Russian Cyber Attacks Fail To Materialize After Biden Warned ‘It’s Coming’

Russian Cyber Attacks Fail To Materialize After Biden Warned ‘It’s Coming’

Authored by by Kyle Anzalone & Will Porter via The Libertarian Institute, 

One month after President Joe Biden warned Americans to prepare for cyberattacks from Russia, a US official said that Washington still has yet to detect any. 

The US Cybersecurity and Infrastructure Security Agency (CISA) has assessed that Russia has not breached US systems, with agency head Jen Easterly saying the administration has “not seen attacks manifest here.”

To date, we have not seen specific attacks on the US. What we are concerned about is the fact that Russia’s malicious cyber activity is part of their playbook,” she said in a statement on Thursday. 

Easterly did mention that American economic penalties could provoke Russian cyber operations in the future, despite the lack of such breaches to date.

“We are very concerned that as the war drags on, there may, in fact, be retaliatory attacks given the very severe sanctions we have imposed on the Kremlin, the US and our allies,” the agency head continued. 

In a March 21 speech, Biden told Americans that “the magnitude of Russia’s cyber capacity is fairly consequential, and it’s coming,” ominous warning of major hacks on the horizon. The Biden administration has issued several similar alerts that have failed to materialize. 

The White House has warned for months that Moscow could deploy chemical weapons and has even shipped protective equipment to Kiev’s forces to prepare for such an attack.

On April 6, however, a series of unnamed US officials told NBC News that “there is no evidence Russia has brought any chemical weapons near Ukraine,” adding that Washington hurled the accusation merely to “deter Russia from using the banned munitions.”

Tyler Durden
Sat, 04/30/2022 – 19:30

via ZeroHedge News Tyler Durden

Twitter’s $17M Per Year Censorship Czar Could Get Axe Under Musk

Twitter’s $17M Per Year Censorship Czar Could Get Axe Under Musk

Twitter’s censorship czar Victoria Gadde – who broke down in tears last week during a conference call to discuss Elon Musk’s purchase of the company – stands to lose her job which paid $17 million last year, as Musk is reportedly planning to cut jobs and executive pay as part of the takeover.

Musk expressed “no confidence” in Twitter’s current management following the announcement of his plans to buy the company.

That said, the 48-year-old Gadde – who was behind decisions such as Zero Hedge’s February 2020 ban for peculating that Covid-19 may have emerged from a Wuhan Lab, and former President Trump’s ongoing ban, has a reported $12.5 million severance package, according to the NY Post.

Musk shared a flowchart last week based on a 2019 appearance by Gadde on “The Joe Rogan Experience” where journalist Tim Pool absolutely wrecked her over anti-conservative bias.

Musk also called Twitter’s decision to block the Hunter Biden laptop story – another ‘buck stops with Gadde’ decision – “obviously incredibly inappropriate.”

The piece was banned by major social media sites in the weeks before the election, with Twitter justifying accusations of censorship by labeling the story “content obtained through hacking that contains private information.”

Many mainstream outlets also tried to discredit the Post’s article, before later reporting on its veracity long after President Joe Biden was elected. -NY Post

Fortunately for Gadde any any other Twitter employees who gets the axe, they can simply start their own Twitter.

Tyler Durden
Sat, 04/30/2022 – 19:00

via ZeroHedge News Tyler Durden

Escobar: The Empire Of Lies, Operation Z, & The New Global Chessboard

Escobar: The Empire Of Lies, Operation Z, & The New Global Chessboard

Authored by Pepe Escobar,

The only antidote to propaganda dementia is served by sparse voices of reason, which happen to be Russian, thus silenced and/or dismissed.

Especially since the onset of GWOT (Global War on Terror) at the start of the millennium, no one ever lost money betting against the toxic combo of hubris, arrogance and ignorance serially deployed by the Empire of Chaos and Lies.

What passes for “analysis” in the vast intellectual no-fly zone known as U.S. Think Tankland includes wishful thinking babble such as Beijing “believing” that Moscow would play a supporting role in the Chinese century just to see Russia, now, in the geopolitical driver’s seat.

This is a fitting example not only of outright Russophobic/Sinophobic paranoia about the emergence of peer competitors in Eurasia – the primeval Anglo-American nightmare – but also crass ignorance about the finer points of the complex Russia-China comprehensive strategic partnership.

As Operation Z methodically hits Phase 2, the Americans – with a vengeance – have also embarked on their symmetrical Phase 2, which de facto translates as an outright escalation towards Totalen Krieg, from shades of hybrid to incandescent, everything of course by proxy. Notorious Raytheon weapons peddler reconverted into Pentagon head, Lloyd Austin, gave away the game in Kiev:

“We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine.”

So this is it: the Empire wants to annihilate Russia. Cue to War Inc.’s frenzy of limitless weapon cargos descending on Ukraine, the overwhelming majority on the road to be duly eviscerated by Russian precision strikes. The Americans are sharing intel 24/7 with Kiev not only on Donbass and Crimea but also Russian territory. Totalen Krieg proceeds in parallel to the engineered controlled demolition of the EU’s economy, with the European Commission merrily acting as a sort of P.R. arm of NATO.

Amidst the propaganda dementia cum acute cognitive dissonance overdrive across the whole NATOstan sphere, the only antidote is served by sparse voices of reason, which happen to be Russian, thus silenced and/or dismissed. The West ignores them at their own collective peril.

Patrushev goes Triple-X unplugged

Let’s start with President Putin’s speech to the Council of Legislators in St. Petersburg celebrating the Day of Russian Parliamentarism.

Putin demonstrated how a hardly new “geopolitical weapon” relying on “Russophobia and neo-Nazis”, coupled with efforts of “economic strangulation”, not only failed to smother Russia, but impregnated in the collective unconscious the feeling this an existential conflict: a “Second Great Patriotic War”.

With off the charts hysteria across the spectrum, a message for an Empire that still refuses to listen, and doesn’t even understand the meaning of “indivisibility of security”, had to be inevitable:

“I would like to emphasize once again that if someone intends to interfere in the events taking place from the outside and creates threats of a strategic nature unacceptable to Russia, they should know that our retaliatory strikes will be lightning fast. We have all the tools for this. Such as no one can boast of now. And we won’t brag. We will use them if necessary. And I want everyone to know about it – we have made all the decisions on this matter.”

Translation: non-stop provocations may lead Mr. Kinzhal, Mr. Zircon and Mr. Sarmat to be forced to present their business cards in select Western latitudes, even without an official invitation.

Arguably for the first time since the start of Operation Z, Putin made a distinction between military operations in Donbass and the rest of Ukraine. This directly relates to the integration in progress of Kherson, Zaporozhye and Kharkov, and implies the Russian Armed Forces will keep going and going, establishing sovereignty not only in the Donetsk and Luhansk People’s Republics but also over Kherson, Zaporozhye, and further on down the road from the Sea of Azov to the Black Sea, all the way to establishing full control of Nikolaev and Odessa.

The formula is crystal clear: “Russia cannot allow the creation of anti-Russian territories around the country.”

