Lex Loci Delicti, not Praetor Peregrinus

From Judge David Oblon’s last week in Mireskandari v. Daily Mail & General Trust PLC:

In this defamation case, a United Kingdom … news publication allegedly defamed a UK [lawyer] practicing in the UK at a UK law firm, involving actions that occurred in the UK, through news stories of parochial interest to UK readers, to gain favor with UK police. The distilled question before the Court is, why is this case in Fairfax, Virginia, USA? The legal question is, can the Court properly exercise personal jurisdiction over the UK Defendants under Virginia’s Long Arm Statute and the Due Process Clause of the United Stales Constitution?

[No, says the court, for various reasons, and adds:]

Fairfax County, Virginia, USA, Is Not The World’s Defamation Court.

Some may have misread the Johnny Depp v. Amber Heard Opinion Letter, wherein another judge of this Court held Virginia was the proper forum for actor Johnny Depp’s defamation suit against his ex-wife, actress Amber Heard, despite the seemingly thin connection of the parties and the cause of action to Virginia.

For starters, the issue in Depp was of forum non conveniens and venue—not in personam jurisdiction. Nevertheless, any jurisdictional or locational ruling in Depp expressed a limiting principle, not an expansive invitation to forum shop in Fairfax County. The Court held under the lex loci delicti rule that the cause of action in a defamation case arises where the last act for publishing the allegedly defamatory statement took place. In Depp, the last act was when The Washington Post uploaded the statement in an article to the Internet from servers located in Virginia. Stated differently, Depp stands for the principle that Virginia is one of the few places where that defamation action may be adjudicated.

The logical extension of Depp is that the Daily Mail case may be brought where the last link of the publication of the defamatory statements occurred. If that last link was in Virginia, Mr. Mireskandari has not realistically pled that. Merely being accessible is not synonymous with where something is published. Although in paragraph 14, Plaintiff avers Daily Mail “published” the defamatory articles in Virginia, that statement is belied by the rest of the Amended Complaint. Defendants are UK companies operating a UK news publication. And even assuming the place of publication is where the article was first uploaded onto a server, Mr. Mireskandari has not pled that Virginia was the place….

The only real similarity between Depp and this case is that Virginians sitting in Virginia can access both The Washington Post and Daily Mail online. The differences are remarkable: The Washington Post is a US company with offices in Virginia, is printed in Virginia, and its digital platform is created and routed through servers in Virginia. Conversely, Daily Mail is a UK company and has the “‘.co.uk” web address of UK domains. Unlike in Depp where the alleged defamatory op-ed was first printed and/or uploaded in Virginia, Mr. Mireskandari has not alleged the Daily Mail’s alleged defamatory article was first published in Virginia, as opposed to elsewhere, such as the UK….

The Circuit Court of Fairfax does not sit as praetor peregrinus. {In ancient Rome, a praetor was a judicial officer, who generally handled matters of equity. A praetor urbanus was an arbiter over disputes between citizens; a praetor peregrinus handled suits in which one or both parties were foreigners.} Daily Mail’s Motion to Dismiss is granted….

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Can’t Seal Court Files Just to Keep Them from One’s Current Employer

From Abdul-Haqq v. Kaiser Foundation Hospitals, decided Wednesday by Judge Phyllis J. Hamilton (N.D. Cal.):

Years ago, plaintiff filed Kaiser I and Kaiser II as actions for employment discrimination against the various medical organizations named above. Ultimately, the court dismissed both actions with prejudice and entered judgment against plaintiff. The court terminated Kaiser I on April 10, 2015 and Kaiser II on May 1, 2017…. [P]laintiff [now] asks the court to seal her “case file,” which the court understands to mean all records publicly accessible on each action’s docket.

Plaintiff contends that a third-party, … who is the significant other of plaintiff’s former significant other, … has “taken the information that is available online which has some of [plaintiff’s] medical diagnosis and has harass[e]d, threatened, [and] taunted [plaintiff] to improperly disclose [the subject] records.” …

The court rejected the request, for the usual reason that court files are presumptively open; but I found this passage noteworthy:

Plaintiff principally asserts that “Smith has made it clear that she will send information to my employment … and my place of worship for the gratification of public scandal, to circulate libelous statements, and to cause financial harm.” … [But] plaintiff fails to explain why any “disclosure” by Smith of the subject records to plaintiff’s job, house of worship, or nursing board would be improper. The contents of the filings in this action speak for themselves and, in any event, have long been publicly available to the above referenced institutions in the first instance.

I think this is right, and important. It’s true that the mere fact that the filings are “publicly available” to plaintiff’s employer or others doesn’t mean that the employer actually saw them. But it does mean that they are something that everyone, including the employer, is entitled to see. That Abdul-Haqq wants to keep that information from her employer, house of worship, and nursing board doesn’t mean that she is entitled to do so, or to enlist the courts in helping her do so.

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Democrats Sharpen Tech Antitrust Messaging at Historic House Hearing

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Tech commentators often note that political antipathy to Silicon Valley is a bipartisan affair. When it comes to antitrust, that’s not exactly true. This was especially apparent at last week’s blockbuster House Judiciary Committee hearing that featured the digital visages of the CEOs of Facebook, Google, Apple, and Amazon.

It’s not that the Republicans have any professed love for these companies. Beyond a few paeans to American capitalism and entrepreneurship, the elephants trumpeted against platform censorship and the left-learning companies’ potential to tilt elections. But they didn’t really talk about antitrust per se, much to conservative populists’ outrage. To the extent that Republicans mentioned market power, it was mostly a tactic to pivot to their non-antitrust (although not necessarily unfounded) concerns.

Contrast this to the Democrats, who came both prepared and with receipts. One after another, they grilled the executives on specific allegations of competitive wrongs. Mark Zuckerberg had to account for his Instagram acquisition, Jeff Bezos for absorbing Diapers.com. Tim Cook got the least guff, but he still had some ‘splaining to do on App Store fees. And Alphabet/Google CEO Sundar Pichai, whose company is perhaps more vulnerable to antitrust enforcement, had to defend basically everything Google does.

There was a decent amount of non-antitrust griping from the Democrats, too. And no real bombshells were dropped. But the sharpened antitrust focus of the Democrat representatives is undeniable.

Eagle-eyed observers noticed a woman seated behind House Antitrust Subcommittee Chairman David Cicilline (D-RI). This was Lina Khan, antitrust hipster extraordinaire. The paper she wrote as a Yale law student is credited with energizing the neo-Brandeisian movement to reform antitrust law. She now serves as counsel to Rep. Cicilline; no wonder he concluded the festivities with a quote from the ur-antitrust hawk himself, Supreme Court Justice Louis Brandeis.

It’s a salient one: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” In other words, the purpose of antitrust law should not intrinsically be economic, but rather political.

This is evident when you compare current antitrust doctrine with the neo-Brandeisian approach that seeks to dethrone it. Under the consumer welfare standard, the focus is on the final economic effects on, well, consumers. The goal is not to maintain a particular market structure or protect certain competitors. Rather, companies are punished when they abuse their market positions to raise prices or restrict output or lower quality.

The neo-Brandeisian approach would do away with the consumer welfare standard. In its place would be a market structure approach that would empower enforcers to intervene whenever a firm gets a little too big, regardless of whether or not that firm is anti-competitive or monopolistic.

As such, the Democrat line of questioning focused a lot on the tech companies’ effects on competitors moreso than consumers. It is not hard to sympathize with the stories they presented. For instance, one rep played a soundbite from an Amazon seller whose large-immigrant-family-supporting business was apparently inexplicably delisted by the platform. You can promise to look into it, as Bezos did, but how can you argue against that?

The challenge now, as it was in Brandeis’ time, is that it’s hard to craft an objective antitrust approach not guided by consumer and price effects. So “bigness” is the problem. What is the solution? Neo-Brandeisians rarely draw a clear lines. They instead call for a broader range of social factors (which often just happen to align with the progressive agenda) to be considered in antitrust proceedings.

This is why adherents to the consumer welfare standard warn that a departure from this approach heralds another era of politicization in market oversight. Some neo-Brandeisians proudly admit this, touting intentions to wield antitrust enforcement to “create a more equitable society”—or at least what they consider to be a more equitable society. Markets, like everything else in life these days, are “inherently political” to these antitrust activists. And they wish to be empowered to decide which “different sets of beneficiaries” will prosper.

Say what you will about aggressive competition in the tech sector, it has yielded a lot of free or cheap stuff for users. (Indeed, according to some critics, this is precisely the problem.) With a more socialized antitrust regime, targeted benefits would be channeled to government-determined groups. And a lot of development—including on things that help or launch small businesses—would be stymied along the way. That’s politics.

It’s also “politics” to appeal to small businesses when advancing a new antitrust paradigm but forget them when it comes to things like lockdown policy and civil unrest. It’s “politics” to accept campaign contributions from the same companies that you castigate (on this issue, at least). And it’s “politics” to pretend that you’re not being political about it at all.

Some observers came away from the hearing thinking the consumer welfare standard escaped unscathed. I must have watched a different event. The Democrats have honed their rhetoric on exactly this target. They may not have attacked it by name. But if they are successful, the welfare of favored political constituencies will triumph over that one identity that is at least common to all Americans: the consumer.

