Just for fun, I do an anonymous internet survey of my Constitutional Law I class every year. The survey is voluntary, with a high but far from universal response rate. Some of the students were required to take my class, and others were required to take Constitutional Law I, but got to choose their professor. Here are some results from the past three years:
Baltimore Mayor Warns Of Body “Snatching” White Van Targeting Young Girls To Sell Their Organs
Seriously WTF!
We tend to report on how Baltimore City’s socio-economic crisis is sending the region into a collapse. Now there’s a new report that appears to be literally from a third world country!
Baltimore Mayor Bernard C. “Jack” Young warned in an interview this week with WBAL News’ Vanessa Herring that a white van has been running around the city targeting young girls for their organs, reported The Baltimore Sun.
“We’re getting reports of somebody in a white van trying to snatch up young girls for human trafficking and for selling body parts, I’m told. So we have to be careful because there’s so much evil going on, not just in the city of Baltimore, but around the country,” Young said. “It’s all over Facebook.”
.@mayorbcyoung says, “we’re getting reports of somebody in a white van trying to snatch up young girls for human trafficking and for selling body parts.
Adding, “it’s all over Facebook” & “that’s something that our police officers are aware of because its been reported.” #WBALpic.twitter.com/k1y1o96z7T
Police spokesman Matt Jablow told The Sun that the department is “aware of the posts on social media, but we do not have any reports of actual incidents.”
WBAL asked the FBI’s Baltimore Field Office about any reports of abductions in the city, and they responded by indicating no reports have yet been filed.
A spokesman for the mayor said Young was discussing a general problem of human trafficking in the city, not a specific incident.
Councilman Kristerfer Burnett, the co-chair of the Baltimore City Human Trafficking Collaborative, said: “While it’s important that we do raise awareness about human trafficking, I would note that rarely are people snatched as you may see in film or may see on social media.”
Young’s latest claims of a body-snatching van come after a news conference last month, which he said: “I’m worried about people pulling up in vans, snatching young girls to take their organs or sell them into prostitution.”
Just for fun, I do an anonymous internet survey of my Constitutional Law I class every year. The survey is voluntary, with a high but far from universal response rate. Here are some results from the past three years:
Angry Trump Cancels Press Confedence, Leaves NATO Summit Early After Video Of World Leaders Laughing At Him
The leak by the Canadian Broadcasting Corporation of a clip showing Justin Trudeau, Emmanuel Macron and Boris Johnson caught on a hot mic appearing to ridicule President Trump at the NATO 70 year anniversary summit, appears to have made an already tense diplomatic situation, downright unbearable.
Shortly after Trump told reporters that Trudeau was “two-faced” in response to questions about the hot mic video, which reportedly was also a reference to the Canadian PM’s “blackface” history, Trump tweeted that he won’t hold a scheduled news conference to conclude the NATO summit, noting that he’s spoken repeatedly to reporters at meetings with world leaders that past two days, and would leave the NATO summit early, heading to Washington at the end of the day’s meetings.
Great progress has been made by NATO over the last three years. Countries other than the U.S. have agreed to pay 130 Billion Dollars more per year, and by 2024, that number will be 400 Billion Dollars. NATO will be richer and stronger than ever before.
Just finished meetings with Turkey and Germany. Heading to a meeting now with those countries that have met their 2% GOALS, followed by meetings with Denmark and Italy.
When today’s meetings are over, I will be heading back to Washington. We won’t be doing a press conference at the close of NATO because we did so many over the past two days. Safe travels to all!
Confirmed by @POTUS that the news conference in London is cancelled.
Then Trump issued a thinly veiled threat to his NATO peers, whom he has criticized of repeatedly underpaying, saying that if they refuse to pay their required quote, he would “get them on trade,” hinting that the trade war may soon spread to even more NATO member nations:
TRUMP: IF NATO COUNTRIES DON’T PAY `WE’LL GET THEM ON TRADE
So, as NYT reporter Katie Rogers, summarized: “This was a really unusual trip for Trump, who abided by Boris Johnson’s wishes to not interfere in UK elections, got an earful from Macron, woke up to footage of close allies mocking him, and, on top of it all, decided not to get the final say with a presser.”
This was a really unusual trip for Trump, who abided by Boris Johnson’s wishes to not interfere in UK elections, got an earful from Macron, woke up to footage of close allies mocking him, and, on top of it all, decided not to get the final say with a presser.
