Indiana Jones and the Dial of Destiny Is a Dud

Quick: Name your favorite bit from an Indiana Jones film. I mean “bit” expansively—it could be a quip, an extended action sequence, a scene of tension or tenderness, a shocking effect, a moment of playfully mischievous charm. One could say that the series, at its best, is marked by a profusion of these moments, but perhaps even more important is that the series is marked by them even at its worst.

Raiders of the Lost Ark, which kicked off the franchise in 1981, is a masterpiece of popular filmmaking, in which every single scene, shot, and line works individually, and somehow they all work even better together. Raiders created a magic movie alchemy that still maintains an outsize influence on blockbuster movies more than 40 years later.

Indiana Jones and the Temple of Doom, the second film in the series, is far worse than its practically perfect predecessor: It’s both too silly and too grotesque, too mean-spirited and too enamored with its own elaborate action-movie cleverness. But it also boasts a slew of ideas and images that you can instantly recall: the antic diamond scramble in the nightclub that kicks off the movie, the gross-out meal at the palace, the mine-cart chase, the shocking, gory, ritual heart removal scene.

The same can even be said for the franchise’s much-derided, late-breaking fourth entry, Indiana Jones and the Kingdom of the Crystal Skull, which contains a handful of crackerjack, high-hijinks action sequences and a delightfully ridiculous performance from Cate Blanchett, as the Natasha-esque villain. You may not care for the movie, or remember all the specifics, but you still know what it means to “nuke the fridge.”

All four of these films, of course, were directed by Steven Spielberg, whose gift for witty comic action is unrivaled in modern Hollywood. Spielberg’s action sequences may not make total sense in terms of real-world physics, but they all have perfectly coherent internal logic—even if it’s Looney Tunes logic.

And they were anchored on maximally charming Harrison Ford performances in his movie star prime (or, in the case of Crystal Skull, only a little past it). If you understand what it means to be a movie star, watch Ford in these films: Not only does he take patently ridiculous material and make it a hoot, he makes a roguish, bordering-on-unlikable jerk—Indy is selfish and buffoonish throughout the series—and turns him into one of cinema’s most enduringly charming characters.

Sadly, the same can’t be said for the newest installment in the franchise, Indiana Jones and the Dial of Destiny. The fifth installment is a charmless dud, with no apparent reason to exist other than the enduring appeal of the character. It might as well have been titled Indiana Jones and the Quest for Cash.

Instead of Steven Spielberg, the film is directed by James Mangold, who conspicuously lacks Spielberg’s gift for antic action. The big setpieces are creaky and uncreative, with none of the cartoon logic that gave Spielberg’s over-the-top setpieces such energy and life. Several sequences, including an opening fight on top of a train and a chase that has Indy riding a horse into a subway, are so riddled with awful computer-generated effects work that at times they almost look fully animated. Almost every shot in the movie looks like it was shot inside, in front of a green screen, with heavy compositing work in post-production. For a series about global adventure, it rarely looks like Indy actually goes anywhere beyond the studio backlot.

And while it brings back Ford as the lovably grumpy archaeologist of the title, it also pairs him with Phoebe Waller-Bridge, playing Indy’s goddaughter, another roguish archaeologist with some self-dealing tendencies, Helena Shaw. Anyone who’s seen Waller-Bridge’s Fleabag knows she has a gift for making nominally unlikable characters vulnerable and charming, and you can imagine her capturing some of the young Ford’s roguish appeal. Instead, she’s just blandly off-putting, as if the filmmakers forgot to put the charming bits in.

The script, meanwhile, goes from boring to bizarre, with a third-act twist that feels like it came from a Roger Corman quickie.

A late-breaking sequel with an aging star need not be a disaster: Just a few years ago, Harrison Ford reprised his 1980s role as the robot-hunting detective Rick Deckard in the remarkable, haunting Blade Runner 2049.

But Indiana Jones and the Dial of Destiny mostly just serves as a reminder of how great even not-so-good Spielberg/Ford joints used to be. There’s not a memorable bit or moment in the movie, not a scene or a line or a gag that will stick with you for the rest of your life. The franchise’s 1980s installments are some of Hollywood’s most prized relics; but these days, Indiana Jones just belongs in a museum.

