WTI Holds Losses Despite Another Crude Draw

WTI Holds Losses Despite Another Crude Draw

Oil prices slipped to the lower-end of their recent range – WTI back below $70 – shrugging off any ‘war premium’ from Russia’s coup-gate and seemingly weakening on expectations of a more hawkish Fed after strong econ numbers today.

“The market appears to have quickly discounted any meaningful supply risk tied to the short-lived uprising by Russian paramilitary forces over the weekend. That comes amid a broader trend that has seen Russian crude exports frequently come in above expectations over the past year as the country continues to find buying interest from China and other developing markets to counter lost market share in the U.S. and EU,” said Robbie Fraser, manager of global research and analytics at Schneider Electric, in a note.

For now all eyes will be on crude stocks after last week’s unexpected draw…

API

  • Crude -2.4mm (-1.47mm exp)

  • Cushing +1.45mm

  • Gasoline -2.85mm

  • Distillates +777k

For the second week in a row, US commercial crude stockpiles were drawn-down (by a greater than expected amount). Stocks at the Cushing hub rose for the 9th week of the last 10

Source: Bloomberg

WTI was trading around $68 ahead of the print – at the low end of its recent range – and extended losses modestly after the API data…

“Oil is well and truly stuck and rangebound, taking all the news on the chin,” said Ole Hansen, head of commodities strategy at Saxo Bank.

Meanwhile, Bloomberg reports that key nearby timespreads, which help gauge the strength of the oil market, fell deeper into a bearish contango structure on Tuesday. Timespreads will continue to face headwinds due to pessimistic views on demand and high interest rates, Goldman analysts wrote in a note to clients.

Tyler Durden
Tue, 06/27/2023 – 16:40

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The Fed’s “One Weird Trick”

The Fed’s “One Weird Trick”

Authored by Charles Hugh Smith via OfTwoMinds blog,

The U.S. economy has been saved time and again over the past two decades by this one weird trick:

“Bringing Demand Forward” by lowering interest rates and lending standards so Americans could continue to buy stuff they didn’t really need because the monthly payment dropped as interest rates were pushed toward zero.

Every time the economy faltered, the Federal Reserve would push interest rates down to “Bring Demand Forward” by goosing debt-based consumption: OK, so you don’t actually need a new car, but come on, the new car loan is only 1.9%, you can afford the monthly nut.

Or hey, it’s zero-percent financing for a couple years. Just go for it, get that new vehicle. Live large, you can swing it.

Flooding the economy with low-cost credit doesn’t just “Bring Demand Forward”; it also juices speculative bubbles across the entire spectrum, from cryptocurrencies to commercial real estate.

As bubbles inflate, punters feel wealthier and so they’re willing to borrow and spend more — the infamous “wealth effect.”

Nothing “Brings Demand Forward” like a speculative bubble and so inflating credit-based bubbles is all part of the plan to encourage people to buy stuff they don’t need on credit to keep GDP expanding.

“Bringing Demand Forward” with speculative bubbles is joyous until the bubble pops — and all bubbles pop. When bubbles deflate, gains are replaced by losses and the reverse wealth effect kicks in.

The solution for the past two decades has been to drop interest rates even further and expand credit even more to generate a new bubble in one asset class or another.

Now that central banks have pumped up the Everything Bubble and unleashed inflation, the weird trick of dropping interest rates/juicing liquidity no longer works. It no longer works in China, Japan, Europe, the U.S. or the developing world: Diminishing returns are systemic.

Economies that become dependent on zero interest rates juicing liquidity habituate to this constant stimulus and become dependent on speculative bubbles rather than on organic growth funded by earnings, savings and the advances of productivity.

“Bringing Demand Forward” always had an expiration date. You can’t bring demand forward forever. Eventually consumers tap out, bubbles pop, speculative gambles go bust, debt service eats up consumers’ disposable income, credit cards get maxed out and enterprises bloated by decades of bubbles and credit-funded spending implode under their fixed costs and debt loads.

