Tag: news

So much for finally holding Goldman Sachs accountable.

Anyone who feared Goldman might suffer a massive fine or, worse, criminal penalties (possibly involving current and former senior executives such as Hillary Clinton’s very close friend, Lloyd Blankfein) can breathe a sigh of relief.

Goldman shares jumped 2.5% Friday morning after Bloomberg reported that the DoJ is seeking a settlement of between $1.5 billion and $2 billion for Goldman’s involvement in the 1MDB affair.

That substantially less than most analysts had anticipated. Earlier this year, senior Malaysian officials made a big show of demanding that Goldman pay back all of the money stolen from 1MDB with interest, as well as any fees that the bank collected for its work underwriting three separate bond offerings that helped seed the fund. In total, the sum demanded came out to about $7.5 billion.

We know now that senior Goldman bankers, including then-CEO Lloyd Blankfein, signed off on the deals, ignoring warnings from the compliance department about Malaysia’s point man for the project, the mysterious financier Jho Low. Which may explain why even the DOJ is now rushing to get this episode in the history books.

Low is now an international fugitive, and at least one Goldman banker has pleaded guilty and agreed to cooperate with the government; a settlement could be announced as soon as next month (though the bank also faces charges in Malaysia), although BBG’s sources warned that the terms of the deal could change.

It’s unclear from the report whether the DoJ will also seek a guilty plea from the bank, which could be a game-changer if it happens.

The notion that the DoJ is going easy on Goldman is hardly a surprise. Attorney General William Barr has reportedly directly involved himself in the case, which is unusual because his former law firm, Kirkland & Ellis LLP, represents Goldman, and Barr had to secure a waiver to excuse this conflict.

But this type of special treatment would be nothing new to Goldman: After all, its alumni occupy some of the most powerful jobs in the world. Goldman is the very definition of ‘too big to jail’.

As the US was basking in the warm glow of the best jobs report since January, it was a different story over in Canada, where BMO’s chief economist Robert Kavcic had one recommendation to clients: “avert your eyes.” Here’s why: Canadian employment unexpectedly tumbled by 71,200 in November, the biggest decline since the financial crisis.

For those hoping that the details might serve up better news, they too were disappointed: Full-time employment was down 38.4k, and the private sector shed 50.2k. The jobless rate also rose sharply, up four ticks, and also the biggest monthly jump since the recession, to 5.9%.

Hours worked fell 0.3%, and remain an area of persistent disappointment—they’re now up just 0.25% y/y, much more muted than the 1.6% annual job gain. Oddly enough, the one area of strength was wages, with growth accelerating to match a cycle high at 4.5% y/y, according to Kavcic.

Putting it together, BMO’s “grading system” gave this report a 12.1 rating out of 100, which is pretty much as bad as it can possibly get (it is in fact the worst rating in about six years of tracking).

The BMO economist wasn’t alone in slamming the report: it’s a “terrible jobs report,” said Wells Fargo strategist Brendan Mckenna. “There’s really not much you can point to that is positive about those numbers. We’ll probably hover around these levels til year-end.”

With that said, the LFS has been known to have some violent swings, and we could be getting a lot of payback for previous outsized strength in one fell swoop. Looking at 1.6% y/y job growth, and an average monthly gain of 26k through November, those numbers look pretty consistent with underlying economic performance.

The “terrible” number may force the BOC to reassess its monetary policy. Earlier this week, the Bank of Canada presented a strong defense of its decision to stand pat on its policy rate for a ninth straight meeting. Deputy Governor Timothy Lane said policy makers believe Canada’s economy is near capacity. Recent developments, both domestic and global, have bolstered the central bank’s confidence that growth is poised to accelerate over the next couple of years, despite “enduring” uncertainty, he said.

In response to the jobs report, and anticipating a resumption in central bank easing, the loonie plunged as much as 0.7% to 1.3259 per dollar, its biggest decline since October…

.. putting it in a neck-and-neck race with the British pound for the No. 1 spot among major currencies in 2020 and threatening its status as one of this year’s top performing major currencies. Both the loonie and the pound have strengthened close to 3% this year against the greenback.

Authored by Pat Buchanan via Buchanan.org,

The “Our diversity is our strength!” Party is starting to look rather monochromatic in its upper echelons these days.

The four leading candidates for its presidential nomination — Joe Biden, Elizabeth Warren, Bernie Sanders and Pete Buttigieg — are all white.

The six candidates who have qualified for the Dec. 19 debate — the front four, plus Amy Klobuchar and Tom Steyer — are all white.

Speaker Nancy Pelosi and House Democratic Majority Leader Steny Hoyer are both white, as are Senate Minority Leader Chuck Schumer and Whip Dick Durbin.

