Month: September 2018

Trump Cries ‘Treason!’ Over Anonymous Times Op-Ed: Reason Roundup

Welcome to the #Resistance, Mike Pence? The vice president is one of many White House higher-ups who have been floated as the likely author of an anonymous editorial challenging President Trump’s competency and authority. Published by The New York Times yesterday, “I Am Part of the Resistance Inside the Trump Administration” has politics-watchers speculating. The op-ed’s use of one of Pence’s signature words (“lodestar”) could be an unintended tell, or an intentional misdirection. Pence is now the leading candidate for “White House mole behind the anonymous bombshell” on betting site MyBookie (markets in everything!).

Within a few hours of the piece’s publication, Trump responded, telling a sheriff’s conference “someday when I’m not president… The New York Times and CNN and all of these phony media outlets will be out of business. … They don’t like Donald Trump and I don’t like them because they’re very dishonest people.” He tweeted a clip from the speech with the caption “The Failing New York Times!” and followed it up with, simply:

A bit later, Trump was back, asking “Does the so-called ‘Senior Administration Official’ really exist, or is it just the Failing New York Times with another phony source? If the GUTLESS anonymous person does indeed exist, the Times must, for National Security purposes, turn him/her over to government at once!”

This morning, Trump blamed the “Deep State and the Left, and their vehicle, the Fake News Media,” for slandering him out of anger because he was doing so awesome at being president (“The economy is booming… soon TWO Supreme Court Justices & maybe Declassification to find Additional Corruption. Wow!).

This seems, like so many of the president’s tweets, to have been inspired by him watching Fox News. Trump’s next weet cited Fox host Maria Bartiromo staing that the amazing “economic success” story of the Trump administration was “unnerving his detractors.”

Outside Trump’s safe space, the anonymous op-ed lends more heft to the case for his impeachment. “If the president’s closest advisers believe that he is morally and intellectually unfit for his high office, they have a duty to do their utmost to remove him from it, by the lawful means at hand,” writes David Frum at The Atlantic.

Others kept cooler heads. “It’s becoming hard to get excited about every anonymous White House official who regales a reporter with tales of how they’re nobly fighting to keep President Trump from destroying the country,” writes Margaret Hartmann at New York. But at least the latest one had spawned “a new parlor game not unlike the decades-long quest to identify Deep Throat.” Alas, “working in the Trump administration is an unrelenting nightmare, so everyone is a suspect.”

(Or, as Jesse Walker quipped: “It’s cool that the rest of us get to play our own who-is-Q game too.”)

Other speculation has focused on the motive: Is the person about to be ousted, and thus looking to put some ideological distance between them and their odious boss? Pleading with Congressional Republicans for more serious impeachment considerations? A double-cross designed to confirm pro-Trump tales of a Deep State conspiracy against him?

Read Nick Gillespie’s take here. In short: “The anonymity of the author will only work to harden Trump loyalists and members of the so-called resistance.”

We did like the anonymous author’s invocation of free minds and free markets, however…

But the classical-liberal-saving-democracy pose is a little questionable in light of the author’s stated position. “The irony in the op-ed from the NYT’s anonymous WH coward is glaring and massive,” tweeted Glenn Greenwald. The writer “accuses Trump of being ‘anti-democratic’ while boasting of membership in an unelected cabal that covertly imposes their own ideology with zero democratic accountability, mandate or transparency.”

And as writers such as Michael Tracey and Rania Khalek have pointed out, the more “grown-up” conservatism championed in this op-ed and by other traditional Republicans is very often wrapped up in a desire for more interventionist foreign policy.

