The Guantanamo Defense Lawyers Quit Because They Found Microphones in Their Office Walls

Nashiri at his military arraignment at Guantanamo in 2011The team of lawyers defending the accused USS Cole bomber resigned because they discovered their client meeting room was bugged, according to a report yesterday in The Miami Herald.

Attorneys for Abd al Rahim al Nashiri, the Saudi man charged with orchestrating the 2000 attack on the U.S. Navy destroyer, quit the case in protest back in October and have refused multiple orders from the presiding judge to return to the commission. Up to now, the exact motivation for their departure has been unclear, beyond that it was related to a dispute over attorney-client confidentiality.

But a prosecution filing obtained by Herald reporter Carol Rosenberg, the only journalist continuing to cover the trial’s proceedings, gives a fuller account of the events that have sent the 17-year-old effort to try the case grinding to a halt.

Those events began last August, when the defense team discovered that there were a number of microphones built into the walls of the room designated for them to meet with al Nashiri, who is being held in Guantanamo’s mysterious Camp 7 under undisclosed conditions of confinement.

The defense team asked to raise the issue of the microphones before the judge presiding over the military commission, Air Force Colonel Vance Spath. They also wanted to get discovery regarding whether anyone had listened in on their meetings. But Spath wouldn’t even allow them to specify their complaint in open court, and he denied the discovery motions. The three civilian attorneys then resigned, arguing that Spath had made ethical representation impossible.

Those resignations set off a bitter feud between Spath and the defense team as he attempted to get them to return to the case. When the Marine general in charge of the defense team refused to order their attendance at the commission, Spath held him in contempt and sentenced him to home confinement before being overruled by officials at the Department of Defense.

Then, apparently in a moment of intense frustration, Spath instructed the military prosecutors to draw up arrest warrants for the recalcitrant attorneys—even as he observed that their arrest would probably impede the proceedings even further by jeopardizing their security clearances, and thus their ability to keep representing al Nashiri.

Spath later thought better of his order, declining to arrest the lawyers but suspending the proceedings entirely instead.

In a lengthy monologue that betrayed intense emotional distress, Spath said from the bench that the case had caused him to consider retiring from the military. The stress and uncertainty had made him unable to sleep, he said, and he had resorted to running on the treadmill all night. Without instructions from a higher court, he couldn’t keep hearing the case.

“We’re done until a superior court tells me to keep going,” he said. “We are in abatement. We’re out.”

Prosecutors are now asking the U.S. Court of Military Commissions Review, the intermediate appellate court for court-martial proceedings, to order Spath to resume the case. They claim the microphones were left over from previous unrelated interrogations conducted in the room, and that they were never turned on during al Nashiri’s meetings with the defense.

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“Washington Terrified”, Stocks Spooked By Report Navarro Wants Cohn’s Job After All

It was just 24 hours ago, when a headline hit announcing that Peter Navarro, the recently reincarnated architect of Trump’s tariff tactics presently roiling Washington, was not in the running for the director of the National Economic Council post being vacated by “globalist” Gary Cohn helped reassure shaky markets, sending stocks higher.

It turns out that he is after all, and a report from Axios claiming that Navarro is running a stealthy campaign to fill Cohn’s old job had the opposite effect, helping spook stocks.

Chart

According to Axios, “publicly, Navarro has been coy, telling Bloomberg TV he’s not in the running for the job. But privately, the hardcore trade adviser is all in for the job” which in turn has “terrified” D.C.  As reported yesterday, stocks spiked in the middle of the day when BBG first reported that Navarro had no “Cohn” career intentions.

“Sources familiar with Navarro’s thinking” told Axios there are too many people inside the White House who oppose the president’s agenda – especially on trade, and the president would like to remedy this.

Cohn reportedly tried to undercut Navarro at every turn, telling colleagues that Navarro “had no idea what he was doing, no grasp of economics, and constantly “lied to the president.”

Navarro

Navarro, meanwhile, has always been a favorite of Trump for his willingness to reflect the president’s “hard-wired” view on trade – something that only Navarro, US trade rep Robert Lighthizer and Commerce Secretary Wilbur Ross share. Trump would sometimes reportedly ask “Where’s Peter?” when Cohn and other White House staff had “forgotten” to tell him about a meeting.

