Month: September 2018

Two weeks after JPM predicted that the Tesla “going private” transaction was bunk and slashed its price target on the electric car maker by $113 to $195, overnight it was Goldman’s turn, and now that the bank is once again unrestricted from advising Musk on the imaginary deal, Goldman analyst David Tamberrino is out with a scathing reinstatement of coverage, which carries a Sell rating and a $195 price target.

Goldman’s investment thesis, or lack thereof, is familiar to those who have read the company’s report on Tesla in the past. And while the core issue remains Tesla’s cash burn and the “exhaustion of higher price point buyers “, what is notable is that Goldman now focuses on growing competition – the same risk we highlighted several months ago – as the biggest challenge facing Elon Musk:

We have removed the NR designation from TSLA shares. We add TSLA to the Sell List with a 6-month price target of $210.  While we see the potential for a better near-term backdrop with growth in Model 3 production/deliveries driving positive FCF in 2H18, we believe this will likely not be sustained as working capital tailwinds abate and as spending ramps back up after a period of cash conservation. Further, we see the medium-to-longer term industry backdrop as challenging for Tesla’s products; this follows from an increasing number of EV launches from both traditional OEMs and other start-up competitors – at a time when the company’s product cadence hits a gap. Ultimately, we believe the intensifying industry dynamics combined with the phase out of the US Federal EV Tax Credit for Tesla customers – driving an exhaustion of higher price point buyers – could weigh on company gross margins and profitability. Altogether, we remain bearish on the company’s ability to execute, achieve its targeted production ramp/margins, and sustain FCF generation.

Goldman then focuses on the following 5 key points behind its bearish outlook:

1. Electric vehicle competition on the come up … as Tesla product cycle takes a pause. With regional mandates and tightening CO2 standards, both traditional and new entrants are expected to launch several EVs in the coming years (Exhibit 2) – with a large crescendo in the early-to-mid 2020s. With Tesla not expecting to launch the Model Y until 2020 (and likely not ramp volume until 2021), we believe the company will see pressure to its lead in EVs as competition catches up.
2. Demand / margins further tested as tax credit phases out. In addition to growing competition, TSLA will face the phase-out of the $7,500 US Federal EV Tax Credit beginning in 1Q19 – which has been a key point by sales associates when up-selling customers on the current offering of higher trim packaged Model 3s; as the incentive declines and base Model 3s are offered, we expect a downward trajectory to mix. Further, the loss of EV tax incentives has typically corresponded with declines in demand for EVs. We expect both to present challenges to TSLA hitting its gross margin targets.
3. Balance sheet a concern. The company has seen net-debt balances increase each quarter – partly due to its on-balance sheet lease activities, but also as cash has declined. Customer deposits have helped keep the company above our estimate for minimum cash balance (i.e., a $2bn level given historical quarterly FCF burn of $1bn), but recently saw a sequential decline. With looming maturities on convertible debt (Exhibit 10), we believe the company would likely need to come back to the capital markets in 1H19.
4. Estimates still well below the Street: Our 2018 through 2020 adjusted EBITDA estimates remain an average 19% below FactSet consensus expectations, largely from a slower demand cadence and lower forecast gross margin trajectory.

As a result of the above, Goldman sees downside to TSLA shares:

Our 6-month $210 price target (based on Automotive, Energy, and SolarCity segment valuations) implies 30% downside risk vs. 6% upside potential on average for our Americas Autos coverage. We believe investors that are looking to be long TSLA are essentially under-writing growth to approximately 3.5mn annual units by 2025 – which we believe will likely be challenging to achieve given incremental competition coming, current capacity levels, capex requirements, and historical operational execution.