You Better Not Short; You Better Not Try; Larry Kudlow, Please Tell Them All Why
Submitted by Michael Every of Rabobank
The NATO summit saw the expected shenanigans with: Turkey’s President Erdogan stating it will oppose defense of the Baltic region if NATO doesn’t support it in its fight against the Kurds; France’s Macron refusing to do so; and US President Trump and Macron having a public spat, and then uniting in a clash over Turkey and the Kurds and its Russian S-400 missile system, with the word “sanctions” being mentioned by the US president again. Trump also suggested that countries who don’t pay up the 2% of GDP for defence might be dealt with via the trade channel, further politicizing trade as an issue, if it wasn’t already. Markets didn’t pay any attention.
That was because they were too busy being rocked when President Trump stated he is in no rush and “in some ways I think it’s better to wait until after the election” to make a trade deal with China. Not September, as we were told by those ‘in the know’ at certain financial media; not October, as were again told; not November, as we were still told; and not December, and perhaps not early 2020 – but after the US presidential election….which might as well be forever for markets. Especially as Trump will not have any electoral concerns at that point so might just dump the whole idea and go ‘all-in’. Indeed, Commerce Secretary Ross also made clear if “substantial progress” isn’t seen soon then the final 15% tariff tranche is indeed going to happen on 15 December.
The market reaction was clear: US 10-year yields plunged from 1.84% intraday to 1.72%, presumably because of all the inflation now coming from the tariffs, and 2-year yields from 1.62% to 1.55%; the S&P dipped; and CNH went from under 7.04 to over 7.08 and is at 7.0726 at time of writing. Perhaps it will go lower again when people read headlines on Bloomberg like “China Stockpiles Foreign Tech as ‘Silicon Curtain’ Descends”.
If not, it certainly should do given the US House of Representatives just passed legislation 407-1 to impose sanctions on Chinese officials responsible for alleged human rights abuses in Xinjiang, and to prevent the sale of technology to China that can be used in such repression. The Senate measure has already passed, but the House has added provisions that require the president within 120 days to list all officials deemed responsible and to impose visa restrictions and Global Magnitsky Act sanctions; the bill also ties US policy to China to Xinjiang via an annual State Department report to Congress on the issue. As with the recent HKHRDA legislation, it is expected there will now be rapid work to consolidate the two similar bills into one and to pass it to Trump before year-end – again with a veto-proof majority behind it. Indeed, a president who already signed the HKHRDA, and who is about to be impeached by the House on strictly bipartisan lines based on the Democrats just-released report, is not really going to be in a position to veto a bill backed by his own party. China has already vowed a response: banning US-based NGOs and US military visits to Xinjiang? And not getting as much coverage, but very significant, Taiwan is inviting US military experts to the island to advise on how it can bolster its defences: that’s on top of the recent agreement of US arms sales to it.
In which case, for those in markets trying to close out their books for the year-end and to get into the Xmas party spirit–and to pretend that the geopolitical issues I have been warning about as potential landmines for so long will never actually matter–it’s time for a Christmas Carol.
The following needs to be sung to the tune of ‘Santa Claus is Coming to Town’, and is best accompanied by a *large* brandy and a larger dose of tongue-in-cheek:
“Larry Kudlow, Larry Kudlow, Please don’t let this bull market go – tell us
A trade deal is comin’ to town! A trade deal is comin’ to town! A trade deal is comin’ to town!
He’s making a list; He’s checking it twice; Of all the things about China that’re suddenly nice – so
A trade deal is comin’ to town! A trade deal is comin’ to town! A trade deal is comin’ to town!
He sees when stocks are slipping; He knows when bears awake
He knows the Dow Jones must look good; For Trump’s electoral sake
So you better not short; You better not try; Larry Kudlow, please tell them all why – ‘cos
A trade deal is comin’ to town! A trade deal is comin’ to town! A trade deal is comin’ to town!
A great, great trade deal is comin’ to toooooooooooooownnnnn!”
And there will be nowhere singing this more loudly than Australia given that Q3 GDP came in at just 0.4% q/q, a tick weaker than expected vs. an upwardly-revised 0.6% in Q2, and meaning only 1.7% y/y, around half of where the RBA sees the low-productivity/high-net immigration Aussie economy as deserving to grow. The Reserve Bank Governor of course left rates unchanged yesterday at 0.75%, and once again displayed his magic touch in saying that some downside risks to the global economy had lessened recently. Maestro!
