Month: March 2020

She Said He Said He Saw Demons. Then He Had to Give Up His Guns.

The allegations against Kevin Morgan were alarming. They described just the sort of circumstances that Florida legislators had in mind when they approved that state’s “red flag” law in 2018, three weeks after the mass shooting at Marjory Stoneman Douglas High School in Parkland.

Morgan’s estranged wife, Joanie, claimed he was depressed, suicidal, and obsessed with the apocalypse, which he thought was imminent. She said he was stockpiling food, gold, guns, and ammunition in anticipation of the end times; that he talked about seeing, hearing, and wrestling with demons; and that he had performed a ritual that involved rubbing “oils” on their children and the walls of their house. She reported that he was abusing the drugs he had been prescribed for chronic pain, had talked about dismembering his former wife, had intimated he would do the same to her if she ever disrespected him, and had threatened to kill her with succinylcholine, a paralytic agent used during surgery and intubation.

On the strength of such claims, Joanie Morgan obtained a temporary domestic violence protection injunction, an involuntary psychiatric evaluation order under the Florida Mental Health Act (a.k.a. the Baker Act), and a temporary “risk protection order” under the red flag law, which authorizes the suspension of a person’s Second Amendment rights when he is deemed a threat to himself or others. All three were ex parte orders, meaning they were issued without giving Kevin Morgan a chance to rebut the allegations against him.

But when it was time for a judge to decide whether the initial gun confiscation order, which was limited to 14 days, should be extended for a year, Morgan got a hearing, and the lurid picture painted by his wife disintegrated. By the end of the hearing, in an extraordinary turn of events unlike anything you are apt to see in a courtroom drama, the lawyer representing the Citrus County Sheriff’s Office, which was seeking the final order, conceded that he had not met the law’s evidentiary standard, and the judge agreed.

This bizarre case vividly illustrates why legal representation and meaningful judicial review are necessary to protect gun owners from unsubstantiated complaints under red flag laws, which 17 states and the District of Columbia have enacted. But it also shows that police and prosecutors, who in Florida are the only parties authorized to file red flag petitions, are not necessarily diligent about investigating allegations by people who may have an ax to grind. That problem is especially serious in the states that allow petitions by broad categories of individuals whose accounts may be colored by personal animus, including current or former spouses, lovers, and housemates as well as in-laws and close or distant blood relatives. Without adequate safeguards, respondents can lose their constitutional rights based on little more than an aggrieved individual’s unverified assertions.

‘It Wasn’t Him That Had Gone to the House’

Circuit Judge Peter Brigham

Circuit Judge Peter Brigham issued the ex parte risk protection order against Morgan on September 18, 2018, six months after Florida’s red flag law took effect, in response to a petition by Rachel Montgomery, a detective with the Citrus County Sheriff’s Office. It was the first time the sheriff’s office had used the law.

In the affidavit supporting her petition, Montgomery said she responded to a complaint from Joanie Morgan alleging that her husband had violated the temporary domestic violence protection injunction by returning to the house in Citrus Springs they used to share and retrieving clothing, medications, “several firearms,” and his Ford Mustang. Montgomery paraphrased the claims Joanie Morgan had made in her petitions for the injunction and the Baker Act examination: that “the respondent has had a decline in mental stability over the last four months” and “has displayed irratic [sic] behaviors to include making threats to dismember a former paramour and threats to kill his entire family while yielding [sic] a vial containing a paralytic agent.” She added that “the respondent has purchased several firearms and ammunition during this time period.”

At this point, Montgomery later testified, she had done no investigation beyond talking to Joanie Morgan and reading her petitions. Montgomery said she subsequently discovered there was no basis for the claim that Kevin Morgan had violated the injunction by visiting the house. “I determined that it wasn’t him that had gone to the house,” she said. “It was actually a pool maintenance worker that had been by the house.” Furthermore, “the firearms had been transferred prior to his risk protection order” in response to the domestic violence injunction, meaning there were no guns for Morgan to retrieve from the house.

Montgomery did read the Baker Act petition that led to Morgan’s court-ordered psychiatric evaluation, but she did not mention the outcome of that evaluation. On September 13, 2018, police handcuffed Morgan and took him to The Centers, a mental health facility in Ocala, where he spent the night. The next day, a psychiatrist determined that he did not meet the law’s criteria for involuntary treatment. A discharge form dated September 14, 2018, described Morgan as “alert and oriented” and “calm and cooperative.” It explained that “Kevin was evaluated by the psychiatrist and it was determined that Kevin does not present as a danger to himself or others.”

Yet here was Montgomery, four days later, asserting that there was “reasonable cause to believe” Morgan “poses a significant danger of causing personal injury” to himself or others “in the near future.” Judge Brigham agreed, and there was no reason to think he wouldn’t. Statewide data indicate that Florida judges always grant petitions for ex parte risk protection orders.

A follow-up mental health report from The Centers, written two days after Brigham approved the temporary risk protection order, described Morgan’s appearance as “appropriate,” his behavior as “compliant,” his mood as “stable,” his thought process as “organized,” and his judgment and impulse control as “good.” Based on prescription records and a drug screen, Stefanie Glover, a licensed mental health counselor at The Centers, reported that Morgan was “displaying no drug abuse.” She also said Morgan “did not display any signs or symptoms of paranoia, psychosis or delusions.” In the “trauma” section of the form, Glover typed: “Client is being mentally and emotionally abused by his wife. Client stated that he filed for a divorce on Monday September 17th, 2018.”

Glover’s conclusions about Morgan jibed with an August 29, 2018, letter from his personal physician, Ulhaus Deven. “He has shown no sign of abusing the opioids prescribed to him,” Deven wrote. “He has not had any indication of depression or suicidal ideation.”

‘This Puts Us in an Awkward Situation’

On September 28, 2018, 10 days after Brigham issued the temporary risk protection order, he held a hearing to determine whether there was “clear and convincing evidence” that Morgan  posed “a significant danger” to himself or others. That is Florida’s standard for issuing a final risk protection order, which lasts up to a year and can be renewed for another year.

At the hearing, the sheriff’s office was represented by its lawyer, Robert Batsel, while Morgan was represented by Crystal River attorney J. Michael Blackstone. I listened to the official audio recording of the hearing, which lasted about two hours and 20 minutes. It included testimony by Kevin Morgan, Joanie Morgan, and her mother as well as Detective Montgomery.

In addition to refuting the claim that Kevin Morgan had violated the domestic violence injunction, Montgomery described him as “very calm” when he was taken into custody for the Baker Act examination. Responding to questions from Blackstone, she said Morgan was polite and cooperative, neither raising his voice nor behaving erratically, and seemed to be in control of his faculties.

Joanie Morgan’s testimony was tearful, highly emotional, scattered, and frequently vague. She reiterated her earlier allegations and added a few more. But when Blackstone asked whether she had any evidence to corroborate what she claimed her husband had said and done, she admitted that she did not.

There were no witnesses to confirm his alleged threats and no photographs of oil on the walls, of the hypodermic needles he allegedly had stashed away to inject the succinylcholine, or of the food, gold, weapons, and ammunition he allegedly had accumulated in preparation for the end times. Nor had police ever visited the house to confirm any of those details. Blackstone also noted that, despite Joanie Morgan’s portrait of her husband as dangerously deranged, she was planning to build a new house with him on property they had purchased together in April 2018, and she had left her children overnight with him that August, in the midst of his supposed breakdown, to attend a conference in Tampa.

Joanie Morgan’s mother, Susan Harper-Clements, tried to back up her daughter’s portrayal of Kevin Morgan as dangerous, but the evidence she offered fell notably short. For example, she mentioned “conversations” after the 2017 mass shooting in Las Vegas. “Kevin had told me that the NRA…was all into this gun thing and that you couldn’t even buy the bullets you wanted, because people were stockpiling,” she said. “And he said, ‘When they’re all through with this, you won’t be able to buy guns and ammunition.'” On cross-examination, Blackstone noted that such comments hardly proved homicidal intent. “He has never threatened anyone in your presence, has he?” he asked. “No,” Harper-Clements replied.

Kevin Morgan’s demeanor at the hearing was as Montgomery and the staff at The Centers had described it: calm, polite, and cooperative. He denied seeing demons, making threats, or obsessing about the apocalypse. He denied that he had recently been stockpiling guns, saying he had acquired his collection of roughly 40 rifles and handguns over the course of more than two decades. The only guns he had acquired recently, he said, were three black-powder pistols he had bought the previous spring and summer—antique replicas ill-suited for the end times.

