“The reason I can see it coming is because I have studied this field of persuasion,” says Adams. “I saw this Trump character and he had the full tool set.” The 60-year-old Bay Area resident doesn’t agree with Trump on many political issues, but his prediction was enough for his to receive death threats from embittered Hillary Clinton supporters.
Adam’s new book, Win Bigly: Persuasion in a World Where Facts Don’t Matter, is both a detailed analysis of how Trump reframed political rhetoric during the 2016 campaign and a guide to how all of us can communicate more effectively and persuasively.
Adams sat down with Reason‘s Nick Gillespie in front of a live audience in San Francisco to talk about his book, his “extreme liberal” views, the popularity of his live broadcasts with followers via Twitter, and why Trump is a “master persuader.”
Click here for full text, and downloadable versions.
Did the FBI mislead the federal surveillance court about the credibility of the information it submitted to get authorization to snoop on an aide to Donald Trump’s presidential campaign? Or did the source of the information mislead the FBI about his own behavior, prompting the FBI to mislead the court accidentally in its warrant applications?
Essentially the question is this: What did the FBI actually know about the controversial “Steele dossier” that alleges all sorts of ties between the Trump campaign and the Russian government, and what did it know about former British Intelligence Officer Christopher Steele when it used his information to get authorization to snoop on former Trump aide Carter Page?
This week the Senate Judiciary Committee released a redacted copy of a January memo by Sens. Chuck Grassley (R-Iowa) and Lindsey Graham (R-S.C.), asking the Department of Justice to consider charges against Steele for lying to the FBI.
The release of this Senate Intelligence memo relates directly to the “Nunes memo,” produced by the staff of House Intelligence Committee chairman Rep. Devin Nunes (R-Calif.) in January and made public last week. In some ways the two documents dovetail nicely. Both memos argue that the Foreign Intelligence Surveillance Court was not properly informed that the dossier was put together by Fusion GPS and funded by the Democratic National Committee and Hillary Clinton’s campaign. And both argue that Steele’s motivations to keep Trump from getting elected prompted him to leak information inappropriately to the media while he was working with the FBI.
But a close look at the Grassley memo shows an important difference from what Nunes has claimed. Nunes’ memo argued that the FBI knew that Steele had been leaking to media outlets and concealed this information from the court. After all, the FBI continued using his information after it learned Steele was leaking and cut ties with him. But the Grassley memo suggests that that Steele misled the FBI:
A few paragraphs down:
This disagreement matters in terms of determining whether the FBI had a good sense of Steele’s credibility when using his documents to bolster its wiretapping request. The bureau acknowledged to the court that there were some political motivations behind the dossier’s creation, but it didn’t go into detail. How much did it grasp that Steele wanted to stop Trump from getting elected president, and how much should the court have been able to consider those circumstances when authorizing Page’s wiretapping?
This different interpretation of how the dossier was actually used to justify snooping on Page is yet another reason why the underlying warrant documents should be released. As Reason‘s Jacob Sullum just noted, the public is not seeing much actual evidence of lawbreaking that can be pinned on Trump as a result of this surveillance. It’s very much worth exploring whether this investigation was a fishing expedition.
JPMorgan warned that as the bond market sell-off gathered pace over the past weeks, it was raising concerns about the impact on equity markets. This is especially because the bond-equity correlation, which has been predominantly negative since the Lehman crisis, has started creeping up towards positive territory.
The 90-day correlation between stock (SPY) and bond (TLT) markets has surged ominously in the last few weeks…
In turn this raises concerns about de-risking by multi-asset investors who depend on this correlation staying in negative territory such as risk parity funds and balanced mutual funds? How worried should we be about de-risking by these two types of investors?
And this week (worst weekly drop in Risk-Parity funds since June 2013’s Bernanke Taper Tantrum)…
As mentioned above, these types of investors benefit from the structurally negative correlation between bonds and equities as this negative correlation suppresses the volatility of bond/equity portfolios allowing these investors to apply higher leverage and thus boost their returns.
