In August, Oklahoma asked Justice Barrett to overrule McGirt. Well, not exactly. To be precise, the petition asked the Court to reverse the 2020 precedent. But in reality, ACB’s vote would have made the 5-4 decision come out the other way.
Now, five months later, the Court declined that request. Instead, the Court granted cert on a question that could limit the scope of McGirt. From today’s orders in Oklahoma v. Castro-Huerta:
The petition for a writ of certiorari is granted limited to Question 1 presented by the petition. The case will be set for argument in the April 2022 argument session. Petitioner’s brief on the merits is to be filed on or before Monday, February 28, 2022. Respondent’s brief on the merits is to be filed on or before Monday, March 28, 2022. The reply brief is to be filed in accordance with Rule 25.3.
Here were the two questions presented in the petition:
1. Whether a State has authority to prosecute non-Indians who commit crimes against Indians in Indian country.
2. Whether McGirt v. Oklahoma, 140 S. Ct. 2452 (2020), should be overruled.
Question #2 is out. But Question #1 is in.
If I had to predict, the Court will say that McGirt is limited to cases where there is both an Indian defendant and an Indian victim. That should narrow the destabilizing effects of McGirt. Justice Gorsuch may even get behind that decision. But the Justices will not have to labor over yet another stare decisis fight this term. Once again, the Court limits questions presented as a bulwark of moderation.
I think the past few days have taught me a lesson about the Supreme Court. Perhaps Oklahoma made a mistake by asking the Court to overrule McGirt. Maybe it would have been more effective to merely suggest, in one form or another, to reverse the precedent. We all know Chief Justice Roberts prefers the subtle art of persuasion. Or so I heard on the radio.
After a cascade of school shutdowns, supply chain issues, and soaring inflation, COVID-19 is still the biggest problem facing Americans. Congress remains at a policy standstill on many of these issues, yet some lawmakers seem focused on America’s alleged tech company “monopoly problem” rather than dealing with the pandemic’s ill effects. Zeroing in on the sectors of our economy putting out products that improve our lives is a mistake.
Interest in antitrust problems has increased thanks to progress of a misplaced legislative crusade by Rep. David Cicilline (D–R.I.), Rep. Ken Buck (R–Colo.), and Sen. Amy Klobuchar (D–Minn) against America’s tech sector—an industry Americans trust more than the U.S. government. If legislators are interested in tackling antitrust in a way that improves the lives of all Americans, they should focus on antagonistic, state-empowered monopolies like occupational licensing boards. Tech companies are regularly facing new competitors, but these quasi-governmental boards that determine how, when, and if someone can work are not.
Roughly one-quarter of Americans face occupational licensing obstacles before they can do their jobs. For some jobs, like doctors, lawyers, and teachers, licensing requirements may serve a valid state interest in promoting health and safety. But for interior designers, florists, and creatives, licensing boards strangle economic opportunity.
In most cases, an individual licensing board controls who can practice a profession in a particular state. The time it takes to get a license is inexcusably long and entirely unrelated to the risks of a profession or the way it impacts the public. Even if an applicant has the proper training, licenses are still denied for convoluted reasons. Decisions like threatening to suspend critical health care workers’ licenses due to their unpaid student loans not only harm consumers, but also the businesses that are short-staffed.
The fragmented, state-level control of quasi-governmental occupational licensing boards exacerbates the problem. Working across state lines is nearly impossible because most occupational licenses are location dependent. Online businesses that operate in multiple states jump through significant hoops just to keep themselves afloat. These costly and time-consuming licensing requirements prevent Americans from pursuing careers, opening new businesses, finding worthy job candidates, and affording child care.
Antitrust reformers can help consumers by taking on the “state action doctrine” that shields licensing boards from antitrust enforcement. Though it didn’t eliminate the doctrine, in a 2012 case the Supreme Court refused to extend such immunity to North Carolina’s dental board since it lacked government supervision and was composed of self-interested market members. Sens. Mike Lee (R–Utah) and Chuck Grassley (R–Iowa) are laying the groundwork to codify and clarify limitations through the Tougher Enforcement Against Monopolies(TEAM) Act, which would compel occupational licensing boards to meet specific requirements to earn immunity from antitrust enforcement.
Occupational licensing boards wouldn’t disappear, but they would be subject to the same competitive forces that improve other industries. And they’ll still serve legitimate public safety purposes while being prevented from engaging in the anti-competitive activities that overly burden new entrants to many industries.
Antitrust enforcement and competition policy are supposed to focus on protecting consumers from the harms of anti-competitive practices. If antitrust reformers really want to foster competition in a way that will have a significant upside, scrutinizing the monopoly status of licensing boards is more impactful than creating new barriers for innovative businesses.
In August, Oklahoma asked Justice Barrett to overrule McGirt. Well, not exactly. To be precise, the petition asked the Court to reverse the 2020 precedent. But in reality, ACB’s vote would have made the 5-4 decision come out the other way.
