock

Europe’s largest economy is attracting bad news as companies are entering the earnings season. While Germany’s DAX Index has managed to shrug off bad economic indicators and trade worries that had hit shares in May, yesterday’s profit warning from BASF was harder to ignore. And dividend futures indicate traders are pricing in payout cuts at companies such as BASF, Bayer and Lufthansa.

The DAX’s performance has broken away from macro fundamentals this year. Within the main European economies, Germany is the bottom country when it comes to manufacturing PMI, with data indicating a contraction since January. Yet, the equity benchmark has climbed near a one-year high and has entered a bull market again.

Although trade tensions have faded for now amid bets of looser monetary policy, no resolution has been reached between the U.S. and China. Given the German gauge is a manufacturing-heavy index, and suffered more than peers as tariff worries grew last year, any new developments will be keenly watched.

While the DAX is a total return index, looking at its performance minus the dividend effect shows it’s actually underperforming most of the main European indexes this year, with the exception of U.K. and Spanish benchmarks.

Carmakers BMW and Daimler have already warned about their outlook earlier this year and underwhelming results from Geely yesterday did not bode well for the auto sector. BASF’s profit warning surprised analysts with its magnitude and rippled through the sector. Unfortunately for the DAX, autos and chemicals account for more than a quarter of the index.

Since dividend levels are very relevant to the benchmark, they should be closely monitored as warnings accumulate for high dividend yield shares. Deutsche Bank already said it will omit a payout next year after restructuring, while swaps show Lufthansa’s dividend could be at risk as its outlook is darkening. More bad news could end up weighing on the DAX’s performance. The dividend swap market has started to price a potential cut for BASF, while Covestro could also be impacted. The table below shows the difference between dividend swaps and estimated dividends.

via ZeroHedge News https://ift.tt/32imTEb Tyler Durden

Stocks, Bonds, & Gold Spike As Dollar Dives After Powell’s Dovish Remarks

A ‘dovish-er’ than expected set of prepared remarks from Fed Chair Powell has sparked a bid in bonds, stocks, and gold as the dollar takes a dive ahead of his testimony late this morning.

Dow futures love the bad economic news… are up 150 points on Powell’s promises…

 

The dollar is rapidly pulling back from the pre-FOMC levels it has recovered to…

And as the dollar dives, investors are buying gold…

And bonds (also yields diving from the pre-FOMC levels)…

Powell’s remarks suggest he is comfortable with market pricing of an interest rate cut at the end of July. This was an opportunity to push back against those expectations if he wanted to, and he did just the opposite. July rate-cut odds are back at 100% (from 92.5% pre-remarks).

 

via ZeroHedge News https://ift.tt/2G3UCI8 Tyler Durden

“Outlook Continues To Dim” – Powell Prepared Remarks Signal Dovish Bias Persists

With all eyes on today’s testimony, watching for strawman hawkishness ahead of the FOMC meeting, Fed chair Powell’s prepared remarks offer some signal that he is in fact just as dovish.

Powell TL/DR: The economic news is terrible enough to send the S&P back over 3,000

Powell begins by noting that uncertainties since June’s FOMC continue to dim their outlook, which is odd because macro data has surprised to the upside since then…

Federal Reserve Chairman Jerome Powell says:

Baseline case is still for solid growth and for labor market to stay strong but notes uncertainties have increased in recent months

Notes many officials at June FOMC saw stronger case for somewhat easier monetary policy

Powell points to risk weak inflation may prove more persistent, says inflation pressures remain muted

Says housing investment and manufacturing look to have dipped again in 2q

Powell also notes that “growth in business investment seems to have slowed notably” … which is great news as investment in stock buybacks has accelerated notably.

The punchline is that Powell warns that “a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate.”

Ahead of the release, July rate-cut odds had slid to 92.5% from 100% (with zero percent chance now of a 50bps cut).

Powell comments in text of testimony prepared for delivery to House Financial Services Committee, which is scheduled to start at 10 a.m. in Washington

*  *  *

Full Prepared Remarks below (link to statement)

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Trump Asked Fed Board Nominees For Their Views On The Dollar

President Trump has renewed his attacks on the greenback lately by ratcheting up pressure on the Fed to deliver a steep rate cut this month (which, in Trump’s mind, would help Powell stay one step ahead of the uber-dove Mario Draghi and his probable successor, Christine Lagarde), and accusing Europe and China of manipulating their currencies to disadvantage the US.