What about the mostly empty vial of succinylcholine that his wife had presented to sheriff’s deputies as evidence of Morgan’s deadly designs? Morgan recalled that his wife, a nurse who had worked at two local hospitals, had once accidentally brought home just such a vial, saying she had put it in her lab coat pocket after participating in the treatment of a patient who had suffered a cardiac arrest. Morgan, who also has a nursing degree, had managed the emergency room at one of those hospitals, but he left that job in January 2015 because of a disability caused by spinal stenosis. After that, he no longer had access to drugs such as succinylcholine. Given the expiration date on the vial that his wife gave to police, Morgan said, it was clear he could not have been the person who had obtained it.

After the last witness testified, Blackstone asked Brigham to deny the petition by the sheriff’s office. “The testimony, frankly, does not make any sense,” he said. “There’s no objective evidence for the court to base a ruling on. There’s been ample opportunity. The police could have gone and looked at the inside of the house and verified that there were gold coins or gold bullion or oil on the walls or anything else. We basically only have the word of a woman that’s in the early parts of a divorce. Most of the testimony has already been contradicted by Mr. Morgan. It’s unpersuasive under any circumstances, and the standard is ‘clear and convincing.’ With all due respect to Mr. Batsel, who I think a lot of, I don’t think he’s carried that burden. At best, it’s a swearing match.”

At this point, Batsel got up and admitted that Blackstone was right. “I’ve conferred with my client,” he said, and “they won’t object to me tending to agree. This puts us in an awkward situation. The sheriff’s office is coming into this with all the best intentions…The legislature has put us in a bit of a box, and that’s OK; we’re going to figure it out. But in a ‘he said, she said,’ where the evidence, I frankly will agree, does not meet ‘clear and convincing,’ we don’t want to waste the court’s time.”

Blackstone thanked Batsel for his candor. “I can’t tell Mr. Batsel how much I appreciate, in the world today, somebody standing up and just accepting what the facts are,” he said. He also thanked the sheriff’s office. “I think we’re all learning as we go,” he said. “It’s a new statute. It’s going to put huge burdens on everybody.”

Brigham ratified the agreement between both sides that the sheriff’s office had failed to make its case. “I don’t think I’ve heard clear and convincing evidence,” he said. “I found Mr. Morgan’s testimony to be credible.” Explaining his decision in an order he issued later that day, he said, “The issue came down to a credibility determination between the respondent and his current wife. The court found the respondent credible and that the petition was not proved by clear and convincing evidence. [Regarding] the only piece of physical evidence, a vial of drugs, [it] was never clearly, or convincingly, explained from whence it came.”

‘You Have to Go in and Prove That You’re Not Guilty’

Blackstone, who supports red flag laws in principle, thinks Florida’s statute worked as intended in this case. “I thought you had a well-intentioned police officer who sat on the stand and told the truth,” he says. “I thought you had an exceptionally well-intentioned and competent attorney for the Citrus County Sheriff’s Office who did a fabulous job. I thought I did a competent job in representing Kevin, and I thought that the law worked the way it was supposed to.”

At the same time, Blackstone recognizes that it’s important to have a lawyer in situations like this. “It’s always dangerous to go into court without a lawyer,” he notes. Without “competent counsel,” he says, this case “might have turned out the same way,” but “it might have turned out entirely different.”

Florida, like nearly all of the states with red flag laws, does not provide court-appointed counsel for respondents. Colorado is the only state that guarantees a right to counsel for respondents who can’t afford a lawyer or choose not to hire one.

Kevin Morgan

Morgan says the red flag case cost him about $1,500, on top of the legal fees and extra living expenses he incurred as a result of his other legal battles with his wife. “I had about $13,000 or $14,000 in savings, and by the time all this was done, I had nothing,” he says. “I was lucky to have a lawyer. I was lucky to be able to afford it.”

Morgan’s take on Florida’s red flag law is less sanguine than Blackstone’s. The law ostensibly puts the burden of proof on the agency seeking an order. But in practice, Morgan says, “you have to go in and prove that you’re not guilty.”

The automatic issuance of ex parte orders means that when a respondent gets his day in court, the playing field is slanted sharply against him. The judge is deciding whether to maintain the presumptively protective status quo or change course and give the respondent legal access to guns he might use to kill himself or someone else. That prospect tends to loom larger than the possibility that a respondent who does not really pose a threat will unfairly but temporarily lose his Second Amendment rights. Those dynamics help explain why judges in Florida issue final orders about 95 percent of the time.

Morgan’s case nevertheless shows that the standard of proof matters. In the end, both parties and the judge agreed that the sheriff’s office had not presented clear and convincing evidence. While that is the standard in most states with red flag laws, four states and the District of Columbia require only proof by “a preponderance of the evidence,” meaning any probability greater than 50 percent. When laws combine a low standard of proof with undefined terms such as “a significant risk,” “a significant danger,” or “a risk of danger,” the respondent does not have much chance of prevailing.

Another safeguard is requiring that petitions be filed by police or prosecutors, as Florida does. While anyone who knows a potentially dangerous person can still share his concerns with the authorities, police are supposed to act on those concerns only when they consider them well-grounded. The idea is to have dispassionate officials evaluate complaints from people who may have personal biases. But that goal is defeated if police simply record and pass along allegations by aggrieved parties.

Even allowing for Citrus County’s inexperience with the red flag law at the time it sought the orders against Morgan, one has to ask why a law enforcement agency would go to court with a case so weak that its own attorney ended up throwing in the towel at the end of the hearing. Police should not seek ex parte orders without evidence of an imminent threat, and they should not seek final orders unless they are confident they can meet the law’s requirements. Such caution is especially important when judges can be expected to rubber-stamp ex parte orders and approve nearly all of the final orders police request.

The possible cost of deciding not to seek or issue an order—a preventable suicide or homicide—has to be weighed against the certain cost of suspending someone’s constitutional rights. Police should conduct a thorough investigation before trying to do that. In this case, easily discoverable facts—including Morgan’s supposed hypodermic needles and end times stockpile, the whereabouts of his guns prior to the temporary risk protection order, and the provenance of the succinylcholine—were either not clarified until the hearing or remained unresolved even then.

The sheriff’s office “jumped into a civil action without completing a proper investigation,” Morgan says. “I don’t think the average person understands just how dangerous these laws are. Hopefully, if my story can get out, folks will see how easily [red flag laws] can be used against someone for revenge or to get an upper hand in [a custody dispute]. I want people to know how these laws can be used improperly, in the hope that some reforms will take place. We need protection for falsely accused individuals and stiff punishment for those who abuse the system.”

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She Said He Said He Saw Demons. Then He Had to Give Up His Guns.

The allegations against Kevin Morgan were alarming. They described just the sort of circumstances that Florida legislators had in mind when they approved that state’s “red flag” law in 2018, three weeks after the mass shooting at Marjory Stoneman Douglas High School in Parkland.

Morgan’s estranged wife, Joanie, claimed he was depressed, suicidal, and obsessed with the apocalypse, which he thought was imminent. She said he was stockpiling food, gold, guns, and ammunition in anticipation of the end times; that he talked about seeing, hearing, and wrestling with demons; and that he had performed a ritual that involved rubbing “oils” on their children and the walls of their house. She reported that he was abusing the drugs he had been prescribed for chronic pain, had talked about dismembering his former wife, had intimated he would do the same to her if she ever disrespected him, and had threatened to kill her with succinylcholine, a paralytic agent used during surgery and intubation.

On the strength of such claims, Joanie Morgan obtained a temporary domestic violence protection injunction, an involuntary psychiatric evaluation order under the Florida Mental Health Act (a.k.a. the Baker Act), and a temporary “risk protection order” under the red flag law, which authorizes the suspension of a person’s Second Amendment rights when he is deemed a threat to himself or others. All three were ex parte orders, meaning they were issued without giving Kevin Morgan a chance to rebut the allegations against him.

But when it was time for a judge to decide whether the initial gun confiscation order, which was limited to 14 days, should be extended for a year, Morgan got a hearing, and the lurid picture painted by his wife disintegrated. By the end of the hearing, in an extraordinary turn of events unlike anything you are apt to see in a courtroom drama, the lawyer representing the Citrus County Sheriff’s Office, which was seeking the final order, conceded that he had not met the law’s evidentiary standard, and the judge agreed.

This bizarre case vividly illustrates why legal representation and meaningful judicial review are necessary to protect gun owners from unsubstantiated complaints under red flag laws, which 17 states and the District of Columbia have enacted. But it also shows that police and prosecutors, who in Florida are the only parties authorized to file red flag petitions, are not necessarily diligent about investigating allegations by people who may have an ax to grind. That problem is especially serious in the states that allow petitions by broad categories of individuals whose accounts may be colored by personal animus, including current or former spouses, lovers, and housemates as well as in-laws and close or distant blood relatives. Without adequate safeguards, respondents can lose their constitutional rights based on little more than an aggrieved individual’s unverified assertions.

