HFT Giant To Challenge Citadel’s Dominance Of Retail Stock Trading

HFT Giant To Challenge Citadel’s Dominance Of Retail Stock Trading

By now it’s common knowledge that the golden goose that powers the tremendous revenue and cash flow juggernaut of HFT giant Citadel, which resulted in record EBITDA of $4 billion last year, more than doubling the prior year results…

… not to mention the driving force behind Ken Griffen’s mansion and artwork collection, is Citadel’s near monopoly when it comes to controlling retail orderflow in the US: Citadel Securities estimates that it commands 27% of equity volume market share in the U.S., up from 21% in 2017 a recent loan private presentation revealed; the company is especially dominant in retail order flow, with 46% of the market.

There’s more: according to Bloomberg, Citadel’s EBITDA for Q4 was $1 billion and a whopping $4.1 billion for the year, also a record. It also means that Citadel has an EBITDA margin of more than 60%, an unprecedented number even for a high-margin brokerage. 

So seeing how Citadel’s near-monopoly of this particular corner of the market had led to such staggering monetary gains, we were always confused why there is so little competition in the retail orderflow business.

Well, that’s finally changing.

According to WSJ, Hudson River Trading, one of the biggest high-frequency trading firms, is planning to enter the business of executing stock trades for retail investors. By doing so, the New York-based Hudson River sets its sights on two huge rivals: Citadel Securities and Virtu Financial, which combined handle more than 70% of individual investors’ stock orders.

The firm – which handles 8% of daily U.S. stock-trading volume, or about a third of Citadel’s market share – has been building out a so-called retail wholesaler business. It aims to launch later this year or in early 2022, an executive at the firm told The Wall Street Journal. Wholesalers – such as Citadel and Virtu – execute orders to buy and sell stocks submitted by people using online brokerages such as Robinhood Markets Inc. and TD Ameritrade. In fact, Citadel has long been the single biggest paying client to Robinhood…

… and what it gets in exchange for these orderflow payments, is a first look at what everyone in the retail space is buying and selling, both en masse and at the individual level. Which of course is known as frontrunning, but because “everyone does it”, payment for orderflow is viewed as perfectly legal in the US.

Why? Because of the universal “get out of jail” card – namely that wholesalers “provide liquidity” which of course is bullshit – liquidity collapses once these wholesalers have no more retail trades to frontrun or when volatility surges, resulting in numerous flash crashes, as for bid/ask spreads, these shrink simply because the HFTs position themselves inbetween the natural buyers and sellers in hopes of getting the trade ahead of everyone else.

“We have a lot of respect for Citadel Securities and Virtu and their ability to provide great execution for retail investors,” Adam Nunes, Hudson River’s head of business development, told the WSJ. “We do see demand from retail brokers for an additional wholesaler. We are confident that we can compete with Citadel Securities and Virtu in providing liquidity to retail investors, the same way we do on exchanges.”

This too, is a joke: as even the WSJ admits, “most retail traders would be unlikely to notice the effect of increased competition from Hudson River. Investors typically save a small amount of money, often just a fraction of a penny per share, by having their orders routed to wholesalers.” However, it does mean that there will be one more shark swimming in the waters, hoping to frontrun their orders away.

What Hudson River’s involvement really means is that Citadel’s market share of retail orderflow is about to drop as competition ramps up, while the money firms like Robinhood who sell retail traffic, will pocket from HFTs should rise as there is more competition for the same limited universe of orders.

That said, it’s unclear how much longer such a clearly manipulative practice will remain legal. The SEC recently launched a broad review of payment for order flow and related practices, while Chairman Gary Gensler, who announced the review earlier this month, has also voiced concerns that the wholesaler business is too concentrated.

Besides Citadel Securities and Virtu, several other wholesalers compete to execute individual investors’ stock orders. Most are units of high-speed trading firms, for the simple reason that only an HFT can benefit from frontrunning odd lot retail orders.

Unlike Citadel, Hudson River maintains a low profile, even though it has grown into a huge competitor in global financial markets since its founding in 2002. The firm employs more than 500 people around the world, and is active in stocks, options, futures, currencies, bonds and cryptocurrencies. Like many HFT firms, Hudson River is a proprietary trading firm that manages its own money and doesn’t take outside capital. It too operates under the flawed umbrella that is “provides liquidity.”

Nunes said Hudson still needed to clear some final regulatory and technology hurdles before it could begin executing trades for individual investors. The firm decided to enter the wholesaler business several years ago, well before the recent meme-stock frenzy, he said.

Tyler Durden
Wed, 06/30/2021 – 14:41

via ZeroHedge News https://ift.tt/2Tny2Uv Tyler Durden

FOSTA’s Failure: The 2018 Sex Trafficking Law Has Been Worse Than Useless So Far


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Is FOSTA a failure?