Now let’s move to an extremely detailed interview by Secretary of the Security Council Nikolai Patrushev to Rossiyskaya Gazeta, where Patrushev sort of went triple-X unplugged.

The key take away may be here:

“The collapse of the American-centric world is a reality in which one must live and build an optimal line of behavior.” Russia’s “optimal line of behavior” – much to the wrath of the universalist and unilateralist hegemon – features “sovereignty, cultural and spiritual identity and historical memory.”

Patrushev shows how “tragic scenarios of world crises, both in past years and today, are imposed by Washington in its desire to consolidate its hegemony, resisting the collapse of the unipolar world.” The U.S. goes no holds barred “to ensure that other centers of the multipolar world do not even dare to raise their heads, and our country not only dared, but publicly declared that it would not play by the imposed rules.”

Patrushev could not but stress how War Inc. is literally making a killing in Ukraine: “The American and European military-industrial complex is jubilant, because thanks to the crisis in Ukraine, it has no respite from order. It is not surprising that, unlike Russia, which is interested in the speedy completion of a special military operation and minimizing losses on all sides, the West is determined to delay it at least to the last Ukrainian.”

And that mirrors the psyche of American elites:

“You are talking about a country whose elite is not able to appreciate other people’s lives. Americans are used to walking on scorched earth. Since World War II, entire cities have been razed to the ground by bombing, including nuclear bombing. They flooded the Vietnamese jungle with poison, bombed the Serbs with radioactive munitions, burned Iraqis alive with white phosphorus, helped terrorists poison Syrians with chlorine (…) As history shows, NATO has also never been a defensive alliance, only an offensive one.”

Previously, in an interview with the delightfully named The Great Game show on Russian TV, Foreign Minister Sergei Lavrov had once again detailed how the Americans “no longer insist on the implementation of international law, but on respect for the ‘rules-based world order’. These ‘rules’ are not deciphered in any way. They say that now there are few rules. For us, they don’t exist at all. There is international law. We respect it, as does the UN Charter. The key provision, the main principle is the sovereign equality of states. The U.S. flagrantly violates its obligations under the UN Charter when it promotes its ‘rules’”.

Lavrov had to stress, once again, that the current incandescent situation may be compared to the Cuban Missile Crisis: “In those years, there was a channel of communication that both leaders trusted. Now there is no such channel. No one is trying to create it.”

The Empire of Lies, in its current state, does not do diplomacy.

The pace of the game in the new chessboard

In a subtle reference to the work of Sergei Glazyev, as the Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union explained in our recent interview, Patrushev hit the heart of the current geoeconomic game, with Russia now actively moving towards a gold standard: “Experts are working on a project proposed by the scientific community to create a two-circuit monetary and financial system. In particular, it is proposed to determine the value of the ruble, which should be secured by both gold and a group of goods that are currency values, to put the ruble exchange rate in line with real purchasing power parity.”

That was inevitable after the outright theft of over $300 billion in Russian foreign reserves. It may have taken a few days for Moscow to be fully certified it was facing Totalen Krieg. The corollary is that the collective West has lost any power to influence Russian decisions. The pace of the game in the new chessboard is being set by Russia.

Earlier in the week, in his meeting with the UN secretary-general Antonio Guterres, Putin went as far as stating that he’d be more than willing to negotiate – with only a few conditions: Ukrainian neutrality and autonomy status for Donbass. Yet now everyone knows it’s too late. For a Washington in Totalen Krieg mode negotiation is anathema – and that has been the case since the aftermath of the Russia-Ukraine meeting in Istanbul in late March.

So far, on Operation Z, the Russian Armed forces have used only 12% of its soldiers,10% of its fighter jets, 7% of its tanks, 5% of its missiles, and 4% of its artillery. The pain dial is set to go substantially up – and with the total liberation of Mariupol and the resolution one way or another of the Donbass cauldron there is nothing the hysteria/propaganda/weaponizing combo deployed by the collective West can do to alter facts on the ground.

That includes desperate gambits such as the one uncovered by SVR – Russian foreign intel, which very rarely makes mistakes. SVR found out that the Empire of Lies/War Inc. axis is pushing not only for a de facto Polish invasion to annex Western Ukraine, under the banner of “historical reunification”, but also for a joint Romanian/Ukrainian invasion of Moldova/Transnistria, with Romanian “peacekeepers” already piling up near the Moldova border.

Washington, as the SVR maintains, has been plotting the Polish gambit for over a month now. It would “lead from behind” (remember Libya?), “encouraging” a “group of countries” to occupy Western Ukraine. So partition is already on the cards. Were that ever to materialize, it will be fascinating to bet on which locations Mr. Sarmat would be inclined to distribute his business card.

Tyler Durden
Sat, 04/30/2022 – 18:30

via ZeroHedge News Tyler Durden

$2 Billion Hedge Fund Loses Nearly Half After Carvana Plummets 75% In 2022

$2 Billion Hedge Fund Loses Nearly Half After Carvana Plummets 75% In 2022

For a vivid example of a hedge fund that prospered and grew, expanding relentlessly with the blessings of the Fed’s ZIRP and QE but now that QE is on idefinite hiatus and the Fed’s put is gone and successful “investing” actually requires more skill than just putting cash into high beta names and praying that the Fed will keep BRRRRing, is imploding look no farther than CAS Investment Partners, a Westport-based hedge fund which had “grown” more than 1000% sine its inception in October 2012 yet which has lost nearly half of its assets in just the past four months, thanks to a heavily concentrated portfolio of stocks, but mostly novelty used care dealer Carvana.

CAS – which is based on the initials of its 40-year-old founder, Clifford Sosin – had built up a huge (for a smallish hedge fund) 3.3 million share stake in Carvana in 2019 and early 2020, one which grew to over $1 billion in August 2021 when CVNA stock topped $350 and accounted for a quarter of the fund’s AUM as of March 31. However, since then things have gone from bad to worse, and after dropping to $250/share by year-end, Carvana has plunged another 75% in 2022, before tumbling another 10% on Friday as traders grow concerned that the company equity may be worthless and a debt-for-equity swap is inevitable (and there is a lot of debt to be swapped) especially if the used car market is just now starting to crack.

The crash in CVNA shares, and the resulting collapse in the CAS hedge fund, must have prompted a barrage of angry and or concerned investors phone calls, which culminated on Friday in a 25-page letter (attached below) written by Sosin, in which he writes (over and over) that Carvana’s troubles are transitory and that all will be well soon:  “Carvana’s challenges, especially when coupled with the precipitous decline in its stock price, clearly seem terrifying,” Sosin wrote in the Friday’s letter. However, “I believe that in due time we will look back at them as bumps in the road on the company’s path to success.”

Sosin, who started his career in the Houlihan Lokey restructuring group in 2004, then worked at Silverpoint and UBS before starting off on his own in 2012 – declined to comment to Bloomberg.