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Supreme Court Rules Against Biden’s Student Loan Forgiveness Plan

Today, in Biden v. Nebraska, the Supreme Court ruled that President Biden’s $430 billion loan forgiveness plan is illegal because not authorized by Congress under the 2003 HEROES Act. It also ruled that, at least one of the plaintiffs, the state of Missouri, has standing to sue. Chief Justice John Roberts wrote the majority opinion, in a 6-3 split along ideological lines. He concludes that the plan is unauthorized under the text of the HEROES Act and also runs afoul of the “major questions” doctrine.

In my view, this decision is correct on both standing and the merits. It is an important step towards curbing executive abuse of emergency powers and executive raids on the Treasury for purposes not authorized by Congress.

In the companion case, Department of Education v. Brown, the Court unanimously (and correctly, I think) ruled that the plaintiffs lack standing.

I will have much more to say about this case later in the day, including in a forthcoming article for CNN.

I previously outlined my views on the merits here, and on standing here, here, and here.

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Robert F. Kennedy Jr.: COVID Ukraine Bitcoin Guns Free Speech and More

This is the audio version of The Reason Livestreamwhich takes place every Thursday at 1 p.m. Eastern.

The guest for this week’s livestream was Robert F. Kennedy Jr., the environmentalist and anti-vaccine activist who is running for the Democratic presidential nomination. My colleague Zach Weissmueller and I talked with him about the war in Ukraine, COVID-19 policy, gun rights, bitcoin, pardoning Julian Assange, Edward Snowden, and Ross Ulbricht, and much more.

To watch the video version, go here.

Today’s sponsor:

  • BetterHelp. When you’re at your best, you can do great things. But sometimes life gets you bogged down, and you may feel overwhelmed or like you’re not showing up in the way that you want to. Working with a therapist can help you get closer to the best version of you—because when you feel empowered, you’re more prepared to take on everything life throws at you. If you’re thinking of giving therapy a try, BetterHelp is a great option. It’s convenient, flexible, affordable, and entirely online. Just fill out a brief questionnaire to get matched with a licensed therapist, and switch therapists anytime for no additional charge. If you want to live a more empowered life, therapy can get you there. Visit BetterHelp.com/TRI today to get 10 percent off your first month.

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Remy: Cold Dead Hands

Remy finds artificially low interest rates come with consequences.

Music and lyrics written and performed by Remy.

LYRICS:

You save a piece of each paycheck
To buy a house in your town
With a short white picket fence

You’ve got the right down payment
You’re pre-approved as planned
So you can buy my house

From my cold dead hands

30 years fixed at 2.5
My name will be on this deed until the day that I die
Interest rates were kept artificially low
You think I’m ever selling? That must be some kind of joke

Zero inventory within five miles of church?
Zoom out to North America and click “redo search”

Like Amber Heard on a bed, I’m squatting right here
I hear the rental market’s great around this time of year
So go and build your own house on that vacant land
Here, you can take this shovel

From my cold dead hands

More cars on the road, less sun in the sky
I will oppose all new construction till the day that I die
My property value might be slightly harmed
It would change the area’s character—when you built here, this was all farms

Senior homes and row houses, I’m blocking them all
And God help the man I witness playing pickleball

Congressman! Congressman! I just want a house
But building here’s illegal? Yeah, how’s that allowed?
We could use a voice like yours, keep our House in your plans
You could take my seat. Really?

From my cold dead hands

Zero term limits, and industry vies
I will be the incumbent until my brain finally dies
And then a couple years more, it is what it is
I almost lost one time, so we drew the district like this

My cold hands
My cold dead hands

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Supreme Court Clarifies ‘Undue Hardship’ Standard for Religious Accommodations in the Workplace

Everyone is talking about the Supreme Court’s Thursday decision striking down affirmative action in college admissions (more on that below in the “Free Minds” section). But it wasn’t the only decision the Court handed down yesterday. SCOTUS also ruled in a religious freedom case we’ve covered previously in the Reason Roundup. The case centers on an evangelical Christian postal carrier who didn’t want to work on Sundays.

