Month: April 2020

Microsoft Rips As Sales Jump 15%, Company Reports “Minimal Impact” From COVID-19

Microsoft Rips As Sales Jump 15%, Company Reports “Minimal Impact” From COVID-19

Adding to the flurry of optimistic earnings reports from the big-tech market leaders, Microsoft reported surprisingly strong EPS and sales (particularly in its increasingly important cloud business) while claiming that COVID-19 had “minimal impact” on the quarter’s performance.

Specifically, MSFT reported revenue for the third quarter of $35.02 billion, a +15% jump y/y, vs. the consensus est. of $33.69 billion (with a range $32.75 billion to $34.77 billion).

Here’s a quick breakdown courtesy of BBG:

  • 3Q EPS $1.40 vs. $1.14 y/y, estimate $1.28 (range $1.17 to $1.35)

  • 3Q Productivity and Business Processes revenue $11.74 billion, +15% y/y, estimate $11.54 billion

  • 3Q Intelligent Cloud revenue $12.28 billion, +27% y/y, estimate $11.67 billion

  • 3Q More Personal Computing revenue $11.00 billion, +3% y/y, estimate $10.55 billion

  • 3Q capital expenditure $3.77 billion, +47% y/y

  • Covid Had Minimal Net Impact on Total Co. Rev.

  • Cloud Usage Increased in Some Segments

  • MSFT Saw Slowdown in Transactional Licensing in Final Weeks

  • MSFT: More Personal Computing Benefited From Increased Demand

The blow to Microsoft’s business from the outbreak and ensuing economic downturn was blunted by increases in Internet usage as well as a spike in demand for hardware and software related to the great transition to WFH.

In the Productivity and Business Processes and Intelligent Cloud segments, cloud usage increased, particularly in Microsoft 365 including Teams, Azure, Windows Virtual Desktop, advanced security solutions, and Power Platform, as customers shifted to work and learn from home. In the final weeks of the quarter, there was a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn.

In the More Personal Computing segment, Windows OEM and Surface benefited from increased demand to support remote work and learn scenarios, offset in part by supply chain constraints in China that improved late in the quarter. Gaming benefited from increased engagement following stay-at-home guidelines. Search was negatively impacted by reductions in advertising spend, particularly in the industries most impacted by COVID-19. The effects of COVID-19 may not be fully reflected in the financial results until future periods.

MSFT’s gaming segment benefited as millions of Americans whiled away the hours playing video games, though MSFT said its search segment was impacted by the drop in demand for advertising.

MSFT stock ripped in after-hours trading:

Though the report didn’t go into too much detail, MSFT warned that “catastrophic events or geo-political conditions, such as the COVID-19 pandemic…may disrupt our business,” though it didn’t offer anything substantial to replace the guidance it walked back weeks ago.

Read the press release below:

REDMOND, Wash. — April 29, 2020 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2020, as compared to the corresponding period of last fiscal year:
·        Revenue was $35.0 billion and increased 15%
·        Operating income was $13.0 billion and increased 25%
·        Net income was $10.8 billion and increased 22%
·        Diluted earnings per share was $1.40 and increased 23%
“We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything,” said Satya Nadella, chief executive officer of Microsoft. “Our durable business model, diversified portfolio, and differentiated technology stack position us well for what’s ahead.”

“In this dynamic environment, our sales teams and partners executed a solid third quarter, with Commercial Cloud revenue generating $13.3 billion, up 39% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”
COVID-19 Impact
In the third quarter of fiscal year 2020, COVID-19 had minimal net impact on the total company revenue.

In the Productivity and Business Processes and Intelligent Cloud segments, cloud usage increased, particularly in Microsoft 365 including Teams, Azure, Windows Virtual Desktop, advanced security solutions, and Power Platform, as customers shifted to work and learn from home. In the final weeks of the quarter, there was a slowdown in transactional licensing, particularly in small and medium businesses, and a reduction in advertising spend in LinkedIn.