The federal law concerning commercial sex ads was pitched and passed by Congress with extreme urgency, as activists and politicians insisted it was absolutely necessary for stopping sexual violence and exploitation. But FOSTA—short for the Allow States and Victims to Fight Online Sex Trafficking Act—has only factored into one criminal prosecution since its passage in 2018. Meanwhile, it’s made finding and fighting sex criminals more difficult.

The law’s lack of usage and its unintended consequences are the subject of a new report from the Government Accountability Office (GAO), which looked at cases brought by the U.S. Department of Justice (DOJ) against commercial sex ad platforms from 2014 through March 2021.

The Feds Didn’t Need FOSTA

Before and after the passage of FOSTA, the U.S. Department of Justice has preferred to use money laundering and racketeering charges to target adult-advertising platforms for criminal prosecutions.

Since 2014, DOJ has filed at least 11 cases against websites that allowed ads for sex work, leading to the prosecution of 23 people and seven organizations. Only one of these cases—filed in June 2020 against Cityxguide.com—has utilized FOSTA.

The first DOJ case was filed in June 2014 against myredbook.com. The second came in 2015, against rentboy.com. Next up: Backpage.com. (This tally does not count state prosecutions DOJ assisted with but did not prosecute on its own, such as the 2016 takedown of Seattle’s The Review Board.)

In spring 2018, the DOJ filed three cases involving Backpage. According to FOSTA advocates, prosecuting Backpage was the main reason FOSTA was needed. But this was never true—as evidenced by the fact that the site was seized and those affiliated with it charged before FOSTA became law.

Nor has the DOJ needed FOSTA to target Backpage descendants. Since FOSTA’s passage, the DOJ has initiated six more criminal prosecutions of commercial sex platforms. Five out of these six did not involve FOSTA charges.

DOJ officials told GAO that this may be partly because of the law’s newness but also because they’ve seen so much success using the old statutes. Racketeering, money laundering, and conspiracy statutes have long been used by the federal government to target prostitution and those who enable it.

But FOSTA was also aimed at prostitution broadly—not just sex trafficking, though this more salacious element was the near-exclusive focus of advocates, media, and legislators pushing for the new law.

Prostitution—which is not a federal crime—is often a consensual matter between two adults. By contrast, sex trafficking by definition involves either an adult being forced, coerced, or defrauded into prostitution or someone under age 18 engaging in prostitution (on their own accord or via force, fraud, or coercion). “While prostitution and sex trafficking both involve commercial sex activity, sex trafficking is defined under federal law as inherently exploitative,” explains the GAO report.

FOSTA dealt with both prostitution and sex trafficking, creating the new federal crime of owning, managing, or operating “an interactive computer service […] with the intent to promote or facilitate the prostitution of another person.” It also carved out an exception to Section 230, the federal communications law that shields websites from some liability for user-generated content. Under FOSTA, Section 230 does not apply in civil lawsuits involving claims of sex trafficking or in state criminal prosecutions involving allegations of sex trafficking or managing a website that promotes prostitution.

States Didn’t Need FOSTA 

FOSTA’s change to Section 230 was one long pushed for by state attorneys general.

Before FOSTA, it was already a federal crime to knowingly advertise a sex trafficking victim. And, as we’ve seen, the DOJ could also go after websites for prostitution ads by using money laundering, conspiracy, and racketeering charges. But until FOSTA, Section 230 precluded state attorneys general and private actors from successfully taking websites to court for merely running ads that later led to sex crimes. State prosecutors that tried it—including now-Vice President Kamala Harris—kept losing in court.

Attorneys general tend to flock toward law enforcement issues that can get them lots of press and allow them to seize ample assets or negotiate big settlements. Yet here was a hot-button issue—sex trafficking and ads that facilitated it—perfect for getting attention and making money, with just one thing—Section 230, “the Internet’s First Amendment“—perceived as standing in their way.

So, for years, state attorneys general begged Congress to change federal law so they could ignore Section 230 when it came to cases involving sex ads. FOSTA granted them this power.

Yet since FOSTA was passed more than three years ago, states have declined to file civil suits or criminal charges against adult-ad platforms. Instead, they’ve moved on to targeting deep-pocketed and mainstream tech companies such as Facebook and Google with antitrust lawsuits (and pushing further erosion of Section 230).

Two of the main premises for passing FOSTA were that the law was needed to target Backpage and that state attorneys general were missing a crucial tool. Neither justification holds up.

Still, FOSTA wouldn’t be a complete failure if it accomplished another goal: fighting sex trafficking. And yet…

FOSTA Didn’t Fight Trafficking (But Backpage Did) 

FOSTA and the takedown of Backpage have made finding and fighting sex criminals more difficult, according to the GAO report.