The fantasy is that inflation will plummet to zero and we can all go back to “Bringing Demand Forward.”

The reality is what’s plummeting is demand. The Everything Bubble is popping, credit is tightening, stimulus that worked in the past is no longer saving stagnating economies and the higher cost of credit is drowning consumers and enterprises that have grown complacent after 20 years of continuous “saves” via zero interest rates and tsunamis of cheap credit.

Sure, those households bringing in $250,000 and up are doing just fine — if they bought houses and other assets ages ago and can reap the gains to subsidize their lifestyles. But everyone living off average earnings without the cushion of Everything Bubble gains — how much “demand” will they be able to afford after paying $300 for a couple bags of groceries?

It’s going to hurt when we hit the rocks at the bottom and unfortunately few are taking measures to reduce their risk while such measures are still within reach.

Tyler Durden
Tue, 06/27/2023 – 16:20

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Alabama Isn’t Ready To Kill Inmates By Nitrogen Hypoxia. It Wants To Try Anyway.

Alabama can’t decide whether it’s ready to execute James Barber. 

Barber, a death-row inmate set to be killed on July 20th, has requested to die by nitrogen hypoxia, an as-yet untested execution method approved by the state in 2018. Last month, the U.S. Supreme Court sided with Kenneth Eugene Smith, another Alabama death row inmate who asked to be executed by nitrogen hypoxia, against the state’s objections.

While a new execution date for Smith has not been set, officials announced last month that Barber’s execution date had been set for summer 2023. Barber was sentenced to death after being convicted for the 2001 beating death of 75-year-old Dorothy Epps.

The state Attorney General’s Office requests that the state be legally allowed to execute Barber by nitrogen hypoxia next month; however, the Alabama Department of Corrections insists that the state is not yet ready and needs more time to prepare. The confusion is the latest controversy over the state’s execution procedures. 

Barber is scheduled to be the first person executed in Alabama since the state’s governor imposed a moratorium on executions following a string of botched lethal injection attempts last year. However, Barber wants to die by nitrogen hypoxia—which involves suffocating the inmate in a gas chamber by increasing the proportion of nitrogen in the air—rather than lethal injection, and has asked a federal court to cancel his lethal injection execution so he can be killed by the alternate method. Barber has claimed he wants to die by nitrogen hypoxia because it will be more humane than death by lethal injection, especially considering the state’s recent record. 

State officials have recently sent mixed messages about Alabama’s ability to carry out such an execution. In a court filing responding to Barber’s request, the Alabama Attorney General’s Office wrote that should the U.S. District Court for the Middle District of Alabama side with Barber, “such an injunction should be limited in scope so as to permit Barber’s July 20, 2023, execution to be conducted by nitrogen hypoxia.”

However, a spokesperson for the Alabama Department of Corrections (ADOC) clarified in an email to Al.com that the department was not ready to carry out a nitrogen hypoxia execution.

“The Alabama Department of Corrections has completed many of the preparations necessary for conducting executions by nitrogen hypoxia,” the spokesperson continued. “The protocol for carrying out executions by this method is not yet complete. Once the nitrogen hypoxia protocol is complete, ADOC personnel will need sufficient time to be thoroughly trained before an execution can be conducted using this method.”

The state’s conflicting messages make it unclear if Alabama will attempt to kill Barber by nitrogen hypoxia next month, should he win his federal case. However, the state’s mixed messages are hardly surprising. 

Alabama has displayed a chaotic response following several botched executions last year. While Governor Kay Ivey (R) called for a moratorium on executions in November, pending an investigation into the state’s lethal injection procedures, the state did not release its internal audit. ADOC officials made vague promises to increase the number of available staff for executions and rehearse the process. At the same time, Ivey successfully requested the Alabama Supreme Court to allow execution to be attempted over an extended time frame rather than on a specific day, allowing officials to attempt executions for hours or days.

