Tag: news

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Assad was supposed to be gone already. President Obama thought it would be just another “regime change” operation and perhaps Assad would end up like Saddam Hussein or Yanukovych. Or maybe even Gaddafi. But he was supposed to be gone. The US spent billions to get rid of him and even provided weapons and training to the kinds of radicals that attacked the United States on 9/11.

But with the help of his allies, Assad has nearly defeated this foreign-sponsored insurgency.

The US fought him every step of the way. Each time the Syrian military approached another occupied city or province, Washington and its obedient allies issued the usual warnings that Assad was not liberating territory but was actually seeking to kill more of his own people.

Remember Aleppo, where the US claimed Assad was planning mass slaughter once he regained control? As usual the neocons and the media were completely wrong. Even the UN has admitted that with Aleppo back in the hands of the Syrian government hundreds of thousands of Syrians have actually moved back. We are supposed to believe they willingly returned so that Assad could kill them?

The truth is Aleppo is being rebuilt. Christians celebrated Easter there this spring for the first time in years. There has been no slaughter once al-Qaeda and ISIS’ hold was broken. Believe me, if there was a slaughter we would have heard about it in the media!

So now, with the Syrian military and its allies prepare to liberate the final Syrian province of Idlib, Secretary of State Mike Pompeo again warns the Syrian government against re-taking its own territory. He Tweeted on Friday that:

“The three million Syrians, who have already been forced out of their homes and are now in Idlib, will suffer from this aggression. Not good. The world is watching.”

President Trump’s National Security Advisor, John Bolton, has also warned the Syrian government that the US will attack if it uses gas in Idlib. Of course, that warning serves as an open invitation to rebels currently holding Idlib to set off another false flag and enjoy US air support.

Bolton and Pompeo are painting Idlib as a peaceful province resisting the violence of an Assad who they claim just enjoys killing his own people. But who controls Idlib province? President Trump’s own Special Envoy for the Global Coalition to Counter ISIS, Brett McGurk, said in Washington just last year that, “Idlib province is the largest al-Qaeda safe-haven since 9/11, tied to directly to Ayman al Zawahiri, this is a huge problem.”

Could someone please remind Pompeo and Bolton that al-Qaeda are the bad guys?

After six years of a foreign-backed regime-change operation in Syria, where hundreds of thousands have been killed and the country nearly fell into the hands of ISIS and al-Qaeda, the Syrian government is on the verge of victory. Assad is hardly a saint, but does anyone really think al-Qaeda and ISIS are preferable? After all, how many Syrians fled the country when Assad was in charge versus when the US-backed “rebels” started taking over?

Americans should be outraged that Pompeo and Bolton are defending al-Qaeda in Idlib. It’s time for the neocons to admit they lost. It is time to give Syria back to the Syrians. It is time to pull the US troops from Syria. It is time to just leave Syria alone!

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Following July’s drop in US manufacturing surveys, expectations remained lower for August as ‘hard’ data slumps to 11-month lows – but – as has become so ubiquitous in recent months – the surveys vehemently disagreed with each other.

Markit’s Manufacturing PMI survey fell from 55.3 to 54.7 (the lowest since Nov 2017), but was very modestly better than the 54.5 flash print earlier in the month. Under the hood, Markit showed Output slowed to weakest since Sept 2017 and New Orders slipped to the weakest growth since Nov 2017.

ISM’s Manufacturing soared from 58.1 to 61.3 (smashing expectations of a modest drop to 57.6) – The highest since May 2004’s all-time record high.

 

Which as the chart below shows, is utterly idiotic!!!

 

Under the hood in ISM, New Orders and Production surged (channel-stuffing ahead of tariffs?) as Prices Paid dropped and Export Orders contracted…

New Orders rebounded notably…

However, Chris Williamson, Chief Business Economist at IHS Markit said something very different from ISM:

“Manufacturers reported the smallest output rise for almost a year in August, suggesting production growth could be as weak as 0.2% in the third quarter.

