Month: August 2022

The Satanic Panic Is Back, and It’s Bipartisan


woman with horns surrounded by Satanic imagery

A new poll looking at Americans’ belief in conspiracy theories finds high levels of support for loony-tunes ideas about sex, Satan, and U.S. institutions. In addition, more than half of those surveyed believed child sex-trafficking myths.

The situation echoes fears prevalent during the 1980s and ’90s, a mass hysteria that has in retrospect been dubbed the Satanic Panic. This vintage worry about ritual murders, sexual abuse inspired by devil worship, and Satanists in child care centers, the entertainment industry, and elsewhere was unfounded—but still ruined lives. (You can read much more about the Satanic Panic in Reason Books Editor Jesse Walker’s The United States of Paranoia: A Conspiracy Theory.)

For a few decades, the moral panic around these topics seemed to subside—which is not to say people didn’t displace these fears into other overblown villains, such as sex trafficking cabals. Now it seems to be in full swing again, blended with ongoing panic about sex trafficking and retro myths about queer people being pedophiles and perverts.

“Accusations involving ritual sex abuse and the sexualization of children have surged into the mainstream of American politics over the past year,” University of Miami political science professors Joseph E. Uscinski and Casey Klofstad note on the London School of Economics’ U.S. politics and policy blog. “In particular, conservative politicians and opinion leaders have increasingly expressed concerns about Satan, Satanists, sex “grooming“, and the supposed “agenda” by public schools and entertainment companies to indoctrinate children into sexualized lifestyles or to turn them gay or trans.”

To gauge support for such views, Uscinski and Klofstad conducted a nationwide poll, garnering 2,001 (nationally representative) respondents between May 26 and June 30, 2022. They found not only high levels of nouveau Satanic Panic but also high levels of belief in conspiracy theories about child sex trafficking and Disney:

• 25 percent agree that “Satanic ritual sex abuse is widespread in this country.”

• 33 percent agreed that “members of Satanic cults secretly abuse thousands of children every year.”

• 26 percent agreed that “the Disney Corporation ‘grooms’ children into sexualized lifestyles.”

• 28 percent agreed that “there is a secret ‘gay agenda’ aimed at converting young people into gay and trans lifestyles.”

• 30 percent agreed that “elites, from government and Hollywood, are engaged in a massive child sex trafficking racket.”

• 60 percent agree that there are at least 300,000 kids being sex trafficked in the U.S.

The child sex-trafficking myth: Only 10.3 percent of those surveyed said there are somewhat fewer or far fewer than 300,000 kids being trafficked. Around 30 percent said they didn’t know.

We’ve tackled this last myth at Reason a number of times. It’s a statistic based on a bad study that assigned risk factors based on broad situations—like being the child of immigrants, being in foster care, or living in public housing—and then used these factors to arrive at the conclusion that 326,000 kids were “at risk for commercial sexual exploitation.” The research never said this many kids were or would be trafficked, and even the method used to calculate risk is dubious. Nonetheless, the study is still cited frequently by people in government and law enforcement, and often morphs from children at risk of trafficking to children who are being trafficked.

The National Center for Missing and Exploited Children drew from this study and a 2002 Justice Department study (the National Incidence Studies of Missing, Abducted, Runaway and Thrownaway Children, or NISMART) to suggest that the number actually being trafficked is 100,000.

Years ago, Washington Post fact checker Glenn Kessler did a thorough debunking of both myths. Kessler notes that the NISMART survey “showed nearly 1.7 million kids had a runaway episode a year,” but “only 1,700 kids — less than one percent — reported having engaged in sexual activity in exchange for money, drugs, food, or shelter during the episode.”

Bipartisan lunacy: Many have blamed former President Donald Trump and other Republicans for myths about sex trafficking, given the right-wing bent of believers in the sex-trafficking panic that is QAnon. But myths and misinformation about sex trafficking have been spread for decades by both Republicans and Democrats.

And if Uscinski and Klofstad’s poll is accurate, both Republicans and Democrats are strong believers in child sex-trafficking myths as well as Satanic Panic hoopla. In the poll, Republicans were more likely to agree that Disney is “grooming” children and that there’s a secret “gay agenda.” But Democrats were as or more likely to believe other conspiracy theories.

For instance, on the question of whether Satanic ritual sex abuse is widespread, 29 percent of Democrats and 26 percent of Republicans said yes.

Thirty-two percent of both Republicans and Democrats said Hollywood and government elites are sex-trafficking children.

And 61 percent of Democrats and 63 percent of Republicans agreed that 300,000 or more children are being trafficked in the U.S.

Surveys like this one get at why curbing misinformation on social media—something politicians are constantly harping on tech companies to do—is so difficult. Wild myths are not merely fringe beliefs in many cases. They’re shared by a number of Americans and, all too often, rooted in rhetoric from mainstream politicians.

You can find the full poll results here.

FREE MINDS

Judges shouldn’t be able to sentence people based on crime accusations they’ve been cleared of, right? That seems like it only makes sense. Alas, it’s not so clear to some, apparently. A case involving this question is before the U.S. Supreme Court. The Due Process Institute lays out the stakes in a new friend-of-the-court brief:

FREE MARKETS

TikTok is pushing back on claims that it poses a national security threat. In a letter obtained by Politico and sent to Catherine Szpindor, chief administrative officer of the U.S. House of Representatives, the company challenged a “TikTok Cyber Advisory” issued by Szpindor’s office. The company is urging Szpindor’s office to rescind the advisory.

“Allegations that TikTok stores U.S. user data in China are inaccurate,” states the letter, noting that U.S. user data is currently stored in Virginia and backed up on a server in Singapore. “Moreover, as we recently announced, 100% of U.S. user traffic is being routed to Oracle Cloud Infrastructure. We still use our U.S. and Singapore data centers for backup, but we expect to delete U.S. users‘ personal information from our own data centers and fully pivot to Oracle cloud servers located in the U.S.”

TikTok also noted that contrary to the House report, it does not use facial recognition technology or collect face or voice data and “does not automatically collect precise GPS location information in the U.S. Our privacy policy is quite clear that in the event we were to request precise location data, users would have to approve it for each request.” 

The letter is the latest in an ongoing saga involving attempts to ban or further regulate the popular video app since it is owned by a Chinese company.

QUICK HITS

• Arizona is punishing a mom for letting her 7-year-old kid and his friend play at the park without adult supervision.

• The Centers for Disease Control and Prevention should get back to its roots, writes Reason‘s Ron Bailey.

• “Two former Pennsylvania judges who orchestrated a scheme to send children to for-profit jails in exchange for kickbacks were ordered to pay more than $200 million to hundreds of people they victimized,” reports the Associated Press.

• Monkeypox may be spreading specifically through sex, rather than through simple skin-to-skin transmission as previously believed.

• Oklahoma’s governor issued a two-month stay of execution for Richard Glossip, a man on death row for a 1997 murder he did not (by anyone’s account) commit and may have had nothing to do with.

• Sex workers say they’re increasingly being restricted on Reddit—one of the few social media sites to still allow nudity and explicit sexual content.

• PEN America looks at censorship in American schools and finds that “this year, proposed educational gag orders have increased 250 percent compared to 2021. Thirty-six different states have introduced 137 gag order bills in 2022, compared to 22 states introducing 54 bills in 2021,” though “there has been a decline in new gag order laws passed from 12 last year to 7 this year.”

• What could go wrong?

The post The Satanic Panic Is Back, and It's Bipartisan appeared first on Reason.com.

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Initial Claims Drop From 10 Month High As Continuing Claims Keep Rising

Initial Claims Drop From 10 Month High As Continuing Claims Keep Rising

After hitting the highest level since November, in the latest week, the number of Americans filing for jobless benefits for the first time dipped from a downward revised 252K (was 262K originally) to 250K, well below the consensus estimate of 264K.


Source: Bloomberg

Unlike initial claims, continuing claims are also picking up also and is now at its highest in over 4 months.