The post Alabama Isn’t Ready To Kill Inmates By Nitrogen Hypoxia. It Wants To Try Anyway. appeared first on Reason.com.

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Newly Released Video Shows Border Patrol Shooting Man Who Called Authorities for Help

Last month, U.S. Customs and Border Patrol agents shot and killed Raymond Mattia, a man of the Tohono O’odham Nation from Menagers Dam near the American side of the Arizona-Mexico border, after he had, according to his sister, called authorities for help after he was alarmed by what he thought were illegal immigrant trespassers on his property.

An edited presentation of agent bodycam video has now been released. The agents claim they believed Mattia to have a gun on him, though he did not. After reporting on the incident from The Intercept, it is not clear whether they were directly responding to Mattia’s call, as The Intercept reports Tohono O’odham tribal authorities had called in the Border Patrol with reports of shots having been heard fired in the area.

The clip cobbles together various perspectives from various agent’s bodycam of the approach and murder. At least one of them is clearly already in a nervous, aggressive, hunter mindset. He thinks he saw someone moving on the periphery near Mattia’s home before Mattia himself is in sight, at around 10:35 on the video. (An agent is already discussing “shooting the fucking lock off” on a building they are circling.)

I personally am not sure what he saw, if anything. Still, given how Mattia did approach the agents, and that he had called for the help of the law in the first place, I wouldn’t be quick to presume that what the officer saw or thought he saw was him, or anyone or anything of significance to the officers.

But the officer already considers this person or imagined person “this motherfucker,” and he’s angry as he runs toward what he thinks he might have seen. By the time the officer and his fellow agents do have Mattia in sight (around 12:00 on the video), the Border Patrol agent is approaching the experience like he was tracking the quarry and now has found it.

The agents see Mattia, shout at him to put his hands up and to “put that down” and take his “hands out of his fucking pocket.” He does both, first tossing his sheathed knife away as he’s shouted at. Within about 16 seconds of the first verbal command to put his hands up, the agents open fire as Mattia’s hands leave his pocket and start going up.

The agents do, to their credit, begin trying to give emergency medical care to Mattia quickly enough, all the while continuing to shout about finding and securing the gun that did not exist. One officer is sure he’s still holding a gun after he’s on the ground shot. The only thing apparently on him was a cell phone.

They continue shouting commands about hands up and the like after he’s on the ground bleeding to death, warning him he’ll get shot again if he doesn’t somehow obey their commands about his hands, although all he’s doing is lying there on the ground dying. They cuff him. The video does not reveal any verbal realization on their part that there was no gun and what their reaction, if any, to that sinking in might have been. (Unless they are great actors, they seem to believe a gun was in Mattia’s hands.)

But the officers remain in a pugnacious mindset. Mattia did, at their shouted command, very visibly toss away the only weapon he had, a sheathed hunting knife. One agent refers to that action as “he threw the machete at us.”

An agent quickly identifies Mattia as not an illegal migrant but as “one tribal member hit multiple times.”

The Intercept’s detailed report on the incident after the video’s release notes that “Late last week, a tensely awaited medical examiner’s report ruled the case a homicide, finding that Mattia was shot nine times.”

“The case is still under investigation, with the participation of the Border Patrol’s parent agency, Customs and Border Protection, as well as the FBI and the Tohono O’odham Nation,” The Intercept reported. “Of the 10 Border Patrol agents involved in the incident, three opened fire, CBP has said. Those agents are currently on administrative leave.”

The Intercept quotes Mattia’s niece, Yvonne Nevarez, saying, “We feel after watching the video that he was trying to comply the best he could….If they’re allowed to get away with this now, it’s not going to stop.”