‘It Wasn’t Him That Had Gone to the House’

Circuit Judge Peter Brigham

Circuit Judge Peter Brigham issued the ex parte risk protection order against Morgan on September 18, 2018, six months after Florida’s red flag law took effect, in response to a petition by Rachel Montgomery, a detective with the Citrus County Sheriff’s Office. It was the first time the sheriff’s office had used the law.

In the affidavit supporting her petition, Montgomery said she responded to a complaint from Joanie Morgan alleging that her husband had violated the temporary domestic violence protection injunction by returning to the house in Citrus Springs they used to share and retrieving clothing, medications, “several firearms,” and his Ford Mustang. Montgomery paraphrased the claims Joanie Morgan had made in her petitions for the injunction and the Baker Act examination: that “the respondent has had a decline in mental stability over the last four months” and “has displayed irratic [sic] behaviors to include making threats to dismember a former paramour and threats to kill his entire family while yielding [sic] a vial containing a paralytic agent.” She added that “the respondent has purchased several firearms and ammunition during this time period.”

At this point, Montgomery later testified, she had done no investigation beyond talking to Joanie Morgan and reading her petitions. Montgomery said she subsequently discovered there was no basis for the claim that Kevin Morgan had violated the injunction by visiting the house. “I determined that it wasn’t him that had gone to the house,” she said. “It was actually a pool maintenance worker that had been by the house.” Furthermore, “the firearms had been transferred prior to his risk protection order” in response to the domestic violence injunction, meaning there were no guns for Morgan to retrieve from the house.

Montgomery did read the Baker Act petition that led to Morgan’s court-ordered psychiatric evaluation, but she did not mention the outcome of that evaluation. On September 13, 2018, police handcuffed Morgan and took him to The Centers, a mental health facility in Ocala, where he spent the night. The next day, a psychiatrist determined that he did not meet the law’s criteria for involuntary treatment. A discharge form dated September 14, 2018, described Morgan as “alert and oriented” and “calm and cooperative.” It explained that “Kevin was evaluated by the psychiatrist and it was determined that Kevin does not present as a danger to himself or others.”

Yet here was Montgomery, four days later, asserting that there was “reasonable cause to believe” Morgan “poses a significant danger of causing personal injury” to himself or others “in the near future.” Judge Brigham agreed, and there was no reason to think he wouldn’t. Statewide data indicate that Florida judges always grant petitions for ex parte risk protection orders.

A follow-up mental health report from The Centers, written two days after Brigham approved the temporary risk protection order, described Morgan’s appearance as “appropriate,” his behavior as “compliant,” his mood as “stable,” his thought process as “organized,” and his judgment and impulse control as “good.” Based on prescription records and a drug screen, Stefanie Glover, a licensed mental health counselor at The Centers, reported that Morgan was “displaying no drug abuse.” She also said Morgan “did not display any signs or symptoms of paranoia, psychosis or delusions.” In the “trauma” section of the form, Glover typed: “Client is being mentally and emotionally abused by his wife. Client stated that he filed for a divorce on Monday September 17th, 2018.”

Glover’s conclusions about Morgan jibed with an August 29, 2018, letter from his personal physician, Ulhaus Deven. “He has shown no sign of abusing the opioids prescribed to him,” Deven wrote. “He has not had any indication of depression or suicidal ideation.”

‘This Puts Us in an Awkward Situation’

On September 28, 2018, 10 days after Brigham issued the temporary risk protection order, he held a hearing to determine whether there was “clear and convincing evidence” that Morgan  posed “a significant danger” to himself or others. That is Florida’s standard for issuing a final risk protection order, which lasts up to a year and can be renewed for another year.

At the hearing, the sheriff’s office was represented by its lawyer, Robert Batsel, while Morgan was represented by Crystal River attorney J. Michael Blackstone. I listened to the official audio recording of the hearing, which lasted about two hours and 20 minutes. It included testimony by Kevin Morgan, Joanie Morgan, and her mother as well as Detective Montgomery.

In addition to refuting the claim that Kevin Morgan had violated the domestic violence injunction, Montgomery described him as “very calm” when he was taken into custody for the Baker Act examination. Responding to questions from Blackstone, she said Morgan was polite and cooperative, neither raising his voice nor behaving erratically, and seemed to be in control of his faculties.

Joanie Morgan’s testimony was tearful, highly emotional, scattered, and frequently vague. She reiterated her earlier allegations and added a few more. But when Blackstone asked whether she had any evidence to corroborate what she claimed her husband had said and done, she admitted that she did not.

There were no witnesses to confirm his alleged threats and no photographs of oil on the walls, of the hypodermic needles he allegedly had stashed away to inject the succinylcholine, or of the food, gold, weapons, and ammunition he allegedly had accumulated in preparation for the end times. Nor had police ever visited the house to confirm any of those details. Blackstone also noted that, despite Joanie Morgan’s portrait of her husband as dangerously deranged, she was planning to build a new house with him on property they had purchased together in April 2018, and she had left her children overnight with him that August, in the midst of his supposed breakdown, to attend a conference in Tampa.

Joanie Morgan’s mother, Susan Harper-Clements, tried to back up her daughter’s portrayal of Kevin Morgan as dangerous, but the evidence she offered fell notably short. For example, she mentioned “conversations” after the 2017 mass shooting in Las Vegas. “Kevin had told me that the NRA…was all into this gun thing and that you couldn’t even buy the bullets you wanted, because people were stockpiling,” she said. “And he said, ‘When they’re all through with this, you won’t be able to buy guns and ammunition.'” On cross-examination, Blackstone noted that such comments hardly proved homicidal intent. “He has never threatened anyone in your presence, has he?” he asked. “No,” Harper-Clements replied.

Kevin Morgan’s demeanor at the hearing was as Montgomery and the staff at The Centers had described it: calm, polite, and cooperative. He denied seeing demons, making threats, or obsessing about the apocalypse. He denied that he had recently been stockpiling guns, saying he had acquired his collection of roughly 40 rifles and handguns over the course of more than two decades. The only guns he had acquired recently, he said, were three black-powder pistols he had bought the previous spring and summer—antique replicas ill-suited for the end times.

What about the mostly empty vial of succinylcholine that his wife had presented to sheriff’s deputies as evidence of Morgan’s deadly designs? Morgan recalled that his wife, a nurse who had worked at two local hospitals, had once accidentally brought home just such a vial, saying she had put it in her lab coat pocket after participating in the treatment of a patient who had suffered a cardiac arrest. Morgan, who also has a nursing degree, had managed the emergency room at one of those hospitals, but he left that job in January 2015 because of a disability caused by spinal stenosis. After that, he no longer had access to drugs such as succinylcholine. Given the expiration date on the vial that his wife gave to police, Morgan said, it was clear he could not have been the person who had obtained it.

After the last witness testified, Blackstone asked Brigham to deny the petition by the sheriff’s office. “The testimony, frankly, does not make any sense,” he said. “There’s no objective evidence for the court to base a ruling on. There’s been ample opportunity. The police could have gone and looked at the inside of the house and verified that there were gold coins or gold bullion or oil on the walls or anything else. We basically only have the word of a woman that’s in the early parts of a divorce. Most of the testimony has already been contradicted by Mr. Morgan. It’s unpersuasive under any circumstances, and the standard is ‘clear and convincing.’ With all due respect to Mr. Batsel, who I think a lot of, I don’t think he’s carried that burden. At best, it’s a swearing match.”

At this point, Batsel got up and admitted that Blackstone was right. “I’ve conferred with my client,” he said, and “they won’t object to me tending to agree. This puts us in an awkward situation. The sheriff’s office is coming into this with all the best intentions…The legislature has put us in a bit of a box, and that’s OK; we’re going to figure it out. But in a ‘he said, she said,’ where the evidence, I frankly will agree, does not meet ‘clear and convincing,’ we don’t want to waste the court’s time.”

Blackstone thanked Batsel for his candor. “I can’t tell Mr. Batsel how much I appreciate, in the world today, somebody standing up and just accepting what the facts are,” he said. He also thanked the sheriff’s office. “I think we’re all learning as we go,” he said. “It’s a new statute. It’s going to put huge burdens on everybody.”

Brigham ratified the agreement between both sides that the sheriff’s office had failed to make its case. “I don’t think I’ve heard clear and convincing evidence,” he said. “I found Mr. Morgan’s testimony to be credible.” Explaining his decision in an order he issued later that day, he said, “The issue came down to a credibility determination between the respondent and his current wife. The court found the respondent credible and that the petition was not proved by clear and convincing evidence. [Regarding] the only piece of physical evidence, a vial of drugs, [it] was never clearly, or convincingly, explained from whence it came.”

