Recent evidence suggesting most Covis-19 transmission happens from pre-symptomatic individuals.
This makes masks critical.
Mean number of days between someone getting infected with #COVIDー19 and their *infector* showing symptoms is negative 0.19 days! Suggesting most transmission is happening from pre-symptomatic individuals and masks are critical. https://t.co/8tnt6QM34n
Tests by the National Institute for Occupational Safety and Health found that about60% of 67 different types of imported masks tested allowed in more tiny particles in at least one sample than U.S. standards normally permit.
One mask that Niosh tested, sold in packaging bearing unauthorized Food and Drug Administration logos, filtered out as little as 35% of particles. Another, marked KN95, a Chinese standard similar to N95, had one sample test below 15%, far short of the 95% it advertised.
Officials in Colorado, Illinois, Massachusetts and Missouri said they found many imported masks failed quality tests.
Gregory Rutledge, an MIT professor, said his lab tested more than 40 masks in the Massachusetts stockpile that claimed to be made to China’s KN95 standard. He found only a third performed comparably to certified N95s.
Ear Loops
Lawrence General Hospital in Massachusetts said it had distributed part of a batch of Chinese-made masks using ear loops from its stock, before seeing a Niosh alert that the masks weren’t up to the American N95 standard their label suggested.
Miscalculation at Every Level Left U.S. Unequipped to Fight Coronavirus
The U.S. government focused more on preparing for terrorism than for a pandemic. Despite the severe 2009 flu, the government lacked a permanent budget to buy protective medical gear for its Strategic National Stockpile of supplies for health emergencies.
The Trump administration further weakened the safety net as it rejiggered the Health and Human Services Department’s main emergency-preparedness agency, prioritized other threats over pandemics, cut out groups such as one that focused on protective gear and removed a small planned budget to buy respirator masks for the national stockpile, according to former officials.
The N95 story reveals failures of readiness at every level.
Three-Point Synopsis
Trump did not take the pandemic threat seriously.
At the outset of the crisis, the US exported millions of good masks to China.
Then in a panic need for masks, the FDA lowered quality standards and imported millions of bad masks from China.
That is how “almost identical” (except they don’t work) masks get into widespread use in US hospitals.
Where Do You Find Them?
Q: Where do you find the good ones?
A: Sorry, I don’t know
If they attach on the ears, they are not approved. If they are from China, they are also suspect.
Amazon Search
An Amazon search of N95 masks bring up many items that are: “Currently unavailable. We don’t know when or if this item will be back in stock. …. Prioritized for organizations on the frontlines responding to COVID-19.“
There are numerous masks that attach behind the ears but those “almost identical” are not N95.
Finder.Com has a supplier, Canopus, labeling masks with ear loops as N95. Beware.
My article is forthcoming next year in the Southern California Law Review. I’ve previewed some of the interesting cases I discuss on this blog, and I have a larger book project in mind. Here is the abstract for the article:
This article explores the modern American law of race.
Part I of this Article addresses the origins and development of modern racial categorizations–African American, Asian, Hispanic, Native American, White–in the United States. These categories arose from categories used for federal anti-discrimination enforcement and affirmative action policies. There has never been a coherent or comprehensive explanation from any federal source as to why some minorities are deemed to be “official” minority groups and others are not, or why groups have the precise, and often seemingly arbitrary, boundaries they do.
As documented in Part I of this Article, the scope and contours of official minority status have come about from a combination of which groups were deemed analogous to African Americans, bureaucratic inertia, lobbying campaigns, political calculations by government officials, a failure to anticipate future immigration patterns, and happenstance.
Part II discusses state variations on the scope of the standard ethnic categories, in particular in the states’ Minority Business Enterprise (MBE) programs.
Having discussed the origin and scope of official minority categories at the federal and state level, this Article next turns to a second issue–what evidence individuals must provide to demonstrate membership in these categories. Conventional wisdom is that these categories are purely a matter of self-definition based on informal norms. However, various states require a wide range of proof of minority status to participate in MBE programs, ranging from providing an official document such as a birth certificate listing one’s race, to providing letters of support from ethnic organizations, to relying on certification by the National Minority Suppliers Development Corporation.
Perhaps surprisingly, challenges to the under- or over-inclusiveness of a government’s definition of the scope of racial or ethnic categories are rare. Part IV of this Article discusses the only three such cases this author found.
Part V of this Article reviews cases in which a denial of minority status to a petitioner seeking Minority Business Enterprise status has been adjudicated and resulted in a published opinion. Most of the cases discussed in Part V involve the question of Hispanic status, the boundaries of which have proved especially vexing to administrators and courts.
The next section of this Article, Part VI, turns from racial categorization in the Minority Business Enterprise context to adjudication of claims of minority status by individuals seeking to benefit from affirmative action in employment.
Part VII of this Article discusses two other contexts in which courts have had occasion to determine racial or ethnic identity; first, cases in which a plaintiff has needed to show he is a member of a protected class under anti-discrimination laws, and second, cases involving “Indian” status under the Major Crimes Act.
This Article concludes by noting that laws dictating ethnic and racial categories were designed primarily to assist African Americans overcome the legacy of slavery, Jim Crow, and discrimination. As the United States has become more demographically diverse, however, African Americans are now a shrinking minority of non-whites protected from ethnic and racial discrimination, and of those eligible for affirmative action programs. Given high rates of interracial marriage among other minority groups and the reality that mixed-race and mixed-ethnicity individuals can check whichever box most benefits them, the percentage of non-African-American individuals eligible for minority status for affirmative action purposes will continue to grow, putting increasing strains on the current method of categorization.
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From Judge Thomas E. Johnston’s opinion yesterday in Williams v. Rigg (S.D. W. Va.); see this post from when the case was first filed for more. (Note that I had submitted an amicus brief on my own behalf arguing that preliminary injunctions against allegedly defamatory statements are unconstitutional, and that West Virginia even more categorically bans anti-libel injunctions.)
This case arises out of an alleged oral contract dispute between Plaintiff [Hershel Woodrow “Woody” Williams] and Defendant Bryan Mark Rigg … over the publication of a book. On March 20, 2020, during the pendency of this lawsuit, Rigg self-published the book in controversy entitled Flamethrower: Iwo Jima Medal of Honor Recipient and U.S. Marine Woody Williams and His Controversial Award, Japan’s Holocaust and the Pacific War. This book is currently being offered for sale on Amazon.com.
Williams is a Congressional Medal of Honor recipient, so earned for his heroism during the Battle of Iwo Jima in World War II, and a well-known public figure who makes frequent public appearances and has been interviewed for numerous articles. The parties first met in 2015, while accompanying other veterans on a tour of Guam and Iwo Jima. After this initial introduction, Plaintiff states the parties had several discussions concerning the possibility of collaborating to write Williams’ biography. However, Rigg, a historian and author, states he had already decided to write a book about the Pacific campaign of World War II prior to the parties’ initial introduction. He states he had traveled to Guam and Iwo Jima as part of this research, and then, after meeting Williams, decided to incorporate Williams in the book as a vehicle to tell the stories of all servicemen who fought in the Pacific campaign.
In July of 2016, Rigg visited West Virginia, where Williams was born and still resides, and met with Williams and his family to gather personal details about Williams’ life. On February 12, 2017, Rigg returned to West Virginia to again meet with Williams and his representatives at the Holiday Inn hotel in Barboursville, West Virginia, where Plaintiff alleges the parties discussed the terms of their collaboration. Plaintiff contends the parties both agreed to the following:
Williams would provide Defendant Rigg with personal information about his life and his military service;
Defendant Rigg would conduct research as necessary for the book and prepare a draft manuscript of the book;
The information contained in the book would be factual as it related to Mr. Williams;
Williams, along with Defendant Rigg, would have input into, and authority over, the text and content of the book; and
Williams and Defendant Rigg would share equally in any proceeds from the book.