In the More Personal Computing segment, Windows OEM and Surface benefited from increased demand to support remote work and learn scenarios, offset in part by supply chain constraints in China that improved late in the quarter. Gaming benefited from increased engagement following stay-at-home guidelines. Search was negatively impacted by reductions in advertising spend, particularly in the industries most impacted by COVID-19. The effects of COVID-19 may not be fully reflected in the financial results until future periods.
Segment Highlights
Revenue in Productivity and Business Processes was $11.7 billion and increased 15% (up 16% in constant currency), with the following business highlights:
·        Office Commercial products and cloud services revenue increased 13% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 27% in constant currency)
·        Office Consumer products and cloud services revenue increased 15% (up 17% in constant currency) with continued growth in Office 365 Consumer subscribers to 39.6 million
·        LinkedIn revenue increased 21% (up 22% in constant currency)
·        Dynamics products and cloud services revenue increased 17% (up 20% in constant currency) driven by Dynamics 365 revenue growth of 47% (up 49% in constant currency)
Revenue in Intelligent Cloud was $12.3 billion and increased 27% (up 29% in constant currency), with the following business highlights:
·        Server products and cloud services revenue increased 30% (up 32% in constant currency) driven by Azure revenue growth of 59% (up 61% in constant currency)
·        Enterprise Services revenue increased 6% (up 7% in constant currency)
Revenue in More Personal Computing was $11.0 billion and increased 3% (up 4% in constant currency), with the following business highlights:
·        Windows OEM revenue was relatively unchanged year over year
·        Windows Commercial products and cloud services revenue increased 17% (up 18% in constant currency)
·        Search advertising revenue excluding traffic acquisition costs increased 1%
·        Xbox content and services revenue increased 2%
·        Surface revenue increased 1% (up 2% in constant currency)
Return to Shareholders
Microsoft returned $9.9 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2020, an increase of 33% compared to the third quarter of fiscal year 2019.
Business Outlook
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.
Responding to COVID-19
At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.
Quarterly Product Releases and Enhancements 
Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.
Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.
Environmental, Social, and Governance (ESG)
To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.
Webcast Details
Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 29, 2021.
Constant Currency
Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with generally accepted accounting principles (GAAP).

About Microsoft
Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.
Forward-Looking Statements
Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:
·        intense competition in all of our markets that may lead to lower revenue or operating margins;
·        increasing focus on cloud-based services presenting execution and competitive risks;
·        significant investments in products and services that may not achieve expected returns;
·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
·        disclosure and misuse of personal data that could cause liability and harm to our reputation;
·        the possibility that we may not be able to protect information stored in our products and services from use by others;
·        abuse of our advertising or social platforms that may harm our reputation or user engagement;
·        the development of the internet of things presenting security, privacy, and execution risks;
·        issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
·        quality or supply problems;
·        the possibility that we may fail to protect our source code;
·        legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
·        claims that Microsoft has infringed the intellectual property rights of others;
·        claims against us that may result in adverse outcomes in legal disputes;
·        government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
·        potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
·        additional tax liabilities;
·        damage to our reputation or our brands that may harm our business and operating results;
·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
·        uncertainties relating to our business with government customers;
·        adverse economic or market conditions that may harm our business;
·        catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and
·        the dependence of our business on our ability to attract and retain talented employees.
For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.
All information in this release is as of March 31, 2020. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

 

 

 


Tyler Durden

Wed, 04/29/2020 – 16:19

via ZeroHedge News https://ift.tt/35iW0Sz Tyler Durden

Facebook Shares Explode Higher After Big Q1 Beat, Warns Of “Significant” Slowdown In Last Few Weeks

Facebook Shares Explode Higher After Big Q1 Beat, Warns Of “Significant” Slowdown In Last Few Weeks

Facebook shares are soaring after hours – back above $200 – after beating top line as well as better than expected daily- and monthly-active users, as engagement improved…

  • 1Q Rev. BEAT $17.74B, Est. $17.27B (up 18% YoY)

  • 1Q Ad Rev. BEAT $17.44B, Est. $17.10B (Up 17% YoY)

  • 1Q Daily Active Users BEAT 1.73B, Est. 1.68B

  • 1Q Monthly Active Users BEAT 2.60B, Est. 2.34B

All good news, but they do warn on revenues going forward (though do not offer guidance)…

We experienced a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020. Due to the increasing uncertainty in our business outlook, we are not providing specific revenue guidance for the second quarter or full-year 2020, but rather a snapshot on revenue performance in the second quarter thus far. 

After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago, down from the 17% year-over-year growth in the first quarter of 2020. The April trends reflect weakness across all of our user geographies as most of our major countries have had some sort of shelter-in-place guidelines in effect.

But the market doesn’t care – it’s panic-buying…

…maybe we should have a pandemic-driven global lockdown more often? However, Facebook isn’t immune to coronavirus.

“Like all companies, we are facing a period of unprecedented uncertainty in our business outlook. We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the U.S. dollar.”

Finally, on expenses, Facebook slightly decreases its expense range for 2020, to be between $52 billion and $56 billion, but said it’s committed to continuing to invest in product development and the recruitment of technical talent. Also the amount towards coronavirus recovery spend, around $300 million, will have an impact on earnings.


Tyler Durden

Wed, 04/29/2020 – 16:15

via ZeroHedge News https://ift.tt/3f5f0Z1 Tyler Durden

Gold Spikes As Fauci & The Fed Distract Stocks From Crushing Collapse In Economy

Gold Spikes As Fauci & The Fed Distract Stocks From Crushing Collapse In Economy

Seconds before the US GDP print, a well-timed report (and aggressively disseminated by mainstream media) on marginal success in a COVID therapy (mortality rates improved from 11.6% to 8.0%), which was then promoted by Fauci (who played down another study from The Lancet that showed no effect from the COVID therapy), distracted the stock market algos just enough from the economy’s worst collapse since 2008 (and devastation in consumption)…

Look over there…

Ignore this…

Source: Bloomberg

Oh and ignore this too…

Source: Bloomberg

Oh and even better news – expectations are for another 4-million-plus initial jobless claims tomorrow – that should be good for more stock market gains, because remember fake drug trials + helicopter money = good!