FREE MINDS

Kavanaugh confirmation hearings enter day three. An exchange between Supreme Court nominee Brett Kavanaugh and Sen. Kamala Harris (D–Calif.) became one of the biggest moments from day two of Kavanaugh’s confirmation hearings yesterday. Harris asked whether Kavanaugh, while a judge, had ever talked about the Mueller investigation with a lawyer from the law firm that has long represented President Trump. From Politico:

“Be sure about your answer, sir,” Harris asked Kavanaugh. Trump’s high court pick appeared nonplussed, responding that “I’m not sure I know everyone who works at that law firm,” but the California Democrat… would not let up.

“How can you not remember whether you’ve had a conversation about Robert Mueller or his investigation with anyone at that law firm?” Harris asked, suggesting that Kavanaugh was “thinking of someone and you don’t want to tell us.”

[…] Harris offered no further context for her line of questioning with Kavanaugh, which suggested that he may have discussed an investigation affecting Trump with Trump-connected lawyers but lacked any solid proof.

But the exchange went on for nearly eight minutes, notes Chris Geidner at Buzzfeed. “Is there a person you’re talking about?” Kavanaugh had asked. Harris demanded a yes or no answer.

“I’m not sure I know everyone who works at that law firm,” Kavanaugh replied, later adding “I’m not remembering, but I’m happy to be refreshed, or if you want to tell me who you’re thinking about.” Harris asked him how that was possible, since Mueller’s “investigation has only been going on for so long.” From Buzzfeed:

At one point, Sen. Mike Lee objected, saying that “there are a lot of people who work at a law office” and questioning whether Kavanaugh could be presumed to know everyone who works at a given law firm.

During his objection — as has happened throughout the proceedings — a pair of protesters stood up in the audience to object to the Senate’s consideration of Kavanaugh’s nomination until they were arrested and removed from the room by US Capitol Police.

After the hearing concluded for the night, a Democratic aide said that they “have reason to believe” that a conversation happened and they “are continuing to pursue it.”

FREE MARKETS

QUICK HITS

  • “In some ways, social media platforms have become a victim of their own claimed ability to find and remove speech,” writes Faiza Patel.

“Normally, democratic governments that wish to prevent speech must publicly identify the speech and speaker they wish to censor and convince a neutral decision-maker that they have met the applicable legal standard — a tough sell under free speech principles. But governments are now incentivizing tech companies to remove certain speech, either directly through regulation or indirectly through political bullying. Government attempts to influence the information the public sees are being moved into mostly secret corporate processes. Equally important, the check provided by judicial review is eliminated. These moves exacerbate already serious concerns about the control that social media platforms and search engines already exercise over information and communication.”

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Utah Autopilot Crash Driver Suing Tesla, Claims Brakes “Did Not Work”

More bad legal news has emerged for Tesla at a time when it’s the last thing the company needs.

A Tesla driver in Utah whose vehicle slammed itself into a stopped fire truck at a red light earlier this year is now suing the company, claiming that when she bought the car she was told that it would stop on its own if the Autopilot was on and something was in the vehicle’s path. 

The driver, Heather Lommatzsch, reportedly wrote in her lawsuit that she was told in 2016, when she purchased her Tesla Model S, that she only had to “touch the steering wheel occasionally while using Autopilot mode”. She also claims that she tried to engage the brakes when she saw the vehicle stopped ahead of her, but that the car’s brakes simply “did not work”.

The accident took place in May and as a result, Lommatzsch wound up with a broken foot as well as a traffic citation for failure to keep a proper lookout. Occupants of the fire truck suffered minor injuries but were not hospitalized. Tesla went on record in a statement that addressed the lawsuit, stating it has “always been clear that Autopilot does not make the car impervious to all accidents.”

However, Tesla sleuths on Twitter have consistently pointed out that Tesla’s own interviews and media coverage surrounding Autopilot seem to encourage drivers from keeping their hands on the wheel while Autopilot is engaged.

CNBC even labeled a puff piece on Tesla’s Autopilot “Tesla’s Autopilot: How it Feels Hands Free” back in 2015.