Based on this alleged agreement, Williams provided Rigg with information, including untold stories and sentimental items, which Rigg used to prepare drafts of the book.
During the writing process, Rigg shared drafts of the book with Williams and Williams in turn would provide suggested edits and revisions. Towards the end of 2017, the parties attempted to draft a written contract to memorialize the alleged oral agreement. Over the course of a year, the parties, through Williams’ representatives, exchanged numerous drafts of this proposed written contract, but were ultimately unable to reach an agreement. Thereafter, the relationship between the parties began to deteriorate due to both parties’ dissatisfaction with the failed written contract.
After this breakdown in communication, Williams became aware of additions to the manuscript which called into question his military actions during the Battle of Iwo Jima and the legitimacy of his Medal of Honor. Plaintiff alleges these statements are “defamatory and misleading.” As a result of this, Plaintiff filed this suit alleging the following six causes of action: (1) preliminary and permanent injunction to enforce oral agreement; (2) breach of oral contract: (3) promissory estoppel/detrimental reliance; (4) conversion of an idea; (5) joint venture; and (6) interference with the right of publicity.
On March 21, 2020, in response to Defendant’s self-publication of the book, Plaintiff [moved for a temporary restraining order and a preliminary injunction].
The court refused to enter the TRO and the preliminary injunction, reasoning:
[1.] Permanent injunctions against libels may well be constitutional, but preliminary injunctions are not. “Traditionally, injunctions to enjoin libel were disfavored under both common law and First Amendment prior restraint doctrine,” but “this traditional rule appears to be changing.” (The research in my Anti-Libel Injunctions article suggests the court is right on that point, with over 2/3 of the states allowing some such injunctions, and with holdings or practice in most federal circuits doing the same.) Still, the injunctions would be permissible “only after a finding on the merits that the speech is unprotected.”
“[M]any of these federal and state courts rely on prior Supreme Court opinions that suggest an adjudication on the merits is required to enjoin alleged defamatory speech.” “Thus, the majority rule first requires a finding on the merits that such speech is unprotected before an injunction can be issued enjoining further speech. Otherwise, the injunction runs afoul of the First Amendment and constitutes a prior restraint on what might otherwise be lawful speech.”
[2.] Under the Erie doctrine, a federal court resolving a state law case brought to it because of the parties’ diversity of citizenship must apply the substantive law of the state (though of course it’s also bound by any federal constitutional constraint). But though the Fourth Circuit has held that “federal courts sitting in diversity to apply state substantive law to a request for permanent injunctive relief,” “the Fourth Circuit has explicitly stated that ‘[t]he grant of preliminary injunctions in diversity cases, as well as those of original jurisdiction, is subject to federal standards.’ Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1991) (citing Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 799 (3d Cir.1989)). Thus, because Plaintiff seeks a preliminary not a permanent injunction, this Court will apply federal law.”
I think that’s not right: It seems to me Direx was speaking about federal courts applying the basic federal preliminary injunction test (likelihood of success, irreparable harm, etc.), but wasn’t authorizing federal courts to issue injunctions that state law precludes for state policy reasons. West Virginia courts categorically forbid injunctions in libel cases (West Virginia is one of a small but significant minority of states that still take this view); given that federal courts follow that principle in permanent injunction cases arising under West Virginia law, the same principle should apply to preliminary injunctions as well. But in any event, given that preliminary injunctions against libel are generally forbidden by the First Amendment (as the court recognized, see item 1 above), this Erie issue isn’t that significant (as the court also acknowledged).
[3.] The plaintiff had argued that his case is based on the defendant’s contractual obligations, and the libel law cases thus don’t apply:
Plaintiff argues this case is controlled by the United States Supreme Court’s holding in Cohen v. Cowles Media Co. (1991), that a promissory estoppel action brought by a confidential source against a newspaper did not implicate the First Amendment. In Cowles Media, a newspaper promised to keep a source’s identity confidential in exchange for information. Despite this agreement, the reporters decided to publish the source’s name as a part of their story, and the source was fired by his employer…. The Supreme Court held that the First Amendment did not prohibit the recovery of damages under state promissory estoppel law for the newspaper’s breach of a promise of confidentiality because it was a law of general applicability that did not offend the First Amendment simply because it had incidental effects on the newspaper’s ability to gather and report the news.
Most importantly, the Supreme Court emphasized that the source, Cohen, was not attempting to use a promissory estoppel cause of action to avoid the strict requirements for establishing a libel or defamation claim. “As the Minnesota Supreme Court observed here, ‘Cohen could not sue for defamation because the information disclosed [his name] was true.’ Cohen is not seeking damages for injury to his reputation or his state of mind. He sought damages in excess of $50,000 for breach of a promise that caused him to lose his job and lowered his earning capacity. Thus, this is not a case like Hustler Magazine, Inc. v. Falwell (1988), where we held that the constitutional libel standards apply to a claim alleging that the publication of a parody was a state-law tort of intentional infliction of emotional distress.”
This is what separates the case at hand from Cowles Media. Plaintiff has repeatedly claimed that Rigg’s speech is false, defamatory, and presents a risk of harm to Williams’ reputation, goodwill, and his public image. In fact, these allegations serve as the basis for Plaintiff’s argument that the second and third Winter factors weigh in favor of granting this injunction. [Details omitted. -EV] …
By basing his claims for irreparable harm on allegations of falsity and defamation, Williams seeks a preliminary injunction that will, in essence, punish Rigg for the content of his speech…. Plaintiff has repeatedly challenged the truth of Rigg’s statements concerning his Medal of Honor. Further, the harm Plaintiff seeks to prevent with this injunction is based entirely on defamation, libel, and reputation-based damages. Thus, granting a preliminary injunction on this basis would require this Court to evaluate Rigg’s speech and, at a minimum, pass judgment on the truth or falsity of that speech and its potential for harm.
Further, even if the Court were to just consider the first Winter factor, concerning the likelihood of success of the merits, it would still be required to evaluate the truth of Rigg’s speech. Plaintiff alleges an oral contract was formed between the parties where they both agreed “[t]he information contained in the book would be factual as it related to Mr. Williams,” and Plaintiff claims Rigg violated their oral agreement by publishing a book that contains false statements, in violation of their alleged oral contract….
In essence, Plaintiff seeks to bar further speech before a final adjudication on the merits concludes that the speech is unprotected….
[4.] More broadly, injunctions against speech that allegedly breaches a contract should generally be based only on express, written contracts:
[T]he Supreme Court has not articulated a standard for determining whether a party has waived his free speech rights. Though in Curtis Pub. Co. v. Butts (1967), the Supreme Court did refuse to find that a party waived his right to bring a First Amendment defense to a libel claim, and held that, “[w]here the ultimate effect of sustaining a claim of waiver might be an imposition on that valued freedom, we are unwilling to find waiver in circumstances which fall short of being clear and compelling.” Additionally, in Fuentes v. Shevin (1972), the Court stated, “a waiver of constitutional rights in any context must, at the very least, be clear.” Plaintiff’s arguments here are at odds with these statements because it is undisputed that no written contract existed between the parties.
Further, when reviewing the few cases analyzing the enforcement of non-disparagement clauses under preliminary injunction standards, Defendant is correct that all involve a specific, written contract that contains some type of language limiting the parties’ future statements. See, e.g., Taylor v. DeRosa, No. 03-08-00199-CV, 2010 WL 1170228 (Tex. Ct. App. Mar. 24, 2010)
(affirming a preliminary injunction to enforce a non-disparagement clause in a written settlement agreement); Perricone v. Perricone, 972 A.2d 666 (Conn. 2009) (affirming a preliminary injunction to enforce a non-disparagement clause contained within a confidentiality agreement which forbid defamatory or disparaging statements); Aultcare Corp. v. Roach, No. 2007CA0009, 2007 WL 3088036 (Ohio Ct. App. Oct. 22, 2007) (affirming a preliminary injunction to enforce a non-disparagement clause in a written settlement agreement); see also Brammer v. KB Home Lone Star, L.P., 114 S.W.3d 101, 104 (Tex. App. 2003) (holding that the waiver of a parties First Amendment rights was not knowing, voluntary, and intelligent).