One wonders if this is an actual improvement in the labor market or someone at the DOL got a tap on the shoulder, to make the weakening claims series more compatible with the relentless surge in payrolls.

Still given the mainstream push to claim there is ‘no inflation’ after last week’s 0.0% MoM CPI print, who knows what the arbiters of what is acceptable speech will allow us to claims this time…

Tyler Durden
Thu, 08/18/2022 – 08:52

via ZeroHedge News https://ift.tt/2tq9BJn Tyler Durden

Plea Deal Rejected For Couple Accused Of Selling Nuclear Submarine Secrets

Plea Deal Rejected For Couple Accused Of Selling Nuclear Submarine Secrets

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

These booking photos released Oct. 9, 2021, by the West Virginia Regional Jail and Correctional Facility Authority show Jonathan Toebbe and his wife, Diana Toebbe. (West Virginia Regional Jail and Correctional Facility Authority via AP)

A federal judge on Aug. 16 rejected a plea deal for a U.S. Navy nuclear engineer and his wife who are accused of attempting to sell U.S. submarine secrets to a foreign government.

Jonathan, 42, and Diana Toebbe, 45, from Annapolis, Maryland were arrested by the FBI and the Naval Criminal Investigative Service (NCIS) in October 2021 during a string operation and charged with one count of “conspiracy to communicate restricted data” and two counts of the “communication of restricted data.”

Prosecutors alleged that the couple had sold “restricted data” for nearly a year to an individual they believed was a representative of a foreign government. The data concerned the design of nuclear-powered warships.

However, the individual they were attempting to sell the information to was actually an undercover FBI agent.

The couple pleaded guilty in February in federal court in Martinsburg, West Virginia, to one count each of conspiracy to communicate restricted data as part of plea deals that saw two counts of communication of restricted data dropped.

Under the plea agreement, Diana Toebbe would serve no more than three years in federal prison while Jonathan Toebbe would spend between roughly 12 years and 17 years behind bars.

However, on Tuesday, U.S. District Court Judge Gina Groh of the Northern District of West Virginia rejected those plea deals, stating that they were “not in the best interest” of the country.

The judge said the couples’ actions were done “for selfish and greedy reasons” but could have caused great harm to the Navy and others.

“Counsel, it’s not in the best interest of this community or, in fact, this country to accept these plea agreements,” Groh said. “Therefore, I’m rejecting them. I don’t find any justifiable reasons for accepting either one of these plea agreements.”

As a result of Groh’s decision, the Toebbe’s separately withdrew their guilty pleas and Groh set a new trial date for Jan. 17.

Unrestricted Access to Nuclear Data

Jonathan Toebbe, a nuclear Navy engineer who was assigned to the Naval Nuclear Propulsion Program, also known as Naval Reactors, held an active national security clearance through the U.S. Department of Defense, meaning he was able to access restricted data regarding reactors for nuclear-powered warships.

According to prosecutors, the FBI became involved in the couple’s scheme after an agent obtained a package intended for a foreign entity that contained a sample of restricted data along with instructions on how to establish a way to purchase further restricted data.

Prosecutors said the package contained U.S. Navy documents, a letter with instructions, and an SD card containing specific instructions on how the recipient should communicate with the Toebbes via an encrypted communication platform.

“I apologize for this poor translation into your language. Please forward this letter to your military intelligence agency,” the letter with instructions stated, according to prosecutors. “I believe this information will be of great value to your nation,” it added.

Read more here…

Tyler Durden
Thu, 08/18/2022 – 08:40

via ZeroHedge News https://ift.tt/8XSmMQa Tyler Durden

Futures Levitate Higher After China Vows To Accelerate Reopening

Futures Levitate Higher After China Vows To Accelerate Reopening

US futures were flat as the Fed minutes did not help resolve the uncertainty about the path of Federal Reserve monetary tightening, while fresh prospects about China’s economic reopening sent oil higher. Nasdaq 100 and S&P 500 futures were up 0.2% at 745am ET having recovered from an earlier loss, as traders assessed minutes from the Fed’s last meeting which noted that officials saw risks from tightening more than necessary even as they planned on hiking until inflation was on a steady downward slope, while President Xi Jinping’s comments that China will persist with opening up its economy were also in focus and boosted commodities. The dollar gave up gains, and Treasury yields dipped, reversing some of this week’s sharp gains. Bitcoin traded in a tight range around $23,500.

In US premarket trading, Cisco Systems advanced after issuing an upbeat forecast for quarterly sales as chip-supply shortages ease and the company is able to fill more orders. Keep an eye on US building products stocks as Deutsche Bank initiates coverage on 22 names, saying the US housing market is in the midst of a “mid-cycle crisis,” but that this is likely to be different from the downturn seen in the mid-2000s. Here are some other notable premarket movers:

  • Bluebird Bio’s (BLUE) shares rise as much as 10% as analysts digest yesterday’s FDA clearance of its Zynteglo therapy, ahead of its launch call due later today.
  • BJ’s Wholesale (BJ) shares gain 6% after the warehouse club operator reported adjusted earnings per share for the second quarter that beat the average analyst estimate.
  • Cisco Systems (CSCO) rose 6% after issuing an upbeat forecast for quarterly sales as chip-supply shortages ease and the company is able to fill more orders.
  • Elanco Animal Health (ELAN) cut to equal-weight from overweight at Morgan Stanley as visibility on the firm’s outlook remains weak. Elanco shares fall 1.7% in US premarket trading.
  • Estee Lauder (EL) falls 1.3% after the beauty company’s forecasts for first quarter and the full year trailed consensus estimates. In Europe, shares of L’Oreal declined after EL’s release.
  • Five months after disclosing a stake in Bed Bath & Beyond Inc., (BBBY) activist shareholder Ryan Cohen wants out, sparking a selloff in the shares of the home goods retailer. Shares fall 13%.
  • Kohl’s (KSS) drops 7% after slashing its guidance for the year, including adjusted earnings per share, operating margin and net sales growth. Peer Macy’s (M), which reports Aug. 23, falls 3%.
  • Mattel (MAT) rises 0.8% after it was initiated with a buy rating at BofA, which said that the company has “successfully” completed its turnaround and is now in growth mode.
  • MoffettNathanson cut the recommendation on Verizon Communications Inc. (VZ) to underperform from market perform, as T-Mobile widens its competitive advantage in 5G and AT&T undercuts it with aggressive promotions. Verizon shares fall 0.8%.
  • NetEase (NTES) shares rise as much as 3% after the Chinese video-game giant’s 2Q revenue came in slightly above the consensus analyst estimate.
  • NuScale Power (SMR) was initiated with a recommendation of buy at Guggenheim Securities, as analyst Shahriar Pourreza says its “shares represent one of the only opportunities for public exposure to the next generation of nuclear.” Shares gain 4%.

While policy makers warned against over-tightening and signaled the potential for slower rate increases at some point, they also flagged the risk of inflation pressures becoming entrenched. The nuanced messaging wasn’t dovish enough for markets to sustain a risk-on stance into Thursday. Caution was the byword of the moment with further clues awaited at the Fed’s annual symposium in Jackson Hole, Wyoming next week.

“People are a little overly optimistic about how likely it is that we can solve the inflation problem quickly and in a way where we don’t have to include more policy and more rising rates,” Kathryn Kaminski, AlphaSimplex Group chief research strategist and portfolio manager, said on Bloomberg Television.

While most saw the FOMC minutes as dovish, others disagreed. According to Ipek Ozkardeskaya, a senior analyst at Swissquote, the Fed meeting minutes were more hawkish than what was needed to give another boost to US equities. “Investors quickly realized that there was no mention of cutting the rates in the foreseeable future. If anything, the Fed would continue lifting the rates, and keep them steady for a while.”