Meanwhile Tesla is blaming the driver: the company brought up that she was cited and that the final police report from the scene said that she had told police she was looking at her phone prior to the crash. Data taken from her vehicle reportedly showed that she “did not touch the steering wheel for 80 seconds before the crash”. Additional data from her vehicle shows that it picked up speed for 3 1/2 seconds before crashing.

The suggested order of events by local police was as follows:

  1. The Tesla was following another vehicle and it slowed down to 55 mph to keep pace with it
  2. The vehicle in front of the Tesla changed lanes 
  3. The Tesla may have sped back up to its preset speed of 60 miles an hour
  4. The Tesla may not have then taken into account the stopped traffic in front of it

In the lawsuit, Lommatzsch says that she has suffered “serious physical injuries that have deprived her of being able to enjoy life” and “substantial medical bills”. She is seeking $300,000 in damages.

As the AP article notes, the NTSB recently issued additional findings about two other separate crashes involving Autopilot:

The agency found that a Tesla Model S electric car that crashed and burned last month in Florida, killing two teenagers, was traveling 116 mph (187 kph) three seconds before impact and only slowed to 86 mpg (138 kph) as the air bags were inflated.

The agency said that a Tesla Model X SUV using Autopilot accelerated just before crashing into a California freeway barrier in March, killing its driver.

It’s unclear whether or not a lawsuit will be filed in these cases. The Utah crash is still under investigation. 

With the overhang from a formal SEC investigation prompting Tesla’s Board of Directors and its CEO to “lawyer up in a major way”, as we reported yesterday, and the company’s cash balances dwindling, the last thing Tesla needs is a new sieve of legal liabilities opening up. We will monitor this case as it moves forward.

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Vietnam and the Rise of White Power: New at Reason

America’s defeat in Vietnam produced a surge of men who felt betrayed by the federal government and who feared communism’s spread to the United States. Further incensed by government scandals, economic struggles, and a changing cultural landscape in the wake of the civil rights movement’s successes, some of these men sought to regain control through white power organizations.

So argues Kathleen Belew, a historian at the University of Chicago, in Bring the War Home, an engaging account of how and why the modern white power movement emerged from 1975 to 1995. Find Amy Cooter reviews the book in the latest issue of Reason.

View this article.

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European Stocks Are At A Critical Technical Support Level

Via Dana Lyons’ Tumblr,

Several key equity trendline tests are underway across the European region.

The past few editions of our #TrendlineWednesday feature on Twitter have not exactly been the most intriguing we’ve ever posted. In fact, it has been a challenge at times recently to even find enough candidates to publish the feature. This week, however, is a different story. Compelling trendline developments abound in the financial markets – with no area sporting more critical trendline tests than the European equity markets. Here is a sample of some of those key tests underway.

The STOXX Europe 600 Index is testing its post-2009 Up trendline…again.

The German DAX is also testing its post-2009 Up trendline…again.

And the French CAC-40 is testing its post-Brexit Up trendline.

Each of these developments is worthy of its own dedicated blog post. The fact that we are observing coordinated trendline tests across those key markets tells us that this is potentially a key juncture. So is this another buying opportunity – or have these markets worn out the support of their respective trendlines?

*  *  *

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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Bookies See Pence, Sessions As Front-Runners To Be NYT Op-Ed Author

Mike Pence is the bookies’ favorite named insider to be the “gutless” wretch who wrote the “reckless” anonymous NYTimes op-ed from inside the ‘resistance’ with 2-to-3 odds according to MyBookie website.

“What tipped us off was ‘lodestar,’ “ MyBookie head oddsmaker David Strauss said of Pence.

“When you search members of the administration (who have used that word) only one name comes up – and that name is Mike Pence. He’s used in multiple speeches this year.”