No wonder it is hard to mount an effective rebuttal. “We all pay the same low price!” is hardly a rousing battle cry, especially in this tense climate. Add in the many grievances the outer party’s constituents harbor against Silicon Valley and you’ve got a recipe for a weird, unfocused, and largely ineffectual spectacle. Republicans can’t bring themselves to clearly commit to defend what is arguably the biggest policy victory of movement conservativism: the adoption of economic analysis by the court system.

Earnest watchers who hope that this rediscovered wellspring of antitrust reform can spark a return to a more localist Americana they may have only glimpsed secondhand will probably be disappointed. After all, “class reductionist” is now a slur on the left. If relief for this cohort should come, I wouldn’t expect it from neo-Brandeisian quarters.

The battle over the consumer welfare standard isn’t about the poor little billionaires at the end of the day, although our legal environment is one where they could become fabulously wealthy. Elite businessmen can and do spend a lot of money on lobbyists and lawyers to protect their interests.  They will almost certainly die fabulously wealthy either way.

It’s not even really about whether any particular big tech company is broken up, although that would bring many downsides for a lot more people than just the Bezoses and Zuckerbergs out there. The quality and price of living standards to which Americans are accustomed would slowly suffer—China is already ascendant. But this decline, too, would be managed.

What’s at stake is the dynamism of the U.S. economy. It’s something that is very difficult to build, but trivially easy to take for granted and destroy. And it looks increasingly likely to be something that the right is willing to sacrifice in a confused crusade that is simultaneously both for and against specific big businesses rather than for economic vitality per se.

The optimists in America think we can turn things around if we are allowed to build. With such radical proposed changes to antitrust laws, this call to build may become all the fainter.

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What’s the Best Way To Protect Free Speech? Ken White and Greg Lukianoff Debate Cancel Culture

Milo Yiannopoulos

Even as debates over cancel culture have swept the nation, free speech defenders have disagreed about what, exactly, cancel culture is, and what it means for freedom of speech. In many ways, these disagreements represent differences of opinion about how best to protect and uphold true freedom of speech. 

And what better way to deal with questions about free speech than with a debate? Ken White is an attorney, a co-host of All the President’s Lawyers, and a frequent commenter on issues of speech and law. Greg Lukianoff is the president of the Foundation for Individual Rights in Education (FIRE), a nonprofit whose mission is to “defend and sustain the individual rights of students and faculty members at America’s colleges and universities.” In the following exchange, the pair debate the resolution: Free speech law is the best defense against cancel culture.

PRO

Ken White: Protect Free Speech Norms With Free Speech Rights 

This is a golden age for free speech in America.

For more than a generation, the United States Supreme Court has reliably protected unpopular speech from government sanction. The Court’s staunch defense of the First Amendment is remarkable because it has transcended political partisanship and upheld speech that offends everyone, including the powerful. 

In overturning flag burning laws, the Court protected (literally) incendiary speech that remains intolerable to many Americans. Years later, in upholding the right of Westboro Baptist Church to picket the funerals of servicemen with vile homophobic insults, the Court aggrieved both the left and the right, permitting violation of norms of veneration of the military and against hate speech. The Court has protected scatological and humiliating ridicule of public figures and overturned laws purporting to bar “disparaging” or “immoral or scandalous” trademarks, firmly establishing that offensive speech is free speech. 

Crucially, the Court has repeatedly rebuked demands that it create new First Amendment exceptions based on the tastes of the moment. Instead, it has adhered to a select, narrowly defined list of historical exceptions, rejecting efforts to create a general “balancing test” that would determine whether speech is protected by an ad hoc weighing of its value and harm. The Court’s defense of free speech is not perfect—students and public employees have seen some narrowing of rights—but it is unprecedented in American history, and in sharp contrast to the Court’s halfhearted defense of Fourth, Fifth, and Sixth Amendment rights.  

Moreover, Congress—typically not a reliable defender of rights—has contributed meaningfully to our freedom to speak without fear of legal retaliation. For decades, Section 230 of the Communications Decency Act of 1996 has made online discourse feasible by protecting websites from lawsuits based on the speech of visiting commenters and users. The SPEECH Act, enacted in 2010, protects us from libel tourism by making foreign defamation judgments unenforceable in the United States unless they comply with our robust free speech protections

Of course, rights are enforced by courts, which can make them more theoretical than actual. Access to justice is inconsistent, and the litigation process is hideously expensive and burdensome. But we’ve witnessed an explosion of First Amendment advocacy groups from every part of the political spectrum willing to vindicate Americans’ rights—including the Foundation for Individual Rights in Education.  

Yet gloom and despair dominate public discourse about free speech. We’re told that free speech is in decline, under siege, subjected to constant threats. 

It’s true that the First Amendment is constantly under attack and requires ongoing protection from legal assault from all sides. But the prevailing narrative isn’t about official threats to speech—that is, threats involving state action that would violate the First Amendment. Instead, we’re consumed with a debate about free speech culture—a disagreement about whether some speech is impermissibly threatened by other speech. That’s “cancel culture”: the notion that some people’s exercise of their rights to free speech and free association impedes others in exercising those rights. It’s a clash of norms, not of laws.

The notion that free speech norms impact free speech rights is not new. The legal system won’t reliably protect rights unless the culture values them. Consider how our unreflective “law and order” culture has degraded Fourth, Fifth, and Sixth Amendment rights. Judge Billings Learned Hand articulated it perfectly in his “Spirit of Liberty” speech in 1944: “Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it. While it lies there, it needs no constitution, no law, no court to save it.” The project of cultivating a cultural respect for free speech is completely legitimate.

How do we protect free speech norms? With our free speech rights, grounded in the rule of law. Cancel culture and denunciation of cancel culture are competing norms in the protected marketplace of ideas. You can’t burn down the marketplace in order to save it. Efforts to use state force to tamper with the marketplace to sort “valid” criticism from “invalid” cancellation inevitably result in less free speech, not more. 

Consider ongoing efforts to use punitive laws to stop the Boycott, Divestment and Sanctions (BDS) movement against Israel, which put a government thumb on the scales by declaring that some forms of free speech and free association are an impermissible way to protest. Or consider how quickly J.K. Rowling, a very wealthy person who styles herself a victim of cancel culture because of the reactions to her comments about transgender people, uses threats of legal action under the U.K.’s regrettable defamation laws to force retractions and apologies from critics, nominally in service of some right to speak without “unfair” criticism. You can’t win real free speech with censorship.

So what does it mean to use legal norms to protect cultural norms?

The law matters.

It’s common for people criticizing cancel culture to say “we’re not talking about law, we’re talking about culture and behavior.” Sure. But knowledge is power, and ignorance is poisonous. 

Dialogue about free speech—including about free speech culture—is often shot through with misunderstandings and disinformation about our legal rights. For instance, the debate over how social media platforms should be moderating unpopular speech is dominated by propaganda and gibberish about Section 230. That’s bad for culture and civic society, because you can’t effectively rely on or defend a right you don’t understand. 

Debates about free speech need not be limited to the law, but they should not mislead about the law. For example, when FIRE criticizes private universities for censorious policies, they take pains to point out that private schools are not bound by the First Amendment but should be bound by their promises of free exchange of ideas. That approach combines robust discourse about culture with accurate information about rights.

“The culture of free speech” is political; act accordingly.

Many people who are concerned with cancel culture are acting in good faith and not trying to push a political agenda. But some people are. Cancel culture —like any somewhat useful descriptive term—is cynically used to mean “things I don’t like” and “liberals suck.” Take our president:

The problem isn’t just that this reflects a completely unprincipled definition of cancel culture. The bigger problem is that the president (and many other politicians) decry cancel culture while wallowing in it by seeking to inflict social and economic consequences against speakers they don’t like.

In fact, I respectfully submit that most complaining about cancel culture is insincere griping meant to convey “liberals are bad.” This is part of a general political effort to associate free speech with the right and censorship with the left. (That effort isn’t just historically laughable and demonstrably untrue, it’s terribly shortsighted and counterproductive if your goal is to sell young people on free speech culture.) As a result, when people of good faith, like my friend Greg Lukianoff, talk about cancel culture, they’re viewed with skepticism. They cannot pretend that their arguments exist in a vacuum; they exist in a culture of relentless, unprincipled misuse of the phrase. 

So what can they do? They can use the rigor you would associate with legal norms. They can explain their terms, debate principled definitions of what is objectionable, and call out political misuse of the concept, so that their discourse can’t be mistaken for mere partisanship. That brings us to the next way legal norms can inform this debate: 

Specifics are better than generalities.

The debate over cancel culture is best conducted using specific examples, as you would in a legal argument, not broad generalities. 

There is, for instance, a fairly broad consensus that the firing of David Shor was unjust and contemptible. So why not say so explicitly? The now-famous Harper’s magazine letter about cancel culture didn’t. It relied, instead, on somewhat vague allusions to cases, and on general criticism of “intolerance of opposing views” and “a vogue for public shaming and ostracism”––terms that are very susceptible to exactly the sort of cynical political misuse I’m talking about. It should not have shocked the authors that their audience, steeped in our current political culture, read it as a partisan wolf in principled sheep’s clothing. Couching the debate in specific cases, like Shor’s, will help as much as rigorous definitions. 

