Woman Found Responsible for Internet Harassment in Canada Loses Defamation Suit Against N.Y. Times

From today’s decision by Judge Paul Oetken in Atas v. N.Y. Times Co.:

Plaintiff Nadire Atas, proceeding pro se, brings this action against Defendants The New York Times Company [and others], alleging defamation. According to Atas, The Times—through news articles, podcast episodes, and interviews of its journalists—defamed her by describing her as a mentally ill woman who has engaged in years-long campaigns of harassment against her perceived enemies using the internet and the Canadian court system…. [Defendants’] motions to dismiss are granted….

On January 30, 2021, The Times published an article titled “A Vast Web of Vengeance” on its website and in print. The article, written by Defendant [Kashmir] Hill, described the phenomenon of “complaint sites,” which allow anonymous internet users to post malicious and often false accusations about people for the purpose of retribution for perceived slights. It reported that Plaintiff is one such person, responsible for anonymous internet posts targeting those who have slighted her with unfounded accusations of pedophilia, theft, and fraud, among other offenses. The article also reported on Canadian court proceedings against Plaintiff for defamation. It included the statement that in 2017, Judge David Corbett of the Ontario Superior Court of Justice deemed Plaintiff “a vexatious litigant who was ‘ungovernable and bent on a campaign of abuse and harassment.'” Additionally, the article reported that on January 28, 2021, the same judge had issued a ruling stating that Plaintiff was responsible for “unlawful acts of reprisal” [referred to as the Caplan Judgment -EV].

On February 10, 2021, The Times published a follow-up article reporting that Plaintiff had been arrested the previous day for harassment and libel. On February 17, 2021, Hill gave an interview on CBC Radio referencing the two articles. On April 6, 2021, Defendant Michael Barbaro interviewed Hill about her reporting on The Daily Podcast, which is published by The Times.

On April 7, 2021, Atas was charged with criminal harassment and libel under the Canadian Criminal Code for offenses occurring between January 1, 2000 and April 7, 2021. One of the alleged victims was Defendant Lily Meier, who is the daughter of Defendant Ellen Pollock. Pollock is an editor at The Times. On April 24, 2021, The Times published an article written by Hill and Defendant Aaron Krolik describing the internet-based “Slander Industry.” The article referenced Atas as “a woman in Toronto who poisoned the reputations of dozens of her perceived enemies by posting lies about them” and linked back to the January 30, 2021 article. On April 26, 2021, Hill and Krolik made guest appearances on a podcast called In Lieu of Fun, in which they discussed their reporting on Atas and the allegations against her. Finally, on May 3, 2021, Barbaro again interviewed Hill on The Daily. Barbaro referred to Atas as “a woman with a vendetta that stretched back 30 years.”

Atas alleges that each of the aforementioned articles, interviews, and podcasts contained false and defamatory statements about her. She also alleges that The Times Defendants re- published the defamatory statements on their social media accounts. Broadly, Atas claims that she was not the source of any harassment campaign; that she is not mentally ill; that her family has not been trying for years to get her help for her mental health problems; and that The Times’s reporting did not accurately reflect the court proceedings in Canada or the court proceedings were biased against her….

Atas’s defamation claims fail because she has not plausibly alleged that the statements in question were false. To prevail on the motions to dismiss, Atas must plead facts demonstrating the falsity of the allegedly defamatory statements…. The Court concludes that Atas has failed to show that the statements and news articles propounded by The Times Defendants were not substantially true.

The Caplan Judgment reflects (1) that Judge Corbett concluded that Atas “has used the internet to disseminate vicious falsehoods against those towards to whom she bears grudges”; (2) that “serious mental illness must underlie this conduct”; (3) that “there have been as many as 150 victims of Atas'[s] attacks”; and (4) that she was a vexatious litigant, among other findings…. [T]he doctrine of collateral estoppel … “prevents parties … from relitigating in a “Non-mutual collateral estoppel allows a defendant who was not party to the previous litigation to bar issues raised in subsequent litigation.” On a motion to dismiss, even taking all of the plaintiff’s allegations as true, “collateral estoppel will nonetheless bar a plaintiff’s claim when [a] plaintiff’s factual allegations have been decided otherwise in a previous litigation.” Collateral estoppel applies to judgments of foreign courts as long as the district court recognizes the foreign judgment, which the Court does here.The Caplan Judgment [has collateral estoppel effect] with regard to the issues of whether Atas is responsible for the internet-based harassment described in The Times’s reporting, whether she is a vexatious litigant, and whether she has reported suffering from mental illness.

To support her defamation claims, Atas also relies on the fact that the Toronto Attorney General withdrew the criminal charges against her on December 7, 2021. Given that the charges were withdrawn after each of the allegedly defamatory statements, articles, and podcasts was published, this development does not retroactively render The Times’s coverage of the prior legal proceedings against Atas false. And while Atas claims that the Toronto authorities dropped the charges against her because they found no evidence that she had made harassing internet posts, she provides no facts or evidence that this was, in fact, their rationale….

