Month: August 2023

The Freedom to Assign Controversial Books

It is not every day that a government minister writes to an American university president demanding that a book be immediately removed “from the curriculum of any of its courses” and “conduct a thorough review of the academic materials” used in its classes. But such is the demand that Israeli Minister of Diaspora Affairs and Combating Antisemitism has issued to President Christopher Eisgruber of Princeton University.

In recent days it has come to the attention of the national media in both the United States and Israel that an assistant professor in the Department of Near Eastern Studies at Princeton University is assigning a controversial book to students who will take a seminar at the university in the upcoming fall semester. The book in question is The Right to Maim by Rutgers University professor Jasbir Puar. The book is published by Duke University Press and is billed as an application of “Foucauldian biopolitics” to the Israeli-Palestinian conflict.

Critics see it a bit differently. Ronald Lauder of the World Jewish Congress called on Princeton to “cancel the course in question immediately” and “fire its professor” for fomenting “hate speech.” International Legal Forum CEO Arsen Ostrovsky characterized the book propagating “a modern-day antisemitic blood libel” and should be banned from the class in order to avoid creating “hostile and discriminatory environments for students, such as one that will inevitably be created as a result of the use such antisemitic and inflammatory material.” The university has yet to comment.

Unfortunately, the demand that students be protected from problematic books is an age-old one and is once again a live one in the United States. Such efforts to restrict access to disturbing books has most recently focused on primary and secondary education, where the state has an unusually strong hand in setting the approved curriculum and schools must grapple with how and when difficult subjects should be introduced to minor students. It should not be surprising, however, that such demands might make their way into universities as well.

Activists on both the left and the right have insisted that universities should be made into safe spaces where students can be sheltered from disturbing and offensive speakers, materials, and ideas. Professor Stephen Kershnar is still banned from setting foot on the SUNY-Fredonia campus because he talked about his book, Pedophilia and Adult Child Sex: A Philosophical Analysis, on a podcast. It is not hard to imagine a university barring professors from assigning that book in their classes. With universities trying to stay in the good graces of conservative state legislatures, some university presidents might be tempted to prohibit their faculties from assigning Kimberle Crenshaw or Ibram Kendi to their students. With the controversy at Hamline University and the attack on Salman Rushdie fresh in mind, might a university president think it a safer course to ban professors from assigning books visually depicting or satirizing the Prophet Muhammad? If Charles Murray can be shouted down, can a professor assign students to read The Bell Curve? The controversy surrounding this seminar at Princeton might well be a sign of things to come.

We have had this fight before. Some of the earliest fights over academic freedom in American universities involved university officials prohibiting professors from assigning controversial books in their classes.  In 1880, the New York Times breathlessly covered the battle between pioneering sociologist William Graham Sumner and Yale University President Noah Porter over a book assignment. Sumner had assigned Herbert Spencer’s The Study of Sociology in his class. Sumner and Spencer were leading “Social Darwinists” in the late nineteenth century, and Porter had strong views about the “so-called science” of sociology. Sumner threatened to resign over Porter’s “interference with my work,” and they eventually found a compromise. In the early twentieth century as state legislatures debated whether evolution could be taught in public schools, a dean at the University of Tennessee rescinded a professor’s book order and fired the professor for applying the theory of evolution to humans.

In response to such controversies, a fundamental demand of the emerging movement in favor of academic freedom in the United States was the insistence that university officials not interfere with how professors taught their classes. The 1940 Statement of Principles on Academic Freedom and Tenure endorsed by the American Association of University Professors and the Association of American Colleges laid out three core principles of academic freedom. One was that “teachers are entitled to freedom in the classroom in discussing their subject, but they should be careful not to introduce into their teaching controversial matter which has no relation to their subject.” That commitment has found its way into university policies across the country. We may well soon see whether the courts are also willing to recognize this as a First Amendment principle.

As a result, the right of university professors to assign their preferred books to a class without interference from university administrators is one of the fundamental features of academic freedom in the United States. The critical consideration from the university’s perspective is not whether an assigned book is controversial, hateful, or wrong, but whether it is germane to the class being taught. If a book is relevant to the subject matter, it is up to the professional judgment of the faculty member as to whether it should be used.

The professor might be wise or unwise in making such an assignment, and a professor might reasonably come in for public criticism for how they design or run their classes. But criticism must stop short of interference. If a work is relevant to the subject matter of the class, it does not matter whether others regard it as offensive or wrong. Students arriving at a university should expect that they will sometimes encounter readings and ideas that they regard as contemptible or erroneous.

The outrage surrounding the Princeton seminar is also entirely premature. Professors assign readings with which they disagree all the time. It is a routine feature of university classes to criticize and analyze controversial materials and not simply to absorb them uncritically. A professor may be justly criticized for behaving incompetently or unprofessionally if that professor attempts to present roundly rejected ideas as if they were widely accepted or tries to insulate controversial ideas from criticism. Professors should not attempt to indoctrinate or misinform students. But the mere fact that a professor assigns a controversial or mistaken text for undergraduate students to read is no reason to think that the professor is engaged in unprofessional misconduct.

It would be outrageous for a university president to unilaterally prohibit the assignment of any given book in a university class. Universities address bad ideas through discussion and debate, not through gag orders.

The post The Freedom to Assign Controversial Books appeared first on Reason.com.

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Can the State Regulate Content Moderation?

(This post is part of a five-part series on regulating online content moderation.)

Before we dream up policy recommendations for how the state might intervene when private content moderation runs amok, we should probably figure out whether the state can intervene at all. The First Amendment limits the power of governments to regulate online speech, either directly or indirectly by regulating intermediaries that host others’ speech. Since most online content constitutes speech, does the First Amendment completely bar the state from regulating in this space?

That indeed is the view most academics seem to take. In support of that view—let’s call it the “strong editorial rights” position—adherents often point to two cases. First, in Miami Herald v. Tornillo, the Court unanimously struck down a Florida law that required newspapers to print responses from political candidates who were criticized within their pages. Noting that a newspaper is more than a “passive receptacle for news, comment, and advertising,” the Court explained that the choice of what “material [should] go into a newspaper … constitute[s] the exercise of editorial control and judgment.” Interfering with that judgment, therefore, violated the First Amendment’s guarantee of a free press. Nor could it be assumed that newspapers retained their editorial judgment just because the right-of-reply statute required them merely to append a small amount of additional material. Since newspapers offer only a limited number of physical pages, printing mandatory rebuttals would “tak[e] up space that could be devoted to other material the newspaper may have preferred to print.” Let’s call this the “space constraints” principle.

Second, in Hurley v. Irish-Am. Gay, Lesbian & Bisexual Group, the Court held that private organizers could not be compelled to include groups or messages in a public parade that they disapproved of since doing so would alter the overall message the organizers wished to convey. Eugene refers to this as the “coherent speech product” doctrine. If an entity hosts or distributes a collection of third-party content that, together, conveys an overall theme or message, then that hosting or distribution itself becomes a speech act, and the entity becomes a speech participant. The state, therefore, cannot compel the entity to host or distribute additional content if doing so would alter the overall message the entity seeks to express.

The strong editorial rights camp believes that forced carriage laws aimed at social media companies are constitutionally infirm for the same reasons. Social media companies exercise “editorial control and judgment” in deciding which user content to allow and which content to remove. Moreover, in deciding to permit certain viewpoints on their platforms (e.g., “trans women are women”) while proscribing other viewpoints (e.g., “A man cannot get pregnant“), these companies are expressing an overall theme or message (e.g., trans pride or pro-LGBT sentiment) and are therefore creating a coherent speech product. Requiring them to permit trans-critical speech would effectively prevent them from communicating their preferred message and, thus, would violate their First Amendment rights.

