The US Government Just Destroyed Our Privacy While Nobody Was Paying Attention

Authored by Carey Wedler via TheAntiMedia.com,

While the nation remained fixated on gun control and Facebook’s violative practices last week, the U.S. government quietly codified the CLOUD Act, its own intrusive policies on citizens’ data.

While the massive, $1.2 trillion omnibus spending bill passed Friday received widespread media attention, the CLOUD Act — which lawmakers snuck into the end of the 2,300-page bill — was hardly addressed.

The Clarifying Lawful Overseas Use of Data Act (CLOUD) “updates the rules for criminal investigators who want to see emails, documents and other communications stored on the internet,” CNET reported. “Now law enforcement won’t be blocked from accessing someone’s Outlook account, for example, just because Microsoft happens to store the user’s email on servers in Ireland.

The CLOUD Act will also allow the U.S. to enter into agreements that allow the transfer of private data from domestic servers to investigators in other countries on a case-by-case basis, further globalizing the ever-encroaching surveillance state. The Electronic Frontier Foundation, which has strongly opposed the legislation, listed several consequences of the bill, which it called “far-reaching” and “privacy-upending”:

  • Enable foreign police to collect and wiretap people’s communications from U.S. companies, without obtaining a U.S. warrant.

  • Allow foreign nations to demand personal data stored in the United States, without prior review by a judge.

  • Allow the U.S. president to enter “executive agreements” that empower police in foreign nations that have weaker privacy laws than the United States to seize data in the United States while ignoring U.S. privacy laws.

  • Allow foreign police to collect someone’s data without notifying them about it.

  • Empower U.S. police to grab any data, regardless if it’s a U.S. person’s or not, no matter where it is stored.

The bill is an update to the current MLAT (Mutual Legal Assistance Treaty), the current framework for sharing internet user data between countries, which both legislators and tech companies have criticized as inefficient.

Some tech companies, like Microsoft, have endorsed the new CLOUD policy. Brad Smith, the company’s president and chief legal officer, called it  “a strong statute and a good compromise,” that “gives tech companies like Microsoft the ability to stand up for the privacy rights of our customers around the world.”

They echoed the sentiment of lawmakers like Orrin Hatch (R-UT). In February, he said of the bill:

The CLOUD Act bridges the divide that sometimes exists between law enforcement and the tech sector by giving law enforcement the tools it needs to access data throughout the world while at the same time creating a commonsense framework to encourage international cooperation to resolve conflicts of law.”

But one of the biggest complaints from privacy advocates, however, it that the new legislation places too much unmitigated power in the hands of governments with abysmal human rights records while also giving too much discretion to the U.S. government’s executive branch. Noting that the executive branch will decide which countries are human rights compliant and that those countries will then be able to engage in data collection and wiretaps without any further restrictions or oversight, the ACLU warned:

Flip through Amnesty International or Human Rights Watch’s recent annual reports, and you can find a dizzying array of countries that have ratified major human rights treaties and reflect those obligations in their domestic laws but, in fact, have arrested, tortured and killed people in retaliation for their activism or due to their identity.”

The organization pointed out that no human rights organizations have endorsed the CLOUD Act, adding that “in the case of countries certified by the executive branch, the CLOUD Act would not require the U.S. government to scrutinize data requests by the foreign governments — indeed, the bill would not even require notifying the U.S. government or a user regarding a request.”

Further, the ACLU says, if a foreign government’s human rights record deteriorates, there is no mechanism to revoke its access to data. Considering the U.S.’ existing record on supporting regimes that severely restrict basic rights like freedom of expression, the expanded access the CLOUD Act provides is undoubtedly worrisome.

Also predictable is the government’s stale justification for expanding its power. As the CLOUD Act claims, it is purportedly to “protect public safety and combat serious crime, including terrorism” — even if it further empowers governments that support and commit said terrorism.

In an age where the government already engages in mass surveillance and is eager to disable the people’s efforts to protect their privacy through encryption technology, it is unsurprising, albeit dangerous, that Congress continues to encroach on what little is left of safeguards against unwarranted intrusions.