What else to wrap with? Kamala Harris is out of the presidential race unless she gets offered VP by someone else; and Trump has stated he wouldn’t want the NHS even if it was offered to him on a silver platter; and Corbyn obviously doesn’t believe him, especially on drug pricing. On which note, the US has just proposed stripping 10-year protections for biologic drugs from generic rivals from the USMCA to speed its passage in Congress, which seems the complete opposite of what Labour is saying the US would do to the UK in a US-UK trade deal.
Catalysts, as usual, are unclear but a sudden surge of buying has lifted cryptos across the board this morning…
Source: Bloomberg
With Bitcoin testing $7800…
Source: Bloomberg
And Ethereum above $150…
Source: Bloomberg
This surge happens as CoinTelegraph reports that Bitcoin futures open interest on digital asset platform Bakkt has hit a new all-time high.
According to a Dec. 3 Twitter post published on Dec. 3 by Bakkt Volume Bot — a Twitter account dedicated to reporting Bakkt trading volumes — Monday’s open interest on Bakkt Bitcoin futures reached a new all-time high of $6.5 million.
In futures markets, open interest is the number of open contracts in the market and is often used to indicate the health of the market. When there is a large amount of open interest, new or additional capital is flowing in.
Regularly breaking records
The reported open interest is a 42% increase from the previous day, which was an all-time high as well. Last Friday and Saturday saw open interest records of $4.2 million and $4.3 million, respectively.
The platform’s trading volumes have been continuously breaking records since its launch in September. At the end of November, daily volumes on the platform hit a new all-time high of over $42.5 million — or 4,443 BTC at the time.
Also in November, Bakkt’s chief operating officer Adam White announced the firm’s move to include a cash-settled option in an apparent bid to further increase the platform’s popularity among investors. The Intercontinental Exchange — Bakkt’s parent company — later confirmed the launch of the option for Dec. 9.
Bakkt’s management could also soon start influencing United States’ cryptocurrency regulation. As Cointelegraph reported on Dec. 1, Georgia Governor Brian Kemp is expected to appoint Bakkt chief executive officer Kelly Loeffler for a United States Senate seat.
Perfect Storm: Trump Admin To Cut 750,000 From Food Stamps Ahead Of Recession
In a bid to end the massive welfare state, the Trump administration is expected to announce new measures Wednesday that would end food stamp benefits for nearly 750,000 low-income folks. The new rules will make it difficult for “states to gain waivers from a requirement that beneficiaries work or participate in a vocational training program,” according to Bloomberg sources.
Republicans have long attempted to abolish the welfare state, claiming that the redistribution of wealth for poor people keeps them in a state of perpetual poverty. They also claim the welfare state is a system of command and control and has been used by Democrats for decades as a political weapon against conservatives, hence why most inner cities vote Democrat.
House Republicans tried to cut parts of the federal food assistance program last year, but it was quickly rejected in the Senate.
The new requirements by the Trump administration would only target “able-bodied” recipients who aren’t caring for children under six.
Sources said the measure would be one of three enacted by the Trump administration to wind down the massive federal food assistance program.
The measures are expected to boot nearly 3.7 million recipients from the Supplemental Nutrition Assistance Program (SNAP). Though it comes at a time when employment is in a downturn, manufacturing has stumbled into a recession, and the US economy could be entering a mild recession in the year ahead.
As to why President Trump wants hundreds of thousands of low-income folks off SNAP ahead of an election year while the economy is rapidly decelerating could be an administrative error that may lead to social instabilities in specific regions that will be affected the hardest. Then again, no turmoil could come out of it, and it’s hailed as a success during the election year.
The Department of Agriculture estimates that the new measures could save the agency $1.1 billion in year one, and $7.9 billion by year five.
Nearly 36.4 million Americans in the “greatest economy ever” are on food stamps. At least half of all Americans have low-wage jobs, barely enough to cover living expenses, nevertheless, service their credit cards with record-high interest rates.
The economy as a whole is undergoing profound structural changes with automation and artificial intelligence. Tens of millions of jobs will be lost by 2030. It’s likely the collision of these forces means the welfare state is going nowhere and will only grow in size when the next recession strikes.