Equities had rallied in recent weeks as investors bet July’s softer inflation print would allow the Fed to rethink its aggressive pace of hiking rates. The Nasdaq 100 had led the advance amid relief at the prospect of easier policy, boosted by raging CTA buying, stock buybacks, a return of retail investors and hedge funds forced to FOMO-chase higher.

“This rally is over-extended in the technology sector,” said Freddie Lait, chief investment officer at Latitude Investment Management. “The relative valuation of most of those Nasdaq stocks compared to other stocks around the world has become extreme again, and positioning has become quite extreme again, and so I wouldn’t be surprised to see that rolling over into the end of the summer.” The Nasdaq 100 is now trading at 23.2 times forward earnings, above the average level of 20.2 times over the past decade.

In Europe, the Stoxx 600 index was 0.2% higher as the latest report of euro-area inflation met expectations, sparing traders of any ugly surprise. FTSE MIB outperforms, adding 0.4%, IBEX lags, dropping 0.2%. Autos, energy and chemicals are the strongest-performing sectors. Concerns of tightening monetary conditions increased after the European Central Bank’s Governing Council member Martins Kazaks said rate hikes will continue in the region. Thin trading exaggerated moves across markets. The Stoxx 600 witnessed a 33% drop in volumes relative to the 30-day average. Here are the biggest European movers:

  • Siegfried shares jump as much as 13%, the most since October 1998, after 1H results analysts say were a significant beat, also noting effective management of macro risks.
  • GN Store Nord shares rise as much as 10% after the Danish audio firm presented its latest earnings, which included a guidance cut that was less pessimistic than analysts expected.
  • Zur Rose shares rise as much as 14%, the most since May, after its latest earnings report, which includes a goal to be profitable in 2023, a plan Jefferies call “very positive.”
  • Nibe rise as much as 8.6% after the Swedish heat pump manufacturer published earnings. Analysts note solid results, which beat expectations, as well as a positive outlook.
  • Global Fashion Group shares rise as much as 31%, the most intraday on record, after reporting better-than-expected earnings for the second quarter, also offering some FY clarity.
  • Balfour Beatty shares rise as much as 3.8% after Peel Hunt further raised FY22 profit forecasts for the UK construction and engineering firm and saw scope for material share price upside.
  • Adyen shares tumble the most since 2018 as 1H Ebitda and net revenue missed consensus analyst forecasts. Analysts point out that accelerated hiring is also a cause of Ebitda miss.
  • AutoStore shares wipe out an earlier jump of 13% to fall as much as 6.8%. Analysts say results look strong, albeit they note a small miss on orders and guidance for more margin pressure in 2H.
  • Made.com shares drop as much as 12%, biggest decliner in the FTSE All-Share Index, after the online furniture seller said it’s considering “all options” to strengthen its balance sheet.

Earlier in the session, Asian stocks fell as disappointing results from some key Chinese firms and worries about the outlook for the region’s biggest economy weighed on investor sentiment. The MSCI Asia Pacific Index slipped as much as 0.7%, with benchmarks in the biggest markets of Japan and China down close to 1%. Risk appetite improved a smidge after President Xi Jinping said China will persist with opening up its economy, the comments coming in after the nation’s markets closed. China’s largest developer Country Garden Holdings, saw its stock slump after it warned that first-half earnings probably tumbled by as much as 70% amid an escalating property crisis. Tencent, the nation’s most-valuable company, logged its first-ever revenue drop though its shares — which have fallen for three straight months — advanced.

Thursday’s losses in Asia tracked declines in US shares overnight. Minutes of the Fed’s latest meeting showed that officials agreed on the need to eventually dial back the pace of interest-rate hikes but also wanted to gauge how their monetary tightening was working toward curbing US inflation.  The minutes “lacked fresh impetus needed to bring up the pricing of Fed’s rate hikes,” Saxo Capital Markets’ Asia-Pacific strategy team wrote in a note. “Chairman Powell’s speech at the Jackson Hole Symposium next week will be keenly watched for further inputs.” Meanwhile, consumer discretionary and technology were among the worst-performing sectors on the Asian benchmark. Goldman Sachs and Nomura further cut their forecasts for China’s economic growth, with a power supply crunch adding more uncertainty to the outlook.

Japanese stocks fell, following US peers lower after minutes from the Federal Reserve’s last meeting showed officials see risks from tightening more than necessary. The Topix fell 0.8% to close at 1,990.50, while the Nikkei declined 1% to 28,942.14. Toyota Motor Corp. contributed the most to the Topix decline, decreasing 1.8%. Out of 2,170 shares in the index, 565 rose and 1,503 fell, while 102 were unchanged.

Australia’s S&P/ASX 200 index fell 0.2% to close at 7,112.80 as investors assessed a slew of corporate results and jobs data. Australian employment unexpectedly dropped in July, giving the Reserve Bank scope for more flexibility in its tightening cycle. Telix Pharma slumped after reporting a net loss for the first half. IPH was the top performer after saying it’s buying Canadian firm Smart & Biggar. In New Zealand, the S&P/NZX 50 index fell 0.3% to 11,814.34.

In FX, the Bloomberg Dollar Spot Index advanced a second day and the greenback rose versus most of its Group-of-10 peers, with Norway’s krone as the best performer. The euro traded in a narrow range against the dollar for a third consecutive day. Norway’s krone extended an advance versus the euro after Norges Bank raised the key interest rate to 1.75% from 1.25%, in line with what most economists in a Bloomberg survey had expected. The central bank also said the policy rate “will most likely be raised further in September.” The pound extended losses against the dollar, hitting the lowest since July 26, amid broad-based greenback strength.
The yen fell in a volatile session as traders mulled rising US yields and their negative impact on stocks. Japan’s government bond yields rose

In rates, Treasuries were slightly richer across the curve with gains led by long-end, having outperformed bunds and gilts during European morning. US yields richer by ~2bp across long-end of the curve with 5s30s spread flatter by ~1bp on the day; 10-year yields around 2.87% within narrow overnight range, outperforming bunds by 4bp in the sector. Front-end German yields lag after ECB’s Isabel Schnabel says the euro area’s inflation outlook has not changed fundamentally.  Bunds bear-flattened out to the 10-year sector as money markets added to ECB tightening bets after the ECB’s Schnabel said the euro area’s inflation outlook has not changed fundamentally, in an interview cited by Reuters, suggesting that another hike of similar magnitude may be coming next month.  Australia’s bond yields trimmed opening gains and the nation’s currency eased after employment contracted for the first time since October 2021.

In commodities, oil jumps to session high after Xi says China will persist with opening up its economy. WTI rises 1.5% to trade around $89. Spot gold rises roughly $4 to trade near $1,766/oz. Most base metals trade in the red; LME nickel falls 0.5%, underperforming peers. LME copper outperforms, adding 1%, after Xi’s comments

Looking at the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July.