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Stocks Are Suddenly Tanking… Again

Tough to pin a catalyst in this flush – which has pushed S&P red and Nasdaq down hard – but a combination of NVDA’s drop, TSLA’s tumble, 5Y auction tail, and FB comments, seems to be stalling the bounce.

 

Or perhaps stocks are catching down to bonds…

 

As VIX spikes (and remains inverted)

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“Investors Have Become Completely Inured That All Cans Can Be Kicked Down The Road…”

Yesterday’s exuberance in stocks is continuing today (despite some early noise), but bond yields are tumbling, having erased yesterday’s spike higher (and the dollar is rolling back lower). All of this has former fund manager Richard Breslow wondering once again at the reignited ignorance of the stock market to every possible non-positive action… making it clear that investors should “resist any temptation to believe you know what the Chinese are thinking.”

Via Bloomberg,

It certainly isn’t a crime to not have a solid grasp on what is going on with the price action. It doesn’t even make you a bad person. Being out of sync with the market is an important state to identify and should be respected — not ignored nor fought. Opportunities, and good ones, come to all who wait. But I have to admit, it is of some comfort to realize that it is something going around and not just me.

If the equity rally yesterday and so far today can be laid off on having been sparked by a couple of tweets and throw-away lines, then I am going back to the charts until some of the muck has been cleared. As shares went soaring, it was pointed out that fears had been allayed because Treasury Secretary Mnuchin is optimistic about trade tensions. This morning I learned that the global rally continued thanks to the President tweeting that trade talks are going on and “all will be happy.” Man, if that’s all it takes, this should be easier than it looks.

From an analysis point of view, it is, however, safe to assume that the “noise” we’ve been experiencing is largely based on some extraordinarily short-term and superficial analysis. In truth, the market’s ability, and culpability, in ignoring big geopolitical threats is wholly intact. Investors have become completely inured to the belief that all cans can be kicked down the road.

That’s not what is meant by playing long-ball.

And to be fair, this week is month-, quarter-, for some year-end, all ahead of a long weekend. A certain amount of hinky trading is to be expected. But shouldn’t be given more than its fair due. Window-dressing can only mask so much.

So what to do for the next couple of days aside from making up a shopping list for the holiday meals?

Respect that oh-so-impressive 200-day moving average holding up the S&P 500 future. Use 2,700 as a major pivot point and assume if we ever take out 2,800, everything you’ve read for the last two weeks can be shredded. A simple game plan for a market that will rapidly thin out as Friday approaches.

The dollar is in the mood to torture traders. It’s tradable but has a lot going on well beyond the debate of who will impress us with new forward guidance. It’s very tempting to look for places to buy it, but it’s worth asking why it insists on continuing to come back offered. Just remember, if you are selling the currency here, you are making a call that it will be able to power through some formidable support. You wouldn’t be alone.

I’m taking the rest of the week off from Treasuries. They have hurt my feelings by being so insufferable with their unwillingness to move. But I have to confess, it is almost impossible for me to ignore the yield curve down here and consider just how flat 5s/30s will have looked if 40 basis point support holds. I may be crazy, but the yield curve could be a decent proxy way of playing the dollar. The Treasury auctions, all auctions going forward, will matter.

Whether it has any bearing on your trading strategy or not, resist any temptation to believe you know what the Chinese are thinking.

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Trump Administration to Deliberately Undercount Illegal Immigrants in 2020 Census

Yes he can! ||| CNNThe Department of Commerce last night announced that the 2020 Census will, for the first time since 1950, ask all respondents whether they are a legal resident of the United States. The move has already been met with a lawsuit from the state of California, and pre-emptively denounced by five former directors of the Census Bureau as putting “the accuracy of the enumeration and success of the census in all communities at grave risk.”