But, as JPMorgan points out, the opposite takes place when this correlation turns positive: the volatility of bond/equity portfolios increases, inducing these investors to de-lever.
But JPMorgan offered hope that this vicious circle of de-leveraging could be stalled – and had been in the past – by dip-buyers from greater-fool retail inflows.
In the past, just as we have seen this year, these risk-parity-correlation tantrums have been cushioned by equity market inflows, and we note that, in particular, YTD equity ETF flows have surpassed the $100bn mark, a record high pace.
If these equity ETF flows, which JPMorgan believes are largely driven by retail investors, start reversing, not only would the equity market retrench, but the resultant rise in bond-equity correlation would likely induce de-risking by risk parity funds and balanced mutual funds, magnifying the eventual equity market sell-off.
Which could be a problem…
As Bloomberg reports that investors yanked a record $17.4 billion from the mighty SPDR S&P 500 ETF over the past four trading sessions. The $8 billion removed on Tuesday alone was the third-largest daily withdrawal in the post-crisis era.
The last time redemptions were close to matching this frenetic pace? In late 2007, when cracks in U.S. equities began to show before the global financial crisis unfolded.
While JPMorgan stated over the weekend that they were “reluctant to attach too much importance to the outflows of only one day,” the risk of a more significant equity market correction will naturally rise if these outflows extend into next week… and they have!
Put more simply – either we get a major equity ETF inflow to offset the risk parity hit, or markets are going a lot lower, a lot faster as the forced deleveraging accelerates.
Even though the threat of pervasive selling of volatility was generally ignored by the financial community and broader public, at least until Monday’s historic VIX surge when a cascading short squeeze amid the inverse VIX ETN community unleashed the biggest VIX buying order in history also called “volmageddon”, there were many who warned about the potential threat that the one-way VIX short pile up has created: among them were Barclays, Goldman, Morgan Stanley, Fasanara Capital, Peter Tchir, Kevin Muir… as well as SocGen’s Roland Kalyoan.
Last November, Kaloyan warned about the risks of overcrowded short positions on volatility. In his Nov. 23 note, the SocGen strategist wrote that he was “less enthusiastic” about equities in 2018 and warned that the number of short positions on volatility could “potentially strongly deteriorate the risk reward profile of equity markets” to wit:
We are less enthusiastic about equities heading into 2018 – We do not see much upside on our major equity targets for the next 12 months. We expect stretched valuations and rising bond yields to limit equity index performances in 2018 and the prospect of a US economic slowdown in 2020 to further cramp returns in 2019. We also raise some concerns about the quantity of shorts on volatility, which could potentially strongly deteriorate the risk reward profile of equity markets.
Two months later that’s precisely what happened.
Fast forward to today, when he has a similar downbeat message to investors: “don’t even think about buying the stock dip.” Why? Because it was never about vol: that’s just a symptom of all traders being on the same side of the trade, instead it’s all about the 10Y, something we showed earlier today when we observed the sharp adverse reaction to the 10Y yield spiking back over 2.50%.
“Equity investors have had an amazing time over the past four-five years,” Kaloyan told Bloomberg in an interview. “But now, the surge in bond yields is reaching the pain threshold for equities.”
As a reminder, it was the 10% hitting 2.85% last Friday that launched the 666 point Dow Jones dip (followed one day later by a crash nearly double the size). It was also the 10Y’s reaching 2.85% earlier today that halted the surge in the S&P.
Rising bond yields is set to put pressure on already-stretched stock valuations, he said. “With the 10-year Treasury yield reaching the zone of 2.5 percent to 3 percent, it means that fixed income becomes attractive again when compared with equity dividend yields.”
Kaloyan also said investors should “not be fooled by robust corporate earnings momentum as analysts rush to upgrade profit forecasts in part to reflect the tax reform, because the market has already priced in all the good news on that front.”