Atas’s claims fail for the independent reason that The Times’s reporting is protected by the fair report privilege. This privilege, as codified under New York law, provides that “[a] civil action cannot be maintained against any person, firm or corporation, for the publication of a fair and true report of any judicial proceeding.” … The articles and reporting in question made clear that The Times was reporting on judicial proceedings against Atas. For example, the January 30, 2021 article stated that “a portrait emerges from legal filings and evidence submitted in court cases, newspaper articles and people who have known her over the years.” The February 10, 2021 article opened by referring to Atas’s arrest and the charges against her. The April 24, 2021 article contains only a passing reference to Atas, which linked back to the January 30, 2021 article. An ordinary reader would understand The Times’s reporting on Atas to be premised on records of the Canadian civil and criminal proceedings in which she was involved. Atas’s claims therefore fail to the extent that they are premised on The Times Defendants’ reporting on the Canadian judicial proceedings, including the Caplan Judgment and her April 7, 2021 arrest.

The court also noted that New York’s anti-SLAPP law requires a showing of “actual malice”—i.e., knowledge that the statement was false or likely false—for defamation liability as to all speech on matters of public interest (and not just when the speech is about a public official or a public figure). The court concluded that “Atas’s purported use of the Canadian legal system and the internet as tools of harassment are matters of public concern, rather than ‘purely private matter[s],'” and that Atas hadn’t plausibly alleged actual malice.

David Edward McCraw represents the Times.

The post Woman Found Responsible for Internet Harassment in Canada Loses Defamation Suit Against N.Y. Times appeared first on Reason.com.

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NATO Article 5? Romania Firmly Rejects Ukraine Claim That Russian Drone Hit Its Territory

NATO Article 5? Romania Firmly Rejects Ukraine Claim That Russian Drone Hit Its Territory

In November of 2022 the Ukrainian government tried to encourage its NATO backers to invoke an Article 5 situation which would require the Western alliance to go to war against Russia (Article 5: “an attack against one Ally is considered as an attack against all Allies.”). This is because a missile had hit a Polish border village and killed two people, which Kiev insisted was fired by Russia. But it was later proven that it was actually an errant Ukrainian air defense missile which fell on the residential area, and the crisis of potential major escalation with Russia was avoided.

On Monday, a very similar situation happened, but once again Ukraine’s attempt to drag the West into direct shooting war with Russia has failed. Ukrainian Foreign Ministry spokesman Oleg Nikolenko claimed in a public written statement that a Russian suicide drone struck Romanian territory.

Source: Global Images Ukraine/Getty Images

He cited Ukraine’s state border service to claim that a Russian drone “fell and detonated on the territory of Romania” amid broader strikes on the port of Izmail. And that’s when he suggested it marked an attack on a NATO country and thus presented a threat to the entire alliance…

“This is yet another confirmation that Russia’s missile terror poses a huge threat not only to Ukraine’s security, but also to the security of neighboring countries, including NATO member states,” Nikolenko said.

“We urge partners to accelerate the provision of Ukraine with additional modern anti-missile and anti-air defense systems, as well as combat aviation, which will strengthen the protection of Ukraine’s infrastructure and neighboring countries,” he added, in an obvious attempt to at least get more military ‘toys’ from the West.

But NATO-member Romania quickly rejected this narrative, with its defense ministry directly refuting the claim, saying:

“The Ministry of National Defense categorically denies information from the public space regarding a so-called situation that occurred during the night of September 3 to 4 in which Russian drones allegedly fell on the national territory of Romania.”

The statement added that “at no time did the means of attack used by the Russian Federation generate direct military threats to the national territory or the territorial waters of Romania.”

Given the firmness and promptness of Bucharest’s denial of Ukraine’s version of events, it seems that NATO decision-makers are very much aware of the dangers of Ukraine’s own wartime propaganda, despite supporting the country’s fight in every other way possible.

Via Google Maps, Izmail Port

There is general awareness of the unspoken truth that Ukrainian officials have a deep incentive to get NATO more directly involved in the war, given also how badly the counteroffensive is going. The West has been dragged along to a large degree, at first resisting demands for major advanced weapons systems like long-rage rockets, tanks, and F-16s, but later acquiescing. 

Tyler Durden
Tue, 09/05/2023 – 15:20

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Peter Schiff: Government Spending Has Bankrupted The US

Peter Schiff: Government Spending Has Bankrupted The US

Via SchiffGold.com,

Peter Schiff recently appeared on the Capitol Report on NTD News to talk about the state of the US economy. He explained how government spending has created the price inflation Americans continue to struggle with, and how it has bankrupted the United States.

The Biden administration keeps touting its “investments” in infrastructure and other programs. Meanwhile, average Americans continue to say they’re struggling with price inflation. Peter pointed out that the administration isn’t really investing in anything. It’s just spending money it doesn’t have.

And that’s creating inflation.

All of that government spending is being financed by deficits and that’s really the source of the inflation. And it has been the source of the inflation for many, many years because the Fed has been monetizing all the government debt by creating money. That’s what’s been putting all the upward pressure on prices. So, it’s the government that’s responsible for the inflation. As long as the Biden administration keeps spending money that it doesn’t have, inflation is going to get worse.

The NTD anchor played a clip of Vice President Kamala Harris pointing out that the average American is just a $400 unexpected expense away from bankruptcy. Peter pointed out that the US government is also bankrupt.

