Month: March 2018

State Kills Anti-Porn Bill After Discovering More About Its Backer, Free Speech Win for FX’s Feud, FISA Warrants Under Scrutiny: Reason Roundup

State porn bills suffer a blow: New revelations about the man who authored trendy anti-porn and digital censorship legislation has killed its chances in at least one state, Rhode Island, and may doom its chances in the 17 other states with similar proposals. Thank goodness.

The Rhode Island measure—which we covered here earlier this month—would have required people to pay a $20-per-device fee for the opportunity to access porn sites and any other content that might “affront current standards of decency” from phones, laptops, or other digitally enabled devices. Tech companies themselves were supposed to figure out how to make these filters ironclad or face serious liability.

The man behind the idea, Chris Sevier, was lobbying around the country for similar legislation, which he sometimes called the “Elizabeth Smart Law,” in reference to the Utah woman who was famously abducted from her home as a teenager in 2002.

Smart recently demanded that Sevier stop using her name to sell his porn proposal, which she was not associated with and had not endorsed. Sevier told AP that “Elizabeth Smart Law” was just an “offhand name” and the measure was officially called the “Human Trafficking and Child Exploitation Prevention Act.”

It’s a bad legal month all around for Sevier, who had sued in federal court for the right to marry his laptop since same-sex couples can now wed. A federal judge in Utah through out the case in mid-March.

After an AP story on all of this Monday, Republican state Sen. Frank Ciccone, who had introduced the porn-fee bill in the Rhode Island Senate, withdrew his proposal from consideration. He told AP he felt “misled” by the people pushing the bill.

“But not only me. I assume there’s quite a few other people,” [Ciccone] said, adding he assumes lawmakers in other states also will pull their bills. “A lot of us had misinformation.”

Dave Maass, of the Electronic Frontier Foundation (EFF) said he’s not sure “whether legislators really fully understand the nanny state this bill would create.” He also commented that it’s “fascinating” how Sevier “is pulling this off, like how he’s convincing so many people to introduce this bill.”

The whole fiasco isn’t exactly a ringing endorsement of how a lot of state legislatures approach the lawmaking process. At minimum, you’d think someone in these legislators’ offices would put minimal effort into finding out some basic background information about the people whose whims they’re attempting to enable into law. That Sevier is a laptop-spouse-coveting zealot has long been public record.

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FX wins First Amendment feud with centenarian star. Hollywood golden-age actress Olivia de Havilland didn’t like her portrayal in last year’s FX miniseries Feud, a Ryan Murphy vehicle that, like American Horror Story, will feature a different iconic feud each season. Last year’s focused on Bette Davis and Joan Crawford; de Havilland (played by Catherine Zeta-Jones) shows up recurring as a friend of Davis. The 101-year-old actress sued FX and Murphy over the portrayal, on false light and right of publicity claims.

This week, a panel of Los Angeles Court of Appeal judges ruled against de Havilland in what EFF calls “a big win” for free speech. “If the lower court’s interpretation of the law were correct, it would threaten a huge range of expression about real people, ranging from dramas, to documentaries, to fan websites,” according to EFF. The appeals-court judges agreed:

The [lower] court concluded that, because Feud tried to portray de Havilland as realistically as possible, the program was not “transformative” … and therefore not entitled to First Amendment protection. As appellants and numerous amici point out, this reasoning would render actionable all books, films, plays, and television programs that accurately portray real people. Indeed, the more realistic the portrayal, the more actionable the expressive work would be. The First Amendment does not permit this result.”

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Trump slams Amazon for … ruining the Postal Service? Sigh.

As an article in Vox pointed out last year, even if Amazon gets a really good on shipping, “the Postal Service’s problems are deeper than just delivering packages. Larger institutional problems in the age of email and two-hour delivery are really to blame.”

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Victim Of Fatal Model X Crash Complained About Tesla Autopilot

Submitted by Quoth The Raven

After two days of trading turmoil for Tesla, catalyzed by reports of an NTSB investigation into the company involving a fatal Model X accident, more details have emerged that are anything but reassuring for the company. An ABC News report that got very little media visibility, reported that the Apple engineer who died from crashing his Model X had previously complained about Tesla’s autopilot feature.

The report goes on to say:

Walter Huang’s family tells Dan Noyes he took his Tesla to the dealer, complaining that — on multiple occasions — the auto-pilot veered toward that same barrier — the one his Model X hit on Friday when he died.