As noted above, what is most notable in the latest report is Goldman’s focus on the changing competitive landscape as more and more EVs – many at lower price points – come on line. Here is the key excerpt:

While TSLA has developed a lead relative to OEM peers with respect to electric vehicle technology, we see increasing competition from new EV models launching from both traditional OEMs and new entrants leveling the playing field. This is coming as OEMs bring technologies to scale, battery pack costs decline, and the consumer payback period reduces. And while we still expect overall EV penetration to remain relatively low near-term, there is a multitude of new electric vehicles due to come to market on the back of increased spending (Exhibit 1-2). We believe this could lead to a more challenging demand environment and ultimately profitability trajectory for TSLA especially as the new models are launching across vehicle segments and price points – while TSLA has a slower launch cadence planned (historically a new vehicle every three years), and we believe the higher price point buyers for the Model 3 could be exhausted for TSLA by year-end. However, we recognize that timelines for some of these vehicle launches could be aspirational and execution issues could arise (from project funding, manufacturing issues, and/or market acceptance) from potential new-comers —driving less intense competition in the market.

Looking specifically at the products launching, Goldman points out that “we are seeing model variants across regions, product segments, and price points. This has come as battery electric vehicle (BEV) plans and launches have moved from being more niche at specific EV companies to increased investments from traditional OEMs focusing on launching EV models for mass production.”

Further, traditional OEMs are also launching a cadence pick up with multiple models and variants launching in succession, versus the slower launches typically seen from EV specific companies and startups.

And while the lower price point of the Model 3 should allow TSLA to be more competitive, it is still priced at a higher ASP than what is planned to be launched by many of the mass market models traditional OEMs and we believe this may come at a time where there is an exhaustion of higher price point buyers for EVs.

* * *

In addition to the competition, Goldman also highlights the gradual phase out of of tax incentives in the future, which the bank says is somewhat exacerbating the competitive environment, to wit:

TSLA is losing the US tax credit ahead of competition, posing further challenges to affordability at a time when competition is intensifying. This comes as we still believe the higher up-front costs of EVs require an equalizer to match internal combustion engine (ICE) as the current price differentials (approximately $8k on a like-for-like basis comparing just propulsion costs) to ICE vehicles still put EVs out of the mainstream. Even with cost savings versus ICE powertrains, we estimate that the payback period today is approximately 10 years. We believe that the payback period needs to decrease to around 2-3 years for mass-market consumer adoption (similar to the payback period that drove rapid hybrid adoption in the mid-2000s).

However, we do not see that occurring until 2025-2030. Looking at cases where EV incentives were cut or reduced in the past, EV sales saw significant reductions. Notably, we saw this occur in both Denmark and Hong Kong where TSLA previously had high market penetration (Exhibits 5-6). Ultimately, we see similar risk as the US Federal EV incentives will begin to phase out at the end of 2Q18 for TSLA and will completely end by the end of 2019, as other OEMs and competitors launch models (Exhibit 7).

It is worth noting that while the phase out of US tax credits would drive an increased price point to potential Tesla customers, even with the Federal Credit, TSLA pricing remains above comparable ICE models. Given this, Goldman believes the phase out will particularly impact demand for TSLA’s higher priced models (Model X and S, and higher trim Model 3 offerings), while TSLA will begin offering a lower priced variant of the Model 3. This could further weigh on the company’s ability to hit its gross margins and profitability targets.

* * *

Going back to the traditional complaints about Tesla, Goldman then focuses on the company’s balance sheet, and specifically its growing debt load. As a reminder, the company ended 2Q18 with a net-debt position of $9.2bn, up from $8bn at 1Q18 and $4.8bn at 2Q17, and gross debt of $11.6bn. This implies a net-debt leverage ratio of approximately 88x TTM adjusted EBITDA, increasing from 14x at the end of 2017. On our 2018E EBITDA this is a much lower 6.4x, however, it is still a relatively high level of leverage for an automotive company (most are net-cash, excluding pension obligations).

Further, the company has looming maturities of convertible debt – with a conversion price that is currently higher than the company’s current share price. When combined with the company noting that it does not want to raise additional equity capital to fund growth – and there is likely incremental capital needed to enter China, net-debt levels could likely increase going forward (dependent upon cash flow generation). This could add incremental interest expense that weighs on cash generation and adds more risk in our view.

Here, Goldman also notes that Tesla’s cash balance has been helped by its customer deposits –taking reservations for future product offerings in advance to gauge interest (i.e., the Roadster 2.0 and the Semi-truck) as well as for the currently offered Model S, X, and 3. However, the company’s cash balance less that deposit line item is now down to approximately $1.4bn – and has been declining sequentially each quarter from $3bn in 3Q17.