Take competing rights seriously.

The point of the law is to sort out competing claims of rights. Any debate over cancel culture must do so as well. The things decried as “cancellation” of free speech—public denunciations, calls for firings and boycotts, and so forth—are indisputably other people’s free speech. Just as a legal argument won’t persuade if it ignores the claims of the opposing party (well, unless it’s a D.A. arguing), the cultural argument won’t persuade if it amounts to shut up so I feel more comfortable talking. 

This is particularly true because cancel culture is used so flexibly to mean anything from demanding that someone be fired for saying something offensive (which might be a principled definition) to criticizing that person for saying it because doing so might be “mob action” that contributes to cancellation. Everyone’s free speech rights are equal before the law. “There’s no right not to be offended” is indisputably true, but so is “there’s no right not to be criticized.” These rights should be equal philosophically, too. People arguing that cancel culture is bad need to confront the fact that boycotts, group public condemnation, and even demands for firing are the sort of speech that comparatively obscure and powerless people have available to them. 

And finally, in legal advice I always give to clients:

Don’t fall for grifters.

Like any Very Online debate, cancel culture is a bright flame attracting huckster moths, eager to gather money and attention by portraying themselves as its victims—just subscribe here to learn all about it! Exercise prudent skepticism.

Debating free speech values is good. A little legal rigor wouldn’t hurt.

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Greg Lukianoff: Free Speech Culture Is Our Best Hope Against Cancel Culture 

Free speech culture is more important than the First Amendment. It’s more important because free speech culture is what gave us the First Amendment in the 18th century. It’s what kept free speech alive in the 19th century. It’s what reinvigorated the First Amendment in the 20th century. It’s what informs the First Amendment today—and it is what will decide if our current free speech protections will survive into the future.

The thinking that culture can be separated from the law is an odd sociological, let alone legal, theory, especially in a common law country. Indeed, the most important book in the history of freedom of speech, John Stuart Mill’s On Liberty, is primarily a philosophical, not legal, argument against a repressive/conformist culture. The same is true of the most important book on freedom of speech in the last 50 years, Jonathan Rauch’s Kindly Inquisitors. And the greatest speech on the nature of a free society, Judge Billings Learned Hand’s 1944 “Spirit of Liberty” speech, explicitly argues that culture trumps law: “I often wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon courts,” he said. “These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it. While it lies there it needs no constitution, no law, no court to save it.”

Indeed, the framers of the Constitution and the First Amendment itself were heavily influenced by the cultural norms of the mother country and by radical free speech advocates like John Lilburne. They also benefited from free thinkers like Montesquieu, Francis Bacon, John Locke, David Hume, and the colonial experience in which the press and individual free speech was essentially impossible to control. The Bill of Rights in many ways is a summary of cultural values of what had previously been called “free-born Englishmen.” 

Popular Idioms and Free Speech Culture

What does free speech culture look like? Popular idioms—like “it’s a free country”—are one good window into cultural values, and free speech values are not absent from our idioms. The folk wisdom of “to each his own,” and “everyone’s entitled to their own opinion” can be found all over First Amendment law and is mirrored in quotes, including my favorite in West Virginia Board of Education v. Barnette (1943): “Freedom to differ is not limited to things that do not matter much.”

The sentiments “different strokes for different folks” and “who am I to judge?” find their legal analogs in cases including Cohen v. California‘s great line—”one man’s vulgarity is another’s lyric”—from 1971.

Notice, many idioms that were common when many of us were younger just don’t have the same cultural force they used to have. Indeed, “sticks and stones” is regularly made fun of and misrepresented as being an incorrect folk notion rather than a mantra a free society teaches its children to help them deal with the burdens of everyday life. Free speech culture is a culture with a high tolerance for difference; a general presumption that, for most of us, our personal political opinions don’t matter all that much for our day-to-day lives: “To each his own.”

Free speech culture started to decline on college campuses in the mid-1980s, when campuses—whether they knew it or not—started adopting the idea of “repressive tolerance.” This was the belief that free speech protection for minority opinions did not go far enough. Instead, campus authorities should censor hateful speech. Of course, on campus, their political ideology was entirely dominant, giving them a skewed view of the importance of free speech for minority opinions in the off-campus world.

Luckily, lawyers and judges largely educated before the rise of repressive tolerance norms continued to zealously protect it. However, we kid ourselves if we believe our legal freedoms will survive if our free speech culture is undermined by the institutions entrusted to educate future citizens, leaders, lawyers, and judges.

The Necessary Differences Between Culture and Law  

The idea of free speech culture will always be frustrating to lawyers because it doesn’t have the specificity of law. Of course, free speech law is more specific than free speech culture; law is about rules, while culture is about norms. That free speech culture is less specific than law does not make it less powerful. As Charles Davenant had mythological King Thoas observe in 1677’s Circe, there is great power in “Custom, that unwritten Law, By which the People keep, even Kings in awe.” 

Oddly, some lawyers think of the law as something barely influenced by culture. But what about, for example, gay marriage? It only became legal after the culture accepted its legitimacy—an unthinkable development 50 years ago.

What does free speech culture look like? Free speech culture means high tolerance for difference. It means a general presumption that, for most of us, our personal political opinions don’t matter all that much for our day-to-day jobs: That those with “terrible” opinions can still be amazing lawyers, artists, scientists, and accountants, and people with “good” opinions are not necessarily good at anything—indeed, they might be a little too conventional to contribute interesting things to art, science, or social innovation. 

The idea that bad people can be beneficial to society, and good people might be useless, is something that seems heretical in the context of cancel culture, which deems nasty things said in tweets 10 years ago relevant. 

Cancel Culture Is Unchecked Instinct. Free Speech Culture Must Be Learned.

Cancel culture comes from our natural instinct to silence dissent. The desire for compliance and conformity is reflected in most of human history. It’s deeply ingrained in all of us. We did not have to learn to censor others, we had to learn to be tolerant of nonconformity. We had to learn not to burn the heretic.

Cancel culture is a useful term for delineating the social media era expression of the ancient desire for conformity. Pervasive social media means that things that might have previously been ignored––angry letters sent to The New York Times––are now potentially successful efforts to mobilize a sufficient number of people to ruin lives. Early attempts to describe the new phenomena are instructive, including my own short book Freedom From Speech (2014), the documentary Can We Take a Joke? (2015), and Jon Ronson’s So You’ve Been Publicly Shamed (2015).

So how would I define cancel culture? Broadly and tentatively, of course. How about: 

“Cancel culture” is a term to refer to a relatively recent (post-2013) uptick in—and success of—ideologically driven efforts to get individuals fired or otherwise cast out of acceptable society for non-conforming speech or actions, including speech that would have once been considered trivial, private, or unrelated to someone’s job. It is tightly related to the rise in social media, which allows for unparalleled collective policing of ideological norms, and the comparative ease of creating online “outrage mobs.” 

Cancel culture is in my view, the progeny of campus “callout culture” that Jonathan Haidt and I explore in our book The Coddling of the American Mind (2019). Some characteristics of campus callout culture looks similar to cancel culture, including: 1) the conflation of expressions of opinion with physical violence, 2) the use of ad hominem rhetorical tactics which delegitimize the person and soften or ignore the substance of the argument), 3) the elimination of concern for the intent of targeted speech, relying solely on its claimed effect, 4) a high reliance on guilt by association and theories of “moral pollution” (a concept well explained by my colleague Pamela Paresky), and 5) appeals to authority to punish or remove the targeted speaker (also known as moral dependency). None of these criteria are required to be part of cancel culture, but some or all of these characteristics often are. 

Cancel culture often relies on speech that is already unprotected under First Amendment law, including threats of bodily harm and outright harassment. In other cases, cancel culture demands behavior from others that would be unconstitutional or otherwise unlawful. While, for example, you’re absolutely free to advocate for less free speech by, for example, demanding a professor be fired for their expression, if a public university were to act on those demands it would violate the law, plain and simple. 

The forces of conformity are very strong in humans, and we’ve given them superpowers in recent days. It must be opposed. Diversity of opinion, the right to individual conscience, the power of thought experimentation and devil’s advocacy are important for a free and innovative society.

Free Speech Culture Without Free Speech Law vs. Free Speech Law Without Free Speech Culture

What does a culture look like that has a strong free speech culture, but not favorable law? France in the 18th century is a good example. It was one of the greatest philosophical periods in human history. It featured thinkers like Voltaire, Diderot, Rousseau, Montesquieu, and Émilie du Châtelet, as well as salons, like those of Baron d’Holbach, attended by thinkers like David Hume, Adam Smith, and Benjamin Franklin. Sometimes these thinkers and writers had to flee France to avoid arrest, and sometimes they were arrested, but the cultural norm of open discussion was so strong they kept writing and innovating and challenging norms and beliefs.

And what does a country look like that has no free speech culture, but good free speech law? Consider the following guarantees of free speech, from other countries’ constitutions: 

  • “Everyone shall be guaranteed freedom of thought and speech…”
  • “Citizens are guaranteed freedom of speech, the press, assembly, demonstration and association.”
  • “Everyone has the right to express and disseminate his/her thoughts and opinions by speech, in writing or in pictures or through other media, individually or collectively.”