Involving the crash, Tesla has only made limited commentary, still not confirming as to whether or not auto-pilot was definitely engaged at the time of the crash. Instead, the company has come out in a blog post and blamed the lack of a highway safety barrier as the reason the crash was as severe as it was. From a March 27 Tesla blog post:

The reason this crash was so severe is that the crash attenuator, a highway safety barrier which is designed to reduce the impact into a concrete lane divider, had either been removed or crushed in a prior accident without being replaced. The following image shows what the barrier looked like when the crash attenuator was in proper condition, and what it looked like the day prior to the crash, based on dash cam footage from a witness of the accident who commutes daily past this location. 

Regardless, shares of Tesla are down almost 50 handles in the last two days and the company’s bond yields spiked significantly yesterday, indicating a seriously increased concern with the company‘s ability to generate cash or earnings with any type of consistency. Even CNBC had harsh words for the company yesterday, stating it could be an “easy move” for the stock to push under $200.

Finally, Moody’s had downgraded the company’s credit rating on Tuesday afternoon of this week, which was a point of discussion during Quoth the Raven’s most recent podcast covering Tesla’s recent stock price decline, this fatal crash and the executive turnover at the company.

In addition, it also comes days after a 73% approval by shareholders of Elon Musk’s insane new potential $55 billion compensation package, which has milestones based on metrics like market cap and revenue – data points that can grow and meet targets without the company ever technically needing to be profitable or cash flow positive. 

This Tesla report comes just one day after a self-driving vehicle in San Francisco was ticketed for getting “too close to a pedestrian”:

A self-driving car was slapped with a ticket after police said it got too close to a pedestrian on a San Francisco street.

The self-driving car owned by San Francisco-based Cruise was pulled over for not yielding to a pedestrian in a crosswalk. Cruise says its data shows the person was far away enough from the vehicle and the car did nothing wrong.

As for right now the future of Tesla – and autonomous driving – both look shaky.

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Stagflation Alert As Wages And Salaries Roll Over

What a difference two months makes. Back in January, with jobs aplenty and Americans spending like drunken sailors (sending their savings rate to the lowest on record), average hourly earnings suddenly spiked, unleashing the February VIXplosion over concerns that the Fed is behind the curve and will be forced to hike much more aggressively.

Well, fast forward to today, when all those “green shoots” are either dead or on the verge, and after today’s Personal Income and Spending report, it appears that it is stagflation that is once looming.

First, core PCE, the Fed’s favorite inflation gauge, rose 1.6%YoY in February 2017; the biggest gain since April 2017. Meanwhile, the PCE deflator rose by 1.8%, coming hotter than expected, just as the cellular service price collapse falls out of the Y/Y data, sending annual inflation higher by 0.3%, and is set spook the next set of CPI data. In other words, inflation is here.

Then there is the US consumer’s reaction, and while until just a few months back the US savings rate was at all time lows, it has since jumped to 3.4%, the highest since August 2017, as households are no longer spending more than they can afford, a theme we observed at the end of 2017.  This also means that spending is lagging income for 3 consecutive months, as something appears to have spooked American consumers.

That something may be wages and salaries themselves, because while the BLS’ statistical approximation of average hourly wages is just that, the BEA’s personal income actually carries wages and salaries data for both private and government workers. What it found is that after peaking in December, wage growth for these two worker groups has declined for 2 consecutive months, confirming what many have warned, namely that the recent period of benign wage increase is over, and now the slowdown begins.

All of the above also leads into what we said yesterday, namely that household buying plans have plunged in recent months. For those who missed it, yesterday we showed that that “Conference Board ‘Plans To Buy’ Homes, Autos, and Appliance have all plunged in the last three months“

 

 

And now we know why: between higher prices, declining wages, rising savings (not to mention maxed out credit cards), and plunging spending plans, Americans have once tapped out.

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The Spending Bill Brings Us Closer to National Bankruptcy: New at Reason

In the past 17 years, the federal government has spent about $15 trillion more than it has taken in. Publicly held federal debt equaled 31 percent of gross domestic product in 2001. Today, it’s nearly 79 percent.

The blame is bipartisan, observes Steve Chapman. Deficits emerged and grew under George W. Bush. They eventually declined but persisted under Barack Obama. And because of the policies adopted by Donald Trump and the current Congress, budget deficits will only mushroom. The crucial step in this development was the December enactment of a tax “reform” plan. Its main consequence was to add at least $1 trillion in deficits over the coming decade—on top of the $10 trillion that was already in the pipeline.

View this article.

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“Trend Is Your Friend… Except At The End”

Via Dan Lyons’ Tumblr,

A vast number of markets are undergoing key tests of important Up trendlines at the moment.

If you follow us on Twitter or StockTwits, you know that we do a regular chartstorm feature called #TrendlineWednesday (though, it is often published sometime later in the week, time permitting). The feature is meant to highlight some of the more important trendlines in the financial markets that happen to be relevant at the time. It does not necessarily represent the most sophisticated of technical analysis, but it is a quick way of introducing some potentially important chart developments underway.