Of course, Pence has vehemently denied that he is the “treasonous” insider, but there are 17 other named potential “traitors”  listed by MyBookie, are: Education Secretary Betsy Devos (2-to-1), Secretary of State Mike Pompeo (4-to-1), Treasury Secretary Steven Mnuchin (4-to-1), chief of staff John F. Kelly (4-to-1), Defense Secretary Jim Mattis (5-to-1), Attorney General Jeff Sessions (5-to-1), Interior Secretary Ryan Zinke (6-to-1), Agriculture Secretary Sonny Perdue (6-to-1), Commerce Secretary Wilbur Ross (7-to-1) Labor Secretary Alex Acosta (7-to-1), HHS Secretary Alex Azar (8-to-1), HUD Secretary Ben Carson (8-to-1), VA Secretary Robert Wilkie (8-to-1), Homeland Security Secretary Kirstjen Nielsen (10-to-1), Ivanka Trump (12-to-1) and Jared Kushner (12-to-1).

At 2-to-3 odds, a winning bettor investing $1 would profit 66 cents. At 1-to-3, a gambler wagering $1 would net 33 cents with a win.

Given that NYT tweeted “he” about the author, we suspect the well-heeled gambler can discount Betsy DeVos, Ivanka Trump, and Kirstjen Nielsen.

MyBookie places “A.N.Other” as the absolute favorite with the odds of the author of the op-ed not being on the list above at 1-to-3.

Additionally, as The New York Post reports, hours after MyBookie posted numbers, Canada-based Bovada issued its own Trump-leak odds and listed embattled AG Sessions as its favorite at 5-to-2.

MyBookie also lists the odds for Trump charging the writer with treason at 1-to-2, notably more likely than Trump being impeached by 2020 at 3-to-1.

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Jobless Claims Drop To 49 Year Low: Here Is One Reason Why

Another week, another near record low in initial jobless claims, which tumbled by 10,000 to 203K in the last week according to the BLS, below the consensus estimate of 213K, and down from 213K last week.

As further indication of the vibrancy of the job market, continuing claims fell by 3k to 1.707m, the lowest since mid-June.

The data, which comes before tomorrow’s main jobs report, show employment continued to improve in late August although Jobless-claims figures tend to be more volatile around holidays, such as the U.S. Labor Day. Some doubt about tomorrow’s strong number crept in after today’s ADP Private Payrolls disappointed, sliding from 217K to 163K, far below the 200K expected, and the lowest print since last September.

Even so, the figures add to signs businesses are keeping existing staff and adding new workers to help meet demand being boosted by tax cuts in the 10th year of the economic expansion.

Then again, there may be another potential explanation, and as Southbay Research notes, the collapse in initial claims may be tied to Trump’s immigration policy.

According to Southbay, taking the year-over-year change in Initial Jobless Claims (inverse) and comparing it to the GDP y/y growth, the current pattern broadly matches historical patterns. But nominal Initial Jobless Claims are at ~50 year lows.  And that’s with a much larger working population. 

Compare this business cycle with the one in the 1990s:

  • Duration: ~10 years

  • GDP: 1990s GDP much stronger

  • Initial Jobless Claims Year 9 of recovery: 300K (2000) vs 210K (2018)

That is, the current cycle is strong but not as strong as the one in the 1990s.  But Jobless Claims have collapsed even lower. Why?

  • Not tied to duration: While Jobless Claims fall over time, both cycles have lasted roughly the same number of years
  • Not tied to GDP: If GDP were the sole determinant, then the 1990s would have had even lower Claims.

Trump Economy & Immigration Policy

Sudden drop in welfare applications: From 2015-2017, Initial Claims were dropping at a steady nominal level of ~15K per year. Suddenly, in 2018, the pace has tripled: claims have fallen (-30K). What about 2018 is pushing down claims at the fastest rate in 4 years?

Tighter State Eligibility Requirements: Most entitlement programs are seeing a sharp drop this year.  A key driver has been funding: the Federal government is shifting the cost burden to the States.  In response, States have tightened eligibility; for example, many States are requiring food stamp applicants to show proof that the applicant is trying to find a job.