Since FOSTA’s passage, the commercial sex ad market has become more highly fragmented and more likely to be based overseas. This “heightens already-existing challenges law enforcement face in gathering tips and evidence,” the report says. Those running the newer platforms often “host servers abroad, reside abroad, use offshore bank accounts and financial institutions, or introduce third parties to attempt to obscure or distance themselves from the day-to-day operation of their platforms, according to DOJ officials.”

Whereas sites like Backpage and Craigslist were willing to work with legal authorities—reporting suspicious ads, turning over information relevant to prosecutions, etc.—the new crop of commercial sex ad platforms are much less responsive and helpful. As a result, prosecuting their users has become more difficult, as has finding the victims of sex trafficking.

“According to a 2019 FBI document, the FBI’s ability to identify and locate sex trafficking victims and perpetrators was significantly decreased following the takedown of Backpage.com,” states the GAO report. “According to FBI officials, this is largely because law enforcement was familiar with backpage.com, and backpage.com was generally responsive to legal requests for information.”

In contrast, “obtaining evidence from entities overseas may be more cumbersome and time-intensive, as those who control such platforms may not voluntarily respond to the legal process, and mutual legal assistance requests may take months, if not years, according to DOJ officials.”

The FBI also told GAO that it’s seen more sex ads migrate to “social media, dating, hookup, and messaging/communication platforms.” A combination of factors—including greater anonymity on these sites, auto-deleting options, encrypted messaging, and the large number of such platforms—also makes finding victims and building cases off of them more difficult than it was when a few platforms dominated the sex-ad marketplace.

Civil Suits and Chilled Speech

There are some areas where FOSTA seems to be making a major impact—albeit not necessarily a positive one. In the wake of FOSTA’s passage, a number of platforms have begun to crack down on sex worker posts and/or on sex-related content more generally.

Some platforms—such as Craigslist, which shut down its entire personals section in the wake of FOSTA—admitted to changing their policies in direct response to the law. Many more have quietly cracked down on sexual content.

Such crackdowns can be seen in changes to terms of service, and in countless tales of sex workers having their social media posts deleted or accounts canceled.

Evidence suggests these changes haven’t prevented predators—who can still easily use private chat and message functions—from using these services to recruit and communicate with victims. But it has made it harder for independent sex workers to use online platforms (which, incidentally, could put them in danger by cutting into their incomes and necessitating riskier methods of finding and communicating with customers), and led to a general chilling of sexuality-related speech and imagery on the public parts of these websites.

This sort of sanitization of the internet has long been a goal of many of the groups that pushed for FOSTA, including the National Center on Sexual Exploitation (NCOSE), a conservative morals group formerly known as Morality in Media. And making it harder for anyone (including consenting adults) to engage in sex work is also on the agenda of many FOSTA proponents.

On these fronts, FOSTA has been a success. It’s just not the success story that supporters promised, which is that FOSTA would help sex workers and sex trafficking victims.

So far, no victims have obtained restitution as a result of FOSTA. “As of March 2021, one individual had sought civil recovery in federal court under section 3 of FOSTA, but no damages were awarded and the case was dismissed,” according to the GAO report.

Recently, however, NCOSE has been helping orchestrate new federal lawsuits—so far, against Twitter, Pornhub parent company MindGeek, and XVideos—accusing platforms of facilitating sex trafficking. These, too, seem to have serious flaws, and it’s unclear whether they’ll accomplish anything but helping NCOSE get good press.

The Success of FOSTA 

So, is FOSTA a failure? If you accepted political grandstanding around the issue, then yes. FOSTA has failed at the goals publicly stated by most activists, attorneys general, and lawmakers who pushed for its passage.

But there was always a reason to suspect those publicly stated goals. For one, the DOJ was already having success prosecuting prostitution content, had already seized Backpage without it, and had actually urged against FOSTA’s passage. For another, Congress had just passed a sex-ad law a few years earlier (the 2015 SAVE Act) that had gone completely unused.

In addition, politicians pushing for the law had refused to listen to sex workers and non-religious victims groups—who opposed the law en masse—about the negative consequences it would have on their work and safety and who challenged the claim that this law was for their protection. Meanwhile, the groups they did listen to were largely radical feminists and Christian conservatives, openly dedicated to eradicating all sex work and pornography and prohibiting free speech online around even non-criminal displays of sexuality.

For these activist groups, the fight for FOSTA was a great opportunity to get invited to testify before Congress, get their names in the press, and raise money, all while tacitly pressuring internet companies to start cracking down on all sorts of sexual content. And for politicians—in Congress and state prosecutors’ offices—it was a great way to grandstand about fighting crime and helping women without having to make any politically difficult decisions.