Williamson continues:

“Exports remain the key source of weakness for producers, with foreign orders barely rising in August after two months of modest declines. The strongest growth is being seen in consumer-facing companies, reflecting robust domestic demand, in turn linked to the strong labour market and buoyant consumer confidence, though even here growth has slowed.

“However, at least some of the slowdown compared to earlier in the year reflects production being curbed by widespread shortages of inputs, hauliers and labour, leading to a further build-up of backlogs of work. For producers of investment goods such as plant and machinery, order books are backing-up at a rate not exceeded in over ten years.

“Tariffs and trade wars were also commonly cited as factors behind companies building safety stocks of inputs to ensure supply or lock-in lower prices, exacerbating supply shortages and also driving prices even higher.

“Looking at the survey responses, almost two-thirds (64%) of companies reporting higher input prices explicitly blamed tariffs as the cause of increased costs. Almost one-in-three went on to cite tariffs as the cause of having to hike prices to customers. Overall price pressures eased somewhat, however, which if sustained could take some heat off consumer price inflation in coming months.”

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The EM contagion is slamming currencies around the globe, and while the Turkish Lira remains relatively immune for the time being, traders are now focusing their attention on the South African rand and the Argentine peso, both of which are in freefall this morning.

The ZAR has plunged 3.2%, the most since Nov. 10, 2016 on a closing basis, after the country reported that it had unexpected slumped into recession, which in turn is reigniting concerns about a rating agency downgrade. At the same time, the yield on rand-denominated government bonds has jumped 24bps to 9.24%, the highest since Dec. 1.

The Argentine peso is the other EM currency in freefall this morning, dropping 5.5% to 39 per dollar (vs the Friday close dueo the Monday US holiday) when the market opened in Buenos Aires Tuesday following a new series of measures announced by the government on Monday, including new export tariffs to help close fiscal gap by 2019, a move which the market clearly finds insufficient.

As Bloomberg notes, NY-traded shares of Argentine companies opened down, with the Bank of New York Mellon Argentina ADR Index dropping 4.4 percent at the open. Bank stocks led declines with drops of as much as 13 percent.

 

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Authored by Jeffrey Snider via Alhambra Investment Partners,

It’s hard to believe it was only about three months ago. Time flies when disaster unfolds all around you. In early June, Brazil’s central bank arranged a press conference where its President Ilan Goldfajn would set everyone straight. The currency was falling, he admitted, but it would be easily handled by closely following the Portuguese version of the global central bank handbook.

Sometimes you just have to admire the unrivalled brazenness of these guys and gals. Or, as I put it at the time, Goldfajn just called everyone stupid. He would have to believe that of us because Brazil has been through this before. Not in some long distant past disgrace, but just a few years ago. In fact, as he spoke, Brazil still hadn’t yet begun its recovery from the last time.

I couldn’t resist what I still think was appropriate snark in response:

We are just short of five years from when the last Banco chief called a press conference in 2013 to declare pretty much the same exact thing. Only then, Banco acted and had initiated a swap program that by early 2015 had extended to more than $115 billion. It ran so smoothly, the Brazilian economy is today celebrated as the model for how all EM crises should be handled.

Just kidding. Of course not. The real crashed and with it the Brazilian economy.

Is that ahead for Brazil, repeating the nightmare? Today’s statistics for Q2 2018 aren’t looking good, not that anyone who isn’t stupid would have expected otherwise.

Brazil’s economy had been decelerating for some time before. The currency, meaning dollar, and economy go hand in hand in that regard. Both BRL as well as Brazil’s economy each fell into an obvious “L” pattern. That’s not a very good template to follow in either direction, but it makes the potential re-emerging downslope that much more precarious.

Since the middle of last year when renewed “dollar” troubles arose (Q3), Brazilian GDP has been slowing. In the latest quarter, Q2 2018, real GDP grew by just 1% year-over-year. Not only is that the weakest in over a year, it’s becoming obvious in which direction everything is heading.