Cutting food stamps for low-income folks is the right move into creating a more leaner government, but there are severe social implications that could be triggered if the new measures are passed.
And while President Trump wants to slash the welfare state for poor people, his supply-side policies and bailouts of corporate America have been record-setting in some respects.
Actions by the administration clearly show that corporate welfare for Wall Street elites is more important than welfare for low-income folks. Perfect Storm: Trump Admin To Cut 750,000 From Food Stamps Ahead Of Recession
“Psychology is probably the most important factor in the markets, and one that is least understood.”
– David Dreman
A motive of the financial industry is to blur the lines between investor and trader. I’m convinced it’s to make investors feel guilty for taking control of their portfolios. After all, Wall Street firms ares the experts with YOUR money.
How dare you question them?
Sell to take profits, sell to minimize losses, purchase an investment that fits into your risk parameters and asset allocations; it’s all enough to brand one as ‘trader’ in the buy & forget circles that are paid to push the narrative that markets are on a permanent trek higher and bears are mere speed bumps. Wall Street has forgotten the financial crisis. You can’t afford such a luxury.
And, if you’re a reader of RIA, you’re astute enough to know better.
“You’re a trader now?”
Broker at a big box financial shop.
A planning client called his financial partner to complete two trades. Mind you, the only trades he’s made this year. His request was to sell an investment that hit his loss rule and purchase a stock (after homework completed on riapro.net). His broker was dismayed and asked the question outlined above.
Investors are advised – Be like Warren Buffett and his crew: You know, he’s buy and hold, he never sells! Oh, please.
From The Motley Fool:
Here’s what Berkshire sold in the third quarter:
During the third quarter, Berkshire sold some or all of five stock positions in its portfolio:
750,650 shares of Apple.
31,434,755 shares of Wells Fargo.
1,640,000 shares of Sirius XM.
370,078 shares of Phillips 66.
5,171,890 shares of Red Hat.
What Do Paul Tudor Jones, Ray Dalio, Ben Graham, and even Warren Buffett have in common?
A strict investment discipline.
Despite mainstream media to the contrary, all great investors have a process to “buy” and “sell” investments.
Investment rules keep “emotions” from ruling investment decisions:
Rule #1: Cut Losers Short & Let Winners Run.
While this seems logical, it is one of the toughest tenets to follow.
“I’ll wait until it comes back, then I’ll sell.”
“If you liked it at price X, you have to love it at Y.”
It takes tremendous humility to successfully navigate markets. There can be no such thing as hubris when investments go the way you want them; there’s absolutely no room in your brain or portfolio for denial when they don’t. Investors who are plagued with big egos cannot admit mistakes; or they believe they’re the greatest stock pickers who ever lived. To survive markets, one must avoid overconfidence.
Many investors tend to sell their winners too soon and let losers hemorrhage. Selling is a dilemma. First, because as humans we despise losses twice as much as we relish gains. Second, years of financial dogma have taken a toll on consumer psyche where those who sell are made to feel guilty for doing so.
It’s acceptable to limit losses. Just because you sell an investment that isn’t working doesn’t mean you can’t purchase it again. That’s the danger and beauty of markets. In other words, a stock sold today may be a jewel years from now. I find that once an investor sells an investment, it’s rarely considered again. Remember, it’s not an item sold on eBay. The beauty of market cycles is the multiple chances investors receive to examine prior holdings with fresh perspective.
Rule #2: Investing Without Specific End Goals Is A Big Mistake.
I understand the Wall Street mantra is “never sell,” and as an individual investor you’re a pariah if you do. However, investments are supposed to be harvested to fund specific goals. Perhaps it’s a college goal, or retirement. To purchase a stock because a friend shares a tip on a ‘sure winner,’ (right), or on a belief that an investment is going to make you wealthy in a short period of time, will only set you up for disappointment.
Also, before investing, you should already know the answer to the following two questions:
At what price will I sell or take profits if I’m correct?
–Where will I sell it if I am wrong?
Hope and greed are not investment processes.
Rule #3: Emotional & Cognitive Biases Are Not Part Of The Process.
If your investment (and financial) decisions start with:
–I feel that…
–I was told…
–I heard…
–My buddy says…
You are setting yourself up for a bad experience.