To the contrary, the plaintiff here asks this Court to enforce a disputed oral contract, meaning there is no language for the Court to interpret or consider. Plaintiff is essentially arguing that he himself interpreted Rigg to make statements, three years prior, that serve as a waiver of Rigg’s First Amendment rights today. This argument is a reach, to say the least. The Supreme Court has classified the freedom of thought and speech to be “the matrix, the indispensable condition, of nearly every other form of freedom.” Curtis. It is only logical to conclude that clear, compelling, written language is required to waive such rights.
Plaintiff presented no evidence at the preliminary injunction hearings to support a finding that Rigg knowingly, clearly, and compellingly agreed to waive his right to make the statements Plaintiff classifies as false and defamatory. Thus, Plaintiff has failed to show that this preliminary injunction would not constitute a prior restraint…..
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My article is forthcoming next year in the Southern California Law Review. I’ve previewed some of the interesting cases I discuss on this blog, and I have a larger book project in mind. Here is the abstract for the article:
This article explores the modern American law of race.
Part I of this Article addresses the origins and development of modern racial categorizations–African American, Asian, Hispanic, Native American, White–in the United States. These categories arose from categories used for federal anti-discrimination enforcement and affirmative action policies. There has never been a coherent or comprehensive explanation from any federal source as to why some minorities are deemed to be “official” minority groups and others are not, or why groups have the precise, and often seemingly arbitrary, boundaries they do.
As documented in Part I of this Article, the scope and contours of official minority status have come about from a combination of which groups were deemed analogous to African Americans, bureaucratic inertia, lobbying campaigns, political calculations by government officials, a failure to anticipate future immigration patterns, and happenstance.
Part II discusses state variations on the scope of the standard ethnic categories, in particular in the states’ Minority Business Enterprise (MBE) programs.
Having discussed the origin and scope of official minority categories at the federal and state level, this Article next turns to a second issue–what evidence individuals must provide to demonstrate membership in these categories. Conventional wisdom is that these categories are purely a matter of self-definition based on informal norms. However, various states require a wide range of proof of minority status to participate in MBE programs, ranging from providing an official document such as a birth certificate listing one’s race, to providing letters of support from ethnic organizations, to relying on certification by the National Minority Suppliers Development Corporation.
Perhaps surprisingly, challenges to the under- or over-inclusiveness of a government’s definition of the scope of racial or ethnic categories are rare. Part IV of this Article discusses the only three such cases this author found.
Part V of this Article reviews cases in which a denial of minority status to a petitioner seeking Minority Business Enterprise status has been adjudicated and resulted in a published opinion. Most of the cases discussed in Part V involve the question of Hispanic status, the boundaries of which have proved especially vexing to administrators and courts.
The next section of this Article, Part VI, turns from racial categorization in the Minority Business Enterprise context to adjudication of claims of minority status by individuals seeking to benefit from affirmative action in employment.
Part VII of this Article discusses two other contexts in which courts have had occasion to determine racial or ethnic identity; first, cases in which a plaintiff has needed to show he is a member of a protected class under anti-discrimination laws, and second, cases involving “Indian” status under the Major Crimes Act.
This Article concludes by noting that laws dictating ethnic and racial categories were designed primarily to assist African Americans overcome the legacy of slavery, Jim Crow, and discrimination. As the United States has become more demographically diverse, however, African Americans are now a shrinking minority of non-whites protected from ethnic and racial discrimination, and of those eligible for affirmative action programs. Given high rates of interracial marriage among other minority groups and the reality that mixed-race and mixed-ethnicity individuals can check whichever box most benefits them, the percentage of non-African-American individuals eligible for minority status for affirmative action purposes will continue to grow, putting increasing strains on the current method of categorization.
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From Judge Thomas E. Johnston’s opinion yesterday in Williams v. Rigg (S.D. W. Va.); see this post from when the case was first filed for more. (Note that I had submitted an amicus brief on my own behalf arguing that preliminary injunctions against allegedly defamatory statements are unconstitutional, and that West Virginia even more categorically bans anti-libel injunctions.)
This case arises out of an alleged oral contract dispute between Plaintiff [Hershel Woodrow “Woody” Williams] and Defendant Bryan Mark Rigg … over the publication of a book. On March 20, 2020, during the pendency of this lawsuit, Rigg self-published the book in controversy entitled Flamethrower: Iwo Jima Medal of Honor Recipient and U.S. Marine Woody Williams and His Controversial Award, Japan’s Holocaust and the Pacific War. This book is currently being offered for sale on Amazon.com.
Williams is a Congressional Medal of Honor recipient, so earned for his heroism during the Battle of Iwo Jima in World War II, and a well-known public figure who makes frequent public appearances and has been interviewed for numerous articles. The parties first met in 2015, while accompanying other veterans on a tour of Guam and Iwo Jima. After this initial introduction, Plaintiff states the parties had several discussions concerning the possibility of collaborating to write Williams’ biography. However, Rigg, a historian and author, states he had already decided to write a book about the Pacific campaign of World War II prior to the parties’ initial introduction. He states he had traveled to Guam and Iwo Jima as part of this research, and then, after meeting Williams, decided to incorporate Williams in the book as a vehicle to tell the stories of all servicemen who fought in the Pacific campaign.
In July of 2016, Rigg visited West Virginia, where Williams was born and still resides, and met with Williams and his family to gather personal details about Williams’ life. On February 12, 2017, Rigg returned to West Virginia to again meet with Williams and his representatives at the Holiday Inn hotel in Barboursville, West Virginia, where Plaintiff alleges the parties discussed the terms of their collaboration. Plaintiff contends the parties both agreed to the following:
Williams would provide Defendant Rigg with personal information about his life and his military service;
Defendant Rigg would conduct research as necessary for the book and prepare a draft manuscript of the book;
The information contained in the book would be factual as it related to Mr. Williams;
Williams, along with Defendant Rigg, would have input into, and authority over, the text and content of the book; and
Williams and Defendant Rigg would share equally in any proceeds from the book.
Based on this alleged agreement, Williams provided Rigg with information, including untold stories and sentimental items, which Rigg used to prepare drafts of the book.
During the writing process, Rigg shared drafts of the book with Williams and Williams in turn would provide suggested edits and revisions. Towards the end of 2017, the parties attempted to draft a written contract to memorialize the alleged oral agreement. Over the course of a year, the parties, through Williams’ representatives, exchanged numerous drafts of this proposed written contract, but were ultimately unable to reach an agreement. Thereafter, the relationship between the parties began to deteriorate due to both parties’ dissatisfaction with the failed written contract.
After this breakdown in communication, Williams became aware of additions to the manuscript which called into question his military actions during the Battle of Iwo Jima and the legitimacy of his Medal of Honor. Plaintiff alleges these statements are “defamatory and misleading.” As a result of this, Plaintiff filed this suit alleging the following six causes of action: (1) preliminary and permanent injunction to enforce oral agreement; (2) breach of oral contract: (3) promissory estoppel/detrimental reliance; (4) conversion of an idea; (5) joint venture; and (6) interference with the right of publicity.
On March 21, 2020, in response to Defendant’s self-publication of the book, Plaintiff [moved for a temporary restraining order and a preliminary injunction].
The court refused to enter the TRO and the preliminary injunction, reasoning:
[1.] Permanent injunctions against libels may well be constitutional, but preliminary injunctions are not. “Traditionally, injunctions to enjoin libel were disfavored under both common law and First Amendment prior restraint doctrine,” but “this traditional rule appears to be changing.” (The research in my Anti-Libel Injunctions article suggests the court is right on that point, with over 2/3 of the states allowing some such injunctions, and with holdings or practice in most federal circuits doing the same.) Still, the injunctions would be permissible “only after a finding on the merits that the speech is unprotected.”
