Supreme Court Hears Arguments Over Whether Religious Agencies Can Reject Gay Foster Parents

ACB_1161x653

The Supreme Court this morning spent two hours debating whether the city of Philadelphia can decline to contract with a Catholic organization to place foster children with families if that organization holds religious objections to allowing same-sex couples to participate.

The complicated case pits the general application of discrimination laws against the boundaries of religious liberty. Based on the lines of questioning today, it’s not entirely clear where the Court’s justices will fall.

The case, Fulton v. Philadelphia, revolves around Catholic Social Services (CSS), which contracts with the city to provide a number of child welfare services. Because of religious objections to same-sex marriage recognition, it does not want to screen or certify gay couples as potential foster families and does not place children with them. This violates Philadelphia’s anti-discrimination laws, and in 2018, the city stopped contracting CSS for this service, though to this date apparently no gay couples have actually come to CSS looking to foster kids.

CSS and foster parents connected to CSS have sued for discrimination, claiming that they are exercising their right to religious expression and demanding that Philadelphia restore the contract. The City of Philadelphia argues that this is not a case of religious discrimination—the rules are being applied neutrally and without animosity toward CSS’s religious beliefs. The city’s lawyers point out that CSS is still getting $26 million in annual funding from Philadelphia for the child services they provide. They’ve only cut off the placement contract.

The questioning today probed many different areas about the business relationship between CSS and Philadelphia. Several justices (including newly seated Justice Amy Coney Barrett) questioned whether CSS was a contractor with the city (giving the city more power to set guidelines) or a licensed private partner who provided a service to the city.

That may seem like a strange place to take the discussion, but the reason became clear in Barrett’s line of questioning toward Neal Katyal, the attorney for Philadelphia. The city controls who is permitted to participate in this process of certifying foster parents, which led Barrett to hypothesize a situation where the government takes control of all hospitals but then contracts out with private parties to operate the hospitals. Could the state then say, “You can get exemptions from some medical procedures, but every hospital must perform abortions?”

Katyal’s response was that a government takeover of all hospitals would raise any number of constitutional issues and couldn’t really address the hypothetical. He did attempt to reject the characterization of a city-run foster parent monopoly by arguing that this case involves only those children who are wards of the state. For those children, the government has a compelling interest in establishing and enforcing neutral guidelines about who qualifies as appropriate parents, including same-sex couples.

Much was made of the fact that CSS’s refusal to accommodate same-sex couples does not actually stop these couples from becoming foster parents. CSS is just one of 30 agencies working with foster children in Philadelphia and nobody could find any examples of same-sex parents in Philadelphia being unable to actually become foster parents.

But the city’s attorneys argued that if Philadelphia allowed CSS to cite religious belief for an exemption from its anti-discrimination law, then there could potentially be a domino effect of religious organizations seeking exemptions to discriminate for a whole host of reasons, including the possibility that they’d turn away couples of different faiths. The justices and the lawyers all seemed to agree that the Supreme Court would reject any attempt to use religion as an excuse to deny adoption opportunities to interracial couples. But now the court must contend with real religious conflicts raised by recent Supreme Court decisions mandating same-sex marriage recognition and forbidding workplace discrimination against gay and trans people, and several justices noted back in those rulings this conflict was coming. How do these sincerely held religious convictions intersect with government contract rules?

Justices Samuel Alito and Brett Kavanaugh were both most vocally on CSS’s side. Alito said this dispute stems from Philadelphia not being able to “stand the message that the Archdiocese and CSS are sending” by not wanting to work with same-sex couples. Kavanaugh accused the city of “looking for a fight” and failing to consider a balance between religious rights and same-sex marriage rights with the way they’re enforcing the anti-discrimination law. Katyal resisted this characterization, noting that they had won in the lower courts and that the attorneys representing CSS are forcing the fight.

Toward the end of oral arguments, Justice Sonia Sotomayor asked attorney Jeff Fisher, who was representing nonprofits who agree with the city’s position, if there was a possible compromise here—a strong suggestion the justices really don’t want to establish a big precedent, given the complicated nature of this case and foster care and the different policies that come into play when screening parents versus matching children to homes. Fisher noted that the city was not asking the CSS to endorse same-sex marriage when it certifies that a same-sex couple meets the city’s standards for becoming foster parents and can include a disclaimer as such.