The chairs of the House Intelligence and Judiciary Committees managing impeachment, Adam Schiff and Jerry Nadler, are both white. And as Congressman Al Green railed Wednesday, all three experts Nadler invited to make the Democrats’ case for impeachment were white law professors. How come?

Absent affirmative action by the DNC, neither Cory Booker, the leading black candidate for the nomination, nor Julian Castro, the leading Hispanic, will be on the stage Dec. 19.

But though there is zero racial diversity among the top six Democrats in the presidential field, there is gender, ethnic and ideological diversity.

Warren would be the first woman president; Sanders, the first Jewish nominee; and Buttigieg would be the first gay nominee.

Yet the lack of racial diversity across the party hierarchy is going to put immense pressure on Joe Biden, should he win the nomination. If he hopes to reunite the Obama coalition, a woman and/or person of color as his running mate would seem an absolute imperative.

And before Biden gets there, he has other problems.

His “No Malarkey” bus tour across Iowa is all about his fear that, if he loses Iowa on Feb. 3 and New Hampshire on Feb. 11, he may not survive to reach his South Carolina firewall on Feb. 25.

Though he leads in the national polls, Iowa and New Hampshire polls have Biden running as low as fourth. Never has a candidate contested and lost both those states and then gone on to win the nomination.

Nor are these Joe’s only problems.

Call them what you will — gaffes, mental lapses — his repeated verbal miscues, some of which have caused debate rivals to laugh out loud at Joe, are a cause of alarm among Democrats who fear a Biden-Trump TV debate could produce a debacle for their man.

Nor are the other front-runners without racial-ethnic problems.

African Americans are a bedrock constituency of the Democratic Party. In recent presidential elections, they have voted 90% for the party’s nominee, and even higher for Barack Obama.

How is Mayor Pete doing with this constituency?

While running first in some polls in Iowa, his share of the African American vote in South Carolina, in a recent poll, was zero. Buttigieg had no black support in a state where African Americans constitute more than 60% of the Democratic vote.

Bernie Sanders, an unapologetic socialist who went to the Soviet Union, Reagan’s “Evil Empire,” for his honeymoon, is holding on to half of the loyal base from his impressive 2016 race against Hillary Clinton.

The other half of Bernie’s base, however, has been captured by Warren. In October, she took the lead in national polls, only to lose that lead when she could not explain how, without major new taxes on the middle class, she could abolish private health insurance and put the entire country on the Medicare rolls.

And, like Bernie, she is weak with black Democrats, who will decide South Carolina one week before Super Tuesday, when 40% of all the Democratic delegates will be chosen.

How did Democrats arrive at this pass?

As the 2019-2020 campaign began, the party divided into two camps.

There is first the moderate-centrist-pragmatic wing, whose goal is the removal of Trump, and who will go with the Democrat who is the most certain to deliver that. Biden, who spent four decades in the Senate and as vice president, was liked by many and offended few, and was first in the polls, was their natural choice.

Then there is the ideological left of the party that wants not only to win but also to remake America. It was to this huge slice of the party that Warren and Bernie have made their radical appeals.

The promise of victory offered by Biden and the ideological agenda offered by Sanders and Warren trumped the ethnic appeal of Booker, Castro and Kamala Harris.

Now, with the arrival of moneybags Mike Bloomberg and his tens of millions of dollars in ads, almost certain to reach hundreds of millions before Super Tuesday, there is the possibility that four or five candidates will survive to the convention, with no one having a majority of delegates. And the horse-trading will begin.

My view: Super Tuesday will cut the field to two or three. And the nominee will be one of the six palefaces on the stage Dec. 19.

Following a disastrous ADP print just two days ago, which showed that the US economy added just the second fewest number of private payrolls since March 2010, and a sellside “whisper” number that was about half the consensus expectation of 183K, moments ago the BLS reported a blockbuster jobs report, according to which the US economy added 266K jobs (according to the establishment survey), the biggest monthly increase since January, and a near record divergence with what ADP indicated.

To be sure, peaking behind the headline data revealed some questionable data, like only an 83K increase in employment (according to the Household survey), a 7K drop in mining jobs, a 4K decline in wholesale trade, a stagnant construction sector, lot of seasonal hiring, a catch up in census worker hires, and so on.

Warts aside, many are confused what was behind the surprise upside print, and how the payrolls print came 29K jobs more than the highest forecast among 78 economists. The simple answer: a surge in manufacturing workers. As shown in the chart below, 54K manufacturing workers were added in November, the most in over two decades, or since 1998, as a result of about 41K GM striking workers returning to their jobs.  That said, the November surge was an offset to the 43K slide in October, so on net, the print was largely a wash between the two months.