Market Snapshot

  • S&P 500 futures down 0.3% to 4,265.50
  • STOXX Europe 600 down 0.1% to 438.54
  • MXAP down 0.6% to 161.98
  • MXAPJ down 0.5% to 526.40
  • Nikkei down 1.0% to 28,942.14
  • Topix down 0.8% to 1,990.50
  • Hang Seng Index down 0.8% to 19,763.91
  • Shanghai Composite down 0.5% to 3,277.54
  • Sensex down 0.3% to 60,079.59
  • Australia S&P/ASX 200 down 0.2% to 7,112.78
  • Kospi down 0.3% to 2,508.05
  • German 10Y yield little changed at 1.11%
  • Euro down 0.1% to $1.0165
  • Gold spot up 0.1% to $1,763.18
  • U.S. Dollar Index up 0.20% to 106.79

Top Overnight News from Bloomberg

  • The US says it has commenced bilateral trade negotiations w/Taiwan, something Washington signaled was going to happen back in June. WSJ
  • A United Nations expert on slavery has found it “reasonable to conclude” that forced labour is taking place in the China’s far-western region of Xinjiang. SCMP
  • China’s state media said local governments could sell more than $229 billion of bonds to fund infrastructure investment and plug budget gaps, a further move by Beijing to shore up an economy hit by worsening coronavirus outbreaks and a property slump. BBG
  • More AMTD intrigue. The investment firm that stunned investors when its post-IPO stock soared 32,000% was probed by Hong Kong’s watchdog even before its US listing, people familiar said. AMTD Group’s office and the home of ex-UBS banker Calvin Choi were searched in February 2021. The regulator investigated its underwriting arrangements as recently as November, one person said. BBG
  • Norway hiked by 50 bps to 1.75% and flagged the potential for another increase of that magnitude next month. ECB official Martins Kazaks said euro-area rates will continue to go up, while his colleague Isabel Schnabel suggested another big hike may come in September. The Philippines raised by 50 bps as expected. Sri Lanka held. Turkey is expected to follow suit later. BBG
  • Tighter links between crypto and US stock prices are forcing digital asset hedge funds to consider buying expensive data from other markets. The influx of traditional trading firms into crypto, which already have the inputs needed to track what’s up in stocks, is also adding pressure. Hedge fund bosses said crypto firms may see market data costs rise to $500,000 a month from near zero. BBG
  • Allen Weisselberg, a long-time executive for Donald Trump’s company, will plead guilty on Thurs and while he won’t implicate the former president or Trump’s family, his testimony could be used against the Trump Organization. NYT
  • The decision of 10 members of the House of Representatives to vote to impeach former President Trump has cost some of them their seats, including the most vocal critic, Rep. Liz Cheney, R-Wyo., who lost the state’s primary Tuesday to Trump-backed candidate Harriet Hageman.  Trump has spent most of his post-presidency backing candidates who are running against the lawmakers he considers disloyal to him. Four of these 10 Republicans have lost the primaries, four have chosen not to seek reelection, and two made it through their primaries and are running in November’s general election to keep their seats. USA Today
  • AMZN is searching for a senior movie-studio executive to help lead its growing entertainment division, turning to rivals for a chance to poach an experienced Hollywood player. Amazon Studios has held conversations with several Hollywood leaders about the role, including NFLX’s film head, Scott Stuber, one of the streamer’s most powerful and visible executives, according to people familiar with the matter. WSJ
  • The probability of a 75 bps rate hike in September, which was climbing on Wednesday morning, dropped below 50% after the FOMC minutes….

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly declined following the weak handover from global counterparts which were pressured as yields climbed on the back of the red-hot UK inflation data and with only a brief reprieve seen after the FOMC Minutes noted many officials saw a risk the Fed could tighten more than necessary. ASX 200 was subdued as participants digested the latest influx of earnings releases and disappointing jobs data which showed a surprise contraction in headline Employment Change. Nikkei 225 slipped back beneath the 29,000 level in tandem with the overall downbeat sentiment. Hang Seng and Shanghai Comp conformed to the glum mood after both Goldman Sachs and Nomura cut their China GDP growth forecasts and with focus also on earnings releases including Tencent after it posted its first-ever decline in quarterly revenue although its shares were lifted and it had vowed a return to growth, while Country Garden led the declines after the developer issued a profit warning of as much as an 87% drop in H1 net.

Top Asian News

  • China may issue CNY 1.5tln in additional debt as part of an investment push, according to China Securities News.
  • China’s COVID-19 cases rose to a 3-month high of 3,424 on Wednesday from 2,888 the day before.
  • Nomura cut its China 2022 GDP growth forecast to 2.8% from 3.3%.
  • China’s MOFCOM says, re. US CHIPS act, some provisions restrict normal economic, trade and investment activities of relevant enterprises in China. Will, when necessary, take forceful measures to safeguard interests.
  • China’s President Xi says they will persist with opening up the economy, via CCTV.
  • China’s banking regulator is reportedly looking into the property sector loan portfolios of some local/foreign lenders to assess systemic risk, via Reuters citing sources.

European bourses began the session mixed/flat and are yet to gain any real traction in relatively limited newsflow, Euro Stoxx 50 +0.5%.  Though, it is worth pointing out DAX 40 +1.0% outperformance, after lagging on Wednesday, amid strength in their heavyweight industry names. Stateside, performance is similar ahead of a few corporate updates, data and Fed speak, ES +0.1%

Top European News

  • The FTSE 100’s Weirdly Good Run of Form Hits a Wall of Problems
  • Norway Raises Rates to Highest in Decade to Stem Inflation
  • Embracer CEO Eyes IP Windfall After Buying ‘Lord of the Rings’
  • PwC Raises UK Partner Pay to £1 Million for First Time
  • ‘Enough Is Enough’ Rally Pulls UK Crowds as Rail Strike Begins
  • Truss Planning Review of Regulators in City of London Shakeup

FX

  • Buck bounces after brief post-FOMC minutes dip on dovish elements, DXY touches Fib at 106.960 from 106.500 low.
  • Euro derives more support from rising EGB yields amidst hawkish ECB commentary, EUR/USD holds around 1.0150 amidst raft of option expiries extending beyond 1.0200.
  • Norwegian Krona underpinned by another half point hike from Norges Bank and signal for further tightening in September, EUR/NOK towards base of 9.8550-9.9150 range.
  • Aussie finds support at psychological level against Greenback after mixed jobs data, but Kiwi cautious ahead of NZ trade, AUD/USD nearer 0.6950 than 0.6900, NZD/USD closer to 0.6250 than 0.6300.
  • Sterling still stunned by double digit UK CPI and economic ramifications, Cable ducks under 1.2000, albeit fractionally and briefly.
  • Loonie gleans some traction from firmer oil prices pre-Canadian PPI, USD/CAD closer to 1.2900 than 1.2950.
  • Yuan retreats amidst reports of property loan portfolio probes and PBoC LPR cuts, USD/CNY 6.7900+ and USD/CNH 6.8000+.

Fixed Income

  • EGBs and Gilts regain some poise after extended and heavy declines on hawkish ECB rhetoric.
  • Bunds back up near 154.00 within 154.47-153.24 range, UK benchmark 114.00+ between 114.41-113.63 parameters.
  • US Treasuries idling post-FOMC minutes and pre-busy agenda – 10 year T-note flat at 118.24+ vs 119-01+ high and 118-18 low.

Commodities

  • WTI and Brent were bolstered by rhetoric from the Russian Defence Ministry re. Zaporizhia and as China’s President Xi spoke
  • Currently, the benchmarks are in proximity to their respective highs of USD 89.56/bbl and USD 95.44/bbl.
  • Spot gold experienced a marginal haven bid bringing the yellow metal to an incremental new session peak of USD 1767/oz and eclipsing the 21-DMA at USD 1764/oz.
  • Broader metal space is mixed and features essentially unchanged action for Aluminium, after Wednesday’s noted rally, while LME Copper has climbed back towards a test of the USD 8k handle

Central Banks

  • ECB’s Schnabel says a recession alone would not be enough to control inflation, growth is going to slow and a technical EZ recession is possible. Inflation concerns from before the July hike have not alleviated, outlook is unchanged. Number of indicators point to a de-anchoring of inflation expectations. Short-term inflation could still accelerate. Re. fragmentation: markets are more stable now, but volatility is elevated and liquidity is low.
  • Norwegian Key Policy Rate 1.75% vs. Exp. 1.75% (Prev. 1.25%) via a unanimous decision; policy rate will most likely be raised further in September. Click here for reaction & newsquawk analysis.
  • BoE will aim to unwind the full stock of Corporate Bond Purchase Scheme (CBPS) holdings at end-2023/early-2024, subject to market conditions.
  • Turkey’s central bank shocked markets when it unexpectedly cut rates by 100bps to 13% from 14%. All 21 economists polled by Bloomberg had expected an unchanged print.