Carvana, which was once a pandemic darling, has since fast fallen out of favor. Its first-quarter results revealed a deepening cash burn, stemming from surges in used-vehicle prices and capital spending. Meanwhile, after peaking a few months ago, used car prices appear set to plunge in the coming months now that the US consumer is fully tapped out.

Adding insult to injury, earlier this week Carvana struggled to raise $3.3 billion in the junk bond market and had to revamp a junk-bond offering, adding a bankruptcy-friendly make whole provision.

Those new bonds tumbled to 96 cents on the dollar in their first day of secondary trading even after Apollo Global swooped in to buy roughly half of the sale…. or rather because Apollo swooped in, in a move many speculate is a signal Apollo will control the fulcrum security, and thus the post-reord equity, in the coming Chapter 11 filing.

And while we wait for the (used) wheels to come off the Carvana bullish narrative, we go back to what we said at the top, namely how this story may be indicative of the reversal of fortune for “hedge” funds who never actually had to hedge, or do any work for that matter in a world where the Fed did all the work for them, and how now that the Fed is no longer there holding hands, how everything is imploding. Indeed, as Bloomberg notes, “for CAS, 2022 is a stark contrast to its previous performance. Its fund hasn’t had a down year since launching in October 2012, and in 2020 it returned a record 96.5%.”

Desperate to avoid a flood of redemptions, in his 25-page letter Sosin focused entirely on Carvana, and acknowledged its weak unit volume, but said it should accelerate when the industry normalizes (which may take a while since the US economy is only just now entering a recession). He added that the company should generate profits of $100 million annually from its acquisition of Adesa Inc.’s U.S. car-auction business, which was financed with this week’s debt offering. Then again there is the $600 million in interest expense:

“While the company’s $600 million of annual interest expense is largely fixed, and a certain level of fixed/ overhead costs are necessary to run the company, the company’s growth investments are under the management’s control.”

Still, Sosin refuses to cut and run, writing that “Carvana has a great deal of latent margin potential,” and adding that “this potential should allow the company to pursue its growth ambitions, albeit at a slower pace of expansion, without meaningfully accessing the capital markets or counting on a significant used-vehicle industry recovery.”

For now, the market clearly disagrees.

But if Sosin fast and furious reversal of fortune is bad, it’s nowhere near as bad as the billionaire father-son duo behind the Phoenix-based Carvana. Ernie Garcia II and Ernie Garcia III have lost almost $14 billion combined so far this year, according to the Bloomberg Billionaires Index. The younger Garcia, the company’s chief executive officer, has lost about 73% of his net worth since the start of 2022.

The senior Garcia began selling Carvana shares in late October 2020 as they climbed to around $200 each from their pre-pandemic level of about $90. The stock closed Friday at $57.96.

“If Carvana works out as well as it could, they might be among the richest people on the planet,” Sosin told Bloomberg in a 2019 interview. Three years since that remark, he said the company still has a bright future.

“I am not immune to mistakes, and I promise that when I eventually make a doozy I will put it here at the top of this letter,” Sosin wrote. “In this case, however, I do not believe I have.”

For those who disagree, here is a list of CAS’s holdings: if and when the margin calls and forced selling comes, these are the names that Sosin will rush to liquidate to avoid a collapse of his hedge fund. Which is why others may decided to sell them first.

Sosin’s full Carvana letter is below.

Tyler Durden
Sat, 04/30/2022 – 18:00

via ZeroHedge News Tyler Durden

Shippers Are Back In The Driver’s Seat On Rates

Shippers Are Back In The Driver’s Seat On Rates

By Michael Rudolph of

This past week marked the first interruption of consecutive declines in the Outbound Tender Volume Index (OTVI) since early March.

It is still too early to dance around the maypole, however, as this bounce has not yet erased the significant contraction seen in freight demand.

Tender volumes contract early in Q2: SONAR: OTVI.USA: 2021-22 (blue), 2020-21 (green) and 2019-20 (orange);To learn more about FreightWaves SONAR, click here.

Though OTVI climbed 6.6% over the past week, it faced easy comps as volumes were depressed in the week following Easter Sunday. On a year-over-year (y/y) basis, OTVI is down 16.75%. Comparisons on a y/y basis can be thorny because OTVI can be inflated by an uptick in tender rejections. At this time last year, OTVI was greatly inflated by rising tender rejections, whereas rejection rates have since nosedived to incredible lows.

Looking at accepted tender volumes, which is OTVI adjusted by the Outbound Tender Reject Index (OTRI), we see growth of only 0.3% y/y as well as growth by 8.3% on week-over-week (w/w) basis — the latter w/w growth, again, came against easy comps. The y/y picture for accepted volume may not appear grim, but the overall freight market is historically strong during the run-up to summer. The current limping state of the market, on the other hand, should concern carriers.

The Chinese government appears to be gearing up for extended COVID lockdowns in Shanghai and, given recent school closings, possibly Beijing. The Port of Shanghai is the busiest container port in the world; any disruptions to its operations would have severe ripple effects on global supply chains. At first glance, the Port of Shanghai does not seem to be majorly impacted by the ongoing lockdowns — average dwell times for exports are currently at a little more than two days, well below the average of three days over the past year.

Part of these low dwell times can be explained by the lack of goods flowing into the port, as productivity at manufacturing plants and the movement of truck drivers are both heavily restricted by the lockdowns. There is a likely accumulation of goods that are languishing in nearby warehouses or that have yet to be produced by factories in Shanghai. This accumulation is a ticking time bomb: Once it is able to be delivered to the terminals, the port will be inundated with excess cargo and will then be unable to operate efficiently.

Another cause for concern will be the limited supply of empty containers caused by restricted freight flow at Chinese ports. Shipments from China to Europe are already being delayed, inhibiting the gross number of containers that can be delivered, unloaded and, in turn, reloaded and shipped to the United States. Any curb on trade between Europe and the U.S. is a mixed blessing. On the one hand, a reduction in new vessel arrivals will allow East Coast seaports to tackle the backlog of cargo that is currently congesting them. On the other, this reduction could kick the can further down the line, as exporters on the East Coast would eventually have a limited supply of empty containers themselves. Whatever the case, the lockdowns in China are threatening to extend well into the summer.

Volumes rise across the board: SONAR: Outbound Tender Volume Index – Weekly Change (OTVIW).

Of the 135 total markets, 100 reported weekly increases after volumes recovered from the Easter lull.

Since last week was quite barren, freight demand this week faced favorable comps on a w/w basis. Volumes returned to the ports: Charleston, South Carolina, was up 23.4%; Los Angeles was up 7.77%; and Houston was up 4.96%. Volumes also returned to the largest markets: Atlanta was up 10.2%; Ontario, California, was up 6.63%; and Harrisburg, Pennsylvania, was up 6.41%.

There were, however, a few markets to which this bounty of freight volume was not extended. Lakeland, Florida — the state’s largest market by outbound volume — was the only market in the state to experience contraction this week, with volumes falling nearly 2% w/w. The Indianapolis market, a Midwestern hub for manufacturing, saw volumes decline 2.14% w/w after a recent survey expressed Hoosier manufacturers’ concerns about their ability to overcome supply chain disruptions and to contend with the rising costs of material inputs.