Greenback

And according to the most recent report from Bloomberg, Trump has tasked his aides with figuring out exactly what can be done to safely weaken the greenback, and he has also asked both Judy Shelton and Christopher Waller, his two latest nominees to fill the empty Fed board seats, about their views on the dollar.

So far, Trump’s attacks on the dollar have been mostly bluster. But as Bank of America pointed out in a notably prescient research note published last month, jawboning is one of Trump’s most reliable tools for knocking down the dollar. BofA affirmed that the dollar is trading 13% above its long-term average, a sign that Trump is correct to call it overvalued.

REER

BofA warned that the administration might soon take direct action to weaken the dollar, either through jawboning, or perhaps even direct intervention via the New York Fed’s markets desk. Pressing the Fed to ease – although the odds of a rate cut have fallen since Friday’s surprisingly robust jobs report – is another option outlined by BofA. A weaker dollar would, in theory, help bolster US exports and act as a shot in the arm for the economy as Trump prepares to battle it out for a second term.

And as BofA showed, incidences of Trump jawboning the dollar have grown more frequent over the past year.

Dollar

Of course, when moving to weaken the dollar, the Trump administration must tread carefully or risk igniting an all-out currency more among its G-20 allies. In a communique, the group agreed to avoid targeting exchange rates for the purposes of competitive devaluation. Though there is some wiggle room: temporary interventions to stabilize one’s currency would be permitted under the agreement.

During his interview with Trump, Waller, currently the head of research at the St. Louis Fed, led by the dovish James Bullard, said the Fed doesn’t explicitly target exchange rates (then again, that’s what they all say). But one of Trump’s top economic officials, Larry Kudlow, appeared to come around to his boss’s position during an interview with CNBC on Tuesday, where he said that “price level stability and a steady dollar” should be the primary objectives of Fed policy, not employment.

Wall Street strategists are starting to come around to the notion that the greenback’s impressive bull run may have reached a Trump-assisted inflection point.

“Although it would be highly unusual for a US government to attempt further measures to weaken the dollar, it is not beyond the realms of possibility that the Trump administration will try,” said Jane Foley, head of currency strategy for Rabobank.

When it comes to strategies for weakening the greenback, Trump could seek a ‘Plaza Accord 2.0’ with other major economies (since a weaker dollar is broadly in the interest of emerging-market economies that borrow in dollars). Mnuchin could also order the Fed to intervene, as we mentioned above, using money from the Treasury’s exchange stabilization fund and the Fed’s own dollar-denominated assets.

Intervening to weaken the dollar is one thing: Doing it in a way that’s sustainable would be significantly more difficult. That’s because a weaker dollar would stoke inflationary pressures by making imports more expensive. This, in turn, would likely push yields higher and pressure the Fed to hike interest rates.

But even if the administration doesn’t succeed, Trump has already set up the greenback as the perfect scapegoat if the economy goes south between now and election day, 2020. The strong dollar left the US at a competitive disadvantage – and the Fed, not Trump, should shoulder the blame.

via ZeroHedge News https://ift.tt/30xAuG9 Tyler Durden

This may be your last chance to take advantage of Puerto Rico’s best tax benefits

Imagine a place where you could spend all day sitting on a beautiful beach, sipping piña coladas, mingle with some of the most fascinating people you’ll ever meet, and not pay any taxes…

It’s the classic dream of the offshore tax paradise. Unfortunately, that dream is largely dead due to Uncle Sam’s aggressive policies of cracking down on foreign tax havens.

But there’s still one place left in the world where this dream is a reality. And surprisingly enough, it’s in the US– yes, the best tax haven in the world is in the United States of America.

I’m of course talking about Puerto Rico. I recently moved there myself… the benefits are just too great to pass up on.

Every day I wake up there, I have to pinch myself to be reminded I’m not dreaming.

I rent a beautiful house with a gorgeous view on the water. I’ve built tremendous contacts on the island with influential people in business and government.

I am overwhelmed by the amount of opportunity there… and I pay almost no taxes.

The first time I heard of the opportunity through my good friend Peter Schiff, I thought it was too good to be true.

But after the initial skepticism, I went there myself to check it out and spend some time.

I was blown away, and ended up moving there permanently myself last year.

Honestly, the combination of lifestyle, tax benefits, opportunity and proximity to the US is as good as it gets.