FOSTA may not have been legally necessary or socially useful. But in certain prohibitionist and public relations terms, it’s been a resounding success.

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The Stealthy Economic Radicalism of Biden’s Boring Presidency


sipaphotoseleven877284

In the half a year that Joe Biden has been president, it has become something approaching conventional wisdom that he is a boring politician, running a boring presidency that is focused on enacting boring policies. Even his most entrenched political opposition cannot seem to find much to engage or enrage. 

A recent Atlantic article on the downturn in conservative publishing, for example, noted that it has been hard for right of center authors and editors to turn Biden into the sort of villain who moves books, and that his “relative dullness is his superpower.” Similarly, a report in Axios this week declared that the “boring news cycle” had led to a downturn for partisan media. Opposition outlets usually see a boost when a new president from the opposing party settles in the White House; this time, that hadn’t happened. “While the Biden administration has seen plenty of debate over policy,” the Axios report said, “economics and a crisis at the border, personality-based controversy has largely been absent.” 

Biden, in this narrative, is boring. And unless you are a wonk engaged in the minutiae of policy debate—how big is the output gap? Is the federal unemployment insurance bonus slowing the recovery? How much should we worry about inflation?—his policies are boring too. 

This is fair enough, in some ways: Compared to Donald Trump, who specialized in intemperate outbursts, bizarre personal fixations, and Twitter provocations perfectly calibrated to drive his opponents mad, Biden’s presidential persona is a cloud of calm. But those pesky policy debates are, in fact, worth engaging, even if Biden has soft-sold their likely consequences. 

Consider Biden’s big social-spending proposal, the American Families Plan, which promises a vast expansion of welfare spending that would put a majority of Americans on federal benefits—even when the economy is strong and the country is not in crisis. In a new working paper, the Hoover Institution’s John F. Cogan and Daniel Heil find that the plan would add more than 6 million households, and more than 21 million Americans, to federal entitlement rolls—pushing the percentage of non-elderly American households receiving such entitlements past the 50 percent mark. Outside of possibly the pandemic years of 2020 and 2021 for which data is not yet available, they write, “this would be the first time in U.S. history that a majority of working age households are federal entitlement recipients.” Biden wants to make a majority of prime age American households (even more) dependent on federal largesse, a sea-change in the relationship between individuals and the federal government. But I suppose that’s boring in comparison to some crazy presidential tweet. 

Then there are Biden’s tax plans which, even according to center-left analysts, would ultimately raise taxes on 60 percent of taxpayers — and possibly an even larger percentage of the middle class. This is in spite of Biden’s repeated claims that no one making less than $400,000 a year will pay more in taxes. In theory, Biden keeps this pledge by raising taxes on corporations, not individuals. But even left-leaning economists agree that individuals eventually end up bearing some of that burden…but ah, sorry, I’m being boring again. 

Meanwhile, Biden’s budget, if enacted in full with both the American Families Plan and the American Jobs Plan (his infrastructure proposal), would result in fewer jobs and a smaller economy after a decade, according to an estimate from the Tax Foundation

The point is that these sorts of plans, with their tax rate adjustments and opaque spending buckets and bureaucratic implementation schemes might seem boring—but if enacted, they will have serious consequences for both individual livelihoods and the broader economy in the relatively near future. 

The putative boringness of Biden’s presidency has at least one real upside: Under the last few presidents, and Trump in particular, too many Americans have become raging political obsessives, viewing far too much of life through the lens of national politics. During the pandemic, as states shut down economic activities and a considerable amount of social life moved into highly politicized online spaces, that tendency only increased. America, or at least Extremely Online America, got the Facebook and Twitter version of cabin fever. 

Thankfully, as the pandemic ebbs and states reopen, that seems to be subsiding at least a little, which is one reason why partisan media has hit a slump. There is something genuinely healthy about turning away from vicious online political squabbling as a central mode of living. 

At the same time, that turn should not become a vehicle for a highly partisan, highly ideological overhaul of federal power. There is a stealth economic radicalism hidden by Biden’s boring nature, and his very boringness has become a kind of strategic tool. Part of the problem, of course, is that too many Republicans, still entranced by the dying embers of Trump’s presidency, are not all that interested in Biden’s economic agenda. There is a deep failure on the part of the broader GOP, both its voters and its elected representatives, to engage productively on these issues. The GOP is engaged on the culture war, but not on the vast economic transformation that Biden is proposing. 

If anything, Republicans are actively looking for ways to endorse parts of Biden’s agenda. Under Trump, Republicans endorsed precursors to many of the policies that Biden is now proposing. To the extent that Biden’s economic agenda is meeting serious opposition it is from centrist economists long associated with the Democratic party. But wonky intraparty arguments about macroeconomic policy are, I suppose, the definition of boring politics. 