Lori Windham, representing CSS and foster parent Sharonell Fulton on behalf of the Becket Fund for Religious Liberty, is pushing the Supreme Court to reconsider the 1990 precedent Employment Division v. Smith, which held that the government is generally not violating a person’s free exercise clause by enforcing laws as long as such laws are neutrally applied.

While the Smith decision, written by Justice Antonin Scalia, was discussed throughout today’s hearing, there didn’t really seem to be a lot of interest in going so far as to reverse the ruling. It is, however, clear that several justices, including Barrett, are concerned that this case could end up having wider implications for religious liberty regardless of which way they rule. That suggests the possibility of a very specific, narrow ruling and not some new precedent.

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Supreme Court Hears Arguments Over Whether Religious Agencies Can Reject Gay Foster Parents

ACB_1161x653

The Supreme Court this morning spent two hours debating whether the city of Philadelphia can decline to contract with a Catholic organization to place foster children with families if that organization holds religious objections to allowing same-sex couples to participate.

The complicated case pits the general application of discrimination laws against the boundaries of religious liberty. Based on the lines of questioning today, it’s not entirely clear where the Court’s justices will fall.

The case, Fulton v. Philadelphia, revolves around Catholic Social Services (CSS), which contracts with the city to provide a number of child welfare services. Because of religious objections to same-sex marriage recognition, it does not want to screen or certify gay couples as potential foster families and does not place children with them. This violates Philadelphia’s anti-discrimination laws, and in 2018, the city stopped contracting CSS for this service, though to this date apparently no gay couples have actually come to CSS looking to foster kids.

CSS and foster parents connected to CSS have sued for discrimination, claiming that they are exercising their right to religious expression and demanding that Philadelphia restore the contract. The City of Philadelphia argues that this is not a case of religious discrimination—the rules are being applied neutrally and without animosity toward CSS’s religious beliefs. The city’s lawyers point out that CSS is still getting $26 million in annual funding from Philadelphia for the child services they provide. They’ve only cut off the placement contract.

The questioning today probed many different areas about the business relationship between CSS and Philadelphia. Several justices (including newly seated Justice Amy Coney Barrett) questioned whether CSS was a contractor with the city (giving the city more power to set guidelines) or a licensed private partner who provided a service to the city.

That may seem like a strange place to take the discussion, but the reason became clear in Barrett’s line of questioning toward Neal Katyal, the attorney for Philadelphia. The city controls who is permitted to participate in this process of certifying foster parents, which led Barrett to hypothesize a situation where the government takes control of all hospitals but then contracts out with private parties to operate the hospitals. Could the state then say, “You can get exemptions from some medical procedures, but every hospital must perform abortions?”

Katyal’s response was that a government takeover of all hospitals would raise any number of constitutional issues and couldn’t really address the hypothetical. He did attempt to reject the characterization of a city-run foster parent monopoly by arguing that this case involves only those children who are wards of the state. For those children, the government has a compelling interest in establishing and enforcing neutral guidelines about who qualifies as appropriate parents, including same-sex couples.

Much was made of the fact that CSS’s refusal to accommodate same-sex couples does not actually stop these couples from becoming foster parents. CSS is just one of 30 agencies working with foster children in Philadelphia and nobody could find any examples of same-sex parents in Philadelphia being unable to actually become foster parents.

But the city’s attorneys argued that if Philadelphia allowed CSS to cite religious belief for an exemption from its anti-discrimination law, then there could potentially be a domino effect of religious organizations seeking exemptions to discriminate for a whole host of reasons, including the possibility that they’d turn away couples of different faiths. The justices and the lawyers all seemed to agree that the Supreme Court would reject any attempt to use religion as an excuse to deny adoption opportunities to interracial couples. But now the court must contend with real religious conflicts raised by recent Supreme Court decisions mandating same-sex marriage recognition and forbidding workplace discrimination against gay and trans people, and several justices noted back in those rulings this conflict was coming. How do these sincerely held religious convictions intersect with government contract rules?

Justices Samuel Alito and Brett Kavanaugh were both most vocally on CSS’s side. Alito said this dispute stems from Philadelphia not being able to “stand the message that the Archdiocese and CSS are sending” by not wanting to work with same-sex couples. Kavanaugh accused the city of “looking for a fight” and failing to consider a balance between religious rights and same-sex marriage rights with the way they’re enforcing the anti-discrimination law. Katyal resisted this characterization, noting that they had won in the lower courts and that the attorneys representing CSS are forcing the fight.