We admitted that during the fight over raising the debt ceiling. We said that if we can’t raise the debt ceiling, we have to default on what we’ve already borrowed, which means we’re broke. We don’t have the resources to pay our bills. All we can do is go deeper into debt so that we don’t have to pay our bills. So, the whole country is broke thanks to all this reckless borrowing and spending that has been made possible by a cooperative and complicit Fed that has kept interest rates artificially low and monetized all that debt.”

The artificially low interest rates also blew up all kinds of economic bubbles and incentivized malinvestments in the economy.

Now that the Fed is forced to allow interest rates to rise, the air is coming out of this bubble and it’s going to be felt throughout the US economy.”

The anchor also asked Peter about America’s relationship with China. Commerce Secretary Gina Raimondo recently said, “Decoupling is neither in our economic or national security goals.” Peter said the US can’t afford to decouple from China.

You have to recognize that China is both our biggest supplier and our biggest banker. The Chinese loan us the money to buy the stuff that they produce that we can’t. Our entire standard of living rests on the support of China, and if we lose that support, it’s going to collapse. Now, We’re in the process of losing that whether we want to or not. I think the Chinese realize it’s in their interest to drive the decoupling, and that’s what’s going on.”

Peter mentioned the recent BRICS summit and the expansion of that economic bloc.

They’re looking to de-dollarize, and to reduce and eventually eliminate their dependency on the US dollar. And when they no longer need dollars, well, then they no longer need to sell us their stuff because they have plenty of domestic demand for what they produce. That means the United States is going to be in a lot of trouble because we don’t have the industrial capacity to produce what we’re now getting from China. And despite what Biden is saying about some kind of manufacturing renaissance, it’s all a bunch of BS. The manufacturing sector continues to shrink under his presidency and our trade deficits have hit record highs.

So, how do we mitigate the danger? Peter said we need to reduce the burden that the government puts on the American economy.

We need to see massive deregulation. We also have to see substantial and across-the-board cuts in government spending so we can relieve the economy of the burden of paying for that spending so that we can start producing again the things that we are now importing from China and other countries. Because when the dollar collapses, which I think is inevitable as it loses its status as a reserve currency, we’re not going to be able to consume unless we can produce. And right now, our productive capacity is being inhibited by government.”

Tyler Durden
Tue, 09/05/2023 – 15:00

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American Lung Association Demands the FDA Mislead the Public About Vaping


A shadowed figure of a man vapes with a red and pink glowing background behind the figure | Photo 112959091 © Ilkin Guliyev | Dreamstime.com

The Food and Drug Administration (FDA) should abandon any efforts to inform the public that vaping is safer than smoking, says the American Lung Association (ALA).  

Numerous public surveys show a consistent, widespread misperception that vaping nicotine is just as or more dangerous than smoking cigarettes. The problem is so extensive that correcting these false beliefs forms part of the FDA’s Center for Tobacco Products (CTP) 5-year strategic plan

Writing in the journal Addiction, Brian King, the head of CTP, stated: “Opportunities exist to educate adults who smoke cigarettes about the relative risks of tobacco products.” To that end, among the five goals listed as part of CTP’s plan is a commitment to inform the public that not all tobacco products are created equally, with cigarettes being the most dangerous and others, such as e-cigarettes, being far less harmful. 

The pledge to provide accurate information about the risks of different nicotine products is long overdue and in line with the public health communications of peer countries such as Canada, New Zealand, and the U.K. (The U.K. even has vape shops in hospitals, and some smokers are offered free vapes to help them quit.)

But in their comments on CTP’s strategic plan, the ALA, which proclaims its commitment to a world free of lung disease, demands the FDA “remove language from the description for this goal that references informing adults about the relative risk of tobacco products” and that “CTP should have no part in the industry’s efforts to sustain addiction through the failed and flawed notion that adult smokers should switch to e-cigarettes.”

Despite ALA’s protestations, the idea that e-cigarettes are effective for smoking cessation is not a tobacco industry notion. According to the prestigious Cochrane Review, e-cigarettes are more effective than nicotine patches or gums in helping smokers quit. In essence, the ALA is asking the FDA to withhold accurate information from the public that could save lives. The recommendations sparked strong reactions from those who believe safer alternatives to cigarettes are a no-brainer from a public health perspective.

“This is highly ironic, given the extent to which the Lung Association and other tobacco control organizations went to punish the tobacco industry for lying to the public and hiding critical health information,” writes Michael Siegel, a visiting professor at the Tufts University School of Medicine. “It is also unethical because it violates the public health code of ethics, which calls for honesty and transparency in public health communications. We do not hide critical health information from the public.”

FDA Commissioner Robert Califf is adamant about the need to fight misinformation, calling it the most common cause of death in the United States, but has yet to address the wave of misinformation surrounding the risks of e-cigarettes. Speaking to Reason, Dave Dobbins, recently the chief operating officer of the Truth Initiative, the nation’s largest anti-tobacco nonprofit who has since acted as consultant to the tobacco company Altria on harm reduction, fears that withholding truthful information from the public could further undermine the FDA’s credibility. “I think that if you’re a public health authority and you’re caught not telling the truth, it will have long-term consequences that are with the next time people need information from you that’s true and really important, they may not listen to you.” 