Boring, however, is not the same as irrelevant or unimportant or inconsequential. On the contrary, under the current president, the opposite is true. You may not be interested in Joe Biden. But the president, through his policies, is very much interested in you. 

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CDC Director: Vaccinated People Don’t Need To Wear Masks Amid Delta COVID-19 Variant Fears

CDC Director: Vaccinated People Don’t Need To Wear Masks Amid Delta COVID-19 Variant Fears

Authored by Jack Phillips via The Epoch Times,

U.S. Centers for Disease Control and Prevention (CDC) Director Rochelle Walensky issued a clarification on the COVID-19 “Delta” variant, proclaiming that fully vaccinated individuals are protected against the strain and don’t need to wear masks.

Some municipalities—including Los Angeles County—and a number of countries as well as the World Health Organization (WHO) have recommended mask-wearing in recent days due to the Delta COVID-19 strain. Such guidance has triggered confusion about whether the virus can affect vaccinated individuals and prompted fears that health officials would reimplement more lockdowns or other measures.

Walensky, however, said that the CDC’s recommendation on wearing masks in public hasn’t changed.

“If you are vaccinated, you are safe from the variants that are circulating here in the United States,” Walensky told NBC’s “Today” show, adding it was “exactly right” that the agency’s guidance still stipulates that vaccinated individuals don’t need to wear masks.

Officials in Israel and in other areas, meanwhile, have reported a number of so-called “breakthrough” cases involving fully vaccinated people contracting the COVID-19 Delta strain. The strain has prompted new lockdowns in the Asia-Pacific region as well as Israel.

In the case of WHO’s guidance, she added, the U.N. health organization is dealing with COVID-19 on a larger scale than the United States, which has a relatively high vaccination rate.

“We know that the WHO has to make guidelines and provide information to the world,” Walenksy said.

“Right now, we know as we look across the globe that less than 15 percent of people around the world have been vaccinated and many people of those have really only received one dose of a two-dose vaccine. There are places around the world that are surging.”

And in response to Los Angeles County issuing recommendations on wearing masks, she didn’t make any specific comments.

“We have always said that local policymakers need to make policies for their local environment,” the CDC director said.

The media coverage on health officials’ announcements about the Delta strain, meanwhile, has prompted harsh words from lockdown critics.

“Don’t let the fearmongers win. New public England study of delta variant shows 44 deaths out of 53,822 (.08%) in unvaccinated group. Hmmm,” wrote Sen. Rand Paul (R-Ky.) on Twitter.

Walensky noted in the interview that there is “less data” on how the Johnson & Johnson vaccine performs against the Delta variant, adding:

 “Right now we have no information to suggest that you need a second shot after J&J, even with the Delta variant.”

Tyler Durden
Wed, 06/30/2021 – 14:00

via ZeroHedge News https://ift.tt/3duGuZ6 Tyler Durden

The Stealthy Economic Radicalism of Biden’s Boring Presidency


sipaphotoseleven877284

In the half a year that Joe Biden has been president, it has become something approaching conventional wisdom that he is a boring politician, running a boring presidency that is focused on enacting boring policies. Even his most entrenched political opposition cannot seem to find much to engage or enrage. 

A recent Atlantic article on the downturn in conservative publishing, for example, noted that it has been hard for right of center authors and editors to turn Biden into the sort of villain who moves books, and that his “relative dullness is his superpower.” Similarly, a report in Axios this week declared that the “boring news cycle” had led to a downturn for partisan media. Opposition outlets usually see a boost when a new president from the opposing party settles in the White House; this time, that hadn’t happened. “While the Biden administration has seen plenty of debate over policy,” the Axios report said, “economics and a crisis at the border, personality-based controversy has largely been absent.” 

Biden, in this narrative, is boring. And unless you are a wonk engaged in the minutiae of policy debate—how big is the output gap? Is the federal unemployment insurance bonus slowing the recovery? How much should we worry about inflation?—his policies are boring too. 

This is fair enough, in some ways: Compared to Donald Trump, who specialized in intemperate outbursts, bizarre personal fixations, and Twitter provocations perfectly calibrated to drive his opponents mad, Biden’s presidential persona is a cloud of calm. But those pesky policy debates are, in fact, worth engaging, even if Biden has soft-sold their likely consequences. 

Consider Biden’s big social-spending proposal, the American Families Plan, which promises a vast expansion of welfare spending that would put a majority of Americans on federal benefits—even when the economy is strong and the country is not in crisis. In a new working paper, the Hoover Institution’s John F. Cogan and Daniel Heil find that the plan would add more than 6 million households, and more than 21 million Americans, to federal entitlement rolls—pushing the percentage of non-elderly American households receiving such entitlements past the 50 percent mark. Outside of possibly the pandemic years of 2020 and 2021 for which data is not yet available, they write, “this would be the first time in U.S. history that a majority of working age households are federal entitlement recipients.” Biden wants to make a majority of prime age American households (even more) dependent on federal largesse, a sea-change in the relationship between individuals and the federal government. But I suppose that’s boring in comparison to some crazy presidential tweet. 

