Two more cases from the last few days show this, both from within the Third Circuit. First, from Lampon-Paz v. U.S. Dep’t of Justice, 2019 WL 5681351 (3d Cir. Nov. 1, 2019) (nonprecedential):
Lampon-Paz is a former federal air marshal who has filed a series of federal lawsuits seeking to hold the federal government and the State of New Jersey liable for a litany of seeming unrelated events alleged to have befallen him and his family, including his now former wife and his minor son…. To the extent that any of Lampon-Paz’s present claims survive [various preclusion] doctrines, we conclude—as the District Court in his second New Jersey action suggested, and as the District Court and the Ninth Circuit in his California action concluded as well—that Lampon-Paz’s continued attempt to hold the federal government liable for his alleged injuries is “wholly insubstantial and frivolous” and thus failed to invoke the District Court’s subject-matter jurisdiction….
Lampon-Paz routinely files meritless motions to seal briefs and other documents, and we routinely deny them. See, e.g., Lampon-Paz v, DHS, 532 F. App’x 125, 126 n.3 (3d Cir. 2013). In this case, Lampon-Paz requests sealing because this case involves his minor son. Sealing is not necessary because Lampon-Paz’s brief does not identify his minor son by name.
And from Judge Peter Sheridan in Bonner v. Huber, 2019 WL 5622536 (D.N.J. Oct. 31, 2019), another unsuccessful sealing attempt from Mr. Bonner as well:
Plaintiff moves to seal all documents and orders relating to the two motions [for a jury trial and for relief from a judgment or order] denied above. However, “the courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Comm., Inc., 435 U.S. 589, 597 (1978) (citations omitted). Indeed, there is “a presumption that ‘all materials and judicial proceedings are matters of public record and shall not be sealed.’ ” Novo Nordisk A/S v. Sanofi-Aventis U.S. LLC, No. 07–3206(MLC), 2008 WL 323611, at *2 (D.N.J. Feb. 4, 2008) (citation omitted); see also Union Oil Co. of California v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000) (“[I]t should go without saying that the judge’s opinions and orders belong in the public domain.”). The party seeking to seal “has the burden of establishing ‘good cause’ with respect to each document that it seeks to seal.” Id. A party seeking to seal must support such request by affidavit, declaration, certification, or other document “describing with particularity”:
(a) the nature of the materials or proceedings at issue;
(b) the legitimate private or public interest which warrant the relief sought;
(c) the clearly defined and serious injury that would result if the relief sought is not granted;
(d) why a less restrictive alternative to the relief sought is not available;
(e) any prior order sealing the same materials in the pending action; and
(f) the identity of any party or nonparty known to be objecting to the sealing request.
L. Civ. R. 5.3 (c)(3). The party seeking to seal must provide “legitimate public or private reasons for the documents to be kept from the public” and must identify “a clearly defined and serious injury that would result if the motion is not granted.” Celgene Corp. v. Abrika Pharm., Inc., No. 06–5818(SDW), 2007 WL 1456156, at *5 (D.N.J. May 17, 2007). Here, Plaintiff’s motions to seal do not comply with the Local Rules, nor provide legitimate reasons for keeping the documents out of the public domain. Therefore, Plaintiff’s motions to seal are denied.
Note: (1) I had intervened in Bonner v. Justia to oppose the requested sealing. (2) Mr. Bonner took the view in the Bonner v. Justia argument that my blog posts that had mentioned him (in the context of this case and related matters)—or perhaps my intervention in the case and serving him with my filings, or both—had violated N.J. Rev. Stat. § 2C:28-5, which bans, among other things, witness tampering and “retaliation” against “witnesses and informants”:
[a.] Tampering. A person commits an offense if, believing that an official proceeding or investigation is pending or about to be instituted or has been instituted, he knowingly engages in conduct which a reasonable person would believe would cause a witness or informant to:
(1) Testify or inform falsely;
(2) Withhold any testimony, information, document or thing;
(3) Elude legal process summoning him to testify or supply evidence;
(4) Absent himself from any proceeding or investigation to which he has been legally summoned; or
(5) Otherwise obstruct, delay, prevent or impede an official proceeding or investigation….
[b.] Retaliation against witness or informant. A person commits an offense if he harms another by an unlawful act with purpose to retaliate for or on account of the service of another as a witness or informant. The offense is a crime of the second degree if the actor employs force or threat of force. Otherwise it is a crime of the third degree.
I’m happy to report those allegations (as well as Mr. Bonner’s assertion that my posts and litigation in the case “has become a concern to the New Jersey State Police Cyber Crimes Unit,” whatever that means), though I am quite confident that they have no merit, for many reasons.
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“There are short ladders and very long snakes. That one took us back to square 1..”
Trawling through the market headlines this morning, I’m struck by the number of comments about how much better the investment environment looks. There is less likelihood of a global recession, corporate earnings aren’t as bad as expected, and jobs are growing. I am unconvinced. I see worrying connections across the wires. From my perspective – which admittedly has been from a train in the middle of nowhere – it feels we’ve reached the end of something. Time has been called on this particular era of irrational market exuberance.
My spidey-senses are tingling due to manner in which events across markets, individual stocks, politics, geopolitics and gut-instinct are connected. I’m not predicting sudden or massive financial collapse – just a wake up and smell the coffee correction in Bonds (which feels underway), and selective deflation in over-sold sectors of the stock markets. As always, any reversal will set off wailing and despair, yet most of the critical lessons will be missed. Fear not – we will get another chance to relearn them in a few years time! (Blain’s Market Mantra No 2: The Market has no memory.)
It’s just as well we aren’t heading for the deep prolonged global recession so many naysayers have been predicting thru 2019. Slowdown yes. Trade is going to remain a problem. But growth drivers were changing anyway. Tech will change the world’s trade roads. China’s furious growth spurt of the last 20 years is over. India might be growing, but it lacks the state momentum to drive global growth the way China did. And climate change will prove deeply significant in the future as consumers are persuaded to believe food miles and imports matter.
Long-term the relationship between the West and China will continue to dominate economies. There is more of a wall than ever before. Xi has consolidated his position as defacto emperor. He will allow his mandarins to make a show of engaging on trade, but has made clear his distrust of Trump. We’ll see that distrust and divergence drive Occidental and Oriental Technological economies apart and inevitably lead to a variation of Cold War economics.
That’s all in the long-term. The medium term is going to be even more fascinating. Expect some surprising shifts over the next few months. Taking some of the effervescence out of overhyped expectations may be positive past the short-term pain. Consider what is to come like toothache: root canal surgery without anaesthetic. Anticipating the consequences is the trick.
Let me try to connect some of the dots:
We’ve heard immediate pushback from international investors on the $2 trillion Aramco valuation Crown Prince MBS demands. Bank’s anxious for fees now say $1.7 ish. Investors say far less, pointing out the returns are less than the other oil majors for much greater political risk. MBS has staked his and his country’s future on being able to diversify the economy away from oil. He can only do that by monetising Aramco because the Saudi Royals have squandered the massive wealth their oil once promised.
The consequences of failing to deliver diversification and jobs will be rising political dissent – which is becoming apparent. Instability in the Middle East? Never a good thing for a global economy still dependent on oil.
Saudi is heavily invested in the increasingly discredited Softbank Vision fund. No matter how many bone-saws are employed, losing $50 bln in the Vison fund will not increase MBS’ political longevity. Softbank’s London based trading head, Rajeev Misra was a genius in the market’s eye last year, but this year is pillioried for running a dysfunctional firm. The papers say his trading style is creating the same kind of losses that sank his former bank – Deutsche Bank. Softbank’s losses in its vision fund are steadily mounting – a string of losing IPOs (Uber and WeWork) spell the end of the Unicorn myth.