By mode: Reefer volume took a tumble this week as the Reefer Outbound Tender Volume Index (ROTVI) fell 6.7% w/w. Lakeland, Florida — the nation’s largest outbound market for reefer freight — saw its own ROTVI decline 3.1% w/w after a sharp rise and fall early in the week. Dry van volumes, however, bounced back and the Van Outbound Tender Volume Index (VOTVI) rose 6.9% w/w accordingly. In produce-heavy markets, such as those in the Southeast, reefer volumes should be sustained by seasonal patterns — after all, demand for food is fairly inelastic.

Tender rejections finally fall to sub-10% levels and show no signs of slowing

Although treading water above 10% at the beginning of the week, OTRI quickly fell into single-digit percentages before the week’s end. Excepting the onset of the 2020 pandemic, OTRI’s current trend marks both the steepest and longest decline in a non-holiday-affected period.

Rejection rates sink into the single digits: SONAR: OTRI.USA: 2021-22 (blue), 2020-21 (green) and 2019-20 (orange)

Over the past week, OTRI, which measures relative capacity in the market, fell to 8.82%, a change of 138 basis points (bps) from the week prior. OTRI is now 1,634 bps below year-ago levels as it is decidedly established in single-digit percentages.

One of the biggest pressures facing carriers is the uninterrupted rise of diesel prices. Carriers playing primarily within the spot market already are exposed to volatile rate swings and reduced demand for spot freight, but to make matters worse, they typically have to eat the cost of fuel as part of their all-in rate. Yet even carriers running contracted loads still face the pressure of diesel hikes, since they normally pay for fuel at the point of sale while fuel surcharges can take months to reimburse them. That period of waiting for reimbursement can be crucial, since other monthly costs cannot be deferred so easily: insurance expenses, maintenance costs and, if the carrier’s equipment is not paid off, debt servicing.

Larger carriers often buy fuel at discount, wholesale prices and then charge elevated retail prices for their surcharges, but the trucking industry as a whole is dominated by smaller carriers. As of February 2021, of all the carriers registered with the FMCSA, a mere 2.6% operated fleets with 20 or more trucking units. Almost 92% had fleets of six or fewer trucks. So, while larger carriers might experience some insularity from diesel price hikes, the truckload market is altogether exposed to these fluctuations.

Capacity loosens in Southern California and the Southeast. SONAR: WRI (color)

The map above shows the Weighted Rejection Index (WRI), the product of the Outbound Tender Reject Index — Weekly Change and Outbound Tender Market Share, as a way to prioritize rejection rate changes. As capacity is finding freight, there are currently no blue markets that would normally be objects of attention.

Of the 135 markets, only 24 reported higher rejection rates over the past week as carriers compete for loads amid quieter freight demand.

By and large, capacity came back online during this week with only a few notable exceptions. As volume surged through the East Coast seaports, rejection rates rose as capacity did not meet demand. After a dramatic fall in tender rejections the week prior, Savannah, Georgia, saw rejections rebound by 159 bps to 6.73%. Similarly, the market of Charleston posted a rejection rate of 7.08% this week, up 82 bps from the previous week. These two markets host two of the fastest-growing container ports in the U.S., since they are increasingly an attractive alternative to congested seaports in Southern California.

SONAR: VOTRI.USA (blue); ROTRI.USA (orange); FOTRI.USA (green)

By mode: Despite falling 315 bps this past week, the Flatbed Outbound Tender Reject Index (FOTRI) shows clearer demand for flatbeds than its dry van and reefer counterparts. FOTRI currently sits at 29.22%, 304 bps higher on a y/y basis. In Illinois (and probably elsewhere), it was commonly joked that there were two seasons: winter and construction. Construction season is already well underway, with new residential and nonresidential construction heating up to levels not seen since 2006. Moreover, high crude prices are driving investment into oil drilling. Accordingly, flatbeds will be in great demand for the foreseeable future.

Rejection rates in the other two modes, dry van and reefer, have continued along a protracted decline that began in early March. The Van Outbound Tender Reject Index (VOTRI) is now at 8.7%, 124 bps lower on a w/w basis and 1,642 bps lower y/y. Following the trend in ROTVI, the Reefer Outbound Tender Reject Index (ROTRI) is down 479 bps this week to 11.43%, a whopping 3,307 bps below year-ago levels. 

Contract rates show signs of following spot rate trend, declining rapidly w/w

The spot rate data available in SONAR from is updated every Tuesday with the previous week’s data.

Contract rates are hit hard by Q2 repricing: SONAR:’s national spot rate (blue, right axis) and dry van contract rate (green, left axis).

The bottom has yet to be found on dry van spot rates. To borrow yet another analogy from roller coasters, any carrier wearing a waterproof poncho is painfully dry as it waits for the Splash at the end of the Mountain.’s national all-in dry van spot rate, which is based on the top 100 lanes from’s load board, fell 8 cents per mile this week to $2.94 per mile, including fuel surcharges and other accessorials. 

This week marks the first time that the rate has fallen below $3 a mile since February 2021. For context, the national rate averaged around $2.10 a mile prior to the pandemic, almost 30% lower than the current rate. While the gap between then and now might seem insurmountable, keep in mind that spot rates have already fallen 23% from their peak in early January. Diesel prices will, however, continue to provide upward pressure on spot rates. In short, spot rates are unlikely to return to $2.10 a mile, but they might soon be moving into the same neighborhood.

Of the 102 lanes from’s load board, only 19 reported weekly increases, up from last week’s 13 lanes but not up enough to provide relief to carriers. The most drastic increases were found on peripheral lanes in New England: For example, Syracuse, New York, to Hartford, Connecticut, jumped 25 cents per mile to $4.39 a mile, well above the national average.

Ever since the supply chain disruptions early in the pandemic, shippers have been increasingly shifting their contract bid cycles to shorter periods so as to keep better pace with a volatile market. Now that data has come in from the Q2 renegotiations, it is clear that shippers have realized their newfound pricing power. Contract rates, which are the base linehaul rate excluding fuel surcharges and other accessorials that are included in spot rates, fell 9 cents per mile to $2.81 a mile. This decline bodes ill for those carriers hoping that contract rates would insulate them from the rapid decline seen in the spot market. Nevertheless, contract rates are still up 16.1% y/y, so all is not yet lost for those carriers.

There are also the backhaul lanes to consider, many of which have hit their floor on rates and are now steadily increasing. Of these lanes, Dallas to Los Angeles is one of the most interesting, since it shares some characteristics with a backhaul lane but not others. Dallas is currently the third-largest outbound market in the country, yet carriers are covering loads from it to Los Angeles at rates near their operational cost. Because of that razor-thin margin, spot rates (which include fuel surcharges) on this lane are mainly affected by shifting diesel prices. 