Nowhere in the world have I seen such an incredible line-up of advantages.

To revive the island after twenty years of economic depression, the government passed a series of laws in 2012, hoping to attract wealthy investors and entrepreneurs to the island.

Two of those pieces of legislation, in particular, are incredibly attractive.

The first is Act 20, which allows entrepreneurs on the island to start a local company servicing foreign clients and pay just 4% in corporate tax.

The other is Act 22, which allows investors to pay 0% tax on dividends and capital gains in Puerto Rico.

And for maximum tax benefit, both regulations can be combined– allowing you to pay only 4% corporate tax and then ZERO percent on the dividends your company pays out to you.

For those looking to start financial services companies, Puerto Rico also has Act 273, which aims to turn Puerto Rico in a global financial hub (that’s also why I started my bank there).

And the best part is that Puerto Rico is part of the US– just hours away from the US mainland by plane. American citizens don’t even need a passport to move here. For them, it’s just like moving from Kansas to Florida.

So it might come as no surprise to some of you that I’ve been hammering on the Puerto Rico opportunity in Notes From the Field for the past year.

That’s because whenever governments put out incredibly generous gifts like this one, it never lasts forever.

Ultimately, demand meets supply and the laws change accordingly.

(That’s what’s happened with places like Singapore and Hong Kong by the way. It used to be a breeze to move there and start a company– but today, because these places no longer NEED people, it’s a lot more difficult.)

That’s why I’ve written at great lengths about taking advantage of this opportunity NOW while it still lasts.

It seems the message was prescient…

A few weeks ago, the government of Puerto Rico released new legislation that makes it more costly and complicated to make the move to the island and enjoy the tremendous benefits.

Under the earlier rules, there were very few costs associated with moving to the island, and you didn’t need to own property to qualify for Act 22. But with the new legislation, that’s now changed…( more on that below)

Luckily, it’s still possible and relatively inexpensive to obtain residency in Puerto Rico.

But everyone knows this will not last forever. Ten years ago, these incentives didn’t exist. And the government’s recent moves indicate that it likely won’t exist ten years from now – and probably not even in a few years.

However, by acting NOW you can still be grandfathered in under the old rules– as long as you take action before December 31, 2019.

That way you will enjoy all the tremendous benefits for decades to come.

(If you are already a member of Sovereign Man: Confidential, our flagship international diversification service, stay tuned for our comprehensive Black Paper on Puerto Rico’s tax incentives, including the critical new updates you need to know about.)

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Bombshell: Alex Acosta Reportedly Claimed Jeffrey Epstein “Belonged To Intelligence”

Authored by Mike Krieger via Liberty Blitzkrieg blog,

To appreciate the significance of what I’m about to share, you really need to go back and read yesterday’s post: The Jeffrey Epstein Rabbit Hole Goes a Lot Deeper Than You Think.

In that piece, I shared many lesser known, but extremely bizarre facts about Jeffrey Epstein and the people around him. I also noted that it appeared his real job was to run a blackmail operation to ensnare some of the most wealthy and powerful people on earth. I alluded to the possibility that he was collecting this priceless information on behalf of a third party, and then just today we learn the following via the Daily Beast:

“Is the Epstein case going to cause a problem [for confirmation hearings]?” Acosta had been asked. Acosta had explained, breezily, apparently, that back in the day he’d had just one meeting on the Epstein case. He’d cut the non-prosecution deal with one of Epstein’s attorneys because he had “been told” to back off, that Epstein was above his pay grade. “I was told Epstein ‘belonged to intelligence’ and to leave it alone,” he told his interviewers in the Trump transition, who evidently thought that was a sufficient answer and went ahead and hired Acosta. (The Labor Department had no comment when asked about this.)…

For almost two decades, for some nebulous reason, whether to do with ties to foreign intelligence, his billions of dollars, or his social connections, Epstein, whose alleged sexual sickness and horrific assaults on women without means or ability to protect themselves is well-known in his circle, remained untouchable.

It should be noted the reason I attach credibility to the above is based on who wrote it, Vicky Ward. She has an extensive history of digging into Epstein, and wrote one of the earliest profiles on him back in 2003. As she notes in today’s article:

I spent many months on his trail in 2002 for Vanity Fair and discovered not only that he was not who he claimed to be professionally, but also that he had allegedly assaulted two young sisters, one of whom had been underage at the time. Very bravely, they were prepared to go on the record. They were afraid he’d use all his influence to discredit them—and their fear turned out to be legitimate.