Gerald Groff was employed delivering mail for the U.S. Postal Service (USPS) in Quarryville, Pennsylvania, a job that didn’t initially require Sunday work. But this changed after the USPS began facilitating Sunday deliveries as part of a deal with Amazon. Groff’s petition for a transfer to a facility that didn’t require Sunday work was granted, but in 2017 this facility began doing Sunday deliveries as well.

The USPS continued to accommodate Groff’s scheduling preference but “throughout this time, Groff continued to receive ‘progressive discipline’ for failing to work on Sundays,” Justice Samuel Alito noted in the Court’s June 29 opinion. In January 2019, Groff resigned and, a few months later, sued.

A U.S. district court sided with the USPS and the U.S. Court of Appeals for the 3rd Circuit affirmed that decision, stating “that requiring an employer ‘to bear more than a de minimis cost’ to provide a religious accommodation is an undue hardship.”

The Supreme Court has now vacated the appeals court’s decision and remanded the case for further proceedings.

The case turned on what could be considered an “undue hardship” for an employer.

Under Title VII of the Civil Rights Act of 1964, employers must accommodate the religious beliefs of their employees when it doesn’t create an “undue hardship on the conduct of the employer’s business.” The Supreme Court has previously said anything more substantial than a “de minimis cost” can be used to justify the denial of religious accommodations.

Depending on the size and structure of a particular business (or branch of that business), letting employees unilaterally refuse to work on Sundays or some other day of the week could certainly pose more than a de minimis burden. But is it an “undue hardship”? And, if not, what is?

That’s what SCOTUS was asked to decide in this case. Groff argued that a religious accommodation should have to involve “significant difficulty or expense” before an employer can legally deny it.

The Court rejected Groff’s formulation. But it also rejected the de minimis cost standard. Instead, it held “that an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.”

The Court’s June 29 opinion takes a lengthy look at the 1977 case—Trans World Airlines, Inc. v. Hardison—from which the de minimis standard arose. The case turned on a dispute between Trans World Airlines (TWA) and clerk Larry Hardison over whether Hardison should have to work on the Sabbath. But the Court in this case paid very little attention to constitutional concerns, instead focusing on the union-backed seniority rights of employees, noted Alito. And the de minimis cost line—”viewed by many lower courts as the authoritative interpretation of the statutory term ‘undue hardship'”—contradicts other statements in the same opinion. Ultimately, the 1977 Court was not clear on “its guidance on ‘undue hardship’ in situations not involving seniority rights.”

In the Groff case, the Court decided “that showing ‘more than a de minimis cost,’ as that phrase is used in common parlance, does not suffice to establish ‘undue hardship’ under Title VII.” So how should it be defined?

In this case, both parties agree that the “de minimis” test is not right, but they differ slightly in the alternative language they prefer. Groff likes the phrase “significant difficulty or expense.” The Government, disavowing its prior position that Title VII’s text requires overruling Hardison, points us to Hardison‘s repeated references to “substantial expenditures” or “substantial additional costs.”…We think it is enough to say that an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business….

What matters more than a favored synonym for “undue hardship” (which is the actual text) is that courts must apply the test in a manner that takes into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, “size and operating cost of [an] employer.”…

Faced with an accommodation request like Groff’s, it would not be enough for an employer to conclude that forcing other employees to work overtime would constitute an undue hardship. Consideration of other options, such as voluntary shift swapping, would also be necessary.

Having clarified this standard, the Court did not rule further on the particulars of Groff’s situation with the USPS (“we think it appropriate to leave the context-specific application of that clarified standard to the lower courts”) and stated that there was still a “possibility that USPS will prevail.”

You can find the full decision here.


FREE MINDS

Perspectives on the affirmative action ruling. In a 6–3 ruling released yesterday, the Supreme Court said colleges using race-based affirmative action schemes to decide who gets in violates the 14th Amendment. Reason‘s Emma Camp has more about the decision itself here. It’s obviously spawned a lot of commentary; here are a few takes worth considering…

Some—including Rep. Alexandria Ocasio-Cortez (D–N.Y.)—have complained that the Court should tackle legacy admissions programs, which give preference to the children of alumni. “This is an extremely silly point,” Reason‘s Robby Soave writes:

The reason the Supreme Court weighed in on race-based admissions rather than legacy admissions is that the former was the issue being litigated. For the Supreme Court to consider legacy admissions, someone would have to bring a lawsuit about this issue.