‘You Have to Go in and Prove That You’re Not Guilty’

Blackstone, who supports red flag laws in principle, thinks Florida’s statute worked as intended in this case. “I thought you had a well-intentioned police officer who sat on the stand and told the truth,” he says. “I thought you had an exceptionally well-intentioned and competent attorney for the Citrus County Sheriff’s Office who did a fabulous job. I thought I did a competent job in representing Kevin, and I thought that the law worked the way it was supposed to.”

At the same time, Blackstone recognizes that it’s important to have a lawyer in situations like this. “It’s always dangerous to go into court without a lawyer,” he notes. Without “competent counsel,” he says, this case “might have turned out the same way,” but “it might have turned out entirely different.”

Florida, like nearly all of the states with red flag laws, does not provide court-appointed counsel for respondents. Colorado is the only state that guarantees a right to counsel for respondents who can’t afford a lawyer or choose not to hire one.

Kevin Morgan

Morgan says the red flag case cost him about $1,500, on top of the legal fees and extra living expenses he incurred as a result of his other legal battles with his wife. “I had about $13,000 or $14,000 in savings, and by the time all this was done, I had nothing,” he says. “I was lucky to have a lawyer. I was lucky to be able to afford it.”

Morgan’s take on Florida’s red flag law is less sanguine than Blackstone’s. The law ostensibly puts the burden of proof on the agency seeking an order. But in practice, Morgan says, “you have to go in and prove that you’re not guilty.”

The automatic issuance of ex parte orders means that when a respondent gets his day in court, the playing field is slanted sharply against him. The judge is deciding whether to maintain the presumptively protective status quo or change course and give the respondent legal access to guns he might use to kill himself or someone else. That prospect tends to loom larger than the possibility that a respondent who does not really pose a threat will unfairly but temporarily lose his Second Amendment rights. Those dynamics help explain why judges in Florida issue final orders about 95 percent of the time.

Morgan’s case nevertheless shows that the standard of proof matters. In the end, both parties and the judge agreed that the sheriff’s office had not presented clear and convincing evidence. While that is the standard in most states with red flag laws, four states and the District of Columbia require only proof by “a preponderance of the evidence,” meaning any probability greater than 50 percent. When laws combine a low standard of proof with undefined terms such as “a significant risk,” “a significant danger,” or “a risk of danger,” the respondent does not have much chance of prevailing.

Another safeguard is requiring that petitions be filed by police or prosecutors, as Florida does. While anyone who knows a potentially dangerous person can still share his concerns with the authorities, police are supposed to act on those concerns only when they consider them well-grounded. The idea is to have dispassionate officials evaluate complaints from people who may have personal biases. But that goal is defeated if police simply record and pass along allegations by aggrieved parties.

Even allowing for Citrus County’s inexperience with the red flag law at the time it sought the orders against Morgan, one has to ask why a law enforcement agency would go to court with a case so weak that its own attorney ended up throwing in the towel at the end of the hearing. Police should not seek ex parte orders without evidence of an imminent threat, and they should not seek final orders unless they are confident they can meet the law’s requirements. Such caution is especially important when judges can be expected to rubber-stamp ex parte orders and approve nearly all of the final orders police request.

The possible cost of deciding not to seek or issue an order—a preventable suicide or homicide—has to be weighed against the certain cost of suspending someone’s constitutional rights. Police should conduct a thorough investigation before trying to do that. In this case, easily discoverable facts—including Morgan’s supposed hypodermic needles and end times stockpile, the whereabouts of his guns prior to the temporary risk protection order, and the provenance of the succinylcholine—were either not clarified until the hearing or remained unresolved even then.

The sheriff’s office “jumped into a civil action without completing a proper investigation,” Morgan says. “I don’t think the average person understands just how dangerous these laws are. Hopefully, if my story can get out, folks will see how easily [red flag laws] can be used against someone for revenge or to get an upper hand in [a custody dispute]. I want people to know how these laws can be used improperly, in the hope that some reforms will take place. We need protection for falsely accused individuals and stiff punishment for those who abuse the system.”

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The Fed “Is Complicit In Creating Fragilities In The System”

The Fed “Is Complicit In Creating Fragilities In The System”

Authored by Richard Breslow via Bloomberg,

When the Fed cut interest rates this week, everyone had an opinion about it.

  • The economy needs it to fend off recession.

  • The economy has been hanging in well and they shouldn’t have rushed to spend dwindling monetary policy resources.

  • They were responding to the stock market.

  • They were helping keep the financial plumbing functioning.

  • They were bold.

  • They folded to criticism.

  • More is needed immediately.

  • Enough is enough for now.

  • Their communication strategy was sloppy.

  • They were willing to show flexibility in the face of evolving circumstances.

  • They are scaring people.

  • They are reassuring people.

The list is endless. As are the number of commentaries taking each side.

Who was right?

To a very real extent, they all were.

Sometimes, you just have to take action. And that is what they had at hand. Even if there will be both positive and negative consequences. But, if the rest of the government fails to demonstrate proper and immediate resolve to do its part in fighting the disease, it will all be for naught. They are buying time. But there isn’t a lot of it. Especially because, while fiscal policy would be a help, it remains to be seen if and when it can be expected to take its rightful place in manning the laboring oar.

It doesn’t mean the Fed can allow itself to be assumed to be at the complete mercy of the markets. Although, to be honest, they ultimately are.

They have been complicit in creating fragilities in the system through their encouragement of desperation investing that they bear a responsibility to be responsive to it. Perhaps at the moment, more than we thought or would like.

If there is one thing everything is at the mercy of, it’s the virus. And there was just too much uncertainty to be ignored. The authorities can show urgency without it necessarily being taken as panic. To use the well-worn cliche, we can handle the truth. In fact, will benefit from hearing it. The last thing anyone needs is for people to begin thinking that they feel fine, so what’s the big deal. That was a factor in slowing the rush for a global response when too many people thought of it as a problem “over there.”

Now the headlines are hitting home. And if we have to take short-term disruptions, even unpleasant ones, to lessen the chance of long-term disaster, so be it. It’s not something we have proved willing or adept at doing in response to too many challenges. Closing schools, banning business travel, the California state of emergency are scary realities indeed. They should provide greater hope than despair. We are safer for them. The equity market has fallen back so far today in response. It means little.

This has become a global problem. And as Mohamed El-Erian, among many others, correctly pointed out, it needs an all-hands response. So far this week there have been four central banks that have cut rates. All four cited this risk as a factor. More cuts are coming, as are other monetary and fiscal responses. It was interesting how much criticism was handed out that other banks didn’t act along with the Fed. They will. There are a lot of meetings scheduled this month. And it won’t be a case of speak now or forever hold your peace.

It was surprising to read, therefore, that currencies such as the pound and euro have been bid based on lessening expectations of any imminent policy action. That may be driving short-term price action. It’s unlikely to be proved correct analysis. They all can do something. Japan is said to be considering a new lending program targeting affected companies. It’s a negative externality that their GPIF is simultaneously considering raising its investment allocation to foreign bonds. Distortions in markets will necessarily have to continue for the foreseeable future. Maybe for longer than that. Current 10-year Treasury yields are a reflection of global fears far more than domestic ones.

When the stock market was up big on Wednesday, it didn’t mean everything was right with the world. Today’s downdraft doesn’t mean the opposite is suddenly true. At the moment, you should trade whatever opportunities daily momentum provides.

And don’t get lulled into giving away your safe havens without serious consideration.


Tyler Durden

Thu, 03/05/2020 – 08:24

via ZeroHedge News https://ift.tt/2ToVm1l Tyler Durden

OPEC Agrees To 1.5MM Barrel Output Cut, But Fails To Obtain Critical Russian Backing

OPEC Agrees To 1.5MM Barrel Output Cut, But Fails To Obtain Critical Russian Backing

Today’s OPEC meeting has been more of a stunt by members to persuade Russia to agree to deep cuts amid a demand shock triggered by the Covid-19.

Ministers from OPEC agreed on a large cut of 1.5 million barrels per day in the second quarter to support prices but made it conditional on Russia joining in, said two OPEC sources, who were cited by Reuters.

Brent crude futures have soared between 6-10% in the last four sessions on OPEC+ JMMC technical committee recommendation, which stated cuts between 750,000 to 1 million barrels per day are needed to stabilize prices. Demand destruction from China and aboard has been one of the most significant shocks to hit global oil markets since the financial crisis a decade ago.

Reuters notes that Saudi Arabia, the largest producer in OPEC, has yet to win the support of Russia agreeing on the cuts. 

But that didn’t stop the algos bidding oil higher…

Moscow, which has worked with OPEC+ since 2016 to balance supply, has so far withheld its support for a reduction in output.

Russia’s energy minister left OPEC meetings in Vienna on Wednesday, expected to return on Friday for more in-depth talks.

“Our expectation is that OPEC+ will deliver a credible and coherent strategy that will take more barrels than what’s priced into the market off the table,” Mitsubishi UFG’s Ehsan Khoman told Reuters.