Now, five months later, the Court declined that request. Instead, the Court granted cert on a question that could limit the scope of McGirt. From today’s orders in Oklahoma v. Castro-Huerta:
The petition for a writ of certiorari is granted limited to Question 1 presented by the petition. The case will be set for argument in the April 2022 argument session. Petitioner’s brief on the merits is to be filed on or before Monday, February 28, 2022. Respondent’s brief on the merits is to be filed on or before Monday, March 28, 2022. The reply brief is to be filed in accordance with Rule 25.3.
Here were the two questions presented in the petition:
1. Whether a State has authority to prosecute non-Indians who commit crimes against Indians in Indian country.
2. Whether McGirt v. Oklahoma, 140 S. Ct. 2452 (2020), should be overruled.
Question #2 is out. But Question #1 is in.
If I had to predict, the Court will say that McGirt is limited to cases where there is both an Indian defendant and an Indian victim. That should narrow the destabilizing effects of McGirt. Justice Gorsuch may even get behind that decision. But the Justices will not have to labor over yet another stare decisis fight this term. Once again, the Court limits questions presented as a bulwark of moderation.
I think the past few days have taught me a lesson about the Supreme Court. Perhaps Oklahoma made a mistake by asking the Court to overrule McGirt. Maybe it would have been more effective to merely suggest, in one form or another, to reverse the precedent. We all know Chief Justice Roberts prefers the subtle art of persuasion. Or so I heard on the radio.
Germany Blocks NATO Partners From Supplying Its Weapons To Ukraine
It was very noticeable when this week British military flights delivering weapons to Ukraine deliberately avoided German airspace – so much so that Berlin issued a statement clarifying that the German government had not demanded this ahead of time, saying it has “not denied access to its airspace as the UK did not submit a request, there has been no dispute between the UK and Germany on this issue.”
Despite being a lead NATO country and close US ally, it’s become clear Berlin has sought to avoid unnecessarily provoking Moscow, also as the Nord Stream 2 gas pipeline is soon to come online pending the significant hurdle of regulatory approval. This week it became evident that Germany will not directly export weapons to Ukraine, even as allies like the UK and US have begun to. This also has a lot to do with a long-standing arms export control policy which prevents German arms from going into geopolitical hot zones.
After on Thursday the Biden administration authorized US-made arms to be “rushed delivered” via third party countries to Kiev in order to deter any possible ‘Russian aggression’ – namely from the Baltic allies of Estonia, Lithuania, and Latvia – this raised the question of whether German would allow for the same indirect weapons transfers.
On Friday afternoon The Wall Street Journal reported that Berlin has given its definitive answer, sticking by a strict interpretation of its arms transfer policy: “Germany is blocking North Atlantic Treaty Organization ally Estonia from giving military support to Ukraine by refusing to issue permits for German-origin weapons to be exported to Kyiv as it braces for a potential Russian invasion,” the report say.
Further, according to the WSJ, the German government is now prohibiting other countries from sending German-produced weapons to Ukraine:
Unlike the U.S., Britain, Poland and other allies, the German government has declined to export lethal weapons directly to Ukraine.
In the case of Estonia, a small country on Russia’s northern border, Berlin is also refusing to allow a third country to send artillery to Ukraine because the weaponry originated in Germany, according to Estonian and German officials.
Ukraine’s Defense Minister Oleksiy Reznikov confirmed German’s “hesitation” to deliver arms. This also as German government spokesman reaffirmed “The principle governing arms exports” which “is always the same—whether they come directly from Germany or from third countries—and no permission has been issued at this stage.”
These are flights from U.K. delivering weapons, not diplomats, to Ukraine. It’s massive manoeuvres & public spending so let’s not pretend we’re not already involved. #bbcaqhttps://t.co/XywocutA7q
At the same time, it’s been revealed that Germany’s chancellor turned down a request to meet with President Joe Biden on Ukraine, saying it was too “short notice” – though there’s speculation it was again more about not angering Russia and avoidance of getting too deeply involved at his intense moment of the Russia-Ukraine standoff.
“German Chancellor Olaf Scholz turned down an invite at short notice from U.S. President Joe Biden to discuss the Ukraine crisis, German magazine Der Spiegel said on Friday,” Reuters reports. “Scholz did not accept the invitation due to a full schedule, including a trip to Madrid, as well as the desire to show that he was present as Germany grapples with the COVID-19 pandemic, according to Der Spiegel.”
Should things escalate, this would put Berlin in a no-win situation, or between a rock and a hard place, given Russia’s is Germany’s main gas supplier, now locked in a ratcheting contests with its closes Western allies.
After a cascade of school shutdowns, supply chain issues, and soaring inflation, COVID-19 is still the biggest problem facing Americans. Congress remains at a policy standstill on many of these issues, yet some lawmakers seem focused on America’s alleged tech company “monopoly problem” rather than dealing with the pandemic’s ill effects. Zeroing in on the sectors of our economy putting out products that improve our lives is a mistake.