“[M]any of these federal and state courts rely on prior Supreme Court opinions that suggest an adjudication on the merits is required to enjoin alleged defamatory speech.” “Thus, the majority rule first requires a finding on the merits that such speech is unprotected before an injunction can be issued enjoining further speech. Otherwise, the injunction runs afoul of the First Amendment and constitutes a prior restraint on what might otherwise be lawful speech.”
[2.] Under the Erie doctrine, a federal court resolving a state law case brought to it because of the parties’ diversity of citizenship must apply the substantive law of the state (though of course it’s also bound by any federal constitutional constraint). But though the Fourth Circuit has held that “federal courts sitting in diversity to apply state substantive law to a request for permanent injunctive relief,” “the Fourth Circuit has explicitly stated that ‘[t]he grant of preliminary injunctions in diversity cases, as well as those of original jurisdiction, is subject to federal standards.’ Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1991) (citing Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 799 (3d Cir.1989)). Thus, because Plaintiff seeks a preliminary not a permanent injunction, this Court will apply federal law.”
I think that’s not right: It seems to me Direx was speaking about federal courts applying the basic federal preliminary injunction test (likelihood of success, irreparable harm, etc.), but wasn’t authorizing federal courts to issue injunctions that state law precludes for state policy reasons. West Virginia courts categorically forbid injunctions in libel cases (West Virginia is one of a small but significant minority of states that still take this view); given that federal courts follow that principle in permanent injunction cases arising under West Virginia law, the same principle should apply to preliminary injunctions as well. But in any event, given that preliminary injunctions against libel are generally forbidden by the First Amendment (as the court recognized, see item 1 above), this Erie issue isn’t that significant (as the court also acknowledged).
[3.] The plaintiff had argued that his case is based on the defendant’s contractual obligations, and the libel law cases thus don’t apply:
Plaintiff argues this case is controlled by the United States Supreme Court’s holding in Cohen v. Cowles Media Co. (1991), that a promissory estoppel action brought by a confidential source against a newspaper did not implicate the First Amendment. In Cowles Media, a newspaper promised to keep a source’s identity confidential in exchange for information. Despite this agreement, the reporters decided to publish the source’s name as a part of their story, and the source was fired by his employer…. The Supreme Court held that the First Amendment did not prohibit the recovery of damages under state promissory estoppel law for the newspaper’s breach of a promise of confidentiality because it was a law of general applicability that did not offend the First Amendment simply because it had incidental effects on the newspaper’s ability to gather and report the news.
Most importantly, the Supreme Court emphasized that the source, Cohen, was not attempting to use a promissory estoppel cause of action to avoid the strict requirements for establishing a libel or defamation claim. “As the Minnesota Supreme Court observed here, ‘Cohen could not sue for defamation because the information disclosed [his name] was true.’ Cohen is not seeking damages for injury to his reputation or his state of mind. He sought damages in excess of $50,000 for breach of a promise that caused him to lose his job and lowered his earning capacity. Thus, this is not a case like Hustler Magazine, Inc. v. Falwell (1988), where we held that the constitutional libel standards apply to a claim alleging that the publication of a parody was a state-law tort of intentional infliction of emotional distress.”
This is what separates the case at hand from Cowles Media. Plaintiff has repeatedly claimed that Rigg’s speech is false, defamatory, and presents a risk of harm to Williams’ reputation, goodwill, and his public image. In fact, these allegations serve as the basis for Plaintiff’s argument that the second and third Winter factors weigh in favor of granting this injunction. [Details omitted. -EV] …
By basing his claims for irreparable harm on allegations of falsity and defamation, Williams seeks a preliminary injunction that will, in essence, punish Rigg for the content of his speech…. Plaintiff has repeatedly challenged the truth of Rigg’s statements concerning his Medal of Honor. Further, the harm Plaintiff seeks to prevent with this injunction is based entirely on defamation, libel, and reputation-based damages. Thus, granting a preliminary injunction on this basis would require this Court to evaluate Rigg’s speech and, at a minimum, pass judgment on the truth or falsity of that speech and its potential for harm.
Further, even if the Court were to just consider the first Winter factor, concerning the likelihood of success of the merits, it would still be required to evaluate the truth of Rigg’s speech. Plaintiff alleges an oral contract was formed between the parties where they both agreed “[t]he information contained in the book would be factual as it related to Mr. Williams,” and Plaintiff claims Rigg violated their oral agreement by publishing a book that contains false statements, in violation of their alleged oral contract….
In essence, Plaintiff seeks to bar further speech before a final adjudication on the merits concludes that the speech is unprotected….
[4.] More broadly, injunctions against speech that allegedly breaches a contract should generally be based only on express, written contracts:
[T]he Supreme Court has not articulated a standard for determining whether a party has waived his free speech rights. Though in Curtis Pub. Co. v. Butts (1967), the Supreme Court did refuse to find that a party waived his right to bring a First Amendment defense to a libel claim, and held that, “[w]here the ultimate effect of sustaining a claim of waiver might be an imposition on that valued freedom, we are unwilling to find waiver in circumstances which fall short of being clear and compelling.” Additionally, in Fuentes v. Shevin (1972), the Court stated, “a waiver of constitutional rights in any context must, at the very least, be clear.” Plaintiff’s arguments here are at odds with these statements because it is undisputed that no written contract existed between the parties.
Further, when reviewing the few cases analyzing the enforcement of non-disparagement clauses under preliminary injunction standards, Defendant is correct that all involve a specific, written contract that contains some type of language limiting the parties’ future statements. See, e.g., Taylor v. DeRosa, No. 03-08-00199-CV, 2010 WL 1170228 (Tex. Ct. App. Mar. 24, 2010)
(affirming a preliminary injunction to enforce a non-disparagement clause in a written settlement agreement); Perricone v. Perricone, 972 A.2d 666 (Conn. 2009) (affirming a preliminary injunction to enforce a non-disparagement clause contained within a confidentiality agreement which forbid defamatory or disparaging statements); Aultcare Corp. v. Roach, No. 2007CA0009, 2007 WL 3088036 (Ohio Ct. App. Oct. 22, 2007) (affirming a preliminary injunction to enforce a non-disparagement clause in a written settlement agreement); see also Brammer v. KB Home Lone Star, L.P., 114 S.W.3d 101, 104 (Tex. App. 2003) (holding that the waiver of a parties First Amendment rights was not knowing, voluntary, and intelligent).
To the contrary, the plaintiff here asks this Court to enforce a disputed oral contract, meaning there is no language for the Court to interpret or consider. Plaintiff is essentially arguing that he himself interpreted Rigg to make statements, three years prior, that serve as a waiver of Rigg’s First Amendment rights today. This argument is a reach, to say the least. The Supreme Court has classified the freedom of thought and speech to be “the matrix, the indispensable condition, of nearly every other form of freedom.” Curtis. It is only logical to conclude that clear, compelling, written language is required to waive such rights.
Plaintiff presented no evidence at the preliminary injunction hearings to support a finding that Rigg knowingly, clearly, and compellingly agreed to waive his right to make the statements Plaintiff classifies as false and defamatory. Thus, Plaintiff has failed to show that this preliminary injunction would not constitute a prior restraint…..
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Global Markets Jump On Easing Of Lockdowns, Surging Oil
Traders are buying in May and not going away.
For the second consecutive day, US equity futures rose on Tuesday, bolstered by continued gains in the price of oil which headed for its longest winning streak in nine months amid optimism demand is rebounding and the peak of the production glut is behind us, while a slew of countries eased coronavirus-led restrictions in an attempt to revive their economies bolstering optimism for some random letter-shaped recovery.
Hopes for a recovery in demand boosted oil prices, helping energy giants Exxon Mobil and Chevron lead gains among the blue-chip Dow components.