With Small Caps now up over 10% on the week – NOTE that for the 3rd day in a row, the close was weak…

Small Caps are up 41% off the lows…

“Most Shorted” stocks are up for the 6th day in a row (and 9th of the last 10 days)…

Source: Bloomberg

Banks ripped higher again today – 4th day in a row of opening squeeze gap higher…

Source: Bloomberg

Bond yields caught up to stocks today… then fell back

Source: Bloomberg

Mixed picture in bond-land with the short-end bid and long-end offered (2Y -1bps, 30Y +3.5bps)

Source: Bloomberg

30Y spiked on The Fed, only a few bps, but back into its two week range…

Source: Bloomberg

The dollar extended its decline to two-week lows…

Source: Bloomberg

And as the dollar dived, gold spiked on The Fed’s confirmation that it will do “whatever it takes”…

Cryptos all ramped today as the halving grows closer for Bitcoin…

Source: Bloomberg

Bitcoin soared up near $9,000 – its highest since the March puke…

Source: Bloomberg

Oil managed magnificent gains in the front-month once again after a smaller than expected crude inventory build BUT faded late on…

Quite a round trip on the week…

Source: Bloomberg

 

 

 

Finally, don’t forget… near record high valuations of the S&P as economic confidence is near record lows?

Source: Bloomberg

And this…

 


Tyler Durden

Wed, 04/29/2020 – 16:02

via ZeroHedge News https://ift.tt/3f1F4o0 Tyler Durden

FDA To Announce Emergency Use Authorization for Antiviral Remdesivir as COVID-19 Treatment

The antiviral drug remdesivir will be given an emergency use authorization as a treatment for COVID-19 by the Food and Drug Administration (FDA) shortly, reports The New York Times. Gilead Science, the maker of the compound, noted in a press release earlier today that it was “aware of positive data emerging from the National Institute of Allergy and Infectious Diseases’ (NIAID) study of the investigational antiviral remdesivir for the treatment of COVID-19. We understand that the trial has met its primary endpoint and that NIAID will provide detailed information at an upcoming briefing.”

Apparently, that briefing may occur at the White House later today with President Trump and Dr. Anthony S. Fauci, the head of the NIAID.

The Times reports that Fauci said that the federal trial indicated that the drug remdesivir could shorten the time to recovery by about a third.

“Although a 31 percent improvement doesn’t seem like a knockout 100 percent, it is a very important proof of concept because what it has proven is that a drug can block this virus,” Dr. Fauci said. “This is very optimistic.”

Mr. Trump called that a good sign. “Certainly it’s a positive, it’s a very positive event,” he said.

In addition, Gilead Sciences reported that an open-label observational trial found that five days of treatment with the intravenous drug for COVID-19 was essentially as effective as 10 days.

Scott Gottlieb, the former commissioner of the FDA, told the biomedical news site STAT that “remdesivir isn’t a home run but looks active and can be part of a toolbox of drugs and diagnostics that substantially lower our risk heading into the fall.”

An earlier Chinese study reported that remdesivir was no more effective than placebo in treating severe cases of COVID-19. However, that study did note that patients treated earlier in the course of the disease did seem to fare somewhat better.

Using the drug to treat patients earlier in the course of their disease may result in better outcomes. “We know that with most antiviral medications the earlier you give it the better it is,” said Boston Medical Center researcher Nahid Bhadelia to STAT. She suggested that means that treatment with the drug will likely be most effective in patients who have been infected more recently. “What will be important is that we find people on the outpatient side,” Bhadelia said. “Again, testing becomes important, we want to have them come to the hospital as soon as possible.”

A hopeful result, if still not an anti-COVID-19 silver bullet.

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The National Labor Relations Board Wants To Punish a Conservative Publisher for a Joke About Unions

The National Labor Relations Board (NLRB) has ordered Ben Domenech—publisher of the conservative website The Federalist, and a friend of mine—to take down a June 2019 tweet in which he joked about sending employees who wanted to unionize to work in “the salt mines.” Domenech has refused, and the case is now making its way through the courts.

Domenech’s tweet came in response to news that employees of Vox Media Inc. walked off the job in support of unionization. No one at The Federalist had publicly expressed any interest in unionizing, and two of the website’s six employees filed affidavits attesting that they viewed the tweet as a joke. As far as I know, Domenech doesn’t own any salt mines.