Interest in antitrust problems has increased thanks to progress of a misplaced legislative crusade by Rep. David Cicilline (D–R.I.), Rep. Ken Buck (R–Colo.), and Sen. Amy Klobuchar (D–Minn) against America’s tech sector—an industry Americans trust more than the U.S. government. If legislators are interested in tackling antitrust in a way that improves the lives of all Americans, they should focus on antagonistic, state-empowered monopolies like occupational licensing boards. Tech companies are regularly facing new competitors, but these quasi-governmental boards that determine how, when, and if someone can work are not.
Roughly one-quarter of Americans face occupational licensing obstacles before they can do their jobs. For some jobs, like doctors, lawyers, and teachers, licensing requirements may serve a valid state interest in promoting health and safety. But for interior designers, florists, and creatives, licensing boards strangle economic opportunity.
In most cases, an individual licensing board controls who can practice a profession in a particular state. The time it takes to get a license is inexcusably long and entirely unrelated to the risks of a profession or the way it impacts the public. Even if an applicant has the proper training, licenses are still denied for convoluted reasons. Decisions like threatening to suspend critical health care workers’ licenses due to their unpaid student loans not only harm consumers, but also the businesses that are short-staffed.
The fragmented, state-level control of quasi-governmental occupational licensing boards exacerbates the problem. Working across state lines is nearly impossible because most occupational licenses are location dependent. Online businesses that operate in multiple states jump through significant hoops just to keep themselves afloat. These costly and time-consuming licensing requirements prevent Americans from pursuing careers, opening new businesses, finding worthy job candidates, and affording child care.
Antitrust reformers can help consumers by taking on the “state action doctrine” that shields licensing boards from antitrust enforcement. Though it didn’t eliminate the doctrine, in a 2012 case the Supreme Court refused to extend such immunity to North Carolina’s dental board since it lacked government supervision and was composed of self-interested market members. Sens. Mike Lee (R–Utah) and Chuck Grassley (R–Iowa) are laying the groundwork to codify and clarify limitations through the Tougher Enforcement Against Monopolies(TEAM) Act, which would compel occupational licensing boards to meet specific requirements to earn immunity from antitrust enforcement.
Occupational licensing boards wouldn’t disappear, but they would be subject to the same competitive forces that improve other industries. And they’ll still serve legitimate public safety purposes while being prevented from engaging in the anti-competitive activities that overly burden new entrants to many industries.
Antitrust enforcement and competition policy are supposed to focus on protecting consumers from the harms of anti-competitive practices. If antitrust reformers really want to foster competition in a way that will have a significant upside, scrutinizing the monopoly status of licensing boards is more impactful than creating new barriers for innovative businesses.
If the left believed that draping the Capitol riot of Jan. 6, 2021, around the neck of former President Donald Trump and the party that refused to repudiate him would sink the GOP, it appears to have miscalculated.
For, as the left painted the Capitol riot as an “armed insurrection,” “domestic terrorism,” “attempted coup,” and political atrocity that stands beside Pearl Harbor and 9/11 as “a day that will live in infamy,” Republicans were displacing the Democrats as America’s first party.
Democrats began 2021 as the preferred party of 49% of the country. Only 40% identified as Republicans.
When 2022 began, the standings had been reversed.
Forty-two percent of Americans identified as Democrats, and 47% as Republicans, a turnaround of 14 points.
While President Joe Biden began 2021 with an approval rating in the mid-50s, he ended the year with an approval rating in the low 40s. One national poll showed Biden’s approval rating sinking to 33%.
On Wednesday, a Politico/Morning Consult survey came out that showed that 37% of Americans awarded Biden a grade of “F” for his first year, with another 12% giving him a “D.” School kids with grades like that risk being held back a year or expelled.
On his handling of the issues of immigration and restoring national unity, 40% of Americans flunked Biden. On the economy, 38% gave him an “F.”
Also, in that Politico survey, 68% of respondents said America is on the “wrong track,” more than twice the number who believe she is heading in the “right direction.”
In this same survey, Biden’s overall approval stands at 40%.
What is the message that the totality of these numbers conveys?
Democrat and media obsession with Jan. 6, their vast exaggeration of what happened, and the campaign to indict the GOP as a mortal threat to “American democracy” has failed as a strategy. And Biden’s presidency is seen by the people he leads as a failing presidency.
If the election of 2022 were held next Tuesday, Democrats would be swept from power in both houses of Congress, and a Republican Congress would face a lame-duck President Joe Biden for the next two years.
And it is hard to see any deus ex machina waiting in the wings to prevent what is coming: gridlocked U.S. government from 2023 to 2025.
Indeed, when one considers the political situation one year after Biden’s inauguration and 10 months before the 2022 elections, how Biden turns things around for himself, his presidency and his party is not easy to see.