Over in Europe, every sector climbed as the Stoxx Europe 600 advanced after slumping a day earlier and missing out on the late rebound for U.S. stocks. Shares of energy companies led the gains as oil extended its rebound. U.S. futures and European equities briefly trimmed gains as risk sentiment was curtailed after a 7-to-1 ruling from Germany’s top court over the legality of ECB stimulus found that some parts of the quantitative easing program aren’t backed by European Union treaties and gave the central bank three months to fix the asset purchase program. Total SA was among the big winners despite reporting a 35% plunge in first-quarter profit.
Earlier in Asia, there was little activity with markets closed in Japan, China and South Korea.
Wall Street snapped a two-day losing streak on Monday as gains in large tech and internet companies and oil prices outweighed concerns about the latest U.S.-China tensions and downbeat sentiment from the annual meeting of Warren Buffett’s Berkshire Hathaway.
The S&P 500 has climbed about 30% from its March lows on the back of unprecedented stimulus measures and signs of a plateau in new COVID-19 cases in many areas. However, many market experts have warned that the rally could be tested amid a risk of another wave of virus infections and with growing evidence of the damage to economy and corporate America.
The euro fell as investors scrutinized a verdict from Germany’s top judges over the legality of European Central Bank stimulus. They ruled that some actions taken by the country’s Bundesbank to participate in the asset purchase program were unconstitutional. Most bonds in the region turned lower led by Italian debt.
“There is reaction among euro area government bonds, but this ruling in Germany is not definitive for sentiment today on global markets,” said Stephen Gallo, head of European FX strategy at the Bank of Montreal. “Signs that lockdowns aren’t being severely re-tightened are setting the tone.”
Efforts by many major economies to start easing restrictions that have helped contain the coronavirus pandemic are inspiring a fragile confidence and hopes for an economic recovery. Countries including Italy as well as some U.S. states are tentatively lifting some restrictions this week but at the risk of a second wave of infection as global deaths surpassed a quarter of a million. However stocks remain on shaky ground as U.S.-China tension flares, and traders weigh the chances of a second wave of infections.
As global deaths from the pandemic topped 251,000, Hong Kong said it will ease curbs on social gatherings and reopen shuttered schools. California, the first state to shut down its economy over Covid-19, said it will start loosening its lockdown on Friday. Italy began to reopen its economy after two months. Spain started to relax its lockdown regime after weeks of confinement.
In rates and FX, Bloomberg Dollar Spot Index reversed an earlier loss and the greenback rose versus most Group-of-10 peers. The euro whipsawed after Germany’s constitutional court partly dismissed an ECB QE case but said some action is unconstitutional. The euro initially touched a session high against the dollar after the first headline on the ruling, before reversing, and losses extended as stops were hit around the 21-DMA; Italian bonds edged lower after the news. Treasury and bund yield curves bear steepened and commodity currencies, led by Australia’s dollar, held up well against the greenback as oil prices climbed; Australia’s central bank maintained policy and said it was ready to boost bond purchases, if needed.
WTI and Brent front month futures continue their grinds higher amid optimism of a rebalancing market as oil producers curtail output and economies gradually come back online. Further on the supply side, the Texas Railroad Commission is to convene today at 15:30BST to discuss and vote on mandated oil cuts. Markets largely expected the Commission to vote against the production limit.
Elsewhere, spot gold is on the backfoot amid the risk-appetite in the market and trades on either side of 1700/oz. Copper meanwhile remains underpinned by the risk-tone alongside the prospect of demand spurred by the reopening of global economics.
Expected data include trade balance and PMIs. Fiat Chrysler, Cheesecake Factory, and Disney are among companies reporting earnings.
Market Snapshot
S&P 500 futures up 0.5% to 2,840.25
STOXX Europe 600 up 1.6% to 333.65
MXAP up 0.6% to 143.59
MXAPJ up 0.9% to 462.76
Nikkei down 2.8% to 19,619.35
Topix down 2.2% to 1,431.26
Hang Seng Index up 1.1% to 23,868.66
Shanghai Composite up 1.3% to 2,860.08
Sensex up 0.6% to 31,889.14
Australia S&P/ASX 200 up 1.6% to 5,407.07
Kospi down 2.7% to 1,895.37
Brent futures up 6.8% to $29.05/bbl
Gold spot down 0.1% to $1,699.70
U.S. Dollar Index up 0.4% to 99.92
German 10Y yield rose 3.4 bps to -0.529%
Euro down 0.1% to $1.0892
Italian 10Y yield rose 0.4 bps to 1.593%
Spanish 10Y yield rose 0.3 bps to 0.762%
Top Overnight News from Bloomberg
The European Central Bank’s quantitative-easing program looks set to fight another day, even after German judges issued a three-month ultimatum to fix flaws in the controversial measure. In a 7-to-1 ruling, judges said that it isn’t backed by European Union treaties
Hong Kong’s leader said some social distancing measures will be eased, Italy began to reopen its economy after two months and Spain started to relax its lockdown regime after weeks of confinement. In the U.S., California and Arizona took steps toward reopening as New York reported the fewest new infections since mid-March
Chinese state media unleashed a torrent of criticism against Secretary of State Michael Pompeo – – calling him “evil” and a liar — as Beijing sought to push back against the U.S.’s virus allegations without prompting a confrontation with President Donald Trump
Italian banks are seeking to remove another 6 billion euros ($6.6 billion) of non- performing loans from their books before a new wave of toxic debt is unleashed because of the coronavirus outbreak
Australia’s central bank kept the interest rate and yield objective unchanged Tuesday as it braces for the shock from the shuttering of large parts of the economy to stem the spread of the coronavirus
With the U.K. government all but certain to ramp up spending to save jobs and keep businesses afloat, BOE Governor Andrew Bailey may signal he’s willing to buy more debt to keep borrowing costs from rising. At the current pace, the central bank will hit its current bond-buying goal around the end of June
U.K. new-car registrations plunged 97% in April to a level not seen since February 1946, after the government closed auto dealerships and other businesses to slow the spread of the coronavirus
Asian equity markets traded positively as the region took impetus from the rebound on Wall St where all major indices spent the session gradually paring earlier losses from the renewed US-China trade tensions and geopolitical concerns in the Korean peninsula, with the upside led by strength in tech and energy. As such, ASX 200 (+1.6%) is higher with the energy names mirroring the outperformance of the sector stateside on continued gains in oil prices and with strength seen across all of the big 4 banks, while Afterpay Touch extended on its rally after Tencent recently became a substantial shareholder in the Co. Hang Seng (+1.1%) was also underpinned by the improved risk tone and following comments from Chief Executive Lam who stated the time has come to ease social distancing measures and that she will announce the easing of restrictions as soon as possible. However, gains were limited by GDP data which showed Hong Kong fell deeper into a recession with the largest contraction on record for Q1 and as mainland China remained shut, alongside holiday closures in Japan and South Korea.
Top Asia News
Australian Central Bank Holds Fire as It Braces for Economic Hit
At Least China’s Big Market Reopen Won’t Be So Brutal This Time
‘Mind Boggling’ 122 Million Jobs Lost in India, CMIE Says
Malaysia Cuts Key Rate by Most Since 2009 as Economy Reopens
Stocks remain positive territory [Euro Stoxx 50 +1.0%] following on from a similarly positive APAC session, albeit stocks saw substantial downside on the release of the German Constitutional Court verdict which issued a three-month ultimatum to the ECB in order to demonstrate proportionality – i.e. the monetary objectives of PSPP are not disproportionate to the economic and fiscal policy effects. Should the ECB fail to show this, then the Bundesbank may no longer participate in PSPP. On the release, DAX cash slipped from around 11,700 to around 10,6200 before continuing to trickle lower before finding a recent base just above 10,500. Sectors are all in the green with outperformance in the energy sector as the oil market continues its upwards trajectory. Some defensive sectors also lag cyclicals – with the exception of Healthcare. The sector breakdown also paints a similar picture with Oil & Gas and Basic Resources the top performers – whilst Household Goods and Food & Beverages reside on the other side of the spectrum. In terms of individual movers Infineon (+2.5%) rises post-earnings despite mixed numbers as the group issued earnings following its withdrawal earlier in the year. SAP (-0.8%) is weighted on after it identified that some of its cloud products did not meet one, or more, of the contractually, agreed or statutory IT security standard conditions – this affects 9% of customers. Total (+5.4%) is supported post-earnings amid the rise in oil prices alongside announcing that new measures taken will allow organic cash breakeven to remain below USD 25/bbl in 2020. Finally, Pandora (+6%) resides towards the top of the Stoxx 600 after noting in its earnings that it has the liquidity to sustain a stress-test scenario where all physical stores are temporarily closed throughout 2020.