Still, as discussed in earlier Reason reporting on the story, recent Supreme Court precedent will make it far harder for his family to get justice for this crime if that justice depends on holding federal agents to account legally for their misdeeds. As Reason‘s Billy Binion has previously reported in detail, the Court decided last June in Egbert v. Boule that immigration officials (the specific type of agent at issue in that case) can more or less violate citizens’ rights at will without being held accountable via being directly civilly sued for the damages they did. By recently neglecting to take up two other cases in which citizens tried using courts to hold federal officials to account for violating their rights, the Court seems to think, as Binion wrote, that any variety of U.S agent enjoys “absolute immunity for committing transgressions while policing domestically.”

The post Newly Released Video Shows Border Patrol Shooting Man Who Called Authorities for Help appeared first on Reason.com.

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Stocks Soar As Strong Data Batters Bonds & Bullion Sparks Hawkish Shift In Rate-Hike Odds

Stocks Soar As Strong Data Batters Bonds & Bullion, Sparks Hawkish Shift In Rate-Hike Odds

Strong housing data today is bad news for The Fed – and the market’s ‘pause-hopers’ – as it threatens to re-ignite the Owners Equivalent Rent segment of CPI (which has rolled over and is helping with the recent trend of disinflation).

For context, the housing macro data is seeing the biggest serial upside surprises since 2003…

Source: Bloomberg

Consumer confidence also spiked, according to The Conference Board, and Durable Goods orders also surged in May. All-in-all, hot, damned hot, as overall macro surprise data is soaring…

Source: Bloomberg

And that all sent hawkish shivers through the STIRs market – with a 25bp hike in July now trading at 75% odds (and that terminal rate – around 5.35% – holding through year-end)…

Source: Bloomberg

But long-duration stocks didn’t care. In fact from the moment the cash market opened, we were off to the races as the algos lifted everything (with Small Caps and Nasdaq leading the charge). The Dow lagged, weighed down by WBA’s weakness. Some late-day selling, profit-taking wiped a little lipstick off the pig…

Options-traders (all expiration and 0-DTE) panic-bought calls all day…

Source: SpotGamma

Which ignited a huge short-squeeze. ‘Most shorted’ stocks surged over 4% from their lows…

Source: Bloomberg

VIX was lower again on the day and with stocks higher, the outlier correlation of VIX and S&P has begun to fade from 30 year highs…

Source: Bloomberg

From around 1130ET, the market barely saw any negative TICKs…

Source: Bloomberg

Before we leave equity-land, we note that while many have noted the concentration of equity market performance, we point out that the ‘median’ stock’s performance is dramatically decoupled from the S&P 500 cap-weighted indices. We note that the last time these two indices decoupled to this scale was Q4 2021 (marking the peak in the S&P 500)…

Source: Bloomberg

Treasury yields were all higher on the day with the belly underperforming (3Y +8bps, 30Y +2bps). Yields are all higher on the week now…

Source: Bloomberg

The yield curve (3s30s) flattened (inverted deeper) almost back to pre-SVB lows…

Source: Bloomberg

Bonds (even Bills) continue to offer an alternative (6mo bill yields at their widest vs the S&P’s earnings yield since Jan 2001)…

Source: Bloomberg

The dollar was lower on the day – despite the hawkish shift in rates – dumped during the early Asian market (Yuan strength) and then going nowhere…

Source: Bloomberg

Bitcoin surged overnight up to $31,000 but fell back – still closing higher though…

Source: Bloomberg

Oil prices tumbled ahead of tonight’s API data, with WTI unable to hold $70, falling back to the recent range lows…

Gold continues to make lower highs and lower lows, back to 3-month lows…

Finally, to sum everything up…strong data (hawkish ‘good is bad’ signal), rate-hike odds up (hawkish response), stocks up (implied dovish signal, easing financial conditions), bond yields up (hawkish response to less recession risk, Fed reaction function), dollar down (implied dovish response to a hawkish shift?), commodities down (implied demand fears from hawkish response).