To be sure, Trump is considering up to a dozen possible replacements for Cohn, who has been advocating for Shahira Knight, a senior figure on the NEC, is well-regarded on the Hill and played a crucial role in passing tax reform, to succeed him. Trump has only said that a replacement will be chosen “soon.”

But until a choice is made, it remains foolish to rule Navarro out.

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US Steel To Reopen Idle Plant Thanks To Trump Tariffs

U.S. Steel will reopen an idle plant in Illinois in anticipation of increased domestic demand following President Trump’s announced 25% steel and 10% aluminum tariffs. The steelmaker will be calling 500 employees back to work to the plant – which was set on idle status two years ago as a flood of cheap imported metals have pushed down domestic steel prices. 

“We’re really excited to be able to tell our employees in the community in Granite City, Illinois, that we will be calling back 500 employees,” said CEO David Burritt in an interview with CNBC’s “Squawk Box.”

Two blast furnaces will be fired back up at the Granite City Works integrated steelmaking plant in Illinois – a process which could take up to four months, and will add approximately 1.4 million tons of steel annually to the U.S. market – generating up to $85 million in pretax income in 2018 for the company. The restarted furnace will require inventories of iron ore, metallurgical coking coal and other ingredients to operate. The site also has another idle blast furnace which could be restarted later. 

The facility had been idle since December 2015 over what Burritt called unfair trade practices. “If you don’t have customers here to sell to and you can’t make money, you have to shut them down.” 

Steel producers have been hurt in recent years by increasing competition from foreign competitors, particularly China, that have ramped up production at lower prices.

Prices have been rising again in the U.S. in part because of the Trump administration’s discussions over whether to widen tariffs that have been applied piecemeal in recent years. Spot-market sheet-steel prices have risen more about 37% since October to about $810 a ton, according steel-industry price surveys. –WSJ

“Our Granite City Works facility and employees, as well as the surrounding community, have suffered too long from the unending waves of unfairly traded steel products that have flooded U.S. markets,” said Burritt. 

President Trump announced the tariffs on steel and aluminum last Thursday – a move widely credited with the “last straw” in White House economic advisor and former #2 at Goldman Sachs, Gary Cohn. 

Commerce Secretary Wilbur Ross appeared on CNBC Wednesday with Burritt, where he said the White House is not trying to “blow up the world” with tariffs – indicating that President Trump was open to exempting U.S. trading partners Mexico and Canada under a reworked NAFTA deal. 

“This feels like the beginning of a renaissance for us,” said Burritt, a former chief financial officer at heavy equipment maker Caterpillar. “It’s really important that we get this right, and now it’s finally happening.”

“You’ve got to be able to make stuff in the United States. If you take away our ability to make things, you don’t really have a society.”

“Just think about the way the U.K. used to have a big manufacturing base. It went away. If you don’t make stuff, you can’t have a strong country. You can’t protect yourself and you go by the way of Greece or maybe Puerto Rico,” added Burritt. 

Not everyone’s happy

As the Wall St. Journal notes, the tariffs are going to affect several domestic manufacturers, including Caterpillar Inc. and Harley-Davidson Inc., which have both said the tariffs could significantly increase their raw material costs. Construction equipment firm Terex Corp said it would simply pass on higher steel costs to customers. 

“The steel market has moved as though the tariffs are going into place,” said Tererx CEO John Garrison Tuesday. “We can’t be the shock absorber for that significant increase.”

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Is There a ‘Rape Culture’ on College Campuses?: Soho Forum/Reason Debate

“There is a rape culture on college campuses that creates an unsafe environment for female students.”

That’s the resolution that will be debated at the next Reason-Soho Forum debate, which takes place in New York City on Monday, March 19.

Co-founded and moderated by Gene Epstein, the Soho Forum is “a monthly debate series that features topics of special interest to libertarians, and the series aims to enhance social and professional ties within the NYC libertarian community.”