Kenneth Chu, an NLRB administrative law judge, nevertheless ruled that Domenech violated the 1935 Wagner Act, which prohibits employers from interfering with employees’ unionization efforts. Domenech explains what happened in an article for The Wall Street Journal:

The NLRB proceeded to invade our publication, heedless of the freedom of the press. Members of my staff were subpoenaed to testify in New York, where none of them lived and we had no office. The NLRB attempted to subpoena all emails and communications between staff members going back years—including about editorial decisions, hiring decisions, and confidential sources during our coverage of the Russia-collusion hoax.

Help arrived in the form of the New Civil Liberties Alliance, a nonprofit set up by legal scholar Philip Hamburger that defends constitutional rights against overreach by the administrative state.

The NLRB proposed a settlement: I delete the joke, I post information on the rights of employees to unionize, and the complaint goes away. I said no.

That meant the NLRB’s case against me would be adjudicated by an NLRB employee, Administrative Law Judge Kenneth Chu. As expected, we lost. The board called no witnesses. It submitted my tweet and printouts of Federalist articles and asserted we were not a publication but an “anti-union website.”

The government lawyer claimed that “the editorial positions of the website are reasonably . . . understood as Mr. Domenech’s own,” even though we publish thousands of conflicting opinions under various bylines. Federalist employees filed affidavits stating they viewed my tweet as a joke. Mr. Chu dismissed their opinions as subjective and irrelevant.

The NLRB does not claim that anyone at The Federalist complained about Domenech’s tweet. This entire action is the result of complaints filed with the NLRB by the leftist writer (and former NLRB attorney) Matt Bruenig and an attorney named Joel Fleming, both of whom acted based solely on the tweet. It’s concerning that two individuals who have nothing to do with a company can assert on behalf of its employees that their employer has violated their rights, but this is the reality permitted under the Wagner Act’s ambiguous, open-ended language.

Domenech is fighting the government’s decision. “Eventually we’ll get to a real court, where we’ll be able to assert our rights and prove our case,” he writes.

Bruenig, the original complainant, argues that Chu’s ruling is in keeping with decades of legal precedent:

“I was just joking” is not an uncommon thing people say in response to unfair labor practice charges based on coercive statements. This is not usually tolerated as a defense because, as the Eight Circuit (326 F.2d 910) wrote quite elegantly in 1964, “executives who threaten in jest run the risk that those subject to their power might take them in earnest and conclude the remarks to be coercive.”

Even as far back at 1977, NLRB joke cases (231 NLRB No. 40) were repeating boilerplate like “it is well established that the coercive and unlawful effect of a statement is not blunted merely because interrogations of, warnings to, or disparaging statements about union adherents are accompanied by laughter or made in an offhand humorous way.” In that case, the manager had asked some workers why they were wearing union buttons, and when they replied “because everyone else is,” the manager said “I’ll be damned if y’all can’t fuck up a wet dream,” which caused the workers to laugh. Following precedent, the NLRB ruled that the manager’s statement violated the [Wagner Act].

That there’s a long history of judges punishing employers for dumb jokes makes the matter more concerning, not less. In any case, Chu’s ruling contains a number of questionable statements: He held that the tweet “had no other purpose except to threaten the FDRLST employees with unspecified reprisal.” This is nonsense: Domenech is the only person who knows why he sent the tweet and what effect he intended it to have, and he has said he sent it as a joke. Chu’s assessment that the tweet would make a “reasonable” Federalist employee feel coerced is at odds with the fact that none of them say they felt coerced. Chu is insisting that he knows more about Domenech’s internal thought processes than Domenech does, and more about The Federalist‘s virtual office climate than the people who work there.

The free speech implications of the government’s position are obvious. The Wagner Act was intended to prevent employers from hampering unionization efforts. But if mere satirical condemnations of unionization are impermissible, then the First Amendment rights of employers and managers don’t seem to exist. That Chu’s ruling reflects a long history of legal precedent doesn’t make those earlier rulings worth protecting.

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Ninth Circuit Refuses to Reconsider Ruling that Mandating Union Organizer Access to Employer Property is not a Taking—but Eight Judges Dissent

 

Earlier today, the US Court of Appeals for the Ninth Circuit refused to grant en banc reconsideration of a three judge panel decision in Cedar Point Nursery v. Shiroma,  an important takings case where the panel had ruled there was no taking of private property requiring “just compensation” under the Fifth Amendment in a situation where the government had mandated that agricultural employers grant union organizers regular access to their property. The panel ruled that there was no taking largely because state regulations did not require owners to give union organizers the right to “unpredictably traverse their property 24 hours a day, 365 days a year.” Instead, they are only allowed to access the property at specified times, amounting to “360 hours a year out of a total 8,760 hours (and only 120 of those hours would be during the workday).” Thus, there is no “permanent physical occupation” of property, of the sort required by Supreme Court precedent for this to be considered a “per se” (automatic) taking, as opposed to one subject to the complex Penn Central balancing test, that usually comes out in favor of the government.