Who knew: companies with no discernible route to profit don’t work?
Deutsche Bank is a whole distraction in itself. That you can buy German’s leading bank for less than Malaysian Fraudster Jho Low nicked on an average day from 1MBS says it all about the lack of future proofing across the German economy – which begins to explain the structural problems Germany now faces redirecting national engineering talent and infrastructure. (And is why Europe is likely to remain mired in slowdown long after the rest of the global economy picks up.)
Meanwhile, Berkshire Hathaway – the quintessential fundamental value investor, sits on its largest ever cash pile – waiting for the right assets to buy. Timing is everything. You have to wonder what they know and expect? It’s not just the unicorns that are sinking Softbank feeling a lack of market love. The earnings season was stronger than anyone expected (after all, we were told to expect recession), but the bond market appears to have peaked meaning corporate credit quality and leverage is back in investors’ sights.
And if corporate America looks week, then what about the potential credibility of the Government? While the Democrats pursue impeachment, the world looks on in horror. If Trump was playing games with Ukraine – what has his son-in-law been promising the Saudis? Trump may or may not have committed a crime to justify impeachment – but the devil will be proving it clearly, openly and transparently. The Democrats are unlikely to get the 2/3 through the Republican dominated Senate they need to sling him. Who cares? The real issue is how American voters read the signal it sends in terms the 2020 election!
Not that the UK or Europe are any better. Political weakness is a major theme underlying global markets.
In Central banking we’ve got Christine Lagarde giving her first big speech has ECB head in Berlin later today. What’s her offer? More of the same plus an intent to bring Europe together in fiscal harmony to paper over the monetary cracks so apparent in the Euro? Good luck to her. Back in the UK – Mark Carney finishes at the end of January, but no one seems to be considering his successor during the election.
We Have Melt-Up: Futures Jump To New All Time High On “Trade Optimism”
In retrospect, the Trump administration’s decision to announce a “phased” launch of the trade deal with China – which does not exist yet, and will likely never be completed – was the most insightful announcement because not only did it drive stocks sharply higher on the day “phase one” was unveiled, but it has been pushing stocks higher ever since.
And sure enough, Monday has been no different because after a weekend full of Trump and Ross soundbites that a deal appears imminent and Trump even offered up the US as a venue for the “phase one” signing, even though nothing has actually been agreed yet, S&P futures levitated higher all session alongside global stocks while bonds slipped and the dollar inched higher.
As we reported over the weekend, commerce secretary Wilbur Ross expressed optimism the U.S. would reach a “phase one” trade deal with China this month and said licenses would be coming “very shortly” for American companies to sell components to Huawei Technologies, while Trump told reporters a trade deal, if completed, will be signed somewhere in the U.S.
As a result, optimism ran rampant in Europe with the Stoxx 600 Index extending gains, in what was a sea of green amid the abovementioned trade deal optimism; the index advanced 0.8% with automakers leading gain among sectors, rising 3% while mining shares and banks follow, with sector indexes up 2.4% and 1.6%, respectively.
Risk assets favored optimistic comments on trade from U.S. officials over caution from China and soft manufacturing PMIs, with major European equities all gaining over 0.75%, Autos gain nearly 3% after Ross comments downplay expectations for U.S. tariffs on EU automakers, offsetting another contraction in Eurozone manufacturing PMI, with the final print coming in at 45.9, just above the 45.7 flash print.
Meanwhile, Dow futures were up triple digits even as MacDonald’s fell in pre-market trading after its CEO was fired for an inappropriate relationship with an employee. The Stoxx Europe 600 Index headed for a four-year high, led by miners and automakers, which jumped after the U.S. commerce secretary said tariffs on importing vehicles into the American market might be unnecessary. All major Asian markets advanced except Tokyo’s, which was shut. An index tracking emerging-market was set for its biggest gain in three weeks.
“Everyone is kind of upbeat around the prospect of at least a partial China-U.S. trade deal,” Peter Dragicevich, a strategist at Suncorp Corporate Services, told Bloomberg TV. “It’s going to keep equities pretty supported.”
After last week’s Q3 earnings reporting peak, investors are eager to push up stocks for a fifth successive week, adding to the 22% gain this year in the S&P500, even as long-time bulls such as Ed Yardeni are starting to get worried, noting that a “market melt-up” is becoming a real risk: speaking on CNBC, Yardeni said that “if the S&P 500 forward earnings multiple ticks to 19 or 20, it could spark a “nasty correction.”
“I just don’t want too much of a good thing here. I’d like this bull market to continue at a leisurely pace not in a melt-up fashion,” he told CNBC’s “Trading Nation” on Friday. “That’s actually the risk.”
For now, however, nobody cars, and earnings continue to roll in around the world, in what is set to be the 3rd consecutive quarter of declining S&P500 earnings. In China, trade data is coming at the end of this week and will give details for October against a backdrop of easing tensions on negotiations with U.S. counterparts.
In geopolitical news, the head of Iran’s Energy Authority says operation of 30 new centrifuges is underway, adding “We didn’t intend to take these steps, but Washington’s wrong policies pushed us to do so”, reported via Al Jazeera. Elsewhere, North Korea and US working level talks could be held in mid-November/December, Yonhap citing South Korea’s spy agency. Over in China, reports via China People’s Daily noted that government employees’ careers are at stake as it flagged intervention in senior appointments. Finally, Turkey was said to be evaluating a Russian offer for fighter jets and the second delivery of Russian S-400 missile system is planned for 2020 but could be delayed due to technology sharing and production talks according to the Head of Turkish Defense Industry Directorate.
In rates, Treasury yields jumped 4bps to 1.75% while the curve bear steepened, as long end Treasuries underperform having been closed during Asian hours.
In FX, most G-10 currencies weakened against the dollar, with the biggest losses seen in the haven Swiss franc, the pound and the Japanese yen. The New Zealand and Australian dollars rallied after U.S. Commerce Secretary Wilbur Ross said he was optimistic an initial trade deal would be signed with China this month, with the kiwi reaching its strongest level since mid-August against the greenback. The pound edged lower after polls over the weekend indicated the Conservative Party’s lead ahead of the December election may be narrowing; sterling dropped on Monday after last week’s 0.9% rally. In EMs, South Africa’s rand surged after the country clung on to its investment-grade credit rating. Treasuries fell along with most sovereign bonds in Europe. The dollar edged higher versus its biggest peers, reversing a five-session decline.
In commodities, crude-oil futures ticked higher. The IPO process for Saudi Aramco officially started on Sunday, with the stock likely to start trading in Riyadh next month. Valuations vary widely.