Russia could capitulate on Friday, as it has done everything so far to drag out production cut talks. Still, as we noted yesterday, “Russia will decide on production cuts at the very last minute.”

“We think OPEC+ really needs to cut about 1 million to 1.5 million barrels a day just to put a floor under prices right now,” Allyson Cutright, a director at Rapidan Energy Advisers, said in a Bloomberg TV interview. Cutright said Moscow would likely accept a reduction in output, but the Saudis “will have to take the majority” of cuts.

Goldman Sachs’ Jeff Currie is not bullish on OPEC achieving their goals, warning any OPEC cut is “too little, too late,” and forecasts Brent Crude tumbling to the low-40s. That may make sense after we just heard from Russia’s FinMin Siluanov, who said “Russia is prepared for a possible drop in oil prices.”

Doesn’t sound like they are about to acquiesce to the Saudis anytime soon.


Tyler Durden

Thu, 03/05/2020 – 08:09

via ZeroHedge News https://ift.tt/2VLWxcX Tyler Durden

“In The Eye Of The Storm”: Futures Plunge On Surge In Virus Cases, California State Of Emergency

“In The Eye Of The Storm”: Futures Plunge On Surge In Virus Cases, California State Of Emergency

The rollercoaster market is back. 

After yesterday’s torrid surge, which saw the Dow Jones soar by nearly 1,200 points for the second day in three, US equity futures tumbled alongside European stocks on Thursday as cases of the coronavirus surged in the US, California announced a state of emergency, Switzerland reported its first covid-19 death, and fears about the pandemic re-emerged front and center as traders once again realized that central banks are powerless to reverse the change in consumer behavior that is shutting down entire parts of the global economy on fears the pandemic will be here for a long time. Treasuries rallied with the yen and gold.

After initially trading higher, European bourses snapped a three-day winning streak with markets in London, Frankfurt, Paris and Milan dropping as much as 1.4% amid mounting evidence of the damage the coronavirus outbreak was inflicting. Meanwhile, in the US, S&P index futures pointed to more pain ahead as E-Minis fell nearly 2% after California declared a state of emergency as coronavirus cases increased.

Europe’s losses came after MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.7% in a fourth day of gains. The gains came after the Dow and S&P 500 surged more than 5% on Wednesday while the Nasdaq nearly matched their gains

“European stocks are now catching with the downward trend, dragged by a wave of profit warnings,” said TFS Derivatives strategist Stephane Ekolo. “U.S. futures are down due to fears the situation could worsen after California declared a state-wide emergency.”

Earlier in the session, Asian stocks blissfully gained for a fourth day, extending their longest rising streak since mid-January, following a 4.2% rebound in U.S. equities. All markets in the region traded in the green with Australia’s S&P/ASX 200 Index enjoying its biggest jump in almost two months, and Japan’s Topix up as much as 1.3%. Trading volume for MSCI Asia Pacific Index members was 20% above the monthly average for this time of the day. While coronavirus infections outside of China accelerated, the epidemic showed signs of easing in the Asian nation, with new cases slowing dramatically and recoveries gathering pace. Remarkably, the CSI 300 Index jumped 2.2% Thursday to its highest level in two years as China is now actively manipulating not just public opinion but also markets.

Conmenting on the volatile market jumps, DB’s Jim Reid writes that “in terms of the virus impact it feels like we’re in the eye of the storm at the moment. We’ve not yet had the number of cases to justify large lockdowns of significant parts of the Western World but given all the contingency plans outlined by the authorities and the constant climb of news cases, it feels like they are coming. Yesterday felt like the calmest day since Italy’s cases started to jump but this will be drawn out over many, many weeks and there will likely be some nasty surprises to come.”

Thursday’s slump follows Wednesday’s surge when US stocks found relief in Joe Biden’s performance in the campaign for the Democratic presidential nomination. Adding to the momentum was an approval by the U.S. House of Representatives of an $8.3 billion funding bill to combat the spread of the coronavirus. The emergency legislation followed a surprise rate cut by the U.S. Federal Reserve on Tuesday. Unfortunately none of this matters for the pandemic, which showed no signs of slowing, with deaths mounting globally.

Risk assets have whipsawed this week, with traders still on edge amid a rise in virus cases around the world and governments extending quarantines and travel restrictions. An industry association warned the outbreak could cost airlines as much as $113 billion in lost revenue. The S&P 500 has rebounded since the Federal Reserve pledged action on Friday, but it remains about 7.5% below last month’s all-time high.

“There is little doubt that the COVID-19 outbreak will slow global growth considerably this quarter, and we expect it to actually produce a rare non-recessionary contraction in GDP,” said JPMorgan which now expects a 50% chance of rates hitting 0% this year. JPM also noted that the bank’s all-industry PMI measure of activity for February slumped 6.1 points, the largest one-month drop on record, and at 46.1 was at its lowest since May 2009.

In response to the economic slowdown, the Fed and Bank of Canada both responded by cutting interest rates by 50 basis points. Markets in the euro zone are pricing in a 90% chance that the European Central Bank will cut its deposit rate, now minus 0.50%, by 10 basis points next week.

“We have to get past the threshold where COVID-19 shifts from panic to headline exhaustion and subsequent news on it becomes more and more of a fade,” Tom Porcelli, chief U.S. economist at RBC Capital Markets. “Then risk assets can move higher in earnest.”

Investors are struggling to find the correct balance between two factors, RaboBank strategists led by Richard McGuire wrote in a note. One is “the need to de-risk on the back of virus-related fundamental concerns,” and the other is “the growing appeal of risky assets in the wake of an unfolding coincidental, or perhaps co-ordinated, global policy response.”

In rates, 10Y Treasury yields fell below 1% again, trading last at 0.9536%, and just 5bps away from record lows hit earlier this week. Yields have fallen for 11 straight days, the longest slide in at least a generation.

In FX, the dollar index softened 0.2%, with the Bloomberg Dollar index sliding below 1,200 and the euro trading at $1.1170, heading back toward a two-month high of $1.1212 hit earlier in the week. The dollar hit a fresh five month low of 106.78 yen, up from a five-month low of 106.84.

In commodities, oil prices rose with OPEC agreeing to cut output by an extra 1.5 million barrels per day in the second quarter of 2020 to support prices, conditional on Russia joining in. Oil prices have fallen around a fifth since the start of the year. Brent crude futures stood at $51.57 a barrel; U.S. crude at $47.16. Gold steadied after jumping when the Fed cut rates. It was last at $1,638.97 per ounce.

Looking at the day ahead now, there are a number of data releases out from the US, including January’s factory orders, weekly initial jobless claims, the final reading for Q4’s nonfarm productivity and unit labour costs, as well as the final January reading for durable goods orders and nondefence capital goods orders excluding air. From central banks, we’ll hear from the BoE’s Governor Carney and chief economist Haldane, the Bank of Canada’s Governor Poloz and Dallas Fed President Kaplan. Kroger and Costco are among companies reporting

Market Snapshot

  • S&P 500 futures down 1.6% to 3,064.50
  • STOXX Europe 600 down 0.8% to 383.40
  • MXAP up 1.3% to 159.92
  • MXAPJ up 1.3% to 527.41
  • Nikkei up 1.1% to 21,329.12
  • Topix up 0.9% to 1,515.71
  • Hang Seng Index up 2.1% to 26,767.87
  • Shanghai Composite up 2% to 3,071.68
  • Sensex up 0.3% to 38,534.38
  • Australia S&P/ASX 200 up 1.1% to 6,395.74
  • Kospi up 1.3% to 2,085.26
  • German 10Y yield rose 1.5 bps to -0.623%
  • Euro up 0.2% to $1.1158
  • Italian 10Y yield rose 2.5 bps to 0.847%
  • Spanish 10Y yield rose 1.8 bps to 0.194%
  • Brent futures down 0.7% to $50.79/bbl
  • Gold spot up 0.4% to $1,643.49
  • U.S. Dollar Index down 0.2% to 97.15

Top Overnight News from Bloomberg

  • California declared a state of emergency to give authorities greater leeway in combating the coronavirus. The declaration in the most populous U.S. state followed passage in the House of Representatives of a $7.8 billion spending package to fund measures to combat the outbreak
  • Italy announced a nationwide closing of its schools until March 15 as it redoubles efforts to curb the worst virus outbreak in Europe
  • Incoming Bank of England Governor Andrew Bailey said the central bank will work hand-in- hand with the Treasury to help the economy withstand the virus fallout
  • Michael Bloomberg endorsed Joe Biden for the Democratic nomination as he ended his presidential campaign on Wednesday and pledged to continue working to defeat President Donald Trump. (Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
  • Oil firmed in Asia trade on Thursday after an emergency U.S. spending bill to combat coronavirus lifted optimism on the outlook for demand
  • The coronavirus outbreak is re-firing enthusiasm for a debt market that many bond buyers had long since written off.
  • The Bank of Japan is likely to consider the introduction of a new lending program to help companies affected by the outbreak of coronavirus this month, according to people familiar with the matter.
  • Other Asian governments have stepped up their fiscal response to the virus.
  • One of the world’s largest metals and mining giants has tumbled to record lows in the bond market, adding to a growing list of commodity companies that are selling off as the coronavirus epidemic hits demand for raw materials.