Today, a majority of the full Ninth Circuit ruled that the case would not be reconsidered en banc, by a much larger panel. However, eight judges joined a dissenting opinion authored by Judge Sandra Ikuta. Here is a summary of their position:

Once again, the Ninth Circuit endorses the taking of property without just compensation. See Horne v. U.S. Dep’t of Agric., 750 F.3d 1128 (9th Cir. 2014), rev’d sub nom. Horne v. Dep’t of Agric., 135 S. Ct. 2419 (2015). California property law and Supreme Court precedent make clear that an easement is private property protected by the Takings Clause. See, e.g., L.A. Terminal Land Co. v. Muir, 136 Cal. 36, 48 (1902); Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 831 (1987). In opposition to this precedent, the majority concludes there is no taking because the state’s appropriation of an easement is not a “permanent physical occupation.” Cedar Point Nursery v. Shiroma, 923 F.3d 524, 531–34 (9th Cir. 2019). This decision not only contradicts Supreme Court precedent but also causes a circuit split. See Hendler v. United States, 952 F.2d 136, 1377–78 (Fed. Cir. 1991). We should have taken this case en banc so that the Supreme Court will not have to correct us again….

To the extent there was any doubt as to whether the appropriation of an easement constitutes a taking, it was dispelled by Nollan [v. California Coastal Commission].There, the Court stated that if California were to require landowners to “make an easement across their beachfront available to the public,” there is “no doubt there would . . . be[] a taking.” Nollan, 483 U.S. at 831. According to the Court, “[t]o say that the appropriation of a public easement across a landowner’s premises does not constitute the taking of a property interest but rather . . . ‘a mere restriction on its use,’ is to use words in a manner that deprives them of all their ordinary meaning.” Id. (citation omitted).

The Federal Circuit’s decision in Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991), is in accord with these precedents. There, the Federal Circuit held that the federal government had acquired an uncompensated easement when “Government vehicles and equipment entered upon plaintiffs’ land from time to time, without permission, for purposes of installing and servicing . . . various [groundwater] wells.” Id. at 1377. Entry onto private property, “even though temporally intermittent,” effected a taking because “the concept of permanent physical occupation does not require that in every instance the occupation be exclusive, or continuous and uninterrupted.” Id.

The issue here comes down to whether a “permanent physical occupation” occurs only when it is literally continuous, or when the right to occupy continues indefinitely, but does not apply to all hours of the day, all the time. The Supreme Court precedent on this subject—like on a number of other takings issues—is far from a model of clarity, and this is one of the questions on which it is ambiguous. That said, I largely agree with the dissenting Ninth Circuit judges, and with the 1991 Federal Circuit decision they cite above. A permanent right to an easement to enter or occupy an owner’s land is a severe infringement on property rights even if applies only to certain hours of the day, and even if the intrusion is not continuous. Moreover, the right to exclude unwanted entrants is a central element of property rights in the Anglo-American legal tradition. So it is hard to argue that a major restriction on it is not a taking of property rights.

It’s also worth noting that this case has implications that go far beyond the union organizing context. If the Ninth Circuit majority’s position prevails, it could allow the government to impose a wide range of access requirements on owners without paying compensation.

As the dissenting judges point out, this Ninth Circuit ruling has a created a split with the Federal Circuit. This—combined with the intrinsic importance of the issue—makes it more likely that the Supreme Court will take the case, though of course it is far from certain they will do so.

 

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FDA To Announce Emergency Use Authorization for Antiviral Remdesivir as COVID-19 Treatment

The antiviral drug remdesivir will be given an emergency use authorization as a treatment for COVID-19 by the Food and Drug Administration (FDA) shortly, reports The New York Times. Gilead Science, the maker of the compound, noted in a press release earlier today that it was “aware of positive data emerging from the National Institute of Allergy and Infectious Diseases’ (NIAID) study of the investigational antiviral remdesivir for the treatment of COVID-19. We understand that the trial has met its primary endpoint and that NIAID will provide detailed information at an upcoming briefing.”

Apparently, that briefing may occur at the White House later today with President Trump and Dr. Anthony S. Fauci, the head of the NIAID.

The Times reports that Fauci said that the federal trial indicated that the drug remdesivir could shorten the time to recovery by about a third.

“Although a 31 percent improvement doesn’t seem like a knockout 100 percent, it is a very important proof of concept because what it has proven is that a drug can block this virus,” Dr. Fauci said. “This is very optimistic.”

Mr. Trump called that a good sign. “Certainly it’s a positive, it’s a very positive event,” he said.

In addition, Gilead Sciences reported that an open-label observational trial found that five days of treatment with the intravenous drug for COVID-19 was essentially as effective as 10 days.

Scott Gottlieb, the former commissioner of the FDA, told the biomedical news site STAT that “remdesivir isn’t a home run but looks active and can be part of a toolbox of drugs and diagnostics that substantially lower our risk heading into the fall.”