By contrast, critics of the strong editorial rights position—let’s call them the “weak editorial rights” camp—believe that certain forms of forced carriage regulation may indeed be constitutional. It isn’t that these critics necessarily disagree with Tornillo or Hurley, but they aren’t convinced that those precedents apply to social media. Eugene’s article, Treating Social Media Platforms Like Common Carriers?, makes the skeptics’ case in far greater detail, so I’ll highlight just a couple distinctions here.

First, unlike a newspaper, which might be able to publish a mandatory rebuttal only by dropping another piece it would prefer to print, social media lacks any comparable space constraints. With the possible exception of spam or bot-generated content (which providers would presumably block for viewpoint-neutral reasons), laws requiring social media companies to host all lawfully expressed viewpoints would not force providers to make difficult decisions about which other posts to cut in order to make everything fit.

Second, because of their capacity to host an effectively infinite amount of user content, social media companies don’t appear to put out anything approximating a coherent speech product. Not only would it be impossible to view or consume the entire universe of user content made available on, say, Reddit in order to discern an overall theme or message, but it’s hard to argue that any overall theme or message currently exists on such platforms. Sure, providers may clearly prohibit certain viewpoints while permitting others, but does a collection of unrelated “can’t say this” rules communicate any particular message? While platforms could argue that they present overarching themes like “decency, “dignity,” or simply being on the “right side of history,” skeptics say such themes are far too diffuse to constitute a concrete message under Hurley.

The weak editorial rights camp also points to Pruneyard Shopping Center v. Robins, in which the Supreme Court upheld an interpretation of the California Constitution requiring shopping centers to allow members of the public to distribute leaflets and gather signatures on their property. Although a shopping center might have disagreed with the messages it was effectively forced to host, that disagreement did not constitute compelled speech for First Amendment purposes. Nor was the shopping center’s desire to provide a generically appealing environment for patrons (e.g., a non-political or family-friendly space) sufficiently concrete to constitute an overall message or speech act.

Likewise, in Turner Broad. Sys., Inc. v. FCC (“Turner II”), the Supreme Court upheld an FCC regulation requiring cable television providers to carry local broadcast television channels, even though such providers might not agree with the content of those channels. And in Rumsfeld v. FAIR, the Court found no First Amendment violation in the Solomon Amendment, which required universities to host military recruiters despite those universities’ moral objection to the military’s then-existing policy on homosexuals’ serving in the armed forces.

Taken together, and as cabined by Tornillo and Hurley, these cases can be said to stand for the proposition that the state can force a private company to carry third-party speech it dislikes as long as (1) the speech medium does not qualify as a coherent speech product, (2) the carried speech is not likely to be attributed to the regulated provider, and (3) the provider is not prevented from disavowing or distancing itself from the speech it is forced to carry. Given that today’s large social media platforms arguably meet each of these requirements, skeptics of the strong editorial rights position believe that the state could constitutionally compel such platforms to moderate user content in a viewpoint-neutral manner, perhaps even through laws like those enacted by Texas and Florida.

So, which side is right in this debate? Unfortunately, the current caselaw doesn’t unambiguously boil down to either position. Social media companies would seem to have some editorial interests in what content they choose to allow on their platforms (Tornillo) and might have some expressive interests in permitting only user speech that corresponds with their values (Hurley). But I agree with Eugene that these companies’ ad hoc, automated, and ex post removal of only a fraction of content that violates their acceptable use policies seems like a far cry from the kind of careful, ex ante curation that a newspaper or a parade organizer typically undertakes. Likewise, Pruneyard, Turner, and Rumsfeld do indeed establish that the state may sometimes require a provider to host another party’s speech. But I agree with Ashutosh Bhagwat that Pruneyard and Rumsfeld did not involve communications platforms, and although Turner did, the Court ultimately upheld the FCC regulations only after concluding that the regulated cable companies had certain editorial rights.

In the end, I think Jane Bambauer has the best take on the issue when she says that “there are no close analogies in First Amendment precedent for internet platforms.” Instead, “online platforms are their own free speech beast.” And even if there are decent arguments for applying the Pruneyard line of cases to social media, it seems more likely than not that the Court will ultimately side with the strong editorial rights camp if and when it reviews the Texas and Florida laws. Kavanaugh showed his hand when he argued that the FCC’s net neutrality rules violated ISPs’ First Amendment rights. And Breyer, who was famously warm to forced carriage, has yielded his seat to Jackson, who I think is unlikely to vote to allow red states to force social media companies to carry racist, sexist, or homophobic speech.

Fortunately, for my purposes, I don’t need to take a position on whether social media companies possess strong or weak editorial rights over their users’ content. When it comes to viewpoint foreclosure—the ability to boot a person, viewpoint, or group from the internet entirely—the entities that have the power to effect such a result operate in a very different space than social media companies or any other website operators, for that matter.

As I’ll explain in more detail in tomorrow’s post, viewpoint foreclosure can occur only when those entities that operate the internet’s core resources—the resources that make internet speech possible in the first place—start to delve into content moderation. Those resources include IP addresses, domain names, and the actual wires and airwaves that carry internet communications. Such providers operate at a far greater distance from actual expression on the internet, functioning more like phonebooks, telephone switches, and conduits. Neither courts nor the public are likely to attribute an internet troll’s racist screed to the operator of subsea cables that carry his packets across the ocean any more than they would attribute the views expressed in an Antifa pamphlet to the utility companies that provide water and electricity to the premises where the pamphlet was printed. And it would seem that the operator of the .com registry has as much editorial interest in suspending a domain name associated with a controversial website as AT&T has in revoking a phone number used by a pro-Israel (or pro-Palestine) interest group. Which is to say, not much.

Imposing forced carriage on the entities that operate the internet’s core functions would seem to satisfy both the strong editorial rights camp and the weak editorial rights camp. It would satisfy the weak rights camp because the greater includes the lesser. If the state can regulate websites like social media platforms, which operate close to actual user expression, then it can obviously regulate core intermediaries, which operate much further from that expression. And it would likely satisfy the strong rights camp because even those who take a broad view of editorial discretion draw a line when it comes to ISPs. Their embrace of net neutrality rules, which prevent ISPs from blocking access to websites or services they dislike, shows they don’t believe that editorial rights should extend to all communications media, especially not to those that operate as mere “passive receptacle[s].”

Thus, whether or not the state can regulate content moderation where most moderation happens—namely, on websites like social media platforms—the First Amendment likely doesn’t prevent the state from regulating “content moderation” at the hands of the internet’s core intermediaries. Administering foundational resources like IP addresses, domain names, and fiber lines seems far more akin to publishing a phonebook, providing a utility, or maintaining a pipe. And it’s hard to argue that providing a pipe constitutes a speech act.

The post Can the State Regulate Content Moderation? appeared first on Reason.com.

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US Home Prices Rose For 4th Straight Month In June, Case-Shiller Data Shows

US Home Prices Rose For 4th Straight Month In June, Case-Shiller Data Shows

After seeing their biggest rise in more than a year in May, home prices in America’s 20 largest cities rose once again in June, up 0.92% MoM (the latest Case-Shiller data released today). That is the 4th straight monthly increase in prices, but they remain down just over 1% YoY…

Source: Bloomberg

The Nation Home Price Index rose 0.65% MoM, but also remains down YoY (barely at -0.02%).

Chicago, Cleveland, and New York again led the way reporting the highest year-over-year gains among the 20 cities in June. On the other side of the scale, we note that Tampa just rolled negative and Miami is about to turn red YoY...

And judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline…

Source: Bloomberg

But, when selling volumes and inventory are so low, anything can happen. Certainly not the tamping-down of home unaffordability that The Fed would have been hoping for.