Then there are Biden’s tax plans which, even according to center-left analysts, would ultimately raise taxes on 60 percent of taxpayers — and possibly an even larger percentage of the middle class. This is in spite of Biden’s repeated claims that no one making less than $400,000 a year will pay more in taxes. In theory, Biden keeps this pledge by raising taxes on corporations, not individuals. But even left-leaning economists agree that individuals eventually end up bearing some of that burden…but ah, sorry, I’m being boring again. 

Meanwhile, Biden’s budget, if enacted in full with both the American Families Plan and the American Jobs Plan (his infrastructure proposal), would result in fewer jobs and a smaller economy after a decade, according to an estimate from the Tax Foundation

The point is that these sorts of plans, with their tax rate adjustments and opaque spending buckets and bureaucratic implementation schemes might seem boring—but if enacted, they will have serious consequences for both individual livelihoods and the broader economy in the relatively near future. 

The putative boringness of Biden’s presidency has at least one real upside: Under the last few presidents, and Trump in particular, too many Americans have become raging political obsessives, viewing far too much of life through the lens of national politics. During the pandemic, as states shut down economic activities and a considerable amount of social life moved into highly politicized online spaces, that tendency only increased. America, or at least Extremely Online America, got the Facebook and Twitter version of cabin fever. 

Thankfully, as the pandemic ebbs and states reopen, that seems to be subsiding at least a little, which is one reason why partisan media has hit a slump. There is something genuinely healthy about turning away from vicious online political squabbling as a central mode of living. 

At the same time, that turn should not become a vehicle for a highly partisan, highly ideological overhaul of federal power. There is a stealth economic radicalism hidden by Biden’s boring nature, and his very boringness has become a kind of strategic tool. Part of the problem, of course, is that too many Republicans, still entranced by the dying embers of Trump’s presidency, are not all that interested in Biden’s economic agenda. There is a deep failure on the part of the broader GOP, both its voters and its elected representatives, to engage productively on these issues. The GOP is engaged on the culture war, but not on the vast economic transformation that Biden is proposing. 

If anything, Republicans are actively looking for ways to endorse parts of Biden’s agenda. Under Trump, Republicans endorsed precursors to many of the policies that Biden is now proposing. To the extent that Biden’s economic agenda is meeting serious opposition it is from centrist economists long associated with the Democratic party. But wonky intraparty arguments about macroeconomic policy are, I suppose, the definition of boring politics. 

Boring, however, is not the same as irrelevant or unimportant or inconsequential. On the contrary, under the current president, the opposite is true. You may not be interested in Joe Biden. But the president, through his policies, is very much interested in you. 

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DIDIsaster

DIDIsaster

Didi raised about $4.4 billion in its initial public offering Tuesday after pricing shares at $14 apiece, making it the biggest IPO haul for a Chinese company since Alibaba Group Holding Ltd. listed shares in 2014, according to Dealogic.

BUT… Having been proudly displayed by CNBC et al. as indicative of investor demand for recovery stocks and “money on the sidelines” being put to work, DIDI is puking after its open this morning…

Didi’s American depositary shares opened trading at $16.65 on Wednesday afternoon, 19% above their $14 IPO price. At the open, Didi’s market capitalization was roughly $80 billion.

It’s not worth that now.

Here’s WSJ crowing over the earlier success:

“The gains bucked the trend of poor performance that has plagued several other Chinese companies’ IPOs in recent weeks, signaling that investors are willing to overlook some risks for the promise of high growth, and that Didi and its underwriters were wise in conservatively pricing the deal.”

Not bucking that trend so much anymore.

Tyler Durden
Wed, 06/30/2021 – 13:45

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

Do We Hear A Trillion: Fed’s Reverse Repo Hits Record $992 Billion, Up $150 Billion In One Day

Do We Hear A Trillion: Fed’s Reverse Repo Hits Record $992 Billion, Up $150 Billion In One Day

There’s not much we can add here: after all we have beaten to death the topic of the Fed’s soaring reverse repo facility (see “With Fed’s Reverse Repo Hitting Half A Trillion, Wall Street Scrambles To Figure Out What Comes Next” and especially “Powell Just Launched $2 Trillion In “Heat-Seeking Missiles”: Zoltan Explains How The Fed Started The Next Repo Crisis“), but while many were expecting fireworks for month and quarter end, nobody expected that a record 90 counterparties (up from 74 on Tuesday) would park an additional $150 billion in loose liquidity (for context, all of QE2 was $600 billion) at the Fed’s reverse repo facility where it is now earning 0.05% compared to the 0.00% rate prior to the June FOMC, bringing the total reverse repo usage to a mindblowing $991.9 billion!