But it’s not just Kaloyan: another warning comes from an analyst who until very recently was an unabashed permabull, Morgan Stanley’s chief equity strategist Mike Wilson, who last year had the highest price target for the S&P. Wilson has joined a growing chorus of warnings to get out and not buy the dip, and in a note released this week, wrote that he expects “further downside in the near term as markets continue to digest shocks… This should take several weeks however and we are in no rush to buy this dip as we wait for better technical signals.“
Today the Virginia House of Delegates passed a pair of narrowly tailored reforms to state rules that artificially limit the supply of health care for critically ill infants and psychiatric patients.
Virginia is one of 30 states where Certificate of Public Need (COPN) laws limit the availability of a wide range of medical services. If a hospital wants to build a new surgical facility, install a new MRI machine, or offer specialty care for sick infants, it first has to get permission from the state Department of Health. Before 2015, Virginia hospitals had to get permission just to add new parking spaces.
In practice, hospitals use the law to limit the competition they face. Last year, Reasonhighlighted the tragic consequences with the story of an infant who died at Lewis-Gale hospital in Roanoke, Virginia. The hospital had twice applied for a COPN license to build a neonatal intensive care unit, but both times had been rejected by the state. In both instances, a cross-town rival hospital (which advertises itself as having the only NICU in southwestern Virginia) successfully lobbied to have the applications blocked, even though Lewis-Gale had the support of local officials, civic leaders, doctors, nurses, and residents.
One of the bills passed today would directly address that conflict by exempting hospitals in the Roanoke area (“Planning Region 5” in state bureaucratese) from COPN rules that require the state to assess the impact of competition on other hospitals. The exemption only applies to hospitals seeking a COPN license to build a NICU.
It’s a classic government move, one that responds to the most recent crisis in a way that may placate the immediately aggrieved interests but does nothing to prevent something similar from happening somewhere else. If the bill clears the Senate and gets a signature from Gov. Ralph Northam, a Democrat, Lewis-Gale will finally get to build its NICU but the state COPN regime will remain in full force for everyone else.
State Rep. Sam Rasoul (D-Roanoke) urged his colleagues to vote against a bill that did little to fix the underlying problems.
“We aggressively need COPN reform,” Rasoul said. “But this specific bill is a carve-out.”
The other bill is slightly broader, but it still represents only a small change to Virginia’s COPN rules. Under the terms of HB 1606, psychiatric facilities would be exempt from the COPN process if they wanted to purchase additional beds to expand access to care.
There are more than a dozen COPN reform bills kicking around in the Virginia legislature this year. Most deal with small exemptions for particular services or geographic areas rather than wholesale changes or repeal.
That’s unfortunate, because Virginia’s COPN laws have real, if somewhat hidden, consequences for residents of the state. A 2015 study by the Mercatus Center, a free market think tank, found that there are 131 fewer hospital beds per 100,000 people in Virginia when compared to the rest of the United States. Virginia also has fewer hospitals offering MRI services and CT scans than national averages. Hospital beds, MRI machines, and CT scanners are all subject to COPN licensing in Virginia, which means adding those services can be costly and difficult.
States with some form of COPN laws for hospitals have higher mortality rates for patients with pneumonia, heart failure, and heart attacks than states without such restrictions, according a separate Mercatus Center study published in 2016. The Federal Trade Commission and the Justice Department have found that COPN laws “raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers,” while allowing hospitals and other large health care providers to inflate costs.
It’s heartening to see that COPN laws are losing some of their grip in Virginia, but it’s a shame that lawmakers are unwilling to do more than chip at parts of the system.
“If policy makers are interested in increasing access to care, increasing the quality of care, and reducing the cost of care, the evidence is quite clear that CON laws should be entirely eliminated,” Matt Mitchell, a senior research fellow at Mercatus, told Reason. “Unfortunately, political incentives don’t encourage wholesale repeal. Instead, they encourage piecemeal exceptions granted to highly organized individuals.”
A few months after it purchased a sizable stake in Uber industries – receiving some of its shares at a discount – the Wall Street Journal reported Wednesday that Japanese conglomerate Softbank is in advanced talks to buy a stake in Swiss Reinsurance giant Swiss Re.