Longer-term things have ‘decoupled;…

Source: Bloomberg

Confused yet? Are macro data surprises at “as good as it gets” levels?

Tyler Durden
Tue, 06/27/2023 – 16:00

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“Gone Gone”: Anheuser Busch Fires Pro-Trans Marketing Execs Who Destroyed Brand

“Gone, Gone”: Anheuser Busch Fires Pro-Trans Marketing Execs Who Destroyed Brand

Anheuser-Busch has fired two marketing executives who were placed on leave after destroying the Bud Light brand with an advertising campaign featuring transgender influencer Dylan Mulvaney.

According to the Daily Caller, Group VP for Marketing Daniel Blake, and Bud Light Marketing VP Alissa Heinerscheid are “gone, gone” after initially being placed on leave, per an anonymous source.

“To my understanding if we publicly announced the word ‘fire’ it opens up the potential for them to sue us. Thats why we said leave of absence,” said the source in a text message to the Caller. “The wholesalers would have had an absolute HAY DAY with leadership if they didn’t remove her.” (Or maybe a field day?)

To be fair- Daniel Blake was actually awesome. I think he was just caught in cross fire. But also he did hire her… so thats a fault,” the source continued.

Wholesalers were told they are both gone for good by leadership during in person conversations. They already shifted all their direct reports to new people and the head of marketing,” they said.

Earlier in June, Bud Light parent company Anheuser-Busch opened an email the Caller sent asking for specifics about Blake and Heinerscheid but did not reply. The Caller specifically asked whether the two were still on leave, whether they were on paid leave or unpaid leave and whether they would be returning to work if they hadn’t yet. The company was given multiple days to respond to the deadline.

Bud Light has faced heavy criticism and lost its spot as America’s top-selling beer in early June due to a boycott that began after transgender influencer Dylan Mulvaney showed off a personalized beer can featuring the influencer’s face.  -Daily Caller

One Anheuser-Busch distributor told The Wall Street Journal earlier this month, “Our year is screwed” because of slumping sales and since they don’t carry Modelo, which has taken the top spot.

For the week ending June 3, Bud Light sales were still down 24%, while Modelo Especial was up 12%. The latest numbers follow Memorial Day weekend images shared on social media showing desperate retailers marking 18-packs of Bud Light all the way down to just $2.99

Betting on a new ad campaign to stop the bleeding is a gamble. Dave Williams, vice president of consumer insights and analytics at Bump Williams, told USA Today this week that Bud Light faces further declines and Modelo will continue to take market share nationwide. 

Bud Light has an uphill battle to regain its customer base after abandoning them for a clownish trans-TikTok star. The damage seems irreversible as many beer drinkers have realized the light beer is ‘piss water masquerading as beer.’

Tyler Durden
Tue, 06/27/2023 – 15:40

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Kamala Harris Has The Worst Net Negative Rating Of Any Vice President In NBC Poll’s History

Kamala Harris Has The Worst Net Negative Rating Of Any Vice President In NBC Poll’s History

Authored by Debra Heine via American Greatness,

While voters continue to have serious concerns about Joe Biden’s mental health, they are even less impressed with his vice president, according to the latest national NBC News poll.

Kamala Harris has a historically low approval rating of 32 percent in survey, compared with 49 percent who have a negative view of her. Thirty-nine percent of respondents said they had a “very negative” view of Harris.

Her net negative rating of -17 is reportedly the worst for any vice president in the NBC poll’s history.

In Oct. 2019, then-Vice President Mike Pence had a 34% positive, 38% negative rating (-4).

In Dec. 2010, Joe Biden’s rating was 34% positive, 33% negative (+1).

In May 2003, Dick Cheney was at 47% positive, 24% negative (+23).

And in March of 1995, Al Gore’s rating in the poll was 42% positive, 27% negative (+15).