Tyler Durden
Tue, 08/29/2023 – 09:05

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Watch: Canadian Activists Demanding Return Of Mask Mandates Attack Counter Protester

Watch: Canadian Activists Demanding Return Of Mask Mandates Attack Counter Protester

The covid cult is still out there, desperate for a return to the days of lockdowns and restrictions and in Canada they appear to be highly militant.

  Mask mandates were perhaps one of the most egregious violations of science during the pandemic scare (though there were so many violations, that question is up for debate).  Government officials including Anthony Fauci in the US admitted in the early days of the crisis that masks would do little to save the public from transmission.  Suddenly, the narrative changed and masks became a hard requirement in many regions just to enter retail establishments to buy necessities.

Medical tyranny was upon us. 

Luckily, enough people in the US and Canada stood against the mandates and eventually disrupted the agenda.

As it turns out, according to multiple studies all common masks (including N95 masks) offer no significant protection against the covid virus. 

That’s right, the science says the masks are useless; they are nothing more than a placebo. 

We’ll say that again:  The masks are ineffective against covid.  This is a fact.  

Yet, activists in Canada are still demanding mandated masks, specifically in health facilities, after the government of British Columbia finally dropped the requirements.

Protesters gathered in front of Health Minister Adrian Dix’s MLA office in Vancouver Friday, calling for mask mandates to be brought back.

Protesters describe the event as an “expression of outrage,” ignoring the reality that their mindless fears conflict with the facts at hand, and are also irrelevant to individual freedoms.  What the above news broadcast conveniently cuts out is how the mask obsessives react when someone expresses a viewpoint contrary to theirs:

So, why continue to support the mask mandates to the point of violence? Because the masks became more than a safety tool.  They became a signal of ideological virtue, a uniform for the political left.  The masks were also a signal of submission to state controls, and for a period of a couple years maskers were like an army, an extension of state power, and they loved it.  They could easily identify their “enemies” merely by looking for a missing mask, thereby applying mob pressure to force those people to conform.  It doesn’t matter to them that the masks offer little-to-zero protection, that was not their true purpose anyway.

With the masking mandates gone from most of the west and covid exposed as an over-hyped illness with a tiny Infection Fatality Rate of 0.23%, leftists act as if they are floundering.  They got a taste of power and then it was taken away from them, and now they’re angry.  The lesson?  People who want power this badly should never have access to it.  Hysteria is food for fanatics.   

Tyler Durden
Tue, 08/29/2023 – 08:50

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’10 Best Days’: A Meme For Every Bull Market

’10 Best Days’: A Meme For Every Bull Market

Authored by Lance Roberts via Real;InvestmentAdvice.com,

About once a year, I have to address the issue of chasing the “10 Best Days” of the year. Visual Capitalist recently presented the analysis:

“There is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red. By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods. The graphic below shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.”

The financial media regurgitates this same analysis whenever there is a market correction.

“If an investor were to simply miss the 10 best days in the market, they would have shed over 50% of their end portfolio value. The investor would finish with a portfolio of only $29,708, compared to $64,844 if they had just stayed put.”

What is interesting is that this analysis is almost always the same. We addressed the same in March last year as the market stumbled following the Russian invasion of Ukraine.

Panic selling not only locks in losses but also puts investors at risk for missing the market’s best days.

Looking at data going back to 1930, Bank of America found that if an investor missed the S&P 500′s 10 best days in each  decade, total returns would be just 91%, significantly below the 14,962% return for investors who held steady through the downturns.” – Pippa Stevens via CNBC

However, as Paul Harvey used to quip, “In a moment…the rest of the story.”

Best Days Occur During Bear Markets

Here is the problem with the analysis. What about the losing days?

While those doing the analysis do mention the losing days, they dismiss the impact. Here is the “rest of the story” from Statista.

“Why is timing the market so hard? Often, the best days take place during bear markets. Over the last 20 years, seven of the 10 best days happened when the market was in bear market territory. Adding to this, many of the best days take place shortly after the worst days.“

Such was the same conclusion by Pippa Stevens’ in 2022.

“The firm noted this eye-popping stat while urging investors to ‘avoid panic selling,’ pointing out that the ‘best days generally follow the worst days for stocks.’” 

Think about that for a moment.

“The best days generally follow the worst days.“

The statement is correct, as the S&P 500’s largest percentage gain days tend to occur in clusters during the worst of times for investors.

The analysis of “missing out on the 10-best days” of the market is steeped in the myth of the benefits of “buy and hold” investing. (Read more: The Definitive Guide For Investing.) As a strategy, buy and hold works great in a long-term rising bull market.

However, “buy and hold” generally fails as a strategy during a bear market for a straightforward reason: Psychology.

I agree investors should never “panic sell,” as such “emotional” decisions are always made at the worst possible times. As Dalbar regularly points out, individuals always underperform the benchmark index over time by allowing “behaviors” to interfere with their investment discipline.

In other words, investors regularly suffer from the “buy high/sell low” syndrome.

This is why investors should follow an investment discipline or strategy that mitigates volatility to avoid being put into a situation where “panic selling” becomes an issue.

Let me be clear. An investment discipline does NOT guarantee your portfolio against losses if the market declines. This is particularly true when it plummets, as seen in 2008. However, a solid investment discipline will work to minimize the damage to a recoverable state.

Avoiding The Worst Days Is A Better Endeavor

So, if the best days occur during the worst periods for the market, does it not become more logical to focus on avoiding those periods? While missing the “10-Best Days” of the market certainly does impair portfolio performance over time, what about missing the “10-Worst Days?”

How important is this? Over an investing period of about 40 years, missing the “10 Best Days” would cost you about 50% of your capital gains. But successfully avoiding the “10-Worst Days” would have led to 2.5x the gains over “buy and hold.”

Avoiding significant drawdowns in the market is critical to long-term investment success. Obviously, if you are not spending the bulk of your time making up previous losses, more time is spent compounding invested dollars towards long-term goals.

Brett Arends once penned:

“In other words, it’s something of a wash. The cost of being in the market just before a crash, are at least as great as being out of the market just before a big jump, and may be greater. Funny how the finance industry doesn’t bother to tell you that.”

The finance industry doesn’t tell you the other half of the story because it is NOT PROFITABLE for them. The finance industry makes money when you are invested, not in cash.

However, you DO have options.

A Simple Method

Let me take a moment to be very clear.

“I do not strictly endorse ‘market timing,’ which is specifically being ‘all-in’ or ‘all-out’ of the market at any given time. The problem with market timing is consistency.”

This is a critical point. No one, and I do mean no one, including A.I., can effectively time the market over the long term. Being all in or out of the market will eventually put you on the wrong side of the “trade.” Such then leads to a host of other problems.

Furthermore, ask yourself why no “great investors” in history employed “buy and hold” as an investment strategy. Even the great Warren Buffett occasionally sells investments. True investors will buy when they see value and sell when value no longer exists.

There are many sophisticated methods of handling risk within a portfolio. However, even using a basic price analysis method, such as a moving average crossover, can be a valuable tool over long-term holding periods. Will such a method ALWAYS be right? Absolutely not. However, can such a method reduce the risk of damaging capital losses? Absolutely.

The chart below shows a simple 18-month moving average crossover study. (via Portfolio Visualizer)

What should be obvious is that using a basic form of price movement analysis can provide a practical identification of periods when portfolio risk should be REDUCED. Importantly, I did not say risk should be eliminated, just reduced. 

Here are the comparative results. Notice the “Max Drawdown” column.

Again, I do not suggest that such signals mean going 100% to cash. 