It’s not clear whether the money for the Swiss Re investment would come from SoftBank itself or its “Vision” fund, which company founder Chief Executive Masayoshi Son once pledged to use to create thousands of US jobs during the wake of President Donald Trump’s electoral victory.
The deal being discussed calls for the purchase of up to a third of Swiss Re’s shares at a premium, according to people familiar with the matter. Swiss Re shares currently trade at about 90 Swiss francs, giving the company a market value of 31 billion Swiss francs, or about $33 billion.
The Zurich company’s management in recent weeks traveled to Tokyo to meet with top SoftBank officials including Chief Executive Masayoshi Son, the people said. As always, the talks could still fall apart and there might not be a deal.
The talks are the latest sign of Mr. Son’s seemingly boundless, if sometimes quixotic, ambitions. He is recasting SoftBank, Japan’s largest mobile-phone carrier and majority owner of U.S. wireless carrier Sprint Corp. , as a global technology conglomerate, laying bets on everything from e-commerce to driver-less cars and virtual reality.
As expected, Swiss Re’s shares spiked on the news…
SoftBank is best known for its tech investing pool – known as the Vision Fund – which has plowed billions of dollars into private startups including broadband satellite company OneWeb Ltd., co-working firm WeWork Cos. – and, of course, Uber.
* * *
According to Recode, the Japanese conglomerate disclosed late Tuesday that its giant investing fund had already invested just under 40% of its pool of cash. That should quiet some critics who say it is impossible to spend that much money that quickly.
The Vision Fund and its companion, the $6 billion Delta Fund, invested $27.5 billion through the end of last year, according to a new quarterly earnings report from SoftBank.
When you throw in the $7.7 billion invested in Uber and $4.6 billion in Didi Chuxing earlier this year, the funds have spent $40 billion of their the $106 billion total.
U.S. oil production will surge above its 1970 “peak” of 9.6 million barrels per day this year, according to the latest projections from the Energy Information Administration (EIA). The agency estimates that American oil production will average 10.6 million barrels per day this year and will rise to a daily average of 11.2 million barrels in 2019.
Only a decade ago, the world was in the grip of one of its periodic “peak oil” panics. Dire predictions everywhere announced that humanity was on the cusp of a disastrous and accelerating decline in oil production. One prominent analyst declared in 2009 that global oil production had peaked at 82 million barrels per day in 2008 and would thereafter begin declining at a rate of 2.2 million barrels per day. Reaching peak oil would result in a “meltdown of society” and a “dying civilization” with a “landscape littered with the rusting hulks of SUVs.”
What happened?
Russia and the Organization of Petroleum Exporting Countries have been trying to boost prices by cutting back on production. Political chaos has engulfed several big oil producers—Iraq, Iran, Libya, South Sudan, Venezuela. The International Energy Agency (IEA) notes with understated charm that “declines are accelerating in Venezuela, which posted the world’s biggest unplanned output fall in 2017.” Yet the IEA expects global production to average about 98 million barrels per day this year.
Even in 2018, you can find die-hard peak oilers projecting doom. Just this week, J. David Hughes of the Post Carbon Institute questioned the EIA’s projections. “There is no doubt that the U.S. can produce substantial amounts of shale gas and tight oil over the short- and medium-term,” Hughes declared. “Unrealistic long-term forecasts, however, are a disservice to planning a viable long-term energy strategy. The very high to extremely optimistic EIA projections impart an unjustified level of comfort for long-term energy sustainability.”
Keep in mind that Hughes flirted with peak oil predictions back in 2010, forecasting that global crude production would peak in 2012. He based this conclusion on a consensus estimate (excluding the “optimistic” views of EIA and Cambridge Energy Research Associates) of more than 20 predictions.
How can you say that peak oil is dead, when oil’s sell price is one third of the price needed to sustain current production level? That’s silly. Many oil companies are going broke, oil exporting countries will be broke soon. You just don’t understand the subject. But when you don’t understand it, you shouldn’t write articles about it. Peak oil happened in 2015, instead of 2005-2007 probably only because of coal boom in China. But that coal boom has now ended. Before making a fool of yourself again, please get to know the subject first.