At its best point, real GDP expanded by a little more than 2%, the disappointing fruits of 2017’s globally synchronized growth. Following several years of the worst sustained contraction (inarguable depression) in the country’s history, to only “recover” that little suggests more than recent issues holding back not just Brazil’s economy.

If last year disappointed, this year was supposed to make up for it. That’s no longer likely to happen (it wasn’t a good bet to begin with). While GDP remained positive, the key internals did not.

Both industrial output and gross capital formation fell in Q2 reversing again only small gains during the last “reflation.” Industry declined by an annual rate of 2.4% (Q/Q, seasonally-adjusted) while capital formation fell by a sharp 7.2%.

The relative overperformance of overall GDP expansion, if it can be called that, during 2017 was due to the usual export contributions. As a resource economy, at the margins the export sector is a big contributor. In Q2 2018, however, exports dropped by an annual rate of 20%.

That big of a contraction for Brazilian exports is usually an indication of serious global trade distress. I’m sure the media will work in trade wars here, but there is no way that can account for these results. A dollar disruption, on the other hand, not only would, it has been behind each instance of global trade distress the last eleven years.

Household spending in Brazil was slightly positive, but has been essentially flat for a year now. Consumption is up just 0.4% in the three quarters since Q3 2017, and up only 3% from the bottom at the end of 2016. This despite HH consumption dropping by an incomprehensible 9% during the 2014-16 depression, the one that Banco officials in summer 2013 assured their people would never happen because of their monetary expertise.

To purposefully understate the situation, this is bad and it is likely just getting (re)started. It is therefore pretty understandable why the political and social situation is at times chaotic. People will put up with a lot, a sort of human societal inertia. They will even suffer an immense economic contraction and still look to the status quo for answers – but only if it seems reasonable the status quo might be able to offer any.

That’s what was so repugnant about the June 7 press conference. The consequences of central banker ineptitude are very real and at times so disastrous we just have no frame of reference for them. What you see above is a catastrophe, and all signs pointing to its unfortunate renewal, but one that isn’t unique.

The proportions are different in different places, but this global “L” is, well, global.

What you see above is not China’s economy controlling Brazil’s, rather it’s a pretty good reflection of the same force acting on both producing the same marginal ups and downs as well as the intensity and duration of each. Reflation #3 is unraveling and the reasons for its disappointing end are the same as those that came before it. There is no global growth because there can’t be. Central bankers don’t offer answers because they don’t have any. They don’t deliver solutions because they are the problem. They really, really don’t know what they are doing. 

After enough happy, optimistic time reality sets back in. Everyone gets hooked on hopes for the “V” until it becomes clear enough we are all stuck with the “L.” At that point, the whole thing, not just Brazil, starts to sink back into the red (below).

Eurodollar (and Eurobond) markets turn ugly on the downslope of the green, rolling the global economy over piece by piece, domino by domino, so that increasingly dark economic prospects feed into more ugliness in “dollars” and so on and so on. Soon enough, it becomes self-reinforcing leading eventually to the entirely-too-familiar downside and downturn. Reflation is the only thing that is transitory, the artificial, intermittent interruption in otherwise background eurodollar deflation.

Q2 2018 doesn’t appear to have been an outlier, either. So far, Q3 isn’t shaping up any better. Adjusting for interventions, and not just those of braindead Banco central bankers, this current quarter may have been worse.

In each of the prior eurodollar episodes, Brazil’s economy has every time been the first domino to tip. It wasn’t quite falling over in Q2, though now we know it is already leaning and unstable.

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Two weeks after JPM predicted that the Tesla “going private” transaction was bunk and slashed its price target on the electric car maker by $113 to $195, overnight it was Goldman’s turn, and now that the bank is once again unrestricted from advising Musk on the imaginary deal, Goldman analyst David Tamberrino is out with a scathing reinstatement of coverage, which carries a Sell rating and a $195 price target.