Each of these sounds similar to our own First Amendment’s speech promise. And if you want to know how they are working out, you can visit Russia, North Korea, and Turkey, respectively. 

And while these are stark examples, free speech is even under threat in the nominally “free world,” including in Spain, Britain, and France, where people have been imprisoned for rap lyrics saying the wrong thing, reading the wrong thing, or having the wrong reaction in a Facebook post. 

That’s where we could be headed if we don’t remember that free speech culture is more important than free speech law. A free speech culture can exist without protective law, but not the other way around—at least not for very long.

Ken White Responds

True Free Speech Defenders Must Resist Making Free Speech a Partisan Issue 

My friend Greg Lukianoff is passionate about free speech, as befits someone who has fought so effectively for it. We have few legal disputes about the scope of the First Amendment. Moreover, as a matter of taste, our views about cancel culture are often consistent—I, too, think that demands that people suffer economic consequences for disfavored speech are often counterproductive and destructive to civic society. But my view of the current public dialogue about free speech culture is substantially more cynical than his, and there we differ. 

Greg asserts that free speech culture “gave us the First Amendment in the 18th century” and “kept free speech alive.” That culture has always been more aspirational than actual. The free speech culture that produced the First Amendment also promptly produced the Alien and Sedition Acts. The dawn of the modern age and mass media gave us broad justifications for censorship of political speech, cultural repression, and suppression of minority views and values

Though Americans support free speech in the abstract, that support often breaks down when we are confronted with specific examples of speech we don’t like. The history of the First Amendment is a history of Americans struggling mightily against other Americans trying to silence them. If free speech is in our national DNA, so is censorship.

That’s a fundamental flaw in the current popular cancel culture narrative. It suggests, expressly or implicitly, that America enjoyed some golden age of cultural tolerance for speech. But did we? Did we really? If so, when was it? I submit that there was never such an age, and that unpopular views have always met with social and economic repercussions in America. 

We can strive to do better, but we shouldn’t distort history by claiming that people now are more censorious than they were before. We can argue, for instance, that Americans should be able to express disapproval of gay marriage without losing their jobs—but that shouldn’t lead us to suggest that America was previously a safe place to express pro-gay views, when it manifestly was not

Why does this matter? It matters because the loudest voices condemning cancel culture in America are not people of good faith like Greg. The loudest voices are using the issue as a cynical political wedge from the right to attack the left

They’re the same voices who try to get people fired for speech when that speech is offensive to them, when that speech comes from the left. The “golden era” concept—the suggestion that there was a better time for social tolerance of speech in America, and it’s now been spoiled by millennials and progressives—is not just wrong, it’s nakedly partisan, and it’s part of the same effort to make free speech culture into a political weapon.   

Making free speech a partisan issue is foolhardy, and true free speech defenders must resist it. The First Amendment—and free speech culture more broadly—rely on a sometimes tenuous bargain. The bargain is this: We all agree not to use the power of the state to punish speech that makes us mad, and instead to use the power of the marketplace of ideas to fight it. That deal convinces Americans to refrain, at least some of the time, from state censorship of some truly despicable and upsetting speech

But what if we now tell Americans that yes, they have the marketplace of ideas, they have the ability to respond to speech they hate with “more speech”—but that more speech shouldn’t be too harsh? What if we tell them—and especially young people, who tend to be far more left-leaning—that we should see harsh responses to ugly speech as “liberal” and mild responses as “conservative”? Their natural reaction may be to see the free speech “deal” as a partisan sham, a rationalization for preferring the speech and feelings of one group over the other. It’s hard to imagine a better way to lose an entire generation’s commitment to free speech values.

To be taken seriously, cancel culture critiques must be doggedly nonpartisan and overtly hostile to political misuse. They must also strive for evenhandedness. Critics shouldn’t impose norms on “more speech” that they don’t impose on the speech it’s rebutting. 

So, for instance, if you’re concerned that widespread condemnation of a professor’s column chills speech, you might ask at the same time whether the professor’s description of student activists as a “terrorist organization” was also chilling. More speech is free speech, entitled to the same legal and cultural protection as the speech to which it responds. A philosophy that criticizes one to the exclusion of the other will not convince Americans.

Greg Lukianoff Responds

Free Speech Culture Is What Makes Free Speech Law Possible

Ken White and I are both great admirers of American First Amendment law. I believe it’s the best body of thought on how to have freedom of speech in the real world. Where Ken and I differ is that I believe free speech culture and law are (almost) inextricable. We interpret law through the lens of culture, and culture is what makes our law possible and effective. The list of countries that have good free speech laws on the books, but have no free speech because they utterly lack a free speech culture, is long.

We are extremely lucky that our Supreme Court is populated by attorneys educated or coming up during the 1970s, arguably the best decade for both free speech culture on campus and free speech law. However, I’ve seen a stark decline in student respect for, or understanding of, speech norms over the past decade, and I believe this will inevitably lead to an eventual decline in law. 

As I’ve recounted countless times, from 2001 to about 2012, the students were the best constituency for free speech on campus. Then, in the 2013–14 school year, students started to demand new campus speech codes and disinvitations, claiming that the presence of people with certain views was medically harmful. Conservatives had railed against campus narrow mindedness for years, but starting in 2014, more and more liberals and left-of-center people grew concerned about the trend, as well. As researchers would discover, the population hitting campuses around 2013–2014 were less tolerant of free speech.  

Because the Foundation for Individual Rights in Education works exclusively on campus, I saw this change in real time and on the ground—both figuratively and literally. In 2015, I filmed Nicholas Christakis when he was encircled by Yale students calling for him to lose his job. 

As more members of Generation Z hit the “real world,” free speech norms like tolerance for political differences will erode. A 2020 Cato/YouGov survey found that 27 percent of Americans under 30 would support firing a business executive who personally donates to Joe Biden’s campaign; 44 percent support firing a similar Donald Trump donor. 

Ken warned me about grifters, charlatans, and Trump tainting my argument. But this is the kind of guilt-by-association argument I am fighting: “Bad people make argument, therefore argument bad!” Never mind that I was speaking about this phenomenon years before anyone imagined a President Trump. Yes, Trump pointed out a rising intolerance on the left, but former President Barack Obama has also made similar arguments several times over, and continues to do so. 

So have former presidential candidates Bernie Sanders and Elizabeth Warren.

Ken is a friend who I love, admire, and respect, but I have to vent some frustration. I’ve seen a lot of hostility to the idea of free speech culture coming from people who defer to Ken’s point of view. If Ken is concerned about free speech cynicism, he’s fortuitously positioned to help stop it. 

So, I have some requests of Ken, but, more importantly, of his fans, and for many others.

Please don’t be so quick to call people hypocrites.

Not everybody who cares about freedom of speech is as well-versed in its nuances as Ken and me. I try to give people the benefit of the doubt, and even expect people to be inconsistent, because that’s part of human nature. Sometimes free speech defenders can disagree about what should be protected, may still be learning, or just made a bad call once. If the price of chiming in to say “I believe in free speech” is to be called out as a presumptive hypocrite, why wouldn’t people become cynical?

Welcome even temporary allies.

If someone usually disagrees with you, but actually agrees with you on a particular free speech incident, welcome their help rather than fixate on what you consider to be their previous hypocrisy (which sometimes isn’t even there).

Stop lumping actual free speech advocates together with the predictable partisan pundits.

Jonathan Rauch, Nadine Strossen, and I and many others are people who actually work in this profession; Milo Yiannopoulos and Charlie Kirk, for example, are explicitly partisan and only care about free speech for ideological allies. In my experience, speech professionals are thoughtful and consistent, and should not be dragged down because grifters exist, as they have always existed. 

Do this first: Ask “how can I help this student or professor who is in trouble for his expression?”

Many people follow Ken’s example by tweeting something about how people on the right “don’t care about these cases—in your face, conservative!” But few realize what else he does: Send the cases our way and actually support our work. Be more like Ken and do more than dunk on your opponents: Spread the word, contact the school, and urge other influential people to join the pro–free speech side. 

Ken and I don’t have to agree on the value of free speech culture. But when people are fostering contempt and cynicism about free speech it makes the job of actual free speech fighters, including both Ken and me, much harder. If we preoccupy ourselves with distancing ourselves from the “bad” folks, we will eventually cede free speech to the grifters. 

It’s okay that people deemed “bad” by internet mobs agree with me about cancel culture. Indeed, I would like more people to come out against cancel culture; most Americans are against it but may be afraid to say so. I may be greedy, but I’d like both strong free speech law and a strong culture. 

Therefore, I would like more people to return to the idioms of a free society: How about “everyone’s entitled to their own opinion,” “it’s a free country,” “address the argument, not the person,” and maybe a new one: “Even people I hate have to make a living.”

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Lex Loci Delicti, not Praetor Peregrinus

From Judge David Oblon’s last week in Mireskandari v. Daily Mail & General Trust PLC:

In this defamation case, a United Kingdom … news publication allegedly defamed a UK [lawyer] practicing in the UK at a UK law firm, involving actions that occurred in the UK, through news stories of parochial interest to UK readers, to gain favor with UK police. The distilled question before the Court is, why is this case in Fairfax, Virginia, USA? The legal question is, can the Court properly exercise personal jurisdiction over the UK Defendants under Virginia’s Long Arm Statute and the Due Process Clause of the United Stales Constitution?