Dobbins believes the ALA has misread the strength of evidence around e-cigarettes rather than Siegel’s stance that the nonprofit has taken an ideological position over a scientific one. “I disagree with their reading of the science, but I believe that’s what motivates them, not a desire to suppress true speech more than just a very different interpretation of the science than many, many health authorities,” Dobbins says.

Still, Dobbins, who stood shoulder to shoulder with the ALA on tobacco regulation for decades, believes they’ve called this issue wrong. If the FDA listens to the ALA, “it will prolong smoking as a behavior in the United States,” he says. According to one estimate, if smoking was largely replaced by vaping, it could result in 6.6 million fewer premature deaths from from 2016 to 2100. 

There is perhaps an underlying fear among many anti-tobacco groups that if the public knows how much safer e-cigarettes are than cigarettes, then many people who never would’ve used nicotine will start doing so. But “you don’t get to live in a super virtuous world where nobody does anything,” says Dobbins. 

Besides, “in order to get people to comply with your vision of virtue, inevitably, you have to engage in coercion. And coercion has societal costs and health costs as well, and you have to take those into account.”

The post American Lung Association Demands the FDA Mislead the Public About Vaping appeared first on Reason.com.

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The Biggest Threat To Global Liquidity Is China

The Biggest Threat To Global Liquidity Is China

Authored by Simon White, Bloomberg macro strategist,

Global money growth will remain under pressure while China refrains from comprehensive easing, posing a potential secular headwind for risk assets and economic growth around the world.

Money makes the world go round. Nowhere is that more true than in markets. No money, no liquidity, no transactions. Any impediments to money are thus a big deal for asset prices and economies.

Money has been in great abundance for most of the last 20 years. But that is in large part due to China. Its current travails therefore pose a significant risk to money’s path in the coming months and years.

China’s dominance in global money trends can be seen in the chart below. Since 2007, China’s M1 in dollar terms has hugely outpaced GDP-weighted M1 in the rest of the world. M1 in China is 67 trillion CNY, or $9.5 trillion, while M1 in the US, the country with the second largest stock of narrow money after China, is 30% lower, despite an economy that is a third bigger than China’s.

That’s without including the demand deposits of households. They’re not part of M1 in China as they are in most other countries. Adding them in would enlarge China’s M1 by more than half again.

Even without this adjustment, China has been pivotal for global money growth over the last 15 years. That can be seen clearly if we look at the first principal component of global money growth (i.e. where there is maximum variation). This component is very close to China’s money growth (and no other country’s, including the US), showing that China has been the primary driver of global money trends for the last two decades.

At no time was China’s global monetary significance more critical than in the aftermath of the GFC. While the US was hesitating in providing large-scale fiscal and monetary stimulus, China’s money growth exploded. Between 2008 and 2011, it was on average about twice the rate than in the rest of the world.

In percentage terms, M1 in the rest of the world rose by 30% in 2008-11, while in China, adjusted for household deposits, it climbed by almost 110%. It’s no overstatement to say a deep recession could well have become a global depression if it were not for China’s largesse.

In the pandemic the situation was reversed, but less dramatic. The US expanded its money supply more than China as the latter refrained from supporting its household sector, while the US handed out stimulus checks. But to put things in perspective, the gap between M1 growth in the pandemic was much smaller than in the GFC, at 14% for China compared to only 38% for the rest of the world. The rest of the world is not providing the money leadership China once did.

Why is M1 is so important? Principally as it’s the most cyclical of the monetary measures. The monetary base, which is currency in circulation and bank reserves, is too narrow a measure. Central-bank reserves can be created but remain locked up in the financial system, and thus have a muted impact on risk assets and especially the real economy.

M2 and M3, on the other hand, are too broad measures of money. They are typically counter-cyclical as they are dominated by items like savings deposits, which tend to rise in periods of risk aversion and fall when economic optimism rises.

M1 is in a sweet spot. It’s primarily made up of the monetary base and demand deposits. Banks create deposits when they lend money, thus it is an excellent sign of forthcoming economic activity. Why borrow unless you are going to spend or invest?

M1’s evolution, therefore, has significant implications for risk assets and global economic activity. We can see in the chart below the strong leading relationship between global M1 growth and US equities, with rises and falls in M1 growth leading stocks by about six months.

But since the pandemic, China has been faltering. For the first time since it entered the global financial system, China has been a persistent drag on global money growth. Its M1 growth has stalled as it imposed some of the most draconian lockdowns in the world, and since then it has resisted engaging in so-called flood-like stimulus to reflate its economy.

Without China, global money supply is likely to remain depressed, especially as growth is unlikely to come from the US et al when they are in the midst of rate-hiking cycles and reducing the size of their central-banks’ balance sheets.

The pressure is mounting on China to stimulate broadly to resuscitate its property market and avert a debt-deflation. But that doesn’t mean it will definitely happen, and happen in time. If resistance to such measures turns into outright recalcitrance, then it’s not just China that will face the consequences.

Tyler Durden
Tue, 09/05/2023 – 14:20

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Is Subprime Credit-Card Crisis Looming?

Is Subprime Credit-Card Crisis Looming?