Goldman’s investment thesis, or lack thereof, is familiar to those who have read the company’s report on Tesla in the past. And while the core issue remains Tesla’s cash burn and the “exhaustion of higher price point buyers “, what is notable is that Goldman now focuses on growing competition – the same risk we highlighted several months ago – as the biggest challenge facing Elon Musk:

We have removed the NR designation from TSLA shares. We add TSLA to the Sell List with a 6-month price target of $210.  While we see the potential for a better near-term backdrop with growth in Model 3 production/deliveries driving positive FCF in 2H18, we believe this will likely not be sustained as working capital tailwinds abate and as spending ramps back up after a period of cash conservation. Further, we see the medium-to-longer term industry backdrop as challenging for Tesla’s products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors – at a time when the company’s product cadence hits a gap. Ultimately, we believe the intensifying industry dynamics combined with the phase out of the US Federal EV Tax Credit for Tesla customers – driving an exhaustion of higher price point buyers – could weigh on company gross margins and profitability. Altogether, we remain bearish on the company’s ability to execute, achieve its targeted production ramp/margins, and sustain FCF generation.

Goldman then focuses on the following 5 key points behind its bearish outlook:

1. Electric vehicle competition on the come up … as Tesla product cycle takes a pause. With regional mandates and tightening CO2 standards, both traditional and new entrants are expected to launch several EVs in the coming years (Exhibit 2) – with a large crescendo in the early-to-mid 2020s. With Tesla not expecting to launch the Model Y until 2020 (and likely not ramp volume until 2021), we believe the company will see pressure to its lead in EVs as competition catches up.
2. Demand / margins further tested as tax credit phases out. In addition to growing competition, TSLA will face the phase-out of the $7,500 US Federal EV Tax Credit beginning in 1Q19 – which has been a key point by sales associates when up-selling customers on the current offering of higher trim packaged Model 3s; as the incentive declines and base Model 3s are offered, we expect a downward trajectory to mix. Further, the loss of EV tax incentives has typically corresponded with declines in demand for EVs. We expect both to present challenges to TSLA hitting its gross margin targets.
3. Balance sheet a concern. The company has seen net-debt balances increase each quarter – partly due to its on-balance sheet lease activities, but also as cash has declined. Customer deposits have helped keep the company above our estimate for minimum cash balance (i.e., a $2bn level given historical quarterly FCF burn of $1bn), but recently saw a sequential decline. With looming maturities on convertible debt (Exhibit 10), we believe the company would likely need to come back to the capital markets in 1H19.
4. Estimates still well below the Street: Our 2018 through 2020 adjusted EBITDA estimates remain an average 19% below FactSet consensus expectations, largely from a slower demand cadence and lower forecast gross margin trajectory.

As a result of the above, Goldman sees downside to TSLA shares:

Our 6-month $210 price target (based on Automotive, Energy, and SolarCity segment valuations) implies 30% downside risk vs. 6% upside potential on average for our Americas Autos coverage. We believe investors that are looking to be long TSLA are essentially under-writing growth to approximately 3.5mn annual units by 2025 – which we believe will likely be challenging to achieve given incremental competition coming, current capacity levels, capex requirements, and historical operational execution.

As noted above, what is most notable in the latest report is Goldman’s focus on the changing competitive landscape as more and more EVs – many at lower price points – come on line. Here is the key excerpt:

While TSLA has developed a lead relative to OEM peers with respect to electric vehicle technology, we see increasing competition from new EV models launching from both traditional OEMs and new entrants leveling the playing field. This is coming as OEMs bring technologies to scale, battery pack costs decline, and the consumer payback period reduces. And while we still expect overall EV penetration to remain relatively low near-term, there is a multitude of new electric vehicles due to come to market on the back of increased spending (Exhibit 1-2). We believe this could lead to a more challenging demand environment and ultimately profitability trajectory for TSLA especially as the new models are launching across vehicle segments and price points – while TSLA has a slower launch cadence planned (historically a new vehicle every three years), and we believe the higher price point buyers for the Model 3 could be exhausted for TSLA by year-end. However, we recognize that timelines for some of these vehicle launches could be aspirational and execution issues could arise (from project funding, manufacturing issues, and/or market acceptance) from potential new-comers —driving less intense competition in the market.