In light of the above, Goldman now expects that Tesla’s next capital raise will take place in the first half of 2019. It explains the math below:

That said, with the expectation for positive FCF in 2H18 (resulting from a large working capital benefit as the Model 3 production ramps), we do see the company ending the year with approximately $3bn in cash. However, as we expect growth capex to resume in 2019, in combination with incremental spending on new product development, and potential cash needs for debt-maturities (given conversion prices and the prevailing share price), we believe TSLA would likely need to come back to the capital markets in 1H19.

Finally, on the operational front, Goldman sees Tesla continuing to miss its production targets:

We increase our estimates minimally (2018-2020 Adj. EBITDA moves to $1,372mn/$2,821mn/$3,572mn from $1,367mn/$2,814mn/$3,572mn, and our EPS estimates become a loss of $7.12, a loss of $0.34, and +$1.86 respectively) as we update the model for incremental 10-Q details. However, we continue to forecast approximately 48k Model 3 deliveries in 3Q18 (vs. consensus of 55k) and for the company’s Model S/X 2H18 deliveries to achieve 45,500 units (vs. consensus of 54,800 and implied guidance of 56,000). When combined with our expectation for slower growth to the demand curve and some pressure to gross margins relative to the company’s targets, our 2018 through 2020 adjusted EBITDA estimates remain approximately 19% below the Street.

Which brings us to Goldman’s conclusion and why the company remains a sell:

We add TSLA to the Sell list with a 6-month price target of $210. Our price target is derived from our probability-weighted valuations for the Automotive segment ($185), Tesla Energy segment ($20), and the SolarCity segment ($5). For the Automotive segment valuation, we model our base case, a downside case, and three “disruptive” upside cases based on the potential upside to the EV market – similar to historical precedents. We then run P/E valuations off the five separate P&Ls, taking the average stock valuation from years 2019 through 2025 and discounting back to present at a 25% discount rate. For Tesla Energy, we value the potential ramp of the business through 2020E based on our forecast for the company’s gigafactory output, apply P/E multiples based off of earnings growth and a 1.2 PEG ratio, and discount back to the present. For the SolarCity segment, we model the business (PPAs and cash/loan sales) out to 2025E, apply peer average EV/EBITDA multiple to the business, and discount back to the present.

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Two months after his nomination to the US Supreme Court by President Trump, Judge Brett Kavanauhgh will sit before the Senate Judiciary Committee on Tuesday for approximately  17 hours of confirmation hearings spanning four days. 

He will be questioned on his conservative views espoused in over 300 opinions and dissents over his 12-year career on the US Court of Appeals for the District of Columbia Circuit – a typical steppingstone for Supreme Court Justices. 

Watch live: 

While Republicans are lined up to support Kavanaugh and his nomination can’t be blocked, Democrats in the minority are expected to hammer the nominee on his views. 

“There will be sparks at this hearing. Sparks will fly,” said Sen. Richard Blumenthal (D-CT). “And there will be a lot of heat.”

Tuesday’s hearing will consist of both sides laying out their initial cases for or against the nominee, while Kavanaugh will give his opening statement along with Senators on the committee. 

Formal questioning of Kavanaugh begins on Wednesday.

Kavanaugh will stress the importance of judicial independence and teamwork during his opening statement to the committee according to excerpts of his statement which were released by the White House.

In his opening statement, Kavanaugh stresses that he has worked to not favor prosecutors or defendants in his career, and assures senators that he will not decide cases based on policy positions. –The Hill

“A good judge must be an umpire—a neutral and impartial arbiter who favors no litigant or policy. … I don’t decide cases based on personal or policy preferences. I am not a pro-plaintiff or pro-defendant judge. I am not a pro-prosecution or pro-defense judge. I am a pro-law judge,” reads Kavanaugh’s remarks. 

“To me, Justice Kennedy is a mentor, a friend, and a hero,” added Kavanaugh, whose seat he has been nominated to replace. 