The official justification for the move, as enumerated by Commerce Secretary Wilbur Ross in a memo, is to produce more complete data so that the Justice Department can better enforce the Voting Rights Act (VRA). In doing so the secretary is explicitly prioritizing a tertiary Census Bureau function over its constitutional raison d’être, which is to provide an accurate decennial head count—including of non-citizens and other non-voters—in order to reapportion the House of Representatives. “The Department of Commerce is not able to determine definitively how inclusion of a citizenship question on the decennial census will impact responsiveness,” Ross wrote. “However, even if there is some impact on responses, the value of more complete and accurate data derived from surveying the entire population outweighs such concerns.” This is a remarkable admission.

Citizenship status was included on Census forms until 1950, and was asked in the long-form questionnaire (sent to one in six households) in 2000. In addition, the Bureau’s annual American Community Survey, which samples 2.6 percent of the population (and whose results had previously been used for Voting Rights Act enforcement), asks the legal-or-not question. So what’s the problem with reinstating it now?

“There are great risks that including that question, particularly in the atmosphere that we’re in today, will result in an undercount, not just of non-citizen populations but other populations that are concerned with what could happen to them,” 2013-2017 Census Bureau director John Thompson told CityLab last month. “That is a tremendous risk.”

Such sentiments are not limited to Democratic appointees. “It would be a horrendous problem for the Census Bureau and create all kind of controversies,” 2008-2009 director Steve Murdock told Mother Jones. Added 1973-76 director Vincent Barabba: “It is simply inconceivable to me there would not be a very high level of anxiety around that question….[It’s] beyond comprehension at this point. It would be really bad.”

And there is plenty of reason to suspect that the Trump administration knows all this full well.

Households and communities that contain illegal immigrants already have ample reason to avoid contact with the government right now. Immigrations and Customs Enforcement (ICE) has been targeting sanctuary cities for deportation raids, and conspicuously showing up at local courthouses to catch suspected aliens in the act of interacting with the legal system. Census results about disfavored populations have not been sacred historically—they were used by Franklin Delano Roosevelt to intern Japanese-Americans, and by Woodrow Wilson to go after draft-dodgers.

Further, we know that key Trumpworld figures have been trying to de-link the Census headcount of illegal immigrants from congressional reapportionment, because they say so out loud. Kansas Secretary of State and gubernatorial candidate Kris Kobach, last seen shambolically defending himself in a trial over his state’s law requiring proof of citizenship to vote, wrote a Breitbart News op-ed in January making the dual argument that 1) the Census should ask about citizenship, and 2) illegal immigrants should not be taken into account when drawing up House maps. (Kobach, you might recall, was the de facto head of the Presidential Advisory Commission on Election Integrity that was dissolved in January after a series of debacles.)

The problem both with Kobach’s legal analysis and the common who cares? response to the prospect of undercounting illegal immigrants is that it goes against the plain meaning of the Constitution and the previous 120 years (at minimum) of practice.

The original text of the Constitution stated that

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.

The notorious three-fifths compromise was wiped out by the 14th Amendment, which changed the language to: “Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed.” You’ll note who was included the head-count: women, who still had another half-century before they could vote. As National Review legal analyst Matthew J. Franck wrote in 2010,

[V]oting rights are not and never have been the relevant consideration in counting population for congressional representation. Like women in most states before the Nineteenth Amendment, and like minor children even today, the alien is counted because he is represented in Congress, even if he cannot participate in electing members of it.

Can we say of the illegal immigrant, though, that he is represented in Congress, even in some Burkean “virtual” sense? That is an interesting question of political theory, perhaps. And we might say that the important thing in practice is to prevent it from becoming a question–by dealing with the problem of illegal entry to the country. But for constitutional purposes, the question hardly arises. For “the whole number of persons in each State” would seem, on its face, to include everyone residing therein, illegally and legally alike.