In his latest tome, Narrative Economics, Yale Professor Robert J. Shiller makes a formidable case for how specific points of view which go viral have the power to affect or create economic conditions as well as generate tailwinds or headwinds to the values of risk assets like stocks and speculative ventures such as Bitcoin. Simply put: We are suckers for narratives. They possess the power to fuel fear, greed and our overall emotional state. Unfortunately, stories or the seductive elements of them that spread throughout society can lead to disastrous conclusions.
Rule #4: Follow The Trend.
80% of portfolio performance is determined by the underlying trend.
Astute investors peruse the 52-week high list for ideas. Novices tend to consider stocks that make 52-week highs the ones that need to be avoided or sold. Per a white paper by Justin Birru at The Ohio State University titled “Psychological Barriers, Expectational Errors and Underreaction to News,” he posits how investors are overly pessimistic for stocks near 52-week highs although stocks which hit 52-week highs tend to go higher.
Thomas J. George and Chuan-Yang Hwang penned “The 52-Week High and Momentum Investing,” for The Journal of Finance. The authors discovered purchasing stocks near 52-week highs coupled with a short position in stocks far from a 52-week high, generated abnormal future returns. Now, I don’t expect anyone to invest solely based on studies such as these. However, investors should understand how important an underlying trend is to the generation of returns.
Rule #5: Don’t Turn A Profit Into A Loss.
I don’t want to pay taxes is the worst excuse ever to not fully liquidate or trim an investment.
If you don’t sell at a gain – you don’t make any money. Simpler said than done. Investors usually suffer from an ailment hardcore traders usually don’t – “Can’t-sell-taxes-due” itis.
An investor which allows a gain to deteriorate to loss has now begun a long-term financial rinse cycle. In other words, the emotional whipsaw that comes from watching a profit turn to loss and then hoping for profit again, isn’t for the weak of mind. I’ve witnessed investors who suffer with this affliction for years, sometimes decades.
Rule #6: Odds Of Success Improve Greatly When Fundamental Analysis is Supported By Technical Analysis.
Fundamentals can be ignored by the market for a long-time.
After all, the markets can remain irrational longer than you can remain solvent.
The RIA Investment Team monitors investments for future portfolio inclusion. The ones that meet our fundamental criteria – cash flows, growth of organic earnings (excluding buybacks), and other metrics, are sometimes not ready to be free of “incubation,” which I call it; where from a technical perspective, these prospective holdings are not in a favorable trend for purchase.
It’s a challenge for investors to wait. It’s a discipline that comes with experience and a commitment to be patient or allocate capital over time.
Rule #7: Try To Avoid Adding To Losing Positions.
Paul Tudor Jones once said “only losers add to losers.”
The dilemma with ‘averaging down’ is that it reduces the return on invested capital trying to recover a loss than redeploying capital to more profitable investments.
Cutting losers short, like pruning a tree, allows for greater growth and production over time.
Years ago, close to 30, when I was starting out at a brokerage firm, we were instructed to use ‘averaging down’ as a sales tactic. First it was an emotional salve for investors who felt regret over a loss. It inspired false confidence backed up by additional dollars as it manipulated or lowered the cost basis; adding to a loser made the financial injury appear healthier than it actually was. Second, it was an easy way for novice investors to generate more commissions for the broker and feel better at the same time.
My rule was to have clients average in to investments that were going up, reaching new highs. Needless to say, I wasn’t very popular with the bosses. It’s a trait, good or bad, I carry today. Not being popular with the cool admin kids by doing what’s right for clients has always been my path.
Rule #8: In Bull Markets You Should be “Long.” In Bear Markets – “Neutral” or “Short.”
Whew. A lot there to ponder.
To invest against the major “trend” of the market is generally a fruitless and frustrating effort.
I know ‘going the grain’ sounds like a great contrarian move. However, retail investors do not have unlimited capital to invest in counter-trends. For example, there are institutional short investors who will continue to commit jaw-dropping capital to fund their beliefs and not blink an eye. We unfortunately, cannot afford such a luxury.
So, during secular bull markets – remain invested in risk assets like stocks, or initiate an ongoing process of trimming winners.
During strong-trending bears – investors can look to reduce risk asset holdings overall back to their target asset allocations and build cash. An attempt to buy dips believing you’ve discovered the bottom or “stocks can’t go any lower,” is overconfidence bias and potentially dangerous to long-term financial goals.