Today’s #TrendlineWednesday was an especially extensive one, mainly due to the fact that there is presently an abundance of important trendlines in play – all of them being Up trendlines of varying magnitude and duration. The reaction in these markets at said trendlines may go a long way toward dictating the dominant direction of equities in the near-term.

The markets presently being impacted by these trendlines include broad global indices like the MSCI EAFE and MSCI All Country World Index (ACWI)…

…foreign regional and country indices like the Dow Jones STOXX 600 Europe Index and Greece’s Athex Composite…

 

…sector-specific indices and ETF’s like the NYSE Biotechnology Index (BTK) and Global X Social Media ETF…

…and individual stocks like Tesla (TSLA) and JPMorgan (JPM).

The fate of the global equity bull market may not ride on these trendlines. However, the fact that so many key trendlines are in play at the present time does suggest that this is an important juncture for the market.

*  *  *

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 insights into what we’re looking to buy and sell and when. Thanks for reading!

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The New Frugal Normal? US Savings Rate Rises As ‘Buying Plans’ Tumble

For the 26th straight month, US spending growth has exceeded income growth.

Both income and spending were in line with expectations but the much-watched PCE Deflator was a little hot (+1.8% vs 1.7% exp) at its highest in 11 months.

 

Which meant that Real Personal Spending was unchanged in February, after dropping 0.2% in January!

The biggest two-month drop since the financial crisis!

However, for the 2nd month in a row, the savings rate upticked (from 3.2% to 3.4%), as perhaps a new frugal normal is dawning in America…

And as we noted previously, the previously systemic slump in savings (as desperate Americans try to maintain their standards of living) has been met with near-record optimism…

 

Something that never ended well in the past.  And judging by the “buying plans” of Americans (from the recent Conference Board survey), things may have hit the tipping point…

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A new ICO from a bunch of porn stars

It’s about time. Someone has finally discovered what the adult entertainment industry has been missing for so many years: blockchain.

It’s true: a bunch of porn stars have recently gotten together to launch Bunny Software Ltd, a new cryptofinance startup that aims to ‘disrupt’ how people pay for pornography.

Instead of charging your credit card for that Pornhub Premium account, now you can charge your credit card for Bitcoin… then trade Bitcoin for Bunny Tokens, then trade your Bunny Tokens for porn.

Seems like quite a bit of extra work to go through– especially considering there are already a number of ways to discreetly make purchases online.

Dozens of services exist, for example, that offer disposable credit card numbers to help anonymize online transactions.

They’re cheap. Safe. Efficient. And proven.

But in the heady world of cryptofinance, none of those benefits matters.

The only thing people seem to care about is whether or not you’re doing something with the Blockchain.

If you are, then your business must obviously be a winner… even when there is absolutely no rational reason why your product or service would even need the blockchain.

Remember– the Blockchain is essentially a de-centralized ledger… a public database that isn’t controlled by any single individual.

Think about your bank account as an example.

Every record of every financial transaction you’ve ever made at your bank is kept in a giant database… a database that is controlled by the bank.

The blockchain, however, isn’t controlled by any single individual. It’s a database whose contents are securely distributed among everyone who uses it.

There are certainly some spectacular uses of the blockchain, especially in finance.

Stock purchases. Property titles. Shareholder records.

But that doesn’t mean that EVERYTHING should be in the Blockchain.

I mean, seriously, do we really need to upload our weekly grocery lists, or childrens’ report cards, into the Blockchain?

Some data doesn’t need to be made public. Or decentralized. Or distributed.

But in their zeal to grab onto the hottest financial trend in the world right now, people are coming up with the most idiotic uses of the Blockchain.

I recently read an article on Bloomberg about an ex-Google employee that wants to use Blockchain to track pigs from the field to the grocery store shelf.

I’ve read about other guys using Blockchain to track tips that people pay to bloggers.

IBM is studying how to use the blockchain to track cannabis distribution.

There’s just no end to these useless applications of the Blockchain.

And now we’ve got Bunny Tokens… a way for people to pay for porn using the Blockchain.

The company recently launched an ICO to raise money.

And if you spend some time on Bunny’s website you’ll learn that the board consists of several porn stars and a porn director.

You also learn the company has already partnered with a few businesses whose names are so explicit I can’t mention them here.

Yet after reading through 42-page white paper and watching their pitch videos, I realized that Bunny isn’t relying on a sound business plan or any actual technology to attract investors.

Sex sells. And BunnyToken is using porn stars its board members to bait the crypto rich into investing.

The message is clear: “Don’t worry about how we’re going to make money. Instead, just watch this video of a Russian porn actress explaining why you should invest in Bunny’s ICO.”