Expected data include durable-goods orders and factory orders. Ferrari, Sprint, Sysco, Uber, and Marriott are among companies reporting earnings
Market Snapshot
S&P 500 futures up 0.4% to 3,075.75
STOXX Europe 600 up 0.6% to 401.99
MXAP up 0.7% to 164.73
MXAPJ up 1.2% to 531.09
Nikkei down 0.3% to 22,850.77
Topix down 0.03% to 1,666.50
Hang Seng Index up 1.7% to 27,547.30
Shanghai Composite up 0.6% to 2,975.49
Sensex up 0.4% to 40,336.29
Australia S&P/ASX 200 up 0.3% to 6,686.87
Kospi up 1.4% to 2,130.24
German 10Y yield rose 1.8 bps to -0.364%
Euro down 0.04% to $1.1162
Italian 10Y yield rose 6.9 bps to 0.651%
Spanish 10Y yield rose 2.0 bps to 0.294%
Brent futures down 0.9% to $62.24/bbl
Gold spot down 0.3% to $1,509.5
U.S. Dollar Index little changed at 97.30
Top Overnight News from Bloomberg
U.S.’s Ross met with Chinese Premier Li Keqiang at a regional summit in Bangkok, a person familiar with the discussion said. The meeting came hours after Ross told a morning business forum that the U.S. was “very far along” with “Phase One” of a trade deal with China
Brexit Party leader Nigel Farage won’t stand as a candidate in the U.K. election, and will focus instead on campaigning across the country, as his party fields 600 candidates. His refusal to back British Prime Minister Boris Johnson has prompted criticism from other Brexit supporters, who say the strategy could split the anti-EU vote and help Labour leader Jeremy Corbyn win
Eurozone October manufacturing PMI came in at 45.9 versus the flash reading of 45.7, while a similar reading for Germany was 42.1 against the flash reading of 41.9. Above the 50 mark indicates expansion, while below that level points to a contraction
China’s private companies have been hit disproportionately hard as the economy slows, with their default rate doubling to 12% this year, compared with 1.5% for the overall domestic bond market, according to China International Capital Corp.
Saudi Arabia is pulling out all the stops to ensure the success of Aramco’s initial public offering after Crown Prince Mohammed bin Salman finally decided to offer shares in the world’s largest oil producer
McDonald’s Corp. fired Chief Executive Officer Steve Easterbrook because he had a consensual relationship with an employee, losing the strategist who revived sales with all-day breakfast and led the company’s charge into delivery and online ordering
Asian equity markets kick-started the week on the front-foot as the region took impetus from the record highs on Wall St. last Friday following a better than expected Non-Farm Payrolls report and constructive call between top US-China trade negotiators in which progress was said to be made in a variety of areas. ASX 200 (+0.3%) was lifted by outperformance in the mining related stocks due to the trade optimism and after the recent rally in oil prices, but with gains in the index limited by weakness in the largest weighted financials sector after Big 4 bank Westpac reported a decline in its FY profit. Hang Seng (+1.7%) and Shanghai Comp. (+0.6%) were also positive with the trade optimism turned up a notch after the recent top-level call, with even White House Trade Adviser and China-hawk Navarro noting the sides had good discussions and US President Trump also floated Iowa as a location for the signing of a phase 1 deal. Furthermore, strength in oil names contributed to the outperformance in Hong Kong, and Japanese markets remained closed today for Culture Day.
Top Asian News
Philippine Central Bank Chief Says 2019 Policy Easing Over
Following on from Friday’s post NFP/encouraging trade rhetoric rally, major European bourses (Euro Stoxx 50 +0.9%) are again on the front foot, with further trade optimism the major tailwind. US Commerce Secretary Ross, over the weekend signalled optimistic China developments whilst noting that US may not need to impose auto tariffs later this month on the EU, Japan and South Korea, following positive conversations with these countries. DAX and Euro Stoxx indices are at fresh YTD highs, with the latter at its highest levels since early 2018. As expected, European auto names, including Fiat Chrysler (+4.0%), Peugeot (+4.9%), Daimler (+2.2%) and Volkswagen (+2.5%) are driving gains amid Ross’ comments. More broadly, sector performance is reflective of the market’s risk-on sentiment; Materials (+1.6%), Consumer Discretionary (+1.2%), Tech (+1.1%), Energy (+1.7%) and Financials (+1.6%) are all on the performing well, with the latter two aided by higher yields and crude prices from Friday’s late-doors rally. Meanwhile, the more defensive Utilities (+0.1%), Consumer Staples (Unch.) and Health Care (+0.5%) sectors are laggards. In terms of specific movers; strong earnings from Ryanair (+6.6%), Siemens Healthineers (+7.0%) and Telefonica Deutschland (+1.6%) has seen their respective stock prices advance. Wirecard (+3.7%) trades higher with the prospect of EUR 200mln in additional share buybacks providing some reprieve from the recent FT-induced declines. Finally, UK gambling stocks fell sharply (William Hill -6.9%, GVC -10%) amid pre-market reports via The Guardian that UK MPs are demanding an overhaul of gambling laws which would see online casinos subject to the a maximum stakes limit similar to the GBP 2 imposed on fixed-odds betting terminals.
Top European News
U.K. Construction Contracts for Sixth Month Amid Weak Demand
Ryanair Says European Regulator Holding Up Return of Boeing Max
European Autos Surge to Six-Month High on Trade Deal Optimism
Takeaway.com Proposes Just Eat Merger Via Recommended Offer
In FX, the Kiwi is head and shoulders above its G10 counterparts in wake of news that NZ and China will enhance their FTA, with Nzd/Usd extending gains through 0.6450 at one stage even though the latest NZ Treasury report paints a rather bleak picture of the domestic economy as Q2 GDP was weaker than expected and business activity remained depressed during the 3 months to September. However, cross-currents also favoured the Kiwi as Aud/Nzd retreated through 1.0750 and the Aussie lost traction vs its US rival on the 0.6900 handle following disappointing retail sales data on the eve of the RBA’s policy meeting – full preview available via the Research Suite. Elsewhere, the Rand is breathing a big sigh of relief after Moody’s SA ratings review on Friday as the agency resisted any temptation to go beyond the widely anticipated outlook downgrade to negative. Usd/Zar has reversed further from recent highs in response and back below the psychological 15.0000 level to test bids/support at 14.7500.
CHF/JPY – The safe-havens have receded in line with risk-on sentiment prompted by the hefty US payroll beats and rising global trade optimism amidst latest positive updates on US-China Phase 1 alongside talks between the US, EU, Japan and South Korea that could culminate in auto tariffs being rolled over or even removed altogether. The Franc is also digesting even more dovish remarks than normal from SNB chief Jordan and latest weekly Swiss sight deposits showing a hefty rise in domestic bank accounts, as Usd/Chf hovers above 0.9875 and Eur/Chf over 1.1025, while the Yen and crosses are also elevated, with Usd/Jpy eyeing 108.50.
CAD/GBP/EUR – All softer vs the Greenback as the DXY holds above 97.000 and Friday’s 97.107 post-NFP low, as the Loonie continues to reflect on the BoC’s rather concerned outlook and pivots 1.3150, while Cable strives to keep its head above 1.2900 ahead of the UK election and the Pound lags against a relatively resilient Euro after some signs of stabilisation in the core and pan Eurozone manufacturing PMIs. Note also, Sentix sentiment improved substantially and Eur/Usd may be benefiting from expiry hedging given 1 bn running off between 1.1155-60.
EM – Choppy trade in Usd/Try within 5.7075-6800 parameters after another slowdown in Turkish CPI and reports that the second batch of S-400 missiles from Russia may be delayed, with the Lira testing 200 DMA resistance, but not quite breaching the technical marker.
In commodities, crude markets are firmer on the first trading session of the week following overnight consolidation from Friday’s late-door gains, with impetus derived from the overall risk sentiment and in wake of of comments from the Iranian Oil Minister Zanganeh who expects further cuts to be agreed at the 5th/6th December OPEC meeting (in-fitting with some of the recent sources reports ahead of the meeting, although the magnitude of the touted cuts is unknown). WTI Dec’ 19 futures have moved above last Friday’s USD 56.43/bbl high, as has Brent Jan’ 20 futures, which also eclipsed the USD 62.00/bbl level. Elsewhere, COT data released last Friday showed that speculators increased their net long in ICE Brent by 45.6k lots over the last reporting week, leaving them with a net long of 253,999 lots as of last Tuesday. “This is the largest weekly increase since early September, and also takes the net spec position back to levels seen in September” notes ING, who point out that “the increase was predominantly driven by fresh longs, rather than shorts coming in to cover.” Turning to metals; gold prices are subdued, despite the risk on moves being seen across equities and bonds. Copper meanwhile is similarly uneventful – CFTC data from last Friday revealed that speculators have increased gross longs by 11,514 lots over the week, and covered 11,949 shorts, amid recent gains in the markets risk tone.