Top European News
Irish Banks Again Europe’s Worst Performer as Crashes Add Up
Britain May Get First Floating Gas Store to Ease Reserve Crunch
U.K. Services Hit a Wall in April, Deepening Virus Malaise
Italian Bonds Fall After German Court Rules on ECB Bond Buying
In FX, The euro currency was already on the verge of relinquishing 1.0900+ status vs the Dollar ahead of the German Constitutional Court’s judgement on ECB QE and only got a fleeting fillip when the verdict went in favour on the grounds of insufficient evidence support the motion that the policy measure violates the prohibition of monetary financing. However, some of the Bank’s actions are deemed to be illegal and not backed by the EU Treaty, so the Senate has set a 3 month deadline for the GC to clearly define PSPP proportionality in the context of associated economic and fiscal effects, after which time the Bundesbank may not be permitted to participate in the asset purchase scheme, or reinvestment following the transition period. Eur/Usd has subsequently slumped towards 1.0800 and support seen around 1.0800, with the DXY eyeing 100.000 given the Euro’s hefty weighting in the index.
CHF – The Franc has extended declines against the Greenback to sub-0.9700 in wake of downbeat Swiss data and survey releases in the form of CPI and consumer confidence both turning more negative, but Eur/Chf has retreated further towards 1.0500 on the aforementioned Euro depreciation that may also have implications for the PEPP.
NOK/SEK/AUD/CAD – Relative G10 outperformers, as the Norwegian Crown draws more momentum from oil’s continued recovery and the aforementioned Euro weakness to retest 11.2000, while the Swedish Krona takes some encouragement from preliminary Q1 GDP metrics showing resilience the economy before the anticipated COVID-19 demise, with Eur/Sek hovering just above 10.7000. Elsewhere, the Aussie is holding a portion of its post-RBA gains following unchanged rates, albeit off overnight peaks when stops were tripped beyond 0.6450, and the Loonie is also benefiting from the more pronounced rebound in crude prices within a 1.4030-95 range ahead of Canadian and US trade reports.
GBP/NZD/JPY – All struggling to contend with Buck’s revival at the expense of the Euro in large part, but Cable has taken comfort from an upward tweak to the UK’s services PMI and Eur/Gbp’s reversal through the 200 DMA to stay afloat between 1.2420-85 parameters. Conversely, the Kiwi is being hampered somewhat by cross-winds given upside in Aud/Nzd from the low 1.0600 area to just shy of 1.0650 after the RBA, but pivoting 0.6050 vs its US counterpart in advance of NZ Q1 labour data tonight. Meanwhile, the Yen remains entrenched in Japanese holiday trade within a 106.50-90 band and waiting for the end of Golden Week that ends just in time for NFP on Friday.
EM – Little respite for the Lira as attempts to pare losses become less compelling and shallower into the 7.0000 handle, with Usd/Try increasingly more inclined to extend the break and target record peaks not seen since Turkey’s economic, fiscal and currency crisis in 2018.
In commodities, WTI andBrent front month futures continue their grinds higher amid optimism of a rebalancing market as oil producers curtail output and economies gradually come back online. Further on the supply side, the Texas Railroad Commission is to convene today at 15:30BST to discuss and vote on mandated oil cuts. Markets largely expected the Commission to vote against the production limit –called “pro-rationing”. Texas is the largest US oil-producing state, with an output of around 5.4mln BPD, accounting for around 41% of the nation’s production. The State of Oklahoma (557k BPD) is expected to discuss quotas on May 11th followed by North Dakota (1.425mln BPD) on May 20th. In terms of bank commentary, UBS expects oil markets to be balanced in Q3 followed by a period of undersupply in Q4. The Swiss bank expects Brent proves to recover to USD 43/bbl by end-2020 but notes that global travel restrictions are likely to keep the market oversupplied in Q2. WTI June resides at the top of its current USD 21.13-22.77/bbl range while Brent July also sees itself at the top-end of its intraday USD 27.77-29.41/bbl band. Later today, eyes will be on the API data for back the storage decline narrative, with extra focus on Cushing. Some traders warn that although the metric may print a smaller build, this does not mean storage capacity is expanding – but rather less room for larger builds. Elsewhere, spot gold is on the backfoot amid the risk-appetite in the market and trades on either side of 1700/oz. Copper meanwhile remains underpinned by the risk-tone alongside the prospect of demand spurred by the reopening of global economics.
US Event Calendar
8:30am: Trade Balance, est. $44.2b deficit, prior $39.9b deficit
9:45am: Markit US Services PMI, est. 27, prior 27
9:45am: Markit US Composite PMI, prior 27.4
10am: ISM Non-Manufacturing Index, est. 37.9, prior 52.5
DB’s Jim Reid concludes the overnight wrap
One of the things that has kept me going through a busy but hard lockdown has been the final series of Homeland and the penultimate series of Better Call Saul. We finished both over the last two nights. For those who gave up on Homeland seven seasons ago after the ridiculous plot, all I can say is you’ve missed a show that got better and better with age. As for Better Call Saul it is possibly as good as Breaking Bad which is an incredibly high bar. So my wife and I now have a hole to fill. After high level negotiations we’ve decided to move onto the latest series of Narcos tonight.
Global equity markets had a plot twist last night as after looking set to continue their fall yesterday a late rally saw US stocks finish slightly higher as oil continued to recover (WTI +3.08%). However the rally also seemed to coincide with California reporting the fewest covid-19 deaths since early April and potentially opening lower-risk businesses as soon as this Friday.
The S&P 500 was up slightly (+0.42%) by the close, impressive given futures were -1.74% at the lows in Asia on Monday with the index over -1% lower just after the US open. One sector that couldn’t claw all the way back were US airlines following Warren Buffet’s weekend announcement that Berkshire Hathaway had completely exited its stakes in the four major carriers. American Airlines (-6.96%), United Airlines (-4.34%), Delta Airlines (-5.67%) and Southwest Airlines (-4.95%) all saw major falls. Technology stocks continued to be the outperformers, with the NASDAQ finishing +1.23%. The VIX reversed course as risk assets rallied, with the volatility index falling -1.22pts to 35.97. Earnings weren’t the main driver yesterday but Tyson Foods fell -7.82% after the largest US meat supplier forecast lower production and higher costs during their earnings call before the US open, while not offering official guidance. After the close AIG reported earnings with about $272 million in costs attributed to virus losses, with the stock down only slightly -0.54% in post-market trading. CEO Duperreault said on the accompanying earnings call that it would probably be the “single largest” catastrophe loss ever, but that AIG was “in a strong financial position before this crisis began.” Like many other companies this quarter, the company withdrew previously released guidance and failed to offer a concrete forecast.
The bounce back overshadowed the US/China story as various news items over the last few days have all pointed to a further escalation in tensions. Reports yesterday suggested that the response will spill over into the trade arena too, with Reuters reporting US officials who said that the administration were seeking to remove global supply chains from China and were considering further tariffs as well.