Toward the end of oral arguments, Justice Sonia Sotomayor asked attorney Jeff Fisher, who was representing nonprofits who agree with the city’s position, if there was a possible compromise here—a strong suggestion the justices really don’t want to establish a big precedent, given the complicated nature of this case and foster care and the different policies that come into play when screening parents versus matching children to homes. Fisher noted that the city was not asking the CSS to endorse same-sex marriage when it certifies that a same-sex couple meets the city’s standards for becoming foster parents and can include a disclaimer as such.

Lori Windham, representing CSS and foster parent Sharonell Fulton on behalf of the Becket Fund for Religious Liberty, is pushing the Supreme Court to reconsider the 1990 precedent Employment Division v. Smith, which held that the government is generally not violating a person’s free exercise clause by enforcing laws as long as such laws are neutrally applied.

While the Smith decision, written by Justice Antonin Scalia, was discussed throughout today’s hearing, there didn’t really seem to be a lot of interest in going so far as to reverse the ruling. It is, however, clear that several justices, including Barrett, are concerned that this case could end up having wider implications for religious liberty regardless of which way they rule. That suggests the possibility of a very specific, narrow ruling and not some new precedent.

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Bitcoin Tops $14k As Billion-Dollar ‘Silk Road’ Wallet Moves For First Time Since 2015

Bitcoin Tops $14k As Billion-Dollar ‘Silk Road’ Wallet Moves For First Time Since 2015

Tyler Durden

Wed, 11/04/2020 – 14:25

After a tempestuous 24 hours, Bitcoin prices are back above $14,000 this afternoon, officially trading for 100 straight days above $10,000…

Source: Bloomberg

This move comes as CoinTelegraph’s Turner Wright notes that CipherTrace speculated that the anonymous user made the transactions “to stay up to date with the Bitcoin network,” but it may have been hacked.

image courtesy of CoinTelegraph

An anonymous crypto user has just moved 69,370 Bitcoin from an address associated with the Silk Road darknet market that more recently has become a popular hacking target.

According to a Nov. 3 report from crypto intelligence firm CipherTrace, the recent movement involving two transactions adding up to 69,370 Bitcoin (BTC) — or more than $960 million at the time of publication — originated from an address connected with the Silk Road marketplace shut down in 2013. The crypto user first sent 1 BTC — likely as a test transaction — before moving the bulk of the coins.

CipherTrace speculated the anonymous user made the transactions “to stay up to date with the Bitcoin network” by switching between address formats. As the last time anyone moved funds associated with the defunct darknet market was in April 2015, the BTC wallet would reportedly also have access to all Bitcoin Cash (BCH) and Bitcoin SV (BSV) associated with the tokens’ hard forks.

However, the firm didn’t rule out hacking as a possibility:

“These movements could possibly mean that the wallet owner is moving funds to new addresses to prevent hackers from accessing the wallet.dat file or that hackers have already cracked the file.”

The Silk Road funds were contained in a wallet that has been circulating among hackers for more than two years. In September, a Twitter user claiming to have the wallet.dat file for the wallet put out a call to the crypto community for solutions on how to gain access to the 69,370 coins, even suggesting a quantum computer as a potential way to determine the private keys.

Silk Road was a darknet market that let users buy and sell illicit goods such as weapons and stolen credit card information, but the majority of listings were for illegal drugs. Ross Ulbricht, the site’s founder, is currently serving two life sentences without the possibility of parole after being found guilty of money laundering, computer hacking and conspiracy to traffic narcotics. He still provides periodic analyses on the Bitcoin market from prison.

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Massachusetts Voters Affirm the Right To Repair Your Own Car

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The most expensive ballot initiative campaign in Massachusetts history ended with a resounding victory for property rights as voters approved the so-called “right-to-repair” ballot initiative.

With more than 96 percent of precincts reporting by Wednesday afternoon, nearly 75 percent of voters had approved Massachusetts Question 1. The initiative’s passage means that car manufacturers will be required to provide vehicle diagnostic data to consumers and independent mechanic shops. Voters in the state approved a similar right-to-repair ballot measure in 2012, but this year’s election closes a loophole that auto manufacturers had been using to skirt the requirements established by that earlier vote.