As the article was being readied for publication, Epstein made a visit to the office of Vanity Fair’s then-editor, Graydon Carter, and suddenly the women and their allegations were removed from the article. “He’s sensitive about the young women,” Carter told me at the time. (Editor’s Note: Carter has previously denied this allegation.) He also mentioned he’d finagled a photograph of Epstein in a swimsuit out of the encounter. And there was also some feeble excuse about the article “being stronger as a business story.” (Epstein had also leaned heavily on my ex-husband’s uncle, Conrad Black, to try to exert his influence on me, which was particularly unwelcome, given that Black happened to be my ex-husband’s boss at the time.)

Many people had assumed Epstein was untouchable merely because he had so much dirt on so many powerful people, but it increasingly looks far bigger than that. It appears he may have been untouchable because he was systematically collecting this information on behalf of an intelligence agency. If so, we need to find out precisely who he was working for.

This should be the number one story in the country right now. Blackmail at this level is a genuine national security issue.

*  *  *

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Man Sues Anti-Homosexuality Group for Libel, Loses, Unsuccessfully Tries to Seal Court Opinions

From Judge John A. Woodcock, Jr.’s opinion Monday in Flanders v. Maine / Flanders v. Mass Resistance, 2019 WL 2929500 (D. Me.):

A plaintiff in several cases in this court, which include two petitions for writs of habeas corpus and an action for libel, slander, and assault, moves the Court to seal these cases from public access, or in the alternative, order that all references by which he could be identified be redacted from the opinions in each case. The Court denies the motion insofar as it requests that the entire court file be sealed and dismisses the motion without prejudice insofar as it requests that personal information be redacted.

Adam Flanders requests that the Court “remove from publication in their entirety or otherwise seal[ ] from public access” opinions in the following federal cases, or the cases in their entirety: Flanders v. Mass Resistance, No. 1:12-cv-00262-JAW; Flanders v. State of Maine, No. 2:12-cv-00277-JAW; Flanders v. State of Maine, No. 2:12-CV-00278-JAW. In the alternative, Mr. Flanders requests that “all personal identifiable information be redacted from these opinions, including but not limited to my name, address, telephone number, and state identifiers, and that the Court prevent search engines from indexing these opinions.”

[Here are the opinions in Flanders v. Mass Resistance and the two Flanders v. State cases; the Flanders v. Mass Resistance opinion provides a good deal more backstory on the dispute between the two parties. -EV]

As the basis for his motion, Mr. Flanders states that “there are several hate groups targeting me, publishing my personal information and encouraging others to stalk and harass me …. They use these government website publications to locate me and further target my family and I.” He says that he has received “hateful emails [and] death threats” and that these groups contacted his employer, resulting in termination of his employment. Mr. Flanders contends that “the safety and private of my family and I outweighs any public interest in these District Court cases.

A. Flanders v. Mass Resistance, No. 1-12-cv-0062-JAW

The first case Mr. Flanders seeks to have sealed, removed, or redacted, is a diversity suit he brought “over allegedly defamatory statements published by Brian Camenker following Mr. Flanders’ dissemination of a tell-all letter in 2007 exposing the questionable activities of a Rockland, Maine based homosexual youth group[ ]”, which the Court dismissed as “the allegations in Mr. Flanders’ Complaint are legally insufficient … and Mr. Flanders’ additional filings … lack merit.”

B. Flanders v. State of Maine, No. 2-12-cv-0277-JAW and Flanders v. State of Maine, No. 2:12-cv-00278-JAW

Mr. Flanders also requests that the Court seal, remove from publication, or redact his two petitions for habeas corpus challenging the validity of multiple state of Maine convictions …. The first petition challenges Mr. Flanders’ August 27, 2008 convictions in Knox County Superior Court for Sexual Abuse of a Minor, and for a probation violation in the same case. Flanders v. State of Maine, No. 2-212-cv-278. The second petition challenges a number of Mr. Flanders’ state of Maine convictions in Knox County Superior Court for Aggravated Assault Class B, Criminal Threatening Class C, Violation of a Protective Order Class D, and Violation of Conditions of Release Class E. The Court denied and dismissed both petitions.