“As a Member of the Court, he was a model of civility and collegiality. He fiercely defended the independence of the Judiciary. And he was a champion of liberty,” he added. 

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In what for Republicans must be a very bitter irony, Special Counsel Robert Mueller’s probe into alleged “Russian interference” in the 2016 election (a probe that has reached far beyond its original mandate) is now at risk of unduly influencing the upcoming midterm vote.

As Bloomberg points out, Trump lawyer Rudy Giuliani has been arguing for weeks that Sept. 1 is the deadline for Mueller to finish his investigation under Department of Justice guidelines. According to Giuliani, Mueller is obligated to either finish his investigation and publish his findings – or at least place the probe into a two-month “deep freeze.” However, Mueller has refused to rebut Giuliani’s claims and has instead maintained his public silence.

Giuliani, President Donald Trump’s lawyer, has maintained for weeks that Saturday, Sept. 1, was a deadline under Justice Department guidelines for Mueller to finish his Russia probe to avoid improperly affecting the midterm elections on Nov. 6. “I always thought that was the day to make some decision,” the former New York mayor said in an interview.

Mueller has responded to Giuliani’s ultimatums with the public silence he’s maintained ever since he was named in May 2017 to lead the probe into Russian interference in the 2016 presidential election. But there’s no indication that the special counsel is going to abide by Giuliani’s clock, and there’s no law or clear policy requiring him to do so.

But Mueller’s refusal to abide by this policy could have serious repercussions if Mueller’s office chooses to subpoena the president, who has refused to commit to a requested sit-down interview with the special counsel for more than eight months. As Giuliani points out, kicking off such a momentous legal battle months before a crucial election could be construed as interference. His pronouncement also gives the Trump Administration more ammunition to continue delaying its decision on whether to grant Mueller an interview.

While the DOJ is reportedly weighing whether it should revise these rules, the US Attorney’s Handbook makes clear that prosecutors are prohibited from using their authority to interfere with an election.

The U.S. Attorneys’ Manual prohibits department personnel from using their official authority or influence to interfere with or affect the result of an election. It also requires prosecutors to consult with the department’s Public Integrity Section of the Criminal Division on major investigative steps.

In 2012, Attorney General Eric Holder issued a binding policy memo on election-year activities that said “prosecutors may never select the timing of investigative steps or criminal charges for the purpose of affecting any election.”

Justice Department officials are currently reviewing whether the policy should be updated, but no decisions have been made, according to two people with knowledge of the matter who asked not to be identified. If the policy were changed, it would be part of a broader update of the manual, one of the people said.

Mueller’s persistence is even more galling considering the findings of the Inspector General report on former FBI chief James Comey’s handling of the investigation into Hillary Clinton. In his report, the IG said prosecutors should avoid all appearance of tampering in an election – not just during the weeks immediately preceding the vote.

“Several department officials described a general principle of avoiding interference in elections rather than a specific time period before an election during which overt investigative steps are prohibited,” according to the report.

Ray Hulser, a deputy assistant attorney general in the Criminal Division, told the inspector general that officials previously considered codifying a 60-day rule, but rejected the approach as unworkable.

Of course, Mueller’s team is expected to be very busy in the weeks between Tuesday and Nov. 6. His prosecutors are preparing for their second trial of former Trump campaign executive Paul Manafort.

Still, some have argued that Mueller isn’t constrained by these principles because Trump isn’t on the ballot in November. But as anybody who has been paying attention to the political media landscape for the past year and a half would likely agree, the US public widely views the midterms as a referendum on Trumpism (after all, that’s the narrative that the media has been pushing). Whether or not Mueller can be held liable for his intrusion doesn’t change the fact that the special counsel is committing an extremely brazen hypocrisy.

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Authored by Michael Snyder via The Economic Collapse blog,

Over the past decade, an unprecedented stock market boom has created thousands upon thousands of new millionaires, and yet the middle class in America has continued to shrink. 

How is that even possible?

At one time the United States had the largest and most vibrant middle class in the history of the planet, but now the gap between the wealthy and the poor is the largest that it has been since the 1920s.  Our economy has been creating lots of new millionaires, but at the exact same time we have seen homelessness spiral out of control in our major cities. 