DB’s Tim Wessel concludes the overnight wrap

Starting in Europe, where the looming energy crisis remains at the forefront. An update from our team, who just published the fourth edition of their indispensable gas monitor (link here), where they note the surprisingly fast rebuild of German gas storage, driven by reductions in industrial activity, reduces the risk that rationing may become reality this winter. Many more insights within, so do read the full piece for analysis spanning scenarios. Keep in mind, that while gas may be available, it is set to come at a higher clearing price, which manifest itself in markets yesterday where European natural gas futures rose a further +2.64% to €226 per megawatt-hour, just shy of their closing record at €227 in March. But, that’s still well beneath their intraday high from March, where at one point they traded at €345. Further, one-year German power futures increased +6.30%, breaching €500 for the first time, closing at €507. Germany is weighing consumer relief measures in light of climbing consumer prices and also announced that planned nuclear facility closures would be “temporarily” postponed.

The upward energy price pressure and attenuated (albeit, not eliminated) risk of rationing pushed European sovereign yields higher. 10yr German bunds climbed +7.1bps to 0.97%, while 10yr OATs kept the pace, increasing +7.4bps. 10yr BTPs increased +15.9bps, widening sovereign spreads, while high yield crossover spreads widened +10.2bps in the credit space.

Equities were resilient, however, with the STOXX 600 posting a +0.16% gain after flitting around a narrow range all day. Regional indices were also robust to climbing energy prices, with the DAX up +0.68% and the CAC +0.34% higher. In the States the S&P 500 registered a modest +0.19% gain, with the NASDAQ mirroring the index, falling -0.19%. Retail shares drove the S&P on the day, with the two consumer sectors both gaining more than +1%, following strong earnings reports from Wal Mart and Home Depot.

Treasury yields also climbed, but the story was the further flattening in the curve. 2yr yields were +7.5bps higher while 10yr yields managed to increase just +1.6bps, leaving 2s10s at its second most negative close of the cycle at -46bps. 10yr yields are another basis point higher this morning. A hodgepodge of data painted a mixed picture. Housing permits beat expectations (+1674k vs. +1640k) while starts (+1446k vs. +1527k) fell to their slowest pace since February 2021. However, under the hood, even permits weren’t necessarily as strong as first glance, as single family permits fell -4.3% with gains in multifamily pushing the aggregate higher. Indeed, year-over-year, single family permits have now fallen -11.7% while multifamily permits are +23.5% higher. So the single family housing market continues to feel the impact of Fed tightening. Meanwhile, industrial production climbed +0.6% month-over-month (vs. +0.3%), with capacity utilization hitting its highest level since 2008 at 80.3%.

Drifting north of the border, Canadian inflation slowed to 7.6% YoY in July in line with estimates, while the average of core measures climbed to a record 5.3%. Bank of Canada Governor Macklem penned an opinion piece saying that while it looks like inflation may have peaked, “the bad news is that inflation will likely remain too high for some time.” In turn, Canadian OIS rates by December climbed +16.2bps.

In other data, the expectations component of the German ZEW survey fell to -55.3, its lowest level since October 2008 at the depths of the GFC. In the UK, regular pay (excluding bonuses) fell by -3.0% in real terms over the year to April-June 2022, its fastest decline on record.

On the Iranian nuclear deal, EU negotiators reportedly found Iran’s response constructive, though Iran still had some concerns. Notably, Iran is looking for guarantees that if a future US administration withdraws from the JCPOA the US will “have to pay a price”, seeking insulation from the vagaries of representative democracy.

Asian equity markets are trading higher after Wall Street’s solid performance overnight. The Nikkei (+0.76%) is leading gains across the region with the Hang Seng (+0.57%), the Shanghai Composite (+0.23%) and the CSI (+0.51%) all rebounding from its opening losses this morning. US futures are struggling to gain traction this morning with the S&P 500 (-0.02%) and NASDAQ 100 (-0.09%) trading just below flat.

The Reserve Bank of New Zealand lifted its official cash rate (OCR) for the fourth consecutive time by an expected +50bps to 3%, a seven-year high, while bringing forward the estimate of future rate increases. The central bank expects the OCR will reach 3.69% at the end of this year and expects it to peak at 4.1% in March 2023, higher and sooner than previously forecast.

Early morning data coming out from Japan showed that exports rose +19.0% y/y in July (v/s +17.6% expected) posting 17 straight months of gains while imports advanced +47.2% (v/s +45.5% expected) driven by global fuel inflation and a weakening yen. With the imports outweighing exports, the nation reported trade deficit for the 14th consecutive month, swelling to -2.13 trillion yen in July (v/s -1.91 trillion yen expected) compared to a revised deficit of -1.95 trillion yen in June.

In terms of the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July.

Tyler Durden
Thu, 08/18/2022 – 08:18

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Lira Crashes After Turkish Central Bank Makes Shock Rate Cut Despite Raging Hyperinflation

Lira Crashes After Turkish Central Bank Makes Shock Rate Cut Despite Raging Hyperinflation

Nevermind the 80% inflation: the boss wants a rate cut and damn it, he will get a rate cut.

That’s probably what was swirling through the heads of the “dependent” Turkish central bank minutes before it shocked markets moments ago when – with the Turkish lira already at record low – it cut rates by 100bps from 14% to 13% with all 21 economists in the Bloomberg survey expecting an unchanged print.

The Monetary Policy Committee led by Erdogan puppet Sahap Kavcioglu lowered its benchmark to 13% on Thursday, after keeping it at 14% for the past seven months. And with the Turkish currency already at an all time low, it promptly plummeted another 1% lower against the dollar as it is now clear that Turkey has picked hyperinflation.

“It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk,” the MPC said in a statement. Here are some other highlights from the statement:

  • Updated level of policy rate is adequate under the current outlook
  • Leading indicators for 3Q point to some loss of momentum in economic activity
  • It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk
  • Stronger than expected contribution of tourism revenues to the current account balance continues
  • Rate of credit growth and allocation of funds for real economic activity purposes are closely monitored
  • Recent increase in spread between policy rate and the loan interest rate is considered to reduce the effectiveness of monetary transmission
  • MPC decided to further strengthen the macroprudential policy set with tools supporting the effectiveness of the monetary transmission mechanism
  • Comprehensive review of the policy framework continues with the aim of encouraging permanent and strengthened liraization in all policy tools of the CBRT

Kavcioglu has blamed a global rally in commodity prices, partly caused by Russia’s invasion of Ukraine in February. The central bank now expects inflation to reach a high of around 85% this fall, before ending the year near 60%, or 12 times its target.

As Bloomberg notes, the sudden resumption of monetary stimulus with less than a year before elections reflects the determination of Turkish authorities to follow through on authoritarian ruler Tayyip Erdogan’s promise in June that rate cuts will continue. The decision follows three weeks after the central bank revised this year’s inflation forecast higher by almost 18 percentage points.

Erdogan is intent on turbocharging growth by focusing on exports and employment as part of what he calls a “new economic model.” But risks abound as the cost-of-living crisis unfolding in Turkey poses a threat to his electoral popularity.

In place of higher rates, the central bank has rolled out “macroprudential measures” that helped slow loan growth momentum in July. It’s also relied on backdoor interventions and the introduction of state-backed accounts that shield savers from lira weakness.
The approach has allowed inflation to gallop near an annual 80% and left the lira vulnerable to a sell-off. The Turkish currency is among five of the world’s worst performers this year against the dollar, having lost around a quarter of its value.

Erdogan, long a believer that cheaper borrowing costs can slow inflation instead of pushing it higher, appointed Kavcioglu as governor of the central bank last year after ousting his three predecessors and seeking more sway over monetary policy.
An easing campaign by Turkey runs directly counter to what may prove to be the most aggressive tightening of monetary policy by central banks around the world since the 1980s.

And speaking of the lira, it of course plunged to a new all time low, the USDTRY soaring as high as 18.13, which is paradoxical since in the past month Turkey has been burning through all of its USD-denominated reserves to avoid a complete currency collapse… one which it just invited with its latest idiotic policy twist.