What I am suggesting is that when “sell signals” are given, that is the time when individuals should perform some essential portfolio risk management such as:

  • Trim back winning positions to original portfolio weights: Investment Rule: Let Winners Run

  • Sell positions that are not working (if the position was not working in a rising market, it likely won’t be in a declining market.) Investment Rule: Cut Losers Short

  • Hold the cash raised from these activities until the next buying opportunity occurs. Investment Rule: Buy Low

Using some measures, fundamental or technical, to reduce portfolio risk by taking profits as prices/valuations rise, or vice versa, the long-term results of avoiding periods of severe capital loss will outweigh missed short-term gains.

Minor adjustments can have a significant impact over the long run.

There is little point in trying to catch each twist and turn of the market. But that also doesn’t mean you must be passive and let it wash all over you. It may not be possible to “time” the market, but it is possible to reach intelligent conclusions about whether the market offers good value for investors.

You do have a choice.

Tyler Durden
Tue, 08/29/2023 – 08:30

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Futures Flat Ahead Of Data Dumpfest

Futures Flat Ahead Of Data Dumpfest

US stock futures erased gains of as much as 0.3% following another parade of modest China stimuli as investors monitored the outlook for interest rates ahead of key inflation and jobs data later this week, with the Federal Reserve’s data dependence in firmly mind. Contracts on the Nasdaq 100 and S&P 500 traded flat by 7:30 a.m. in New York after gaining as much as 0.4% and 0.3%, respectively. In Europe, the Stoxx 600 rises for a second day while Asian stocks closed at the highest level in two weeks, as Chinese equities extended their gains following the country’s market-boosting measures. A fall in Treasury yields also helped sentiment. Treasury yields and the dollar were steady; the USDJPY rose to 146.97, the highest level since November, and a red line for imminent BOJ intervention.

In premarket trading, retailer Best Buy climbed 3.3% ahead of its second-quarter earnings report, while Verizon and AT&T rose after Citigroup upgraded the stocks to buy, saying it sees a more constructive investment case for large-cap telecommunications firms. Here are some other notable premarket movers:

  • BigBear.ai Holdings Inc. climbs 2.9% after HC Wainwright & Co LLC started coverage on the application software company with a buy rating and $4 price target.
  • Emergent BioSolutions slips 2% after Benchmark Company LLC downgraded it to hold from buy, with the analyst citing restructuring plans that are expected to “slow share price rebound.”
  • Jackson Financial rises as much as 7.8% after S&P Dow Jones said the stock is set to join S&P SmallCap 600 index prior to the opening of trading on Sept. 1.
  • Nio falls as much as 3.8% after the Chinese electric-vehicle maker reported bigger-than-expected losses in 2Q as competition heated up. Vehicle sales and margins also missed estimates, while guidance for 3Q deliveries was ahead.
  • Noco-Noco rises as much as 90%, on track to recoup some of its Monday losses when it slid 53% after the Japanese advanced electric battery technology company made its debut on the Nasdaq.
  • PDD Holdings shares surge as much as 13% after the Chinese e-commerce company reported quarterly revenue and earnings well above estimates. Operating and marketing expenses were higher than expected as the company competes with rivals over pricing at home and abroad.
  • Verizon and AT&T rise as Citi upgrades to buy, saying it sees a more constructive investment case for large-cap telecommunications firms.

Despite modest gains so far in the final week of August, global stocks are on track for their worst month in almost a year as policy makers remain determined to stifle inflation. Economic reports are assuming even more importance than usual after Federal Reserve Chair Jerome Powell reiterated at Jackson Hole last week that the central bank is ready to raise rates further if the data suggests that is appropriate.

“August has been a challenging month for markets, with investor sentiment cautiously picking up again,” said Victoria Scholar, head of investment at Interactive Investor. “Focus will be on key economic data from the US this week, with hopes that this will fuel expectations that the economy stateside is heading for a soft landing.”

While it’s a bumper week for data releases, including payrolls and GDP, today traders will be monitoring the latest job openings and US consumer confidence data. Other reports this week include US employment growth, the core PCE deflator and August’s payrolls and wages data. Euro-area inflation readings will be in focus this week as well.

Miners led an advance in the Stoxx Europe 600 index after China signaled further measures to support its economy. NN Group NV jumped as much as 11% after the financial-services company reported results that beat analysts’ expectations. European bonds gained, with the German 10-year yield falling three basis points to 2.54%. UK stocks outperformed when they reopened after Monday’s holiday. Here are the biggest European movers:

  • NN Group surges as much as 11%, the most since March 2020, after the Dutch insurance and investment management firm delivered results that analysts say were ahead of expectations
  • Bunzl shares rise as much as 4.8% after the UK distribution and business services company reported a stronger-than-expected margin performance and raised its full-year guidance
  • Vestas climbs as much as 3.3% after Nordea raised the the wind-turbine-maker’s recommendation to buy, citing easing headwinds, flattening inflation, stabilizing supply chains and higher US orders
  • Heineken rises as much as 2.1% as JPMorgan upgrades the Dutch brewer to overweight from neutral. Share price weakness post first-half results presents an attractive entry point, the broker says
  • Britvic shares gain as much as 4%, the most since Nov. 23, after Barclays upgraded its rating on the UK soft-drinks maker to overweight citing multiple top-line and earnings growth drivers
  • Zurich Airport rises as much as 3.1% after the Swiss airport operator reported Ebitda for 1H that beat the average analyst estimate. ZKB says the company benefited from a “true travel boom”
  • Telecom Italia gains as much as 3% after Italy approved a decree which empowers it to take a stake in the phone company’s network business of as much as a 20%
  • NHOA fell as much as 23%, the most on record, after the French maker of renewable-energy equipment launched a €250m capital increase with shareholders’ preferential subscription rights

Earlier in the session, Asian stocks rose 0.8%, climbing for the second day to the highest level in two weeks, as Chinese equities extended their gains following the country’s market-boosting measures. The Hang Seng Index extended its increase into a second day and China’s stocks outperformed, with the Hang Seng China Enterprises Index rising more than 2%. Chinese internet firms Tencent and Alibaba provided the biggest support to the gauge, with a measure of tech firms listed in Hong Kong rising as much as 3%.

In its latest stimulus step, China is poised to cut interest rates on trillions of yuan of outstanding home mortgages for the first time since the global financial crisis, as policymakers dig deeper into their toolkit to shore up growth in the world’s second-largest economy.

“If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from ‘too little, too late’ to a more confident stance as policymakers regain credibility,” UBS Global Wealth Management strategists including Solita Marcelli and Mark Haefele wrote in a note.

In rates, Treasury futures were lower in early US session, paring small gains amassed during Asia session and London morning. US 10-year yield around 4.22%, 2bps cheaper on the day, outperforming gilts in the sector while trailing bunds, stronger following German 5-year note auction. The week’s coupon auction cycle concludes with $36b 7-year note sale, following decent demand for Monday’s 2- and 5-year notes.

In FX, the Bloomberg Dollar Spot Index rose to 1244, strengthening against EUR, GBP and CHF, and especially the yen, with the USDJPY surging above 147 for the first time since Nov 2022 and guaranteeing that a BOJ intervention is now inevitable. Meanwhile looking at the BBDXY, Sean Callow, strategist at Westpac Banking said that a move in the index toward 1250 “is still achievable over multi-days or week, but will probably require substantial upside surprises on both NFP and CPI.” The British pound edged higher after the slowest increase in grocery bills in almost a year drove down inflation in shops in August, relieving some of the pressure on the Bank of England to keep raising interest rate hikes.

In commodities, oil climbed toward $81 per barrel as traders waited for the next set of clues on the outlook for crude demand in the US and China. Gold was little changed.

Looking at today’s calendar,  we get the August Conference Board consumer confidence read (116.0 survey vs. 117.0 prior), July’s JOLTS job openings (exp. down to 9.5MM from 9.588MM), and the June FHFA house price index; FDIC will propose new guideline for regional banks today; 7yr auction at 1pm.