As a result, FreightWaves’ Trusted Rate Assessment Consortium (TRAC) spot rate from Dallas to Los Angeles has risen only 2 cents per mile over the past week to $1.90 but has spiked by 52 cents per mile over the past six months. These increases translate to a 1.1% gain w/w and a 37.7% gain over a six-month period. Meanwhile, diesel prices have risen by a comparable 1.2% w/w and by 38.4% over a six-month period.

SONAR: FreightWaves TRAC rate from Dallas to Los Angeles

The opposite is true for rates along headhaul lanes, where carriers had a comfortable margin above their operating costs. For example, the FreightWaves TRAC spot rate along the extremely dense lane from Los Angeles to Dallas has fallen 7 cents per mile over the past week to $2.71 a mile and has plummeted a staggering $1.38 per mile over the past six months. 

SONAR: FreightWaves TRAC rate from Los Angeles to Dallas.

With rejection rates continuing to fall as they have been, shippers have no incentive to keep increasing or even maintaining those contract rates set in previous quarters. Instead, shippers have firm possession of pricing power for the moment and, from the looks of it, will exercise it to the best of their ability. Except on lanes in which fuel cost is a significant factor, neither contract nor spot rates should be expected to reverse course anytime soon.

Tyler Durden
Sat, 04/30/2022 – 17:30

via ZeroHedge News Tyler Durden

Buffett Blasts Bankers For Turning Stock Market Into “A Gambling Parlor”

Buffett Blasts Bankers For Turning Stock Market Into “A Gambling Parlor”

After a tumultuous week of violent lurches higher (but mostly lower), the S&P 500 has ended April with its worst start to a year since the start of World War 2…

Vacation bookings are soaring, car sales are booming and Americans continue to spend with abandon, thanks to higher wages and brisk hiring; and yet, the economy unexpectedly contracted in the first quarter, led by trade deficits and a drop in inventory purchases.

“The market is worried about a very fragile economic outlook, as it should be,” said Joe LaVorgna, chief Americas economist at Natixis and former Trump White House economic adviser.

“The economy is fundamentally soft: The Fed is going to hike next week, the situation in Ukraine is not getting better and high inflation is cutting into costs.”

All this chaos and divergence appears to have ‘triggered’ 91-year-old Warren Buffett who lambasted Wall Street for encouraging speculative behavior in the stock market, effectively turning it into a “gambling parlor.”

Having announced that Berkshire Hathaway suffered a $1.58 billion loss in the first quarter of 2022 (a huge reversal from the nearly $5 billion gain it saw at the same period of 2021), Buffett spoke at length during his annual shareholder meeting Saturday about one of his favorite targets for criticism: investment banks and brokerages.

“Wall Street makes money, one way or another, catching the crumbs that fall off the table of capitalism,” Buffett said.

“They don’t make money unless people do things, and they get a piece of them. They make a lot more money when people are gambling than when they are investing.”

Buffett bemoaned that large American companies have “became poker chips” for market speculation. As CNBC reports, he cited soaring use of call options, saying that brokers make more money from these bets than simple investing.

Still, the situation can result in market dislocations that give Berkshire Hathaway an opportunity, he said:

“That’s why markets do crazy things, and occasionally Berkshire gets a chance to do something.”

98-year-old Charlie Munger also chimed in, warning that “It’s almost a mania of speculation.”

“We have people who know nothing about stocks being advised by stock brokers who know even less,” Munger said.

“It’s an incredible, crazy situation. I don’t think any wise country would want this outcome. Why would you want your country’s stock to trade on a casino?

CNBC noted that an audience member made an inaudible comment while he was talking.

“Was that a banker screaming?” Buffett joked.

Tyler Durden
Sat, 04/30/2022 – 17:00

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Johnstone: “Oh God It’s Going To Get So Much Worse”

Johnstone: “Oh God It’s Going To Get So Much Worse”

Authored by Caitlin Johnstone via,

Rightists have spent the last couple of days freaking out and invoking Orwell’s 1984 in response to something their political enemies are doing in America, and for once it’s for a pretty good reason.

The Department of Homeland Security has secretly set up a “Disinformation Governance Board”, only informing the public about its plans for the institution after it had already been established.

The disinformation board, which critics have understandably been calling a “Ministry of Truth”, purportedly exists to fight disinformation coming out of Russia as well as misleading messages about the US-Mexico border. We may be certain that the emphasis in the board’s establishment has been on the Russia angle, however.

White House Press Secretary Jen Psaki, in her patented “You’re such a crazy idiot for questioning me about the White House” manner, dismissed alarmed questions about what specific functions this strange new DHS entity was going to be performing and what its authority will look like.

“It sounds like the objective of the board is to prevent disinformation and misinformation from traveling around the country in a range of communities,” Psaki said.

“I’m not sure who opposes that effort.”

The answer to the question of “who opposes that effort” is of course “anyone with functioning gray matter between their ears.” No government entity has any business appointing itself the authority to sort information from disinformation on behalf of the public, because government entities are not impartial and omniscient deities who can be entrusted to serve the public as objective arbiters of absolute reality. They would with absolute certainty wind up drawing distinctions between information, misinformation and disinformation in whatever way serves their interests, regardless of what’s true, exactly as any authoritarian regime would do.

I mean, is anyone honestly more afraid of Russian disinformation than they are of their own government appointing itself the authority to decide what counts as disinformation?

This important point has gotten a bit lost in the shuffle due to the utterly hypnotic ridiculousness of the person who has been appointed to run the Disinformation Governance Board. Nina Jankowicz, a carefully groomed swamp creature who has worked in Kyiv as a communications advisor to the Ukrainian government as part of a Fulbright fellowship, is being widely criticized by pundits and social media users for her virulent Russiagating and whatever the hell this is:

Because of this person’s embarrassing cartoonishness, a lot more commentary lately has been going into discussing the fact that the Department of Homeland Security’s Ministry of Truth is run by a kooky liberal than the fact that the Department of Homeland Security has a fucking Ministry of Truth.

Which is really to miss the forest for the trees, in my opinion. Would it really be any better if the “Disinformation Governance Board” was run by a chill dude you wouldn’t mind having a beer with? Especially when we know the ideological leanings of this department are going to bounce back and forth between elections and will always act in service of US empire narrative control regardless of who is in office? I don’t think so.

The real issue at hand is the fact that this new institution will almost certainly play a role in bridging the ever-narrowing gap between government censorship and Silicon Valley censorship. The creation of the DHS disinformation board is a far more shocking and frightening development than last year’s scandalous revelation that the White House was advising social media platforms about accounts it determined were circulating censorship-worthy Covid misinformation, which was itself a drastic leap in the direction toward direct government censorship from what had previously been considered normal.

We should probably talk more about how as soon as people accepted that it was fine for government, media and Silicon Valley institutions to work together to censor misinformation and rally public support around an Official Narrative about a virus, the ruling power establishment immediately took that as license to do that with a war and a foreign government as well.

Like, immediately immediately. We went from a massive narrative control campaign about a virus, which people accepted because they wanted to contain a deadly pandemic, straight into a massive narrative control campaign about Russia and Ukraine. Without skipping a beat. Like openly manipulating everyone’s understanding of world events is just what we do now. Now we’re seeing increasingly brazen censorship of political dissent about a fucking war that could easily end up getting us all killed in a nuclear holocaust, and a portion of the Biden administration’s whopping $33 billion Ukraine package is going toward funding “independent media” (read: war propaganda).