Immigrant Fear

Last year, the Trump administration surfaced a plan to penalize legal immigrants who use welfare (public housing, food stamps, medicaid, etc).  Under this plan, legal immigrants could have their status revoked.  Fear of that plan is causing many immigrants to shy away from using these entitlements, and from filing Jobless Claims.

In addition, undocumented immigrants are finding themselves under pressure from ICE. Applying for Jobless Claims means visiting government offices. And that has risk.

KEY POINT: A strong and sustained period of economic growth is pushing down Jobless Claims.  But the drop may not be as awesome as it seems.

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One Word Has People Convinced That Mike Pence Is Mystery Author Of Scathing NYT Op-Ed

Is Vice President Mike Pence trying to pull off a “House of Cards”-style scheme to undermine Trump and increase his own chances of assuming the presidency?

Pence

Apparently, more than a few journalists believe that might be the case. According to the Huffington Post, some believe that the use of a single word – “lodestar” – is a crucial tell pointing toward Pence as the op-ed’s author. During the op-ed’s final paragraphs the mystery author refers to John McCain as “a lodestar for restoring honor to public life and our national dialogue.”

Senator John McCain put it best in his farewell letter. All Americans should heed his words and break free of the tribalism trap, with the high aim of uniting through our shared values and love of this great nation.

We may no longer have Senator McCain. But we will always have his example – a lodestar for restoring honor to public life and our national dialogue. Mr. Trump may fear such honorable men, but we should revere them.

There is a quiet resistance within the administration of people choosing to put country first. But the real difference will be made by everyday citizens rising above politics, reaching across the aisle and resolving to shed the labels in favor of a single one: Americans.

Pence has, of course, categorically denied these allegations and affirmed his loyalty to the president.

Still, one video circulating on twitter shows Pence using the word in eight different speeches dating back to 2001, when he was a Congressman from Indiana.

Others pointed out that the op-ed’s praise for McCain would rule out Trump hardliners like Stephen Miller as the author.

At the very least, there’s some evidence to suggest that the author is a man. As Bloomberg’s Jennifer Jacobs pointed out yesterday, the Times’ official Twitter feed may have inadvertently revealed their gender.

Though Jacobs also reported that several officials have told her that they suspect the author’s “seniority” isn’t as ironclad as the Times implied.

For those who aren’t familiar with the word, Merriam-Webster defines “lodestar” as “a star that leads or guides” or a person who “serves as an inspiration, model, or guide.”

To be sure, the Pence theory isn’t without its holes. Trump staffers have said previously that they pay attention to the idioms employed by others as a defense mechanism when speaking to the press under the guise of anonymity.

“To cover my tracks, I usually pay attention to other staffers’ idioms and use that in my background quotes. That throws the scent off me,” one White House official told Axios.

But online betting markets have put Pence at the top of the list of suspects, with MyBookie currently reflecting 2-to-3 odds on Pence ass the culprit, per the New York Post. The favorite right now, at 1-3 odds, is “the field” – i.e. someone not listed among the 18 most likely senior admin officials, according to the Costa-Rica-based betting operation.

Still, at first brush, the theory makes a degree of sense: As first in line for the throne, Pence undoubtedly has the most to gain from the collapse of the Trump presidency. But it’s equally likely that a more junior official could’ve intentionally included these cues to sow discord in the ranks.

As the Trump administration has proved time and time again, anything is possible in the West Wing.

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Stopping the Export-Import Bank From Rising Again: New at Reason

At the end of August, the Senate Banking Committee voted Kimberly Reed out of the committee to become the new president of the U.S. Export-Import Bank. But before she can start her job, she must win a confirmation vote in the full Senate. This, writes Veronique de Rugy, is the first step to restore the past glory of an agency mostly devoted to serving big corporate interests at the expense of millions of non-subsidized American firms, workers, and taxpayers.

View this article.