Looking specifically at the products launching, Goldman points out that “we are seeing model variants across regions, product segments, and price points. This has come as battery electric vehicle (BEV) plans and launches have moved from being more niche at specific EV companies to increased investments from traditional OEMs focusing on launching EV models for mass production.”

Further, traditional OEMs are also launching a cadence pick up with multiple models and variants launching in succession, versus the slower launches typically seen from EV specific companies and startups.

And while the lower price point of the Model 3 should allow TSLA to be more competitive, it is still priced at a higher ASP than what is planned to be launched by many of the mass market models traditional OEMs and we believe this may come at a time where there is an exhaustion of higher price point buyers for EVs.

* * *

In addition to the competition, Goldman also highlights the gradual phase out of of tax incentives in the future, which the bank says is somewhat exacerbating the competitive environment, to wit:

TSLA is losing the US tax credit ahead of competition, posing further challenges to affordability at a time when competition is intensifying. This comes as we still believe the higher up-front costs of EVs require an equalizer to match internal combustion engine (ICE) as the current price differentials (approximately $8k on a like-for-like basis comparing just propulsion costs) to ICE vehicles still put EVs out of the mainstream. Even with cost savings versus ICE powertrains, we estimate that the payback period today is approximately 10 years. We believe that the payback period needs to decrease to around 2-3 years for mass-market consumer adoption (similar to the payback period that drove rapid hybrid adoption in the mid-2000s).

However, we do not see that occurring until 2025-2030. Looking at cases where EV incentives were cut or reduced in the past, EV sales saw significant reductions. Notably, we saw this occur in both Denmark and Hong Kong where TSLA previously had high market penetration (Exhibits 5-6). Ultimately, we see similar risk as the US Federal EV incentives will begin to phase out at the end of 2Q18 for TSLA and will completely end by the end of 2019, as other OEMs and competitors launch models (Exhibit 7).

It is worth noting that while the phase out of US tax credits would drive an increased price point to potential Tesla customers, even with the Federal Credit, TSLA pricing remains above comparable ICE models. Given this, Goldman believes the phase out will particularly impact demand for TSLA’s higher priced models (Model X and S, and higher trim Model 3 offerings), while TSLA will begin offering a lower priced variant of the Model 3. This could further weigh on the company’s ability to hit its gross margins and profitability targets.

* * *

Going back to the traditional complaints about Tesla, Goldman then focuses on the company’s balance sheet, and specifically its growing debt load. As a reminder, the company ended 2Q18 with a net-debt position of $9.2bn, up from $8bn at 1Q18 and $4.8bn at 2Q17, and gross debt of $11.6bn. This implies a net-debt leverage ratio of approximately 88x TTM adjusted EBITDA, increasing from 14x at the end of 2017. On our 2018E EBITDA this is a much lower 6.4x, however, it is still a relatively high level of leverage for an automotive company (most are net-cash, excluding pension obligations).

Further, the company has looming maturities of convertible debt – with a conversion price that is currently higher than the company’s current share price. When combined with the company noting that it does not want to raise additional equity capital to fund growth – and there is likely incremental capital needed to enter China, net-debt levels could likely increase going forward (dependent upon cash flow generation). This could add incremental interest expense that weighs on cash generation and adds more risk in our view.

Here, Goldman also notes that Tesla’s cash balance has been helped by its customer deposits –taking reservations for future product offerings in advance to gauge interest (i.e., the Roadster 2.0 and the Semi-truck) as well as for the currently offered Model S, X, and 3. However, the company’s cash balance less that deposit line item is now down to approximately $1.4bn – and has been declining sequentially each quarter from $3bn in 3Q17.