The foremost issue in the public mind is the economy, inflation in particular. The consumer price index has been surging at 7%. But for the Federal Reserve to put on the brakes to control inflation could mean a major hit in the stock market, which was robust in Biden’s first year.
If Biden is fighting stagflation by the fourth quarter of calendar year 2022 — as Jimmy Carter was in 1980 — Democratic candidates will be avoiding him the way Stacey Abrams shunned him on his visit to Atlanta.
A second issue on which Biden is racking up failing grades in the public’s mind is immigration, which means the southern border across which some 2 million illegal immigrants from more than 100 countries poured in 2021. Biden has conceded that he has no chance of dealing with the crisis legislatively because of GOP opposition in Congress.
And his unhappy progressive allies would not permit Biden to employ the means necessary to halt the invasion of the country whose borders he has sworn to protect and defend.
Another issue gaining traction is the explosion of flash mob robberies and shootings and killings in Democratic-run cities, coupled with the perception that progressives are soft on criminals and tough on cops.
Saturday, a week ago, Michelle Alyssa Go, a 40-year-old New Yorker, was shoved to her death in front of a subway train at Times Square station by a “homeless” person.
Atrocities like this are now almost daily fare, and the stories and video are moving public opinion back to the law-and-order attitudes that worked so well for the Republican Party in the Richard Nixon and Ronald Reagan eras.
As for the coronavirus, the Biden administration neither anticipated nor prepared for the delta and omicron variants. And no one knows where we will be next November — hopefully, in a better place.
As of now, Biden is a drag on the Democratic Party at the national level, and very probably in the off-year election in November.
What began his slide in public approval last August was a foreign policy debacle, the perception of a bungled withdrawal from Afghanistan.
And how Biden handles the Ukraine crisis ginned up by Russian President Vladimir Putin may come to be seen as a reflection of his mastery of foreign policy, or his ineptitude.
Ukraine could be determinant in history’s judgment of Biden’s presidency.
Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.
Does any American actually own their home if all local officials need in order to seize it is to imagine an alternative use for the property that might generate more tax dollars? So asks IJ Attorney Bob Belden on the latest episode of the Eminent Domain Podcast, where the conversation centers on Onondaga County, N.Y. officials’ plan to seize family homes to enlarge a “commerce park” that has sat vacant for decades.
In which the D.C. Circuit channels the energy of your eighth-grade English teacher who knows that, deep down, you’re better than this and is sad you won’t put in the work to realize your potential. Except the “you” in this analogy is FERC.
Allegations: There aren’t a lot of players in the niche market for bankruptcy advising involving estates with assets in excess of $1 bil, so you can imagine that one such New York-based firm was pretty upset when it learned that a major competitor had been securing consulting gigs through shady pay-to-play dealings. The firm sues, alleging that they would have gotten some of those gigs if their competitor hadn’t done a RICO. Second Circuit: Very possibly. Proceed to discovery.
A Nassau County, N.Y. detective rolls his eyes, displays a distinct lack of interest in evidence presented to him that shows man he is arresting for domestic violence is in fact wrongfully accused. (The man misses his father’s funeral while he’s sitting in jail.) Jury: The detective is personally on the hook for $35k. Second Circuit: Nope, qualified immunity. The detective may not have had probable cause to arrest, but he had arguable probable cause. That said, the jury’s $150k award against the county still stands. Concurrence: We really should have asked New York courts whether municipalities can still be held liable when the employee who caused the injuries in question is immune.
Under federal law, a noncitizen minor whose parents have legally separated is entitled to derivative citizenship if the custodial parent becomes a naturalized citizen before the minor turns 18. USCIS: But we’re not going to recognize your parent’s divorce under Sharia law in Jordan because both sides didn’t agree to the divorce. Third Circuit: A separation under Jordanian law is still a legal separation, and this guy has been entitled to citizenship since April 1982.
Fifth Circuit: When the gov’t defaults on a contract, it doesn’t violate the Constitution. It violates the contract.
Allegation: Shelby County, Tex. sheriff rehires jail officer who’d been fired for abusing inmates. The officer then sexually abuses several inmates, including the plaintiff, a pretrial detainee. Sheriff: Ah, but there’s no allegation the officer was fired for sexually abusing anyone. Fifth Circuit: There’s enough here to get past a motion to dismiss. No qualified immunity for the sheriff for negligent rehiring.
In the future, entire federal courts casebooks will be written about the Texas SB 8 litigation. This chapter? Fifth Circuit: “Certified Questions to State Supreme Courts.” Dissent: More like “Delay and Subterfuge on Remand.”