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ADP Employment Growth Slows To Weakest In 10 Months

Having beaten expectations in July (and printed notably higher than payrolls), ADP employment growth was expected to slow in August and it did – more than expected. ADP printed +163k against expectations of +200k (down from July’s revised +217k).

This is the weakest employment growth since Oct 2017…

 

Medium-sized firms dominated the job gains in August as did Service-providing roles…

“Although we saw a small slowdown in job growth the market remains incredibly dynamic,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“Midsized businesses continue to be the engine of growth, adding nearly 70 percent of all jobs this month, and remain resilient in the current economic climate.”

Mark Zandi, chief economist of Moody’s Analytics, said,

“The job market is hot. Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions.  “

Full Breakdown:

ADP National Employment Report: Private Sector Employment Increased by 163,000 Jobs in August

Job growth is very broad – as measured by the BLS Diffusion index, employment breadth is the highest since 1998…

 

On average during President Trump’s tenure, ADP has – on average – had no bias in its reporting compared to BLS data, this is notably different from the systemic under-reporting that ADP did relative to BLS during Obama’s tenure…

Of course, with a 96.3% chance of a September rate-hike priced in, today’s ADP (and tomorrow’s payrolls) print likely have little to no impact on monetary policy (Dec odds for another hike is 67.4%)

 

 

 

 

 

 

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Bitcoin Plunges For Second Time In One Day As Cryptocurrency Turmoil Deepens

The selloff across cryptocurrencies accelerated late on Wednesday, when bitcoin and other digital tokens dropped for the second time in less than 24, sinking to a nine-month low amid growing concern broader adoption of digital assets will take longer than some anticipated following an earlier report that Goldman was suspending its cryptocurrency trading desk plans.

Bitcoin tumbled as much as 10% percent and was trading at $6,408 on Thursday morning, down 7.8%. The Bloomberg Galaxy Crypto Index, a gauge of the largest digital assets, traded near its lowest level since November 2017 as rival coins Ripple, Ether and Litecoin also tumbled in sympathy.

The recent plunge has resulted in the biggest two-day drop in the Bloomberg Galaxy Crypto Index since June.

The Goldman decision to pull back from trading crypto followed more bad news last month, when the SEC rejected another round of Bitcoin ETF proposals.

“Their name carries weight across the globe,” said Ryan Rabaglia, head trader at digital asset brokerage OSL in Hong Kong, referring to Goldman Sachs. “When people see their name, their eyes may light up, and they say: OK, we’ve finally made it — the bigger players are going to start to enter.”

Separately, Bloomberg reported on Wednesday that enthusiasts drawn to Bitcoin’s original promise of anonymity and freedom from government control were also dealt a blow when veteran Erik Voorhees’s trading platform ShapeShift AG said it will begin asking users for personal information.

While the decision may dispel users that prioritize anonymity, it may also help ShapeShift attract users that trade larger amounts of funds that tend to prefer regulated venues, said Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange.

“Regulators are never going to be OK with not knowing the identities of who’s doing what and who’s buying crypto,” Ayyar said.

And while Bitcoin has plunged before, for now any hopes of broader retail participation (ETFs) or institutional pick up appear to have been indefinitely delayed. Furthermore, even as many banks and institutional investors are dipping their toes into the world of cryptocurrencies, concerns over everything from market manipulation to regulatory uncertainty have prevented institutional adoption. The result has been a 75% collapse in the market cap of virtual currencies which hit a January peak of $202 billion.

What happens next? Technicians are already pointing to $5000 as the next key level for Bitcoin. According to Oanda’s head of Asia Pac trading Stephen Innes, a drop below that threshold may cause losses to accelerate.

Meanwhile, others believe the key support is even closer: if Bitcoin loses $6,000 the bottom will drop out of everything, writes the Investing in Chinese Stocks blog, adding that below the $6,000 level, everyone buying Bitcoin in the last 11 months will be underwater.

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