Market Snapshot

  • S&P 500 futures little changed at 4,442.25
  • STOXX Europe 600 up 0.6% to 458.20
  • MXAP up 0.7% to 160.84
  • MXAPJ up 1.0% to 506.27
  • Nikkei up 0.2% to 32,226.97
  • Topix up 0.2% to 2,303.41
  • Hang Seng Index up 1.9% to 18,484.03
  • Shanghai Composite up 1.2% to 3,135.89
  • Sensex up 0.2% to 65,106.00
  • Australia S&P/ASX 200 up 0.7% to 7,210.46
  • Kospi up 0.3% to 2,552.16
  • German 10Y yield little changed at 2.54%
  • Euro little changed at $1.0811
  • Brent Futures up 0.3% to $84.68/bbl
  • Gold spot up 0.1% to $1,922.94
  • US Dollar Index little changed at 104.05

Top Overnight News

  • Japan may be at an inflection point in its 25-year battle with deflation as price and wage rises show signs of broadening, the government said on Tuesday, signaling its conviction the economy was nearing an end to prolonged stagnation. RTRS
  • Toyota will halt all 14 plants in Japan tonight due to a systems problem, though it doesn’t suspect a cyberattack. It’s not clear when operations will resume. BBG
  • Hong Kong’s lived-in home prices declined for a third straight month in July to a six-month low, reflecting the prevailing sentiment in the city’s property market amid an elevated interest-rate environment. Prices fell 1.1% month on month in July, the biggest drop this year. The widely watched gauge slipped to 343.4 from 347.3 in June, the lowest level since 346.8 in February. SCMP
  • China’s biggest state-owned banks are considering lowering deposit rates for at least the third time in a year, according to people familiar with the matter, as they ramp up efforts to boost the economy and protect margins. BBG
  • The slowest increase in grocery bills in almost a year drove down inflation in British shops in August, relieving some of the pressure on the BOE to keep raising interest rates. The British Retail Consortium said that shop price inflation fell sharply again to 6.9% in August from 7.6% the month before. Food price led the decline, particularly for meat, potatoes and cooking oils. BBG
  • AI technology is actually quite labor-intensive, relying on an army of workers scrubbing the data on which models are being trained. Washington Post
  • Today the FDIC will vote on five separate proposals at a meeting, all aimed at ensuring banks with over $100 billion in assets are prepared for their own potential failures, and can be taken apart smoothly and quickly. RTRS
  • The Biden administration and its European allies are laying plans for long-term military assistance to Ukraine to ensure Russia won’t be able to win on the battlefield and persuade the Kremlin that Western support for Kyiv won’t waver. WSJ
  • Homeowners are increasingly forgoing home insurance, gambling that the likelihood of a disaster isn’t high enough to justify the cost of a policy. Some skipping insurance say they are doing so because they can no longer afford the rising premiums. The national average for home insurance based on $250,000 in dwelling coverage increased this year to $1,428 annually, up 20% from 2022, according to Bankrate. WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with an upward bias following the positive lead from Wall Street, with little in terms of fresh catalysts to dictate price action heading into month-end. ASX 200 was supported by its gold, mining, and materials sectors but with the gains modest intraday, with the upside hampered by the index’s IT and Healthcare sectors. Nikkei 225 was caged after opening higher, with the index supported by its machinery sector, while Toyota shares waned after reports it is to suspend operations at all of its 14 Japanese assembly plants amid system failures. Hang Seng and Shanghai Comp saw another session in the green, with the gains in the former more pronounced as index heavyweights are again buoyed by the recent stock support measures.

Top Asian News

  • Chinese State media reports PBoC may cut banks’ RRR earlier than expected to maintain reasonable ample liquidity, according to reports.
  • Chinese banks are considering additional deposit rate cuts to boost growth, according to Bloomberg; Major lenders could lower rates across key tenors by 5-20bps, the plan has been signed off by regulators and the cut could come as soon as Friday.
  • China to cut rates on existing mortgages as soon as today, via Bloomberg.
  • PBoC sold CNY 385bln via 7-day reverse repos with the rate at 1.80% for a CNY 274bln net injection.
  • South Korea plans government spending of KRW 656.9tln (+2.8% from 2023); and sees debt-to-GDP ratio at 51% in 2024 (vs 50.4% in 2023), according to the Finance Ministry.
  • Xiaomi (1810 HK) Q2 (CNY): Revenue 67.35bln (exp. 65.84bln), Net 5.14bln (prev. 2.08bln). Smartphone revenue 36.6bln. Will not declare an interim dividend for 6 months.
  • Fitch affirms New Zealand at “AA+”; outlook Stable

European bourses are in the green, Euro Stoxx 50 +0.4%, after a constructive open with catalysts light at the time. Following the open, both cash and futures pared some of this move before reverting back towards initial bests on subsequent Chinese source reports. FTSE 100 +1.5% outperforms as it plays catch up to gains elsewhere on Monday’s UK Bank Holiday. As mentioned, sentiment saw some modest upside on the sources with ADRs for Chinese stocks seeing upside. Within Europe, sectors are all in the green featuring outperformance in Basic Resources given benchmark and above factors, Real Estate is firmer after pressure in Monday’s session while Tech has made its way into the green despite initial marginal pressure. Stateside, futures are in the green though only modestly so with the ES and NQ posting gains of circa. +0.1%; upside which began before the Chinese rate reports, but has picked up further since those aired. Agricultural Bank of China (1288 HK) – H1 (CNY): net profit 133.234bln vs. prev. 128.945bln, net interest income 290.421bln vs. prev. 300.219bln, NIM 1.66%

Top European News

  • Riksbank’s Bunge says prices are still rising much too fast, right now it looks like the fight against inflation is not over yet. Says the Swedish Crown is undervalued.

FX

  • DXY continues to rotate around 104.000 as demand for month-end rebalancing counters softer rates and renewed risk appetite.
  • Aussie and Kiwi marginally outperform on 0.6400 and 0.5900 handles against the Buck respectively.
  • Yen off worst levels vs. Dollar, but still vulnerable within a 146.60-32 range after an unexpected rise in Japanese unemployment.
  • Euro wanes against Greenback and eyes big expiry at 1.0800 plus 200 DMA for support.
  • The Yuan saw some two-way action before coming under pressure on source reports that Chinese banks are considering additional deposit rate cuts to support growth, subsequent reports saw some of this briefly pare-back.
  • PBoC set USD/CNY mid-point at 7.1851 vs exp. 7.2854 (prev. 7.1856)
  • RBA’s Bullock says the impact of climate change on the neutral interest rate is not clear cut; could put upward and downward pressure on the neutral rate. Inflation is still too high, and that will be my first priority as Governor.

Fixed Income

  • Debt futures pare gains after extending to the upside in early EU trade awaiting a relatively busy PM agenda.
  • Bunds retain bid tone within 132.48-13 range amidst decent Bobl sale and demand for 2053 German tap.
  • Gilts pullback further between 94.79-24 parameters after return from 3-day UK weekend.
  • T-note holding middle ground within 109-28+/21+ bounds.