The state’s existing law—which became the basis for new national standards implemented by the auto industry in 2014—required that vehicle diagnostic data was made available via an open platform. In short, that means that if you own a Toyota, you don’t have to go to a Toyota-affiliated repair shop to find out why your “check engine” light is on. Any repair shop can plug a device into any car and read the data.

But the earlier law exempted wireless data transmitted via a car’s telematics system. Increasingly, car manufacturers have been relying on telematics to transmit crucial data, potentially leaving independent repair shops in the dark. The new ballot initiative closes that loophole and requires wirelessly transmitted data to fall under the same open platform rules starting in 2022.

What might seem like a technical adjustment to a pretty uncontroversial rule, however, turned into a major political battle in the state. The Massachusetts Right To Repair Coalition, a campaign group formed by independent mechanics and national car repair chains like Auto Zone and O’Reilly Auto Parts, dumped more than $24 million into the race. The Coalition for Safe and Secure Data, a group backed by Ford, General Motors, Toyota, and other car manufacturers, spent more than $26 million opposing the initiative.

Much of the campaign centered around sensational accusations that the initiative’s passage would allow cars to be remotely hacked for nefarious reasons. Even the National Highway Traffic Safety Administration waded into the fight, warning in a letter to lawmakers in July that Question 1’s passage would create “an incredible amount of danger.”

Even though there are “some genuine concerns that increasing access to a car’s data could set the platform up for cybersecurity vulnerabilities,” Reason’s Scott Shackford explained last month, “that’s an argument about being careful with technological development, not an excuse for depriving consumers of access to the data produced by the vehicles that they own.”

Consumers should have the right to control the data created by the products they own—and that’s true not only for automobiles. Consider the outcome of this expensive ballot initiative fight in Massachusetts to be one more small victory for freedom on an Election Day where that was an under-the-radar trend.

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Victories for Liberty, Property Rights, and Nondiscrimination on Three Major California Ballot Measures

CaliforniaFlag3

While the final vote count is not yet known, I am happy to report that there have been good results on at least three of the four important California ballot measures that I discussed in this post. California voters overwhelmingly rejected Proposition 16 (which would have legalized racial, ethnic and gender preferences) preferences in admissions to state universities, and the hiring of government employees and contractors. They also rejected Proposition 21, which would have expanded rent control in the state. On the other hand, they voted for Proposition 22, which exempts app-based transportation and delivery drivers (like those work for Uber and Lyft) from California’s terrible AB 5 law, which forces employers to classify these and many other “gig economy” workers as full-time employees. All three of these results appear to have been decided by large double digit margins.

The vote is still too close to call on Proposition 15, which would eliminate some key limitations on property taxes. But as of the time I am writing this post, the “no” side has a narrow lead of about 3 points, with over 70% of the vote counted. If that lead holds up, it too would be a good result.

In my previous post on these ballot measures, I explained their broader significance for the nation, as well as for the state of California. I am a particularly hopeful that the defeat of Proposition 21 will break the momentum of the broader national movement to expand rent control, and that the success of 22 will undermine efforts to pass imitations of AB 5 in other states or—worse still—enact a nationwide version.

NOTE: As indicated in my last post, my wife Alison Somin has been involved in efforts to oppose Proposition 16. Her employer, the Pacific Legal Foundation, has represented plaintiffs in litigation challenging the constitutionality of AB 5. I do not have any financial stake in either effort, and my views on both issues are ones I have held since long before Alison took a position at PLF in May of this year. But I disclose this information for the sake of transparency, and to avoid any imputation that I’m somehow hiding a conflict of interest.

 

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Massachusetts Voters Affirm the Right To Repair Your Own Car

dreamstime_xl_149776429

The most expensive ballot initiative campaign in Massachusetts history ended with a resounding victory for property rights as voters approved the so-called “right-to-repair” ballot initiative.

With more than 96 percent of precincts reporting by Wednesday afternoon, nearly 75 percent of voters had approved Massachusetts Question 1. The initiative’s passage means that car manufacturers will be required to provide vehicle diagnostic data to consumers and independent mechanic shops. Voters in the state approved a similar right-to-repair ballot measure in 2012, but this year’s election closes a loophole that auto manufacturers had been using to skirt the requirements established by that earlier vote.