Today, being part of the middle class is like playing a really bizarre game of musical chairs.  Each month when the music stops playing, those of us still in the middle class desperately hope that we are not among the ones that slip out of the middle class and into poverty.  Well over 100 million Americans receive money or benefits from the federal government each month, and that includes approximately 40 percent of all families with children.  We are losing our ability to take care of ourselves, and that has frightening implications for the future of our society.

One of the primary reasons why our system doesn’t work for everyone is because virtually everything has been financialized.  In other words, from the cradle to the grave the entire system has been designed to get you into debt so that the fruits of your labor can be funneled to the top of the pyramid and make somebody else wealthier.  The following comes from an excellent Marketwatch article entitled “The American Dream is getting smaller”…

More worrying, perhaps: 33% of those surveyed said they think that dream is disappearing. Why? They have too much debt. “Americans believe financial security is at the core of the American Dream, but it is alarming that so many think it is beyond their reach,” said Mike Fanning, head of MassMutual U.S.

Almost everyone that will read this article will have debt.  In America today, we are trained to go into debt for just about everything.

If you want a college education, you go into debt.

If you want a vehicle, you go into debt.

If you want a home, you go into debt.

If you want that nice new pair of shoes, you don’t have to wait for it.  Just go into more debt.

As a result, most Americans are currently up to their necks in red ink…

Some 64% of those surveyed said they have a mortgage, 56% said they had credit-card debt and 26% said they have student-loan debt. Many surveyed said they don’t feel financially secure. More than a quarter said they wish they had better control of their finances.

You would have thought that we would have learned from the very hard lessons that the crisis of 2008 taught us.

But instead, we have been on the greatest debt binge in American history in recent years.  Here is more from the Marketwatch article…

It makes sense that debt is on Americans’ minds. Collectively, Americans have more than $1 trillion in credit-card debt, according to the Federal Reserve. They have another $1.5 trillion in student loans, up from $1.1 trillion in 2013. Motor vehicle loans are now topping $1.1 trillion, up from $878.5 billion in 2013. And they have another nearly $15 trillion in mortgage debt outstanding.

That is one huge pile of debt.

We criticize the federal government for running up 21 trillion dollars in debt, and rightly so, but American consumers have been almost as irresponsible on an individual basis.

As long as you are drowning in debt, you will never become wealthy.  In order to build wealth, you have got to spend less than you earn, but most Americans never learn basic fundamentals such as this in our rapidly failing system of public education.

Many Americans long to become financially independent, but they don’t understand that our system is rigged against them.  The entire game is all about keeping consumers on that debt wheel endlessly chasing that piece of proverbial cheese until it is too late.

Getting out of debt is one of the biggest steps that you can take to give yourself more freedom, and hopefully this article will inspire many to do just that.

To end this article today, I would like to share 14 facts about how the middle class in America is shrinking that I shared in a previous article…

#1 78 million Americans are participating in the “gig economy” because full-time jobs just don’t pay enough to make ends meet these days.

#2 In 2011, the average home price was 3.56 times the average yearly salary in the United States.  But by the time 2017 was finished, the average home price was 4.73 times the average yearly salary in the United States.

#3 In 1980, the average American worker’s debt was 1.96 times larger than his or her monthly salary.  Today, that number has ballooned to 5.00.

#4 In the United States today, 66 percent of all jobs pay less than 20 dollars an hour.

#5 102 million working age Americans do not have a job right now.  That number is higher than it was at any point during the last recession.

#6 Earnings for low-skill jobs have stayed very flat for the last 40 years.

#7 Americans have been spending more money than they make for 28 months in a row.

#8 In the United States today, the average young adult with student loan debt has a negative net worth.

#9 At this point, the average American household is nearly $140,000 in debt.

#10 Poverty rates in U.S. suburbs “have increased by 50 percent since 1990”.

#11 Almost 51 million U.S. households “can’t afford basics like rent and food”.

#12 The bottom 40 percent of all U.S. households bring home just 11.4 percent of all income.