In an amusing twist, whereas once upon a time banks would flood into the Fed’s repo facility at quarter end to window dress their balance sheet, now it is an all out scramble to just get rid of excess liquidity which the Fed continues to inject at a pace of $120 billion.

But while today’s print is likely an outlier due to quarter end, we expect the new normal reverse repo usage to rise above $1 trillion shortly for the very reason Zoltan Pozsar explained last week: with the banks repurchasing well over $100 billion in stock, their CET1 balance sheet capacity is about to collapse by over $2 trillion due to the 20x leverage. As a reminder this is what we said:

… imagine what will happen to the RRP facility if banks indeed proceed to repurchase $142BN in stock; applying Pozsar’s 20x leverage multiple, this means that bank balance sheets will shrink by just under $3 trillion, including trillions in reserves which will have to be parked at the Fed, which also means that in the coming weeks usage on the Fed’s reserve facility is set to explode to unprecedented levels.

Today is the first day that we see this prediction in action, and it will only get much worse: expect total repo usage to soar in the coming days, with the total inert cash parked at the Fed hitting north of $2 trillion in a few weeks.

 

Tyler Durden
Wed, 06/30/2021 – 13:42

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US Spy Plane Was Involved In Warning Shot Incident With UK: Putin

US Spy Plane Was Involved In Warning Shot Incident With UK: Putin

The details of last week’s Royal Navy HMS Defender incident near Crimea in the Black Sea which saw “warning shots” fired by the Russian side continue to be shrouded in mystery and accusations and counter-accusations between the Kremlin and the West.

On Wednesday Russian President Vladimir Putin inserted a new bombshell allegation regarding the dangerous June 23 encounter which could have sparked open conflict. During a live call-in news show, an annual tradition where the Russian leader fields ordinary citizens’ direct questions, Putin said that a US reconnaissance aircraft was present during the incident.

US spy plane, illustrative file image.

Putin slammed the “provocation” which he said both the UK and US were behind, but at the same time downplayed a questioner’s assertion it could have led to WWIII. “Even if we sank that ship, it wouldn’t put the world on the brink of World War III because those who do it know that they can’t emerge as winners in that war, and it’s very important,” the Russian president explained.

He charged for the first time that the American military was also involved in a reconnaissance capacity, according to the Associated Press:

Russian President Vladimir Putin said Wednesday that a U.S. reconnaissance aircraft was operating in sync with a British destroyer last week when the ship sailed through the Black Sea…

Putin charged that the U.S. aircraft’s apparent mission was to monitor the Russian military’s response to the British destroyer.

“It was clearly a provocation, a complex one involving not only the British but also the Americans,” he said, adding that Moscow was aware of the U.S. intentions and responded accordingly to avoid revealing sensitive data.

To recount, during the incident Russia fired “warning shots” from a patrol boat and dropped bombs from an attack aircraft to deter the British Navy destroyer, which may have breached Russian waters.

Below is a timeline of what happened that Wednesday afternoon: 

  • At 1152 local time, HMS Defender sailed across “the Russian border and entered the territorial sea at Cape Fiolent for three kilometers,” RIA said. 
  • Around 1206 and 1208, the Russian patrol ship fired warning shots. The Defender failed to heed radio warnings after it entered Russia’s territorial waters off Crimea. 
  • After nine minutes, a Sukhoi Su-24 attack aircraft dropped four bombs in waters near the British vessel. The Defender then reversed course after the bombing and exited the area. 
  • Reuters noted the Su-24 dropped “four high explosive fragmentation bombs as a warning in the British destroyer’s path.” 

The incident area occurred south of Russia’s naval base in Sevastopol, and there’s since been controversy over whether the UK ship violated Russia’s sovereign waters.

So far in he hours after Putin’s allegations of US indirect involvement via the reconnaissance aircraft, the Pentagon has neither confirmed nor denied. “The Hill has reached out to the Pentagon for comment on Putin’s claim of U.S. involvement in last week’s incident,” one report notes.

It’s unlikely that the US would divulge what was undoubtedly a classified mission, however. Given the likelihood of US involvement, the whole incident shows just how close Russia and the West are to a war footing, given also the ramped up levels of rival military drills in the region.

Tyler Durden
Wed, 06/30/2021 – 13:39

via ZeroHedge News https://ift.tt/3y3AcaC Tyler Durden

California Democrats Look To End Recall Sideshow With Earlier Vote


newsomrecall_1161x653

How confident are California Democrats that Gov. Gavin Newsom will survive an upcoming recall vote? They’re speeding up the process so that there’s less time before the vote and—accordingly—less time for his opponents to make their case.