Last month, Macy’s announced what some suspected to be a canary in the credit coal mine; credit card delinquencies had taken a huge bite out of results in the second quarter. In a call with analysts, execs warned that the resumption of student loan payments could compound the problem

Now, MarketWatch asks; Is there a subprime credit-card crisis on the horizon?

According to new data from VantageScore, Generation Z, Millennials, GenX and Baby Boomers with a credit score between 300 and 600 (subprime) experienced a delinquency rate of 10.6% (for those 30 – 59 days past due), in July of this year – up from 9.3% last year.

For primer borrowers, the delinquency rate was just 0.15% in July, up from 0.14% in July of 2022.

Via vantagescore.com

When looking at 13 months of delinquency rate data, short, medium and term delinquencies are all trending higher.

Meanwhile, the average interest paid on credit card debt is reaching insane levels.

And when one looks at the average delinquencies among small banks, more disturbing data emerges.

Among the top 100 banks, the delinquency rate was 2.63% in the second quarter vs. 1.71% a year ago, according to the Federal Reserve Bank, which notes that more than 80% of consumers in the US had credit cards last year. Of that, nearly half (48%) were carrying a balance.

“We’ve seen a huge increase in credit-card delinquencies,” according to Balbinder Singh Gill, an assistant professor of finance at the Stevens Institute of Technology’s School of Business in Hoboken, NJ, in a statement to MarketWatch. “In the U.S., we only seem to fix things when there is a crisis. I’m very worried about delinquencies, especially as these are impacting households with low wages.”

According to Gill, given the 24% APR on credit cards, falling behind could force lower income workers into bankruptcy.

What’s worse, consumers could end up paying late-payment fees of up to $35 per month if they default on their payments, and an APR of up to 30%, according to LendingTree.

One theory: some smaller banks loosened credit requirements after the recession in 2008 to lure customers and increase deposits. In 2018, Congress rolled back part of the Dodd-Frank Act in 2010 — which was designed to strengthen the banking system — further easing credit-requirement rules for smaller banks.

All of this comes at a bad time. Consumers, particularly low-income Americans, are under pressure. Student-loan repayments resume in October after the pandemic-era moratorium and interest rates are at a 22-year high. While the Fed has signaled it’s not likely to raise rates again imminently, inflation is still above the Fed’s 2% target rate. -MarketWatch

“Wages are not increasing at the same rate as inflation,” said Gill. “People want to have the same standard of living. They want to buy the same food, but it’s impossible as their wages are still low, so they’re using their credit cards. That’s OK for the short term, but at the end of the day, you have to pay off the debt.”

What’s more, total credit card debt surpassed $1 trillion in Q2, with the average credit card balance in the same quarter rising by 20% to $5,947 – the highest level in a decade, according to a recent TransUnion report.

Bankrate’s Ted Rossman sees “pockets of trouble” emerging.

“Half of credit-card holders pay in full every month, and avoid interest and life is great. They get rewards and buyer protections and all these benefits,” he said, “But the other half, more or less, is carrying debt at an average interest rate north of 20%, which is the highest we’ve ever seen. That can be a big deal at the household level.

Tyler Durden
Tue, 09/05/2023 – 14:00

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New Jersey Governor No Longer Wants Immigrants After Earlier Advocating For Sanctuary State

New Jersey Governor No Longer Wants Immigrants After Earlier Advocating For Sanctuary State

Authored by Naveen Athrapully via The Epoch Times,

New Jersey’s Democrat Gov. Phil Murphy has changed his stance on border policies after refusing to take in immigrants as proposed under a Biden administration scheme, even though the governor had earlier insisted on building a “sanctuary state.”

The Biden administration recently proposed that some of the 60,000 asylum seekers in New York City could be moved to the Atlantic City International Airport in Egg Harbor Township, New Jersey. The decision triggered a sharp reaction from New Jersey politicians.

“I don’t see any scenario where we’re going to be able to take in a program in Atlantic City or frankly elsewhere in the state,” Mr. Murphy said during News 12 New Jersey’s “Ask Gov. Murphy” show.

“We are already seeing folks in New Jersey that have probably swelled into Jersey from New York City or from other locations, but you need scale, enormous amount of federal support—resources that go beyond anything that we can afford—putting everything else aside.”

Mr. Murphy’s concerns about housing illegal immigrants and asylum seekers comes despite the fact that he has been a vocal supporter of liberal immigration policies over the past years. In 2017, while he was a candidate, Mr. Murphy insisted on making New Jersey a “sanctuary state.”

New Jersey Gov. Phil Murphy gives a victory speech to supporters at Grand Arcade at the Pavilion in Asbury Park, N.J., on Nov. 3, 2021. (Eduardo Munoz Alvarez/Getty Images)

At the time, his competitor, the Republican nominee for governor, warned about the dangers of providing sanctuary to undocumented immigrants and accused Mr. Murphy of seeking to “violate” the federal law and putting people at risk.

However, Mr. Murphy insisted that sanctuary policies were about “inclusiveness” and the election was about the “nation’s moral compass” and “the goodness of America,” according to Politico.

In a joint statement, a group of Republican legislators from New Jersey’s 13th district said, “New Jersey should not in any way, shape or form be used as a scapegoat to bear the fallout of failed Democrat Policies which continuously impact Americans and immigrants.”