Saudi Arabia have confirmed that Saudi Aramco is to be publicly floated, currently no indication on the timing, price or magnitude of the IPO. Reports note scepticism that Aramco will achieve its USD 2trl valuation, likely to be closer to USD 1.5trl. Stake offered could be between 1-3% valued at USD 15-60bln.
US Event Calendar
10am: Durable Goods Orders, est. -1.1%, prior -1.1%
10am: Durables Ex Transportation, est. -0.3%, prior -0.3%
10am: Factory Orders, est. -0.4%, prior -0.1%
10am: Cap Goods Orders Nondef Ex Air, prior -0.5%
10am: Factory Orders Ex Trans, prior 0.0%
10am: Cap Goods Ship Nondef Ex Air, prior -0.7%
DB’s Jim Reid concludes the overnight wrap
Happy Monday to you all. In all the time I’ve been writing the EMR, the story I get asked about the most is the time I discussed how I had a whole bank of freshly planted trees stolen from outside my old house. This was around 7 years ago. I even replanted some, got stakes inserted through the roots to secure them deep into the ground and they attempted to steal those too. I was incandescent with rage. Well this weekend we’ve tempted fate and planted new ones at the boundary of our new house. So, if anyone reading this from anywhere around the world suddenly gets offered some cheap trees please don’t be tempted as they’re probably using my garden as their tree nursery.
Talking of trees, some green shoots of data recovery were seen towards the end of last week in the US.Indeed our economists have changed their US rate call this weekend for the second time since Wednesday’s Fed meeting. After the FOMC they marginally decided to keep a December cut in their forecasts but Friday’s impressive jobs report (more below) means that the Fed are unlikely to receive enough information prior to the December FOMC that leads to a “material reassessment” in the outlook that they have noted is needed to cut rates again. Therefore, unless they see negative surprises in key events – most notably auto tariffs and China negotiations they now see the Fed remaining on hold for the foreseeable future. They still see the risks to the downside, and the Fed having to cut again, but being on hold is now their central scenario. Interestingly on auto tariffs, US Commerce Secretary Wilbur Ross said yesterday on Bloomberg TV that the US has been having “good conversations” with automakers from the EU, Japan and Korea. He went onto say that he hoped the negotiations had so far will bear enough fruit that the 232 may not need to be put into full or even part effect. This will be seen as good news as the end of the 6-month delay on making a decision on EU auto tariffs ends this month. He also sounded optimistic on the “phase one” trade deal being signed this month and said licences for US companies to sell to Huawei will be coming “very shortly”.
The strong close on Wall Street on Friday and those comments from Ross seem to have helped Asian markets kick start the week on the front foot with the Hang Seng (+1.30%), Shanghai Comp (+0.76%) and Kospi (+1.30%) all up with markets in Japan closed for a holiday. Meanwhile, futures on the S&P 500 are up +0.23%. In FX the big mover is the South African rand (+1.28%) after Moody’s announced on Friday that it had decided not to downgrade the country’s credit score to junk, although it did reduce the outlook to negative.
Back to Friday’s data, the US economy added 128,000 jobs in October, plus another 95,000 of positive revisions to previous months. Consensus was at 85k. Given the GM strikes and revisions these were seen as healthy numbers. For many this meant the subsequent ISM was less of an issue. This proved to be the case but we should note that it came in slightly below expectations at 48.3 (48.9 expected – 47.8 last month) marking the third month below 50. The good news in the report was the surge in new export orders from a shockingly low 41.0 last month to a 4-month high of 50.4. All eyes on the services component tomorrow (53.4 expected from 52.6 last month).
The week post payroll is usually quiet for data. This week is slightly different as given payrolls was released on the 1st (Friday), and that Europe had a part holiday on the same day, we have the rare situation where European manufacturing PMIs (today) and European (Wednesday) /US non-manufacturing PMIs/ISM (Tuesday) are released after payrolls. There’s a raft of Fedspeak due this week and the first speech from new ECB President Lagarde (today). Expect the UK election campaign to gain momentum. The polls (YouGov, Opinium, Orb) over the weekend showed some interesting developments as 1) the Conservatives ranged from an 8-16pc lead, 2) both the Conservatives and Labour are gaining support since the election was announced and 3) Labour seem to be gaining a little more of it from a low base but the Lib Dems and the Brexit Party and getting squeezed. The early signs are that this could be more of the traditional two party race than many thought.
Today’s European manufacturing PMIs will be a big focus and expectations for the Eurozone, Germany and France numbers are for no change to the flash at 45.7, 41.9 and 50.5, respectively. Spain and Italy’s are expected to dip 0.2 and 0.1 points respectively from last month to 47.5 and 47.7 respectively. So with stabilisation expected, any move either way will get markets excited. For Wednesday’s European final services PMIs, the Eurozone and German number is also expected to be unchanged from the flash at 51.8 and 48.6 respectively with the other main countries expected within a few tenths of last month’s readings in the 51-53 range. The Eurozone composite is expected to edge up 0.1 points to 50.2
In terms of other US data we have the final September durable and capital goods orders revisions today, Q3 non-farm productivity and unit labour costs on Wednesday and the preliminary November University of Michigan consumer sentiment survey on Friday. In Europe we’ve also got the September industrial production prints in Germany on Thursday and France on Friday, while the European Commission will also publish its latest economic forecasts on Thursday. Finally in China we’ll get the services and composite Caixin PMIs for October on tomorrow (another important release for global markets) and the October trade data on Friday.
As for policy meetings this week, the BoE meet on Thursday. No policy changes are expected. Our economists expect the BoE to sound dovish, dropping its tightening bias and instead moving towards an easing policy stance. They note that, domestically data have deteriorated sufficiently to warrant more supportive monetary policy. Growth has slowed and is tracking below the Bank’s “speed limit” of 1.5% with uncertainty likely weighing further on the near-term growth outlook. Equally, the UK supply side story is also turning softer, with labour market indicators pointing to downside risks for both pay and jobs by Q4-2019 and inflation now expected to remain below target in 2020. The team see an increasing risk of a rate cut at the January Inflation Report – Governor Carney’s final MPC meeting.
Staying with central banks, as discussed earlier it’s another busy week for Fedspeak. Indeed today we’ll hear from Daly, Tuesday will see Barkin, Kaplan and Kashkari speak, Wednesday will see Evans, Williams and Harker speak, Thursday will see Kaplan speak and on Friday we’ll hear from Bostic and Daly.
Meanwhile, earnings season starts to slow down with just 66 S&P 500 companies reporting. The highlights include Sysco and Berkshire Hathaway on Monday, CVS on Wednesday, and Walt Disney and Cardinal Health on Thursday. Away from the US we’ll also get results from Telefonica, Softbank, BMW, Toyota, Siemens, Allianz and Honda.