But supporters of nondiscrimination can further overcome this criticism by conceding a basic point: Legacy admission—the widespread practice of giving preferential treatment to the scions of alumni—is, in fact, unfair and should be abolished….

The very fact that legacy admissions still exist is not whatsoever a reason to oppose the curbing of affirmative action; eliminating explicit racial discrimination is obviously a noble goal in and of itself. But to any naysayer who disdains the Harvard and UNC ruling by saying that legacy admissions should face the same fate: Your terms are acceptable.

“Yes, of course legacy admissions are ridiculous,” writes author Freddie deBoer. “But college admissions never existed to satisfy some ideal of perfect meritocracy.”

In a wide-ranging post, deBoer goes on to suggest we should be more worried about the number of black students who don’t even apply to college than “about a theoretical Black student who would get into Harvard with a racial preference but wouldn’t without” and criticizes the disingenuous way many talk about affirmative action programs at colleges:

  • …It’s simply not disputable that the system as it exists acts as a massive enterprise in systemic discrimination against Asian applicants to elite colleges. If we’re going to have this conversation, I insist we have it honestly. And the honest truth is that it’s way, way harder for Asian students to get into elite institutions than those from other racial categories. Which is racial discrimination. Period.
  • This framing enrages people, but this is very much a first-world problem: elite colleges are a tiny part of the overall college landscape, by number of institutions and especially by number of students; a majority of Americans still don’t have a college degree; the students of color who get into elite colleges are a tiny sliver of the overall population of people of color and are not remotely representative of that population.
  • …It remains profoundly weird that people who want to defend affirmative action can’t straightforwardly say what it does. Affirmative action is a system in which students of color who would not ordinarily gain entry to a given college are given a slot thanks to consideration of their racial background, on grounds of diversity or addressing systemic bias. But if you say “these college kids got in because of affirmative action,” that’s a horrible, racist thing to say. I can’t think of another progressive program where the defenders of that program have forbidden people from saying that the system is working as it is intended to work. Very strange.
  • It’s a truly bizarre thing, to look at elite college admissions, and say “this can be made equitable and egalitarian.” It can’t be. The whole system exists to create an elite! That’s the system’s most basic function!

Matthew Yglesias makes a similar point:

  • I think professors at top universities face a conceptual problem in that they want to affirm values like “diversity, equity, and inclusion,” but the whole point of top universities is to be elitist, hierarchical, and exclusionary. I’m not 100 percent sure what to tell people in this situation. But if you want to be equitable and inclusive, go teach in a community college or a public high school. If you want to cultivate excellence among a social elite, then own up to that as a mission in life. I don’t think there’s one right thing to do, but it’s deeply confusing to try to do both of them simultaneously.

Yglesias adds:

  • Eugene Scott writes that this decision will “likely jeopardize the representation of Black and Latino students on campuses nationwide.” I think this is wrong. Some campuses will see representation of Black and Hispanic students decline, but other campuses like the University of Michigan and the Berkeley will see representation go up. Affirmative action does not magically create additional Hispanic students with good enough SAT scores to attend selective colleges, it just shifts them around.
  • To the extent that you take seriously the educational benefits of diversity, ending affirmative action will redistribute diversity away from the most selective schools to a set of somewhat-less-selective schools which seems … fine.

If, however, one worries “about Black and Hispanic underrepresentation in selective colleges in general and the downstream consequences of that for representation in skilled professionals generally (and I think we should worry about this), you really do have to care about the pipeline problem” and embrace the fact that K-12 school quality matters,” writes Yglesias.

Many have pointed out that doing away with affirmative action programs will just lead elite colleges to embrace other schemes for accomplishing the same goals, such as putting increased emphasis on personal essays as part of the admissions process. Harvard University already seems to imply as much in a statement highlighting the Court stating that schools could still consider “an applicant’s discussion of how race affected his or her life.” This “loophole will make all the bad aspects of current admissions (the extreme weight given to personal essays) worse, in the sense of more arbitrary and subjective,” suggests The Nation‘s Jeet Heer.