Tyler Durden
Thu, 08/18/2022 – 07:37

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Mask Ban Doesn’t Violate the First Amendment Right to Engage in Symbolic Expression

From a decision last week by the Washington Court of Appeals in Sehmel v. Shah, written by Judge Lisa Worswick, joined by Acting Chief Judge Anne Cruser and agreed with on this point by Judge Bernard Veljacic:

Appellants argue that the act of not wearing a mask communicates a political message, and is therefore entitled to the protections of the First Amendment. We disagree.

Although the First Amendment forbids restrictions on speech, federal case law has long recognized that the First Amendment protects more than the “spoken or written word.” “‘Speech’ includes nonverbal conduct if the conduct is ‘sufficiently imbued with elements of communication.'”

In deciding whether conduct may constitute speech, thereby implicating the First Amendment, courts examine whether (1) the person intended to convey a message, and (2) whether it was likely that a person who viewed the conduct would understand the message. The United States Supreme Court rejected the idea that any conduct may be labeled as speech whenever the person engaging in the conduct intends to express or communicate an idea. The expression must be “overwhelmingly apparent” and not simply a kernel of expression. The fact that “‘explanatory speech is necessary is strong evidence that the conduct at issue … is not so inherently expressive that it warrants protection’ as symbolic speech” [indirectly quoting Rumsfeld v. FAIR (2006)].

[A]n extensive line of federal cases has established that the choice to wear a mask is not expressive conduct because “there are several non-political reasons why one may not be wearing a mask at any given moment.” Stewart v. Justice (S.D. W. Va. 2021). See Minnesota Voters All. v. Walz (D. Minn. 2020) (holding that an order requiring face coverings did not target conduct with a significant expressive element); Denis v. Ige (D. Haw. 2021) (same); Justice (holding that failing to wear a mask is not expressive conduct because “failing to wear a face covering would likely be viewed as inadvertent or unintentional, and not as an expression of disagreement with the Governor.”); Antietam Battlefield KOA v. Hogan (D. Md. 2020) (holding that wearing a mask could be viewed as a means of preventing the spread of COVID-19, not as expressive any message).

We apply the same analysis here and hold that wearing or not wearing a mask is not sufficiently expressive so as to implicate First Amendment protections. While an individual may choose to wear, or not wear, a mask as a way to make a political statement, the subjective intent of the person engaging in the conduct is not determinative. Here, there is a host of reasons why a person may not be wearing a mask. Therefore, not wearing a mask is not “overwhelmingly apparent” as communicating a political message. Rumsfeld….

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The Increasingly Dangerous Variants of the “Most-Favored-Nation” Theory of Religious Liberty, Part IV: Easy Paths to Strict Scrutiny

Let’s move on to other variants. One looks at whether a law has any exceptions at all, and, if religious reasons are not among those exceptions, automatically applies strict scrutiny. It was proposed by Justice Kavanaugh in his dissent in Calvary Chapel Dayton Valley v. Sisolak, and possibly embraced by the Court in Roman Catholic Diocese of Brooklyn v. Cuomo. Call this MFN-3.

Yet another is to ask whether government fails to pursue an interest with uncompromising zeal, as the Court did in Tandon and its other Covid decisions. If so, and there is no religious exemption, strict scrutiny applies. Call this MFN-4.

Roberts’s opinion for the Court in Fulton v. Philadelphia scrutinizes a law that has always been applied uniformly and declares that, because he discerns a formal power somewhere that could grant exemptions, the regulation lacks general applicability and so triggers strict scrutiny. Call this MFN-5.

The first five variants all expand the set of laws that are subject to strict scrutiny. None of them logically entails anything about what courts should do when applying that scrutiny. It is in principle possible for that scrutiny to be applied in a sensible way, giving appropriate weight to the state’s interests. However, MFN-2 typically distorts the application of strict scrutiny after triggering it. When the court asks whether the state’s interest is compelling, that inquiry is impaired, because the court is already committed to a misunderstanding of the pertinent interest.

MFN-3 holds that strict scrutiny is triggered whenever a law enumerates exceptions and does not include religion in those exceptions. The law need not mention religion. Unlike in MFN-1, in deciding whether to apply strict scrutiny, the court need not inquire into the law’s purpose. The mere facial exclusion of religion from a set of exceptions suffices.

The clearest example of this move is Justice Kavanaugh’s dissent in Calvary Chapel, which argues that strict scrutiny should be triggered whenever the law expressly advantages any class that excludes the religious, regardless of whether the exception is consistent with the state’s underlying interest:

First, does the law create a favored or exempt class of organizations and, if so, do religious organizations fall outside of that class? That threshold question does not require judges to decide whether a church is more akin to a factory or more like a museum, for example. Rather, the only question at the start is whether a given law on its face favors certain organizations and, if so, whether religious organizations are part of that favored group.

The absence of a religious exemption is itself evidence of discrimination. Nelson Tebbe observes that this was different from earlier versions of MFN, because Kavanaugh “did not require the church to show that the exempted and regulated categories were comparable in order to shift the burden of justification to the government.” Justice Gorsuch similarly cited, as evidence of discrimination, the fact that California’s “spreadsheet summarizing its pandemic rules even assigns places of worship their own row.”

The Court does not expressly adopt this approach in Roman Catholic Diocese of Brooklyn v. Cuomo, but it does ignore the comparability question, focusing solely on the denial of preferential treatment to churches. Gorsuch’s concurrence explains what was offensive about New York’s list of “essential businesses”:

The only explanation for treating religious places differently seems to be a judgment that what happens there just isn’t as “essential” as what happens in secular spaces. Indeed, the Governor is remarkably frank about this: In his judgment laundry and liquor, travel and tools, are all “essential” while traditional religious exercises are not. That is exactly the kind of discrimination the First Amendment forbids.

New York used “essential” as a term of art, a label for permitted activities. It reflected a judgment that the danger of Covid in specific contexts, combined with the importance of the activity, warranted a partial relaxation of public health measures. Both Kavanaugh and Gorsuch are offended by the withholding from religious activities of what they take to be an honorific, even if those activities are far more hazardous than activities that are included on the list.

Frederick Schauer has shown that “there is no logical distinction between exceptions and what they are exceptions to, their occurrence resulting from the often fortuitous circumstance that the language available to circumscribe a legal rule or principle is broader than the regulatory goals the rule or principle is designed to further.” The question whether to exempt Quakers from military service, for example, arises only because the idea of military service does not, in the English language, automatically exclude religious pacifists. In the vaccination case, everything turns on the happenstance that there is no single word for “health-promoting vaccinations.” If there were, then those with medical reasons for going unvaccinated would simply never have been within the facial coverage of the (exceptionless) law.

Recall that Tandon declared that “whether two activities are comparable for purposes of the Free Exercise Clause must be judged against the asserted government interest that justifies the regulation at issue.” This formulation, MFN-4, ignores countervailing interests. A report by the Columbia Law School Law, Rights, and Religion Project notes the implication:

the only permitted factor in comparing a church and a grocery store is the government’s interest in stopping the spread of COVID — not, for example, its interest in ensuring public access to food. Since both churches and grocery stores present a risk of COVID transmission, the Court treated them as “comparable” and found that the failure to regulate them equally was discrimination.

In other words, if the interest that justifies a restriction is not pursued singlemindedly, if the state trades off that interest for any other consideration (say, preventing starvation) and there is no religious exemption, strict scrutiny is triggered.

Unlike MFN-3, it does not matter if there is no express exception. The law in Tandon was an exceptionless restriction on in-home gatherings. A Kentucky Covid regulation applied equally to both religious and secular schools. A different regulation applied lesser restrictions to stores and restaurants. Gorsuch argued that the lower court “had an obligation to address the plaintiffs’ argument that the two [orders], considered together, resulted in unconstitutional discrimination against religion. Whether discrimination is spread across two orders or embodied in one makes no difference; the Constitution cannot be evaded merely by multiplying the decrees.”