Asia-Pac indices rose across the board following the constructive pick up from Wall St where all major indices surged and the DJIA posted gains of almost 1200 points after Joe Biden’s Super Tuesday victory and with sentiment also underpinned by US data, as well as further response measures including the BoC’s 50bps rate cut and IMF’s USD 50bln aid package. ASX 200 (+1.1%) was underpinned by hopes of looming stimulus which Australian Finance Minister Cormann reiterated will be announced very soon and as healthcare tracked the outperformance of the sector stateside which was boosted after Biden overtook ’Medicare for All’ advocate Sanders as favourite in the Democrat nomination race, while TPG Telecom was the biggest gaining stock post-earnings and after the ACCC declared it will not appeal the decision to allow the Co.’s merger with Vodafone. Nikkei 225 (+1.1%) also benefitted from notable strength in pharmaceuticals including Takeda which is developing a coronavirus drug and completed the sale of certain OTC and non-core assets, although further upside in the broader market was capped by an indecisive currency. Elsewhere, Hang Seng (+2.1%) and Shanghai Comp. (+2.0%) conformed to the optimism and eventually outperformed despite early hesitation after the PBoC continued to hold off on liquidity operations and amid a slight increase in the mainland coronavirus cases, while reports also noted local companies and officials were falsely boosting metrics to achieve back-to-work targets. Finally, 10yr JGBs were choppy and initially slumped following the post-settlement declines in T-notes through 136.00 amid a return of corporate issuers to the market, although JGBs later recouped some of the losses following the break helped by the 30yr JGB auction which attracted higher prices before slipping back again to beneath 154.00.

Top Asian News

  • Virus Drags Mining Giant Vedanta to Record Lows for Bonds
  • China’s Xi Planned State Visit to Japan Delayed Over Coronavirus
  • Vietnam May Loosen Trading Rule in UpCom to Boost Liquidity

Initial gains for European equities (Eurostoxx 50 -1.5%) turned out to be fleeting as sentiment remains vulnerable to the ongoing spread of coronavirus and questions surrounding the efficacy of monetary and fiscal responses. Unexpected rate reductions by the FOMC and BoC this were welcomed by the market, however, central bank action thus far has done little to assuage concerns over the supply-side impact from the spread of COIVD-19 with the UK’s Chief Medical Officer today warning that there is now community transmission in Britain and officials are now at the stage of trying to delay the virus’ spread rather than contain it. From a sector standpoint, performance is relatively mixed with energy, materials and consumer discretionary names the laggards, whilst consumer staples and health care names are faring slightly better than their peers. In terms of individual movers, Merck (+1.8%) sit at the top of the Stoxx 600 after earnings which saw the Co. forecast strong profit growth, Aviva (U/C) have also been supported, albeit fleetingly, post-earnings with the Co. posting record profits. To the downside, Capita (-23.9%) are trading with heavy losses as concerns continue to mount over the Co.’s debt levels, Continental (-10.9%) have also suffered post-earnings after posting a EUR 1.2bln loss and noting falling demand for cars, ITV (-10.7%) shares have been dealt a blow after positing soft earnings and revenues for FY19.

Top European News

  • ProSieben to Buy Dating Firm Meet Group in Tough TV Market
  • Star Banker Collardi’s Past Raises Tensions at Bank Pictet
  • Germany’s Merck Predicts Reduced Impact From Coronavirus
  • ITV Slides as Travel Firms Delay TV Advertising Due to Virus

In FX, it’s been a steady grind and measured move, but Usd/Jpy and Yen crosses are trending lower again amidst more worrying headlines concerning the coronavirus that have halted a recovery in risk appetite prompted by latest attempts to contain the epidemic and economic fallout. On that note, the BoJ is said to be looking at a new credit facility following the IMF, PBoC and others, while conventional policy stimulus via YCC tweaks and a standard rate cut are bound to be under consideration as well. Usd/Jpy has retreated through 107.00 and now testing Wednesday’s 106.85 overnight low and an October 2019 base close by, while Eur/Jpy is below 119.50 even though the single currency is also trying to extend gains vs the Dollar.

  • NZD/GBP/CHF/EUR – All firmer against the Greenback, with the Kiwi making a more decisive break of 0.6300, though probably assisted by a degree of Aud/Nzd retracement after mixed Aussie trade data. Meanwhile, Cable has crossed more resistance levels on the way to and through the 1.2900 handle, like the 10 and 21 DMAs, as Eur/Gbp continues to pull back from another 200 DMA peak. However, 1.2950 and 0.8600 may be tough to breach without additional bullish momentum ahead of more BoE commentary and a speech from EU’s Barnier on the first round of trade talks with the UK at noon. Elsewhere, the Franc is firmer around the 0.9550 axis, but Eur/Chf more restrained either side of 1.0650 as the Euro stages another advance on 1.1200 amidst broad Buck weakness in G10 circles and the DXY losing impetus following yesterday’s upbeat US data/survey releases – index fading ahead of 97.500 and now only just holding above 97.000. Note, however, decent option expiry interest may hamper Eur/Usd between 1.1175-80 (1 bn).
  • AUD/CAD – As noted above, Aud/Usd is lagging somewhat within a 0.6637-07 range in wake of trade data showing weaker than forecast exports and imports under the wider than expected surplus, while Usd/Cad remains above 1.3400 following the BoC’s 50 bp ease and ahead of Governor Poloz presenting the EPR later today.
  • EM – The aforementioned deterioration in sentiment has derailed recoveries in regional currencies to the extent that the Rand has not been able to reap much reward from a modest improvement in SA business morale or a significantly narrower than anticipated current account deficit.

In commodities, the crude complex was modestly in negative territory for much of the session however recent source reports out of OPEC have bolstered WTI and Brent front month futures substantially, although this has since begun to pair back. The report noted that OPEC have agreed to a 1.5mln BPD cut, which would be above the 1.0-1.2mln sought by Saudi but in-line with some reports yesterday. However, and likely the reason for the pairing in price action, this OPEC agreement is subject to approval from Russia who so-far has not offered much indication of their view. Now perhaps more so than any other point in the week participants remains focused on Russia’s stance, but the likelihood of seeing an update to this today has perhaps been diminished by reports that Energy Minister Novak has returned to Russia; albeit, he will be returning for the OPEC+ meeting tomorrow. Elsewhere, spot gold has been grinding higher throughout the session after trading relatively range-bound overnight. The yellow metal is currently posting gains in proximity to USD 10/oz, but is still a way off recent multi-year highs at USD 1689.29/oz. Gold aside, base metals aren’t too changed on the day with copper seemingly remaining capped by the USD 2.60lb mark but ING believes that metals in general are beginning to show signs of support following this week’s policy action.

US Event Calendar

  • 8:30am: Unit Labor Costs, est. 1.4%, prior 1.4%
  • 8:30am: Nonfarm Productivity, est. 1.3%, prior 1.4%
  • 8:30am: Initial Jobless Claims, est. 215,000, prior 219,000; Continuing Claims, est. 1.74m, prior 1.72m
  • 10am: Factory Orders, est. -0.1%, prior 1.8%; Factory Orders Ex Trans, prior 0.6%;
  • 10am: Durable Goods Orders, est. -0.2%, prior -0.2%; Durables Ex Transportation, prior 0.9%
  • 10am: Cap Goods Ship Nondef Ex Air, prior 1.1%; Cap Goods Orders Nondef Ex Air, prior 1.1%

DB’s Jim Reid concludes the overnight wrap

It terms of the virus impact it feels like we’re in the eye of the storm at the moment. We’ve not yet had the number of cases to justify large lockdowns of significant parts of the Western World but given all the contingency plans outlined by the authorities and the constant climb of news cases, it feels like they are coming. Yesterday felt like the calmest day since Italy’s cases started to jump but this will be drawn out over many, many weeks and there will likely be some nasty surprises to come.