I replied: Well, I guess you told me! As the mirage of peak oil continues to recede, I await future emails from you confidently asserting that peak oil occurred in 2020, in 2025, in 2030, etc.
I just can’t seem to help making a fool of myself on this subject.
Trump’s White House staff secretary, Rob Porter, resigned Wednesday after he was accused of physical and emotional abuse by two of his ex-wives.
The resignation came shortly photos of the bruised and battered face of his first wife, Colbie Holderness, 37, a senior analyst for the U.S. government, surfaced online.
The abuse allegations became public after the Daily Mail reported Porter was dating White House communications director Hope Hicks, one of Trump’s closest aides. The Mail reported that according to his first ex-wife, Porter choked and punched her during their marriage, breaking down her confidence so badly with his verbal and emotional abuse that she took an extended leave of absence from grad school.
Holderness spoke on the record to DailyMail.com about her five-year marriage to Porter, detailing physical and mental abuse.
Porter, 40, has been described as one of the most important players in the Oval Office
Colbie’s revelations followed a DailyMail interview on Tuesday evening with Porter’s second wife, Jennifer Willoughby, who told how Porter, 40, once dragged her wet and naked out of the shower and was verbally abusive, calling her a f***ing b***h’ on their honeymoon.
In 2010, Willoughby filed a protective order against Porter after he violated their separation agreement and refused to leave their apartment. According to a complaint filed with the police, he punched the glass on the door to their home, cutting his hand in the process.
Holderness revealed to DailyMail.com that she was interviewed by the FBI – as was Willoughby – about her marriage after Porter was tapped for his current White House position as White House staff secretary and required security clearance – clearance which he has not received.
John Kelly, Chief of Staff, commented: ‘Rob Porter is a man of true integrity and honor and I can’t say enough good things about him. He is a friend, a confidante and a trusted professional. I am proud to serve alongside him.’
But first wife Colbie says that the Porter is ‘a bit of a monster’ and has displayed a pattern of abuse with women.
‘I was his first wife and it wasn’t until there was a second wife and then a long-time girlfriend reaching out to me, who was experiencing some weird things. I started to realize that he keeps getting away with it. It’s a pattern now, it hasn’t gone away.’
* * *
At this point the mess was complete and Porter decided to resign: White House press secretary Sarah Huckabee Sanders read a statement from Porter at the daily press briefing on Wednesday minutes after multiple news outlets reported he had resigned.
“These outrageous allegations are simply false. I took the photos given to the media nearly 15 years ago and the reality behind them is nowhere close to what is being described. I have been transparent and truthful about these vile claims, but I will not further engage publicly with a coordinated smear campaign,” Porter said in a statement.
“My commitment to public service speaks for itself. I have always put duty to country first and treated others with respect. I am deeply grateful for the opportunity to have served in the Trump Administration and will seek to ensure a smooth transition when I leave the White House.”
According to The Hill, Sanders said Porter’s exit would not be “immediate” so he could help usher in a replacement. She said Porter “was not pressured” to resign and that he made the decision to leave “on his own.”
* * *
The abuse allegations became public after the Daily Mail reported Porter was dating White House communications director Hope Hicks, one of Trump’s closest aides. Llast week, the Daily Mail revealed that Porter, who is Mormon, and White House Director of Communications Hope Hicks are dating, and were seen kissing in a cab on the way back to her apartment from a bar.
Porter’s departure is a major blow to the White House staff. He was a member of chief of staff John Kelly’s inner circle and was responsible for the paper flow to President Trump’s desk. He frequently traveled with Trump aboard Air Force One and was seen as helping carry out Kelly’s efforts to bring order to a chaotic West Wing.
Attorney General Jeff Sessions thinks marijuana may be a gateway to prescription opioid and heroin addiction. In fact, a number of academic studies show lower rates of opioid abuse and overdoses in states that have legalized medical marijuana.