[No, says the court, for various reasons, and adds:]

Fairfax County, Virginia, USA, Is Not The World’s Defamation Court.

Some may have misread the Johnny Depp v. Amber Heard Opinion Letter, wherein another judge of this Court held Virginia was the proper forum for actor Johnny Depp’s defamation suit against his ex-wife, actress Amber Heard, despite the seemingly thin connection of the parties and the cause of action to Virginia.

For starters, the issue in Depp was of forum non conveniens and venue—not in personam jurisdiction. Nevertheless, any jurisdictional or locational ruling in Depp expressed a limiting principle, not an expansive invitation to forum shop in Fairfax County. The Court held under the lex loci delicti rule that the cause of action in a defamation case arises where the last act for publishing the allegedly defamatory statement took place. In Depp, the last act was when The Washington Post uploaded the statement in an article to the Internet from servers located in Virginia. Stated differently, Depp stands for the principle that Virginia is one of the few places where that defamation action may be adjudicated.

The logical extension of Depp is that the Daily Mail case may be brought where the last link of the publication of the defamatory statements occurred. If that last link was in Virginia, Mr. Mireskandari has not realistically pled that. Merely being accessible is not synonymous with where something is published. Although in paragraph 14, Plaintiff avers Daily Mail “published” the defamatory articles in Virginia, that statement is belied by the rest of the Amended Complaint. Defendants are UK companies operating a UK news publication. And even assuming the place of publication is where the article was first uploaded onto a server, Mr. Mireskandari has not pled that Virginia was the place….

The only real similarity between Depp and this case is that Virginians sitting in Virginia can access both The Washington Post and Daily Mail online. The differences are remarkable: The Washington Post is a US company with offices in Virginia, is printed in Virginia, and its digital platform is created and routed through servers in Virginia. Conversely, Daily Mail is a UK company and has the “‘.co.uk” web address of UK domains. Unlike in Depp where the alleged defamatory op-ed was first printed and/or uploaded in Virginia, Mr. Mireskandari has not alleged the Daily Mail’s alleged defamatory article was first published in Virginia, as opposed to elsewhere, such as the UK….

The Circuit Court of Fairfax does not sit as praetor peregrinus. {In ancient Rome, a praetor was a judicial officer, who generally handled matters of equity. A praetor urbanus was an arbiter over disputes between citizens; a praetor peregrinus handled suits in which one or both parties were foreigners.} Daily Mail’s Motion to Dismiss is granted….

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Can’t Seal Court Files Just to Keep Them from One’s Current Employer

From Abdul-Haqq v. Kaiser Foundation Hospitals, decided Wednesday by Judge Phyllis J. Hamilton (N.D. Cal.):

Years ago, plaintiff filed Kaiser I and Kaiser II as actions for employment discrimination against the various medical organizations named above. Ultimately, the court dismissed both actions with prejudice and entered judgment against plaintiff. The court terminated Kaiser I on April 10, 2015 and Kaiser II on May 1, 2017…. [P]laintiff [now] asks the court to seal her “case file,” which the court understands to mean all records publicly accessible on each action’s docket.

Plaintiff contends that a third-party, … who is the significant other of plaintiff’s former significant other, … has “taken the information that is available online which has some of [plaintiff’s] medical diagnosis and has harass[e]d, threatened, [and] taunted [plaintiff] to improperly disclose [the subject] records.” …

The court rejected the request, for the usual reason that court files are presumptively open; but I found this passage noteworthy:

Plaintiff principally asserts that “Smith has made it clear that she will send information to my employment … and my place of worship for the gratification of public scandal, to circulate libelous statements, and to cause financial harm.” … [But] plaintiff fails to explain why any “disclosure” by Smith of the subject records to plaintiff’s job, house of worship, or nursing board would be improper. The contents of the filings in this action speak for themselves and, in any event, have long been publicly available to the above referenced institutions in the first instance.

I think this is right, and important. It’s true that the mere fact that the filings are “publicly available” to plaintiff’s employer or others doesn’t mean that the employer actually saw them. But it does mean that they are something that everyone, including the employer, is entitled to see. That Abdul-Haqq wants to keep that information from her employer, house of worship, and nursing board doesn’t mean that she is entitled to do so, or to enlist the courts in helping her do so.

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Democrats Sharpen Tech Antitrust Messaging at Historic House Hearing

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Tech commentators often note that political antipathy to Silicon Valley is a bipartisan affair. When it comes to antitrust, that’s not exactly true. This was especially apparent at last week’s blockbuster House Judiciary Committee hearing that featured the digital visages of the CEOs of Facebook, Google, Apple, and Amazon.

It’s not that the Republicans have any professed love for these companies. Beyond a few paeans to American capitalism and entrepreneurship, the elephants trumpeted against platform censorship and the left-learning companies’ potential to tilt elections. But they didn’t really talk about antitrust per se, much to conservative populists’ outrage. To the extent that Republicans mentioned market power, it was mostly a tactic to pivot to their non-antitrust (although not necessarily unfounded) concerns.

Contrast this to the Democrats, who came both prepared and with receipts. One after another, they grilled the executives on specific allegations of competitive wrongs. Mark Zuckerberg had to account for his Instagram acquisition, Jeff Bezos for absorbing Diapers.com. Tim Cook got the least guff, but he still had some ‘splaining to do on App Store fees. And Alphabet/Google CEO Sundar Pichai, whose company is perhaps more vulnerable to antitrust enforcement, had to defend basically everything Google does.

There was a decent amount of non-antitrust griping from the Democrats, too. And no real bombshells were dropped. But the sharpened antitrust focus of the Democrat representatives is undeniable.

Eagle-eyed observers noticed a woman seated behind House Antitrust Subcommittee Chairman David Cicilline (D-RI). This was Lina Khan, antitrust hipster extraordinaire. The paper she wrote as a Yale law student is credited with energizing the neo-Brandeisian movement to reform antitrust law. She now serves as counsel to Rep. Cicilline; no wonder he concluded the festivities with a quote from the ur-antitrust hawk himself, Supreme Court Justice Louis Brandeis.

It’s a salient one: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” In other words, the purpose of antitrust law should not intrinsically be economic, but rather political.

This is evident when you compare current antitrust doctrine with the neo-Brandeisian approach that seeks to dethrone it. Under the consumer welfare standard, the focus is on the final economic effects on, well, consumers. The goal is not to maintain a particular market structure or protect certain competitors. Rather, companies are punished when they abuse their market positions to raise prices or restrict output or lower quality.

The neo-Brandeisian approach would do away with the consumer welfare standard. In its place would be a market structure approach that would empower enforcers to intervene whenever a firm gets a little too big, regardless of whether or not that firm is anti-competitive or monopolistic.

As such, the Democrat line of questioning focused a lot on the tech companies’ effects on competitors moreso than consumers. It is not hard to sympathize with the stories they presented. For instance, one rep played a soundbite from an Amazon seller whose large-immigrant-family-supporting business was apparently inexplicably delisted by the platform. You can promise to look into it, as Bezos did, but how can you argue against that?

The challenge now, as it was in Brandeis’ time, is that it’s hard to craft an objective antitrust approach not guided by consumer and price effects. So “bigness” is the problem. What is the solution? Neo-Brandeisians rarely draw a clear lines. They instead call for a broader range of social factors (which often just happen to align with the progressive agenda) to be considered in antitrust proceedings.

This is why adherents to the consumer welfare standard warn that a departure from this approach heralds another era of politicization in market oversight. Some neo-Brandeisians proudly admit this, touting intentions to wield antitrust enforcement to “create a more equitable society”—or at least what they consider to be a more equitable society. Markets, like everything else in life these days, are “inherently political” to these antitrust activists. And they wish to be empowered to decide which “different sets of beneficiaries” will prosper.

Say what you will about aggressive competition in the tech sector, it has yielded a lot of free or cheap stuff for users. (Indeed, according to some critics, this is precisely the problem.) With a more socialized antitrust regime, targeted benefits would be channeled to government-determined groups. And a lot of development—including on things that help or launch small businesses—would be stymied along the way. That’s politics.

It’s also “politics” to appeal to small businesses when advancing a new antitrust paradigm but forget them when it comes to things like lockdown policy and civil unrest. It’s “politics” to accept campaign contributions from the same companies that you castigate (on this issue, at least). And it’s “politics” to pretend that you’re not being political about it at all.

Some observers came away from the hearing thinking the consumer welfare standard escaped unscathed. I must have watched a different event. The Democrats have honed their rhetoric on exactly this target. They may not have attacked it by name. But if they are successful, the welfare of favored political constituencies will triumph over that one identity that is at least common to all Americans: the consumer.

No wonder it is hard to mount an effective rebuttal. “We all pay the same low price!” is hardly a rousing battle cry, especially in this tense climate. Add in the many grievances the outer party’s constituents harbor against Silicon Valley and you’ve got a recipe for a weird, unfocused, and largely ineffectual spectacle. Republicans can’t bring themselves to clearly commit to defend what is arguably the biggest policy victory of movement conservativism: the adoption of economic analysis by the court system.