The fundamental error of MFN-4 is presuming that laws normally serve a single purpose, so that any compromise of that purpose is anomalous and should arouse suspicion. That presumption defies reality. (MFN-4 is thus a subspecies of MFN-2.)

It is not just exceptions that undermine the purposes of rules. The rules themselves, by limiting their own application, undermine their own purposes pro tanto. Speed limits have the purpose of limiting traffic accidents, but that purpose would be best served by a speed limit of zero, that prohibited vehicles from moving at all. Or ambulances and fire trucks could be held to the same speed limits as everyone else. We care about many things other than reducing the number of accidents. To that extent we undermine the purpose of speed limits, but that doesn’t make speed limits arbitrary, irrational, or discriminatory. Similarly with most rules. (The ones that are uniform sometimes serve weak interests: no parking on Broadway ever, for any reason.) Each purpose must compete with others. Our pattern of rules and exceptions is the product of an enormous variety of interlocking, competing, mutually interdependent, incommensurable considerations. It is not possible to isolate any one of them and presume that the state is determined to maximize them. Practical decisions don’t work that way.

Tandon precommits the Court to reducing statutory purposes to a singular interest, to which of course almost any statute will then fail to be narrowly tailored. This move entails strict scrutiny across a broad range of cases.

Fulton v. Philadelphia is MFN-5. The Court cited Lukumi as authority for the proposition that a law “lacks general applicability if it prohibits reli­gious conduct while permitting secular conduct that under­mines the government’s asserted interests in a similar way.” But here the Court vastly expanded the scope of that rule to encompass cases in which no exceptions had actually been made. The formal possibility that an exception could be made in some future case triggered strict scrutiny.

Every city contract in Philadelphia prohibited the contractor from discriminating on the basis of sexual orientation. A Catholic social service agency’s contract was terminated because, in certifying foster parents, it could not comply with that provision. The agency understood certification of prospective foster families to endorse their relationships, so it would not certify same-sex couples. Chief Justice Roberts, writing for the Court, seized on a boilerplate provision, which had never been used, saying the nondiscrimination provision applied “unless an ex­ception is granted by the Commissioner or the Commis­sioner’s designee, in his/her sole discretion.”

No entity had ever been treated better than the religious claimants. The mere option (which had never been exercised) of making exceptions to a regulation sufficed to make the regulation lack general applicability. The Court called this “a system of individual exemptions,” even though it brutalizes the concept of a “system” to make the term denote an arrangement of elements none of which actually exist.

Strict scrutiny, the Court declares, applies to any law that has any kind of manual override for its mechanism. Quite a lot of what government does involves the exercise of discretion. In those cases, is the denial of religious accommodation always subject to strict scrutiny?

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Vogue on KBJ and ACB

The September issue of Vogue Magazine is a big deal. In the past, the publisher would boast of how loud a “thud” it made when dropped off a coffee table. The cover of the September 2022 issue announces Serena Williams’ retirement. And inside the issue is a profile of the newest member of the Court, titled The Grace and Promise of Justice Ketanji Brown Jackson. Legendary photographer Annie Leibovitz (who just finished snapping the Zelenskys in Ukraine) took two pictures of Justice Jackson. Both shots are taken at the Lincoln Memorial at dawn.

In the first shot, Jackson is seen in front of the reflecting pool, wearing an “Aliétte coat.” In the second shot, Jackson is leaning against a column with Lincoln in the background, wearing an “Oscar de la Renta coat and dress.”

(I understand there is some dissatisfaction that a white photographer (Leibovitz) took the shots of Jackson.)

For those curious, Justice Amy Coney Barrett did not receive a glowing profile in Vogue. Nor did the magazine send Leibovitz to South Bend. Indeed, the first article in Vogue about Barrett is titled. “Does Amy Coney Barrett Believe Life Begins at Fertilization?” The photo is not the most flattering.

In the wake of Dobbs, I’ve written a lot about judicial courage. The five members of the majority knew full well that their vote would ostracize them from elite society for the rest of their lives. Had any of them changed their vote, and saved Roe, they would be feted as saviors. A glossy spread in Vogue. Honorary degrees. Grand Marshall at the Rose Bowl parade (an honor Justice O’Connor received). But by sticking to their guns, and the law, they will receive none of these accolades. Good. Really, good riddance to these progressive efforts to manipulate the Justices. The Greenhouse Effect is long gone.

Which brings me back to Justice Jackson. We often speak of the cult of celebrity Justices. This obsession affected Justice Ginsburg’s judgment, and likely dissuaded her from retiring. Judges, even those on the left, should resist the siren call of becoming pop icons. Yet, in this glamorous photo shoot, Justice Jackson models couture clothing. I know this was not her intent, but Jackson has become an unofficial spokesperson for Oscar De La Renta and Aliétte. Fame can quickly go to a person’s head. And it never ends well for anyone, especially judges.

Finally, was the Lincoln Monument closed to the public for this shoot? Even with an early morning shoot run, there is usually someone on your left.

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Mask Ban Doesn’t Violate the First Amendment Right to Engage in Symbolic Expression

From a decision last week by the Washington Court of Appeals in Sehmel v. Shah, written by Judge Lisa Worswick, joined by Acting Chief Judge Anne Cruser and agreed with on this point by Judge Bernard Veljacic:

Appellants argue that the act of not wearing a mask communicates a political message, and is therefore entitled to the protections of the First Amendment. We disagree.

Although the First Amendment forbids restrictions on speech, federal case law has long recognized that the First Amendment protects more than the “spoken or written word.” “‘Speech’ includes nonverbal conduct if the conduct is ‘sufficiently imbued with elements of communication.'”

In deciding whether conduct may constitute speech, thereby implicating the First Amendment, courts examine whether (1) the person intended to convey a message, and (2) whether it was likely that a person who viewed the conduct would understand the message. The United States Supreme Court rejected the idea that any conduct may be labeled as speech whenever the person engaging in the conduct intends to express or communicate an idea. The expression must be “overwhelmingly apparent” and not simply a kernel of expression. The fact that “‘explanatory speech is necessary is strong evidence that the conduct at issue … is not so inherently expressive that it warrants protection’ as symbolic speech” [indirectly quoting Rumsfeld v. FAIR (2006)].

[A]n extensive line of federal cases has established that the choice to wear a mask is not expressive conduct because “there are several non-political reasons why one may not be wearing a mask at any given moment.” Stewart v. Justice (S.D. W. Va. 2021). See Minnesota Voters All. v. Walz (D. Minn. 2020) (holding that an order requiring face coverings did not target conduct with a significant expressive element); Denis v. Ige (D. Haw. 2021) (same); Justice (holding that failing to wear a mask is not expressive conduct because “failing to wear a face covering would likely be viewed as inadvertent or unintentional, and not as an expression of disagreement with the Governor.”); Antietam Battlefield KOA v. Hogan (D. Md. 2020) (holding that wearing a mask could be viewed as a means of preventing the spread of COVID-19, not as expressive any message).

We apply the same analysis here and hold that wearing or not wearing a mask is not sufficiently expressive so as to implicate First Amendment protections. While an individual may choose to wear, or not wear, a mask as a way to make a political statement, the subjective intent of the person engaging in the conduct is not determinative. Here, there is a host of reasons why a person may not be wearing a mask. Therefore, not wearing a mask is not “overwhelmingly apparent” as communicating a political message. Rumsfeld….

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The Increasingly Dangerous Variants of the “Most-Favored-Nation” Theory of Religious Liberty, Part IV: Easy Paths to Strict Scrutiny

Let’s move on to other variants. One looks at whether a law has any exceptions at all, and, if religious reasons are not among those exceptions, automatically applies strict scrutiny. It was proposed by Justice Kavanaugh in his dissent in Calvary Chapel Dayton Valley v. Sisolak, and possibly embraced by the Court in Roman Catholic Diocese of Brooklyn v. Cuomo. Call this MFN-3.