Those Asian markets that are open are trading up this morning after taking their cue from Wall Street with the Hang Seng (+0.55%), ASX (+1.27%) and India’s Nifty (+1.46%) all advancing. Markets in Japan, China and South Korea are closed for a holiday. Futures on the S&P 500 are also trading up +0.59% while WTI is up a further +6.52% and closing in on $22.
Back to yesterday and European equities were among the hardest hit, although that was mainly because they were reacting to Friday’s falls elsewhere when they were closed for the Labour Day holiday. The DAX (-3.64%), the CAC 40 (-4.24%) and the FTSE MIB (-3.70%) all saw major declines, though the continent’s sovereign bonds had a more mixed performance. While the spread of both Italian (-1.9bps) and Greek (-1.4bps) 10yr yields over bunds tightened, those on Spanish (+1.3bps) and Portuguese (+2.2bps) widened. Elsewhere the dollar had its second strongest day in over two weeks, with the dollar index up +0.41%, though the pound continued its falls from last Friday, ending the session down -0.50% against the US dollar. That move comes ahead of the start of trade negotiations between the US and the UK today, which will be taking place via videoconference.
The moves in sovereign debt markets came ahead of an expected ruling from the German Constitutional Court this morning. They’ll be delivering their final verdict on the compliance of the ECB’s Public Sector Purchase Programme (PSPP) with the ECB’s mandate and the EU treaties, which prohibit the monetary financing of member states. The original case was actually filed back in 2015, shortly after the ECB started their original asset-purchase programme. The German Constitutional Court then requested an interim ruling from the European Court of Justice, who said in December 2018 that PSPP was acceptable as an instrument of monetary policy, so all eyes will be on whether the GCC agree with the ECJ or whether they might constrain German participation in ECB policy. As I said yesterday what I know about the German constitutional court could be placed on the back of a postage stamp with room to still write. However after an extra day of reading this has increased to a postcard size and from listening to our expert from Frankfurt Barbara Bottcher, it seems that the court could remind the euro area (and the markets) that the question of the Bundesbank’s participation in future risk mutualisation shouldn’t be taken for granted even as they’ll likely accept PSPP today. Whilst it would be a major shock to see a negative ruling the court could still define some conditions around PSPP. Don’t forget we haven’t even got to the legality of PEPP yet but as this current case has taken a few years to get to where we are then the market will cross that challenge when it eventually needs to.
Back to the US, DB’s Matthew Luzzetti has just gone live with his second podcast episode looking at how the US economy is being impacted by the Coronavirus. Visit https://www.dbresearch.com/podzept/ to listen and subscribe to Podzept on Spotify, Google and Apple Podcasts. Sticking with the US, the New York Fed said yesterday that it expects to begin purchasing shares of eligible ETFs in early May through the SMCCF and added that its lending through the PMCCF and SMCCF via purchases of corporate bonds will begin soon thereafter. In additional details, the New York Fed said that it “will generally not purchase shares of an ETF that are trading at a premium” of 1% above its net asset value, or if the NAV premium diverged from the trend of the previous year. It also clarified that companies will have to provide written certifications that they were not able to obtain financing through traditional channels if they wish to place debt directly with the Fed through the PMCCF and added that subsidiaries of foreign companies may use the facilities if they have “significant operations” – meaning “greater than 50%” of assets, income, operating revenues, or operating expenses – in the US, and a majority of employees based there. Meanwhile, the US Treasury said that it plans to boost the US borrowing from April to June by c. $3tn to fund new stimulus spending legislation and tax receipt deferrals.
In terms of data out yesterday, we got a bunch of manufacturing PMIs, though they didn’t get much attention since countries not on holiday had released on Friday, while the flash PMIs had already given us a clue as to the numbers. Anyway, once again the figures showed sharp contractions, with the final Euro Area PMI revised down two-tenths to 33.4, a record low since the series began in 1997. In terms of the countries without a flash reading, Italy and Greece came in at 31.1 and 29.5 respectively, a record low for both. Outside of Europe, India was another badly affected country, with a 27.4 reading.
Wrapping up with the other data, US factory orders fell by -10.3% (vs. -9.7% expected) in March, while durable goods orders fell by -14.7% (vs. -14.4% expected). Meanwhile in Hong Kong, GDP fell by -5.3% in Q1, the largest quarterly decline on record.
To the day ahead now, and there’ll be the aforementioned German Constitutional Court verdict on the ECB’s PSPP, as well as the start of negotiations on a UK-US trade agreement. We have a number of earnings announcements including Disney, while we’ll hear from the Fed’s Evans, Bostic and Bullard. Finally, data highlights include the services and composite PMIs for April from the UK and US, while there’s also the ISM non-manufacturing index for April from the US and March’s trade balance.
A BBC producer once told me about the risk assessment she was required to complete before filming at a market in Wales. She quietly added “superglue to repair broken unicorn horns” to the first aid content list. She was never caught. No one ever checked. Full in-depth risk assessments by companies with 5 or more employees will be required for post lockdown business re-openings. I won’t be getting the train to London anytime soon – the rail unions are insisting on full PPE, and arguing it I would be safer if trains were passenger-free to protect their members.
Nothing ever really changes… I am going to instigate a prize for the most ridiculous threat identified or mitigated by a Risk Assessment. How many lives have risk assessments saved?
What is the future going to look like?
What if I suggest the Coronavirus, and the consequences of the response, will spell the effective end for Financial Asset Markets – bonds and equity? What if I think that’s probably a good thing?
The argument is simple.
The repression of interest rates to zero and negative real yields has become an absolute disincentive to invest in them. The search for yield has pushed investors to take more risk – buying increasingly high-risk corporate debt at lower and lower yields. The effect has been to make businesses less and less efficient as they gorge and grow flabby on cheap debt, while pushing up their stock prices through buy-backs. As dividends collapse because of the crisis, and because any cash is required to service burgeoning debt.. its time to ask an important question:
SERIOUSLY – WHAT IS THE POINT IN BUYING FINANCIAL ASSETS?
At this point, my fund management readers will choking into their coffees, spluttering with rage. They buy financial assets because they are liquid. (No – they are not. They are liquid because QE Infinity makes them liquid by supplying a buyer of last resort.) Or they might bemoan the fact UCITS rules mean they have to hold them. A few will be laughing.. “That idiot Blain, doesn’t he understand that we don’t care.? As long as governments and central banks keep buying, we’ll earn returns.”
You don’t need distorted financial assets.
It’s time to by-pass them. Invest direct into the real economy. The returns will be better, and its honest.
Wake up to the Alternatives Markets – investing directly into the real economy! It’s much less distorted and offers real returns versus risk. I expect to see direct investment grow exponentially in coming years – especially as the investment community wakes up to the fact they already have all the required skills to invest in it. Whether its debt and equity private placements, direct lending, secured loans or venture capitalism – the trick is to understand the business, its risks and returns. Simples…
Arbitraging government bailouts or Central bank QEI is something any second-rate trader can manage.
Let me present you with a choice. Would you rather just follow the Fed, BoE and ECB and buy whatever they buy, or would you rather invest in the Coronavirus recovery?
Anticipating what the Virus Recovery is going to look like is a great place to start. The decimation of humanity by (this) virus came no-where close. We’ve been lucky. It could have been much much worse. The reality is the virus will start to play a smaller part in economic decision making. Be warned: it’s still going to dominate the news and media – Journalists need something to be sensational about.
Expect to see the experts, advisors and politicians become increasingly confident as effective treatments, and long-term mitigation through a vaccine, push back the threat. Last night I was impressed by the confidence of one of the Oxford Team who thinks we could have a functional virus ready in a few months. (The BBC had to balance that with a doomster warning of how much longer it could take…)
Without the fear of the Virus – how quickly can we get the economy up and running?
This where financial asset markets and reality have utterly diverged. President Trump has long made the error of mistaking gains in stock indices as a proxy for economic strength. It’s never been more apparent how detached the two are.