FREE MARKETS

Restrictive U.S. policies make life more difficult for Cuban capitalists. WLRN looks at the rise of the Cuban pyme (“Cuba’s Spanish acronym for a small- and medium-sized private enterprise”)—and how U.S. restrictions are thwarting them:

Cuba’s communist economy is in catastrophic collapse today. The government legally recognized privately owned businesses only two years ago, after a decade of letting them operate informally on a very small scale. Now it wants them to play a larger role. Pymes can import raw materials, for example, and receive foreign investment.

And aspiring capitalists like [Idián] Chávez are responding with larger pymes.

Chávez points out Cuba has to import more than half its toilet paper. Since he specializes in industrial process, he says he’s designed a more streamlined assembly system that will help meet the island’s demand — which is more acute because the state has to direct so much of its own toilet paper production to Cuba’s crucial tourism sector….

But Chávez also points out he had to import his factory equipment from China — because the U.S. embargo against Cuba doesn’t allow licensing for that kind of heavy U.S. export to the island.

He says the $200,000 to buy it, build his factory and purchase raw materials like paper pulp came from a Cuban-American friend in Miami, whom he declined to name, via a convoluted cash remittance process, and not through normal investment channels — since the embargo also prohibits banking between the U.S. and Cuba.

“I totally would have preferred to do all this directly with the U.S.,” Chávez says, “but U.S. policy still makes it very difficult.”

More here.


QUICK HITS

• The Supreme Court is supposed to issue a decision soon in 303 Creative LLC v. Elenis, a case concerning a website designer who refused to build a gay wedding website for a couple named Stewart and Mike. But this couple might not exist.

• “Federal law has put thousands of women on anti-addiction medications like Suboxone into an impossible bind: Give up your treatment or risk losing your child,” Reveal reports.

• Following the filing of an antitrust action against Amazon last week, the Federal Trade Commission is reportedly planning to file an even larger antitrust lawsuit against the company soon. The “far-reaching antitrust suit” will focus “on Amazon’s core online marketplace,” according to Bloomberg. “The main allegation is expected to be that Amazon leverages its power to reward online merchants that use its logistics services and punish those who don’t.”

• Larry Householder—”once one of the most powerful politicians in Ohio,” as The Columbus Dispatch points out—was sentenced yesterday to 20 years in prison for his role in an illegal bribery scheme.

• “Google joined Meta in preparing to block all Canadian news content from its platforms” following the passage of Canada’s Online News Act, notes the Toronto Star.

• The tech industry association NetChoice is suing over Arkansas’ Social Media Safety Act, also known as S.B. 396. (The law “emulates Utah’s law, banning kids from social media unless they get express parental consent,” as we noted in this rundown on attempts to childproof the internet.)

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Supreme Court Strikes Down Student Loan Relief — Here’s Who’s Most Affected

Supreme Court Strikes Down Student Loan Relief — Here’s Who’s Most Affected

In a largely anticipated decision, the Supreme Court on Friday ruled in two separate cases that the Biden administration exceeded its authority with its $400 billion student loan forgiveness plan. The court ruled 6-3 along ideological lines.

The first case, Department of Education v. Brown, was brought by two student loan borrowers who didn’t qualify for relief sued to vacate the program on the basis that Biden’s invocation of the post-9/11 HEROES Act constitutes executive overreach. The Court ruled unanimously that the borrowers did not have standing to sue – but that the Biden administration also doesn’t have the authority to forgive the debt.

“The HEROES Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal,” reads the opinion.

Proponents of cancellation have warned of dire consequences, such as Persis Yu – deputy executive director of the Student Borrower Protection Center.

“If payments are to resume without cancelation, we can expect a tremendous increase in defaults and forbearance,” said Yu, adding “There absolutely must be a plan to avoid the economic devastation.”

Who will be most affected?

According to the Wall Street Journal, citing a Wells Fargo report, typical student loan payments will be between $210 and $314 per month once payments resume.