I’ve learned that when it comes to markets, fighting the overall tide is a fruitless endeavor. It smacks of overconfidence. And overconfidence and finances are a lethal mix.
We can agree on extended valuations; or how future returns on risk assets may be lower because of them. However, valuation metrics alone are not catalysts for turning points in markets. With global central banks including the Federal Reserve hesitant to increase rates and clear about their intentions not to do so anytime in the near future, expect further ‘head scratching’ and astonishment by how long the current bullish trend may continue.
Rule #9: Invest First with Risk in Mind, Not Returns.
Investors who focus on risk first are less likely to fall prey to greed. We tend to focus on the potential return of an investment and treat the risk taken to achieve it as an afterthought.
Years ago, an investor friend was excited to share with me how he made over 100% return on his portfolio and asked me to examine his investments. I indeed validated his assessment. When I went on to explain how he should be disappointed, my friend was clearly puzzled.
I went on to explain how based on the risk, his returns should have been closer to 200%! In other words, my friend was so taken with the achievement of big returns that he went on to take dangerous speculation with his money and frankly, just got lucky. It was a good lesson about the danger of hubris. He now has an established rule which specifies how much speculation he’s willing to accept within the context of his overall portfolio.
The objective of responsible portfolio management is to grow money over the long-term to reach specific financial milestones and to consider the risk taken to achieve those goals. Managing to prevent major draw downs in portfolios means giving up SOME upside to prevent capture of MOST of the downside. As many readers of RIA know from their own experiences, while portfolios may return to even after a catastrophic loss, the precious TIME lost while “getting back to even” can never be regained.
To understand how much risk to consider to achieve returns, it’s best to begin your investor journey with a holistic financial plan. A plan should help formulate a specific risk-adjusted rate of return or hurdle rate required to reach the needs, wants and wishes that are important to you. and your family.
Rule #10: The Goal Of Portfolio Management Is A 70% Success Rate.
Think about it – Major League batters go to the “Hall Of Fame” with a 40% success rate at the plate.
Portfolio management is not about ALWAYS being right. It is about consistently getting “on base” that wins the long game. There isn’t a strategy, discipline or style that will work 100% of the time.
As an example, the value style of investing has been out of favor for a decade. Value investors have found themselves frustrated. That doesn’t mean they should have decided to alter their philosophy, methods of analysis or throw in the towel about what they believe. It does showcase however, that even the most thorough of research isn’t always going to be successful.
Those investors who strayed from the momentum stocks such as Facebook, Amazon, Netflix and Google have paid the price. Although there’s been a resurgence in value investing since October, it’s too early to determine whether the trend is sustainable. Early signs are encouraging.
Chart: BofA Merrill Lynch US Equity & Quant Strategy, FactSet.
A trusted financial professional doesn’t push a “one-size-fits-all,” product, but offers a process and philosophy. An ongoing method to manage risk, monitor trends and discover opportunities.
Even then, even with the best of intentions, a financial expert isn’t going to get it right every time as I outlined previously. The key is the consistency to meet or exceed your personalized rate of return.
And that return is only discovered through holistic financial planning.
ADP Employment Data Disappoints, Second Lowest Print In A Decade
The last few months have seen ADP employment gains trending lower, alongside the plunge in ISM/PMI survey data (driven by job losses in the goods manufacturing sector), and November’s data confirms that slowdown (just as we warned here).
ADP National Employment Report prints +67k (drastically below expectations of +135k and October’s +121k)
Source: Bloomberg
The Goods-producing sector lost 18k jobs (as services added 85k)…
Source: Bloomberg
“In November, the labor market showed signs of slowing,” said Ahu Yildirmaz, vice president and co-head
of the ADP Research Institute.
“The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services. Job creation slowed across all company sizes; however, the pattern remained largely the same, as small companies continued to face more pressure than their larger competitors.”
Full Breakdown highlights the job losses in Mining, Manufacturing, and Construction…
Mark Zandi, chief economist of Moody’s Analytics, said:
“The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs. Job openings are declining and if job growth slows any further unemployment will increase.”