The state’s existing law—which became the basis for new national standards implemented by the auto industry in 2014—required that vehicle diagnostic data was made available via an open platform. In short, that means that if you own a Toyota, you don’t have to go to a Toyota-affiliated repair shop to find out why your “check engine” light is on. Any repair shop can plug a device into any car and read the data.

But the earlier law exempted wireless data transmitted via a car’s telematics system. Increasingly, car manufacturers have been relying on telematics to transmit crucial data, potentially leaving independent repair shops in the dark. The new ballot initiative closes that loophole and requires wirelessly transmitted data to fall under the same open platform rules starting in 2022.

What might seem like a technical adjustment to a pretty uncontroversial rule, however, turned into a major political battle in the state. The Massachusetts Right To Repair Coalition, a campaign group formed by independent mechanics and national car repair chains like Auto Zone and O’Reilly Auto Parts, dumped more than $24 million into the race. The Coalition for Safe and Secure Data, a group backed by Ford, General Motors, Toyota, and other car manufacturers, spent more than $26 million opposing the initiative.

Much of the campaign centered around sensational accusations that the initiative’s passage would allow cars to be remotely hacked for nefarious reasons. Even the National Highway Traffic Safety Administration waded into the fight, warning in a letter to lawmakers in July that Question 1’s passage would create “an incredible amount of danger.”

Even though there are “some genuine concerns that increasing access to a car’s data could set the platform up for cybersecurity vulnerabilities,” Reason’s Scott Shackford explained last month, “that’s an argument about being careful with technological development, not an excuse for depriving consumers of access to the data produced by the vehicles that they own.”

Consumers should have the right to control the data created by the products they own—and that’s true not only for automobiles. Consider the outcome of this expensive ballot initiative fight in Massachusetts to be one more small victory for freedom on an Election Day where that was an under-the-radar trend.

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Victories for Liberty, Property Rights, and Nondiscrimination on Three Major California Ballot Measures

CaliforniaFlag3

While the final vote count is not yet known, I am happy to report that there have been good results on at least three of the four important California ballot measures that I discussed in this post. California voters overwhelmingly rejected Proposition 16 (which would have legalized racial, ethnic and gender preferences) preferences in admissions to state universities, and the hiring of government employees and contractors. They also rejected Proposition 21, which would have expanded rent control in the state. On the other hand, they voted for Proposition 22, which exempts app-based transportation and delivery drivers (like those work for Uber and Lyft) from California’s terrible AB 5 law, which forces employers to classify these and many other “gig economy” workers as full-time employees. All three of these results appear to have been decided by large double digit margins.

The vote is still too close to call on Proposition 15, which would eliminate some key limitations on property taxes. But as of the time I am writing this post, the “no” side has a narrow lead of about 3 points, with over 70% of the vote counted. If that lead holds up, it too would be a good result.

In my previous post on these ballot measures, I explained their broader significance for the nation, as well as for the state of California. I am a particularly hopeful that the defeat of Proposition 21 will break the momentum of the broader national movement to expand rent control, and that the success of 22 will undermine efforts to pass imitations of AB 5 in other states or—worse still—enact a nationwide version.

NOTE: As indicated in my last post, my wife Alison Somin has been involved in efforts to oppose Proposition 16. Her employer, the Pacific Legal Foundation, has represented plaintiffs in litigation challenging the constitutionality of AB 5. I do not have any financial stake in either effort, and my views on both issues are ones I have held since long before Alison took a position at PLF in May of this year. But I disclose this information for the sake of transparency, and to avoid any imputation that I’m somehow hiding a conflict of interest.

 

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Here’s Why Both Bonds & Stocks Are Bid

Here’s Why Both Bonds & Stocks Are Bid

Tyler Durden

Wed, 11/04/2020 – 14:10

US equity and bond markets are at face-value in disagreement over how ‘great’ whatever headline you choose to consider descriptive of the current state of play with the election.

Stocks are soaring, led by growthy mega-tech names…

And bonds are aggressively bid with long-end yields down dramatically overnight…

So WTF is going on?

Well, first things first, what happened overnight was the end of the ‘blue-wave’ massive-stimulus spend narrative, which has a definite ‘deflationary’ impact on the economy…

And that has forced and unwind of the reflation trade and a reversion into growth stocks…

Furthermore, as Charlie McElligott had warned, the massive ‘crash risk’ positioning into the election was always going to act as a catalyst for volatility collapse if the worst case scenario did not occur.