While Norwalk, Ohio man was at work, his wife was beaten to death in her bed. Nevertheless, he’s convicted based on a blood-splatter experiment that ties his socket wrench to the murder. Yikes! The evidence tech who ran the experiment had previously been suspended for a “mental imbalance.” Her file concluded she would “stretch the truth to satisfy a department” and that her “conclusions regarding evidence may be suspect.” (None of which was disclosed.) After spending 22 years in prison, his conviction is overturned. He dies before he can be tried again; his daughters sue. District court: Qualified immunity! Sixth Circuit: No, the claims against the evidence tech can go forward (but not those against the tech’s supervisors or the city).
The Sixth Circuit notes that if you bamboozle FedEx into thinking you’re a large vendor so that it gives you a shipping discount, the bamboozlement is still mail fraud even if FedEx had no written policy about giving discounts to vendors.
Allegations: Deaf man suffers leg injury and goes to hospital, which repeatedly declines to provide a sign-language interpreter, leading to a communication breakdown that culminates in part of the man’s leg having to be amputated. (To the one reader who just said to themselves, “hey, that sentence has a fused participle”—yes, yes it does. You passed the secret test, and Justice Scalia‘s ghost is giving you a paranormal slap on the back right now. Or maybe he’s saying that, in this instance, it’s better to be “ungrammatical instead of pedantic.” Or maybe the sentence should just have been rewritten.) But long story short: The Sixth Circuit says the man timely sued the hospital and his case can proceed.
In 1957, in Lambert v. California, the Supreme Court overturned the conviction of a Los Angeles woman who failed to register with the authorities as a convicted felon—as was required by local ordinance. That’s because due process requires that defendants have some degree of notice that their conduct violates the law. Seventh Circuit: Which is a doctrine that hasn’t been of much help to anyone since, not least this appellant, who got dinged $50 for parking on an unmarked, “secondary” snow route after three inches-plus of snowfall.
Upset that the job of hooking refrigerated cargo containers to electrical supply was going to members of the International Brotherhood of Electrical Workers instead of members of the International Longshore & Warehouse Union, ILWU members shut down Terminal 6 of the Port of Portland for more than a year. The terminal operator sues, alleging an illegal secondary boycott (the Port, not the terminal operator, controlled the job assignments). They win at trial and are awarded $93.5 mil. Ninth Circuit: And we will not be taking an interlocutory appeal of that ruling, because the issues ILWU complains of are factual, not legal.
In March 2020, Ventura County, Calif. officials ordered gun stores and firing ranges to close for 48 days to fight COVID-19. But the order allowed other places, like bicycle shops, to stay open. A Second Amendment violation? Ninth Circuit: First, the 1905 case Jacobson v. Massachusetts doesn’t apply. Second, strict scrutiny does apply and the County fails it. Concurrence: Could have decided this under intermediate scrutiny. Other concurrence (by the judge who authored the majority opinion): My colleagues are awful. They’ll probably reverse this en banc, and to “get a jump-start” I’ve written this draft of what they’ll say. “Sort of a win-win for everyone.” (Ed.: Click here for a probing look at Jacobson.)
Butts County, Ga. sheriff orders signs placed in the front yards of all registered sex offenders in the county that read “STOP” and “NO TRICK-OR-TREAT AT THIS ADDRESS.” Eleventh Circuit (with pictures): Well that’s called compelled government speech, and it’s unconstitutional.
And in en banc news, the Ninth Circuit will not reconsider its opinion that a San Diego vaccine mandate for students 16 years and older that contains a variety of exemptions, but no religious exemptions, is religiously neutral. Dissental: SCOTUS has summarily rejected our approach to COVID restrictions on religious exercise five times. “With this case, our court is gunning for a sixth.”
And in amicus brief news, IJ is asking the Eighth Circuit to reverse dismissal of a 1983 action against Morton County, N.D. officers who purposefully shot a peaceful protester in the face with a lead-filled bean bag as he shielded women and elderly folks in the crowd. Faced with ill-defined criminal charges that required him to travel across the country for hearings, the protester accepted a pretrial-diversion agreement. But the district court said resolving the charges that way now bars him from suing the officers. To learn why that ain’t so, click here. For more on the case, click here.
Since mid-November, San Bernardino County, Calif. sheriff’s deputies have pulled over armored vehicles owned by Empyreal Logistics three times on flimsy pretexts—and seized cash twice. None of the stops resulted in tickets or arrests, and the sheriff has no reason to suspect anything untoward is going on. Rather, the sheriff is just going after Empyreal because of who its clients are: California-licensed marijuana businesses. This week, Empyreal and IJ filed suit against the sheriff—and also against federal law enforcement officials and agencies, who are prohibited by a congressional appropriations rider from interfering with state-legal marijuana businesses but who are doing exactly that in this case by, among other things, helping the sheriff try to forfeit the unlawfully seized cash via DOJ’s equitable sharing program. Click here to learn more.
Markets Scream ‘Panic’ To Powell As 2022’s Tech-Wreck Is Worst In Over 30 Years
The market is sending The Fed some very clear signals as it prices in an aggressive rate-hiking trajectory this year (just as the economic data starts to gravely disappoint) warning that it is ‘panicking’ and deserves ‘more’…
Panic Signals include….