Discussion …

“[T]here is a strong common law presumption favoring public access to judicial proceedings and records.” That presumption is “rooted in a desire to allow the citizenry to monitor the functioning of our courts, thereby insuring quality, honesty and respect for our legal system.” … In civil cases, “the plaintiff instigates the action, and, except in the most exceptional cases, must be prepared to proceed on the public record.”

Once the presumption of public access attaches, it remains possible for a court to seal a document…. However, before sealing a judicial document, the First Circuit mandates that the court issue “particularized findings,” and that where some portions of a document may be sealed, “redaction remains a viable tool for separating this information from that which is necessary to the public’s appreciation of [the court’s order].” In this District, to “obtain an order allowing one or more documents or pleadings to be sealed, a party [must] electronically file … a motion to seal together with the separate document(s) or pleading(s) sought to be sealed.” D. ME. LOC. R. 7A. The motion must also “propose specific findings as to the need for sealing and the duration the document(s) should be sealed ….” “In making specific findings as to the need for sealing and the duration the document(s) shall be sealed, the Court may incorporate by reference the proposed findings in the motion to seal.”

1. Request to Seal Cases in their Entirety

First, Mr. Flanders’ request to seal his three civil cases in its entirety does not comport with Local Rule 7A. Mr. Flanders has not “proposed specific findings as to the need for sealing and the duration the document(s) should be sealed.” Second, Mr. Flanders’ motion does not provide a sufficient basis for sealing the records of each case in its entirety. Mr. Flanders contends that “the safety and privacy of my family and I outweighs any public interest in these District Court cases,” and notes that the opinions are “non-precedential” criminal appeals of state convictions over ten years old. Mr. Flanders does not address why redaction of personal identifiers in these cases would not sufficiently protect the safety and privacy of himself and his family.

Two of the cases Mr. Flanders moves to seal are actions brought by Mr. Flanders challenging the validity of his state of Maine criminal convictions. The convictions themselves are matters of the public record of the state of Maine.

Although the Court takes seriously any threats to Mr. Flanders or his family may have endured, Mr. Flanders has not demonstrated a sufficiently compelling reason to override the common law right of public access to two criminal appellate cases in their entirety. When Mr. Flanders himself instigated these three civil actions in public court, he had to be prepared to proceed on the public record and he has not shown an “exceptional case” which would rebut the presumption of public access….

2. Request to Redact Personal Identifiers

Mr. Flanders requests, in the alternative, that “the Court [ ] order that all personally identifiable information be redacted from these opinions, including but not limited to my name, address, telephone number and state identifiers, and that the Court prevent search engines from indexing these opinions.” …

Federal Rule of Civil Procedure 5.2 governs privacy protections for filings made with the court. The Rule allows the redaction of a “filing with the court that contains an individual’s social-security number, taxpayer-identification number, or birth date, the name of an individual known to be a minor, or a financial-account number.” The redaction requirement does not apply to “the official record of a state-court proceeding,” or to “a pro se filing in an action brought under 28 U.S.C. §§ 2241, 2254, or 2255.” The Rule also provides that “[a] person waives the protection of Rule 5.2(A) as to the person’s own information by filing it without redaction and not under seal.”

First, Mr. Flanders failed to comply with the requirements of the local rules because he filed the motions without proposed redactions. Second, because he filed his motions without redaction, he waived the protection of Rule 5.2(A) as to his own information.

Third, at first glance, the Court’s opinions in these cases do not contain any personal identifiers as that term is legally defined. The Court’s opinions mention Mr. Flanders’ name and the docket numbers and state courts in which he was convicted, but those identifiers are not usually redactable except in unusual circumstances not present here….

In contrast, the exhibits filed along with Mr. Flanders’ Motion for Order of Removal of Personally Identifiable Information, which he did not file under seal, includes personal identifiers. The Court finds that by filing the instant motion not under seal, Mr. Flanders waived the protection afforded under Rule 5.2(a) as to personal identifiers included in his motion for order of removal of personally identifiable information….

If Mr. Flanders seeks to file a redacted version of any of his court filings in the above cases in accordance with Federal Rule of Civil Procedure 5.2(a), he may do so, but in doing so, he must comply with the District’s local rules.