There are many investible scenarios arising from the crisis recovery:
1) Investments that will do well out the crisis long-term because of the new business environment/ecosystem it creates – the dramatic growth of Microsoft’s cloud business is a great example.
2) Firms that got short-term lifts from the crisis, receiving a boost from filling a lock-down need – game makers and companies like Netflix seeing subscriptions surge, while the numbers for supermarket chains may not hold up as a new reality bites.
3) Some companies will see order books hit by supply chains and lockdown – causing massive Q2 earnings hits. But many discretionary purchases will simply be delayed – we will still buy new i-Phones and even a Tesla when the economy reopens.
4) There are whole sectors that have oversold on fear. Property is a good example. There is a blithe assumption Working-from-Home means no-one will ever live in cities again. Wrong. If London-resi blips or slows, it’s a buy! The long-term shows it swiftly recovers.
5) There are businesses that see short-term revenue permanently lost during lockdown, but will see recovery as the economy reopens – local hospitality and restaurants. Despite the panic, I suspect these service sector businesses are best placed to benefit from medium-term low/zero cost govt support, job preservation, and swiftly reopen.
6) Companies that have seen permanently lost revenues and face long-term struggle to reopen as fears persist – airlines, cruising, aerospace. These are today’s equivalent of the 1970s/80 obsolete industries.
7) And of course, there are firms exposed as corporate failures – I would put Boeing in this bracket as it could take years for order books to recover, and despite the bond market arbing the Fed put, they don’t have the cash to develop aircraft airlines can afford to or want to buy! (Personally, I think it’s an opportunity for someone to break the airtravel duopoly and build something new and better. I have Embraer’s phone number…)
How long is recovery going to take? Longer than we hope, but prove less damaging than we fear.
The idea of a sharp V-Shaped recovery has been knocked on the head.
The reality is global supply chains – especially for just-in-time manufacturing – are reliant on multiple producers to come back together. Volkswagen are on the front pages this morning warning their suppliers are being forced to hike parts prices. The supply side of the economy is going to take time to reopen and adjust. (And to complete risk assessments..)
The demand side will be even more tortuous with upwards of 100 million workers constructively unemployed around the developed world. The experience in China seems to show workers slow and reluctant to return to work. We’re hearing similar in the UK and Europe.
Meanwhile, the consequences of bailout and QEI distortions mean Financial Assets are effectively doomed – except as arbitrage games. Direct investment to get away from the distortions that have killed markets is going to boom.
And if you are looking for advice on the subject … my day job is running Shard’s Alternative Asset business… If you want a great play on a vital commodity, a chance to get in at the bottom of the Resi recovery, or even exploit the end of lockdown by investing in outdoor pursuits… then give me a shout.
Russia Reports 30,000 New COVID-19 Cases In 72 Hours As Explosive Spread Continues: Live Updates
Last night, we reported that the number of confirmed coronavirus-linked deaths around the world had surpassed 250,000. The astronomical new milestones reached over the past week – the number of ‘confirmed’ cases topped 3 million while deaths topped a quarter-mil – belie the reality that from Asia, to Europe to the US, restrictions on personal movement and business activity are being rolled back.
One of the biggest news stories of the week so far is an NYT report citing ‘projections’ ordered by the CDC showing the number of deaths doubling to 3k/day by next month. The NYT cited this as evidence that the push to reopen is premature, even as the CDC and the researchers at Johns Hopkins who compiled the projections played down their importance and predictive qualities.
Expanding on those criticisms, former FDA Director Dr. Scott Gottlieb explained that the projection is mostly meaningless during an appearance on CNBC’s “Squawk Box”. Gottlieb explained that considering how far we are into this outbreak, it’s surprising how little researchers know for certain about the virus.
“What they do is they work with outside academic groups – and in this case they worked with a group at Hopkins that was under contract. This was one of a number of different runs that the Hopkins researchers came up…it’s not at all clear that this is a definitive model…of what might happen,” Gottlieb said.
On the other hand, Gottlieb added that the 3,000/day death toll projection isn’t the worst that he’s seen.
“No, from what I’ve heard is there were others that were worse. As we start to reopen the economy more – you saw airline travel pickup Friday for the first time in 30 days – they’re going to pick up. We are going to have a background of spread, and we are going to have to figure out what that looks like,” Gottlieb said.
Whether the US manages to start reopening without a massive surge in deaths is going to depend on a number of factors, Gottlieb explained.
“I think the issue going forward is going to be ‘where can you go to get tested?’ – but if you get to the point where doctors don’t want to run these tests because if you get a positive result you need to deep clean the office and quarantine your staff,” Gottlieb said.
Moreover, Dr. Gottlieb explained that the US outbreak actually hasn’t been subsiding. Most of the nationwide “progress” is largely due to the success that New York State has had bringing its outbreak – the worst of any state in the US – to heel. If one were to ‘back out’ the New York numbers from the national data, Gottlieb explained, the picture they paint is considerably less rosy. “You certainly can’t conclude that the epidemic has reached its peak…” Gottlieb said.
Despite worries about a ‘second wave’, the US and EU4 – Italy, Spain, France and Germany – have continued to push toward reopening, Russia has continued to move in the opposite direction. According to Reuters, the number of new coronavirus cases reported in Russia on Tuesday has risen by 10,102 over the past 24 hours, compared with a record 10,581-case jump the previous day. Over the last 72 hours, Russia has confirmed some 30k+ cases, bringing its total confirmed caseload to 155,370, along with 1,451 deaths, with many more cases likely still unconfirmed, Reuters reported.
New York Governor Andrew Cuomo and California Gov Gavin Newsom took the public by surprise yesterday when they each announced plans to speed up the phased reopening in their states. Cuomo ordered local officials to start preparing “now” for May 15, when New York’s reopening is expected to start. In California, Gov Newsom – who just last week said it was too early to speculate about a reopening date – said that some more retail businesses in his state would reopen by the end of the week. Germany’s provincial leaders reportedly agreed during a phone call with Merkel on Tuesday to reopen more businesses and allow more students to return to class. On Tuesday, Germany reported a fifth consecutive decline in the number of new cases being confirmed.
On Tuesday morning, the biggest news out of the US pertained to a vaccine trial run by Pfizer: the drug giant said Tuesday that the first patients participating in Pfizer’s massive vaccine trial have been dosed. The study will examine the efficacy of four trial drugs.
The number of new coronavirus cases confirmed in Germany declined for the fifth day in a row on Tuesday, assuaging concerns about a recent uptick in Germany’s rate of viral spread seen after it started allowing some more businesses to reopen.
Hong Kong’s government said Tuesday it would further relax restrictions on public gatherings and allow gyms, cinemas and beauty parlors to re-open by the end of the week as the flow of new coronavirus cases slows to a trickle, with practically every new case found to be imported, rather than locally transmitted.
Australia and New Zealand said efforts to resume travel between the two countries would take some time, as they cautiously re-open their mostly shuttered economies after containing outbreaks of the novel coronavirus.
A team of analysts at Goldman Sachs published a research note yesterday arguing that Sweden’s strategy for confronting SARS-CoV-2 likely couldn’t be replicated in the EU and the US. Well, on Tuesday, Sweden’s chief epidemiologists said the country may have had its first case of the virus as early as November.
As far as we know, local authorities in Wuhan weren’t even aware of the outbreak in November.
Over the past few weeks, we’ve seen more evidence suggesting that domestic spread of SARS-CoV-2 had started in US and other countries as early as January. We can’t help but wonder: if accurate, this would cast the battle against the virus in a whole new light.
5/5/1992: The 27th Amendment is ratified. It was initially proposed in 1789.
No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.
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5/5/1992: The 27th Amendment is ratified. It was initially proposed in 1789.
No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.
from Latest – Reason.com https://ift.tt/2W33w0U
via IFTTT