Reason is proud to partner with the Soho Forum, to livestream each debate as it happens, and to publish the debates both as videos and as episodes of the Reason Podcast; go here for our archive.

The Soho Forum is an Oxford-style debate, which means that the audience votes before and after the proceedings. The participant who moves the most people to his or her side is declared the winner.

Details on the event:

For the affirmative:

Michael Kimmel is the SUNY Distinguished Professor of Sociology and Gender Studies at Stony Brook University. Among his many books are Manhood in America; Angry White Men; The Politics of Manhood; The Gendered Society; and the best seller, Guyland: The Perilous World Where Boys Become Men. With funding from the MacArthur Foundation, he founded the Center for the Study of Men and Masculinities at Stony Brook in 2013.

For the negative:

Cathy Young is a contributing editor at Reason magazine, a weekly columnist at Newsday, and a regular contributor to the Jewish Daily Forward and The Weekly Standard. She’s the author of two books: Growing Up in Moscow: Memories of a Soviet Girlhood (1989) and Ceasefire: Why Women and Men Must Join Forces to Achieve True Equality (1999). A frequent speaker on college campuses, Young has also been a regular participant in the “Battle of Ideas,” a unique annual weekend-long event in London that brings together speakers of diverse perspectives for dozens of panels on various issues.

Monday, March 19, 2018

Cash bar opens at 5:45pm
Event starts at 6:30pm
Subculture Theater
45 Bleecker St
NY, 10012

Tickets cost between $10 and $18 and must be purchased in advance.

Seating is limited, so buy tickets now.

The most recent Reason-Soho Forum debate asked whether sex-offender registries should be abolished.

More info on that here.

Click below to watch.

Subscribe to Reason‘s YouTube channel.

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Fact Vs Fiction: GAAP Earnings Have Yet To Surpass 2013 HIghs

How easy is it to goalseek one’s analysis knowing in advance the outcome one wants? Extremely.

Take as an example bank correction and recession “checklists”. Two weeks ago we showed that as of this moment, more than two-thirds, of 68%, or 13 of 18, Bank of America “bear market” checklists had been flagged.

Meanwhile, in a just released update to its “recession dashboard” Credit Suisse does not find a single indicator that points to a recession; in fact, until recently, everything pointed up toward “Expansion” and only this week, did the Swiss bank finally make one change:

In light of the recent acceleration in wage gains, we are updating our Recession Dashboard, taking “Inflation Trends” from favorable to neutral. While not yet problematic, an overheating labor market poses the greatest threat to profit margins and could force the Fed to become more engaged. the worst it can show is that Inflation is currently flagging a “neutral” economy.

This is hardly surprising as it goes to the basis of modern finance in demonstrating how the same exact underlying data can be interpreted in two diametrically opposite ways by a pessimist and by an optimist.

And to demonstrate that again, we go the same report by Credit Suisse’s new equity strategist Jonathan Golub who also shows how vastly different corporate profits are if one looks at GAAP vs non-GAAP earnings.

As shown in the chart below, while non-GAAP, or adjusted, earnings are now at all time highs, and feed into a “modest” 20x forward PE multiple, non-GAAP earnings have yet to surpass their 2013 highs!

And while historically a GAAP vs non-GAAP spread of this magnitude has traditionally launched recessions, this time it is singled out as a sign of economic health!

And finally, in the best example of reality vs hype, here is a chart showing that the spread between intentions to raise wages and actual wages has never been greater…

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Euro-Stocks Trashed

Via Dana Lyons’ Tumblr,

European equity indices are testing key levels of bull market support.

The recent (ongoing?) equity correction has not merely been a U.S. event. Most stock markets around the globe have also suffered drawdowns in concert with the U.S., to varying degrees. Some have experienced mere “flesh wounds” while others have really taken it on the chin. Falling into the latter category would be European stocks, broadly speaking.

Most of the core European markets got hit every bit as hard, or harder, than the U.S. Perhaps the most discouraging thing, though, is that they have yet to rebound nearly as sharply as much of the U.S. market has. And, in fact, in the recent re-test/retracement, many core European markets actually dropped below the levels of their early February correction lows. On one index in particular, this re-test has brought it down to a potentially very key area.