Overall, more than 40 million borrowers would have qualified for loan forgiveness through a required application. Before legal challenges halted the plan, borrowers in every state were approved for loan cancellation. Big states such as California, Texas, Florida and New York had the most approvals overall. The District of Columbia had the most approvals in proportion to its adult population, followed by Georgia and Ohio.

According to the Department of Education, over 43 million people collectively owe $1.6 trillion in student-loan debt. These loans include Direct Loans, Federal Family Education Loans and Perkins Loans. Around half of these borrowers owe less than $20,000.

When broken down by age, borrowers 24 and younger owe $103.4 billion in federal student-loan debt. Less than 4% owe over $40,000. The largest cohort of borrowers is those aged 25-34, of which nearly a quarter owe more than $40,000. Of those aged 35-49, more than 1/3 owe more than $40,000.

By race, around 30% of black households had student-loan debt in 2019, vs. around 20% of white households and 14% of hispanic households.

By household net worth, of those who are in the bottom 25%, more than 1/3 hold student debt, vs. 6% of those in the top 10%, per the Federal Reserve.

As noted last week at Real Clear Education, the administration’s plan to transfer up to $20,000 in student loan debt per borrower – from individuals who voluntarily took out loans to finance their college education to unsuspecting taxpayers – was one of the most audacious examples of executive overreach in American history.

Despite its $400 billion price tag, the action is only a small piece of the administration’s strategy to create a massive new public subsidy for higher education. A cynic might wonder whether the headline-grabbing but legally dubious bailout now before the Court was conceived as a decoy to distract public attention from the real centerpiece of the debt-transfer agenda.

With public attention focused on the blanket forgiveness plan (and the pleas of those demanding more), the Department of Education was busy crafting an ambitious plan to bail out future borrowers in perpetuity by changing the rules governing income-driven repayment.

Currently, multiple income-based repayment programs exist. All would cap the payments of enrollees at a percentage of their current income and then wipe away debt that remains after many years of repayment. When income-based repayment plans are designed properly, they align the timing of repayment with career earnings trajectory, such that borrowers pay the loans back faster as their incomes increase. (It is reasonable for doctors with very large loans to have smaller payments in their residency years when salaries are modest).

But the design principle should be that most loans are eventually paid off, including interest, except in cases of manifest hardship.

With its proposal to phase out several existing income-based repayment programs in favor of a much more generous version of a specific program called REPAYE (Revised Pay as You Earn), the Department of Education is abandoning this expectation to create an ongoing bailout.

REPAYE’s extravagant new terms are a bad deal for taxpayers. Undergraduate borrowers will be required to pay only 5% of their disposable income toward their student loan debt, with disposable income defined as income above 225% of the federal poverty line ($32,805 for an individual or $67,500 for a family of four). Balances will not grow when a borrower’s monthly payment is smaller than the interest accrued. (To accomplish this benefit, the Secretary of Education claims the power to cease charging interest owed to the U.S. Treasury.)

Tyler Durden
Fri, 06/30/2023 – 10:40

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Supreme Court Sides With Christian Web Designer Vs. Same-Sex Couple

Supreme Court Sides With Christian Web Designer Vs. Same-Sex Couple

The Supreme Court on Friday sided with a Christian graphic web designer, Lorie Smith, who objected to designing wedding websites for same-sex couples.

The 6-3 decision, split among ideological lines, cam after Smith sued the state of Colorado over its anti-discrimination law prohibiting businesses from denying services based on a customer’s sexual orientation.

In its ruling, the Court’s conservative majority ruled that the First Amendment bars Colorado from forcing “an individual to speak in ways that align with its views but defy her conscience about a matter of major significance.”

Smith, who owns design company 303 Creative – which has previously served gay customers – only wants to work with heterosexual couples for her wedding website business. She argued that Colorado’s law would force her and other artists to offer customized messages which violate her beliefs and First Amendment rights.

Supporters of Colorado’s law say the decision could allow businesses to discriminate against a wide range of customers – including interfaith couples or those of other races.

In a dissent, Justice Sotomayor wrote: “Today, the Court, for the first time in its history, grants a business open to the public a constitutional right to refuse to serve members of a protected class.”