Commodities

  • WTI and Brent Oct’23 are at the top-end of USD 79.79-80.75/bbl and USD 84.11-85.11/bbl parameters. The respective peaks printed following Bloomberg source reports with support via the bullish catalysts of Hurricane Idalia as it continues to intensify as it enters the Gulf.
  • Dutch TTF pulls back modestly after Monday’s pronounced strike-notice-driven gains, developments since have detailed the potential action workers will take from the 7th.
  • Spot gold is in narrow bounds but just about retains a positive bias as the USD picks up, while base metals were already gleaning support from the firmer APAC handover but have extended since.
  • NHC says Idalia is now a hurricane and is expected to rapidly intensify into an extremely dangerous major hurricane before making landfall on Wednesday.
  • Australian union said workers at Chevron’s (CVX) LNG facilities to participate in rolling stoppages, bans and limitations; Industrial action will escalate each week until Chevron agrees to bargaining claims, according to Reuters. Workers at Chevron’s Australian LNG facilities plan work stoppages of as long as ten hours from next week, according to Reuters
  • Chilean copper miner Codelco makes further staff cuts, according to a statement cited by Reuters.
  • Australian Agriculture Minister said the first shipment of Australian barley has been dispatched to China, according to Reuters.
  • Ukraine’s First Deputy Agriculture Minister says Ukraine’s winter wheat sowing area will likely remain unchanged despite the export crisis, according to Reuters.

Geopolitics

  • North Korean Leader Kim says the US has turned waters near the Korean Peninsula into the most unstable region with the danger of nuclear war, reported via KCNA. Will deliver new weapons to military units under the policy of expanding tactical nuclear weapons operations.
  • US President Biden is to meet with Brazilian President Lula on September 19th, according to Reuters.
  • Veteran US diplomat Mark Lambert likely to be named as Assistant Secretary for China and Taiwan, according to Reuters sources; appointment unlikely to change US’ China stance.
  • Taiwan’s Defence Ministry says 12 Chinese military craft entered the ADIZ on Tuesday, seven craft crossed the median line.

US Event Calendar

  • 09:00: June S&P/Case-Shiller US HPI YoY, prior -0.46%
    • 2Q House Price Purchase Index QoQ, prior 0.5%
    • June FHFA House Price Index MoM, est. 0.6%, prior 0.7%
    • June S&P/CS 20 City MoM SA, est. 0.80%, prior 0.99%
    • June S&P CS Composite-20 YoY, est. -1.60%, prior -1.70%
  • 10:00: July JOLTs Job Openings, est. 9.5m, prior 9.58m
  • 10:00: Aug. Conf. Board Consumer Confidence, est. 116.0, prior 117.0
    • Aug. Conf. Board Present Situation, prior 160.0
    • Aug. Conf. Board Expectations, prior 88.3
    • Aug. Dallas Fed Services Activity, prior -4.2

DB’s Jim Reid concludes the overnight wrap

As the UK returns from the holiday weekend, it’s clear that markets have taken last week’s speeches at Jackson Hole in their stride. That will come as a relief to many, since last year saw the S&P 500 plunge -3.37% on the day of Powell’s hawkish remarks, and we also had a relentless bond selloff that continued into late-October. But this time around, the S&P 500 has advanced on Friday (+0.67%) and again yesterday (+0.63%), just as yields on 10yr Treasuries have kept falling after last week’s highs to trade at 4.19% this morning.

In several respects, Powell’s speech on Friday had quite a few hawkish lines in it. For instance, he reiterated that inflation “remains too high”, and that the Fed was “prepared to raise rates further if appropriate”. He also said that they would be keeping policy “at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.” But on the dovish side, he also acknowledged that inflation had moved lower, and pointed out that there was uncertainty about monetary policy lags. Indeed, Powell said that “there may be significant further drag in the pipeline” from those lags, and he weighed up that there were risks from tightening too little and tightening too much. So it was quite a different tone to last year, when it was abundantly clear that Powell’s message was that the Fed wasn’t about to let-up on inflation.

The most obvious takeaway from this year’s speech is that markets now consider another hike this year as increasingly likely, with futures pricing in a 67% chance of a hike by November. That’s been reflected in front-end yields, with the 2yr Treasury yield closing at a post-2007 high of 5.08% on Friday. Furthermore, the 3m T-bill yield rose to another post-2001 high yesterday of 5.484%. In the meantime, the recent pattern of rate cuts being pushed into the future has continued, and the first full 25bp cut now isn’t priced in until the June 2024 meeting.

Over at the ECB, the debate is also continuing about whether there’ll be another hike at their meeting in two weeks’ time. Currently, markets are considering the decision to be finely balanced, with a 42% chance of a move priced in. This is up from 34% on Friday, as markets took a slightly hawkish interpretation to the lack of a reaction in ECB commentary to last week’s underwhelming PMIs. In her own speech at Jackson Hole, President Lagarde avoided giving a clear signal as well, focusing instead on structural shifts such as changing labour markets, geopolitical divisions and the energy transition. Meanwhile, yesterday saw Austria’s Holzmann push for another hike next month, saying that if “there aren’t any big surprises, I see a case for pushing on with rate increases without taking a pause.”

Looking forward, the question of whether we get more hikes will partly be determined by this week’s data, with several important releases coming up. In the US, the main highlight will be the jobs report on Friday, where our US economists expect nonfarm payrolls to have slowed further to +150k in August. That would be the slowest growth since December 2020, and they see that pushing the unemployment rate up a tenth to 3.6%. One category we’ve been following closely is Temporary Help Services, because that has traditionally been a strong leading indicator in previous cycles, turning down ahead of the overall number. It’s fallen for 6 months in a row now, so one to keep an eye on.

Staying on the US, an important release today will be the JOLTS report for July, which has been closely followed by the Fed to see if the tightness in the labour market is easing. Recent months have seen job openings come down to a 2-year low, albeit to a point that’s still well above pre-pandemic levels. The quits rate will also be an important measure in that release as well, since that’s strongly correlated with wage growth. Otherwise this week, look out for the July PCE inflation report on Thursday, which is the Fed’s preferred measure, along with the ISM manufacturing report for August on Friday, which will be out 90 minutes after the jobs report.

Over in the Euro Area, the main focus will be the flash CPI reading for August, which is out on Thursday. Our European economists see the headline print coming in at +5.5% year-on-year, up two-tenths from July, and they see core inflation at +5.4%. So both headline and core would still be more than twice the ECB’s 2% target, hence there’s still pressure for further rate hikes. Tomorrow we should get an initial indication of where the number might be from the country releases in Germany and Spain. At the same time, we found out yesterday that the Euro Area M3 money supply had seen an annual contraction for the first time since 2010, with a -0.4% year-on-year decline in June. So a fresh sign of how the ECB’s rapid monetary tightening is having an effect.

With all that to look forward to, markets put in a solid performance yesterday, with both the S&P 500 (+0.63%) and Europe’s STOXX 600 (+0.89%) posting steady gains. This makes it the first time in August that the S&P 500 managed to post two consecutive rises (after +0.67% on Friday). It was a similar story for sovereign bonds as well, with yields on 10yr Treasuries coming down -3.3bps to 4.20%. Yields on 10yr bunds were virtually unchanged at +0.2bps, while OAT (-0.4bps) and BTP (-1.9bps) yields saw a slight decline.

That positive mood has continued overnight in Asia, with solid gains for the major indices. Since we weren’t around yesterday, it’s worth mentioning that China announced on Sunday that there would be a cut in the stamp duty on stock trades from 0.1% to 0.05%. That helped trigger an initial surge in the CSI 300 of +5.46% on Monday, although the index pared back those gains through the session to only close up +1.17%. And this morning those gains have continued, with the CSI 300 up another +1.45%.

Other indices across the region seen a consistently positive performance this morning as well, with gains for the Hang Seng (+2.02%), the Shanghai Comp (+1.39%), the Nikkei (+0.31%) and the KOSPI (+0.22%). That’s extended to the US, where futures on the S&P 500 are up another +0.08% this morning. The main negative signal overnight has come from Japan, where the unemployment rate unexpectedly rose to 2.7% in July (vs. 2.5% expected), whilst the jobs-to-applicants ratio slipped further to 1.29.