Earnest watchers who hope that this rediscovered wellspring of antitrust reform can spark a return to a more localist Americana they may have only glimpsed secondhand will probably be disappointed. After all, “class reductionist” is now a slur on the left. If relief for this cohort should come, I wouldn’t expect it from neo-Brandeisian quarters.

The battle over the consumer welfare standard isn’t about the poor little billionaires at the end of the day, although our legal environment is one where they could become fabulously wealthy. Elite businessmen can and do spend a lot of money on lobbyists and lawyers to protect their interests.  They will almost certainly die fabulously wealthy either way.

It’s not even really about whether any particular big tech company is broken up, although that would bring many downsides for a lot more people than just the Bezoses and Zuckerbergs out there. The quality and price of living standards to which Americans are accustomed would slowly suffer—China is already ascendant. But this decline, too, would be managed.

What’s at stake is the dynamism of the U.S. economy. It’s something that is very difficult to build, but trivially easy to take for granted and destroy. And it looks increasingly likely to be something that the right is willing to sacrifice in a confused crusade that is simultaneously both for and against specific big businesses rather than for economic vitality per se.

The optimists in America think we can turn things around if we are allowed to build. With such radical proposed changes to antitrust laws, this call to build may become all the fainter.

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Global COVID-19 Spread Slowest In 3 Weeks As Deaths Near 7 Million: Live Updates

Global COVID-19 Spread Slowest In 3 Weeks As Deaths Near 7 Million: Live Updates

Tyler Durden

Tue, 08/04/2020 – 08:22

Globally, the number of new cases reported on Monday (remember, these cases are reported typically with a 24-hour delay) tumbled to the slowest rate of expansion in nearly three weeks, while the global death toll neared 700,000.

In the US, the death toll surpassed 155,000 yesterday. That comes five days after the US first broke above 150,000 deaths. Though experts like Dr. Fauci and others have warned about the potential for deaths in the US to accelerate, the number of daily deaths has remained anchored at around 1,000.

Over the past two weeks, the worst-hit countries, including the US and Brazil, have seen new cases turn mercifully lower after a streak of record-shattering single-day infection numbers.

Most of the big news out so far on Tuesday comes out of Asia.

One day after placing Manila and its surrounding area on a strict two-week lockdown, the Philippines reported a record 6,352 new coronavirus infections, a new single-day record, bringing the total to 112,593. The 11 new fatalities reported raised the death toll to 2,115.

Yesterday, the WHO’s Dr. Tedros revealed during a press briefing (where he also noted that there may be “no silver bullet” vaccine, at least not right away) that the team of independent scientists from the WHO had finished the first part of their fact-finding mission to Wuhan to investigate the origins of the outbreak. According to a Reuters report published Tuesday morning, the team had “extensive discussions” with scientists in Wuhan and “received updates on epidemiological studies, biologic and genetic analysis and animal health research.”

The mission is the first part of a broader international probe that was demanded by the Trump Administration, Australia, EU and others.

In Japan, Tokyo Gov. Yuriko Koike announced another 309 new infections, up from 258 on Monday. The SCMP reports that the Hong Kong government is building at least 2 new makeshift hospitals that will add 2,400 new beds to the territory’s COVID-19 capacity. The government announced on Monday that it would extend its social distancing restrictions for another week. Hong Kong’s “third wave” of the virus has also been its deadliest yet. Fortunately, the city reported just 80 cases on Tuesday, on par with yesterday’s number. Yesterday, the city’s health authorities reported fewer than 100 new cases for the first time in nearly 2 weeks. Chief Executive Carrie Lam has sought help from the mainland to increase testing and hospital capacity.

India reported more than 50,000 cases for the sixth straight day, bringing total infections to over 1.85 million.

The world’s second-most-populous country also reported another 803 deaths, bringing its total to 38,938.

China reports 36 new cases, down from 43 the previous day. Of those, 28 were in the northwestern region of Xinjiang and two in Liaoning Province in the northeast. Another six were from Chinese arriving from overseas.

After imposing a curfew earlier this week and shuttering a large swath of its economy in another lockdown, new legal measures go into effect on Tuesday whereby anyone caught outside in breach of Victoria’s isolation orders will face fines from AUS$1,652 ($1,200) to AUS$5,000 ($3,559).

Officials warned that noncompliance with quarantine and social distancing rules is widespread. Random checks by police on 3,000 infected people had found more than 800 were not home isolating, as they were supposed to be.

However, the Australian press, for whatever reason, focused on Chief Commissioner Shane Patton’s complaints about a small number of self-declared “sovereign citizens” who have hectored – and in at least one case, attacked – police officers trying to enforce the new orders.

Victoria Police had seen an “emergence” of “concerning groups of people who classify themselves as ‘sovereign citizens'”, the BBC reported Tuesday.

Under the current “stage four” lockdown, Melbournians can leave home only to shop, exercise and provide essential medical care, or do frontline work. Residents must shop and exercise within 5 kilometers (3 miles) of their home, and for no longer than 1 hour at a time.

This, despite a growing body of evidence that the lockdown in Victoria is having little impact on suppressing the growth of cases.

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Futures Slide On US-China Tensions, Fiscal Stimulus Worries, Poor Earnings

Futures Slide On US-China Tensions, Fiscal Stimulus Worries, Poor Earnings

Tyler Durden

Tue, 08/04/2020 – 08:09

S&P futures posted a rare overnight drop alongside shares in Europe as President Trump’s moves to force China-owned TikTok into a sale of its U.S. operations drew a sharp rebuke from Beijing, ratcheting up tensions as the world slides into a pandemic-fueled recession; at the same time a string of poor earnings illustrated the continuing hit from the pandemic while jittery investors also awaited news on whether fresh fiscal stimulus in the U.S. will get approval. The dollar reversed overnight losses and 10Y yields tumbled back to all time lows.

On Monday, the S&P 500 closed Monday within 3% of its all-time high, powered over the past four months by a stimulus-led rebound and a rally in tech-related stocks including Apple Inc, Netflix Inc and Amazon.com Inc. In earnings-related news, insurer AIG fell 2.8% in premarket trading after posting a 56% fall in quarterly adjusted earnings. Take-Two Interactive Software Inc O) rose 4.7% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”. Rival Activision Blizzard Inc gained 3.8% ahead of its results due after the closing bell.

“We see U.S. stocks at risk of fading fiscal stimulus,” BlackRock Investment Institute strategists led by Mike Pyle wrote in a note. “U.S. employment figures are in focus this week as this fiscal cliff nears and the pandemic’s spread in Sunbelt states is starting to affect economic activity.”

The MSCI world equity index was up 0.4% after reaching a five-month high on Tuesday morning. Friction between the world’s top two economies took a back seat in the first half of 2020 as the COVID-19 pandemic crushed global growth, and an escalation now would hamper the recovery of some exporters and importers and fan fears of a deeper economic slump. With Microsoft Corp looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price. On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company. Investors are also focused on whether U.S. Congress will approve fresh stimulus. The pressure is building, with the Senate set to leave on a break Friday, when crucial job data is due.

Europe’s Stoxx 600 reversed an early gain of as much as 0.6%, dropping 0.4%, and London’s FTSE 100 flat on the day with defensives shares among the worst performers. Disappointing earnings reports from the world’s largest spirits maker, Diageo Plc and German drugs and pesticides giant Bayer took the shine off growth-linked cyclical stocks. Food-and-drink shares fall the most after Diageo slumps on sales miss. Health-care shares also lag, while autos and banks outperform and BP boosts oil-and-gas shares. Shares in BP jumped after it cut its dividend and posted a record loss that was in line with expectations. On the other end, the Stoxx 600 Automobiles & Parts Index rises as much as 2.4% after Renault’s CEO outlines a focus on margins, Bankhaus Metzler double-upgrades Daimler on profitability prospects and Jefferies analysts say 2Q results support current terms for the PSA Group-Fiat Chrysler merger. The automotive index was +1.7% at 1:35pm in Paris, with Renault +5.5%, Nokian Renkaat +4.1%, PSA +3.7%, Fiat Chrysler +3.4%, BMW +2.2%; non-index member Schaeffler +8.6%. The sector has second-biggest gain in Stoxx Europe 600 Index, which is down 0.4%

Earlier in the session, stocks in most Asian markets rose, with gauges in Japan, Hong Kong, Shanghai, Taiwan and South Korea advancing led by energy and industrials, after rising in the last session. All markets in the region were up, with Japan’s Topix Index gaining 2.1% and Hong Kong’s Hang Seng Index surged in afternoon trade, with property stocks leading gains. The gauge rose as much as 2.2%, the most since July 21, before paring the gain to 1.9% led by Wharf Real Estate Investment +7% and New World Development +4.1%. Japan’s Topix gained 2.1%, with GSI Creos and Plant rising the most. The Shanghai Composite Index rose 0.1%, with Heilongjiang Interchina Water Treatment and North Navigation Control Technology posting the biggest advances.

As noted above, U.S.-China tensions worsened as President Donald Trump said that he will ban Chinese app TikTok in the U.S. unless a tech company such as Microsoft buys it. China said it would not accept the “theft” of a Chinese company and that is has “plenty of ways to respond if the administration carries out its planned smash and grab.”