Reviewing last week now and it was another positive week for equities with data on balance more positive, trade talks seemingly going in the right direction, a U.K. election finally called and a Fed rate cut. The S&P 500 advanced +1.5% (+0.97% Friday and a new record high) with semiconductors leading gains, up +2.5% on the week. The Nasdaq gained +1.7% (+1.13% Friday and also to a new record). In Europe, the Stoxx 600 gained +0.4% (+0.68% Friday) though banks underperformed, down -2.6% but up +0.99% Friday. Yields fell, with 10-year yields on treasuries and bunds down -8 and -2 basis points respectively but up 2bps and 2.5bps on Friday. Friday not only had positive data but markets liked the comments from the Chinese Ministry of Commerce that they had achieved a “consensus in principle” on trade. Phone talks on Friday were also seen as “constructive” from both sides.
[This post is co-authored with Professor Seth Barrett Tillman]
The Foreign Emoluments Clause provides that “[N]o Person holding any Office of Profit or Trust under [the United States], shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” In a series of briefs and articles, we have explained that the phrase “Office of Profit or Trust under [the United States]” applies to appointed federal officers, but not to elected officials. Therefore, the Foreign Emoluments Clause does not forbid the President or members of Congress from accepting foreign government gifts and emoluments. Congressional consent is not a precondition to their accepting such things. By contrast, appointed officers need congressional consent before accepting foreign government gifts and emoluments. This understanding of the operation of the clause is consistent with the original practice of the government under Washington, his administration, and his successors in the early Republic who were Framers and founders, and their administrations.
When Congress has chosen to grant its consent, it has acted by statute: an instrument passed by both houses of Congress and presented to the President. Often, such congressional instruments—which were uniformly statutes—were frequently stylized or reported as resolutions, resolves, or joint resolutions. INS v. Chadha (1983) teaches that these resolutions, like any other statute however stylized, must comply with the requirements of bicameralism and presentment—that is, the resolutions must be approved by both houses of Congress and be presented to the President. The President can sign the resolution or veto the resolution. If he does neither, the resolution will go into effect by operation of law, or fail as a pocket veto if presented to the President 10 days prior to Congress’ adjournment.
However, Senator Blumenthal and other Democratic members of Congress articulated a different theory about congressional instruments that consent to foreign state gifts and emoluments. In a recent brief filed in Blumenthal v. Trump, the plaintiffs stated that the President plays no role when Congress, under the Foreign Emoluments Clause, grants consent to a covered officer’s accepting a foreign state gift or emolument.
The Framers’ decision to give Congress an ongoing procedural role in vetting foreign emoluments—an exclusive authority exercised without the President—was a deliberate one. Unlike the Foreign Emoluments Clause, some constitutional prohibitions give Congress no special role to play, e.g., U.S. Const. art. II, § 1, cl. 7 (Domestic Emoluments Clause), while others require only that certain acts be authorized “by Law,” e.g., id. art. I, § 9, cl. 7 (Appropriations Clause).
Plaintiffs’ Opposition Brief at 9–10 (D.C. Cir. Oct. 22, 2019) (emphasis added). The plaintiffs contend that a concurrent resolution would suffice to approve a foreign state gift or emolument. This sort of instrument is merely passed by both houses of Congress and is not separately presented to the President. Plaintiffs’ position is novel: such a concurrent resolution cannot have the force of law. Instead, the Constitution, under settled Supreme Court precedent, demands that Congress must use a bona fide statute, even if stylized as a so-called joint resolution.
It is not entirely clear why some bills are denominated a joint resolution and others an act of Congress. The latter term may be reserved for more important government actions and policies affecting the country and its people at large, including rules having permanent prospective effect (until amended), along with significant spending bills. The former term, however, tends to involve private members’ bills, small amounts of spending, and policies in effect for a limited amount of time or in only a part of the country. All of these joint resolutions (just like any other statute) are presented to the President.
As a general matter, where a constitutional provision calls for congressional action, the default position is that congress acts by law—bicameral action followed by presentment. This analysis does not turn on how the instrument is stylized: resolution or law. The Blumenthal plaintiffs argue that the Foreign Emoluments Clause is somehow different and that its “consent” language means that Congress can act by a mere concurrent resolution “without [presentment to] the President.”
The Blumenthal brief’s own appendices undermine the plaintiffs’ argument. The brief includes lengthy extracts from Statutes at Large. In these records, Congress consents to appointed officers’ accepting gifts from foreign states. But every such entry (as far as we can tell) in Statutes at Large appears to be a statute—albeit, some might be labelled a resolution. This particular nomenclature is not surprising for a foreign state gift, a lesser matter, having limited effect in regard to one person and one time. If even one of plaintiffs’ many examples illustrates Congress’ acting by a genuine concurrent resolution absent presentment to the President, the plaintiffs have not identified it as such. The corpus of American history and congressional practice cuts against Senator Blumenthal’s theory.
More importantly, plaintiffs’ argument conflicts with INS v. Chadha: a canonical separation-of-powers case. This decision identified six exceptions to the general rule of bicameralism and presentment. None involved the Foreign Emoluments Clause or its “consent” language. Indeed, even the dissenters in Chadha would not have embraced what plaintiffs argue for in Blumenthal. In Chadha, congressional action absent presentment was “authorized” by a prior procedurally proper federal statute. In Blumenthal, plaintiffs argue that Congress can act by a concurrent resolution absent presentment, and absent any prior authorizing statute. The Blumenthal plaintiffs’ position cannot be reconciled with Chadha: congressional action, however stylized, allowing the acceptance of foreign gifts and emoluments must be subjected to bicameralism and presentment.
The Blumenthal plaintiffs have argued that the Foreign Emoluments Clause applies to appointed officers as well as to elected officials like the President and members of Congress. But applying the Foreign Emoluments Clause to members of Congress runs afoul of the principle of unicameral autonomy. Generally, one house of Congress does not sit in judgment of another house or its members: each sets its own rules, and each judges its own members. Plaintiffs’ position, however, would allow each house to monitor members of the other house.
Additionally, Plaintiffs’ position creates other structural problems. For example, if a member of Congress were subject to the Foreign Emoluments Clause, then the President would have a role in allowing that member to accept a foreign state gift or emolument. Specifically, when Congress enacts a statue to authorize a specific member of Congress to accept a foreign state gift or emolument, then per Chadha, the President would have to sign that bill. Such a process puts members of Congress in the President’s pocket.
Finally, if the Foreign Emoluments Clause applies to the President, then perChadha, the President would play a role in approving his own acceptance of foreign state gifts. That is, the very congressional statute approving a foreign state gift would be presented to the President who seeks to accept that gift.
All these unsound results (and others) flow from plaintiffs’ reading of the Foreign Emoluments Clause. But these odd results disappear if the clause is understood as not applying to elected officials, but is instead given a limited scope: the scope consistent with actual practice during President Washington’s administration and that of his successors during the early Republic.
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[This post is co-authored with Professor Seth Barrett Tillman]
The Foreign Emoluments Clause provides that “[N]o Person holding any Office of Profit or Trust under [the United States], shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” In a series of briefs and articles, we have explained that the phrase “Office of Profit or Trust under [the United States]” applies to appointed federal officers, but not to elected officials. Therefore, the Foreign Emoluments Clause does not forbid the President or members of Congress from accepting foreign government gifts and emoluments. Congressional consent is not a precondition to their accepting such things. By contrast, appointed officers need congressional consent before accepting foreign government gifts and emoluments. This understanding of the operation of the clause is consistent with the original practice of the government under Washington, his administration, and his successors in the early Republic who were Framers and founders, and their administrations.