#13 According to the Federal Reserve, 4 out of 10 Americans do not have enough money to cover an unexpected $400 expense without borrowing the money or selling something they own.

#14 22 percent of all Americans cannot pay all of their bills in a typical month.

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With Trump set to announce another $200BN in Chinese tariffs as soon as Thursday, sparking fears of a more acute phase of global trade wars and sending the dollar higher and US equity futures lower, the emerging market contagion vortex is starting to take on a life of its own and as Bloomberg notes this morning, “even when the most vulnerable countries vow to protect their currencies, the dollar steps in to rain on their parade.”

As noted earlier, the selloff in emerging market currencies has been relentless, dragging down the MSCI FX index to the lowest level in over a year, pressured by the trio of the South African rand, which dropped after Pretoria reported that the nation had entered only its second recession in 9 years, the Turkish lira, which is down again after the central bank failed to restore confidence that even a telegraphed rate hike will be sufficient to curb the country’s soaring inflation, and the Argentine peso which slumped 4% yesterday after president Macri’s latest announcement of emergency measures did little to raise sentiment.

Meanwhile, in addition to the imminent announcement of a new $200BN in China tariffs, US investors are now eyeing the Fed’s September rate hike which now appears inevitable, helping the dollar extend gains which in turn is further pressuring emerging markets amid deepening worries over idiosyncratic risks in emerging markets including Argentina’s fiscal woes, Turkey’s twin deficits, Brazil’s contentious elections and South Africa’s land-reform bill.

And after observing developments in emerging markets with a sanguine eye for months, Wall Street analysts are finally starting to get concerned, and as the following soundbites demonstrate, as long as the Fed keeps tightening rates, virtually nobody sees a quick – or any – way out to break the global emerging markets contagion “doom loop”:

The dollar is winning by default, according to Kit Juckes, a global strategist at Societe Generale: “There’s not much to make me think the dollar should be going up, but there’s plenty to make me nervous about other currencies. The dollar is very strong and lacking rate support, but other currencies are worse.”

Below, courtesy of Bloomberg, are some other hot takes from Wall Street analysts:

“It’s Not Enough”, from Tsutomu Soma, general manager for fixed-income trading at SBI Securities Co. in Tokyo:

• “The measures announced by Argentina and Turkey are probably not enough to lead to a significant improvement in their fundamentals”
• “Contagion risks to other emerging markets are growing especially as the Fed tightens”

“Set to Suffer”; from Michael Every, head of Asia financial markets research at Rabobank in Hong Kong:

• “Emerging-market FX are set to suffer almost regardless of what they do, the only issue is how much”
• “The dollar will remain on the front foot against emerging markets as long as the U.S. continues to raise rates and boost fiscal spending while keeping the trade war fears on the radar”

“Further Pain”. from Lukman Otunuga, research analyst at FXTM:

• “Emerging market currencies could be destined for further pain if the turmoil in Turkey and Argentina intensifies”
• “The combination of global trade tensions, a stabilizing U.S. dollar and prospects of higher U.S. interest rates may ensure EM currencies remain depressed in the short to medium term”

“A Penny Short”, from Stephen Innes, head of Asia Pacific trading at Oanda Corp. in Singapore:

• Argentina’s measures are “likely a day late and a penny short”
• “These moves are a step in the right direction, but they’re unlikely to be convincing enough to remove currency speculators from the driver’s seat. I guess it’s all down the IMF’s ‘White Knight’ to the rescue. However, we are getting into the realm of unquantifiability which makes the market utterly untradable”

“Most Vulnerable“, from Masakatsu Fukaya, an emerging-market currency trader at Mizuho Bank Ltd.:

• “Contagion risks from Argentina and Turkey are growing for other emerging markets and economies with weak fundamentals such as those with current-account deficits and high inflation rates”
• “Currencies of countries such as Indonesia, India, Brazil and South Africa have been among most vulnerable”
• “The Fed’s rate increases and trade frictions means the underlying pressure on emerging currencies is for a further downward move”

Source: Bloomberg

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The US embassy in Cairo is on lock down after local police foiled what some sources say was an attempted suicide bombing, Haaretz reports. Details of the incident are unclear, but Haaretz said the man was arrested after throwing a bomb, which detonated, at the embassy. Others said the man tried to detonate a bomb on his person as well. Still others said there were reports of another bomb believed to be in the vicinity.