Yet another is to ask whether government fails to pursue an interest with uncompromising zeal, as the Court did in Tandon and its other Covid decisions. If so, and there is no religious exemption, strict scrutiny applies. Call this MFN-4.

Roberts’s opinion for the Court in Fulton v. Philadelphia scrutinizes a law that has always been applied uniformly and declares that, because he discerns a formal power somewhere that could grant exemptions, the regulation lacks general applicability and so triggers strict scrutiny. Call this MFN-5.

The first five variants all expand the set of laws that are subject to strict scrutiny. None of them logically entails anything about what courts should do when applying that scrutiny. It is in principle possible for that scrutiny to be applied in a sensible way, giving appropriate weight to the state’s interests. However, MFN-2 typically distorts the application of strict scrutiny after triggering it. When the court asks whether the state’s interest is compelling, that inquiry is impaired, because the court is already committed to a misunderstanding of the pertinent interest.

MFN-3 holds that strict scrutiny is triggered whenever a law enumerates exceptions and does not include religion in those exceptions. The law need not mention religion. Unlike in MFN-1, in deciding whether to apply strict scrutiny, the court need not inquire into the law’s purpose. The mere facial exclusion of religion from a set of exceptions suffices.

The clearest example of this move is Justice Kavanaugh’s dissent in Calvary Chapel, which argues that strict scrutiny should be triggered whenever the law expressly advantages any class that excludes the religious, regardless of whether the exception is consistent with the state’s underlying interest:

First, does the law create a favored or exempt class of organizations and, if so, do religious organizations fall outside of that class? That threshold question does not require judges to decide whether a church is more akin to a factory or more like a museum, for example. Rather, the only question at the start is whether a given law on its face favors certain organizations and, if so, whether religious organizations are part of that favored group.

The absence of a religious exemption is itself evidence of discrimination. Nelson Tebbe observes that this was different from earlier versions of MFN, because Kavanaugh “did not require the church to show that the exempted and regulated categories were comparable in order to shift the burden of justification to the government.” Justice Gorsuch similarly cited, as evidence of discrimination, the fact that California’s “spreadsheet summarizing its pandemic rules even assigns places of worship their own row.”

The Court does not expressly adopt this approach in Roman Catholic Diocese of Brooklyn v. Cuomo, but it does ignore the comparability question, focusing solely on the denial of preferential treatment to churches. Gorsuch’s concurrence explains what was offensive about New York’s list of “essential businesses”:

The only explanation for treating religious places differently seems to be a judgment that what happens there just isn’t as “essential” as what happens in secular spaces. Indeed, the Governor is remarkably frank about this: In his judgment laundry and liquor, travel and tools, are all “essential” while traditional religious exercises are not. That is exactly the kind of discrimination the First Amendment forbids.

New York used “essential” as a term of art, a label for permitted activities. It reflected a judgment that the danger of Covid in specific contexts, combined with the importance of the activity, warranted a partial relaxation of public health measures. Both Kavanaugh and Gorsuch are offended by the withholding from religious activities of what they take to be an honorific, even if those activities are far more hazardous than activities that are included on the list.

Frederick Schauer has shown that “there is no logical distinction between exceptions and what they are exceptions to, their occurrence resulting from the often fortuitous circumstance that the language available to circumscribe a legal rule or principle is broader than the regulatory goals the rule or principle is designed to further.” The question whether to exempt Quakers from military service, for example, arises only because the idea of military service does not, in the English language, automatically exclude religious pacifists. In the vaccination case, everything turns on the happenstance that there is no single word for “health-promoting vaccinations.” If there were, then those with medical reasons for going unvaccinated would simply never have been within the facial coverage of the (exceptionless) law.

Recall that Tandon declared that “whether two activities are comparable for purposes of the Free Exercise Clause must be judged against the asserted government interest that justifies the regulation at issue.” This formulation, MFN-4, ignores countervailing interests. A report by the Columbia Law School Law, Rights, and Religion Project notes the implication:

the only permitted factor in comparing a church and a grocery store is the government’s interest in stopping the spread of COVID — not, for example, its interest in ensuring public access to food. Since both churches and grocery stores present a risk of COVID transmission, the Court treated them as “comparable” and found that the failure to regulate them equally was discrimination.

In other words, if the interest that justifies a restriction is not pursued singlemindedly, if the state trades off that interest for any other consideration (say, preventing starvation) and there is no religious exemption, strict scrutiny is triggered.

Unlike MFN-3, it does not matter if there is no express exception. The law in Tandon was an exceptionless restriction on in-home gatherings. A Kentucky Covid regulation applied equally to both religious and secular schools. A different regulation applied lesser restrictions to stores and restaurants. Gorsuch argued that the lower court “had an obligation to address the plaintiffs’ argument that the two [orders], considered together, resulted in unconstitutional discrimination against religion. Whether discrimination is spread across two orders or embodied in one makes no difference; the Constitution cannot be evaded merely by multiplying the decrees.”

The fundamental error of MFN-4 is presuming that laws normally serve a single purpose, so that any compromise of that purpose is anomalous and should arouse suspicion. That presumption defies reality. (MFN-4 is thus a subspecies of MFN-2.)

It is not just exceptions that undermine the purposes of rules. The rules themselves, by limiting their own application, undermine their own purposes pro tanto. Speed limits have the purpose of limiting traffic accidents, but that purpose would be best served by a speed limit of zero, that prohibited vehicles from moving at all. Or ambulances and fire trucks could be held to the same speed limits as everyone else. We care about many things other than reducing the number of accidents. To that extent we undermine the purpose of speed limits, but that doesn’t make speed limits arbitrary, irrational, or discriminatory. Similarly with most rules. (The ones that are uniform sometimes serve weak interests: no parking on Broadway ever, for any reason.) Each purpose must compete with others. Our pattern of rules and exceptions is the product of an enormous variety of interlocking, competing, mutually interdependent, incommensurable considerations. It is not possible to isolate any one of them and presume that the state is determined to maximize them. Practical decisions don’t work that way.

Tandon precommits the Court to reducing statutory purposes to a singular interest, to which of course almost any statute will then fail to be narrowly tailored. This move entails strict scrutiny across a broad range of cases.

Fulton v. Philadelphia is MFN-5. The Court cited Lukumi as authority for the proposition that a law “lacks general applicability if it prohibits reli­gious conduct while permitting secular conduct that under­mines the government’s asserted interests in a similar way.” But here the Court vastly expanded the scope of that rule to encompass cases in which no exceptions had actually been made. The formal possibility that an exception could be made in some future case triggered strict scrutiny.

Every city contract in Philadelphia prohibited the contractor from discriminating on the basis of sexual orientation. A Catholic social service agency’s contract was terminated because, in certifying foster parents, it could not comply with that provision. The agency understood certification of prospective foster families to endorse their relationships, so it would not certify same-sex couples. Chief Justice Roberts, writing for the Court, seized on a boilerplate provision, which had never been used, saying the nondiscrimination provision applied “unless an ex­ception is granted by the Commissioner or the Commis­sioner’s designee, in his/her sole discretion.”

No entity had ever been treated better than the religious claimants. The mere option (which had never been exercised) of making exceptions to a regulation sufficed to make the regulation lack general applicability. The Court called this “a system of individual exemptions,” even though it brutalizes the concept of a “system” to make the term denote an arrangement of elements none of which actually exist.

Strict scrutiny, the Court declares, applies to any law that has any kind of manual override for its mechanism. Quite a lot of what government does involves the exercise of discretion. In those cases, is the denial of religious accommodation always subject to strict scrutiny?

The post The Increasingly Dangerous Variants of the "Most-Favored-Nation" Theory of Religious Liberty, Part IV: Easy Paths to Strict Scrutiny appeared first on Reason.com.

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