“I too have pounded the table on the idea that a lot of this sticky vol from over-hedging “crash” event risk could then mechanically “slingshot” Equities higher into the year end, particularly as tail-risk passes and hedges are then unwound back into the market bc those options will be decaying hard into imminent expirations.”

And that’s what we’re seeing in VIX…

“So in the sense that last night saw us clear said “left-tail” crash-risk of a shock “Blue Wave” and the negative long-term implications of “magnitude” higher taxes and re-regulation, we are then rationally beginning to see implied vols and “Vol of Vol” get hammered and helping my thesis realize today (UX1 -2.9 vols, VVIX -16.7), which to me confirms that Vanna flows alone are going to be very supportive of higher Equities prices from here, especially as divided government will keep the pressure on the Fed to maintain max “easy” financial conditions going-forward in the background”

On the bond side, clearly a deflationary impulse is ‘bullish’ but there is a massive, record, overhang of short positioning that is about to (or is already) feeling serious squeeze pain…

“The bond market was efficiently priced for a blue sweep and potential for higher deficit spending,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale SA. Now, “it is looking less likely that we will have the final results soon. So you are seeing a flight to safety as bond investors brace for uncertainty.”

A record short by a long way…

The US election was supposed to pave the way for a sell-off in Treasuries as a blue-wave spending spree sparked inflationary excess, but the opposite has happened in a race that remains too close to call (stripping us of concerns surrounding the long-term negative implications of higher taxes and wholesale re-regulation of US industry) and has killed the blue wave narrative.

“The close fight has raised the specter of contested elections and thrown doubts over fiscal stimulus,” said Eugene Leow, a fixed-income strategist in Singapore at DBS Group Holdings Ltd. “Depending on how messy things get, 10-year yields can drop to the 0.7%-0.75% area in the short-term.”

Yields on the 10-year Treasury bond fell nearly 14 basis points, the largest daily drop in seven months

“The short Treasuries trade is really coming back to bite,” said George Boubouras, head of research at hedge fund K2 Asset Management in Melbourne.

“Investors are clearly pricing in a ‘no blue wave’ scenario,” a higher possibility of a Trump victory and a more fiscally conservative stance, he said.

And so that’s why both bonds (deflationary regime and short-squeeze) and stocks (growth rotation and crash-risk unwind) are both soaring this morning…

For now, it’s “buy all the things”, but as Simon Harvey, a foreign-exchange analyst at Monex Europe, warned, “a partisan deadlock can be as bad, if not worse, for markets than this prolonged period of uncertainty.”

It “will only lead to markets downgrading their global growth outlook further.”

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How Will The Next President Impact Gold?

How Will The Next President Impact Gold?

Tyler Durden

Wed, 11/04/2020 – 13:56

Authored by Michael Maharrey via SchiffGold.com,

How will the outcome of the US election impact the price of gold moving forward?

Of course, there is no way to know for sure. US politics is just one of the myriad factors that influence the gold market and you never know how things will play out. But there are reasons to believe the future will remain bullish for the yellow metal no matter who ends up sitting in the Oval Office.

As of Wednesday morning, the election was still up in the air. But one thing is clear. It’s not going to be the Biden landslide many expected.

US stock markets rallied Monday and Tuesday before the election on the expectation of a Biden victory and Democrat control of both houses of Congress. This seems counter-intuitive. After all, Biden has promised higher corporate taxes. We know Democrats tend to favor tighter regulations. This hardly seems like an ideal scenario for businesses, and by extension, stocks. But the markets don’t seem to be particularly concerned about the actual economy. It’s all about fiscal stimulus. And most people believe we’ll get the biggest stimulus package the quickest if Democrats control everything in Washington D.C.

But the reality is we’ll almost certainly get stimulus no matter who wins. This economy is built on stimulus. The powers that be will ensure the stimulus spigot stays open. Trump has already said he wants a stimulus package even bigger than Democrats were calling for. And if for some reason they can’t work out a post-election stimulus plan, the Fed will remain poised to inject printed money into the economy. We’ll get more monetary stimulus regardless.

And this is good for gold. Whether the stimulus comes from Congress, or the Fed, or both, the end result is more quantitative easing. That means more inflation. And ultimately inflation is better for gold than it is for stocks.

Big Picture

Historically, the party controlling the White House has had very little effect on the price of gold. According to a World Gold Council Report, dating back to 1971, gold returns were 11% on average per year during Democratic presidencies and 10% during Republican administrations.