For now markets took a more positive view on the Fed’s emergency cuts from Tuesday, the US government’s funding package, and the Biden surge that we discussed yesterday which continued to draw some sighs of relief in the US market. Overall the S&P 500 closed +4.22% and is now +2.3% above where we were immediately before the 50bps cut and +7.95% above where we were when Powell’s Fed statement came out on Friday night. In fact we’re ‘only’ down -3.12% YTD now. A reminder from yesterday that after the last 7 emergency Fed cuts the median S&P 500 price move has been +2.8% (1 week later), -4.3% (6 months) and -9.2% (1 year). So there is previous form for an initial positive reaction before declines set in. Back to yesterday and defensives that perform well in low-rate environments like utilities continued to lead the US rally higher, but the other big outperformer on a sector basis was healthcare, which may be in response to Biden pulling ahead of Sanders in the nomination race. The VIX dropped another -4.8 points, but still remains over 30 as the market continues to see large daily moves. S&P 500 volumes were the lowest since the selloff began in earnest on February 21st though.

Markets in Asia have also pushed ahead this morning with the Nikkei (+0.71%), Hang Seng (+1.37%), Shanghai Comp (+1.40%) and Kospi (+0.98%) all up. Futures on the S&P 500 are down -0.73% however and yields on 10y USTs are down -4.7bps to 1.013%. This follows the state of California announcing a state of emergency to address the spread of coronavirus where there are currently 53 cases. Hollywood had a similar declaration – with Universal and MGM moving the upcoming James Bond film from April to November (delaying it by 007 months!!) on fears of poor theater turnout. This announcement is another data point as markets continue to get nervous messaging from corporates. Late in the US session last night, United Airlines published plans to reduce flights and impose a hiring freeze on Covid-19 worries while GE also warned on the impact of the virus

Even while it felt calm overall yesterday, big virus-headlines still percolated, especially in Europe. The Italian prime minister said Italy’s health service risks being overwhelmed by the coronavirus. This comes after reports that deaths in the country rose to 107 from 79 on Tuesday and the number of confirmed cases rose over 3,000. Italy announced it would be closing its schools and universities nationwide for the next two weeks in order to tackle the spread of the virus, following other nations with large outbreaks like Japan and China. Even the ECB announced that they were taking precautions, saying that conferences at the ECB would be postponed, with the exception of monetary policy press conferences. Furthermore, non-essential travel by ECB Executive Board and staff members would be restricted until 20 April. Here in the UK, the number of confirmed cases jumped by over 50% yesterday to 85.

Across the Atlantic, Canada’s Public Health Officer cited 33 confirmed cases of covid-19 – all related to travel. Elsewhere China car sales plummeted in February, with data from the China Passenger Car Association showing they fell 80% year-on-year. Overnight, Australia’s Treasury head Steven Kennedy said that “The economic impact of COVID-19 is likely to be deeper, wider and longer when compared to SARS,” while adding, “it will create more risk of a prolonged downturn and fiscal support will be needed to accelerate the recovery of the economy.” Australia’s Treasury and Reserve Bank both expect half a percentage point cut from GDP in Q1 due to the virus and the Australian government is expected to release a fiscal “boost” for the economy in coming days.

In other virus related news, a ship being held off the coast of San Francisco has 21 passengers and crew members which are showing symptoms of the virus. Elsewhere, Hong Kong confirmed first human to animal transmission of the virus as a pet dog of a coronavirus patient has been confirmed with a “low level” infection. In a sign that the virus is continuing to spread in Asia, 12 crew members and 51 passengers on Vietnam Airlines flight have been placed in quarantine over fears the carrier’s employees had been exposed earlier to a Japanese traveler with the novel coronavirus. Meanwhile, Facebook said overnight that an employee in Seattle has been diagnosed with the coronavirus, the first known infection within the company.

Back to markets where 10yr Treasury yields rose +5.2bps to finish at 1.052%, after hitting a midday low of 0.96% – it was the largest one day rise since early February. The yield curve continued to steepen, with the 2s10s curve up by +6.0bps to rise for an 8th consecutive session and is now steeper than any point since June of 2018. Records were also set elsewhere too, with 10yr Gilt yields also falling to a new all-time low, down by -2.0bps to 0.366%. Meanwhile in continental Europe, 10yr Bund yields fell a further -1.3bps yesterday to their lowest level since early September. Italy 10yrs edged higher by +2.5bps.

Even as the virus was spreading through the continent, European equities continued to rally. The STOXX600 gained +1.36% on the day, and is now up every day this week. Banks underperformed however (-0.42%), which came against the backdrop of continued falls in yields. Oil continued selling off, Brent down -1.41%, now down 8 of the last 9 sessions and down over 20% since the beginning of the year, as OPEC+’s Joint Ministerial Monitoring Committee ended with no agreement, with Russia still resisting deeper oil production cuts.

As discussed above and yesterday, Super Tuesday went massively in Biden’s favour and the results were therefore more market friendly. His candidacy was further aided yesterday by the fact that former NYC mayor Mike Bloomberg dropped out of the race, leaving Biden as the sole remaining contender from the more moderate wing of the party, with Bloomberg endorsing Biden as he announced his exit from the race. That said, there’s still a long way to go in this process, with a further 6 states voting next Tuesday, including Michigan – which is a large delegate state that Sanders won in 2016 and is hoping to win to slow Biden’s new found momentum. The week after there’s an even bigger day in terms of delegates, when 4 states including Florida (4th biggest delegate holder) will be holding their primaries. There is another debate right between those two Mini-Tuesdays that will be important for Biden to perform well at if he is indeed going to be the frontrunner. See the note out earlier this week from Karthik on my team for an outline of the process (link here).

The Bank of Canada became the latest to join the ranks of central banks easing policy, and is now the 3rd G20 central bank to cut rates over the last 2 days. The BoC cut rates by 50bps, following the Fed, and in their statement they said that they are “ready to adjust monetary policy further if required to support economic growth and keep inflation on target”, so implying that this is not necessarily the final move lower. Indeed, markets have fully priced in another rate cut by the June meeting so there’s a clear expectation that more will be needed.

Meanwhile here in the UK, incoming Bank of England Governor Andrew Bailey, who’ll be taking over the position on 16th March, said to the Treasury Select Committee that he’d spoken to the Chancellor of the Exchequer and said that “we must act in a coordinated fashion”. That said, sterling strengthened following Bailey’s remarks that more evidence was needed before deciding on policy action, ending the session up +0.48% against the US dollar. Currently markets are pricing in a near 100% chance of a rate cut at the BoE’s meeting later this month, which will be Bailey’s first at the helm.

In terms of data out yesterday, the services and composite PMIs from around the world were the highlight. Looking at the main readings, the final Euro Area composite PMI came in at 51.6, in line with the flash reading and at a 6-month high, while the services PMI was revised down to 52.6 (vs. flash 52.8). Note that the survey for the Euro Area was taken from 12-25th February however, so mostly before the surge in the number of European cases. All eyes will therefore be on the preliminary March PMIs towards the end of the month for the signs of how this has impacted the global economy. There was also positive data out from the US, where the ISM non-manufacturing index unexpectedly rose to 57.3 (vs. 54.8 expected), it’s highest level in a year. Furthermore, the new orders index rose to 63.1, the highest level since it matched that back in June 2018. Once again, the question will be to what extent this deteriorates as the effects of the coronavirus filter through to the economy.

To the day ahead now, and there are a number of data releases out from the US, including January’s factory orders, weekly initial jobless claims, the final reading for Q4’s nonfarm productivity and unit labour costs, as well as the final January reading for durable goods orders and nondefence capital goods orders excluding air. Meanwhile over in Europe there’s the German construction PMI for February. OPEC+ will be officially meeting tomorrow as well to continue discussing cuts. From central banks, we’ll hear from the BoE’s Governor Carney and chief economist Haldane, the Bank of Canada’s Governor Poloz and Dallas Fed President Kaplan.

 


Tyler Durden

Thu, 03/05/2020 – 07:58

via ZeroHedge News https://ift.tt/2TDYsxA Tyler Durden

Reviving Congressional Reauthorization

In “Delegation and Time” (forthcoming in the Iowa Law Review), Christopher Walker and I argue that one of the more important, yet overlooked aspects of delegation is the passage of time, and suggest that the legislative branch (as opposed to the judiciary) may be best suited to address such concerns through greater use of mandatory reauthorizations and sunset provisions.

This week, The Regulatory Review is sponsoring an online symposium discussing our paper and the implications of our arguments. The symposium features comments from a wide range of administrative law experts.

Thus far, the series includes the following:

Additional essays will be posted over the next few days. These will include:

  • Delegation, Time, and Congressional Capacity by Richard J. Pierce, Jr., George Washington University Law School;
  • Punishing the Innocent by Richard W. Parker, University of Connecticut School of Law;
  • A Reply to Our Interlocutors.

I’ll add those links when they are available. They will also be available here.

We appreciate the time and effort these scholars took to engage with our work and look forward to continuing discussions about these issues. I”ll also be speaking about the paper at the Second Annual Legislative Branch Review Conference: Modernizing the First Branch, on March 12 in Washington, DC.