In light of the above, Goldman now expects that Tesla’s next capital raise will take place in the first half of 2019. It explains the math below:

That said, with the expectation for positive FCF in 2H18 (resulting from a large working capital benefit as the Model 3 production ramps), we do see the company ending the year with approximately $3bn in cash. However, as we expect growth capex to resume in 2019, in combination with incremental spending on new product development, and potential cash needs for debt-maturities (given conversion prices and the prevailing share price), we believe TSLA would likely need to come back to the capital markets in 1H19.

Finally, on the operational front, Goldman sees Tesla continuing to miss its production targets:

We increase our estimates minimally (2018-2020 Adj. EBITDA moves to $1,372mn/$2,821mn/$3,572mn from $1,367mn/$2,814mn/$3,572mn, and our EPS estimates become a loss of $7.12, a loss of $0.34, and +$1.86 respectively) as we update the model for incremental 10-Q details. However, we continue to forecast approximately 48k Model 3 deliveries in 3Q18 (vs. consensus of 55k) and for the company’s Model S/X 2H18 deliveries to achieve 45,500 units (vs. consensus of 54,800 and implied guidance of 56,000). When combined with our expectation for slower growth to the demand curve and some pressure to gross margins relative to the company’s targets, our 2018 through 2020 adjusted EBITDA estimates remain approximately 19% below the Street.

Which brings us to Goldman’s conclusion and why the company remains a sell:

We add TSLA to the Sell list with a 6-month price target of $210. Our price target is derived from our probability-weighted valuations for the Automotive segment ($185), Tesla Energy segment ($20), and the SolarCity segment ($5). For the Automotive segment valuation, we model our base case, a downside case, and three “disruptive” upside cases based on the potential upside to the EV market – similar to historical precedents. We then run P/E valuations off the five separate P&Ls, taking the average stock valuation from years 2019 through 2025 and discounting back to present at a 25% discount rate. For Tesla Energy, we value the potential ramp of the business through 2020E based on our forecast for the company’s gigafactory output, apply P/E multiples based off of earnings growth and a 1.2 PEG ratio, and discount back to the present. For the SolarCity segment, we model the business (PPAs and cash/loan sales) out to 2025E, apply peer average EV/EBITDA multiple to the business, and discount back to the present.

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Two months after his nomination to the US Supreme Court by President Trump, Judge Brett Kavanauhgh will sit before the Senate Judiciary Committee on Tuesday for approximately  17 hours of confirmation hearings spanning four days. 

He will be questioned on his conservative views espoused in over 300 opinions and dissents over his 12-year career on the US Court of Appeals for the District of Columbia Circuit – a typical steppingstone for Supreme Court Justices. 

Watch live: 

While Republicans are lined up to support Kavanaugh and his nomination can’t be blocked, Democrats in the minority are expected to hammer the nominee on his views. 

“There will be sparks at this hearing. Sparks will fly,” said Sen. Richard Blumenthal (D-CT). “And there will be a lot of heat.”

Tuesday’s hearing will consist of both sides laying out their initial cases for or against the nominee, while Kavanaugh will give his opening statement along with Senators on the committee. 

Formal questioning of Kavanaugh begins on Wednesday.

Kavanaugh will stress the importance of judicial independence and teamwork during his opening statement to the committee according to excerpts of his statement which were released by the White House.

In his opening statement, Kavanaugh stresses that he has worked to not favor prosecutors or defendants in his career, and assures senators that he will not decide cases based on policy positions. –The Hill

“A good judge must be an umpire—a neutral and impartial arbiter who favors no litigant or policy. … I don’t decide cases based on personal or policy preferences. I am not a pro-plaintiff or pro-defendant judge. I am not a pro-prosecution or pro-defense judge. I am a pro-law judge,” reads Kavanaugh’s remarks. 