An earlier Chinese study reported that remdesivir was no more effective than placebo in treating severe cases of COVID-19. However, that study did note that patients treated earlier in the course of the disease did seem to fare somewhat better.

Using the drug to treat patients earlier in the course of their disease may result in better outcomes. “We know that with most antiviral medications the earlier you give it the better it is,” said Boston Medical Center researcher Nahid Bhadelia to STAT. She suggested that means that treatment with the drug will likely be most effective in patients who have been infected more recently. “What will be important is that we find people on the outpatient side,” Bhadelia said. “Again, testing becomes important, we want to have them come to the hospital as soon as possible.”

A hopeful result, if still not an anti-COVID-19 silver bullet.

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The National Labor Relations Board Wants To Punish a Conservative Publisher for a Joke About Unions

The National Labor Relations Board (NLRB) has ordered Ben Domenech—publisher of the conservative website The Federalist, and a friend of mine—to take down a June 2019 tweet in which he joked about sending employees who wanted to unionize to work in “the salt mines.” Domenech has refused, and the case is now making its way through the courts.

Domenech’s tweet came in response to news that employees of Vox Media Inc. walked off the job in support of unionization. No one at The Federalist had publicly expressed any interest in unionizing, and two of the website’s six employees filed affidavits attesting that they viewed the tweet as a joke. As far as I know, Domenech doesn’t own any salt mines.

Kenneth Chu, an NLRB administrative law judge, nevertheless ruled that Domenech violated the 1935 Wagner Act, which prohibits employers from interfering with employees’ unionization efforts. Domenech explains what happened in an article for The Wall Street Journal:

The NLRB proceeded to invade our publication, heedless of the freedom of the press. Members of my staff were subpoenaed to testify in New York, where none of them lived and we had no office. The NLRB attempted to subpoena all emails and communications between staff members going back years—including about editorial decisions, hiring decisions, and confidential sources during our coverage of the Russia-collusion hoax.

Help arrived in the form of the New Civil Liberties Alliance, a nonprofit set up by legal scholar Philip Hamburger that defends constitutional rights against overreach by the administrative state.

The NLRB proposed a settlement: I delete the joke, I post information on the rights of employees to unionize, and the complaint goes away. I said no.

That meant the NLRB’s case against me would be adjudicated by an NLRB employee, Administrative Law Judge Kenneth Chu. As expected, we lost. The board called no witnesses. It submitted my tweet and printouts of Federalist articles and asserted we were not a publication but an “anti-union website.”

The government lawyer claimed that “the editorial positions of the website are reasonably . . . understood as Mr. Domenech’s own,” even though we publish thousands of conflicting opinions under various bylines. Federalist employees filed affidavits stating they viewed my tweet as a joke. Mr. Chu dismissed their opinions as subjective and irrelevant.

The NLRB does not claim that anyone at The Federalist complained about Domenech’s tweet. This entire action is the result of complaints filed with the NLRB by the leftist writer (and former NLRB attorney) Matt Bruenig and an attorney named Joel Fleming, both of whom acted based solely on the tweet. It’s concerning that two individuals who have nothing to do with a company can assert on behalf of its employees that their employer has violated their rights, but this is the reality permitted under the Wagner Act’s ambiguous, open-ended language.

Domenech is fighting the government’s decision. “Eventually we’ll get to a real court, where we’ll be able to assert our rights and prove our case,” he writes.

Bruenig, the original complainant, argues that Chu’s ruling is in keeping with decades of legal precedent:

“I was just joking” is not an uncommon thing people say in response to unfair labor practice charges based on coercive statements. This is not usually tolerated as a defense because, as the Eight Circuit (326 F.2d 910) wrote quite elegantly in 1964, “executives who threaten in jest run the risk that those subject to their power might take them in earnest and conclude the remarks to be coercive.”

Even as far back at 1977, NLRB joke cases (231 NLRB No. 40) were repeating boilerplate like “it is well established that the coercive and unlawful effect of a statement is not blunted merely because interrogations of, warnings to, or disparaging statements about union adherents are accompanied by laughter or made in an offhand humorous way.” In that case, the manager had asked some workers why they were wearing union buttons, and when they replied “because everyone else is,” the manager said “I’ll be damned if y’all can’t fuck up a wet dream,” which caused the workers to laugh. Following precedent, the NLRB ruled that the manager’s statement violated the [Wagner Act].

That there’s a long history of judges punishing employers for dumb jokes makes the matter more concerning, not less. In any case, Chu’s ruling contains a number of questionable statements: He held that the tweet “had no other purpose except to threaten the FDRLST employees with unspecified reprisal.” This is nonsense: Domenech is the only person who knows why he sent the tweet and what effect he intended it to have, and he has said he sent it as a joke. Chu’s assessment that the tweet would make a “reasonable” Federalist employee feel coerced is at odds with the fact that none of them say they felt coerced. Chu is insisting that he knows more about Domenech’s internal thought processes than Domenech does, and more about The Federalist‘s virtual office climate than the people who work there.