In 2017 and 2018, Adam Flanders had also asked Google to deindex various posts sharply criticizing him on the Mass Resistance site and related sites (e.g., this LifeSiteNews item), as well as various documents from his earlier cases that were archived on the Mass Resistance site, see here, here, and here. He attached a Maine restraining order that he had obtained against Brian Camenker (the founder of Mass Resistance), which barred “harassing” of Flanders and “direct or indirect contact” with Flanders, and which was based on this complaint. As best I can tell, Google didn’t act on the deindexing requests.

When I asked Flanders about the first of his deindexing requests, back in 2017, he responded cordially and in some detail. He first argued that some of the materials he was trying to deindex included “personally identifying information,” such as an “image of [his] signature [that] exists within some of the documents,” “[his] driver’s license number, home addresses, phone number, and other personal information,” and “a police photo of [him] that includes an image of a hospital intake bracelet. Depending on the resolution of the image published, some of the information on that bracelet can be deciphered.” He added that “he realize[d] some of this information is a matter of public record,” and that some of it “is contained in official court documents.”

He went on to make the following argument; I pass this along just to set forth his views, and not because I agree with any of this as a factual or a normative matter:

My primary concern when I sought the Protection from Harassment Order is (and continues to be) my safety and the safety of my family. [The author of some of the material] engaged in a continuing course of conduct over the course of months and years that was not only intended to defame me and promote the political and financial interests of … Mass Resistance, which is recognized as a hate group by the Southern Poverty Law Center.

I strongly believe [these] publications were intended to stir vigilante elements in our society to take action, including violent action, against me…. [A] number of publications, … make[] false allegations about me molesting young children, suggesting collusion with law enforcement, and encourage[] the public to “fight back” against people like me. [They] provide[] my personal information and address alongside these allegations and what can only be interpreted as a call to arms.

This caused me a great deal of distress and I received a number of emails from people in response to [the] publications. Some of these were positive while others were threatening. There were also copycat publications by other organizations, including another hate group, Americans for Truth About Homosexuality. Public comments on some of these publications included violent threats against me, such as how I should be murdered….

The Order does not directly command the removal of the information, however it does command the removal indirectly. The order found that Mr. Camenker committed harassment with his publications (refer to the attached complaint). Specifically, the order commands Mr. Camenker to cease harassment against me. Harassment includes Stalking, which the Maine Revised Statutes Title 17-A §210-A(2)(A) extends to include “communicates to or about a person” (provided that communication causes emotional distress and so on).

Please don’t misunderstand. I support free speech, but, as I’m sure you are aware, the purpose of free speech, as framed in our Constitution, is primarily for the protection of private citizens against government oppression. I am not a representative of the government nor have I ever worked for the government. I am a private citizen. There are inherent limits to free speech and even the founders of our nation recognized abuses, some of which are recognized today as fighting words and incitement to criminal action. I doubt most Americans, yourself included, support completely unrestricted speech. Unrestricted free speech would make legal threats of violence, the dissemination of confidential medical information, and publication of child pornography, among other things. There are no doubt very good reasons for limits on free speech, and restraining orders are just one tool that private citizens have to protect themselves.

I support anyone’s right to publish their opinions about a topic, including opposition to homosexuality, but targeting a private citizen and repeatedly making false claims about that individual, alongside that individual’s home address and a call to vigilante action against that individual, is not protected speech. I would also argue it lacks value as free speech, but for the purposes of the Protection from Harassment Order, my argument was limited to my safety. Belfast District Court agreed that Mr. Camenker’s publications constitute harassment under Maine law….

The conditions for which the order was granted still exist today and so I could, in theory, pursue another order. Federal laws regarding Stalking, specifically 18 USC § 2261A(2), also arguably prohibit Mr. Camenker’s actions (see U.S. v. Osinger, 9th Circuit, 2014). As you may or may not know, I pursued a federal defamation lawsuit against Mr. Camenker. Although the lawsuit itself was unsuccessful, to my knowledge Mr. Camenker and his associates never created any further publications following that lawsuit. A number of other copycat publications have removed their publications about me following the Protection from Harassment Order, lawsuits, and DMCA complaints.

The ability to find information about Mr. Camenker’s harassing publications about me depend in part upon search engines such as Google. It is my hope that US law will eventually embrace the European “Right to Be Forgotten” model. In light of recent state laws regarding harassment, cyberbullying, and “revenge porn,” as well as efforts at the federal level, I am optimistic that we are headed in that general direction. I believe that victims of harassment such as myself, will soon have more tools to protect ourselves and our privacy.

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