Kamala Harris’ terrible poll numbers come amid a concerted White House effort to broaden her appeal so she isn’t a liability on the Biden/Harris reelection campaign trail. While both Biden and Harris have seen historically low approval ratings throughout their time in office, Harris has consistently been the more unpopular of the two.

Axios reported in April that Senior Biden adviser Anita Dunn tasked White House political teams to schedule events featuring Harris promoting issues like abortion that are popular with their left-wing base.

Over the weekend, Harris marked the first anniversary of the Supreme Court’s Dobbs v. Jackson ruling by blasting pro-life lawmakers as “extremists.”

“This fight is not only about people in one particular state; these extremists plan to take their agenda national. And that agenda, by the way, goes way beyond reproductive rights,” Harris declared at a pro-abortion rally Saturday in Charlotte, North Carolina.

“Many of these same folks attack the right to vote, which prevents the teaching of America’s history.”

Harris claimed that pro-life Republicans are passing laws in State legislatures that deprive women of health care “rights,” and they “don’t even understand how a woman’s body actually works,” despite the fact that many pro-life lawmakers are women.

In the NBC poll also found that Joe Biden had a 43 percent job-approval rating among all registered voters, with 53 percent disapproving.

A combined 44 percent of registered voters say they’d “definitely” or “probably” consider voting for a third-party or independent candidate for president — if the other candidates include Biden and Trump. That’s a greater share than the poll found saying that in the 2008 and 2012 cycles, but it’s down slightly from the 46 percent who said they’d consider a third-party candidate in 2016.

The survey also showed that majorities of registered voters had concerns about the mental and physical health of both Biden and former president Donald Trump.

Sixty-eight percent of voters were concerned that Biden doesn’t have the necessary mental and physical health to be president, including 55 percent who said they have “major” concerns, compared with 55 percent who said they have concerns about Trump’s mental and physical health, including 44 percent who had major concerns.

Despite these concerns, Biden has an edge over Trump in a head to head matchup, garnering support from 49 percent of registered voters versus Trump’s 45 percent.

In this hypothetical rematch, Biden enjoys advantages among women (55 percent-38 percent), voters 18-34 (65 percent-30 percent), Latinos (66 percent-26 percent) and Black voters (73 percent-20 percent), as well as independents (47 percent-33 percent) and those who “somewhat” disapprove of Biden’s job as president (50 percent-39 percent).

Trump, meanwhile, has the edge among white voters (51 percent-43 percent), men (51 percent-42 percent), whites without college degrees (60 percent-35 percent) and rural voters (68 percent-26 percent).

In a hypothetical contest between Biden and Florida Governor Ron DeSantis, the two men are tied at 47 percent each.

Tyler Durden
Tue, 06/27/2023 – 15:20

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Download Edited Version Of Moore v. Harper From Barnett/Blackman Supplement

I have finished editing Moore v. Harper for the Barnett/Blackman supplement. I trimmed 65 pages down to 22 pages. You can download the opinion here.

This case will be useful for two separate topics: jurisdiction/mootness and election law. I suspect professors interested in the former will be less interested in the latter, and vice versa. To make things easier, the discussion on mootness appears in Part II of the majority opinion and Part I of the dissent. And the discussion of election law appears in Parts III and IV of the majority opinion and Part II of the dissent.

I’ll have much more to say about this decision in future writings.

The post Download Edited Version Of <i>Moore v. Harper</i> From Barnett/Blackman Supplement appeared first on Reason.com.

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Supreme Court Confirms That State Legislatures Can’t Ignore the Constitution When Writing Election Rules

When it comes to setting the rules for elections, the Supreme Court ruled on Tuesday, state legislatures are not allowed to ignore the Constitution or evade judicial review.

It may not have been the most politically divisive issue in this year’s Supreme Court docket—that honor probably goes to the still-yet-to-be-announced review of President Joe Biden’s student loan forgiveness scheme—but Moore v. Harper was the Court’s most potentially seismic case. It raised a fundamental question about the balance of power in election law: do state courts possess the authority to review and overturn state legislatures’ decisions about the rules for federal elections?