The free speech implications of the government’s position are obvious. The Wagner Act was intended to prevent employers from hampering unionization efforts. But if mere satirical condemnations of unionization are impermissible, then the First Amendment rights of employers and managers don’t seem to exist. That Chu’s ruling reflects a long history of legal precedent doesn’t make those earlier rulings worth protecting.

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Ninth Circuit Refuses to Reconsider Ruling that Mandating Union Organizer Access to Employer Property is not a Taking—but Eight Judges Dissent

 

Earlier today, the US Court of Appeals for the Ninth Circuit refused to grant en banc reconsideration of a three judge panel decision in Cedar Point Nursery v. Shiroma,  an important takings case where the panel had ruled there was no taking of private property requiring “just compensation” under the Fifth Amendment in a situation where the government had mandated that agricultural employers grant union organizers regular access to their property. The panel ruled that there was no taking largely because state regulations did not require owners to give union organizers the right to “unpredictably traverse their property 24 hours a day, 365 days a year.” Instead, they are only allowed to access the property at specified times, amounting to “360 hours a year out of a total 8,760 hours (and only 120 of those hours would be during the workday).” Thus, there is no “permanent physical occupation” of property, of the sort required by Supreme Court precedent for this to be considered a “per se” (automatic) taking, as opposed to one subject to the complex Penn Central balancing test, that usually comes out in favor of the government.

Today, a majority of the full Ninth Circuit ruled that the case would not be reconsidered en banc, by a much larger panel. However, eight judges joined a dissenting opinion authored by Judge Sandra Ikuta. Here is a summary of their position:

Once again, the Ninth Circuit endorses the taking of property without just compensation. See Horne v. U.S. Dep’t of Agric., 750 F.3d 1128 (9th Cir. 2014), rev’d sub nom. Horne v. Dep’t of Agric., 135 S. Ct. 2419 (2015). California property law and Supreme Court precedent make clear that an easement is private property protected by the Takings Clause. See, e.g., L.A. Terminal Land Co. v. Muir, 136 Cal. 36, 48 (1902); Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 831 (1987). In opposition to this precedent, the majority concludes there is no taking because the state’s appropriation of an easement is not a “permanent physical occupation.” Cedar Point Nursery v. Shiroma, 923 F.3d 524, 531–34 (9th Cir. 2019). This decision not only contradicts Supreme Court precedent but also causes a circuit split. See Hendler v. United States, 952 F.2d 136, 1377–78 (Fed. Cir. 1991). We should have taken this case en banc so that the Supreme Court will not have to correct us again….

To the extent there was any doubt as to whether the appropriation of an easement constitutes a taking, it was dispelled by Nollan [v. California Coastal Commission].There, the Court stated that if California were to require landowners to “make an easement across their beachfront available to the public,” there is “no doubt there would . . . be[] a taking.” Nollan, 483 U.S. at 831. According to the Court, “[t]o say that the appropriation of a public easement across a landowner’s premises does not constitute the taking of a property interest but rather . . . ‘a mere restriction on its use,’ is to use words in a manner that deprives them of all their ordinary meaning.” Id. (citation omitted).

The Federal Circuit’s decision in Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991), is in accord with these precedents. There, the Federal Circuit held that the federal government had acquired an uncompensated easement when “Government vehicles and equipment entered upon plaintiffs’ land from time to time, without permission, for purposes of installing and servicing . . . various [groundwater] wells.” Id. at 1377. Entry onto private property, “even though temporally intermittent,” effected a taking because “the concept of permanent physical occupation does not require that in every instance the occupation be exclusive, or continuous and uninterrupted.” Id.

The issue here comes down to whether a “permanent physical occupation” occurs only when it is literally continuous, or when the right to occupy continues indefinitely, but does not apply to all hours of the day, all the time. The Supreme Court precedent on this subject—like on a number of other takings issues—is far from a model of clarity, and this is one of the questions on which it is ambiguous. That said, I largely agree with the dissenting Ninth Circuit judges, and with the 1991 Federal Circuit decision they cite above. A permanent right to an easement to enter or occupy an owner’s land is a severe infringement on property rights even if applies only to certain hours of the day, and even if the intrusion is not continuous. Moreover, the right to exclude unwanted entrants is a central element of property rights in the Anglo-American legal tradition. So it is hard to argue that a major restriction on it is not a taking of property rights.

It’s also worth noting that this case has implications that go far beyond the union organizing context. If the Ninth Circuit majority’s position prevails, it could allow the government to impose a wide range of access requirements on owners without paying compensation.

As the dissenting judges point out, this Ninth Circuit ruling has a created a split with the Federal Circuit. This—combined with the intrinsic importance of the issue—makes it more likely that the Supreme Court will take the case, though of course it is far from certain they will do so.