1) Indices puking hard
This the 3rd straight weekly loss for the S&P (its longest weekly losing streak since Sept 2020) with every bounce hit hard. Nasdaq and Small Caps were the hardest hit this week with The Dow the best of a bad bunch. This was the worst week for Nasdaq Since March 2020, Russell 2000’s worst week since June 2020, and S&P and Dow’s worst since Oct 2020…
Nasdaq is now suffering its worst start to a year in at least 30 years (it is very slightly worse than 2008)
The Nasdaq Composite is down 14% from its highs, but the Russell 2000 is worst, down over 18% from its highs (S&P -8.1% from its highs and Dow -6.75%)
2) Headline stock names have been clubbed like a baby seal (PTON, NFLX, ZM, etc…)…
…Retail Favorite stocks have been routed…
…and Bubble markets (unprofitable tech, SPACs, Crypto…) all monkeyhammered…
All of which looks like this…
3) VIX term structure inverted.
While typically projected as a ‘bottom’ indicator, this inversion seems particularly focused into The Fed meeting next week…
4) HY Bond prices at 14 month lows.
Credit leads, equities follow…
5) Fed rate expectations pricing in 4 hikes by Dec 2022.
…and given that 2Y yields dropped back below 1.00% today, the market is exclaiming to The Fed that a reversal in their policy is imminent…
6) The market is implying The Fed will fold by the end of 2025…
Not a good sign for Powell and his pals when the market is screaming at them not to even start because they’ll be forced to lose all credibility with a year or two…
7) Yield Curve inverting hard (policy error warning).
The yield curve is the flattest since April 2020, screaming out to The Fed that they won’t be hiking rates like they think for long…
8) Fed Repo facility usage hits YTD high.
Yes, there is $1.7 trillion in excess liquidity being thrown into this facility and not being leveraged to buy any dips…
Source: Bloomberg
9) Put-Call ratios are surging.
We suspect a lot of this is hedging into The Fed (but also note that today’s OpEx would have wiped out some of the P/C strength)…
10) ‘Panic’ is accelerating (but has more to go yet before it reaches the scariest levels)…
Source: Bloomberg
TICK was really ugly the last two days with the biggest ‘sell programs’ since Sept 2021…
Source: Bloomberg
All signals that the market knows The Fed looks at for signs of stress as they put pressure on Powell to fold and strike his Put…
“Into the open today, we were looking for indications of panic readings for a more tradeable bottom ahead,” said Alon Rosin, Oppenheimer & Co.’s head of institutional equity derivatives.
“Between the TICK/TRIN readings during the morning flush and VIX inversions, it is possible that fear, panic has finally arrived.”
The problem – of course – is, as we noted earlier, the hope that this is a resumption of the Q4 2018 playbook – i.e. Fed tries to tighten, market pukes and forces Powell to fold) – is missing the fact that this time, with just so much more extensive speculative & valuation excess as a starting point the problem is the inflation issue – now a political imperative too – means the “Fed Put” is now struck much lower below spot…
…meaning no “dovish pivot” relief unless things get much, much worse from the markets-side.
Some more thoughts…
A violent intraday reversal like the Nasdaq’s yesterday is rare and most often happens during a crisis. This was the 21st time since 1972 that the benchmark rose more than 2% during the session only to decline 1% or more at the close.
The majority of those episodes occurred during the bursting of the Internet bubble and during the 2008 financial crisis. Before yesterday, the most recent example was in early days of the Covid pandemic in March 2020.
It takes time for volatility to wane. On average the index fell the following day and traded sideways in the next five days.
The S&P 500 closed below its 200DMA. As Jim Bianco notes, this ends a 409 trading day streak above it – the longest streak in 8 years…
In fact, all the US majors closed below their 200DMAs…
FAAMG-T stocks puked this week – the worst week since March 2020 (AMZN is in a bear market)…
Source: Bloomberg
Bank stocks had an ugly week with GS and JPM now significantly lower YTD…
Source: Bloomberg
Value stocks continued to outperform (this is the 4th straight week of outperformance and Value just broke above the downtrend relative to Growth…
Source: Bloomberg
Treasury yields ended lower on the week (apart from 2Y) with 30Y outperforming…
Source: Bloomberg
2Y Yields dropped back below 1.00%…
Source: Bloomberg
The dollar ended the week higher – its best week in the last 5 – finding resistance at the YTD unchanged line once again…
Source: Bloomberg
Cryptos cratered this week, with Ethereum underperforming (-17%, the worst week for ETH since Jun 2021) and Bitcoin the least bad horse in the glue factory (-11%)…
Source: Bloomberg
Pushing Bitcoin’s RSI into deeply oversold territory that marked a local low last time…
Source: Bloomberg
Oil rallied for the 5th straight week with WTI topping $87 (highest since 2014)…
Gold rallied for the 5th week in the last 6, holding above $1800…
Finally, if you think you had a bad week, take a look at Biden’s approval rating (now barely better than Trump’s was)…
Source: Bloomberg
But worse still, Trump has overtaken Biden as the most ‘favored’ politician in America…
Source: Bloomberg
US Macro data disappointed this week again and has dropped back into negative territory…
Source: Bloomberg
And Stagflation is imminent…
Source: Bloomberg
We suspect more than just Ed Norton need a hug after this week…
I don’t keep pictures from films around home. But I have this one in my office in a frame bc it makes me smile every time. It’s engraved ‘Love and Hugs, Meat’ it sums him up well. He was so funny. And gentle. And warm to everyone. A sweet soul. RIP Meat Loaf pic.twitter.com/aMrIgXByEc
Planet Fitness Expands While Peloton Fades Into Darkness
COVID-19 crushed the gym industry, and many closed their doors over the last two years. People replaced gym memberships with daily rides on Peloton stationary bikes at home. However, the trend to replace gym workouts with at-home ones appears to be waning fast as Planet Fitness is expected to increase its national footprint.