“To me, Justice Kennedy is a mentor, a friend, and a hero,” added Kavanaugh, whose seat he has been nominated to replace. 

“As a Member of the Court, he was a model of civility and collegiality. He fiercely defended the independence of the Judiciary. And he was a champion of liberty,” he added. 

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In what for Republicans must be a very bitter irony, Special Counsel Robert Mueller’s probe into alleged “Russian interference” in the 2016 election (a probe that has reached far beyond its original mandate) is now at risk of unduly influencing the upcoming midterm vote.

As Bloomberg points out, Trump lawyer Rudy Giuliani has been arguing for weeks that Sept. 1 is the deadline for Mueller to finish his investigation under Department of Justice guidelines. According to Giuliani, Mueller is obligated to either finish his investigation and publish his findings – or at least place the probe into a two-month “deep freeze.” However, Mueller has refused to rebut Giuliani’s claims and has instead maintained his public silence.

Giuliani, President Donald Trump’s lawyer, has maintained for weeks that Saturday, Sept. 1, was a deadline under Justice Department guidelines for Mueller to finish his Russia probe to avoid improperly affecting the midterm elections on Nov. 6. “I always thought that was the day to make some decision,” the former New York mayor said in an interview.

Mueller has responded to Giuliani’s ultimatums with the public silence he’s maintained ever since he was named in May 2017 to lead the probe into Russian interference in the 2016 presidential election. But there’s no indication that the special counsel is going to abide by Giuliani’s clock, and there’s no law or clear policy requiring him to do so.

But Mueller’s refusal to abide by this policy could have serious repercussions if Mueller’s office chooses to subpoena the president, who has refused to commit to a requested sit-down interview with the special counsel for more than eight months. As Giuliani points out, kicking off such a momentous legal battle months before a crucial election could be construed as interference. His pronouncement also gives the Trump Administration more ammunition to continue delaying its decision on whether to grant Mueller an interview.

While the DOJ is reportedly weighing whether it should revise these rules, the US Attorney’s Handbook makes clear that prosecutors are prohibited from using their authority to interfere with an election.

The U.S. Attorneys’ Manual prohibits department personnel from using their official authority or influence to interfere with or affect the result of an election. It also requires prosecutors to consult with the department’s Public Integrity Section of the Criminal Division on major investigative steps.

In 2012, Attorney General Eric Holder issued a binding policy memo on election-year activities that said “prosecutors may never select the timing of investigative steps or criminal charges for the purpose of affecting any election.”

Justice Department officials are currently reviewing whether the policy should be updated, but no decisions have been made, according to two people with knowledge of the matter who asked not to be identified. If the policy were changed, it would be part of a broader update of the manual, one of the people said.

Mueller’s persistence is even more galling considering the findings of the Inspector General report on former FBI chief James Comey’s handling of the investigation into Hillary Clinton. In his report, the IG said prosecutors should avoid all appearance of tampering in an election – not just during the weeks immediately preceding the vote.

“Several department officials described a general principle of avoiding interference in elections rather than a specific time period before an election during which overt investigative steps are prohibited,” according to the report.

Ray Hulser, a deputy assistant attorney general in the Criminal Division, told the inspector general that officials previously considered codifying a 60-day rule, but rejected the approach as unworkable.

Of course, Mueller’s team is expected to be very busy in the weeks between Tuesday and Nov. 6. His prosecutors are preparing for their second trial of former Trump campaign executive Paul Manafort.

Still, some have argued that Mueller isn’t constrained by these principles because Trump isn’t on the ballot in November. But as anybody who has been paying attention to the political media landscape for the past year and a half would likely agree, the US public widely views the midterms as a referendum on Trumpism (after all, that’s the narrative that the media has been pushing). Whether or not Mueller can be held liable for his intrusion doesn’t change the fact that the special counsel is committing an extremely brazen hypocrisy.

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