“It is well past time for the Governor and our U.S. Senators to make it clear to New York City and Washington, D.C., that New Jersey will not tolerate their inabilities to implement real, effective changes to address the immigration crisis facing this nation.”

“The State of New Jersey should not become a tool to gloss over the gross ineptitude of federal politicians to produce a fair resolution.”

In an interview with the outlet, Republican Atlantic County Executive Dennis Levinson said that he will do his “best to prevent” migrants from being sent to the region. Atlantic County is one of the poorest counties in the state.

“We can’t afford it. We’re a poor county. We’re one of the poorest counties in New Jersey. It’s not a burden I can put on our taxpayers.”

Democrats Fight Over Immigrants

While New Jersey is rejecting the Biden administration’s proposal to send some of New York’s illegal immigrants to their state, New York’s leaders are facing heat over the impacts of their own party’s border policies and the resulting immigrant surge, with Democrats blaming each other for the situation.

NY Democrat Governor Kathy Hochul is pushing the blame onto the Biden administration.

“This crisis originated with the federal government, and it must be resolved through the federal government … The borders and decisions about who can work are solely determined by the federal government,” she said.

New York Gov. Kathy Hochul gives a speech in New York on Jan. 31, 2023. (Michael M. Santiago/Getty Images)

Meanwhile, New York City Mayor Eric Adams is blaming Ms. Hochul for the crisis. “I think the governor’s wrong. She’s the governor of the state of New York. New York City is in that state. Every county in this state should be part of this,” he said during a recent speech.

Over the past year, more than 55,000 foreigners have sought asylum in New York City, claiming to be at threat of violence and persecution in their home nations, according to the City Hall.

The Mayor’s Office of Management and Budget calculates the cost of providing shelter and other services to these illegal immigrants and asylum seekers at $1.4 billion in 2023 and $2.8 billion in 2024.

Last month, comedian commentator Bill Maher slammed progressive leaders for their handling of the immigration crisis. “Don’t pretend that you love migrants so much and then, when [border states] send them to you, you don’t like them,” he said during a podcast.

“Yeah, you liked them when it wasn’t your problem because you’re not a border state. And then when they show up in Chicago, in New York, you’re like … ‘What are we going to do with these people?’”

Immigrant Numbers Jump Under Biden

The migrant crisis in New York is happening as the number of illegal immigrants crossing into America across the southwest land border has surged under the policies of the current administration.

Illegal immigrants wait to be taken by Border Patrol to a processing facility to begin their asylum-seeking process in Eagle Pass, Texas, on June 25, 2023. (Suzanne Cordeiro/AFP via Getty Images)

In 2020, the U.S. Customs and Border Protection (CBP) reported 458,088 encounters in the southwest land border. This jumped to 1.73 million in 2021 and then to 2.37 million in 2022. As of July, the encounters have already exceeded 1.97 million.

In an interview with Breitbart last month, presidential hopeful Sen. Tim Scott (R-S.C.) highlighted the need to complete President Donald Trump’s border wall.

“The number one thing we should do is finish the border wall. The second thing that we should do is use the available technology to stop the fentanyl from killing another 70,000 Americans per year.”

Mr. Scott also stressed the need to “crush the cartels.”

“We cut off their blood support, so to speak, by taking away their money. If we do that, we’ll save tens of thousands of American lives.

“I wrote the legislation to get that done. It was passed through the Senate,” he said. The bill is yet to become law.

Tyler Durden
Tue, 09/05/2023 – 13:40

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FAA Cancels United Airlines Nationwide Ground-Stop

FAA Cancels United Airlines Nationwide Ground-Stop

Update: United’s ground-stop has been cancelled by the FAA.

*  *  *

United Airlines issues a nationwide ground stop due to a computer issue, ABC reports, citing the Federal Aviation Administration.

Fox Business is reporting, as per the FAA advisory below, the grounding is due to “equipment failure”.

United aircraft were unable to contact flight dispatchers using normal means, the FAA website showed.

…how long will this ‘glitch’ take to fix?

UAL stock tumbled over 4% on the news, down at 3-month lows…

 

Tyler Durden
Tue, 09/05/2023 – 13:25

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Three Reasons Why Goldman Is Dead Wrong In Slashing Recession Odds To Just 15%

Three Reasons Why Goldman Is Dead Wrong In Slashing Recession Odds To Just 15%

Goldman’s economist team, which has an abysmal prediction hit-rate, is out with the worst possible news for the Biden admin: the team led by Jan Hatzius has once again slashed its subjective odds of a recession, and the bank – which last raised its recession odds back during the March bank crisis, just when the Fed’s massive liquidity injection via Discount Windows and the BTFP made a recession less likely, and has been trimming its ever since – now sees the probability of a US recession at 15%, down from 20% previously and well below a Bloomberg consensus which has been stuck at 60% since 2022 largely thanks to the grotesquely inverted yield curve which has always correctly predicted an imminent recession.

For those confused, the reason why this is bad news for Biden is that Goldman’s client-facing sellside research, unlike its FICC or Equity sales and trading desk whose notes and views are among the most accurate and sought after on Wall Street, is almost always dead wrong. Hence, one can say a recession is virtually assured.