As presented earlier in our #TrendlineWednesday feature on Twitter and StockTwits, the popular broad European index, the STOXX Europe 50, has now dropped down to where it is testing the Up trendline stemming from its March 2009 lows.

Some technical tests are obviously more important than others. While many of the major U.S. indices have tested various trendlines and other manners of support on a shorter-term basis, this test by the STOXX 50 is a bit more significant. This is a test of the integrity of its 9-year bull market. A failure here may well lead many technicians to trash some their European exposure.

On the other hand, this support level may be just what the doctor ordered for European equities which have had a rough start to their year. The trendline may serve as a rally springboard as it did at the early 2016 and Brexit lows. Although, even if it bounces, the region’s present under-performance may be cause for a relatively short-lived rally. Either way, the reaction of the STOXX 50 at this level certainly bears watching.

*  *  *

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including our strategy for European equities as well as insights into what we’re looking to buy and sell and when. Thanks for reading!

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Rhode Island Wants to Tax Pornography

The government hasn’t yet figured out how to tax having sex. But Rhode Island at least wants to tax pornography.

Yes I’m serious.

It starts with censorship: two Rhode Island state senators just introduced legislation that would require Internet Service Providers (ISPs) to block all “sexual content and patently offensive material.”

We have no idea, of course, what is considered “offensive”. But in an age of cry-bullies where even the word “man” offends delicate university students, we can only imagine this covers a lot of ground.

Rhode Islanders could then unblock this ‘offensive’ content with a written request, presentation of government-issued ID which proves they’re over the age of 18, and then making a one-time payment of $20.

Internet Service Providers must collect the money and send it to the Rhode Island Treasury every quarter.

Enforcing this law rests solely on the shoulders of the ISPs. If they fail to respond to reports of unblocked pornography or sexual content, they will be fined $500 for each instance.

We can only begin to image what other genius ideas these politicians will come up with next.

Source

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Trump: “Cohn May Be A Globalist But I Like Him”

Playing off a comment made by OMB Director and former House Freedom Caucus leader Mick Mulvaney earlier this week, President Trump joked at a mid-day cabinet meeting that he still likes former economic advisor Gary Cohn – even though he’s a “globalist.”

Trump seized the opportunity to give Cohn a light-hearted public ribbing after announcing to the room that this would be his last cabinet meeting – for now, at least.

“This is Gary Cohn’s last cabinet meeting. He’s been terrific – he may be a globalist, but I still like him. He’s seriously a globalist there’s no doubt about that but in other ways he’s a nationalist because he loves our country. He’s going to go out and make another couple of hundred million dollars and…I have a feeling you’ll be back.”

Trump’s declaration that Cohn “loves our country” was met with a round of applause. Cohn announced his resignation as director of the National Economic Council on Tuesday after failing to persuade President Trump to drop his promise to impose stiff tariffs on aluminum and steel imports.

Mulvaney last week issued a confusing statement that appeared to both praise and criticize Cohn:

“As a right-wing conservative and founding member of the Freedom Caucus, I never expected that the coworker I would work closes, and best, with at the White House would be a ‘globalist….

He continued, saying Cohn “is one of the smartest people I’ve ever worked with. Having the chance to collaborate with him will remain one of the highlights of my career in public service.”

Of course, as Business Insider explains, “globalist” is typically used in a derogatory way to to describe supporters of free-trade and other internationally-focused economic policies.

Cohn was asked during a CNBC interview shortly after announcing his resignation if the president had ever called him a “globalist.” Cohn only responded that the two had a “good relationship.”

Trump also said during the cabinet meeting that he would be sticking with the original 25% and 10% tariffs on steel and aluminum, and that they’d apply to all countries – except those that receive “carve outs.” He later suggested that Australia could be exempt.

Trump is set to provide an update about his plans for imposing tariffs at 3:30 pm ET – though it’s possible he could also officially unveil the tariffs at the meeting.