Waving away the constitutional link between illegal-immigrant head-counts and congressional reapportionment has been on the restrictionist wishlist since at least the 1980s, and certainly has resonance in the broader population to this day, but that doesn’t make it one inch closer to being a reality. For the Kris Kobaches of the world, diminishing the political power both of illegal immigrants and the communities they live in is the next best thing, regardless of the negative consequences on perfectly legal residents. There’s a reason why Donald Trump’s initial pick to run the Census (since withdrawn after controversy) was not a demographer, but a GOP gerrymanderer.

The Republican Party has dropped the pretense of colorblind analysis, constitutional fealty, and opposition to Census mission creep, and is now openly using data collection for smash-mouth politics. If the move survives legal challenge, the result will likely be an inaccurately drawn House map, more power tilted toward Republicans, and crappier survey data. In other words, mission accomplished.

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Coincident Economic Indicators: History Suggests Recession Is Close

Authored by Mike Shedlock via MishTalk,

The Philadelphia Fed’s coincident economic activity index suggests the economy is close to recession.

The Coincident Economic Activity Index is produced monthly by the Philadelphia Fed.

The indexes are released a few days after the Bureau of Labor Statistics (BLS) releases the employment data for the states.

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

A dynamic single-factor model is used to create the state indexes. James Stock and Mark Watson developed the basic model for constructing a coincident index for the U.S. Theodore Crone and Alan Clayton-Matthews adapted the basic model for the states. The method involves a system of five major equations: one equation for each input variable and one equation for an underlying (latent) factor that is reflected in each of the indicator (input) variables. The underlying factor represents the state coincident index. The model and the input variables are consistent across the 50 states, so the state indexes are comparable to one another.

On a year-over-year basis, recessions have started when the year-over-year CEI was around 2.5 percent.

Leading Economic Indicators

The Philadelphia Fed also produces leading indexes for each of the 50 states.

The data does not go back as far as the CEI data.

LEI Data Sources

  • Delivery times from the ISM Manufacturing Survey can be obtained from the Institute for Supply Management.

  • Housing permits can be obtained from the U.S. Census Bureau.

  • Initial unemployment insurance claims can be obtained from the Department of Labor.

  • Interest rates for the 10-year Treasury bond and the 3-month Treasury bill can be obtained from the Board of Governors.

The leading index for each state predicts the six-month growth rate of the state’s coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.

A time-series model (vector autoregression) is used to construct the leading index. Current and prior values of the forecast variables are used to determine the future values of the index.

The model uses leading index components to predict the coincident index. The concept seems bogus, even more so with a closer look at the allegedly leading indicators.

Permits vs Starts

I question the use of housing permits as a leading indicator. Instead, I suggest using housing starts. Permits are essentially a leading indicator of a leading indicator and hugely wrong at economic turns.

ISM

Reliance on ISM data single-handedly makes the leading indicator report bogus.

For discussion, please see ISM a Leading Indicator? Of What?

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Dentist Threatens to Report Parents for Neglect Unless They Bring in Their Kids (and Wallets)

Clown dentist with chainsawA dental practice in Pennsylvania has a novel method for guaranteeing return business: Threaten to turn parents in for neglect if they stop bringing in their kids.

Smiles 4 Keeps, which has three offices in the state, insists that its threats are being misinterpreted. But the letter it sent out is pretty clear: Get your kids back in here.

Mom Trey Hoyumpa did not like the treatment she and her kids got at the Smiles 4 Keeps location in Bartonville, Pennsylvania. In a Facebook post she claims that the practice wouldn’t let her go into the patient area with her children, wouldn’t let her meet with the dentist, and diagnosed but wouldn’t treat more than one of her children on her visit. She decided not to go back. A few months letter she received this letter:

Letter

The letter says that neglecting a child’s dental care can be considered child abuse in Pennsylvania and that dental providers are required to report it to the state. It notes that the dental office has not yet reported the parent, but she should schedule an appointment to have her children seen ASAP or else.

The letter concludes: “To keep your child as healthy as possible and to avoid a report to state authorities, please call Smiles 4 Keeps immediately to schedule an appointment.” This is obviously going to be perceived as a threat.