We should probably talk more about this. We should probably talk more about how insane it is that all mainstream western institutions immediately accepted it as a given that World War II levels of censorship and propaganda must be implemented over a faraway war that our governments are not even officially a part of.

It started as soon as Russia invaded Ukraine, without any public discussion whatsoever. Like the groundwork had already been laid and everyone had already agreed that that’s what would happen. The public had no say in whether we want to be propagandized and censored to help the US win some kind of weird infowar to ensure its continued unipolar domination of the planet. It just happened.

No reason was given to the public as to why this must occur, and there was no public debate as to whether it should. This was by design, because propaganda only works when you don’t know it’s happening to you.

The choice was made for us that information is too important to be left in the hands of the people. It became set in stone that we are to be a propaganda-based society rather than a truth-based society. No discussion was offered, and no debate was allowed.

And as bad as it is, it’s on track to get much, much worse. They’re already setting up “disinformation” regulation in the government which presides over Silicon Valley, the proxy war between the US and Ukraine is escalating by the day, and aggressions are ramping up against China over both the Solomon Islands and Taiwan. If you think imperial narrative management is intense now, wait until the US empire’s struggle to secure global hegemony really gets going.

Do you consent to this? Do you? It’s something you kind of have to take a position on, because its implications have a direct effect on our lives as individuals and on our trajectory as a society. How much are we willing to sacrifice to help the US win an infowar against Russia?

The question of whether we should abandon all hope of ever becoming a truth-based society and committing instead to winning propaganda wars for a globe-spanning empire is perhaps the most consequential decision we’ve ever had to make as a species. Which is why we weren’t given a choice. It’s just been foisted upon us.

Whoever controls the narrative controls the world. By taking our control of information out of our hands without asking our permission and determining for us that we are to be a propaganda-based civilization for the foreseeable future, they have stolen something sacred from us. Something they had no right to take.

Nothing about the state of the world tells us that the people who run things are doing a good job. Nothing about our current situation suggests they should be given more control, rather than having control taken away from them and given to the people. We are going in exactly the wrong direction.

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on FacebookTwitterSoundcloud or YouTube, or throwing some money into my tip jar on Ko-fiPatreon or Paypal. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. All works co-authored with my American husband Tim Foley.

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Tyler Durden
Sat, 04/30/2022 – 16:30

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NY Case Against Trump Implodes As Grand Jury Ends With No Charges

NY Case Against Trump Implodes As Grand Jury Ends With No Charges

New York’s grand jury case against Donald Trump is ending without charges for the ex-president, as a lengthy criminal investigation into alleged manipulation of property assets to secure tax advantages or better loan rates is set to expire this week.

Manhattan DA Alvin Bragg (D) inherited the case from former DA, Cyrus R. Vance Jr. (who famously accepted campaign donations from Harvey Weinstein to quash a #MeToo investigation).

According to the Washington Post, Bragg decided not to move forward and ask the grand jury to vote on charges – mostly because the new DA had major issues using former Trump fixer Michael Cohen as a star witness.

Bragg has said he will announce when the investigation is over, noting that even after the special grand jury disbanded, other grand juries hearing a broad range of criminal cases in New York would be available to take action in this one if needed. -WaPo

The expiration of the grand jury comes after two senior prosecutors (Mark Pomerantz and Carey Dunne) quit the case in February after claiming Bragg was stalling the inquiry. Cohen said he met with investigators from the DA’s office around a dozen times, but that nobody has contacted him since the two departures.

According to Pomerantz, Trump’s ““financial statements were false, and he has a long history of fabricating information relating to his personal finances and lying about his assets to banks, the national media, counterparties, and many others, including the American people.”

Meanwhile, attorneys for NY Attorney General Letitia James’ (D) office told WaPo that it’s unlikely a criminal case will be brought, despite a spokeswoman for James saying that the investigation is ongoing.

James is looking into Trump’s business practices. On Monday, a lawyer from her office said a lawsuit could be filed in that case soon. Last week a judge held Trump in contempt for failing to provide James’ office with business records – fining him $10,000 per day until he complies. Trump’s attorneys are appealing the order, as well as another one from New York Supreme Court Judge Arthur Engoron which require Trump and two of his adult children to be deposed by James’ team.

On Friday, Engoron rejected a bid by Trump to purge the contempt ruling after he and his attorneys submitted affidavits. The affidavits “fail to specify” who conducted searches for the requested documents, or where and when searches took place, the judge said. He called Trump’s two-paragraph sworn statement “completely devoid of any useful detail.” -WaPo

Trump and team maintain they did nothing illegal regarding the Trump Organization’s asset valuations – accusing James of waging lawfare against him in a personal vendetta.

Tyler Durden
Sat, 04/30/2022 – 16:00

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Why Is CDC Trying To Put A Mask On Your Face Again?

Why Is CDC Trying To Put A Mask On Your Face Again?

Authored by Jeffrey Tucker via The Brownstone Institute,

We know the wicked truth about Chairman Mao’s “Let a Hundred Flowers Bloom.” He said this in 1957 while inviting anyone to criticize the Communist Party. There were cheers all around and the criticisms were unleashed. This lasted six weeks, after which many of the biggest critics were shot. It was a bait and switch. 

It’s a brilliant tactic for evil regimes. Ferret out the enemy and then make them go away. 

That’s not exactly what happened this week but the analogy works. A judge in Florida this week struck down the Biden administration’s transportation mask mandate. The opinion was highly technical and turned entirely on issues of administrative law. The judge ruled that the Public Health Service Act of 1944, the first ever to give the quarantine power to the federal government, did not authorize the imposition of universal mandates on what is really an article of clothing in the name of “sanitation.”

Instead, what appeared to happen here was entirely arbitrary. The Biden administration wanted masks and the CDC imposed them, including with criminal penalties. For a full year, travelers have been hectored and threatened at every turn. 

After the court decision, a hundred flowers bloomed in the form of air-born celebrations from coast to coast. 

Will it last? Not if our rulers in DC get their way. 

But let’s be clear about something. It’s about masks but more. The mask is a metaphor for all the controls, restrictions, impositions, mandates, closures, and resulting wreckage of the past two years. People hate them because they are so personal. More precisely, they are depersonalizing, which is precisely how the lockdown period of American history has felt the entire time. 

We are our faces, to others and ourselves. Take that away and what are we? We are tools. We are pawns. We are lab rats for their experiments. Masks are dehumanizing because they are supposed to be. The mask has a very long history as a tool of subjection and enslavement. We all know this intuitively. 

Therefore, the opportunity to throw it off was glorious. One evening an entire nation of travelers celebrated. Celebrating even more were the airline staff, flight attendants, and pilots. They have lived two years in these ridiculous things, which have nowhere been proven to work to crush a virus. Emancipation from them was a welcome relief. So too for workers around the country, whose interests have been consistently disregarded. 