So besides the one-time surge in manufacturing workers, where else did the jobs come from? Well, as the chart below shows, excluding a drop of 7K miners and 4.3K wholesale traders, every single job category was positive in November, as follows:

• As has been the case for much of the past decade, in November the biggest job gains came from health care, which added 45,000 jobs, following little employment change in October (+12,000). The November job gains occurred in ambulatory health care services (+34,000) and in hospitals (+10,000).
• Employment in professional and technical services increased by 31,000 in November; this included 4.8K new temp jobs.
• As noted above, manufacturing employment rose by 54,000 in November, following a decline of 43,000 in the prior month.  Within manufacturing, employment in motor vehicles and parts was up by 41,000 in November, reflecting the return of GM workers who were on strike in October.
• In November, employment in leisure and hospitality continued to trend up (+45,000).
• Employment in transportation and warehousing continued on an upward trend in November (+16,000). Within the industry, job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000).
• Financial activities employment also continued to trend up in November (+13,000), with a gain of 7,000 in credit intermediation and related activities.
• Mining lost jobs in November (-7,000), largely in support activities for mining (-6,000). Mining employment is down by 19,000 since a recent peak in May.
• In November, employment in retail trade was about unchanged (+2,000). Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores lost jobs (-18,000).
• Employment in other major industries–including construction, wholesale trade, information, and government–showed little change over the month.

And visually:

Yet for all the attention that manufacturing jobs are getting this month, expect this series to return to its boring monotone of hugging the flat line, if modestly declining. The one series that does matter? Education and Health, because as America gets older and more frail, the one job that will be most in need is for more people to take care of the country’s wealthy baby boomers. Sure enough, if one excludes this category, US jobs have been declining in the past year as the following ECRI chart shows.

Finally, lets not forget the “food services and drinking places” jobs: the relentless dynamo driving the US jobs market. Since February 2010, there have been just 5 months in 116 in which the number of waiters and bartenders in the US has posted a monthly decline, and November was no different.

Having extended its bounce in November, UMich confidence survey was expected to rise modestly more in preliminary December data, but instead it soared (printing 99.2 vs 96.8 prior and well above the 97.0 expectation).

The components both rose for the 4th month in a row…

• Current economic conditions index rose to 115.2 vs. 111.6 last month.

• Expectations index rose to 88.9 vs. 87.3 last month.

Source: Bloomberg

Nearly all of the early December gain was among upper income households, who also reported near record gains in household wealth, largely due to increased stock prices and mainly benefitting retirement accounts.

Buying conditions soared across all aspects with Vehicles surging the most (durables rose to their highest level since last December)…

Source: Bloomberg

Finally, the data indicate the strong impact of partisanship on economic expectations, which has widened in the past few months.

Source: Bloomberg

Moreover, the gap has grown considerably in the past decade. The average gap between Democrats and Republicans was 18.7 points in the Obama administration and 41.6 points since Trump took office, with the more favorable views held by the President’s party. Importantly, the views of Independents closely track the overall Sentiment Index since Trump took office, with a mean of 96.6 versus 97.0 for all consumers.

The Sentiment Index has averaged 97.0 in the past three years, the highest sustained level since the all-time record in the Clinton administration.

Authored by Jonathan Turley, op-ed via The Hill,

The most dangerous place for an academic is often between the House and the impeachment of an American president. I knew that going into the first hearing of the House Judiciary Committee on the impeachment of Donald Trump. After all, Alexander Hamilton that impeachment would often occur in an environment of “agitated passions.” Yet I remained a tad naive in hoping that an academic discussion on the history and standards of it might offer a brief hiatus from hateful rhetoric on both sides.

In my testimony Wednesday, I lamented that, as in the impeachment of President Clinton from 1998 to 1999, there is an intense “rancor and rage” and “stifling intolerance” that blinds people to opposing views. My call for greater civility and dialogue may have been the least successful argument I made to the committee. Before I finished my testimony, my home and office were inundated with threatening messages and demands that I be fired from George Washington University for arguing that, while a case for impeachment can be made, it has not been made on this record.

Some of the most heated attacks came from Democratic members of the House Judiciary Committee. Representative Eric Swalwell of California attacked me for defending my client, Judge Thomas Porteous, in the last impeachment trial and noted that I lost that case. Swalwell pointed out that I said Porteous had not been charged with a crime for any conduct, which is an obviously material point for any impeachment defense.

Not all Democrats supported such scorched earth tactics. One senior Democrat on the committee apologized to me afterward for the attack from Swalwell. Yet many others relished seeing my representations of an accused federal judge being used to attack my credibility, even as they claimed to defend the rule of law. Indeed, Rachel Maddow lambasted me on MSNBC for defending the judge, who was accused but never charged with taking bribes, and referring to him as a “moocher” for the allegations that he accepted free lunches and whether such gratuities, which were not barred at the time, would constitute impeachable offenses.