Tyler Durden
Tue, 08/29/2023 – 08:14

via ZeroHedge News https://ift.tt/lS3EB2L Tyler Durden

Race Discrimination/Harassment Lawsuit Against Seattle Related to Its “Race and Social Justice Initiative” …

From yesterday’s decision by Judge Jamal Whitehead (W.D. Wash.) in Diemert v. City of Seattle:

This is an employment case, in which Plaintiff Joshua Diemert alleges that Defendant City of Seattle, his former employer, discriminated against him and subjected him to a racially hostile-work environment because he is white. Diemert alleges the City retaliated against him when he complained about the way that he was treated, and that when he could no longer take it, he was forced to resign….

The Court accepts all facts as true from the complaint and construes them in the light most favorable to Diemert [as is required in considering a motion to dismiss]….

Diemert began working as a program intake representative for the City of Seattle, Human Services Department (“HSD”) in January 2013. Although he does not describe his racial background in the complaint, Diemert alleges the City classified him as white. He claims his race became an “albatross around his neck” as a “deliberate outgrowth of the City’s Race and Social Justice Initiative (‘RSJI’).” In effect since 2005, RSJI is a city-wide program that requires race-based thinking and decision-making, which “is based on the foundational premise that American society has ‘internalized and normalized’ culture and practices that are ‘rooted in white supremacy, colonialism, classism, Christian hegemony, sexism, heterosexism, physical ableism, [and] mental health oppression[.]”

Diemert attended mandatory RSJI trainings. He alleges RSJI applied differently to City employees depending on their racial identity, and that it divided employes into two groups: “Black, Indigenous and People of Color (BIPOC),” on the one hand, and “white folks,” on the other. Diemert alleges he experienced severe discrimination and harassment because of the City’s pervasive focus on race and “supposed ‘white supremacy,'” and that he was consistently treated worse than his BIPOC colleagues.

Diemert alleges he experienced disparate and hostile treatment during his employment until he was forced to resign in September 2021. For example, starting in August 2015, a Youth and Family Empowerment Division Manager, allegedly asked Diemert, “What could a straight white male possibly offer our department?” In 2016, a Director-level employee told Diemert it was “impossible to be racist toward ‘white people.'” Another Director-level employee repeated a similar sentiment during a mandatory RSJI training, and added that all white people have white privilege and are racist.

Also in 2016, Diemert claims he received no support from his supervisors while serving in a “lead” position within his department. When Diemert reported his concerns to his supervisor, he alleges she told him he should step down and that he used his white privilege to retain the position and that he was denying a person of color an opportunity for promotion. Diemert alleges he was coerced to resign his lead position and returned to working as a program intake representative.

In 2017, Diemert’s coworker called him privileged and labeled him racist, also calling his words “violence” and an invasion of her “safe space.”

At some point after he stepped down from the lead position, Diemert alleges Shamsu Said became his supervisor or “team lead.” In October 2019, Diemert alleges Said misused his authority by “being aware that his sister was ineligible for [a] program, submitting the application on her behalf, and being directly involved in the business[.]”Diemert reported Said to the Mayor’s Officer Operations Manager. On February 19, 2020, Diemert alleges Said “chest bumped” him, got in his face, and told Diemert he had white privilege and racist motives. Diemert informed the Ethics Department about his altercation with Said, causing the City to move Said “a few feet away from [Diemert’s] workstation.”

Diemert alleges the City required he attend trainings in which he and the other attendees played “privilege” bingo. In 2019, Diemert also allegedly attended an “Undoing Institutional Racism” workshop hosted by El Centro De La Raza, in which the facilitators allegedly stated, “white people are like the devil,” “racism is in white people’s DNA,” and “white people are cannibals.” In June 2020, the Office of Civil Rights invited Diemert to attend a training on Internalized Racial Superiority “specifically targeted for white employees.” Defendant allegedly promoted “race-specific ‘affinity groups’ or ‘caucuses'” where “people of color and white people … meet separately in order to do … different work.”

In 2020, Diemert’s supervisor allegedly told him that his coworkers were calling him racist and hateful. At one point, Diemert witnessed a group of employees discussing white privilege and joined their conversation. The members of the group allegedly told Diemert, because he is white, he did not have the right to speak about oppression faced by Black people and, in doing so, he discredited their lived experience.

On December 23, 2020, Diemert filed a charge with the U.S. Equal Employment Opportunity Commission (EEOC). Diemert amended this charge to include retaliation on January 16, 2023. Diemert also filed an additional EEOC charge on June 30, 2022, for discrimination he allegedly experienced between December 23, 2020, and September 7, 2021.

Diemert claims that filing these charges led to harassment. In January 2021, Diemert inquired why the inbox for public emails was not being checked. In response, one of his supervisor’s allegedly sent an email asking, “how many applications does [Diemert] have sitting in the drawer … what is the oldest date of his applications and delays?” The same supervisor also cancelled most of her regularly scheduled meetings with Diemert in 2021 even though she continued to meet with other employees. Diemert alleges that, because he could not meet with his supervisor, he did not receive approval to use Adobe PDF software even though “it was crucial for his day-to-day work.” The same year, Diemert “experienced issues with an [Family Medical Leave Act (FMLA)] request” and Human Resources gave him incorrect instructions on how to correct his medical certification. In August 2021, because of staffing shortages, the City allegedly told Diemert it could no longer accommodate his request to work from home. Diemert believed employees of color were given priority to telework, and he resigned in September 2021.

Diemert sued, and the court allowed Diemert’s case to go forward, generally denying the city’s motion to dismiss (except as to “discrete acts occurring before February 27, 2020,” as to which the court held the statute of limitations had run).

Diemert alleges enough facts to state a plausible claim for a hostile-work environment based on race.

Diemert alleges the City subjected him to a hostile-work environment because of his race. To succeed on this claim, Diemert must show (1) that he was “subjected to verbal or physical conduct because of [his] race,” (2) that the conduct was “unwelcome,” and (3) that “the conduct was sufficiently severe or pervasive to alter the conditions of [his] employment and create an abusive work environment.” “‘The working environment must both subjectively and objectively be perceived as abusive.'” …

The City argues that Diemert cannot establish a hostile-work environment claim based on the RSJI because the program is aimed at educating the City’s workforce about “historical atrocities, systemic bias, and white privilege,” as opposed to a targeted campaign of harassment against Diemert in particular. The City frames its argument as a question of law, but offers no legal authority in support of its position. And given the standard of review, it would be inappropriate for the Court to consider any evidence outside the complaint about the operation and purposes of the RSJI to round out the record. The Court need not confront the issue at this time, however, because the City frames Diemert’s alleged hostile-work environment claim too narrowly.

Here, it is clear on the face of Diemert’s complaint that, beyond any problems he may have had with the RSJI, he alleges his co-workers and supervisors verbally and physically assaulted him because of his race. And that he was the target of potentially offensive comments and other abusive actions, also because of his race. Diemert alleges this conduct was unwelcome, and he has pleaded sufficient factual allegations showing a pattern of race-based harassment of a repeated, routine, or generalized nature that affected his ability to do his job. Whether there is any merit to his claims is an inquiry for another day, but for now, he has stated a plausible claim for a hostile- work environment based on race under Title VII and the WLAD [the Washington Law Against Discrimination].

Diemert alleges enough facts to state a plausible claim for disparate treatment based on race.

… Diemert claims he experienced “a series of adverse employment actions,” including:

[L]ess favorable treatment in work/project assignments, hours, and promotions; failure to address his genuine concerns; creating a confidential file about him; subjecting him to increased scrutiny; interfering with his FMLA rights; coercing him into stepping down out of a lead position because of his race; denying him back pay for out-of-class work but requiring him to complete this type of work anyway; and forcing him to continue reporting to the supervisor that had physically accosted him.

The Court finds that Diemert has alleged sufficient facts, which must be taken as true at this early screening stage of the case, to show that he plausibly suffered an adverse employment action; that is, the treatment he experienced at work constituted a material change in the terms and conditions of his employment.