When Congress has chosen to grant its consent, it has acted by statute: an instrument passed by both houses of Congress and presented to the President. Often, such congressional instruments—which were uniformly statutes—were frequently stylized or reported as resolutions, resolves, or joint resolutions. INS v. Chadha (1983) teaches that these resolutions, like any other statute however stylized, must comply with the requirements of bicameralism and presentment—that is, the resolutions must be approved by both houses of Congress and be presented to the President. The President can sign the resolution or veto the resolution. If he does neither, the resolution will go into effect by operation of law, or fail as a pocket veto if presented to the President 10 days prior to Congress’ adjournment.
However, Senator Blumenthal and other Democratic members of Congress articulated a different theory about congressional instruments that consent to foreign state gifts and emoluments. In a recent brief filed in Blumenthal v. Trump, the plaintiffs stated that the President plays no role when Congress, under the Foreign Emoluments Clause, grants consent to a covered officer’s accepting a foreign state gift or emolument.
The Framers’ decision to give Congress an ongoing procedural role in vetting foreign emoluments—an exclusive authority exercised without the President—was a deliberate one. Unlike the Foreign Emoluments Clause, some constitutional prohibitions give Congress no special role to play, e.g., U.S. Const. art. II, § 1, cl. 7 (Domestic Emoluments Clause), while others require only that certain acts be authorized “by Law,” e.g., id. art. I, § 9, cl. 7 (Appropriations Clause).
Plaintiffs’ Opposition Brief at 9–10 (D.C. Cir. Oct. 22, 2019) (emphasis added). The plaintiffs contend that a concurrent resolution would suffice to approve a foreign state gift or emolument. This sort of instrument is merely passed by both houses of Congress and is not separately presented to the President. Plaintiffs’ position is novel: such a concurrent resolution cannot have the force of law. Instead, the Constitution, under settled Supreme Court precedent, demands that Congress must use a bona fide statute, even if stylized as a so-called joint resolution.
It is not entirely clear why some bills are denominated a joint resolution and others an act of Congress. The latter term may be reserved for more important government actions and policies affecting the country and its people at large, including rules having permanent prospective effect (until amended), along with significant spending bills. The former term, however, tends to involve private members’ bills, small amounts of spending, and policies in effect for a limited amount of time or in only a part of the country. All of these joint resolutions (just like any other statute) are presented to the President.
As a general matter, where a constitutional provision calls for congressional action, the default position is that congress acts by law—bicameral action followed by presentment. This analysis does not turn on how the instrument is stylized: resolution or law. The Blumenthal plaintiffs argue that the Foreign Emoluments Clause is somehow different and that its “consent” language means that Congress can act by a mere concurrent resolution “without [presentment to] the President.”
The Blumenthal brief’s own appendices undermine the plaintiffs’ argument. The brief includes lengthy extracts from Statutes at Large. In these records, Congress consents to appointed officers’ accepting gifts from foreign states. But every such entry (as far as we can tell) in Statutes at Large appears to be a statute—albeit, some might be labelled a resolution. This particular nomenclature is not surprising for a foreign state gift, a lesser matter, having limited effect in regard to one person and one time. If even one of plaintiffs’ many examples illustrates Congress’ acting by a genuine concurrent resolution absent presentment to the President, the plaintiffs have not identified it as such. The corpus of American history and congressional practice cuts against Senator Blumenthal’s theory.
More importantly, plaintiffs’ argument conflicts with INS v. Chadha: a canonical separation-of-powers case. This decision identified six exceptions to the general rule of bicameralism and presentment. None involved the Foreign Emoluments Clause or its “consent” language. Indeed, even the dissenters in Chadha would not have embraced what plaintiffs argue for in Blumenthal. In Chadha, congressional action absent presentment was “authorized” by a prior procedurally proper federal statute. In Blumenthal, plaintiffs argue that Congress can act by a concurrent resolution absent presentment, and absent any prior authorizing statute. The Blumenthal plaintiffs’ position cannot be reconciled with Chadha: congressional action, however stylized, allowing the acceptance of foreign gifts and emoluments must be subjected to bicameralism and presentment.
The Blumenthal plaintiffs have argued that the Foreign Emoluments Clause applies to appointed officers as well as to elected officials like the President and members of Congress. But applying the Foreign Emoluments Clause to members of Congress runs afoul of the principle of unicameral autonomy. Generally, one house of Congress does not sit in judgment of another house or its members: each sets its own rules, and each judges its own members. Plaintiffs’ position, however, would allow each house to monitor members of the other house.
Additionally, Plaintiffs’ position creates other structural problems. For example, if a member of Congress were subject to the Foreign Emoluments Clause, then the President would have a role in allowing that member to accept a foreign state gift or emolument. Specifically, when Congress enacts a statue to authorize a specific member of Congress to accept a foreign state gift or emolument, then per Chadha, the President would have to sign that bill. Such a process puts members of Congress in the President’s pocket.
Finally, if the Foreign Emoluments Clause applies to the President, then perChadha, the President would play a role in approving his own acceptance of foreign state gifts. That is, the very congressional statute approving a foreign state gift would be presented to the President who seeks to accept that gift.
All these unsound results (and others) flow from plaintiffs’ reading of the Foreign Emoluments Clause. But these odd results disappear if the clause is understood as not applying to elected officials, but is instead given a limited scope: the scope consistent with actual practice during President Washington’s administration and that of his successors during the early Republic.
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Ross Meets With Top Chinese Official As Mid-Level Trade Talks Spark More “Optimism”
Perhaps to help quash rumors that they’re not taking the trade talks seriously, the Chinese leadership (according to President Trump) recently offered Trump an important concession to help facilitate the trade talks: They allegedly agreed to hold the next round of high-level talks on American soil (perhaps Mar-a-Lago or even President Trump’s Doral golf club might be floated as locations).
But in the mean time, scattered talks, over the phone and in person, have continued. But in a sign that the president might be growing tired of his top trade negotiators and surrogates, Trump reportedly dispatched a “downgraded” delegation led by US Commerce Secretary Wilbur Ross and National Security Adviser Robert O’Brien to meet Chinese Premier Li Keqiang Monday afternoon at the 10-member Association of Southeast Asian Nations in Bangkok, according to a Bloomberg report. The meeting took place hours after Ross, who was sidelined early on during the trade talks reportedly because Trump felt he had mishandled early negotiations, tried his hand at jawboning and told a meeting of business leaders that the US was “very far along” with “Phase One” of the trade deal with China.
Then, in an interview with Bloomberg on Sunday, Ross “expressed optimism” about the prospects for talks with China this month before working on additional phases. He also said licenses would be coming “very shortly” for US firms to sell components to Huawei, an issue that has, so far, stuck in China’s craw.
To be sure, President Trump has been promising to issue waivers for Huawei, which wound up on a Commerce Department blacklist earlier this year prohibiting US firms from selling critical components.
Trump and Vice Premier Liu He insisted that “Phase 1” was pretty much finished, Ross offered a more “nuanced” take…insisting that the continuing talks on “Phase 1” are merely Washington doing its due diligence, and nothing more (he also seems to have left out “Florida” from the list of possible locations for the next round of top-level talks).
Ross called the Phase One agreement “particularly complicated” and said the US was “making sure that each side has a very correct and clear, detailed understanding of what each side has agreed to.” Iowa, Alaska, Hawaii and locations in China were all possible places for Trump and President Xi Jinping to sign the deal after the cancellation of this month’s Asia-Pacific Economic Cooperation summit in Chile.
“We’re in good shape, we’re making good progress, and there’s no natural reason why it couldn’t be,” Ross said. “But whether it will slip a little bit, who knows. It’s always possible.”