We found ourselves in the position of caste-like scenes in restaurants around the country: customers dining happily while being served by masked workers. This is inconsistent with the democratic and commercial ethos. 

All the airlines as well as Amtrak announced it quickly, perhaps as a way of making it impossible for the Biden administration to roll it back. Even Biden himself said that the new rule is that everyone should do what they want. I guess he didn’t get the memo. 

Hold one just one minute, said someone in the administration. We need to find out what the Department of Justice says. Then the Justice Department immediately kicked it to the CDC: they are in charge of “The Science” and so we’ll wait. 

“The Department of Justice and the Centers for Disease Control and Prevention (CDC) disagree with the district court’s decision and will appeal, subject to CDC’s conclusion that the order remains necessary for public health. The Department continues to believe that the order requiring masking in the transportation corridor is a valid exercise of the authority Congress has given CDC to protect the public health. That is an important authority the Department will continue to work to preserve….

If CDC concludes that a mandatory order remains necessary for the public’s health after that assessment, the Department of Justice will appeal the district court’s decision.”

What’s this about? The plaintiff Health Freedom Defense Fund issued a sharp statement

“DoJ’s statement is perplexing to say the least and sounds like it comes from health policy advocates not government lawyers. The ruling by the US District Court is a matter of law, not CDC preference or an assessment of “current health conditions.”

In the early days of the Biden administration, the PR decision at the top was that it would always “follow the science,” a statement that the new president said many times. This was supposed to be different from the Trump administration, at least after the summer of 2020 when the CDC lost control over the political side of the executive state. 

On one hand, following The Science sounds good. However, if the “science” really means the bureaucracies and hence this slogan is just another way of passing the buck, there is a problem. The bureaucracies are unaccountable, and typically default to the safest and changeless route to preserve their power over the population. 

Even so, following the DOJ’s announcement, there must have been moments of panic at the CDC. They had the hot potato and didn’t know what to do with it. Finally they settled on the usual strategy: they threw it to an anonymous committee. Then the committee came out with a statement unsigned by anyone in particular. 

Instead of citing The Science, or claiming that they knew for sure that masks were great for people, the statement started with the following sentence: “To protect CDC’s public health authority….” Notice that this doesn’t say to protect public health. It says public health AUTHORITY. Those are certainly different things. 

In any case, the decision was made. The CDC “has asked DOJ to proceed with an appeal.” Ah, there we go: throw that potato back at a different agency. The CDC has merely asked! So now the DOJ will appeal, as forced by the sloganeering of the Biden administration and the deference to the CDC. The results will certainly be terrible for the administration because the next court will agree with the previous court that there was never any legal basis for the mandate in the first place. 

They could also issue a stay. That would be catastrophic for the Biden administration. Public anger would be out of control. Mao got away with this because he had total power. Biden does not. In fact, his poll numbers are awful. I’ve personally never seen an example of a sadistic government that is simultaneously politically masochistic. In other words, these people not only do not understand what’s good for the country; they don’t even know what’s good for themselves! 

The words of the CDC statement are the chilling part. They care about their authority first and foremost, even only. This seems to be the view pervasive in Washington today, as a Cold Civil War heats up between the states and with Washington. Every day grows more intense. Every day, the conflict becomes more raw and brutal. There seems to be no end in sight because there will be no rollbacks, no apologies, no regrets, no admission that their “authority” was an overreach all along. 

Will governments have learned their lessons? Look around! We live in a world burdened by extremely arrogant and immovable public agencies that have lost public trust. The administrative state is right now as angry as the public is at them. There is a peaceful solution here but it doesn’t seem to be on the table. 

If I’ve learned anything new over the last two years, it’s about the strange way in which the ruling class is impervious not only to actual research but also to the will of the people, even when it shows up in devastating polls.

They seem not to regard the celebrations after the judge’s decision not as a corrective but a challenge to overcome. 

It’s all about…authority. Not public health but public-health authority. Who is in charge? That’s what’s really at issue. They say them and we say us. 

Tyler Durden
Sat, 04/30/2022 – 15:30

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Sage Steele Suing ESPN for Violating Her Free Speech Rights: A Quick Sense of the Law

NPR (Dustin Jones) reports on the lawsuit, Steele v. ESPN Productions, Inc. (Conn. Super. Ct.):

During Steele’s appearance on former NFL quarterback Jay Cutler’s podcast, which aired Sept. 29, 2021, Cutler asked why she had a Band-Aid on her arm. She explained that she had just gotten her COVID-19 vaccine in compliance with Disney’s corporate mandate, even though she personally felt the company’s requirement to do so was out of line.

“I respect everyone’s decision. I really do. But to mandate it is sick, and it’s scary to me in many ways,” Steele said on the podcast. “But I have a job, a job that I love and, frankly, a job that I need.”

On the topic of race, Steele explained she was proud to come from a family that is both Black and white, the court filing said. As the conversation continued, Steele recalled her 2014 appearance on The View, where she was asked why she didn’t simply identify herself as a Black, similar to Obama. She said she was fascinated that the former president had identified solely as Black despite having been raised by his white mother and grandmother.”

Steele claims that she was “suspended from on-air appearances,” though ESPN denies there was a suspension; she also claims that she was “punish[ed]” by being “remov[ed] from prime assignments, including coverage of the New York City Marathon, the Rose Parade, and the 12th Annual ESPNW Summit, which Steele had hosted and emceed since its inception in 2010,” as well as being “forced to issue a humiliating public apology …  and [being] subjected to bullying and harassment by colleagues while ESPN and Disney did nothing to stop it.” She also alleges that she “appeared on the podcast as a private citizen on her day off, and made it clear during the interview that she was speaking on her own behalf, not on behalf of ESPN or Disney.”

My useful correspondent Sammy Straightman asks:

[1.] How come this Sage Steele is suing ESPN for violating her First Amendment rights? I’m well acquainted with the state action doctrine, under which the Bill of Rights only applies to the government (federal, state, or local), not private companies!

So true, Sammy, so true—but only half the picture. Many states (and some cities and counties) have special statutes that limit private employers’ ability to retaliate against their employees based on the employees’ speech or political activity (see my 2012 article canvassing such statutes, which differ widely in their text). Indeed, Connecticut, where ESPN is apparently headquartered and where Steele works, is one such; here’s the relevant statute:

[No employer may] discipline or discharge [an employee] on account of the exercise by such employee of rights guaranteed by the First Amendment …, provided such
activity does not substantially or materially interfere with the employee’s bona fide job performance or the working relationship between the employee and the employer ….

Connecticut courts have also read this statute as borrowing into the statute two First Amendment principles developed by the Supreme Court as to government employee speech: (1) Speech is excluded from this protection if it’s on a matter of merely “private concern.” (2) Speech is excluded and also is unprotected if it’s said by an employee as part of her duties, unless—and here Connecticut precedent departs from federal cases—it involves “comment on official dishonesty, deliberately unconstitutional action, other serious wrongdoing, or threats to health and safety,” in which case it’s protected even if it’s part of her duties.