“This kind of rhetoric lines up with our view that U.S.-China frictions may increase into the U.S. elections, injecting volatility into related assets like China tech ADRs (American Depository Receipts) while also supporting insurance assets like gold,” wrote UBS Global Wealth Management’s chief investment officer, Mark Haefele.

The United States and China are also clashing over Chinese journalists working in the United States, who may be forced to leave the country if their visas are not extended.

Elsewhere, investors were waiting for Washington to make progress in talks over the next round of fiscal stimulus. A $600-per-week enhanced unemployment benefit, which provided a lifeline for the tens of millions of Americans who lost their jobs due to the pandemic, expired on Friday. Lawmakers said they had made “progress” in the talks, and U.S. House Speaker Nancy Pelosi will meet again with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows on Tuesday, raising hopes for a breakthrough.

“A second wave of Covid-19, contested elections, civil unrest and escalating tensions with China could provide a toxic cocktail for the final quarter of the year,” Philip Marey, senior U.S. strategist at Rabobank, wrote in the bank’s monthly outlook. Marey said that he expects another economic contraction, or at least a “substantial slowdown” in the fourth quarter, which could force the Federal Reserve into action.

“If they don’t want to cut policy rates below zero, yield curve control is the next logical step,” he said. “Meanwhile, any failure by Congress and the White House to provide sufficient fiscal stimulus going forward will only speed up the Fed’s thinking process.”

In FX, the dollar rebounded from a new bout of overnight selling, as traders re- balanced their portfolios in the run-up to key U.S. economic data releases this week. The Australian dollar’s rally followed the central bank’s pledge to resume quantitative easing from Wednesday; the euro and Swiss franc also climbed. Japanese government bonds edged higher after an auction of 10-year debt attracted decent demand, while the yen halted a two-day loss

In rates, 10-year TSY yields were around 0.54%, richer by ~2bp vs Monday’s close; Bunds outperformed slightly with ten-year German bond yields edged down to -0.5400%, but remained above the two-month lows reached at the end of last week. European peripherals outperform, led by Portugal and Spain.

Long-end Treasuries were near session highs after catching a bid in London hours as S&P 500 E-mini futures pared gains, flattening the yield curve. Price action has been broadly muted ahead of Wednesday’s supply announcement, however, while another heavy IG credit issuance slate is possible following Monday’s strong start to the week. Yields lower by 1bp to 2.5bp from belly out to long end, flattening 2s10s spread by nearly 2bp, 5s30s by 1.4bp

Spot gold edged down from all-time highs, at $1,974.3033 per ounce, amid mounting COVID-19 cases and a warning from the World Health Organization that the road to normality would be long. Oil prices slipped on fears that a new wave of COVID-19 infections could curtail a pick-up in fuel demand, just as major producers ramp up output. WTI crude futures fell 59 cents, or 1.44% to $40.42 a barrel. Brent crude futures fell 59 cents, or 1.3% to $43.56 a barrel

Looking at the day ahead, economic data include June factory orders and final reading for durable goods. Disney, Fox Corp, Activision Blizzard, Twilio and KKR are due to report earnings

Market Snapshot

  • S&P 500 futures down 0.3% to 3,279.25
  • STOXX Europe 600 down 0.2% to 362.90
  • MXAP up 1.7% to 168.02
  • MXAPJ up 1.5% to 558.93
  • Nikkei up 1.7% to 22,573.66
  • Topix up 2.1% to 1,555.26
  • Hang Seng Index up 2% to 24,946.63
  • Shanghai Composite up 0.1% to 3,371.69
  • Sensex up 1.6% to 37,535.54
  • Australia S&P/ASX 200 up 1.9% to 6,037.55
  • Kospi up 1.3% to 2,279.97
  • Brent futures down 1% to $43.72/bbl
  • Gold spot unchanged at $1,976.95
  • U.S. Dollar Index down 0.06% to 93.49
  • German 10Y yield fell 1.0 bps to -0.533%
  • Euro up 0.1% to $1.1776
  • Brent Futures down 1% to $43.72/bbl
  • Italian 10Y yield fell 0.5 bps to 0.882%
  • Spanish 10Y yield fell 3.7 bps to 0.299%

Top Overnight News

  • House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin head into another round of negotiations on a new virus relief package after talks on Monday yielded “a little bit” of progress
  • With the talks dragging on, President Donald Trump on Monday said he was considering executive action to restore a moratorium on evictions that expired, and the White House was looking at other steps the administration could take without action by Congress
  • China’s government may take action against Washington, if a sale of TikTok’s U.S. operations to Microsoft Corp. is forced, the state-run China Daily said in an editorial
  • California and Arizona reported fewer new coronavirus cases after battling a surge in infections last month, while Germany and Poland recorded increases
  • BP Plc slashed its dividend for the first time in a decade after the coronavirus pandemic upended the oil business

Asian equity markets traded positively as the region took its cue from the constructive handover from Wall St where sentiment was underpinned by strong ISM Manufacturing PMI data and with advances led by a continued tech rally after Apple shares extended on record highs and with Microsoft the biggest gainer in the DJIA amid a potential TikTok acquisition. ASX 200 (+1.9%) outperformed and broke above the 6000 level as tech names found inspiration from their counterparts stateside and a potential WFH boost due to the impending tougher lockdown restrictions in Victoria state, with notable strength also seen in the top-weighted financials sector. Nikkei 225 (+1.7%) remained underpinned by favourable currency flows and with slight encouragement also provided by firmer than expected Tokyo inflation data, as well as comments from BoJ Governor Kuroda that the central bank could extend the period of corporate support. Hang Seng (+2.2%) and Shanghai Comp. (+0.1%) conformed to the upbeat tone but with less conviction in the mainland after another notable liquidity drain by the PBoC and continued US-China tensions with the US attempt to force a sale of TikTok being branded by Chinese press as a robbery and with allegations from US Secretary of State Pompeo that the Chinese Communist Party is running an espionage operation in the US. 10yr JGBs were initially flat with demand sapped by the gains in Tokyo stocks and as participants were sidelined ahead of the 10yr JGB auction which saw mixed results but nonetheless attracted higher prices and eventually spurred 10yr JGBs in late trade.

Top Asian News

  • RBA Keeps Key Rate, Yield Unchanged, Will Resume Bond Purchases
  • Modi Reimposes Kashmir Clampdown a Year After Autonomy Ended
  • Most Valuable Indian Lender Gets New Chief After 26 Years
  • China’s Hottest Stocks Stumble in Push Toward Five Year- High

The initial optimism seen in Europe at the cash open somewhat petered out – with the region now posting a mixed performance despite a lack of fresh fundamental catalysts and a positive APAC handover. No major under/outperformers are seen across major European bourses, but DAX saw a notable reversal into negative territory from a firm positive performance earlier in the session – potentially on the back of heavyweight Bayer (-3.3%) extending on post-earnings losses after cutting its guidance, whilst the turnaround in the tech sector prompted SAP (-2.5%) to tumble to the bottom of the index, albeit Infineon (+4.7%) remains positive despite the broader erosion in the tech sector after raising its revenue guidance.. Sectors are now mixed as earlier gains recede, albeit the detailed breakdown sees cyclical sectors Oil & Gas, Autos, Bank and Travel & Leisure retaining their top positions whilst defensives hold onto losses. The auto sector has seen little by way of fresh news, although pre-market, the German Ifo institute noted that the auto industry business expectations rose significantly for a second straight month, thus potentially underpinning the sector. Individual movers largely consist of earnings: BP (+7.5%) extends on gains despite a 50% cut to dividends after posting a smaller than expected loss and noting that the current financial breakeven is at USD 40/bbl. Diageo (-5.5%) holds onto losses after missing on expectations across the main metrics whilst refraining from providing guidance. Easyjet (+12%) drifts higher after upping its Q4 capacity to 40% from the prior 30%, with the performance also supporting the likes of Air France-KLN (+5.5%), Lufthansa (+3.5%) and peers. Other earnings-related movers include Hugo Boss (+2.1%), Fraport (+0.3%), Evonik (+3.6%) and Metro AG (+4%).

Top European News

  • Bond Titans Led by Pimco Double Down on Their Bet on Europe
  • Former King Abandons Spain in Disgrace as Legal Woes Pile Up
  • Schaeffler Mulls More Cost-Cutting to Deal With Covid Crisis
  • German Bonds Fated to Stay Rich If ECB Has Any Say: Markets Live

In FX, it remains to be seen whether the Buck stops retreating and stages another rebound, but for now it looks as though yesterday’s narrow failure to recapture the 94.000 level in DXY terms was telling from a psychological standpoint if nothing else. Indeed, the index has drifted down from a lower 93.612 high through 93.500 to 93.268 and lost inverse correlation with broad risk sentiment that briefly returned yesterday. Ahead, relatively 2nd tier data scheduled and unlikely to have a major impact given the lack of meaningful or last reaction to Monday’s manufacturing ISM that was largely better than expected in headline and sub-component terms. However, technical factors may direct trade given near term support at 93.169 and resistance at 93.997 ahead of last Friday’s 94.007 high.