The case is reminiscent of the ‘gay wedding cake’ controversy that arose a decade ago, after Colorado baker Jack Phillips refused to make a wedding cake for a gay couple, also on religious grounds. The court ruled for the baker, however the decision – penned by Justice Anthony Kennedy – did not settle whether the First Amendment applies to discrimination based on religious beliefs.

Tyler Durden
Fri, 06/30/2023 – 10:20

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Analysts Contemplate A Bankruptcy For The Nation’s Third Largest LTL Truckload Carrier

Analysts Contemplate A Bankruptcy For The Nation’s Third Largest LTL Truckload Carrier

By Todd Maiden of FreightWaves,

With questions swirling around the fate of the nation’s third-largest less-than-truckload carrier, Yellow Corp., industry analysts have started looking at which carriers stand to benefit the most if the company fails.

Seemingly running out of options, Yellow filed a $137 million lawsuit against the Teamsters union on Tuesday. The suit alleges the union is unjustifiably blocking proposed operational changes that the carrier is contractually allowed to implement. Yellow asserts the union’s slow response and unwillingness to negotiate have added to the company’s deteriorating financial condition.

Yellow recently asked health and welfare and pension funds if it could delay contribution payments for the months of July and August in order to preserve its cash, which it says will be depleted by mid-July. Also, the lawsuit revealed Yellow unsuccessfully solicited the White House’s help brokering a deal.

“YELL’s situation creates huge benefits for the remaining, stronger LTL players that are able to profitably handle the extra volumes,” Deutsche Bank equity research analyst Amit Mehrotra told clients on Wednesday.

He said the negative press has likely resulted in more freight leaving the company.

A recent intraquarter report from Yellow showed its tonnage was down 16% year over year in April and May and 33% lower than in the same two months of 2021. Some of the declines can be attributed to recent yield improvement initiatives and the dislocation caused by a multiyear restructuring, which has allowed it to consolidate its four LTL brands and reduce its terminal footprint.

However, Mehrotra notes, customers are also seeking other transportation options given Yellow’s inability to reach a deal with the Teamsters.

“Based on all the developments over the last two weeks, we continue to think it’s more likely than not that a meaningful piece of Yellow’s business is diverted away to competitors.”

He also pointed to a final report issued Tuesday from the congressional oversight commission tasked with overseeing the 2020 COVID-relief lending program. The report noted numerous mistakes made by government agencies during the approval process of a $700 million Treasury loan to Yellow. It also advised the Treasury to unwind its debt and equity holdings in the company.

“These developments make it highly unlikely, in our view, for a last-minute deal via outside intervention,” Mehrotra said.  

Yellow has narrowly averted bankruptcy in the past by orchestrating wages and benefits concessions from Teamsters as well as eleventh-hour debt restructurings. With the unfavorable loan commission report and the Biden administration’s recent pass on lending a hand, it doesn’t appear the government is interested in a bailout.

TD Cowen analyst Jason Seidl said union carriers like ABF Freight, an ArcBest subsidiary, and TForce Freight, a TFI International company, would likely be the biggest winners of Yellow’s $5.2 billion slice of the LTL industry.

He said these carriers are more compatible with the way Yellow operates and could hit the upper end of the earnings-per-share growth ranges he calculated. The high end of the EPS range was 32% for ArcBest and 14% for TFI. XPO had an EPS growth range of 9% to 35% but presumably with a lower confidence level assigned.

He doesn’t see Old Dominion as a big beneficiary due to its “strict pricing discipline and freight profile.” He also noted some “strong private carriers” would likely see incremental volumes if Yellow were to fail.

Seidl said he wasn’t predicting Yellow’s demise or its survival, just providing some math in case the carrier exits.

He drew on comparisons to the 2002 failure of Consolidated Freightways, the third-largest LTL carrier at the time. That company was generating more than $2 billion in revenue with 20,000 employees, 14,500 of whom were Teamsters.

Seidl said that competitor ArcBest reported an 11% increase in daily tonnage the month that followed the announcement of CF’s bankruptcy. ArcBest’s tonnage was down 2.4% in the month prior to CF’s bankruptcy.