 

 

 

 

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Reviving Congressional Reauthorization

In “Delegation and Time” (forthcoming in the Iowa Law Review), Christopher Walker and I argue that one of the more important, yet overlooked aspects of delegation is the passage of time, and suggest that the legislative branch (as opposed to the judiciary) may be best suited to address such concerns through greater use of mandatory reauthorizations and sunset provisions.

This week, The Regulatory Review is sponsoring an online symposium discussing our paper and the implications of our arguments. The symposium features comments from a wide range of administrative law experts.

Thus far, the series includes the following:

Additional essays will be posted over the next few days. These will include:

  • Delegation, Time, and Congressional Capacity by Richard J. Pierce, Jr., George Washington University Law School;
  • Punishing the Innocent by Richard W. Parker, University of Connecticut School of Law;
  • A Reply to Our Interlocutors.

I’ll add those links when they are available. They will also be available here.

We appreciate the time and effort these scholars took to engage with our work and look forward to continuing discussions about these issues. I”ll also be speaking about the paper at the Second Annual Legislative Branch Review Conference: Modernizing the First Branch, on March 12 in Washington, DC.

 

 

 

 

from Latest – Reason.com https://ift.tt/2VJ8Pmp
via IFTTT

NYC Confirms 2 More Cases As Virus Spreads To New Jersey; First Patient Dies In Switzerland As Global Cases Near 100,000: Live Updates

NYC Confirms 2 More Cases As Virus Spreads To New Jersey; First Patient Dies In Switzerland As Global Cases Near 100,000: Live Updates

Update (0720ET): NYC Mayor Bill de Blasio has apparently just announced during an appearance on “Morning Joe” that NYC has confirmed 2 more cases, raising the citywide total to 4 and the state-wide total to 11.

* * *

With stock futures once again pointing to a massive drop at the open, the brief respite provided by Joe Biden’s political comeback has faded as Americans brace for the outbreak by, among other things, hoarding Purell, while California and others threaten to prosecute sellers caught gouging prices on essentials as people across the country stock up.

Since midday on Wednesday, the virus death toll in the US has held steady at 11. But there’s no denying the reality that coronavirus hysteria has arrived in America. Last night, California declared a state of emergency, joining Florida and Washington State.

And with cases confirmed in New York, Rhode Island and New Jersey, the virus has officially gone bi-coastal.

Globally, the number of confirmed cases has surpassed 95,000, and the global death toll is north of 3,000. China remains by far the worst hit, with 80,410 cases, while South Korea is No. 2 with 5,766. They’re followed by Italy and Iran.

Courtesy of the FT

In addition to declaring the state of emergency, Cali Gov. Gavin Newsom ordered that a cruise ship – the ‘Grand Princess’ – preparing to dock in San Francisco be held off the coast of California after the one fatality in California was linked to a previous voyage on the ship.

Late yesterday, New Jersey Gov. Phil Murphy announced that local health officials had discovered the first “presumptive” case of the virus in Bergen County, a suburb of New York City. The individual, a male in his 30s, has been hospitalized in the county since March 3. The “presumptive” case was initially tested at a local New Jersey lab

According to the CDC, 14 US states have reported either confirmed or “presumptive” cases of the virus.

Already, the number of confirmed cases in the US is north of 150 (including the 48 evacuees).

Yesterday, VP Pence and HHS Secretary Azar promised that new screening measures would be applied to travelers from South Korea and Italy. Australia on Thursday joined the list of countries restricting travel by barring visitors from South Korea. Meanwhile, in a glimpse of what’s to come for the airline industry, which could be in for a $100 billion hit tied to the coronavirus, the UK regional airline Flybe collapsed.

As the outbreak appears to wane in China, President Xi has cancelled a state visit to Japan because of the rapidly circulating outbreak.

In South Korea, mass testing has confirmed more than 6,000 cases as of the health officials’ second update on Thursday, as well as more than 40 deaths. Italy has confirmed more than 3,000 cases, along with more than 100 deaths. Elsewhere in Asia, Malaysia has confirmed another 5 cases, bringing its national total to 55. Travelers who have recently visited any hot spots – northern Italy, Hokkaido (in Japan), Tehran and Daegu – will be temporarily banned from entering Malaysia, unless they are Malaysian citizens.

Officially, Iran has confirmed 92 deaths and 2,922 cases. But the Washington Post reported last night that data obtained from a string of hospitals in Tehran suggests that the epidemic has spread far more widely than the government has acknowledged.

CNN reports that the case total in India, the world’s second most populous country, has climbed to 29 (three have already recovered). In response, India has started screening all passengers who arrive at its airports for the virus. The Indian government is also preparing to evacuate its citizens from Iran, becoming the first country to plan an evacuation from the epicenter of the virus in the Middle East.

Based on the data, which was given to WaPo by a UK-based activist, the true case count in Iran is probably closer to 30,000 than the 3,000 cases counted by the government. And the death toll is likely closer to 1,000 than 100 – after all, the BBC reported last week that the true death toll was already north of 200 days ago.

Whatever the real number, as more senior government officials catch the virus, the Islamic Republic has kicked off its “national mobilization” scheme in which 300,000 medical teams joined by voluntary members of the IRGC – the Revolutionary Guard – will monitor families across the country and take unexplained action to help limit the spread. The teams will be stationed in “medical facilities, schools and military bases” across Iran. The Iranian government has also started to limit travel within the country after suspending issuing visas for travelers from other hot spots.

With 15 cases confirmed in Israel, the West Bank city of Bethlehem has closed all mosques and churches, setting of a controversy in the town where Jesus was reportedly born, Middle East Eye reports.

Over in Europe, Switzerland reported its first death overnight; health officials have confirmed 80 cases across the small alpine state. In Italy, where the number of cases climbed above 3,000 (total: 3,089) and deaths surpassed 100 (total: 107), Deputy Economy Minister Laura Castelli said the government could increase the size of the package to €5 billion, according to the FT. In the UK, PM Boris Johnson said Thursday morning during an interview with ITV that the best thing Britons can do to prevent the spread of the virus is to “just wash our hands,” Johnson said. He also stressed that for most people who catch the virus, this will be a “mild to moderate” illness. The number of confirmed cases in the UK climbed to 88 on Thursday. ITV also reported. Six of those were reported in Scotland, 2 in Wales and three in Northern Ireland.

In London, en employee in HSBC’s research department has reportedly tested positive for the virus, Reuters reported.

The latest increase in cases comes as the NHS warns that it doesn’t have enough nurses, ITV reports. Despite efforts to fill positions, more than 43,000 vacancies remain across the UK.

Meanwhile, the UK’s chief medical officer has said the UK is now “mainly in the second stage” of its plan to tackle coronavirus, which means authorities are focusing on delaying the virus.

After all, since western democracies simply can’t undertake the same heavy handed response imposed by China (though the west has the advantage of jumping on the problem instead of choosing to ignore it for weeks), the strategy is to manage the outbreak in a way that doesn’t completely overwhelm the health-care system, causing a rash of deaths.

Before we go, we’d like to leave readers with a little levity. Are you a recent college grad searching for a business plan?

Here’s a freebie, courtesy of the CCP:


Tyler Durden

Thu, 03/05/2020 – 07:17

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HSBC Evacuates London Office After Employee Tests Positive For Coronavirus

HSBC Evacuates London Office After Employee Tests Positive For Coronavirus

HSBC’s London office in Canary Wharf has evacuated its entire research department on Thursday morning after  an employee tested positive for the Coronavirus, Financial News reports .

The research department was then “deep-cleaned and sanitized”, according to a person familiar with the matter. The lender’s trading floor in the Canary Wharf office has currently not been impacted, the person said.

“If confirmed, it would mark the first case of the respiratory illness at a major financial institution in the UK and come in the same week that professional services firm Deloitte said a member of its London team was suffering from the virus,” said FN.

The news of a possible virus breakout in London’s financial district comes as the UK saw its most significant day-on-day increase in virus cases on Wednesday, bringing confirmed cases to a total of 87. Health minister Edward Argar told BBC this week the UK was “still very much” in the first “contain” phase of the government’s four-phase response to the virus.

UK’s chief medical adviser Prof Chris Whitty has said that in “the worst-case scenario,” 80% of the UK population could be infected with Covid-19.

Earlier in the day, Italy’s largest bank, UniCredit, said in a statement that its business center at Largo Cesare Battisti in Piacenza has been closed since Sunday after an employee tested positive for the Coronavirus. The Milan-based bank has asked employees who have been in contact with infected colleague to go in quarantine for 14 days. UniCredit also said it would contact clients who have recently visited the Piacenza office, The lender has already taken steps to contain the spread of the virus including encouraging employees to work from home and banning non-essential travel both in Italy and abroad.


Tyler Durden

Thu, 03/05/2020 – 06:32

via ZeroHedge News https://ift.tt/2uV0p0a Tyler Durden