  • AUD/EUR/CHF/CAD – The Aussie has taken advantage of Greenback’s pull-back to reclaim 0.7100+ status and the 10 DMA (0.7144) in wake of the RBA policy meeting that maintained rates and guidance, but in acknowledgement of the COVID-19 resurgence in Victoria will see the Bank resurrect its QE program from Wednesday. Elsewhere, the Euro has retested 1.1800 from Monday’s low just under 1.1700 and the Franc is back over 0.9200, with the former topping out ahead of Fib resistance at 1.1823 and the latter into 0.9150, while the Loonie is meandering between 1.3404-1.3360 parameters in the run up to Canadian manufacturing PMI.
  • JPY/NZD/GBP/NOK/SEK – Lagging their G10 counterparts, albeit to varying degrees, as the Yen pivots 106.00, Kiwi straddles 0.6600 in advance of NZ jobs data and Pound fades within a 1.3107-1.3047 range having failed to get close enough to stir or arouse stops said to be waiting for a break of 1.3120. Similarly, the Scandinavian Crowns have slipped both slipped from best levels against the Euro, though in tight bands of 10.7675-7200 and 10.3045-2740 respectively and the Nok eyeing softer crude prices.
  • EM – Try in focus due to Turkish inflation data, but not deflated even though CPI slowed more than forecast on the headline and core measures, with the Lira hovering towards the upper end of 6.9170-9795 extremes vs the Usd. The aforementioned weaker Dollar is clearly a factor, while Usd/Try may also be taking on board Turkey’s manufacturing PMI extending its rising trend to 3 months in a row and reaching its best level since early 2011. Over in Asia, the HKMA has been active again to keep the Hkd pegged, selling over 1.16 bn of the local currency.            

In commodities, WTI and Brent front month futures remain subdued in early European trade as investors weigh the impact a second COVID-19 wave could have on lockdown impositions and reopening delays alongside rising OPEC supply with the implications as reflected by prelim numbers. Aside from that, traders will be eyeing the weekly Private Inventory figures – with expectations currently positing to a headline draw of 3.5mln barrels, with a draw seen in gasoline and a build in distillates. WTI and Brent futures trade ~40.50 (vs. high 40.99/bbl) and around 43.50/bbl (vs. high 44.11/bbl) respectively. Elsewhere, precious metals are uneventful with spot gold trading on either side of 1975/oz, whilst its silver counterpart remains contained below 24.50/oz. Data compiled by Bloomberg showed that ETFs increased gold holdings for a 27th straight session yesterday – equating some USD 580mln at yesterday’s spot price, whilst UBS expects spot gold prices to rise to around USD 2000/oz in H2 2020. In terms of base metal prices, Dalian iron ore saw another day of gains amid concerns regarding Brazilian miner Vale’s ability to increase production of the raw material, whilst London copper prices continue to ease, in-fitting with the performance in sentiment.

US Event Calendar

  • 10am: Factory Orders, est. 5.0%, prior 8.0%; Factory Orders Ex Trans, prior 2.6%
  • 10am: Durable Goods Orders, est. 7.3%, prior 7.3%; Durables Ex Transportation, est. 3.3%, prior 3.3%
  • 10am: Cap Goods Orders Nondef Ex Air, prior 3.3%; Cap Goods Ship Nondef Ex Air, prior 3.4%

DB’s Jim Reid concludes the overnight wrap

Yesterday it was Bronte’s turn to provide the high drama at home as on a dog walk with my wife and three kids she ate a whole discarded chocolate bar in one sitting having come across it on the floor. She is totally food obsessed but never goes for chocolate as there must be some knowledge that it is potentially lethal for dogs. We must be starving her. Anyway a trip to the vets, forcing her to be sick, and a big bill later and all was well. That wasn’t the only big bill yesterday. We are looking to convert a dilapidated building in our garden at some point over the next year and require planning permission. As part of this we need to do a bat survey to check there are none living in it as they are a protected specie. We were confident there weren’t. On the day of the survey yesterday the “bat man” found fresh bat droppings and says we now have to send it off for analysis and then have a team camp out overnight in the garden to “track and trace” the bat and find a way of protecting Mr or Mrs Bat and any offspring. When I saw the potential bill for this I went a bit batty. Think of a suitable number and then times it by about 7 and you’ll be at around the right ballpark. So an expensive animal led day yesterday.

With slightly better than expected PMIs in major countries and technology stocks continuing to lead the way, US equities started August on the front foot. The S&P 500 rose +0.72%, led by a mix of Software (+2.90%), Autos (+2.17%), and Tech Hardware (+2.03%), while defensives like Real Estate (-1.47%) and Utilities (-1.14%) lagged. With the strength in technology stocks it was another record close for the Nasdaq, finishing +1.47% higher. In line with PMIs, equites in Europe outpaced those in the US with the STOXX 600 finishing +2.05% higher, the biggest 1 day rise since mid-June with every sector finishing higher. With the economic optimism from macro data, cyclical sectors like autos (+3.76%) and construction (+3.15%) led the index higher yesterday. Bank underperformed, but were still up (+1.57%), with poor earnings results from SocGen and HSBC who cited trading losses and a weak economic outlook respectively.

On those final July PMI data points, similar to the flash PMI readings roughly two weeks back, final July manufacturing PMI readings showed stronger economic momentum in Europe than in the US. Although the US PMI impressed. In general PMIs mostly beat estimates or the recent flash levels, which is good news for the recovery, but there is one note of caution. A recurring theme from the data was a weaker employment component, showing that there is still fragility on this front. The Euro area saw an upward revision from the flash estimate, up to 51.8 from 51.1, with gains in output overcoming continued job cuts as corporates report they are operating under capacity. It was the first time the measure was in expansion for the Euro area as a whole since January 2019.

Germany also came in above the flash estimate at 51 vs. 50, with new orders driving the improvement from June, however again the rate of job losses was near the largest since 2009. France’s final July PMI was only marginally higher than the flash (52.4 vs 52.0), as both softer demand and employment levels dragged on the index. Italy (51.9 vs. 51.2) and Spain (53.5 vs. 52.3) saw their strongest levels since Q2 2018. The UK was one of the few countries that was slightly lower, with the final manufacturing PMI 0.3 lower than the 53.6 flash print. In the US, the ISM manufacturing index rose to 54.2 from 52.6 last month, (vs. 53.6 estimates), which was the fastest pace since Mar 2019. The US Markit PMI measure was at 50.9, under the 51.3 flash print, but still the best print since January and just slightly in expansionary territory.

Back to markets and core sovereign bonds were slightly higher or unchanged as risk sentiment improved yesterday. German 10yr yields were largely unchanged (+0.1bps) at -0.52%, while US 10yr yields were +2.6bps higher at 0.554%. The dollar rose +0.21%, rising for consecutive sessions for the first time since 29 June.

Asian markets have largely tracked Wall Street this morning with the Nikkei (+1.42%), Hang Seng (+0.83%), Kospi (+1.06%) and ASX (+1.82%) all posting decent gains but with the Shanghai Comp trading flat. Futures on the S&P 500 are marginally down at -0.08%.

On the virus, Norway’s government is banning cruise ships from entering all ports for two weeks after an outbreak on board a cruiseliner led to about 40 new cases, according to Trade Minister Nybov yesterday. Meanwhile, the UK is in talks with Portugal to ease quarantine rules on travelers returning from the country on the Iberian Peninsula. The UK are looking into more closely tailoring rules for specific regions, according the government. This comes while the government has put together plans to lockdown London in case of another surge of cases, according to Prime Minister Johnson’s Spokesman Slack. The plan, he said, sets out “the possibility of a power to restrict people’s movement and potentially close down local transport networks.” Concerns across the continent are rising as daily case growth is again starting to accelerate from low levels in much of Europe, even as it’s gently falling from high levels in the US. Across the other side of the world, state of Victoria in Australia has announced that it will start imposing on the spot fines of as much as AUD 5,000 on anyone who flouts isolation rules while repeat and serious offenders could attract a court imposed penalty of AUD 20,000. The move comes as the state is battling to control the spread of virus.

Back to the US and the main late-June/mid-July hot spots are continuing to cool down with California reporting the fewest new cases in four weeks (4,982), which is well below the average increase of 8,700 over the past 7 days. Arizona also saw new cases hit the lowest levels since the end of June, with just over 1030 versus the 7-day average of over 2400. Regardless of the improving news, as highlighted above the overall numbers are still high with economic restrictions in place to reduce these case numbers. This continues to encourage focus on the fiscal stimulus package that Congress is debating. Republican and Democratic leaders have still been unable to agree on the specifics of the latest stimulus bill ahead of their month long recess from this Friday. There was a little more positivity yesterday but nothing concrete yet.

Here in the UK, Bloomberg has reported overnight that the government will invest c.GBP 1.3bn in building projects and provide GBP 2bn in energy efficiency grants in an effort to create jobs and rally the pandemic-hit UK economy. Relatively small numbers but the direction of travel is clear.

Finally to the day ahead, markets will receive data on the Euro Area June PPI while, manufacturing PMI from Canada will be seen alongside US June factory orders, and final durable goods orders. In terms of earnings, there will be results from Bayer, Diageo, Fidelity, BP, Walt Disney and Activision Blizzard.

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