They do, the Supreme Court unambiguously declared in Tuesday’s ruling. “When state legislatures prescribe the rules concerning federal elections, they remain subject to the ordinary exercise of state judicial review,” Chief Justice John Roberts wrote in the 6-3 ruling.

That might seem like constitutional common sense. After all, anyone with a passing understanding of constitutional law knows that Marbury v. Madison confirmed that courts have the power to review the actions of the other branches of government. But the crux of the Moore case rested on a novel theory bouncing around conservative legal circles: the “independent state legislature theory.”

That theory has its basis in Article I, Section 4 of the U.S. Constitution, which explicitly grants state legislatures control over “The Times, Places and Manner of holding Elections for Senators and Representatives.” Advocates of the independent state legislature theory argue that the Constitution places those decisions—including the drawing of congressional districts—solely in the hands of state lawmakers, with no space for courts to intervene. Therefore, the argument goes, there are no constitutional or legal constraints on state legislators when setting the rules for elections.

A redistricting battle in North Carolina became the testing ground for that idea. Last year, the North Carolina Supreme Court struck down a proposed congressional district map because it was an unfair political gerrymander. The court imposed a new map drawn by its hand-picked experts. Republicans and Democrats each won seven of the state’s 14 congressional seats in the subsequent midterm election, held with court-drawn lines. The Republican lawmakers who drew the rejected map asked the U.S. Supreme Court to intervene and offered the independent state legislature theory in their arguments.

With a conservative majority on the Supreme Court, some liberal commentators feared that the independent state legislature theory was about to be enshrined nationally. It didn’t help that some of then-President Donald Trump’s cronies tossed around the theory as part of various schemes to overturn the results of the 2020 presidential election—even though the Elections Clause quite clearly applies only to congressional and senatorial elections, and it does not allow state lawmakers to intervene after an election has been held.

But Tuesday’s ruling soundly rejected the independent state legislature theory.

“The Elections Clause does not vest exclusive and independent authority in state legislatures to set the rules regarding federal elections,” Roberts wrote in the majority opinion, in which he was joined by Justices Amy Coney Barrett, Ketanji Brown Jackson, Elena Kagan, Brett Kavanaugh, and Sonya Sotomayor. (Separately, Kavanaugh also offered a concurring opinion.)

The importance of judicial review is one of the “fundamental principles” of America’s constitutional system, Roberts wrote. “The Elections Clause does not carve out an exception to that fundamental principle.”

The cross-ideological nature of the 6-3 ruling is a major blow to the independent state legislature theory’s advocates—and to its critics who expected the conservative majority on the Court to rubberstamp a radical reinterpretation of the Constitution.

It’s also worth noting that Justice Clarence Thomas does not argue for the independent state legislature theory in his dissent. Instead, he argues that the Court should have punted the case as moot after the North Carolina Supreme Court overruled its prior decision earlier this year.

“The federal defense no longer makes any difference to this case—whether we agree with the defense, disagree with it, or say nothing at all, the final judgment in this litigation will be exactly the same,” Thomas argues. “The majority does not seriously contest that fact. Even so, it asserts jurisdiction to decide this freefloating defense that affects no live claim for relief.”

That’s a fair criticism, but the willingness of the Court’s majority to lay down a clear signal about the independent state legislature theory is important, too, even if it made no difference to the acute issues in the underlying redistricting case.

The real winner in Tuesday’s ruling is the constitutional system itself and its insistence on the separation of powers. Roberts notes that courts also do not have unchecked authority and “may not so exceed the bounds of ordinary judicial review as to unconstitutionally intrude upon the role specifically reserved to state legislatures.”