On 29 November 2018, defendant Davin Eldridge, a frequent publisher for a Facebook page called “Trappalachia,” entered the Macon County Courthouse. The officer working the metal detector saw defendant had a small tape recorder and “advised [defendant that] he [could] not record inside the courtroom.[“] Defendant acknowledged the officer’s instruction and entered a courtroom. As he did so, defendant bypassed signs posted on the entranceways stating: “BY ORDER OF THE SENIOR RESIDENT SUPERIOR COURT JUDGE: DO NOT use or open cell phones, cameras, or any other recording devices inside the courtrooms. Violations of this order will be contempt of court, subjecting you to jail and/or a fine. Your phone may be subject to seizure and search.”
While in the courtroom, defendant was observed sitting on the second row with a cell phone, holding it “shoulder-chest level” towards the front of the courtroom. The officer went over to defendant and instructed him to put his phone away. Defendant replied, “I’m not doing anything.” The Honorable William H. Coward, Superior Court Judge of Macon County, was presiding over a criminal matter at that time. Judge Coward was informed that a live posting of the hearing in session was streaming from a Facebook page. Based on that information, Judge Coward interrupted the hearing to issue a reminder that recordings of courtroom proceedings were prohibited by law. At the conclusion of the hearing, Judge Coward viewed the Facebook postings by defendant, which included footage of the inside of the courtroom and the prosecutor presenting his closing argument.
Judge Coward then held Eldridge in criminal contempt for violating the restrictions, and the court unanimously upheld the punishment. But, more controversially,
[T]he trial court sentenced defendant to be confined in the Macon County Detention Center for thirty days. Defendant’s sentence was suspended for twelve months, upon six specific conditions for him to meet during his probationary sentence: 1) serve an active sentence of 96 hours; 2) pay the costs of the action; 3) pay a fine of $500.00; 4) draft a 2,000-3,000 word essay on the following subject: “Respect for the Court System is Essential to the Fair Administration of Justice,” forward the essay to Judge Coward for approval, and following approval, post the essay on all social media or internet accounts that defendant owns or controls or acquires hereafter during his period of probation and attributed to defendant, without negative comment or other negative criticism by defendant or others, during said period of probation; 5) not violate any order of Court or otherwise engage in further contemptuous behavior; and, 6) not attend “any court session in Judicial District 30A unless and until his essay has been approved and posted as required herein and he has fully complied with all other provisions of this order.”
The majority, in an opinion by Judge Wanda Bryant, joined by Judge John M. Tyson, upheld this:
Given defendant’s questionable and intentional conduct, his frequent visits to the courtroom, and his direct willingness to disobey courtroom policies, we discern no abuse of discretion in the trial court’s decision to impose conditions on defendant’s probationary sentence. Such conditions are reasonably related to the necessity of preventing further disruptions of the court by defendant’s conduct, and the need to provide accountability without unduly infringing on his rights.
Judge Christopher Brook dissented as to the delete-negative-comments portion of the sentence:
While I agree with the majority that the sentencing judge’s decision to require Defendant, who violated multiple court orders by recording and livestreaming courtroom proceedings on social media, to write an essay about respect for the courtroom and publish this essay on his social media and internet accounts bears a reasonable relationship to Defendant’s criminal contempt of court, and to his rehabilitation for this crime, I do not agree that requiring Defendant to monitor comments made on this essay by third-parties and delete any comments the court might consider critical bears a reasonable relationship to Defendant’s crime or to his rehabilitation, as N.C. Gen. Stat. § 15A-1343 requires….
The [comment-monitoring] condition … holds Defendant responsible for what is essentially the behavior of others; and while there is some truth to the adage that we are only as good as the company we keep, the relevant community in this context is incredibly diffuse, extending through cyberspace….
Our Court has a “settled policy” of avoiding constitutional questions “when a case can be disposed of on appeal without reaching the constitutional issue[.]” Because I vote to vacate the condition of probation requiring Defendant to delete negative comments on the essay [on statutory grounds], I do not delve deeply into what I consider deeply troubling constitutional problems with this condition of probation. Although we generally do not review constitutional questions that have not first been raised in the trial court, suffice it to say that the sentencing judge has not only compelled Defendant to speak within the meaning of the First Amendment, he has compelled Defendant to then continue speaking by censoring the viewpoints of others expressed in response to speech compelled by the court. This compelled speech silencing third-party viewpoints expressed in response to compelled speech raises serious First Amendment concerns.
Note that, under First Amendment precedents, conditions on criminal sentences can indeed restrict or compel speech, though only so long as the conditions are “reasonably related to legitimate penological objectives,” a pretty vague standard under which the government often wins, but sometimes loses.
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