Pennsylvania does indeed require that dental offices report to child welfare agencies any signs of abuse or neglect. But not taking your child to Smiles 4 Keeps isn’t evidence of neglect.

When Local media and Yahoo Lifestyle started probing back, the dental clinic told them that letters aren’t sent until multiple attempts have been made to communicate with the family, and that if parents seek business with a different dentist they should let them know. Hoyumpa told Yahoo that she has absolutely no interest in communicating with the clinic any further and and that she’s looking for a second opinion. (She doesn’t trust their claim that her two children had several cavities, and she says they refused to show her the X-rays.)

Remarkably, Ross Wezmar, the dentist who founded the practice, defended his letters on Monday, insisting that he regular sees children with all sorts of medical problems because they missed a dental appointment.

Color me suspicious, but that’s not the point. Smiles 4 Keeps is a private business providing a service, not a government agency. Neither Hoyumpa nor any other consumer has any obligation to communicate with Smiles 4 Keeps or to set foot in its offices if she doesn’t want to, and she is not required to tell them why or where they’ve gone instead. Yet Wezmar and his offices are threatening families with government investigations for declining to do business with him.

I doubt lawmakers intended the reporting requirements to be used this way, but it’s one of the side effects of mandating that private actors play tattletale to the government. Does he even care that he could upend families’ lives by reporting them to the state?

It’s bad enough that abuse fears have led some hotels and airlines to start calling the authorities simply for seeing an adult (usually male) traveling with a child (usually his). Citing this law to try to scare parents into patronizing your business is pretty damned low.

Fortunately, since Smiles 4 Keeps is a private business and not a government agency, the market can decide if it agrees with Wezmar’s tactics. I suspect a business that treats its customers well doesn’t have to threaten them to get them to come back again. But that’s just me.

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Mediocre Demand For 5Y Auction Amid Record Weekly Treasury Supply

One day after the Treasury sold $124BN in 3 and 6 Month Bills and $30BN in 2Y bonds in average auctions, on Tuesday the Treasury continued its record weekly sales by unloading $24BN in 52 Week Bills and, moments ago, $35BN in 5Y notes.

Stopping at a high yield of 2.612%, the 5Y saw a dip in the yield from 2.658% one month ago and 2.44% in January; the yield also tailed the 2.609% When Issued by 0.3bps. This was the 5th consecutive tailing 5Year auction in a row.

On the other hand, the internals came in somewhat stronger than recent auctions, with the bid to cover rising from 2.44 to 2.50, and above the 6 month auction average of 2.45. Notably, Indirects took down 63.5%, a solid improvement to the 58.0% last month (just in case there is any confusion if foreign buyers are in the market), with Directs taking down 8.3%, down from 12.7% last month, leaving Dealers with 28.2% of the auction, down from 29.3% the previous month.

Overall, an average auction, however considering the record deluge of Treasury sales this week, which is just shy of $300BN, the fact that the market managed to digest the ongoing issuance with virtually no problem is more notable than the mediocre auction specifics.

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“Want To Freak Yourself Out?” Here Is All The Personal Data That Facebook/Google Collect

The Cambridge Analytica scandal was never really about Cambridge Analytica.

As we’ve pointed out, neither Facebook nor Cambridge Analytica have been accused of doing anything explicitly illegal (though one could be forgiven for believing they had, based on the number of lawsuits and official investigations that have been announced).

Instead, the backlash to these revelations – which has been justifiably focused on Facebook – is so severe because the public has been forced to confront for the first time something that many had previously written off as an immutable certainty: That Facebook, Google and the rest of the tech behemoths store reams of personal data, essentially logging everything we do.

In response to demands for more transparency surrounding user data, Facebook and Google are offering users the option to view all of the metadata that Google and Facebook collect.

And as Twitter user Dylan Curran pointed out in a comprehensive twitter thread examining his own data cache, the extent and bulk of the data collected and sorted by both companies is staggering.

Google, Curran said, collected 5.5 gigabytes of data on him – equivalent to some 3 million Microsoft Word documents. Facebook, meanwhile, collected only 600 megabytes – equivalent to roughly 400,000 documents.