So why is Goldman so optimistic? Perhaps a better question is why is everyone so pessimistic when the Atlanta Fed’s own GDPNow tracker sees US GDP rising (an absolutely idiotic) 5.6% in Q3?

Well, as even Goldman admits, the strength in Q3 GDP tracking “overstates the economy’s true momentum, given the still-soft business surveys and the much slower growth in real gross domestic income (which seems to be continuing in Q3 based on the July personal income data).” Indeed, as we first noted last week, the delta between the manipulated GDP number and the accurate, and depressed, GDI has never been bigger, which means that when reality finally hits, US economic growth will come thundering down as all the manipulation higher is revised away.

If that wasn’t enough, Goldman also warns that while “there are some fundamental reasons to expect a deceleration in Q4, including the resumption of student loan payments and a near-term hit to housing from the recent increase in mortgage rates”, the bank “expects the slowdown to be shallow and short-lived.” We don’t, since the resumption in student loan repayments will slash household spending by $16 billion per month

… and will be larger than monthly mortgage payments for many households.

In light of all that, it seems that Goldman is actually rather gloomy on GDP and views the near-term outlook with skepticism; so why does the bank expect a recession to be avoided? For two rather laughable reasons:

  • First, real disposable income looks set to reaccelerate in 2024 on the back of continued solid job growth and rising real wages.
  • Second, we still strongly disagree with the notion that a growing drag from the ‘long and variable lags’ of monetary policy will push the economy toward recession —in fact, we think that the drag from monetary policy tightening will continue to diminish before vanishing entirely by early 2024

Spoiler alert: none of that will happen, and here is why:

The only reason US consumer disposable income has been strong so far this year, is because of aggressive credit card spending and draining of excess savings. Unfortunately, as we detailed before, consumers are now tapped out with both credit card where we just saw the first decline since the covid crash as consumer now actively repay credit card debt ahead of the coming recession…

… while not only have all covid excess savings have been used up

… but the latest personal income and spending data revealed that personal savings from current income just tumbled by the most since January 2022 to the lowest level in 2023.

In short i) US consumers’ credit cards are maxed out and ii) their savings are now spent, but there is another reason why the miracle of “Bidenomics” is about to come crashing to a halt. The favorable fiscal tailwind, which DB and JPM called a “stealth stimulus” courtesy of $1 trillion in excess government spending which has ballooned the US budget deficit to wartime levels, is about to hit a brick wall, and send the US economy tumbling off a cliff…

… just as credit cards are maxed out, savings are spent, and households resume paying down hundreds of billions in student loans.

And just in case if these three weren’t enough, there is another reasons why the US economy is about to go into a tailspin: as Hatziues himself admits, “our confidence that the Fed is done raising rates has grown in the past month. We view Chair Powell’s promise at Jackson Hole to “proceed carefully” as a signal that a September hike is off the table and the hurdle for a November hike is significant…. And if the committee skips not only September but also November, the hurdle for restarting the hikes at a later point would probably rise, all else equal.”

Goldman is right here that the Fed is done, what the bank fails to grasp is the reflexive nature of the Fed-market-economy relationship, and once it become a fact that the last Fed hike is in the history book, the question will turn to “what does the Fed know that nobody else does, and why is it done hiking?” A good question, and one which BofA’s Michael Hartnett answered over the weekend when he simply said to “sell the last Fed hike.”  And if anyone needs confirmation to do just that, Goldman’s bullish assessment should seal it.

Much more in the full Goldman note available to pro subscribers.

Tyler Durden
Tue, 09/05/2023 – 13:15

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Mega-Cap Stocks Continue To Dominate. But Why?

Mega-Cap Stocks Continue To Dominate. But Why?

Authored by Lance Roberts via RealInvestmentAdvice.com,

Mega-cap stocks continue to dominate the market in 2023. The question is, why? After all, many other great companies have arguably much better valuations and fundamentals. Yet, those companies continue to lag the market’s overall returns as the bifurcation between the Mega-cap companies and everything else widens. The chat below clarifies the problem, which compares the market-capitalization weighted index to the equal-weight.

The bifurcation between the top 10 companies, as measured by market capitalization, and the other 490 stocks in the index has created an illusion of market bullishness. As we discussed just recently in “Investing In 2024:”

“The surge in the most hated sectors last year has been the main driver of this year’s broad market performance. If we strip out the performance of those three sectors, the market would be near flat on a year-to-date basis.”

Despite the extremely crowded trade into the three sectors comprised of those ten stocks, we continue to see professional investors crowd into those shares at a record clip.

The question is, why are professional managers seemingly chasing these stocks with reckless abandon?

The answer is more simplistic than you may think.

Career Risk And The Passive Effect

For investment managers, generating performance is necessary to limit “career risk.” If a manager underperforms their relative benchmark index for very long, they most likely won’t have a “career” in the investment management business. Currently, there are two drivers for the mega-capitalization stock chase. First, these stocks are highly liquid, and managers can quickly move money into and out without significant price movements.

The second is the passive indexing effect.

As investors change their investing habits from buying individual stocks to the ease of buying a broad index, the inflows of capital unequally shift into the largest capitalization stocks in the index. Over the last decade, the inflows into exchange-traded funds (ETFs) have exploded.