Washington Post columnist Dana Milbank expanded on this theme of attacking my past argument. Despite 52 pages of my detailed testimony, more than twice the length of all the other witnesses combined, on the cases and history of impeachment, he described it as being “primarily emotional and political.” Milbank claimed that I contradicted my testimony in a 2013 hearing when I presented “exactly the opposite case against President Obama” by saying “it would be ‘very dangerous’ to the balance of powers not to hold Obama accountable for assuming powers ‘very similar’ to the ‘right of the king’ to essentially stand above the law.”

But I was not speaking of an impeachment then. It was a discussion of the separation of powers and the need for Congress to fight against unilateral executive actions, the very issue that Democrats raise against Trump. I did not call for Obama to be impeached, but that is par for the course in the echo chamber today in which the facts must conform to the frenzy. It was unsettling to see the embrace of a false narrative that I “contradicted” my testimony from the Clinton impeachment, a false narrative fueled by the concluding remarks of Committee Chairman Jerry Nadler of New York quoting from my 1998 testimony. Notably, neither Swalwell nor Nadler allowed me to respond to those or any other attacks. It was then picked up eagerly by others, despite being a demonstrably false narrative.

In my testimony Wednesday, I stated repeatedly, as I did 21 years ago, that a president can be impeached for noncriminal acts, including abuse of power. I made that point no fewer that a dozen times in analyzing the case against Trump and, from the first day of the Ukraine scandal, I have made that argument both on air and in print. Yet various news publications still excitedly reported that, in an opinion piece I wrote for the Washington Post five years ago, I said, “While there is a high bar for what constitutes grounds for impeachment, an offense does not have to be indictable,” and it could include “serious misconduct or a violation of public trust.”

That is precisely what I have said regarding Trump. You just need to prove abuse of power. My objection is not that you cannot impeach Trump for abuse of power but that this record is comparably thin compared to past impeachments and contains conflicts, contradictions, and gaps including various witnesses not subpoenaed. I suggested that Democrats drop the arbitrary schedule of a vote by the end of December and complete their case and this record before voting on any articles of impeachment. In my view, they have not proven abuse of power in this incomplete record.

However, rather than address the specific concerns I raised over this incomplete record and process, critics have substituted a false attack to suggest that I had contradicted my earlier testimony during the Clinton impeachment. They reported breathlessly that I said in that hearing, “If you decide that certain acts do not rise to impeachable offenses, you will expand the space for executive conduct.” What they left out is that, in my testimony then and again this week, I stressed that the certain act in question was perjury. The issue in the Clinton case was whether perjury was an impeachable offense. Most Democratic members of Congress, including Nadler, maintained back then that perjury did not meet the level of an impeachable offense if the subject was an affair with an intern.

I maintained in the Clinton testimony, and still maintain in my Trump testimony, that perjury on any subject by a sitting president is clearly impeachable. Indeed, as I stated Wednesday, that is the contrast between this inquiry and three prior impeachment controversies. In those earlier inquiries, the commission of criminal acts by Andrew Johnson, Richard Nixon, and Bill Clinton were clearly established. With Johnson, the House effectively created a trapdoor crime and he knowingly jumped through it. The problem was that the law, the Tenure of Office Act, was presumptively unconstitutional and the impeachment was narrowly built around that dubious criminal act. With Nixon, there were a host of alleged criminal acts, and dozens of officials would be convicted. With Clinton, there was an act of perjury that even his supporters acknowledged was a felony.

While obviously presented in a false context, the quotation of my Clinton testimony only highlights the glaring contrast of those who opposed the Clinton impeachment but now insist the case is made to impeach Trump. I have maintained that they both could be removed, one for a crime and one for a noncrime. The difference is that the Clinton crime was accepted by Democrats. Indeed, a judge reaffirmed that Clinton committed perjury, a crime for which thousands of other citizens have been jailed. Yet the calls for showing that “no one is above the law” went silent with Clinton.

As I stated Wednesday, I believe the Clinton case is relevant today and my position remains the same. I do not believe a crime has been proven over the Ukraine controversy, though I said such crimes might be proven with a more thorough investigation. Instead, Democrats have argued that they do not actually have to prove the elements of crimes such as bribery and extortion to use those in drafting articles of impeachment. In the Clinton impeachment, the crime was clearly established and widely recognized.

As I said 21 years ago, a president can still be impeached for abuse of power without a crime, and that includes Trump. But that makes it more important to complete and strengthen the record of such an offense, as well as other possible offenses. I remain concerned that we are lowering impeachment standards to fit a paucity of evidence and an abundance of anger. Trump will not be our last president. What we leave in the wake of this scandal will shape our democracy for generations to come. These “agitated passions” will not be a substitute for proof in an impeachment. We currently have too much of the former and too little of the latter.