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Rosenberg: Everything Today Is Eerily Similar To 1987

The Strategic Investment Conference 2018 kicked off in San Diego with a keynote speech from David Rosenberg of Gluskin Sheff titled, “Year of the Dog: Will It Bark or Bite?” (Spoiler: The latter). Rosenberg began by running through a list of his own metrics: forward P/E, price/sales, price/book value, enterprise value/EBITDA. Not surprisingly, and as shown here previously, all of them pointed to record-high valuations.

Looking at normalized charts over time, they’re now at the 83rd percentile or higher. Price/sales is at the 99th percentile. The bottom line: it’s an ugly picture if you are looking for value in equities.

Rosenberg shared a scary quote from Howard Marks:

“Most valuation parameters are either the richest ever or among the highest in history. In the past, levels like these were followed by downturns. Thus a decision to invest today has to rely on the belief that ‘it’s different this time.’ I’m convinced the easy money has been made.”

Rosenberg pointed out that even the Fed admits that valuations are high. Our policymakers themselves believe this can’t continue for long. In fact, the Shiller CAPE ratio now stands at its second-highest level in decades. History shows that high P/E ratios are usually followed by years of low returns in equities. In fact, even the San Francisco Fed now predicts that equity returns over the next decade will be, at best, 0%, to wit:

Current valuation ratios for households and businesses are high relative to historical benchmarks. Extending the analysis by Campbell and Shiller (1996), we find that the current price-to-earnings ratio predicts approximately zero growth in real equity prices over the next 10 years.

Later, Rosenberg moved on to monetary policy and picked up on the Federal Reserve’s 2% inflation policy. To paraphrase:

“On what planet does 2% annual inflation constitute price stability? Prices can’t be rising and stable at the same time. This makes no sense. Furthermore, why 2%? Why not 1%? Whatever the inflation target, the Fed has proven unable to hit it, so maybe it’s time to rethink this whole idea.”

Rosenberg also pointed out that the composition of the Federal Open Market Committee had vastly shifted since 2017. At the beginning of 2017, there were no hawks in that group. Between departures, additions, and voting rotation, now it’s four hawks, one dove, and one unknown, by Rosenberg’s assessment. This should not comfort anyone who hopes the Fed will pull back on tightening and balance sheet roll-offs.

The Gluskin-Sheff strategist revealed that he’s been de-risking and it’s time to be very careful about exposure to emerging markets. He thinks investors must have a strong theme behind views on emerging markets, as he sees concerns on several fronts.

Credit Shows Warning Signals

Rosenberg then shifted to what is one of the biggest recession threats to be observed in this late-cycle behavior by looking at the erosion in credit quality as one of the warning signals, something we noted two weeks ago in “This Is Where The Next US Debt Crisis Is Hiding

 

He also stressed that former big buyers of corporate debt have started to “pull back.” Although profound, this trend has not received proper attention among investors.

The situation on the retail side isn’t better either. Rosenberg pointed out that consumers begin to struggle to make credit card payments.

He quoted new Fed chair Jerome Powell as saying that we are encouraging risk-taking too much. One of Powell’s primary concerns is that more accommodative policy could undermine financial stability.  In fact, Rosenberg brought to mind one of the key quotes from Powell which Zero Hedge first uncovered in the 2012 FOMC transcripts, in which the new Fed Chair said that we are at the point of encouraging risk-taking.

One of Powell’s primary concerns is that more accommodative policy could lead to frothy financial conditions and eventually undermine financial stability. And yet, his predecessor Janet Yellen saw no “red flags” regarding financial stability.

And yet, his predecessor Janet Yellen saw no “red flags” regarding financial stability, and no major crisis “during her lifetime”…

Putting it all together a week-old tweet from Rosenberg summarized it best: “Hmmm. Let’s see. Tariffs. Sharp bond selloff. Weak dollar policy. Massive twin deficits. New Fed Chairman. Cyclical inflationary pressures. Overvalued stock markets. Heightened volatility. Sounds eerily familiar (from someone who started his career on October 19th, 1987!).”

Get other live updates from David Rosenberg and other participants at the Strategic Investment Conference 2018 at the following link

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