That ETF issuance surge and the assets’ growth under management fuel the performance of the top 10 stocks. As we discussed previously:

“In other words, out of roughly 1750 ETF’s, the top-10 stocks in the index comprise approximately 25% of all issued ETFs. Such makes sense, given that for an ETF issuer to “sell” you a product, they need good performance. Moreover, in a late-stage market cycle driven by momentum, it is not uncommon to find the same “best performing” stocks proliferating many ETFs.”

Therefore, as investors buy shares of a passive ETF, the shares of all the underlying companies must be purchased. Given the massive inflows into ETFs over the last year and subsequent inflows into the top-10 stocks, the mirage of market stability is not surprising.

As shown, for each $1 invested in the S&P 500 index, $0.32 flows directly into the top 10 stocks. The remaining $0.68 is divided between the remaining 490 stocks. This “passive indexing effect” has changed the market dynamics over the last decade.

However, the “passive effect” is only one reason portfolio managers hide in these massive companies.

The other reason is “safety.”

Safety In Liquidity

If and when the economy slips into a recession, earnings and revenue will decline for companies. Given the current level of interest rates, inflation, and reversal of monetary liquidity post-pandemic, the risk of recession is higher than normal. Higher interest rates, in particular, currently pose the largest threat to small and medium-sized companies. As Andrew Lapthorne of Societe General recently noted:

“The largest 10% of companies represent 62% of the overall non-financial market cap of the S&P 1500, so from a market perspective, it would appear that interest rates are not yet affecting the balance-sheet stress of the market overall. But lower down the size scale, things are tough and getting tougher. Interest coverage at the bottom 50% of S&P 1500 companies and the smallest quoted companies (as listed in the Russell 2000 index) falling sharply from low levels.”

These smaller companies do not have access to the capital markets as easily as larger capitalization companies and do not have the massive cash balances the mega-cap companies hold.

“It stands to reason that smaller quoted companies in the Russell 2000 index, as well as unquoted companies, don’t have as much access to corporate bond issuance so have been unable to lock into the near-zero long-dated fixed borrowings that the larger companies have.”

As that debt wall of term loans hits over the next few years, higher borrowing costs are going to raise the risk of defaults and bankruptcies. While we may not be in a recession yet, doesn’t mean it can’t happen. As noted by Simon White via Bloomberg, tightening financial conditions have seen corporate bankruptcies rise by 71% since last year. If financial conditions are still elevated over the next few years, that bankruptcy risk increases markedly.

As Albert concludes:

“Contrary to what the mega-cap valuations might suggest, smaller companies remain the beating heart of the US economy – maybe the mega-caps are more like vampires sucking the lifeblood out of other companies. It seems the lights are going out all over the US smaller-cap corporate sector.

They weren’t able to lock into long-term loans at almost zero interest rates and pile it high in the money markets at variable rates. Ultimately the pain for US small- and mid-cap companies will trigger the recession most economists are now giving up on, and hey, guess what? I think we’ll soon find out that even the large- and mega-cap stocks might not be immune to the indirect recessionary impact of higher interest rates after all.

Portfolio managers must chase the market higher or potentially suffer career risk. Therefore, the easiest place to allocate cash is the mega-capitalization companies with low risk of bankruptcy or default and extremely high liquidity.

I agree with Albert that current exuberance in the markets and the belief of a “no landing” scenario are likely largely overblown. Substantially tighter financial conditions remain the biggest risk to the markets. Therefore, when the Fed begins cutting rates to fix what it broke, we will see the rotation to safety occurring simultaneously.

Mega-Cap Will Dominate Until It Doesn’t

For now, there is little to deter portfolio managers from chasing the mega-cap stocks for performance reporting purposes. As noted, a big divergence between the manager’s performance and the benchmark index will lead to “career risk.” However, the problem is compounded by retail investors piling money into passive ETFs.

There is a basic belief by investors that “for every buyer, there is a seller.”

However, the correct statement is:

“For every buyer, there is a seller….at a specific price.”

In other words, when the selling begins, those wanting to “sell” overrun those willing to “buy.” Therefore, prices drop until a “buyer” is willing to step in.

That surge in selling pressure creates a “liquidity vacuum” between the current price and a “buyer” willing to execute. In other words, just as professional managers are trying to sell their shares of Apple (AAPL), the other 343 ETFs that own Apple are vying for the same scarce pool of buyers in a declining market.

Furthermore, advisors are also actively migrating portfolio management to passive ETFs for some, if not all, of the asset allocation equation. The rise of index funds has turned everyone into “asset class pickers” instead of stock pickers. However, just because individuals are choosing to “buy baskets” of stocks rather than individual securities, it is not a “passive” choice but rather “active management” in a different form.  

With the concentration of risk in a handful of stocks, the markets are set for a rather vicious cycle. The concentration of holdings and the subsequent lack of liquidity suggest reversals will not be a slow and methodical process. Rather, it will be a stampede with little regard for price, valuation, or fundamental measures as the exit narrows.

I suspect that March 2020 was just a “sampling” of what will happen when the next “real” bear market begins.

Tyler Durden
Tue, 09/05/2023 – 12:55

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