During his appearance on Monday, Ross reportedly insisted that the White House remained “fully committed” to the Indo-Pacific region, as Trump’s absence and “America First” policies that recently inspired the pullout from Syria have seemingly shaken the faith of other US allies around the world.
But most importantly, at least as far as the fate of the talks is concerned, Ross reportedly remained “non-commital” about the possibility of the administration cancelling the next round of planned tariff hikes in December. Ross said it will depend on Chinese legislation and an enforcement mechanism.
Trump agreed to cancel a round of tariffs set for October just days before they were set to take effect last month. The bigger test this time around will be whether the US can get the ‘partial’ trade deal that Trump once loathed down on paper before mid-December.
Meanwhile, the US-China deal wasn’t the only trade deal being discussed in Bangkok…
Asian leaders were separately expected to announce a breakthrough on another trade pact, the China-backed Regional Comprehensive Economic Partnership, at the end of the meetings. It remained uncertain whether the pact would include India, which jeopardized it with last-minute requests.
Ross in the interview downplayed the significance of RCEP, which would lower tariffs in an area that represents roughly a third of the global economy, and defended U.S. engagement in Asia after Trump skipped the Asean meetings for a second straight year.
Contentious issues remain and the terms aren’t yet known, but RCEP would at least partly fill a trade gap left by Trump’s 2017 withdrawal from the Trans-Pacific Partnership. Southeast Asia collectively has the world’s fifth largest economy and has struggled to wade through the economic fallout of U.S.-China trade tensions.
The message is clear: Beijing isn’t waiting around for Washington to make up its mind.
On April 16, 2019, an armed band of vigilantes calling themselves the United Constitutional Patriots “detained” at least 200 men, women, and children in New Mexico, then called in the Border Patrol to collect the captives. I put detained in quotation marks because most of the kneeling migrants being held at gunpoint were probably planning to present themselves to the authorities at the first opportunity anyway. They were here to seek asylum, after all. But in footage posted online, the gunslingers speak like they’ve seized an invading army. “We just got a note that a couple of kids are picking up rocks,” a woman holding a camera declares as the feds lead some migrants away. “So be careful.”
If you remember the days when George W. Bush was president, that story may have given you a gust of déjà vu. Several civilian border patrols cropped up back then too, most famously the Minutemen. These weren’t the first paramilitary groups to go hunting for unauthorized border crossers—that had been happening for decades—but the Bush years were a boom time for the practice.
That, in turn, was part of a larger pattern. When Bill Clinton was in the Oval Office, the social space that would later be filled by the immigrant-fearing Minuteman movement was filled instead by the government-fearing militia movement. When Barack Obama became president, the Minutemen fell into factionalism and ’90s-style militias began to grow again. Donald Trump’s reign has seen a new surge of border patrols by nativist vigilantes. What do these shifts mean?
The easy reply is that this is just a matter of which party occupies the White House: Camo-clad right-wing populists are more likely to be afraid of a Democratic president than a Republican one, so they turn their guns outward rather than upward when the GOP is in power.
There is truth to that, but it doesn’t explain everything. The Minutemen weren’t exactly fans of George W. Bush. (Some of them disliked his immigration policies so much that they called for his impeachment.) And while the border paramilitaries have been re-emerging during the Trump years, the conventional militias—and the broader “patriot” movement of which they’re a part—haven’t dropped out of view. So what else has been going on?
For one thing, there’s 9/11. The Bush-era border groups emerged for many reasons, but it’s no coincidence that they took off after the attacks of September 11, 2001. Sometimes you can draw that line directly.
Consider Chris Simcox, one of the founding fathers of the Minutemen. After 9/11, he quit his job as a kindergarten teacher and tried to enlist in the military. He was told he was too old. Then he tried to join the Border Patrol. It rejected him too. After an interlude as an O.K. Corral re-enactor at a Tombstone tourist stop, he started patrolling the Arizona border. We may see Simcox “as someone wanting to circumvent the state,” Harel Shapira recounts in his 2013 book Waiting for José: The Minutemen’s Pursuit of America, yet “his first inclination was to join the state.”
This wasn’t a ’90s-style story of a man radicalized by the feds’ lethal decisions in Waco or Ruby Ridge. The event that inspired Simcox, and many like him, was an attack on the American homeland. The Clinton-era militias were a product of the post–Cold War moment, a time when an external threat was suddenly yanked from the psychic landscape and many Americans started shifting their suspicions toward Washington. The Minutemen emerged at a moment when the nation was on alert for outside enemies again.
The revival of the ’90s-style militias coincided with a switch from a Republican administration back to a Democratic one. But it also came when a failed war and a financial crisis were restoking mistrust of American elites. That distrust affected the right as well as the left, particularly among the sorts of folks who are more likely to get politically involved by joining a militia than by joining a get-out-the-vote drive.
But the fear of the enemy outside persisted alongside the fear of the enemy above. It even intermingled with it. One of the most popular conspiracy theories of the era, after all, claimed that the president of the United States was secretly a foreigner. A man closely associated with that story is now himself the president of the United States. And as Trump intensifies Washington’s immigration crackdown—which itself has been building since 9/11—the paramilitary border bands have been growing more visible too.
The “patriot” milieu was being pulled in different directions even before Trump took office, going back at least as far as the Ferguson riots of 2014. On one side, there are people who resent federal law enforcement but aren’t eager to tie local authorities’ hands. On the other side, a relatively libertarian element extends its critiques to the local police.
That was further complicated by the sort of drift that often besets movements over time. The Oath Keepers, founded in 2009, is a group of current and former cops and soldiers who initially attracted attention with a pledge to defy liberty-infringing unconstitutional orders. But the group has evolved in sometimes curious ways over the last half-decade. Lately it has spent a lot of time providing security at right-wing rallies.
Two more factors muddle the picture even more. One is the white nationalists of the alt-right, who sometimes draw on the same pool of potential recruits as the militias, though relations between the two movements are frequently frosty. The other consists of the armed “counter-recruitment” organizations that imitate the militias’ iconography while advocating leftist (usually anarchist) politics.
The latter include Redneck Revolt (which also does security work at rallies, but on the antifa side), the John Brown Gun Club, and the polar opposite of the DIY border patrols: Land and Liberty, a group whose Facebook feed intersperses denunciations of the immigration crackdown with attacks on gun control and the surveillance state. Instead of celebrating the border vigilantes, it celebrates the civilians who do migrant rescue and relief work.
And if you check in on the militias based in places like the Midwest, far from the Mexican border, the immigration issue often just isn’t a major concern for them. “Some of the traditional militia groups didn’t even really talk about” the civilian border patrols, says Amy Cooter, a Vanderbilt sociologist who has done extensive fieldwork in the movement. “Or if they did, it was just sort of as an example of what good outstanding citizens should be doing to stop crime.”
Some other elements of the patriot movement, such as the 3 Percenters, have been more enthusiastic about the civilian patrols. (Some of these organizations don’t, in Cooter’s view, properly qualify as militias, since they don’t regularly meet to train with firearms.) Few in the movement are prone to Land and Liberty–style denunciations of the border branch of the security state, even though it’s been engaged in the very activities—mass surveillance, internment camps, Fourth Amendment–shredding checkpoints—that the militias repeatedly decried in the ’90s.
But there are exceptions. Most famously, Ammon Bundy, leader of the 2016 occupation of the Malheur National Wildlife Refuge in rural Oregon, has criticized the crackdown, put out a call to sponsor refugee families, and suggested that Trump might be playing up the alleged threat posed by the migrant caravans in order to justify the militarization of the border and the construction of a wall.