 

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Global Economic Activity May Have ‘Bottomed’ But Don’t Expect Any ‘V-Shaped’ Recovery; Fathom

Global Economic Activity May Have ‘Bottomed’ But Don’t Expect Any ‘V-Shaped’ Recovery; Fathom

A new report from Fathom’s Recession Watch indicates global economic activity may have troughed in the last several weeks, but that doesn’t guarantee a V-shaped recovery. 

We noted on Tuesday that Goldman Sach’s coronavirus activity tracker showed some signs of life amid an unprecedented collapse in aggregate demand. 

Here are the highlights from Fathom’s report: 

  • Global economic activity may have hit its trough in the past couple of weeks

  • But output is likely to remain below pre-COVID 19 levels for an extended period

  • It is unclear how much restrictions can be relaxed while keeping R below 1

  • Excess mortality data from a range of countries suggest official figures understate the COVID-19 impact on deaths

Fathom points out that relaxation in strict social distancing measures has been seen in Europe and the US. It suggests that global economic activity could be finding a trough. Shown below, the bottom in air travel occurred 12 days ago. The report said, “Global GDP may have stopped declining, but is still at levels well below those from just a few months ago.”

While a bottoming in global economic activity could certainly be possible, the research firm said, “it is too early to identify real green shoots.”  

“The US Conference Board survey of American consumers offers some dose of optimism. Its measure of households’ ‘present situation’ fell by a record 90.3 points in April, which was more than double the previous record monthly decline. However, the ‘expected’ situation actually increased by 7 percentage points after declining in March. Are US consumers already pricing in a swift recovery? Perhaps. Large fiscal and monetary stimulus has supported asset prices and should keep incomes broadly stable in the coming months even for those who have lost their job. The pessimistic interpretation is that consumers remain too sanguine about the medium-term economic and health consequences of COVID-19.”

And this is absolutely shocking… 

“It is now clear that while entry into lockdown was swift, exit will not be. Estimates of the New York COVID-19 reproductive rate suggest that this figure has dropped to 0.8 and is therefore consistent with a gradual erosion of the virus. It is a big improvement from COVID-19’s reproductive rate without mitigation, which is thought to be around 2.5 or 3. But it remains very close to the critical threshold of 1, which separates erosion and expansion of the virus. Moreover, that figure bottomed around two weeks after lockdown and has remained broadly stable since then, suggesting measures to reduce it further such as centralised quarantine of infected patients would not be politically palatable. More importantly, it means that even gradual restrictions on New Yorkers risk moving the reproduction rate back above 1, leading to increasing daily caseloads. Indeed, reports from Germany yesterday said its reproduction rate had risen to above 1.

While almost all countries are following similar approaches, there appears to be a difference between those who want to flatten and those who want to bend their curves. Countries such as Australia and New Zealand seem to be trying to suppress the virus entirely, with daily new cases below 100 before relaxing restrictions. That is consistent with bending. Getting cases to such low levels should mean that future test-and-trace strategies are more achievable. In contrast, countries in Europe and individual US states appear willing to ease lockdown measures subject to the constraint of the reproduction rate being below 1 and the health system not being overwhelmed, even if that means an ongoing spread of the virus.”

“Further signs of a different approach come from the UK government, which appears to have changed one of its five rules for exiting the lockdown. Previously, no exit would be considered before the government was confident of no “second peak of infections”. That language has since been changed to no “second peak of infections that would overwhelm the NHS”. The distinction is key. The latter suggests comfort with rising cases as long as there is increased NHS capacity to deal with them. (The construction of new hospitals in recent weeks suggests that there is.) It points to a desire on the part of policymakers for easing the UK lockdown earlier rather than later even if it means continued transmission of the virus.

This more relaxed approach will almost certainly boost economic activity earlier than a world of more extended lockdowns but it comes with risks. For one, some citizens will be less willing to resume normal economic activity with ongoing cases and fatalities. Moreover, attempting to fine-tune restrictions risks moving too fast, particularly if the reproduction rate is only slightly below 1, perhaps leading to a re-introduction of more severe restrictions. For those reasons, it is difficult to see economic activity returning to pre-virus levels anytime soon. Our most likely, and most optimistic, scenario sees GDP in Europe and the US 5% below 2019 levels through 2021. The risks to that, however, are skewed to the downside.” 

As for the duration of the recovery returning the US to pre-corona levels, well, Scott Minerd, the chief investment officer of Guggenheim Investments, believes it could take upwards of “four years” for a recovery to take place adding that “to think that the economy is going to reaccelerate in the third quarter in a V-shaped recovery to the level where gross domestic product (GDP) was prior to the pandemic is unrealistic.”

Even though, as per Fathom’s call, the global economy might have found a bottom after one of the worst crashes in history – that doesn’t necessarily mean a V-shaped recovery is ahead, preferably something of a U-shaped or even L-shaped could be seen. 


Tyler Durden

Wed, 04/29/2020 – 15:45

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