Speaking at a Heritage Foundation event last night in honor of the late Ronald Reagan’s birthday, Sessions lamented the “permissive rhetoric” and media coverage surrounding marijuana and other drugs.
“We don’t think illegal drug use is ‘recreation.’ Lax enforcement, permissive rhetoric and the media have undermined the essential need to say no to drug use. Don’t start,” Sessions said. “That’s what President Trump said to us the other day in a meeting. What did Nancy Reagan say? Just say no. Don’t start this stuff.”
Sessions was also asked during a Q&A section about the opioid crisis. “My goal for 2018 is to see a further declin,” he replied “We had a 7 percent last year decline in actual prescriptions of opioids. We think doctors are just prescribing too many….These pills become so addictive, and the DEA said a huge percentage of the heroin addiction starts with prescriptions. That may be an exaggerated number—they had it as high as 80 percent—but we think a lot of this is starting with marijuana and other drugs, too. We’ll see what the facts show, but we need to reduce the prescription abuse and hopefully reduce the addiction that’s out there.”
WATCH: Attorney General Jeff Sessions says his goal for 2018 is to see a further decline in prescriptions of opioids, and says, “we think a lot of this is starting with marijuana and other drugs.” pic.twitter.com/paWSsEuNrl
If marijuana use leads to opioid abuse, you might expect states where pot can be obtained legally to have a bigger opioid problem. Yet numerous studies have found the opposite:
A 2017 study published in Drug and Alcohol Dependence found that states that legalized medical marijuana reported on average 23 percent fewer hospitalizations for opioid addiction and 13 percent fewer hospitalizations for opioid overdoses.
A 2017 study found that New Mexico patients with chronic pain who enrolled in the state’s medical marijuana program were likely to reduce their opioid dosage or even cease opioid use altogether.
A 2017 study in Colorado found that marijuana legalization “was associated with short-term reductions in opioid-related deaths.”
A 2016 study published by the American Journal of Public Healthreported that fatally injured drivers in car crashes were less likely to test positive for opioids in states with legal medical marijuana.
A 2016 study looking at prescriptions covered by Medicare found that “the use of prescription drugs for which marijuana could serve as a clinical alternative fell significantly once a medical marijuana law was implemented.”
A 2014 JAMA study found that states with legalized medical marijuana had on average a nearly 25 percent lower mortality rate for opioids.
The Justice Department did not immediately respond to a request for comment or additional information.
Donald Trump’s longstanding desire for a military parade in D.C. has turned into a presidential directive, according to a report in The Washington Post.
That led to the usual back-on-forth in the punditocracy. Liberals got a bit of collective amnesia about America’s storied history of jingoism, claiming that a military parade doesn’t reflect American values. In fact, like it or not, many presidents have found comfort in wrapping themselves in the flag and hiding behind service members and veterans.
Trump supporters, and even some conservatives who don’t support Trump, lauded the idea. National Review‘s David French—the guy Bill Kristol once touted as a potential third-party candidate in 2016—said he was “fine” with a military parade because of the things he says the military has done since 9/11, like toppling the Taliban and Saddam Hussein and defeating the Islamic State in Iraq and Syria. He didn’t note that American troops remain in Afghanistan more than 16 years after toppling the Taliban, and that they’re also present in Hussein’s old Iraqi stomping grounds and in Syria.
Rep. Justin Amash (R-Mich.) may have had the most relevant take:
I’m all for a parade if it’s to celebrate bringing our young men and women home from these unauthorized wars overseas.
Trump’s desire for a military parade is certainly on-brand. He’s spoken highly of France’s traditional Bastille Day Military Parade ever since being invited as President Emmanuel Macron’s guest last year, and he made a big deal during his presidential campaign of saving a veterans’ parade in New York in 1995.
At the same time, Trump has sometimes flirted with understanding that U.S. foreign policy is dangerously interventionist. A military parade would be a small price to pay for declaring victory and ending the war on terror, if someone could convince the president to link the two. It would certainly be an ego-booster.