That’s kind of like religious discrimination, by the way: The Free Exercise Clause and the Equal Protection Clause only apply to the government, but if a private employer fires you because of your religion, it will probably be liable under statutes that apply similar nondiscrimination principles to private employers. (The one difference is that for religious discrimination, you can sue under federal and state statutes; generally speaking, private firing based on speech is barred only by some state and local laws, not federal law.)

This is why, by the way, careful commentators try to distinguish “the First Amendment,” which is a legal rule binding American government entities (as to religion as well as speech), from “free speech” or “religious freedom,” which are broader sets of principles that may apply to others as well. In practice, I realize that people use the terms interchangeably, and that’s normally a tolerable sort of imprecision. But here it’s important both to understand the limits on the scope of the First Amendment, and the fact that there are protections for free speech beyond the First Amendment.

[2.] Wait a sec: How can an employer be required to keep employees whose views it disagrees with, or who are just more trouble than they’re worth?

A perfectly plausible policy argument, and in fact many states take the view that employers shouldn’t be restrained this way. But many other states, including Connecticut, have concluded that employee speech should indeed be protected from such retaliation—again, just as employee religious practice is protected from employer retaliation by federal law (even when the employer or coworkers or customers think this practice is bad).

Part of the reason might be that, if free speech is important for protecting democratic self-government, or the marketplace of ideas, or the search for truth, the threat of private employer retaliation (and not just of government retaliation) may undermine those socially valuable features of free speech. The theory of these private employee protection laws, right or wrong, is that the employers’ private property rights should yield in this situation, as they do with regard to employees’ religious freedom rights (and some other rights).

[3.] OK, but can’t ESPN just say that Steele was saying controversial things, and this “substantially or materially interfere[d] with the employee’s bona fide job performance or the working relationship between the employee and the employer”?

Yes, it can say that; and if the court agrees, then Steele would lose. Under this statute, as under the First Amendment rules applicable to the government as employer (on which this statute is based), a form of “heckler’s veto” is indeed allowed: If coworkers or customers get upset enough about an employee’s speech, the employee can be fired.

But that’s generally a factual question, which is left for the factfinder—a jury, or a judge if the parties choose a bench trial—to decide (at least unless the evidence is so clear that a judge can conclude that any reasonable jury could come to only one conclusion). If it turns out that there was only a modest amount of criticism, then the factfinder may well conclude that the statement didn’t “substantially or materially” affect Steele’s performance or her working relationship with the employer.

Nor do I think that ESPN can say that their employees are always on the job, and always speaking on behalf of ESPN. The premise of the Connecticut statute, and of the government employee speech protections on which it’s based, is that even people who are known to be someone’s employees, and whose credibility stems from their employment, are entitled to speak on their own behalf. Nothing Steele said suggested that she was speaking on behalf of ESPN, and indeed her criticism of ESPN made clear that she wasn’t acting as an ESPN spokeswoman. And of course listeners are used to knowing that often employees are expressing their own personal views, not their employers’.

[4.] What about the requirement of “discipline”—would the alleged suspension from various appearances and assignment qualify?

Not so clear, and I couldn’t find any Connecticut binding appellate precedent on the subject. But here’s a passage from a trial court opinion that other trial courts have cited:

Although in some situations a transfer to a new assignment may not be discipline, where that transfer is to a position that is so objectively undesirable it could be considered a demotion, then such a transfer could be “discipline.” Likewise, a removal of duties is an affirmative act that could be considered a demotion in certain circumstances…. [And a]lthough in a strict sense these acts might be an “omission,” the defendant’s failure to investigate threats made toward the plaintiff and protect him from those wishing to do him harm could be “discipline” because employers generally are supposed to protect employees from threatening or harassing coworkers…. [Section] 31–51q was clearly intended to protect an employee from de facto demotion and retaliatory employer actions that diminish the happiness and status of an employee.

Not squarely on point factually, and in any event not binding precedent, but it should give a sense of the arguments the parties will be making as to “discipline.”

[5.] Wait a sec: What about ESPN’s own First Amendment rights? Doesn’t it have the right to decide whom to select to speak for it on the air, just as the Boy Scouts have a right to decide not to select gays as Assistant Scoutmaster?

Another great question, Sammy! The answer turns out to be unsettled. Nelson v. McClatchy Newspapers, Inc. (Wash. 1997) held, by a 5-4 vote, that the First Amendment allowed a newspaper to require that its reporters not engage in political activity, notwithstanding a state statute that provided, “No employer … may discriminate against an … employee … for … in any way supporting or opposing a candidate, ballot proposition, political party, or political committee.”

On the other hand, Ali v. L.A. Focus Publications (Cal. Ct. App. 2003), rejected the claim that a newspaper “has the unfettered right to terminate an employee for any [outside-the-newspaper] speech or conduct that is inconsistent with the newspaper’s editorial policies,” and allowed plaintiff to go forward with his claim under California’s employee political activity protection statute. And AP v. NLRB (1939) rejected (by a 5-4 vote) the Associated Press’s claim of a right not to hire employees who belonged to unions; the AP’s theory had been that it “must have absolute and unrestricted freedom to employ and to discharge those who, like Watson, edit the news, that there must not be the slightest opportunity for any bias or prejudice personally entertained by an editorial employee to color or to distort what he writes, and that the Associated Press cannot be free to furnish unbiased and impartial news reports unless it is equally free to determine for itself the partiality or bias of editorial employees.”

“The business of the Associated Press is not immune from regulation because it is an agency of the press,” the Court reasoned: “The publisher of a newspaper has no special immunity from the application of general laws. He has no special privilege to invade the rights and liberties of others.” And while Boy Scouts v. Dale does secure the rights of groups that want to spread an ideological message to choose speakers whose conduct or identity doesn’t undermine that message, it’s not clear that this rationale would apply to ESPN, which I think isn’t generally trying to spread any message to the public about vaccination or about racial self-identification. The Court in Dale framed the issue as “whether Dale’s presence as an assistant scoutmaster would significantly burden the Boy Scouts’ desire to not ‘promote homosexual conduct as a legitimate form of behavior'”; it seems unlikely that Steele’s presence in the assignments she mentioned would significantly burden any particular message that ESPN is trying to send.

Moreover, even if Connecticut courts choose to follow Nelson, and allow a defendant to restrict the speech of those who speak for it pursuant to a neutral “no politics” policy, Steele alleges that other ESPN employees were allowed to express their own political views. If that’s true, then it makes it harder for ESPN to rely on Nelson, which had reasoned that:

Here, TNT [The Tacoma News Tribune] implemented a code of ethics which it designed in good faith to foster the newspaper’s integrity and credibility. Case law unambiguously allows a news publication to follow a code designed to limit conflicts of interest which may diminish publication credibility. TNT adopted such a code. Freedom of the press leaves such decisions to the press, not the legislature or the courts. The code is facially designed to uphold the appearance of impartiality.

So an interesting case, I think, which I hope to follow closely.

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