Moreover, as explained above, Diemert has stated a plausible hostile-work environment claim. A constructive discharge may result where, as Diemert has alleged, a workplace becomes so hostile and intolerable that a reasonable person in the employee’s position would feel compelled to resign. Deciding whether the alleged hostile-work environment Diemert faced was so egregious that it forced him to quit is beyond the scope of the Court’s inquiry on the City’s Rule 12(b)(6) motion, but based on the facts asserted, Diemert has stated a plausible constructive discharge claim….

Diemert has stated an Equal Protection claim based on the City’s Rase-Based Affinity Groups.

Diemert alleges the City violated the Fourteenth Amendment Equal Protection clause when it subjected him to “intentionally segregated staff meetings by race … [and] promoted affinity groups.” … As alleged in the complaint, the RSJI—the City’s official policy—promoted caucuses through which white people and people of color would “meet separately in order to do [their] different work.”

In June 2020, a coworker allegedly invited Diemert to join an Office of Civil Rights training on Internalized Racial Superiority, “a training for white people[.]” Participation is voluntary—Diemert elected not to attend the available meetings. Diemert alleges that he tried to “sign up for a training reserved only for people of color,” but he was harassed and advised that he should not sign up. {Diemert also alleges he was invited to attend a discussion on “white racial literacy” and a discussion about an article entitled “White People Are Cowards.” The Court cannot discern from the complaint whether this conduct falls within the statute of limitations period.}

The City counters that Diemert “fail[ed] to allege sufficient facts to support a finding that he was treated differently based upon a protected class,” but this is really an invitation to weigh the evidence or “forecast” Diemert’s likelihood of success on the merits. This the Court cannot do on a Rule 12(b)(6) motion.

The City argues in the alternative, that even if Diemert does allege sufficient facts to state an equal protection claim, it would not matter because “the RSJI is narrowly tailored to achieve the compelling state interest of eradicating systemic racism within the City’s workforce.”

The City’s policy, as alleged, however, appears to encourage employees to attend different trainings based on their race, so the City must establish these affinity group distinctions are narrowly tailored to achieve the asserted compelling state interest. The Court finds further factual development is necessary regarding the City’s affinity group policy and whether it caused Diemert a constitutional injury….

Diemert has stated a plausible claim of retaliation.

Diemert alleges that the City retaliated against him after he engaged in protected activity. To establish a prima facie case of retaliation, a plaintiff must show that (1) they participated in a protected activity; (2) they suffered an adverse employment action; and (3) a causal link exits between the protected activity and the employer’s adverse action. A retaliation claim “need not be supported by an adverse action that materially altered the terms or conditions of the plaintiff’s employment” instead a plaintiff must allege that “a reasonable employee would have found the challenged action materially adverse, which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.”

Diemert claims his supervisor retaliated against him for filing an EEOC charge and because he “voiced his objections to the City’s RSJI on numerous occasions.” Specifically, Diemert alleges his supervisor called him out when he asked why the public email inbox was not being checked by saying, “how many applications does [Diemert] have sitting in the drawer … what is the oldest date of his applications and delays?”

Diemert also alleges that his supervisor cancelled their regular meetings and that the HR department denied his FMLA request for a reduced work schedule and leave for biannual medical treatment in 2021. Although the facts alleged are unclear, it appears the FMLA denial occurred sometime around May 2021, or around five months after Diemert filed his EEOC charge…. Because the FMLA decision allegedly occurred within five months of Diemert’s EEOC complaint he has plead a causal nexus sufficient to satisfy the minimal threshold required to withstand a motion to dismiss….

Judge Whitehead was only recently appointed to the bench, but from 2010 to 2014 he was a senior trial attorney at the EEOC.

Andrew Quinio, Brian Hodges, and Laura D’Agostino (all of the Pacific Legal Foundation) represent Diemert.

The post Race Discrimination/Harassment Lawsuit Against Seattle Related to Its "Race and Social Justice Initiative" … appeared first on Reason.com.

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Toyota Factories In Japan Paralyzed Due To ‘Glitch’

Toyota Factories In Japan Paralyzed Due To ‘Glitch’

The world’s biggest-selling automaker has frozen output at all factories across Japan “due to a system malfunction,” according to Bloomberg.

A Toyota spokesperson said a ‘glitch’ in ordering parts forced the company to shutter operations at all 14 assembly plants. This is a big problem for the company because it utilizes a just-in-time inventory strategy, which keeps only a limited amount of parts on hand to minimize costs — might lead to supply chain snarls if downtime is long enough. 

Bloomberg said, “28 assembly lines churning out everything from the top-selling Corolla and Camry to Prius hybrids” have been affected. The spokesperson said it’s unclear when operations will restart, nor does the company suspect a cyberattack. 

Toyota shares were muted in Asia and have yet to react to the disruption because it’s still unclear how much output would be lost. Reuters calculations showed the 14 plants accounted for a third of the automaker’s global production. 

Even though Toyota does suspect a cyberattack, Japan’s biggest port in Nagoya was paralyzed in July due to a Russian ransomware attack. Last year, the carmaker was hit with a one-day production halt after a major supplier was hit with a cyberattack. The cause of the malfunction that has made it impossible to order parts is still unknown. 

The good news is public broadcaster NHK said the Miyata plant in the southern prefecture of Fukuoka would restart on Wednesday. 

 

Tyler Durden
Tue, 08/29/2023 – 07:45

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US Stocks Are Underpricing Recession Risks

US Stocks Are Underpricing Recession Risks

Authored by Simon White, Bloomberg macro strategist,

There continues to be compelling signs that a US recession could be near at hand, a risk that stock markets are not reflecting.

This week we get a raft of US data that will shed further light on US recession risks. While some data points, such as the Atlanta Fed’s GDPNow growth estimate, are consistent with a robust economy, there are several other data points that continue to imply a recession is close (or not implausibly, even here now, if data is subsequently revised lower).

The Four P’s of recessions is that they are downturns that are persistent, protracted, pervasive and precipitate.

To capture these, I created the Recession Gauge, which is made up of 14 sub-components that cover a wide array of market and economic data. It has been in recession mode all of this year.

One of its sub-components is the Fed Regional Manufacturing Indicator (we’ll get one of its data points today with the Dallas Fed’s Manufacturing Index for August). The Fed regional banks’ indexes are notoriously volatile, however if we look at the percentage of them contracting, it gives a historically reliable foreshadowing of a recession, having only two false positives going back to 1970. The indicator is currently in recession mode.

This week we will also get claims, payrolls and ISM data.

Claims data by US state continues to be consistent with a near-term recession. ISM manufacturing remains in contraction territory. The new orders-to-inventory component is rising, pointing to some near-term upside for the headline index, but recent PMI data disappointed to the downside, intimating that the manufacturing recession is ongoing.

The labor market has been the most unexpectedly resilient part of the economy through the Fed’s hiking campaign. But weakness is becoming more apparent. Not only is, for example, payrolls data being revised lower (as is typical at turning points), leading jobs data shows payrolls growth should keep falling, and the unemployment rate soon start rising.

Employers tend to reduce employee hours and let temporary workers go before they start layoffs. Average hours worked has been falling, and growth in temporary-help employment has been contracting, pointing to much weaker growth in payrolls.

Stocks have been dancing to a different tune, however. Their path since the bear market began last year has not only exceeded previous bear markets that coincided with a recession, but is now clearly ahead of all prior bear markets going back to 1929.

Even though in this downturn – as one likely to be accompanied by high inflation – stocks are less likely to fare as badly (in nominal terms), they are still prone to a rude awakening from an economy that could precipitately look very recession-like.

Tyler Durden
Tue, 08/29/2023 – 07:20

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