Let’s begin with the Peloton news this week of alleged leaked memos containing confidential information that led CNBC to publish a report about the company experiencing a “significant reduction” in demand.
Meanwhile, Planet Fitness, one of the largest fitness clubs in the US with over 2,000 locations, is set to embark on a debt borrowing binge next week to expand its gym locations on a bet that consumers are expected to return as the Omicron spread eases.
“For Planet Fitness, as much as $325 million of the money it raises will help pay for more than 100 gyms that it’s buying for $800 million by taking over its oldest franchisee, Sunshine Fitness Growth Holdings. The rest of the bonds it sells will refinance debt,” Bloomberg said.
We see a major trend playing out: at-home workouts slump as the virus eases and people return to the gym. Already, Peloton workouts completed worldwide topped in the fourth quarter of 2021. Either people are getting lazy or they’re giving up on their bike and returning to the gym.
The change of consumer preference from at-home workouts to gyms as COVID subsides could be reflected in investors’ view that Planet Fitness will be the winner this year.
Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.
Does any American actually own their home if all local officials need in order to seize it is to imagine an alternative use for the property that might generate more tax dollars? So asks IJ Attorney Bob Belden on the latest episode of the Eminent Domain Podcast, where the conversation centers on Onondaga County, N.Y. officials’ plan to seize family homes to enlarge a “commerce park” that has sat vacant for decades.
In which the D.C. Circuit channels the energy of your eighth-grade English teacher who knows that, deep down, you’re better than this and is sad you won’t put in the work to realize your potential. Except the “you” in this analogy is FERC.
Allegations: There aren’t a lot of players in the niche market for bankruptcy advising involving estates with assets in excess of $1 bil, so you can imagine that one such New York-based firm was pretty upset when it learned that a major competitor had been securing consulting gigs through shady pay-to-play dealings. The firm sues, alleging that they would have gotten some of those gigs if their competitor hadn’t done a RICO. Second Circuit: Very possibly. Proceed to discovery.
A Nassau County, N.Y. detective rolls his eyes, displays a distinct lack of interest in evidence presented to him that shows man he is arresting for domestic violence is in fact wrongfully accused. (The man misses his father’s funeral while he’s sitting in jail.) Jury: The detective is personally on the hook for $35k. Second Circuit: Nope, qualified immunity. The detective may not have had probable cause to arrest, but he had arguable probable cause. That said, the jury’s $150k award against the county still stands. Concurrence: We really should have asked New York courts whether municipalities can still be held liable when the employee who caused the injuries in question is immune.
Under federal law, a noncitizen minor whose parents have legally separated is entitled to derivative citizenship if the custodial parent becomes a naturalized citizen before the minor turns 18. USCIS: But we’re not going to recognize your parent’s divorce under Sharia law in Jordan because both sides didn’t agree to the divorce. Third Circuit: A separation under Jordanian law is still a legal separation, and this guy has been entitled to citizenship since April 1982.
Fifth Circuit: When the gov’t defaults on a contract, it doesn’t violate the Constitution. It violates the contract.
Allegation: Shelby County, Tex. sheriff rehires jail officer who’d been fired for abusing inmates. The officer then sexually abuses several inmates, including the plaintiff, a pretrial detainee. Sheriff: Ah, but there’s no allegation the officer was fired for sexually abusing anyone. Fifth Circuit: There’s enough here to get past a motion to dismiss. No qualified immunity for the sheriff for negligent rehiring.
In the future, entire federal courts casebooks will be written about the Texas SB 8 litigation. This chapter? Fifth Circuit: “Certified Questions to State Supreme Courts.” Dissent: More like “Delay and Subterfuge on Remand.”