Gold returns have been higher in the year following a change of party in the White House, but only marginally. When the challenger wins, gold returns have averaged 6.5% compared to a 7.9% return when the incumbent wins.

The WGC report also points out that while the US is a large market, it is not the sole driver of gold demand. Gold is a global market. The US accounts for only about 7% of physical gold demand. China and India dominate the market, with the Chinese accounting for about 26% of demand and India making up 22%. As the WGC report put it, “There is still a large portion of physical gold demand that is influenced by global dynamics well beyond the US election.”

Of course, American politics does have a major impact on the global economy and world markets, so we can’t simply discount what happens in the US as irrelevant. Nevertheless, the economic dynamics in play won’t shift significantly with the outcome of the presidential election.

Trump nor Biden will wave a magic wand and fix the economic destruction inflicted by government actions in response to the COVID-19 pandemic. The wounds are deep. Neither man will stop overleveraged companies from shutting down. Neither man will put people back to work. All they can do is borrow and spend money – which we’ve already shown is good for gold.

And neither man will alter the monetary policy of the Federal Reserve.

The central bank has already promised it will keep interest rates at zero for years to come. It will continue QE infinity. It has made clear it plans to ignore any inflation threat. And there is no exit strategy from this extraordinary monetary policy. The printing presses in the Eccles Building will continue to churn out dollar bills. It is setting the stage for a major collapse in the dollar and Biden nor Trump will change that.

In my view, that’s the ball you need to keep your eyes on. Presidential politics will be window-dressing. Not irrelevant, but a sideshow. The real action is at the Fed.

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Democrats’ Crumbling Hopes of a Blue Wave Make Divided Government More Likely

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As the final votes continue to be tallied in elections across the country, Democrats are likely to keep their House majority, though hopes of surpassing the GOP in the Senate dimmed on election night as several key Democrat-leaning toss-up races were either called for or led by incumbent Republicans. Such results could set the scene for a divided government, with the Senate acting as a powerful check on a Joe Biden administration should he win the presidency.

In one swing race, Sen. Joni Ernst (R–Iowa) handily bested her Democratic challenger, Theresa Greenfield, earning 52 percent of the vote to Greenfield’s 45 percent. Ernst had been down consistently in the polls, though she came out on top in a final survey before election night. In the presidential race, the state went for Donald Trump.

Perhaps more surprisingly, Sen. Susan Collins (R–Maine) defeated Democrat Sara Gideon in a win that was called Wednesday afternoon. And though the victor of the North Carolina Senate race is yet to be determined, Sen. Thom Tillis, a Republican, has a two percentage point lead over Democrat Cal Cunningham.

To some degree, Collins’s win and Thillis’s likely victory are an indictment of the polling strategy: Virtually every poll showed the two behind their competitors, as if their losses were a foregone conclusion.

Democrats were able, however, to flip two Senate seats: Former Colorado Gov. John Hickenlooper took a seat from Sen. Cory Gardner (R–Colo.), and Mark Kelly bested Sen. Martha McSally (R–Ariz.) for her seat in Arizona.

In Alabama, Republican Tommy Tuberville defeated Sen. Doug Jones, a Democrat, flipping one of the state’s Senate seats back to red, as was expected.

Long shot goals for Democrats included wins in South Carolina and Kentucky, though Republican Sens. Lindsey Graham and Mitch McConnell both won out over their challengers early in the evening. Sen. Steve Daines, a Republican, claimed victory in Montana, pushing back a bid from Democratic Gov. Steve Bullock. The fate of the Georgia race between Republican Sen. David Perdue and Democratic challenger Jon Ossoff is unclear, though as of this writing Perdue holds a 4-point lead. 

If the toss-up races continue to trend in the current direction, Republicans would secure a 52–48 majority—one seat fewer than they currently have, but a majority nonetheless.

Neither Joe Biden nor Donald Trump have been able to claim victory. On Wednesday afternoon, Biden was up in Wisconsin, Michigan, and Nevada with a chunk of mail-in ballots yet to be counted, which typically tilt in favor of Democrats. If Biden ekes out a win, a GOP Senate potentially provides a better outcome than what much of the chattering class predicted: that Biden would enter the Oval Office with a Democratic Senate and House in tow, allowing him unfettered ability to fulfill his full list of $11 trillion campaign promises.

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