Breaking: Witness says @USEmbassyCairo is on lockdown after a person reportedly attempted to detonate himself outside the premises. Police were able to quickly intervene and arrest the person. Reports of an additional bomb supposedly near by. This is a developing story. #Egypt pic.twitter.com/KJltgJvg82

— Adel El-Adawy (@adeladawy) September 4, 2018

 

#BREAKING: U.S. Embassy in Cairo, Egypt is currently on lockdown after a person attempted to detonate himself near the Embassy.

Reports of an additional bomb nearby. (Photo: @adeladawy) pic.twitter.com/PUdxOBYThg

— BreakingNNow (@BreakingNNow) September 4, 2018

 

Video of the suspect being taken into custody has also circulated online.

BREAKING: Exclusive video of Egyptian police arresting and quickly taking into custody the alleged man who attempted to detonate himself in Simon Bloivar area outside @USEmbassyCairo #Egypt pic.twitter.com/3woUHPhcLf

— Adel El-Adawy (@adeladawy) September 4, 2018

The embassy cautioned that US citizens should avoid the area until further notice.

(1 من 3)
• نحن على علم بواقعة حدثت في شارع سيمون بوليفار في القاهرة. يرجى تجنب المنطقة ومراقبة وسائل الإعلام المحلية للحصول على المستجدات. نحن على علم بالتقارير التي تفيد بأن المواصلات العامة بالقرب من المنطقة قد تعطلت بسبب الحادث. يرجى توخي الحذر.

— US Embassy Cairo (@USEmbassyCairo) September 4, 2018

No casualties have been reported in the incident.

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Since announcing their new advertising campaign will be led by Colin Kaepernick, the social media backlash has dominated the virtue-signaling efforts we presume they hoped for.

With images of Nike apparel and footwear being burned and real sacrifice being discussed, it appears investors are growing disillusioned as Nike shares are down 2.4% in the pre-market.

Setting half their lawn on fire while burning Nike shoes pic.twitter.com/rDqGGARzj0

— Things White Folks Like (@Things4WhitePpl) September 4, 2018

On a side note, it appears Twitter has decided that snowflakes are just not prepared to see a pair of sneakers on fire and have attached a warning note to the previous tweet…

That is a loss of over $3 billion in market capitalization since the market close on Friday…

Nike may have “just done it” but was it worth it?

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While Connecticut Senator (and “phony Vietnam con artist”) Richard Blumenthal has promised that “sparks will fly” at Tuesday’s marathon confirmation hearing from Trump Supreme Court pick Brett Kavanaugh (this despite the carping of some conservatives over Kav’s “insider” status and his close association with former President George W Bush), other Dems have privately complained that there’s little they can do to block his nomination.

But this pervasive sense of inevitability didn’t stop Senate Minority Leader Chuck Schumer from making one last grab for publicity as he pushed to delay Tuesday’s hearing following the last-minute release of more than 42,000 pages of documents from Kavanaugh’s tenure in the Bush Administration, per the Washington Post. The documents, which were released by the National Archives, have been marked “Committee Confidential” – meaning they’re only available to members of the Senate Judiciary Committee. Over the past week, Dems have raised a stink about the White House’s decision to withhold more than 100,000 pages of documents from Kavanaugh’s tenure. Kavanaugh was appointed to the US Court of Appeals for the Washigton DC Circuit by Bush in 2006. Before that, he served in the White House Counsel’s Office from 2001 to 2003 and as staff secretary from 2003 to 2006.

🚨🚨 The Senate was just given an additional 42,000 pages of Kavanaugh documents the NIGHT BEFORE his confirmation hearing. This underscores just how absurd this process is. Not a single senator will be able to review these records before tomorrow.

— Chuck Schumer (@SenSchumer) September 4, 2018

Republicans know this has been the least transparent SCOTUS process in history and the hearings should be delayed until we can fully review Judge Kavanaugh’s records.