While Norwalk, Ohio man was at work, his wife was beaten to death in her bed. Nevertheless, he’s convicted based on a blood-splatter experiment that ties his socket wrench to the murder. Yikes! The evidence tech who ran the experiment had previously been suspended for a “mental imbalance.” Her file concluded she would “stretch the truth to satisfy a department” and that her “conclusions regarding evidence may be suspect.” (None of which was disclosed.) After spending 22 years in prison, his conviction is overturned. He dies before he can be tried again; his daughters sue. District court: Qualified immunity! Sixth Circuit: No, the claims against the evidence tech can go forward (but not those against the tech’s supervisors or the city).
The Sixth Circuit notes that if you bamboozle FedEx into thinking you’re a large vendor so that it gives you a shipping discount, the bamboozlement is still mail fraud even if FedEx had no written policy about giving discounts to vendors.
Allegations: Deaf man suffers leg injury and goes to hospital, which repeatedly declines to provide a sign-language interpreter, leading to a communication breakdown that culminates in part of the man’s leg having to be amputated. (To the one reader who just said to themselves, “hey, that sentence has a fused participle”—yes, yes it does. You passed the secret test, and Justice Scalia‘s ghost is giving you a paranormal slap on the back right now. Or maybe he’s saying that, in this instance, it’s better to be “ungrammatical instead of pedantic.” Or maybe the sentence should just have been rewritten.) But long story short: The Sixth Circuit says the man timely sued the hospital and his case can proceed.
In 1957, in Lambert v. California, the Supreme Court overturned the conviction of a Los Angeles woman who failed to register with the authorities as a convicted felon—as was required by local ordinance. That’s because due process requires that defendants have some degree of notice that their conduct violates the law. Seventh Circuit: Which is a doctrine that hasn’t been of much help to anyone since, not least this appellant, who got dinged $50 for parking on an unmarked, “secondary” snow route after three inches-plus of snowfall.
Upset that the job of hooking refrigerated cargo containers to electrical supply was going to members of the International Brotherhood of Electrical Workers instead of members of the International Longshore & Warehouse Union, ILWU members shut down Terminal 6 of the Port of Portland for more than a year. The terminal operator sues, alleging an illegal secondary boycott (the Port, not the terminal operator, controlled the job assignments). They win at trial and are awarded $93.5 mil. Ninth Circuit: And we will not be taking an interlocutory appeal of that ruling, because the issues ILWU complains of are factual, not legal.
In March 2020, Ventura County, Calif. officials ordered gun stores and firing ranges to close for 48 days to fight COVID-19. But the order allowed other places, like bicycle shops, to stay open. A Second Amendment violation? Ninth Circuit: First, the 1905 case Jacobson v. Massachusetts doesn’t apply. Second, strict scrutiny does apply and the County fails it. Concurrence: Could have decided this under intermediate scrutiny. Other concurrence (by the judge who authored the majority opinion): My colleagues are awful. They’ll probably reverse this en banc, and to “get a jump-start” I’ve written this draft of what they’ll say. “Sort of a win-win for everyone.” (Ed.: Click here for a probing look at Jacobson.)
Butts County, Ga. sheriff orders signs placed in the front yards of all registered sex offenders in the county that read “STOP” and “NO TRICK-OR-TREAT AT THIS ADDRESS.” Eleventh Circuit (with pictures): Well that’s called compelled government speech, and it’s unconstitutional.
And in en banc news, the Ninth Circuit will not reconsider its opinion that a San Diego vaccine mandate for students 16 years and older that contains a variety of exemptions, but no religious exemptions, is religiously neutral. Dissental: SCOTUS has summarily rejected our approach to COVID restrictions on religious exercise five times. “With this case, our court is gunning for a sixth.”
And in amicus brief news, IJ is asking the Eighth Circuit to reverse dismissal of a 1983 action against Morton County, N.D. officers who purposefully shot a peaceful protester in the face with a lead-filled bean bag as he shielded women and elderly folks in the crowd. Faced with ill-defined criminal charges that required him to travel across the country for hearings, the protester accepted a pretrial-diversion agreement. But the district court said resolving the charges that way now bars him from suing the officers. To learn why that ain’t so, click here. For more on the case, click here.
Since mid-November, San Bernardino County, Calif. sheriff’s deputies have pulled over armored vehicles owned by Empyreal Logistics three times on flimsy pretexts—and seized cash twice. None of the stops resulted in tickets or arrests, and the sheriff has no reason to suspect anything untoward is going on. Rather, the sheriff is just going after Empyreal because of who its clients are: California-licensed marijuana businesses. This week, Empyreal and IJ filed suit against the sheriff—and also against federal law enforcement officials and agencies, who are prohibited by a congressional appropriations rider from interfering with state-legal marijuana businesses but who are doing exactly that in this case by, among other things, helping the sheriff try to forfeit the unlawfully seized cash via DOJ’s equitable sharing program. Click here to learn more.