As ridiculous as this all sounds, though, the company has already raised $3 million. And they’re just getting started.

Across the entire crypto sector, more than $9 billion has been through ICOs.

And as I told you earlier this month, nearly half of all 2017 ICOs have already failed.

That failure rate will only increase with time.

Remember that ICOs aren’t even an asset class. That’s the craziest part of all.

Companies looking to raise cash simply need to publish a white paper explaining how their incomprehensibly silly use of the blockchain will ‘disrupt’ some industry.

And then the money starts rolling in.

Instead of traditional equity, though, companies sell “tokens” that are essentially pre-paid credits to be used within their very limited eco-system.

Imagine your neighbor wants to open an ice cream shop and came to you for investment capital.

But instead of offering you a stake in the business, he promises you a bunch of gift certificates that you can use to buy ice cream.

That’s basically what these ICO tokens are– gift cards.

Whether or not these tokens will have any value in the future depends entirely on the executives’ abilities to grow and build a sustainable business.

If your neighbor is a moron and runs the ice cream shop into the ground, your gift card will be worthless.

Similarly, if Bunny’s board of porn stars fall a little bit short of Richard Branson’s business acumen, the company will fail, and Bunny Tokens will go to zero.

And even if by some miracle, Bunny becomes a real business, token holders have no stake in the company.

That’s precisely the problem with most of these ICOs… too much downside, not enough upside.

And the entire sector is littered with stupidity, fraud, and senseless investors who aren’t thinking rationally.

What could possibly go wrong?

If you’ve been a reader for more than a few weeks, you know that I’m not anti-crypto.

I was a very early adopter of Bitcoin and have made a number of crypto investments over the years… including a six figure investment just a few weeks ago.

But this is about avoiding big mistakes.

And most of these ICOs are huge mistakes… incredible opportunities to lose money.

99% of them are going to zero because they’re not real businesses.

They’re just a quick fad… an easy way to dress up some silly idea in grown-up clothes and pass it off as a credible investment.

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Ross Ignores Beijing’s “Pandora’s Box” Warning, Confirms Imminent Tariff Announcement

Just when investors thought trade war tantrums were ebbing…

Despite warnings overnight from Beijing that US should “not open pandora’s box” with regard trade tariffs, US Commerce Secretary Wilbur Ross confirmed on Bloomberg TV this morning that President Trump will announce sweeping China tariffs, aimed at countering IP theft, shortly.

The US “is not strong-arming” China, Ross argued, “we’re defending ourselves.”

This comment follows Reuters reports that China warned the United States on Thursday against sparking a flurry of protectionist practices across the globe, even as Beijing pointed to U.S. goods that it could target in a deepening Sino-U.S. trade dispute.

“The malicious practices of the United States are like opening Pandora’s Box, and there is a danger of triggering a chain reaction that will spread the virus of trade protectionism across the globe,” a commerce ministry spokesman said.

While stocks took an initial hit from AMZN, they are legging lower on the Ross trade-war confirmation.

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How Trump’s Steel Tariffs Harm America: New at Reason

In light of President Donald Trump’s announcement of new tariffs for China, Veronique de Rugy offers some handy advice in her latest column: Don’t be fooled by the false promises of protectionist economics. As de Rugy explains, while steel industry moguls and workers might benefit from Trump’s scheme, the U.S. economy, other U.S. firms, and the American people will all suffer.

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Trump: “Amazon Pays Little Or No Taxes, Puts Thousands Of Retailers Out Of Business”

The main driver behind yesterday’s latest FANG plunge, was a report in Axios, according to which it was not Facebook that Trump wants to go after, but rather Amazon:

“He’s obsessed with Amazon,” a source told Axios. “Obsessed”, and added that Trump has allegedly talked about changing Amazon’s tax treatment because he’s worried about mom-and-pop retailers being put out of business. Another Axios source said that POTUS has “wondered aloud if there may be any way to go after Amazon with antitrust or competition law.”

Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen.

However, as we countered, none of this is new and Trump’s feud with Amazon reemerges periodically, although on Wednesday it came at an especially sensitive time for the tech sector, which had gotten clobbered in recent days, making it especially sensitive to negative news (one almost wonders if someone had bought AMZN puts ahead of the Axios news).

And, as if to underscore what we said yesterday, moments ago Trump himself said that he has stated his concerns with Amazon “long before the Election” and said that “unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!“

In other words, nothing has changed in the two or so years since Trump launched his campaign against Jeff Bezos (who also owns the Washington Post, which has made it overly clear what its feelings toward Trump are over the past year).

So will today’s confirmation that Trump is on the war path against Amazon serve as today’s tech selloff catalyst? Keep an eye on the price of Amazon stock for the answer.

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