Another shocking revelation made by Curran: Even after deleting data like search history and revoking permissions for Google and Facebook applications, Curran still found a comprehensive log of his documents and other files stored on Google drive, his search history, chat logs and other sensitive data about his movements that he had expressly deleted.

What’s worse, everything shown is the data cache of one individual. Just imagine how much data these companies hold in total.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Google even saves a log of every log a user has ever viewed or clicked on, every app they’ve every opened and every image they’ve every searched for – and every news article they’ve ever read.

 

 

 

 

 

 

Curran, who joked that he’s “probably on an FBI watchlist” following his twitter thread, explained that the data he highlighted – while some of it might seem obscure – could have thousands of potentially compromising applications, including blackmailing a rival or spying on a spouse.

 

 

 

 

 

 

The question now is: Will this transparency actually change user’s behavior? Or will Facebook’s hollow promises to change be enough to lull its legions of users back into a passive ignorance. As Curran points out, people would be outraged if they discovered the government was monitoring them to this extent. But when Google does it? People hardly bat an eye.

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Tesla Collapses To 12-Month Lows After NTSB Probes California Crash

Tesla shares were under pressure early on but news that The U.S. National Transportation Safety Board (NTSB) is sending two investigators to examine issues raised by a fatal Tesla car crash in California, has smashed the share to their lowest in a year…

As we detailed previously, while driving on Highway 101 near Mountain View, California, a Tesla Model X suffered a gruesome crash when the vehicle hit a carpool lane barrier, leading two more cars to crashing into it, and causing the lithium ion batteries powering the vehicle to ignite and explode, at which point the vehicle burst into flames.

Here are the details according to the Redwood City CHP.

 

And now, as Bloomberg reports, the safety board will examine the post-crash fire and steps needed to make the vehicle safe to remove from an accident scene, the agency said in a tweet Tuesday. It’s unclear whether the Tesla’s partially autonomous driving system, known as Autopilot, was engaged at the time of the crash, the NTSB said.

As a reminder, the investigation is the second this year involving Tesla by the NTSB, which opens only a handful of highway cases each year. The agency is also examining a Jan. 22 accident in Los Angeles in which a Tesla Model S rammed into the rear of a fire truck parked on a freeway. In that case, the driver told authorities on the scene it was operating under Autopilot.

With bond yields at record highs, Tesla stock investors are rapidly pulling out with the shares now below $290…

This is the lowest level since Elon Musk taunted shorts

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Nvidia Tumbles After Global Suspension Of Self-Driving Tests

One day after Arizona’s Governor  Doug Ducey announced  the suspension of Uber’s license to test self-driving cars on public roads in the state, moments ago Reuters reported that Nvidia would suspend self-driving tests across the globe after Uber’s fatality last week.

Like Uber, Nvidia has been testing self-driving technology globally including in New Jersey, Santa Clara, Japan and Germany.

The test halt is the second in 24 hours, and takes places shortly after Gov. Doug Ducey sent a letter to Uber Chief Executive Dara Khosrowshahi, in which he said that he found a video released by police of the crash “disturbing and alarming, and it raises many questions about the ability of Uber to continue testing in Arizona.”

The move also comes days after The New York Times reported that the company’s own documents showed the testing program was rife with issues. The documents showed trouble with driving through construction zones and requiring far more human intervention than competing companies.

Experts have told The Associated Press that the company’s technology should have detected the pedestrian in time to avoid the crash.

On Monday, the co-founder of Israeli start-up Mobileye, Amnon Shashua, said on Monday its computer vision system would have detected the pedestrian who was killed in Arizona by a self-driving Uber vehicle, and called for a concerted move to validate the safety of autonomous vehicles. In a blog post, Shashua also criticized “new entrants” in the self-driving field that have not gone through the years of development necessary to ensure safety in the vehicles.

News of the halt sent the stock tumbling…

…  and dragged the Nasdaq into the red.

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