However, Mehrotra said the events at Yellow create the potential for “massive earnings accretion,” noting Old Dominion and Saia could see their earnings increase by more than 20%. He said a “wall of freight” could present some execution challenges to network-centric businesses like LTLs, but believes high-quality service standards at Old Dominion and Saia will allow them to more effectively onboard any windfall.

“The bottom line is we continue to see significant further upside in LTL shares on the back of developments at YELL,” Mehrotra said.

Shares of YELL were down again on Wednesday, off 19% following a 22% decline on Tuesday. Shares of other LTL carriers were up slightly to as much as 4% on the day, following mid- to high-single-digit increases on Tuesday.

Tyler Durden
Fri, 06/30/2023 – 10:15

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UMich Inflation Expectations Crash In June; Democrats Lead Sentiment Rebound

UMich Inflation Expectations Crash In June; Democrats Lead Sentiment Rebound

The final print for UMich sentiment’s findings on inflation expectations were unchanged from the flash print with 1Yr outlook at 3.3% – the lowest since March 2021 – and 5-10Y inflation exp eased down to 3.00%…

Source: Bloomberg

However, we do note that these expectations remained elevated relative to the 2.2 – 2.6% range seen in the two years pre-pandemic.

Also good news is that the uncertainty around the inflation outlook has fallen as consumers seem more confident that The Fed has things under control…

The headline sentiment print rose further intra-month to 64.4 from 63.09 flash

Source: Bloomberg

Buying Conditions improved modestly…

Source: Bloomberg

As UMich reports, the year-ahead economic outlook soared 28% over last month, and long-run expectations rose 11% as well.

Democrats are leading the resurgence in confidence…

Overall, this striking upswing reflects a recovery in attitudes generated by the early-month resolution of the debt ceiling crisis, along with more positive feelings over softening inflation.

Tyler Durden
Fri, 06/30/2023 – 10:09

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SEC Says Spot Bitcoin ETF Filings Are Inadequate But…

SEC Says Spot Bitcoin ETF Filings Are Inadequate, But…

Gary Gensler’s crusade against crypto continues… but today’s news may be a silver lining.

The Wall Street Journal reports, citing people familiar with the matter, The Securities and Exchange Commission said a recent wave of applications filed by asset managers to launch spot bitcoin exchange-traded funds are inadequate.

Gensler’s goons reportedly told BlackRock, Fidelity, and a wave of other asset managers that the filings aren’t sufficiently clear and comprehensive.

Cathie Wood’s Ark Investment Management, Invesco, WisdomTree, Bitwise Asset Management and Valkyrie all reactivated or amended their applications for a spot bitcoin ETF in recent days.

An ETF that tracks the actual price of bitcoin would mark a watershed moment for the industry because it would provide wider access to the cryptocurrency.

It would allow investors to buy and sell bitcoin through a brokerage account as easily as shares of stock.

The kneejerk reaction was to sell Bitcoin, pushing it back to $30,000…

The SEC has repeatedly rejected such funds going back to 2017 on the grounds that they are vulnerable to fraud and market manipulation.

At least half a dozen ETFs that own bitcoin futures are already on the market.

As WSJ concludes, some industry watchers predicted that BlackRock’s filing would appease the SEC’s concerns through an agreement to share “surveillance” of a spot bitcoin-trading platform with Nasdaq, which would list the ETF.

Interestingly, while the initial reaction appears to be negative, one could argue this is actually positive with the SEC engaging with asset managers and offering suggestions on what they should do.

Specifically, the SEC told the exchanges that it returned the filings because they didn’t name the spot bitcoin exchange with which they are expected to have a “surveillance-sharing agreement” or provide enough information about the details of those surveillance arrangements. Indeed, as Bloomberg ETF guru Eric Balchunas writes:“this isn’t as bad as headline. The key paragraph is deep in story. Basically SEC wants them to name the “crypto exchange” and give more details on SSA. That’s understandable, arguably good news. I was under impression they’d have to update that as well.

And As ETF Store’s Nate Geraci adds, this may actually be a greenlighting for the Blackrock ETF

Tyler Durden
Fri, 06/30/2023 – 09:45

via ZeroHedge News https://ift.tt/2DwlN5k Tyler Durden