“I can’t believe some of the people that just want to go down to the border and just wipe these people out,” Bundy said in a 2018 Facebook video. “We’re talking about militia groups, we’re talking about people that actually profess to be Christian, who want to go out and just wipe ’em out….Do you not realize that thousands and thousands of immigrants come into this country a year, and the majority of them are actually benefiting our country greatly?” Anti-racist militiamen often make a point of contrasting their “civic nationalism” with white nationalism. Bundy went further, declaring that nationalism itself “is dangerous.”
Bundy received some support from his fans after the video appeared, but he faced fierce backlash too. A few people even accused him of being paid off by a globalist conspiracy. That shouldn’t be a surprise. A movement’s suspicions don’t just flow outward or upward, after all; sometimes they double back on the movement itself.
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On April 16, 2019, an armed band of vigilantes calling themselves the United Constitutional Patriots “detained” at least 200 men, women, and children in New Mexico, then called in the Border Patrol to collect the captives. I put detained in quotation marks because most of the kneeling migrants being held at gunpoint were probably planning to present themselves to the authorities at the first opportunity anyway. They were here to seek asylum, after all. But in footage posted online, the gunslingers speak like they’ve seized an invading army. “We just got a note that a couple of kids are picking up rocks,” a woman holding a camera declares as the feds lead some migrants away. “So be careful.”
If you remember the days when George W. Bush was president, that story may have given you a gust of déjà vu. Several civilian border patrols cropped up back then too, most famously the Minutemen. These weren’t the first paramilitary groups to go hunting for unauthorized border crossers—that had been happening for decades—but the Bush years were a boom time for the practice.
That, in turn, was part of a larger pattern. When Bill Clinton was in the Oval Office, the social space that would later be filled by the immigrant-fearing Minuteman movement was filled instead by the government-fearing militia movement. When Barack Obama became president, the Minutemen fell into factionalism and ’90s-style militias began to grow again. Donald Trump’s reign has seen a new surge of border patrols by nativist vigilantes. What do these shifts mean?
The easy reply is that this is just a matter of which party occupies the White House: Camo-clad right-wing populists are more likely to be afraid of a Democratic president than a Republican one, so they turn their guns outward rather than upward when the GOP is in power.
There is truth to that, but it doesn’t explain everything. The Minutemen weren’t exactly fans of George W. Bush. (Some of them disliked his immigration policies so much that they called for his impeachment.) And while the border paramilitaries have been re-emerging during the Trump years, the conventional militias—and the broader “patriot” movement of which they’re a part—haven’t dropped out of view. So what else has been going on?
For one thing, there’s 9/11. The Bush-era border groups emerged for many reasons, but it’s no coincidence that they took off after the attacks of September 11, 2001. Sometimes you can draw that line directly.
Consider Chris Simcox, one of the founding fathers of the Minutemen. After 9/11, he quit his job as a kindergarten teacher and tried to enlist in the military. He was told he was too old. Then he tried to join the Border Patrol. It rejected him too. After an interlude as an O.K. Corral re-enactor at a Tombstone tourist stop, he started patrolling the Arizona border. We may see Simcox “as someone wanting to circumvent the state,” Harel Shapira recounts in his 2013 book Waiting for José: The Minutemen’s Pursuit of America, yet “his first inclination was to join the state.”
This wasn’t a ’90s-style story of a man radicalized by the feds’ lethal decisions in Waco or Ruby Ridge. The event that inspired Simcox, and many like him, was an attack on the American homeland. The Clinton-era militias were a product of the post–Cold War moment, a time when an external threat was suddenly yanked from the psychic landscape and many Americans started shifting their suspicions toward Washington. The Minutemen emerged at a moment when the nation was on alert for outside enemies again.
The revival of the ’90s-style militias coincided with a switch from a Republican administration back to a Democratic one. But it also came when a failed war and a financial crisis were restoking mistrust of American elites. That distrust affected the right as well as the left, particularly among the sorts of folks who are more likely to get politically involved by joining a militia than by joining a get-out-the-vote drive.
But the fear of the enemy outside persisted alongside the fear of the enemy above. It even intermingled with it. One of the most popular conspiracy theories of the era, after all, claimed that the president of the United States was secretly a foreigner. A man closely associated with that story is now himself the president of the United States. And as Trump intensifies Washington’s immigration crackdown—which itself has been building since 9/11—the paramilitary border bands have been growing more visible too.
The “patriot” milieu was being pulled in different directions even before Trump took office, going back at least as far as the Ferguson riots of 2014. On one side, there are people who resent federal law enforcement but aren’t eager to tie local authorities’ hands. On the other side, a relatively libertarian element extends its critiques to the local police.
That was further complicated by the sort of drift that often besets movements over time. The Oath Keepers, founded in 2009, is a group of current and former cops and soldiers who initially attracted attention with a pledge to defy liberty-infringing unconstitutional orders. But the group has evolved in sometimes curious ways over the last half-decade. Lately it has spent a lot of time providing security at right-wing rallies.
Two more factors muddle the picture even more. One is the white nationalists of the alt-right, who sometimes draw on the same pool of potential recruits as the militias, though relations between the two movements are frequently frosty. The other consists of the armed “counter-recruitment” organizations that imitate the militias’ iconography while advocating leftist (usually anarchist) politics.
The latter include Redneck Revolt (which also does security work at rallies, but on the antifa side), the John Brown Gun Club, and the polar opposite of the DIY border patrols: Land and Liberty, a group whose Facebook feed intersperses denunciations of the immigration crackdown with attacks on gun control and the surveillance state. Instead of celebrating the border vigilantes, it celebrates the civilians who do migrant rescue and relief work.
And if you check in on the militias based in places like the Midwest, far from the Mexican border, the immigration issue often just isn’t a major concern for them. “Some of the traditional militia groups didn’t even really talk about” the civilian border patrols, says Amy Cooter, a Vanderbilt sociologist who has done extensive fieldwork in the movement. “Or if they did, it was just sort of as an example of what good outstanding citizens should be doing to stop crime.”
Some other elements of the patriot movement, such as the 3 Percenters, have been more enthusiastic about the civilian patrols. (Some of these organizations don’t, in Cooter’s view, properly qualify as militias, since they don’t regularly meet to train with firearms.) Few in the movement are prone to Land and Liberty–style denunciations of the border branch of the security state, even though it’s been engaged in the very activities—mass surveillance, internment camps, Fourth Amendment–shredding checkpoints—that the militias repeatedly decried in the ’90s.
But there are exceptions. Most famously, Ammon Bundy, leader of the 2016 occupation of the Malheur National Wildlife Refuge in rural Oregon, has criticized the crackdown, put out a call to sponsor refugee families, and suggested that Trump might be playing up the alleged threat posed by the migrant caravans in order to justify the militarization of the border and the construction of a wall.
“I can’t believe some of the people that just want to go down to the border and just wipe these people out,” Bundy said in a 2018 Facebook video. “We’re talking about militia groups, we’re talking about people that actually profess to be Christian, who want to go out and just wipe ’em out….Do you not realize that thousands and thousands of immigrants come into this country a year, and the majority of them are actually benefiting our country greatly?” Anti-racist militiamen often make a point of contrasting their “civic nationalism” with white nationalism. Bundy went further, declaring that nationalism itself “is dangerous.”
Bundy received some support from his fans after the video appeared, but he faced fierce backlash too. A few people even accused him of being paid off by a globalist conspiracy. That shouldn’t be a surprise. A movement’s suspicions don’t just flow outward or upward, after all; sometimes they double back on the movement itself.
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