— Chuck Schumer (@SenSchumer) September 4, 2018

But Schumer’s complaints were swiftly put to rest by the Judiciary Committee and its Republican chairman Chuck Grassley, which tweeted several hours later that its staff had nearly finished reviewing the documents.

The Majority staff has now completed its review of each and every one of these pages. Chairman @ChuckGrassley and his team are prepped and ready for Judge Kavanaugh’s hearing to begin tomorrow. #SCOTUS https://t.co/jrXRU8QMTg

— Senate Judiciary (@senjudiciary) September 4, 2018

To be sure, the committee’s ability to pull off this last-minute document dump with impunity doesn’t mean the controversy has been put to rest – or that what’s expected to be a 17+ hour marathon hearing will be a snoozefest. Rather, one of the most important questions for both Democrats and Republican pertaining to Kav’s judicial stance remains unanswered: Would he be willing to overturn SCOTUS precedents opposed by conservatives? And if so, how quickly?

Here’s more from WSJ:

With Judge Brett Kavanaugh’s Supreme Court confirmation hearings set to begin Tuesday, partisans on both sides are focusing on one of the most consequential questions surrounding his nomination: Whether he would stand firm with precedents set by landmark rulings or be willing to overturn them.

Liberals warn that key rulings on abortion, affirmative action and gay rights could be weakened or reversed by a court that leans further to the right. Many conservatives, on the other hand, hope those precedents will be limited by future rulings and eventually crumble, even if Judge Kavanaugh moves carefully rather than tearing through established doctrine.

The court sets precedents through its body of rulings. Once the justices decide an issue, lower courts are bound by the Supreme Court’s holding, and the high court itself usually won’t revisit it. But the court on occasion will abandon what it ruled previously.

In other words, while SCOTUS nominees typically avoid explicitly saying how they would rule on certain key issues, it appears that Democrats are throwing this precedent out the window as they try to drum up popular support for Democratic candidates in November. And the notion that Kavanaugh might swiftly move to overturn precedents like Roe V. Wade (though he has reportedly said in the past that he considers Roe “settled law”) and other precedents pertaining to issues like the scope of federal agencies’ regulatory authority could very well help get out the vote in the midterms.

The importance of the precedent question is magnified by the fact that the Roberts Court has typically been less willing to challenge precedent. According to WSJ, the Roberts Court has overturned landmark cases at a rate of 1 a year, compared with 2 for the Rehnquist Court, and 3 for the Burger and Warren Courts. In a potential sign of what’s to come, SCOTUS overturned two precedents during its most recent term, which was also the final term on the bench for Justice Anthony Kennedy – a ruling that struck down a requirement that public union employees to pay their dues, and another that expanded states’ ability to collect taxes on e-commerce sales. So far, President Trump’s first high court nominee, Justice Neil Gorsuch, has proven receptive to these types of changes. Gorsuch wrote that he was “pleased” to join Justice Kennedy’s opinion in the sales tax case.

Ironically, should Kavanaugh prove willing to support these types of changes, one of the biggest impediments to overturning precedent on the Roberts’ Court could be the chief justice himself.

When Justice Kennedy said that the precedent limiting internet tax collection “becomes further removed from economic reality” every year, the chief justice agreed—but said that wasn’t enough to justify the court’s decision to reverse the precedent, especially since Congress could change the rules if it wanted.

“The court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago,” the chief justice wrote.

But in either case, one precedent that could face an immediate threat is a 1997 ruling that expanded the power of government agencies to interpret their own regulations.

Some Supreme Court precedents that could be most immediately vulnerable are lesser-known ones, such as a 1997 case called Auer v. Robbins, which says judges owe deference to government agencies’ interpretation of their own regulations. Conservatives have said that doctrine gives too much unchecked authority to administrative agencies.

The possibility of an activist Supreme Court setting about to rapidly undo a generation’s worth of liberal rulings is enough to give Democrats nightmares. But as Kavanaugh fields questions from lawmakers, Republicans are hoping that he will make his intentions clear.

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