You might also think about Moore v. Harper as a proxy fight between textualism and originalism—with advocates of the independent state legislature theory advancing a pedantic, letter-of-the-law reading of constitutional provisions against a deeper understanding of how the Framers intended the messy mechanisms of democracy to work. Indeed, Roberts points repeatedly to the founding era—to Marbury, to The Federalist Papers, and early constitutional law provisions in various states—as he dissects the problems with the theory.

“When legislatures make laws, they are bound by the provisions of the very documents that give them life,” he writes in one particularly direct rebuttal to the idea that state legislatures should be freed from all constitutional restraints when writing election rules. As such, legislatures are “created and bound” by state constitutions and limited to particular authorities granted by the federal constitution.

“Both constitutions,” Roberts concludes, “restrain the legislature’s exercise of power.”

The post Supreme Court Confirms That State Legislatures Can’t Ignore the Constitution When Writing Election Rules appeared first on Reason.com.

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Ohio E.V. Manufacturer Fails Despite Millions in Taxpayer Subsidies

Upstart electric vehicle (E.V.) manufacturer Lordstown Motors announced on Tuesday that it had filed for Chapter 11 bankruptcy. The company simultaneously sued Taiwan-based electronics manufacturer Foxconn, its largest investor, for fraud and breach of contract. No matter how either scenario shakes out, it’s all part of a long and shameful saga of crony capitalism.

In March 2019, General Motors (G.M.) shuttered its plant in Lordstown, Ohio, open since 1966. Automobile factory closures are nothing new, but in 2009, amid high gas prices and the Great Recession, Ohio gave G.M. $60 million to build the fuel-efficient and inexpensive Chevrolet Cruze in Lordstown. To qualify for the full amount, the company had to operate the plant through at least 2039.

When G.M. shut down the plant two decades early, the state threatened to claw back all $60 million before settling for a $28 million repayment and a $12 million investment in “workforce, education and infrastructure needs.”

Then, in August 2019, Lordstown Motors announced plans to buy the facility and eventually build an all-electric pickup truck. G.M. sold the plant for $20 million and even loaned Lordstown $40 million toward the purchase and renovations (an amount roughly equivalent to the purchase price, plus the amount of taxpayer money that G.M. was allowed to keep).

But G.M. was not the only investor in the project. In December 2020, the Ohio Tax Credit Authority approved a $20 million tax credit for the company. JobsOhio, a private nonprofit development agency that receives funding from state liquor revenues, pledged another $4.5 million.

The extra cash didn’t do much good: In June 2021, Lordstown’s CEO and CFO both resigned amid reports that the company had lied about its preorder numbers. That same month, the company admitted that it did not have enough cash to begin production and may not survive.

Desperate for investment, Lordstown announced in November 2021 that it had sold the factory to Foxconn, an international electronics manufacturer best known for making the iPhone. The following year, Foxconn kicked in an additional $170 million, and in exchange, the two companies would collaborate on a jointly-developed E.V. in addition to Lordstown’s still-unreleased electric truck.

Foxconn is no stranger to bad deals made with taxpayer money: In 2017, in exchange for $3 billion in funding from the state of Wisconsin, the company agreed to spend $10 billion to build a manufacturing plant in the state that would employ over 13,000 people. Four years later, the company had spent around $700 million on a plant that employed around 1,500 people.

Lordstown indicated on Tuesday that part of the reason it sought bankruptcy protection was that Foxconn reneged on the second disbursement of cash. As a result, Lordstown is suing Foxconn for fraud and breach of contract. For its part, Foxconn claims that Lordstown violated the companies’ joint agreement when its share price fell too low and was at risk of being delisted by NASDAQ.

Lordstown’s bankruptcy may be a blow to the local economy in Northeastern Ohio. But the real tragedy is that state officials committed taxpayer money, first to General Motors and then to a completely unproven startup. In this case, the solution is simple: Government should let the taxpayers keep their cash and insist that private companies raise and spend private money.

The post Ohio E.V. Manufacturer Fails Despite Millions in Taxpayer Subsidies appeared first on Reason.com.

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