On Monday, Democratic state lawmakers passed a bill—which Newsom quickly signed—that will allow the state to bypass one of the steps of the recall process and shave as much as 30 days off the time it takes to arrange the election.

Part of the complex process to put a recall vote on the ballot in California involves having the Department of Finance put together a cost estimate for the recall to be reviewed by a legislative budget committee within 30 days. This has to be done before the recall can be certified and scheduled. This new bill, S.B. 152, will allow this step to be bypassed if lawmakers have already appropriated the funds for the recall.

Counties have estimated the recall election will cost about $215 million, and lawmakers have already agreed to cover it. This faster timeline could have voters deciding whether to recall Newsom in September rather than in late October or November.

Why is it such a complicated process to get a recall election on the ballot even after the signatures are verified? After all, lawmakers can’t look at these costs and then decide they’re not willing to pay for recall. That’s just not an option.

Comically, it turns out Democratic lawmakers are themselves responsible for the red tape they’re now trying to eliminate. Four years ago, Democratic lawmakers added this step to slow down a recall effort. They hoped that this would protect State Sen. Josh Newman (D–Fullerton) from being recalled in 2018. It failed: Newman was recalled anyway and replaced by Republican Ling Ling Chang. Then Newman was voted back into office in 2020.

Right now, Newsom seems well-positioned to hold off the recall effort. He’s giving out cash prizes to convince people to get vaccinated, the state’s economy is humming along, people are optimistic about the future, and 57 percent of voters say they aren’t likely to recall him, based on a May poll by the Public Policy Institute of California.

Meanwhile, Ballotpedia counts 68 people who have thus far announced their intent to run as replacements for Newsom should he be recalled. In all likelihood, many of these people won’t actually file, and many of them are just looking for attention.

As for the Democratic maneuvering, it’s terrible that one political party is manipulating the electoral process in whichever way they think will best protect their incumbents. But in this particular case, it’s more objectionable that Democrats added red tape in the first place. Making the recall process more efficient should be a good thing. Unfortunately, in this case, it’s an indicator that the election process is prone to manipulation by a single dominant party for the purpose of maintaining power.

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California Democrats Look To End Recall Sideshow With Earlier Vote


newsomrecall_1161x653

How confident are California Democrats that Gov. Gavin Newsom will survive an upcoming recall vote? They’re speeding up the process so that there’s less time before the vote and—accordingly—less time for his opponents to make their case.

On Monday, Democratic state lawmakers passed a bill—which Newsom quickly signed—that will allow the state to bypass one of the steps of the recall process and shave as much as 30 days off the time it takes to arrange the election.

Part of the complex process to put a recall vote on the ballot in California involves having the Department of Finance put together a cost estimate for the recall to be reviewed by a legislative budget committee within 30 days. This has to be done before the recall can be certified and scheduled. This new bill, S.B. 152, will allow this step to be bypassed if lawmakers have already appropriated the funds for the recall.

Counties have estimated the recall election will cost about $215 million, and lawmakers have already agreed to cover it. This faster timeline could have voters deciding whether to recall Newsom in September rather than in late October or November.

Why is it such a complicated process to get a recall election on the ballot even after the signatures are verified? After all, lawmakers can’t look at these costs and then decide they’re not willing to pay for recall. That’s just not an option.

Comically, it turns out Democratic lawmakers are themselves responsible for the red tape they’re now trying to eliminate. Four years ago, Democratic lawmakers added this step to slow down a recall effort. They hoped that this would protect State Sen. Josh Newman (D–Fullerton) from being recalled in 2018. It failed: Newman was recalled anyway and replaced by Republican Ling Ling Chang. Then Newman was voted back into office in 2020.

Right now, Newsom seems well-positioned to hold off the recall effort. He’s giving out cash prizes to convince people to get vaccinated, the state’s economy is humming along, people are optimistic about the future, and 57 percent of voters say they aren’t likely to recall him, based on a May poll by the Public Policy Institute of California.

Meanwhile, Ballotpedia counts 68 people who have thus far announced their intent to run as replacements for Newsom should he be recalled. In all likelihood, many of these people won’t actually file, and many of them are just looking for attention.

As for the Democratic maneuvering, it’s terrible that one political party is manipulating the electoral process in whichever way they think will best protect their incumbents. But in this particular case, it’s more objectionable that Democrats added red tape in the first place. Making the recall process more efficient should be a good thing. Unfortunately, in this case, it’s an indicator that the election process is prone to manipulation by a single dominant party for the purpose of maintaining power.

from Latest – Reason.com https://ift.tt/3ApEP0S
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